Ryan Tansom: Intentional Growth/Long Term Value, with End Goal In Mind E: 54 Top M&A Entrepreneur

Well, welcome to the top M&A Entrepreneurs podcast. today my guest is Ryan Tansson, runs a company called Arcona. Uh, let me just tell you, he ran a company $21 million sold that 8 figures. He's got a podcast, uh, called Intentional Growth. This has over 300,000 downloads. Ryan, thanks for joining the show. John, I'm super pumped to be here. I'm already excited based on the couple couple conversations you had right before we hit record. Yeah, well, I, I like what you're doing because you're so far ahead of me of creating this audience around yourself and helping people by helping people and then spending absolutely no money on ads and then getting business and deal flow. Yeah, that about sums it up. Yeah. So tell me, how, how did this start? Let's go wind back to the family business, and what was it? How did you get involved? And then, like, what was the responsibility, like all your, your dad or whoever it was said, hey, start taking over you, you, you got a sharp mind. So this is back uh early 90s, my dad mortgaged our house, bought a quarter million dollars of old used Panasonic copiers. So, oh yeah, he was a copier copier sales guy. So he, he went off on his own to do that and then sold them all on the 30 day terms and I said like kind of the rest is history. And, um, he was one heck of a, a grinder, an entrepreneur, and we, uh, so I was in the business, John, like, so like my way of working or getting the, the, the narratives when I was younger was like at 9 o'clock my dad would come home and I'd get the play by play of what happened, like when he got the canon licensing, when he opened up the next branches, so like, The whole my whole childhood, John was inside of that business. I mean, I was doing meter reads backwards before copiers were actually plugged into the internet, and yet she had that an odometer. I'd have to call people and be like, hey, what's your print volume so that way we could bill you and of course they'd lie and not answer and all this, but anyways, I was I could come down and get you some copier. Yeah, exactly. What is like $3000 an ounce or something? Oh my gosh, yeah, there, there used to be, that was such a lucrative business back in the day. It was ridiculous. And one of my biggest paychecks, uh, for income, not on a not on any kind of other deal was like literally selling copiers. But I worked in another business my whole life, '09, the the crash happens. I swear my grave and I were gonna go work for him, but well I decided to because there was like nothing to do. He was very distant from the company. So essentially the, the Cliff Mill version is John, I jumped in, had a like a blissful eight months of like just selling, but then I was, I was, was jumping into a CPA and a banking meeting with him, and we lost a lot of money that year just like everybody else in the best time to come in. Yeah, woo and and then for pretty much for the years going forward it was all about, hey, remember back in the day when there was a bunch of money in this business? So anyways, it was a 6 year turnaround, so it was new year like we. Sold a couple of the branches to different competitors for cash. We built out a new ERP system, built up the manage IT services, got to this point where we didn't know what to do with the business because we couldn't align our goals with the business's goals, sold the company in 2014. And that just sat on my eight year track to to where we are today of like what the heck was that? How do I learn as much about M&A as possible so I can take control over and I can help people essentially give them the fishing rod, so they can learn how to fish, they can write their own narratives. It's kind of like what you're doing in your show, right? Like, M&A is a completely different way of growing a business and thinking about business than just revenue, which is what so many people just focus on. Yeah, I, I, uh, I get a lot of reach outs. I can't remember the, the marketplace that, hey, if you're looking for podcast guests, uh. You know, and I, my title is top M&A Entrepreneurs, and I just say, hey, I think this guy would be a great podcast guest on your sister's like, well, I only have one criteria and that should grow your business through acquisition. Would that be the case? Uh, no, we just do organic. I like uh. Well, it gets they don't, it's, you know what the difference is, John, from what I've seen from all the people that go through our training or the hundreds of episodes that I've done is The moment someone shifts their mindset away from solving for annual income, which my dad and I did with the $20 million business, which, how much money can we take out of this company every year? And they shifted to, hey, what the heck is this thing worth? and how do we grow the value of this asset? It's a completely different game. It's like going from checkers to 3D chess, and it takes a special like circumstance or an experience or something to get someone into that new paradigm shift where then they can go, hey, I can actually buy a company with a certain amount of capital and grow the entire portfolio of assets instead of just wanting launching a new product line. It's a completely different way of thinking. How many of the deals have you worked on like that now? Um, so the way, so the way our business is structured, so I, we had a bunch of deals in our company, like I said, we sold a couple of the branches, sold the business in 2014, and then my partner's been through dozens and dozens of, um, of acquisitions and our business, we've got a training program where we've had hundreds of business owners go through which teaches about valuations and exits and all this stuff. And then a fractional fractional CFO business. So our CFOs will run through, do acquisitions for our clients, go through the eventual sale if they want to sell, whether it's Niss private equity. So, I mean, I'm not directly involved in a bunch of deals anymore, but it's more of like our CFOs, if they're on a team or a company, they each have about 4 or 5, they'll do the deals for our clients. So I'm involved and I'm seeing them all day long. Yeah, well, I mean, that's uh that's part of moving up in management. You just like, you set that structure and temp template in place. Oh, it's fantastic. I mean you get to see inside of the financials of all these companies just like a PE firm. I mean, you really think about it. How do you, uh, uh, the question I have for you is, how do you find a willing, receptive, and then somebody that actually puts the time in, you know, to, to, to say, OK, I want to grow, and this is what I want my evaluation to be at the end and have a life changing ex exit. Who is that person avatar look like? That is the golden question, isn't it? That's the golden question. I mean, I, if I could just identify this, I can go out and look for it, right? So we can go out on like about a 5 minute tangent if you want because it's, it's, it's a tangent I think is valuable for the this point is. I, I tried for 6 years to figure that out, and I, and it threw like I went and got my value building certification, my uh certified value growth advisory certification. I got exit that John's? Yeah, one of them is him and then Ken Sangenario and the exit planning institute, all of this stuff, and then I was consulting. Here's what I learned after burning through a lot of cash and trying to figure this out in a lot of time is. The words exit planning pisses a lot of people off cause they don't, they, they don't, I think inherently they know that their company is not worth what they, it should be worth, so they're not ready to even think about it, talk about it. What happened was, John, I was sitting there in our program before it was called intentional growth. Our book was on someone's desk and he goes, you know, I can't even put your guys' training material on my desk in my office, cause it's a growth and exit planning. I was like, oh my God, I'm like, we, we just can't like they can't, I had people asking to like send me emails from different emails. I'm like, this is not about selling. This is about growing a valuable asset that gives you choices. So what happened was, going back to your question, we went through the story brand framework with Donald Miller a couple years ago, my partner and I. And it's, it's a we, we rebranded it to intentional growth, because it's about shifting your mindset to grow a valuable asset that creates choices for you long term. So what happens is the people that, I mean, when we did that, John, it went from like kind of like like fire, like fighting ground like essentially hand to hand comment to exponential growth because Entrepreneurs that are trapped, they wake up every day and they have the same repeated problems, same friction, same tension. They know that they're not, they know they're not progressing. They know that what their company is doing right now is probably not worth enough money for them to be OK, but they don't know where to turn to. They're talking to different advisors. And really universally what it is, they don't understand valuations and what creates value. Like if you and I bought a a pre commercial real estate, it's kind of obvious like what you need to do to grow the value of that building. In a business it's not there's not as it's not an easy roadmap, so the whole goal is to get that person that avatar when they're unbelievably confused as shit. Asking lots of questions and frustrated because they're in visages, they're trying EOS they're working with other people, and they still know that there's like, they're not moving towards the goals that they want. Yeah, I'll tell you my experience. I was reaching, I reached out to a lot of people on LinkedIn. That's kind of my where I find so, but, uh, and you could talk to somebody that's been working in their business for 5 years and it's 2.5 or $5 million and they said, you start having this conversation about how they can grow. 50% or 100%, it breaks their brain. So it's like, I, that is too early, which is my point of this conversation. It's almost too early because it's gonna be another year before he understands like, well, if I'm gonna have an accent, I gotta do all these things like. Well, 100% and it's not too ready for anybody. I mean, we've had people go through our training and there's, it's 5 pri it's a framework based on 5 principles that we created, just how to think about this stuff. We don't tell anybody what to do. It's like, hey, here's how all this stuff works together. And and there's a framework for that. And so we've had people from like 40 or $500,000 in revenue to $190 million in revenue go through our training. No way, really? $190 million in revenue. Wow. I mean, small, very lucrative business, but like still their question was, you know, how do I, what is this thing worth? How do I grow it to be worth more and what are my choices? I mean, he's in essentially in the process of building a family office, so that's a whole different kind of end of the spectrum. But like, you know, regardless of whether they're at in the timeline of selling their company either, like tomorrow. Or in 20 years. We've got a couple of people more more towards my age where like they've got one guy, he's acquired, I don't know, 5 companies in the last few years, and he's got, you know, 4 pieces of commercial real estate and he wants to be worth $40 million by the time he's 50. OK. So what, where did he start? He started What with a lot of questions like what are these things worth? What am I supposed to do with them? How do I, how do I use my cash? How do I take my growth rates and like what I'm gonna grow my with my income statement, and then tie that to like what what does that mean for cash? What does it mean for my distributions? What does that mean for my ability to buy other companies, so they like after like all of that, then he's like, well, huh, I'm gonna create a holding company. I've got 9 entities underneath that they after the working capital all the capital flows to the top and then they acquire more companies. Yeah, so it was really to your question. Con confusion and disappointment with the lack of meaty answers they're getting from other people. And all these, you know, I mean, I was listening to a couple of your shows, like entrepreneurs have a vision and they've got really good ideas, but it's very difficult for them to take those ideas and actually put those into the 3 financial statements and project them forward to actually understand what the heck it means to them financially now and into the future. Yeah, well, there's this, I had a great interview with this guy and he says, let you start here and you want to go here, like, how do I, what needs to be true for me to get to this spot? And most of the times you don't have the map to get there, so you have to go start asking a lot of people who have been to a $100 million company to get there, like, and work backwards. But hey, you just can't knock on somebody's door and go, hey, you're doing 100 million? Can you spend some time with me? Well, and you know it's it's, yeah, I, I, I agree with that last comment and you know, that's, you know, a good reason to start a podcast, but the, the, there's actually doesn't need to be that complicated because every company has 3 financial statements. Every single company Apple does, I do, so do you. Income saving balance sheet cash flow statement. If you actually tie those together and you start with the income saving, say, what kind of sales do I have to do and what kind of line items? What is the cost of goods of each of those line items that need to be after all the stuff that I do, how much cash ends up at the end of the day, end of the month? And then if I take my strategies and I put those in, I mean it's just a bunch of assumptions. We started our business 3 years ago, well, we're we're exponentially growing and we have we've hired 9 people in the last uh 8 months or maybe it's been 7. Anyways, all of that is built out from the income statement from the the actual sales and capacity planning to say if we, if we hit these numbers, then how do we build to get there so we don't run out of cash, cause like I did a presentation for Visage a couple months ago, John, and Very large companies. I mean this this group specifically was a couple 100 million. So raise your hand if you can see into the future, all three statements tied together, your growth rate, your distributions, your taxes, and the value of the business and the net proceeds internal rate of return 2 years up, on one hand. And so those are big sophisticated, who was the uh in the audience? What what what was the role, like CEO or president or founder. Third generation, I mean, or president, one president actually the most sophisticated uh group person in that group, the president was a non-family member and his comp plan was completely tied to working capital. I was like, oh, that's interesting. Yeah, that's scary. It's actually like working capital is in a ship sitting off of LA. All right, yeah, exactly. Yeah, maybe his comp plan might be a little hard to execute, but I, I think going back to your point of from 0 to 100 million, how do I get there? Yeah, it's gonna be a combination of, you know, a good business and a good strategy, and then if you're gonna think about through acquisitions an investment thesis, and then how are you going to fund that growth to get there? I mean, it's really just It's not as complicated as people think it is. It's hard work. Let's go back to the 5 things that you guys talk about, like, what are those 5 things that you work on? I mean. So we, we call them the the five intentional growth principles, and the reason I I started. Creating these about 67 years ago, John, is I'd be sitting down consulting with someone that's looking to sell or looking to buy. And I'd be like, they, they, like, you just don't, we have to like take a pause and step all the way back and go, OK, here's how all this stuff fits together. So then we can have a good conversation. So these five principles that go in order, and the first one is your drivers. What do you want from this business and why? Legacy, community, disrupt an industry, family, I don't care. We have to really. Are those similar, like after talking to 1000 people or this almost the same thing? Well, everybody's got like you might be different from me versus someone else, but like the process to think about it and reflect, I don't care what you want, but you need to determine what you want, otherwise we can't get a deal done, and we can't grow this company. Second principle is your go back to that. Is it ever too late to say, well, you know, somebody's got, you know, Uh, you're 160 and you want to talk to basketball. Well, maybe not, right? Uh, I agree, but I'll tell you what, if you had, you know, stage 2 cancer, you want to know what stage 2 or stage 4. I don't know, man. I would like unless you can look up in the mirror and see what's going on, and actually let me tell you an exact example. I'm gonna, I'll tell you a story after I tie these all together about a guy that's in his late 60s about what he's doing about that specific topic. So, second principle is your financial targets. There are 3 of them. What is your target annual income, no matter what your ownership structure is? So if it's 200,000 an income for life, OK, then you've got your second target, which is your net worth outside the business. It's just because that matters on your choices. If you have nothing outside the business, you're gonna have to maximize certain things to get to your wealth. The third financial target is the value of your business. Net today and always measuring what that net would be. So enterprise equity and then truly if you sold it today. You don't have to sell it, but as an investor, if you sold this, what would it be worth? And you can track and measure that, so you have an idea of that gap. So how, how, how long do you have to go? And let me, let me ask you about the valuation. Do you value that you have the skills, tools to value the business today and say, here's where they're at, or do they do that themselves? Yeah, so the training we just go through case studies. If someone has a one of our CFOs involved, we build the entire financial plan with the with the statements, tie in the evaluation, roll in their strategies to the future. So like the CFO is actual executing. Oh yeah, right, you got that, yeah, yeah, yeah. So, so if you think about principal and one, what do you want? Principle two, what are your financial targets. Now we're going, OK, what, what is the possibilities with this business long term. So that's where exit options come into play, and we, we bucket them into 5, and there's an infinite amount of ways to do this, but we just said, OK, like categories that have certain attributes that are similar. The first one is internal family, partners, um. Family partners, I mean, you got any different ways that you can do internal transfers, management buyouts. Then there's the second option, which is search funds and acquisition entrepreneurs, which you, I know you've had, I think Walker Diel on the show and I mean I've got, um, we've got a bunch, we got a bunch of people that we know that are in the acquisition entrepreneur space. Yeah. Then there's the 3rd exit option which is ESOs, selling to your employees through a stock ownership plan. The 4th option is private equity. And then the 5th is strategic and like a competitor, and you know half the strategics are backed by private equity nowadays, but anyways, these 5. Give you insights on deal structures, how the value of the company can be valued, your role of their job pre-imposed closing. So you go, what do I want? What are my financial targets? OK, here are my options. And as people round the third principle they're going, got it. Now I want to shift my mindset to grow value, which is principle number 4. Yeah, that's the customer in the the the possibilities are the customer and customer in mind. Mhm. Yeah. Do you guys ever, does it ever come up where I said you're working on ESO, the guy goes, I, I really wanted to give it to the employees cause I love them. They've been around 20 years. But was there ever a case where you're competing, using one of these situations to find out to get the best price for this? Oh yeah, it depends it depends on what they want. around that, around the 5th principle, and then we'll, I'll tell that story and then we'll dive into what you just said because the 4th principle is increased value, and that's by creating sustainable, predictable, and transferable cash flow. So you're de-risking your cash flow to grow the multiple. So and your role in your strategic plan into your financials, and you're de-risking that cash flow to grow the multiple by de-risking the company. The 5th principle is your team of advisors, so that way you're surrounding yourself, like with people like yourself that get it, that have been through deals, and that can optimize the tax plan, the estate plan, the deal structure, the financing, but you're the one telling them, hey, this is what I want, versus relying on everybody else to tell you what you want. So here goes the story. So we had a we had a gentleman, he has um But a $15 million manufacturing firm goes through the drain and he's got 70 employees, owned the company for 30 years. He's like mister like culture, community, two of his daughters in the business, two of his daughters out of the business. His wealth manager said, hey, by the way, the company is worth 7 million bucks. How many times you've seen this? Where did you get that? It's the first question. And tell me how you arrived at that. Yeah, which dart did you pull out of it? And so, well, after going to the training and him like undergoing the understanding the principles, he said, well, I've got about 1.1 in EBITA, so it's worth about $5.5 million. Debt taxes, I'd only walk with 2.5 million bucks. That's $5 million short. Then his $7 million financial freedom number that he was told. So he went, oh shit. Well, because he first principal drivers is he was like a community, legacy focused, family. If, if he sold, he'd have to do what I do, which is maximize purchase price and sacrifice a lot of your first principal drivers, which makes you unhappy. You might, you might have satisfied your second principal financial targets, your wealth, but at the cost of everything that you thought you were building for. So, he said, hell with that. I know, he shifted his mind so he was 67 at the time, now he's in. Let me ask you about that. Do they go through the five stages of grief when they go, it's not worth 70, it's worth 5 or 6. Yeah. It's really painful to watch people's face, man. I, I've had, you know, who who is victim to this a lot, are doctors and uh CPAs and just different things. Like there was a guy that was a doctor going through our training, 50 employees, physician, and everybody was supporting him. And he got cancer actually in the middle of our training, no joke. And he found out that I mean this thing's worth 4.5, 5 million bucks, and I'm like, well dude, it's you, it's you and 49 other people. Like, what am I supposed to do? I'm not a doctor, right? And so just like and hadn't saved a penny for his entire life. I mean, a lot of really cool stuff and so like it's, it's painful to watch that cause it's kind of like us just showing through cases like here's how it all works like. Sorry, I mean like you could maybe get a huge purchase price out of this if you, you know, got a strategic buyer, pinned a couple people against each other, but there's like, hopefully that works cause there's not a lot of plan B's. But like, I want to give you a bit of going back to that that that story. Yeah. He said, OK, this is where that shift in the mindset happened like I was telling you about. He said instead of focusing on top on revenue, I'm gonna grow my value of the company. I'm gonna increase my EBITA from 1.1 to 2 million. I'll then I go, I'm gonna take my enterprise value from 5.5 million to then 12, based on de-risking the cash flow, increasing the multiple. And he paid down $1.5 million in debt in the 1st 12 months after going through the training. Did that come from cash flow or did he, uh, yep, yep, issue equity or something or what? Yeah, well, he focused on it. He focused on paying down debt and then he was investing in ERP systems, his management team, a strategic plan, the financials to de-risk his cash flow to make it more sustainable at the same time. So invest in the right things. Pacing debt down, and then over his goal was I want to do an EAP in year 3, and literally went from a $5.5 million dollar evaluation to 12, he increased his EBITA, increased the multiple, pay down debt. It's like he's pre-engineering exactly what he wants because he knew what he wanted and he knew how he was gonna go do it, instead of just waking up every day and just fighting fires and not knowing what they're doing. Like uh, yeah, you know, I wanna sell, right? How many, uh, the amount of times people call me and they're like, hey Ryan, I just want out, like, out of what, your job or your asset? We're like they're gonna jump off the bridge or what? What do you want out of it? Oh yeah, yeah, exactly, and they don't even know how to answer, and I'm like, well, if you want out of your company, that's just finding a way to monetize that. And if you're doing a million dollars and eBay clipping coupons, I was listening to one of your shows, like, why, why would you want to sell? Well, it might be industry risk. Well, that's an investor thinking about why you want to diversify. Usually 9 out of 10 times it's they have a job, a lot of stress, they haven't built a structure where they can be the investor, it's they're still stuck in the company, so they want out of their job. I mean, it's, it happens almost every end like you name the size companies, it doesn't discriminate. It's usually a lot of it is dictated based on the cap table and who actually owns the company. Yeah, I, I, I have to tell you yesterday I had a conversation with a guy I've known for a while, and he told me what his eba it was and he wanted a 25 multiple. I go. I, I, I, I don't even bud. I don't even like flinch anymore. I like really think somebody is gonna take 25 years to pay off this deal? No, I know, yeah, I know. It's a, you know, and I'll introduce a topic if you want, is like how to think about value and valuations, which I I've seen very helpful for these entrepreneurs that are becoming M&A entrepreneurs is So there's two different ways to think about it. There's what we call intrinsic financial value, which is what is the value of this asset based on the risk of its cash flow. So if it's a million dollars in ebi and you say, hey, it might be worth a 5 or $6 OK? Based on the cash flow, based on me owning it as an investor. Then there's the that compares to what we call transaction strategic value, where it starts at the financial value, right? Like if you're going to come by my company, it's gonna start at like, hey, I know that I could do an SBA um uh an SBA loan and fund this or a management buyout or an EAP at this valuation. But if there's a strategic buyer, like you're talking about pinning people against each other, they might pay a huge premium because of what they're willing to do with that business and how they get the return. But that's a, that's a spread between the intrinsic and then the uh strategic value. The opposite of that, John, I see all day long too is, you know, second generation where the family owner or the the parents don't need the liquidation event. So they discount it using the IRS rules of lack of liquidity and lack of control up to 35% and then gift it to the kids with their estate plan. But it started at a noble number, like it started at this financial valuation based on the risk of the cash flow, and then that's your baseline. If you focus on engineering that financial value to what you want. Then everything in the upside is just choices. You can be sitting at a deal table with you and just going, nope, don't like those terms. Sorry, I got the coupon clipping coupons. The, let me give you this example again is he's got actually 3 different cash flows like and they're uniquely separate, but they relate to each other. It's like this one cash flow may buy this product and This cash flow from this one made by this product, but it's not necessary because there's so many other options out there. So he's gotten offers from some companies that just wants this cash flow and they kill these two others, right? Or they, you know, there's another company that made an offer and just wants this one, and they're like, I don't care about those other two, right? How do you, how do you work with somebody that's done that? So we have tons of clients that have that set up and I did our own business, we had copiers, manage IT services, document management, all different, you know, essentially P&Ls that rolled up to a consolidated P&L and I like I mentioned at the one client, he has 9 entities. And the reality is every one of those entities needs to have clean books based on the operations that they're doing. So once Sorry, one sec, my, my dog is like losing her mind. Can I, can I pause this for? Yeah, yeah, yeah, yeah, let me pause it. Oh So, like I, I had like the example I gave earlier that company that's got 9 entities or like, I mean, like my old business that had the 3. Every, it all starts with clean financials, John, and I was a copier sales guy. Like the fact that I'm sitting here preaching financials, it's really where the game is played and what the levers can be pulled. So if you have every one of those entities that have a clean income statement and said, OK, what money is going, like, what sales are going back and forth, it's where everything gets convoluted that you can't see as each thing stands alone, what is it worth based on the risk of the cap. Cash flow that is coming out of that. So if you have a holding company and they've got different services that are getting used, make sure that you're putting the cost of goods or the cost of the SGNA according to what you're doing. And then the cash flow is for that business. So like I had 3 business units and they all shared a bunch of overhead, but I had the correct allocation of the overhead to each of those. Divisions. And then, yes, like one of my company, one of the divisions would have the IT services from the other one, but they had a contract. Well, it was just essentially showing the due to do not the do to do from, but they had a management agreement back and forth. Point is, so then once you have that cleanliness there, then you can say, OK, well, let's say there's 3 assets, like you said, let's say one's worth 1, one's worth 2, and one's worth 4 alone, but maybe the whole thing might be worth 8. And one comes in and says, I want the one that's worth 2. OK, well, how does that let me, let me stop because do you think it's, you know, it's 3 different distinct units. Do you think it's worth some kind of higher multiple or just, uh, you know, this one you said 42, and 1, uh, yeah, I'm following you like, let's let's take the concept that I threw at us is intrinsic financial value versus strategic. Right. So, if we're talking about the risk of the cash flow as the consolidated report of the consolidated financial say, OK, let's say it's 2 million in IITA and it's combined of three different entities. That 2 million of you that has a certain amount of risk in the cash flow. So let's say we were gonna do an EAP because an ESSAP is based on the financial risk, the, the discounted cash flow, we say, OK, well, the risk of this whole thing as is, cause the EAP just wants the cash flow, right? So like, we're gonna yield the valuation that we want based on the risk of the cash flow and the story that we're telling. So great, the math makes sense, the debt payoff makes sense, the warrants makes sense, and the valuation makes sense based on the risk and based on the the cash flow. So then third party comes out of the woodwork and says, well, I want the second company, OK? And they're willing to pay something, but they're willing to kill the other two, and it's like, well, how do we compare those two? Now we have a comparison. Well, if you're gonna do this, that, you know, let's say you take 7000 of EBITA off the 2 million and it's only 1.3, that might have a lower multiple and more risk because you got rid of part of it. OK, so was there enough value left over after that first, after that strategic bot that it's just, you're kind of just putting the puzzle pieces together and you say, OK, well, maybe that third party is willing to buy one, I've seen this before, where they buy one division because they need it so bad cause the transaction strategic value for them is so high that they're overpaying based on just the financial value. But that's their deal, right? They're, they're gonna roll out. Yeah, yeah, they could, they could say, you know, uh, we could just take your product, your cash flow, and put it in our uh product line, and we will make our money back in a week. Exactly, and so they might look like, and so yes, you and I might that actually might go back to your 27 multiple, that could happen, but it's It's like a hole in one. It's like that all the stars aligned for that to make sense. Yeah, well, the reason he reached out to me was after he got these offers, so I know that he didn't like the offers. Of, you know, separate somebody separating his business. Yeah, and, and I got another client where they, they've got a unique set of revenue streams that all create one really nice stream of cash flow. Trust me, this is a great business, and there are a bunch of, well, we had, we've had 4 interviews with different investment bankers, none of them get it. I mean, it's in the online space, and they just they're old school, they don't understand how they all compliment each other, and it's like, yeah, these people don't get this, but guess what? The ESAP investment banker totally gets it and he's like, wait a second, you've been generating this much cash for that long and you this is exactly where it's going. This is a no brainer. Yeah, so you just go down this list and go, well, it's probably not a strategic buyer cause they Slit it up and throw away. It's probably not a private equity, but if we can find a search funder or internal or some guy independent or an ESOP, it'll work. Yeah, and then the, the, my goal to get back to one of your earlier points is, I want everybody to have multiple options. And if you build the value and you concentrate on acquisitions and organic growth to de-risk that cash flow. You can always do whatever sale you want at the discounted cash flow. You don't have to wait on the strategic lucky poll tab or multiple. Yeah, like, and but, but if you get that offer, let's say you were the strategic coming at me and I'm sitting here going, Jen, this thing's worth 10 times my EBITA because look at what I've got going here. So you're gonna pay me way more than that. My 5 year plan is this will be worth this much. You better pay me more than my 5 year plan, otherwise we're not having a conversation. Right, just move on, right. Yeah, I, I, I, I, with our, with our CFO clients, we got people will, we have this ongoing file, this whole like model that we have, and it'll be like sign the end date, send it over here, we want this valuation. Here's the, here's the 5 year forecast with all three statements, internal rate of return. If you don't over exceed this, like we're not having a discussion. It's just that simple. Yeah. Let's see, let me go back to the part where, you know, somebody is short where they want their goal are and organic, organically it's not gonna happen. So you're gonna have to do it through M&A. What do you guys do to help them do that? I mean, do you go look for companies like these are the best you need IP, you need distribution, you need to go by a competitor, whatever that. You know, a spoken wheel is. So, yeah, good, good question. So the way that our model works, they go through the training, then if they um they don't have to have on moor CFO, but if they do. The CFO on board, build that model, like you said, that that that three statement model to show the gap. Yeah. Then the next question is how confident are you in your plan, and then they do what you just said, there's no way I can get there. I can't do 40% year over year growth. Yeah, it's not gonna happen. I get a HVAC company could say 10% at most, 15% per year, cause it just doesn't, no matter how much you spend locally on radio ads or whatever, you're just not gonna. 100%. And it's harder, it's hard to scale that way. So then you say, OK, well, so to your to your question about how do we get involved. So the CFO is just like a normal CFO like all of our CFOs that came from like private equity, done a bunch of M&A, so like they're versed in this whole world. So the goal is they're just connecting all the dots with the advisors and the people. So we have a partner that does strategic planning, so we build up we build up the model, and then if they're not confident in their plan. Then they should go do a strategic plan, roll that strategic plan into the three financial statements, and part of that strategic plan is going to be mergers and acquisitions like you said. So then it's gonna be, what is our investment thesis, who are we going to target, what geographic location, what is gonna diversify our cash flow, de-risk it. So don't just go, like, for example, we had someone in the automotive automotive uh automotive industry, and it's like don't go buy more companies in that industry because like look at what's going on with microchips and supply chains like a bad idea. So that that whole strategy is then enrolled together, then it's our job as a or our team's job as a CFO, find people like you, work with the CPA, work with the lawyers, work with the business owner. A lot of times the business owner is helping someone like you knock on doors and talk to business owners, but the CFO is doing the CFO's job. And that our clients just don't need someone full time, you know, I mean, like that's why they share, you know, you take a piece of, if you help somebody acquire another company, let's say, you know, they're doing $7 million and they go, well, I just found out the direct competitor next state over wants to sell, and we can get them for $6 million and I'm at $13 million. Do you take a piece of that or is it still just training? You know, it's so it's the training and then it's the CFO. The goal is, John, like. I felt like everybody was making more money than us when my dad and I were doing all this stuff. So our goal is to help protect the owners' equity at their table and say, to go back to your point about if that gap is there, and let's say they're doing a million in IITA and then we find a company for 5000 in IITA. Now we got 1.5%, and it's just the the traditional. arbitrage that you're talking about, but also not just arbitrage, but a good integration plan, which is what my business partner used to do at the old PE firm that he was working for is like, we buy all these companies, what do we pay for them? What are we doing first? How do we roll in the payroll, the earpiece system, the accounting system, the estimating tool, all that stuff, the CRM goes into the mothership and then you keep going. So it's. It's really you guys trained the, you know, CEOs growing up, growing his $7 million dollar company, took 30 years, never made an acquisition. You teach him how to integrate a company. Well, I think, I believe, John, that most business owners, specifically the ones that are willing and open to do training, right? Like, so like let's think about this. This is not my my stores aren't aren't applicable to the whole marketplace because there are people that have their head in the sand and they're never taking it out. Right, like, and that's generally the majority, right? So the people that are coming to our training are the people kind of like they go hire someone at the a trainer at the gym. They're going, I want to get better. So they're disproportionately proactive thinkers and so they're excited to do this and I mean when people go through the training like, I want to buy assets and sell stock. That's like the one of the like phrases that people come out of, come out of the come out of the training with, but it's M&A is a is a two-sided game, right? It's just changing the nature of how they view their company as an asset. Then they, they every person that comes through their entrepreneurs, they're visionaries, they got ideas, they know what competitors or product lines, they have all this. They just need the financial roadmap to make sure that like they don't go broke while they're doing it. And I said, I sat there and I showed this visage group, I was saying, Tonya is like you can have a positive net income. In a month, and a negative net use of cash, and they just look at me, and I'm like, you can grow too fast. Yeah, yeah, so like the whatever shows on your income statement doesn't match what's in your bank. And everybody knows that like my dad and I mean like at tax time you're like, son of a what's the bill? Where is that coming from? We're growing. How do we write that bill when there's, you know, but the income statement shows this like, well, yeah, and the CPA is going, you did good, John. Yeah. So I wanna go to how you get deal flow for to get customers in there. I mean, the, how did that transact from just doing this podcast? Cause I do a podcast. I'm at 53 episodes, you've done over 300. How does that help and You know, I, there's a book that I read years ago, Jan, that led me to thinking that this was a good strategy before everybody was locked in their basements in 2020 and doing it, and it was this book called Killing Marketing, I think it was Joe Pelluzzi. Anytime somebody recommends a book, I write it down and go on. It's and here's here's the general takeaway is that you should take marketing out of your income statement as a cost, and then create a content, some sort of business that people would pay for cause it's so valuable. So good example would be is like Legos, they have movies, they have like um the Mall of America displays, and they sell plastic blocks. Right? And so when I heard this book, and then also the Seth Godin's book This Is Marketing, where Seth Godin says, uh, in that book, which I really enjoyed, and this is like 5 years ago, and I went down this marketing flashy marketing rabbit hole and spent so much money. Oh yeah, you, you can, you will never. Stop spending money if you get caught in that rabbit hole on Amazon. I did, man. I got you at some point you gotta cut yourself off like, dude, you're addicted. You just gotta execute now. Well, that's amen to that. And so Seth's book, uh, this is Mark and he said, build your 1000 disciples where if you stopped doing what you're doing, they would go, Where's Ryan? That's it. It's so damn valuable that people care. So many people just produce shit and it's like. I don't know, like from day one is I'm like, I'm gonna have a very highly valuable conversation once a week. That was, that was it, man. And so to your question about how do we leverage that now is I've learned a lot. I have good relationships and connections from the people I've interviewed. They've introduced me to other people. I've got business partners and clients and stuff that have come from the podcast. I grew up as a copier salesman, and like, so like I go do a presentation, I have a highly valuable presentation. And I'm like, hey, by the way, if you like any of this stuff, you can listen to me for 300 hours and then judge whether you like me or not. Honestly, I don't care. I mean, I do care. I want people to like me and I want to provide value, but if it's not a fit, you can listen to me and get to know me without having to write a huge check and risk. You know, you know, failing at your projects, that is, uh, Frank Kearns like the you're pre-framing yourself before they, they're forming an opinion of you before they even meet you. I listened to 300 hours of your podcast. Yeah. Yeah, I mean, I, the amount of times people have called and said, I've listened to you for 2 years now, and I like, I, I'm like they like literally John just come in and like they know me. I'm like I've never talked to you before, but like, so to your point is now it helps get speaking gigs, and now helps um. You know, work with other channel partners, clients, but also to your point about deal flow, I mean, Because we have a very specific model, and this is where we could, you know, offline, we can talk about ways to refer different people to each other, but like, because we've got training and CFO services. People call me that are looking to sell right now or looking to buy, not ideal clients of ours, so I can push them to other people. So I get every day that's right. It's just a LinkedIn inbound or whatever it is, and I'm like, OK, well you need this person, you wanted this person, a wealth manager over here, an investment banker over here, like we're not any of those things. We have two very distinct, we have a path for people that are looking for like, you know. Training and then, you know, acquisitions and then eventually an exit at some point. That's, that's our perfect fit, but a lot of other people consume the content, which makes good relationships like yourself say, hey, like, do you want some referrals, and then it builds other relationships. Yeah, I, I, I love it. Uh, do you have any products? I'm this is really curious cause I, I'm following this new guy called Justin Welch who Have you seen him? Oh, he just sells this $150 product, how to use LinkedIn and like copyright, and he sold, I don't know, now it's like 5000 pieces, a couple million bucks. But it's just kind of flipped the funnel on its head, where you had the click funnels guys, where you go through this funnel up sell, cross all down so. He just goes, look, there's 800 million people on LinkedIn, right? Sell a $99 product, get a couple 5000 of them, and then at some point later, sell another product, and then they'll, all of those 5000 people will come to you and want to do business with you. I, I mean, so our flywheel, so we have our own strategic plan. We built into our financial plan as we're building our company and the first uh part of the flywheel is create highly valuable, timely, relevant, free content, like the podcasts and all the videos that we have, which leads to paid training. I mean, the paid training, John is $1000 for do it yourself and $3000 for 4 calls with me and accountability calls over a month, then the So that's paid training, so it's not much, right? When you think about the people we're talking to, then that leads to CFO service clients, and as we have CFO service clients, I get to see inside of all of these companies of truly what they're worth, what's going on, what their problems are, that lead us to build free, highly valuable, timely, relevant content to help us create new train. products. So like on the docket for 2023 is a financial literacy boot camp that literally dozens of our clients and customers have asked for. So it's gonna be $5000.02 days is when you're funny when you say that it's like I'm running a $10 million business and I need some financial literacy. Right, and it's so true. I, I look, I, I, when you say preach in the choir, I used to work for do it business developer into it. I saw thousands of income statements, cash flow statements, balance sheet. It tells a story. I don't even have to see you hear your story. Those documents tell me a story on how you're running your business. 100% and like and this is where when I do that presentation, and we wouldn't have gotten to this point without the flywheel I just talked about, which is the podcast, then the paid training, and the CFO clients and then everybody's saying, oh my God, can you guys create this? Sure. We'll create this and we've already got a pre pretty much prepaid for, but the, the, it, it's an obvious thing and the amount of times going back to your point about the story, entrepreneurs, through acquisitions, through their strategies, I'm truly confident that Entrepreneurs and business owners know what they're doing and they can see clearly the vision. Yeah, I, I would never underestimate. They can't, they can't connect it like you said though, financially, cause I said, do you want to be in charge of the story that your business is telling or not? Yes, like I mean me when we're trying to turn the business around, I'd sit down and another bank would come in and like, all right, here's the whiteboard, and I have bubble charts and like here's how the entities work and like, and then the bank would leave and I did it 17 different banks. I mean like exhausting versus being able to. Understand how the numbers work, and then tell the story and say, See, told you. Oh, by the way, if you're questioning my execution, budget to actual every single month was one within 1% of each other. I can predict the future and I execute like hell. And here's the story. I mean the numbers because the desire to go to a next level, let's say they plateau, right? And then then they need a new coach to go to the next plateau. It's like somebody told me this that, uh, you know, Michael Phelps, 21, 20 plus, you never had the same coach, right? You have the coach when you're in a grade school, middle school, high school, college, and an Olympic coach, all different coaches cause they expand your mindset a little bit differently. 100%. I just interviewed this woman that's a high performance coach for entrepreneurs and athletes actually on the show, and like, We as human beings can only like push it forward really a few degrees. We can't like reinvent ourselves completely tomorrow. I mean, it's just, it's like almost traumatic, right? So like, to your point, it's like how do we incrementally get better? You can't go from a million dollars to $100 million dollar company tomorrow. Like, this is where like I think private equity will at some point, the industry will have a reckoning where like, I mean, I, the only times I I talked to these PE Well, I bought 17 companies in 24 months and then we just handed this big flaming pile of shit onto a strategic buyer that bought all zero systems are integrated, zero culture. Like, it was a great, like all that worked in the spreadsheet, but you have to like actually do it. So like my point about that is you can on a spreadsheet, you can go 0 to 100 real fast, but like then there's real life, where you have to like incrementally get better and then you you you're essentially constantly building a new equilibrium. Right, you're like, so this is my new habits, like kind of the atomic habits, right? This is, you ever read that book, uh, Atomic Habits, James I haven't, but I'm writing it down. He talks about, yeah, he calls it a habit stacking. So once you have a really good routines and habits, you just start stacking shit on top of each other, and it's a lot easier to continue to execute because you're not reinventing everything. Like, I mean, the amount of times I hear people like we're on the 70 day challenge, and they tell me what they're doing in 70 days. I'm like. You're reading a book a day, you're doing this and the things with your workout and your diet, your medicine, you're like, you're not gonna keep any of that shit after day 70. Like how much of that stuff you wanna keep? Would you rather just slowly get the right stuff to have like an actual change over time? Yeah, I, I, Tim Ferris talks about that smaller achievable goals, you know, precursor, small wins or precursors to the big ones. Well, that's where they, to your point about the coach, making sure you identify what is your weakness, help that coach get you up to that next rung of the ladder. Yeah, is there any people you just turned down, aside from the fact that they, you know, they, hey, I wanna exit now, but the personalities where you have to match, because we're in this stage of The industry where you just wanna pick people you like and trust and wanna do business with. Yeah, in the training, it doesn't matter. I mean, we'll we'll, I mean, people can go through the training and we want everybody to learn. For the CFO services, you're absolutely right. The people that the people that, like, first of all, I'm recruiting what we call unicorn CFOs because they were in, you know, private equity making a bunch of money or whatever, working 80, 90 hours a week, and they're going, I want to make a difference now. Now that I've made my money, I wanted to go in and help really move the needle for people, so they're coming and working for us. To make a difference for others, and their, their, their currency oddly enough, even though they're highly paid, is they love affirmation because they love being able to help people. And so when people don't listen, they hate it. Honestly, if you think about a trainer, yeah, if I, if I was training you, I'm like, dude, John Wolk walked into the gym smoking a cigarette eating a Big Mac again. Like, damn it, like, are we gonna, like, are we gonna make progress John or not? Like, as a trainer, I want you to succeed. And if you're not, you set your goals, and if you're not willing to do the hard work to help get you to the goals, I don't want to help you. And that's kind of the the way that our CFOs think. Beautiful. Ryan, up on 30 minutes before an hour, so I really appreciate the time, uh, being on top, uh, M&A Entrepreneurs podcast. Thank you so much, John. It's been a blast.