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Manage to Exit is a PMI Acquisitions Team podcast sharing practical playbooks for buying, building, and preparing your property management businesses for successful exits.
In order for a business
to get to that spot where it's
doing over a million in revenue,
it's got to have good systems,
processes.
People like resources
so that when you take it over,
you're not wearing every hat.
the CEO, there's good
value in your business.
Some people don't realize how
valuable their business even is.
Until we really give them
an outline to say, hey,
we went through a valuation,
This is what we pay.
It's actually worth this now.
so yeah,
I think it's interesting,
but people really should
go through a valuation,
even if they're not selling
tomorrow.
Everyone,
welcome to the Manage
to Exit podcast.
My name is Aaron Mceleney.
I'm the executive director
of acquisitions here
at Property Management, Inc.
and I'm Hunter Goodall,
and I am the equivalent
of Dwight Schrute.
not a fan.
I plan on just slipping in
as many offerings from office
references as I can.
I know last week we spoke
kind of live, our first episode,
diving into a little bit
about what we do here,
and I thought this time
we would chat about
some of recent transactions,
a couple deals that closed
in the last month or so.
Each around
a couple million dollars each.
And I thought it'd be good
to share some details
from those deals
just for people
that are looking at
maybe selling their business
or even buying a property
management business.
You know, it's
kind of fun to share
as much of the details as we can
about the deals
we do here in house.
Yeah.
It's, we have two in mind
that we recently worked on,
that I'm
pulling up the information
right now as we're talking,
and it's really interesting
to see the difference here.
One of them
was a public listing,
and one of them was an off
market deal.
And just brief summary for those
who don't know, like multiples
is a phrase that you hear a lot
in acquisition space, right?
And, it's usually referring to
when you're valuing a business.
There's a lot of variables
that go into it.
But basically what's the net,
the financial benefit
that the owner gets for owning
that business.
What's
the multiple of that number.
And that's where you get
your valuation from.
And then all of these factors
of the business
determine what you should pay,
what that multiple should be.
Right. Usually it's
2 to 4 times the seller
discretionary earnings.
However typically
and we tell this to people
all the time,
the better deals are going to be
your off market deals
that come through relationships.
I'm looking at Always I'm
looking at the the multiple on
this one deal that just closed
the multiple on this one.
That was a public listing 4.38
versus the off market one.
And they were both
very similar sized.
The off market one was 3.8.
So that's half
half a point higher.
You know like that's
that's a big difference.
Yeah. Let's talk about why.
And I think with the public
listings too, you just
you know through the years
I don't know if we've done
less than 5% of our transactions
as being public listings.
Primarily, we focus on the
the off market deals.
But I mean, let's talk
about public listings
and why they usually
are a little higher. Right?
Maybe, you know, broker fees is
probably a good place to start.
What do you think?
What's your experience
with that with brokers.
Yeah.
Good and bad.
There's there's always
going to be pros and cons right.
The good thing about public
listings is they're ready to go.
Typically
that broker got involved
and talked to the seller
through the process
and got the business
ready to go with,
you know,
getting all their financials,
all their due diligence docs
that the buyer is going to need.
They pretty much
got that all ready to go.
But the broker yeah,
the broker is going to charge
10 to 12%
of whatever that sale price is.
So it's like that fees
got to be included
and baked into that purchase
price.
Yeah. And usually we see
and tell us a little higher too.
Right.
We're kind of guessing that
they're probably building
a little bit of a buffer to say,
hey, they're probably going
to need to counter
and maybe meet
in the middle, right.
They might get a lower offer.
And so starting
a little bit higher.
But sometimes that expectation
with the seller
is kind of thrown off
by that too right.
Yeah. Yeah.
The seller is expecting a lot.
But then here's here's
the other thing.
I took a screenshot
and I've sent you
that screenshot before.
There is a public listing that
I looked at on a Monday morning.
And within like two days,
that listing had
I took a screenshot, it was like
over a thousand views.
And so it's like
out of a thousand views,
people that view that
that business that was for sale,
how many of them sent
a message to the broker saying,
hey, I want more information.
Like at least 50 of them. Yeah.
And so now their Best Buy sell
I think they put that on there.
Right. Like how many views?
And it's usually in our space
it's like hundreds
if not in some of in some cases
it's up top tier markets.
You might see a thousand
plus people like you said,
looking at one deal.
Yeah.
So now you're competing
with 50 to 200 other buyers.
All of you want that business.
Well, the deal's probably going
to go to the highest bidder.
You're in a bidding war,
and so that drives the price up.
And then there's no way
you're getting any kind of terms
on these.
It's going to be an all cash
closed deal because, one
the broker wants to get his fee
right at the right out the gate.
But two, if you're not willing
to pay all cash at closed
one of those other 200 investor
interested parties, they will.
Right. So how many times?
I mean, I can't even think of
how many times we've been able
to talk to a seller
directly from a public listing
before
being forced to send an email
or send an offer, right?
Brokers
won't even let us chat with
their sellers until there's a
no in place, right?
There's no relationship
into that deal at all,
and the terms are already
laid out there right?
Yeah, it's like half the time
you get to talk to them.
And I've come across the public
listing that I submitted
the deal
just got posted that morning,
and I submitted a request
for it, and the broker
got back to me.
It's like,
hey, sorry, this one went fast.
It's already off the market,
you know?
So it's it's tough to win,
though.
Is the price really high and,
really competitive?
It's you got to be pretty fast
on those so many buyers and
and probably
too many unqualified buyers.
Right. Like I've heard.
Can't remember
what business broker it was.
I want to quote it
from Mike Shay,
but I don't know
if it's from him,
but I think you said something
like public listings
being for people that don't know
what type of business
they want to buy.
Yet it's just for people
that are looking at
being an entrepreneur
or want to start something,
maybe don't want to start
at ground zero.
But for people in our space,
people that know, hey, we're
going to buy property management
businesses or sell them,
the off market space is
just where we live and breathe.
All right.
I mean, yeah, it's for focused,
industry focused individuals.
They know that they can do
deals off market.
They don't need to publicly
list.
They don't need to go use
a business broker.
You know, to, to get
a good price for their business.
Yeah.
I'm trying to think of those
two deals and like how they,
they differ.
When it comes down to portfolio
size and team size, you know,
like, that's a huge value add
to a lot of these transactions.
Like what
kind of team is in place.
And so yeah, maybe we could
speak to that a little bit too.
between the between
the two deals,
the revenue
is about the same on both them.
Very close.
I mean, hovering around that
like 1.8
to to 2 million revenue size.
Right. And.
Yeah, they were,
they were cash flowing 4
to 550,000
in that range on average.
So it's, you know,
looking at them, I'm like,
these were very similar deals,
very similar
except to markdowns on boats.
Right.
And one thing maybe just to talk
about similarities,
both of those businesses,
consolidated
multiple PM companies
over the last few years.
So that's something
that's pretty interesting.
A lot of people in our space,
they buy out the mom and pop
shop that was operating for 20
plus years.
Both of these recent
transactions
that sold for around 2
million each
were consolidating,
you know, three or more,
companies there locally.
Just kind of interesting
to see that always part of that,
that buy side and,
you know, that
that existing
kind of add value scenario.
And I'm going
to keep rolling it.
the exit piece
is super interesting, right?
These were companies
that were being built to sell.
And, you know,
I think three years old
at the, at the oldest maybe.
I think both have been operating
for about three years.
My right.
The existing the current owner
was about three years.
Right.
The business itself
had been around
the portfolios had been built up
over,
you know, ten plus years.
But they went
and did that small consolidation
effort where they were,
you know, buying these two,
$300,000 businesses for,
you know, maybe 1 or 2 times
cash flow on these.
They package it together.
And then our buyer comes
in, they say, hey,
yeah, you've been running this
for three years.
You pieced all these
these businesses together.
We want to pay you
2 million for it.
And now our buyer wants to go
do the same thing.
And we're going to buy a couple
of million
dollar businesses
that we can sell for,
I don't know,
five, six, 7 million.
Right. And
it's kind of a fun game.
Yeah.
But a lot of our buyers
were already in the space too.
So, you know, there's a lot of,
value with those mergers.
It's not to say the buyer was
brand new to the industry.
They had to just build off
that platform.
Both of these deals
were essentially mergers.
yeah, just a different position,
I think, recently totally
different markets.
That portfolios, they were
across the same kind of similar
industries, residential
and association management.
But the differences being,
you know, there's some much
larger communities, let's
say, in the, in the southeast
versus the northeast, right.
On the association side,
not a lot of large
associations, tied to that
northeastern, transaction.
You know, I think, you know,
some of the community
sizes were smaller,
even 20 to 30 homes
in an association versus
the ones down in the southeast.
There's multiple
that are 100 or 200 or more,
homes in some of those,
those HOA is
or communities
to have so similar revenue.
But totally different,
you know, portfolio pieces.
When you look at, unit counts
in those associations.
I think one of my favorite
things about the, the,
the public listing, all cash
that close the off market deal.
how do we set that one up?
Wasn't it 15% cash it close
and seller finance the rest.
And there was a went structures.
Yeah yeah.
But again that only works
if you have experience
in in that business.
You've got to have years
of experience
to really instill confidence
that you're not going to tank
this thing, that you're going to
you're going to be able
to pay that. No.
But I think my favorite
part about it is
we baked in on that deal,
kind of this, this weird and win
scenario, which we could do
because there's an off
market deal
and the seller was
was financing it, but we said,
hey, you're selling this
because you want to focus
on another business.
We believe we could help that
business grow.
If we do, we want a discount
on the balance owed.
Yeah. I mean, only in experience
buyer would get access to that
to your point.
Right.
But the off market deal,
the seller worked with us
directly and we were able to
negotiate some of those pieces.
The seller had enough confidence
in our buyer.
They were great. Operator.
They already
had a great team in place.
They've been doing this
for a number of years.
But yeah,
if the seller doesn't have
that confidence in the buyer,
they're going to say,
hey, I'll catch it.
Close is what it is.
Go to the bank, get SBA
if you need it, whatever,
whatever you need
to do to bring the cash.
But,
yeah, I mean, the seller
liked our buyer enough,
and they're a good fit, right?
Just in a cultural fit behind
both of those.
That's a huge question.
I get a lot too, right.
Like, how do you identify
and target these businesses.
And we are looking for kind
of these cultural fits.
Beyond just the
the value multiple.
Right.
But yeah,
there is a big trust piece
there in the off market deal
that we got the chance to build
with the seller that we just
didn't really get that
that chance on the
the public listing.
Yeah. A lot of times to get off
market deals.
It does take time right.
It takes a lot of time
to build up
that kind of a relationship.
And to to have that trust
with somebody
to be able to say, yeah,
I want to buy your business.
And for the other person
to be like,
I'll finance you because
I have confidence in you.
This one was kind of unique
because I think
I started talking to the seller
in September,
beginning of October,
and then the deal
closed in February.
So we had to go through
the valuation, building
trust, due diligence,
getting funds together
all within
about a five month period.
And that transparency
that was kind of unique to
I mean, we don't want to waste
anyone's time.
The seller didn't either.
And so everyone just outlined
kind of what they needed.
And then we brought a bunch
of ideas to to make it work.
Right.
But,
I think what was interesting
with that,
and I got a lot of people
to think that, hey, you can get
80, 85% seller
financing on every deal.
I would regret it
if we get, you know,
25% to 50%.
Hey, that's great.
But, you know,
a lot of our deals we offer
and put different structures
together.
You know,
sometimes we're providing,
like an A and B,
you know, a being all cash flows
and, you know, B being more
of a seller financed model.
And and so we provide
those options realizing like,
hey, we've got good banking
partners in place, that,
you know,
our buyers can take advantage of
if they need to,
but some seller sellers
will be upfront about that
and they'll say, hey,
I need this cash
to go into this next business,
or, hey, I'm willing to finance
because it's
going to be a heavy tax year
for me.
I'd rather spread this out,
you know, for different reasons.
so yeah, like
I think that flexibility
is only there in the off market
deals.
Any public listing we've worked
on, I'm pretty sure it's just.
But 90% or more cash IT clubs.
I think it's more fun
doing the seller
financing once when you can,
when you can investigate like
you're building a relationship
with these people.
And so many times
people think, hey
when we sit at the negotiation
table it's me versus you.
And it's if you can change
that mindset to think like, hey,
what do you need?
What do I need?
Like, can we get on the same
side of the table here?
Like, let's figure out how
we can both get what we need.
And it's part of
that is figuring out
what is the seller doing next.
The that first
not the first deal,
but one of the big deals
that we did out here
in Arizona, in Scottsdale,
that was I remember
that was part
of the conversation.
We were like, hey, what?
You're selling this business?
You're still pretty young guy.
What are you doing next?
And here's like, oh, well,
my wife and I want to do
some e-commerce business.
And so our initial
deal structure,
we were like, well,
what do you need
to get by every month
while you're building that?
Like,
what if we set up this deal
so that we're covering
all of your living expenses
while you're getting that off
the ground? Yeah.
And it was like
it was kind of a core structure.
And we started going down
that path for for a while.
But then they decided
to just take the discounted cash
at close.
Yeah.
No to your point,
a discounted option
like it made more sense for them
at the end of the day.
And we went to the bank
at that point.
And that's a fair option for us
either way.
But maybe we could talk
about the time to close to right
like the seller finance piece
without getting the bank
involved, you know,
obviously moves a lot quicker.
You know, our cash
our cash deals usually require
the bank to spend
at least a few months,
you know,
getting that deal together.
But but yeah,
I think we could probably
talk about the speed to close
with the seller financed option
to for maybe a seller
that does want to make a move
in like 60 days, like,
how does that impact financing?
Yeah, it's it
part of my discount
like psychology
when I'm going through
that is I'm
thinking of the painful hurdles
that it's going to take
to go through like SBA
financing.
SBA is great because.
So let's let's rewind on
how that works.
The SBA is not the one
funding anyone's deal.
It's whoever the bank is.
But the SBA has their own
set of diligence process
because they're going to tell
the bank, yes,
we will insure 80% of this loan
and then the seller or the buyer
has to come in with 10%.
So the bank is really only on
the hook for 10% of this deal.
But there's a ton of paperwork.
It takes a ton of time.
And they're always it's like,
we'll we'll send them
this giant packet of all these,
all these documents
that they asked for.
And then three weeks later
we're like, so what's up?
And they're like, oh,
we forgot to tell you.
We need this now.
It's like
just keeps on going and going
and going and it takes for ever.
And so part of my,
my discount
psychology here is it's like,
I don't want to jump
through those hoops.
My buyer doesn't want to jump
through those hoops.
We can get this done way faster
if the seller is
willing to be the bank,
and we would rather pay them
like they'll
they'll make more money
if they act as the bank for us,
we'd rather they get
the interest than the bank.
Yeah.
I think, you know, some sellers
gravitate towards that
a little bit quicker
than others, right?
When they see the time.
Difference. Right.
SBA could be 3 to 4 months.
You know, we've
seen it a lot quicker before,
but it's not something
we want to overpromise on.
You know, a lot of our buyers
have gone through SBA or other,
you know, small business
products before it.
Some businesses
are really a gift set for SBA.
Like
we've done a fair amount of,
expansion loans
and working on one right now
that has, you know, an office
building included with it.
And so I don't want to speak
too much about SBA
and all the details that I think
that could be actually
a really fun, topic to maybe
bring in one of our lenders
and, let them dive into it,
and then people can hear
from them directly.
But,
but yeah, SBA does take time.
So it's a good fit.
But if if someone's looking
to move a little bit quicker
and is willing to,
you know, finance
some portion of it
doesn't need
to be the whole thing, right?
If it's 50% or 25% or or 80%,
who knows?
Just that ability
and that flexibility
for the seller to finance
can speed things up quite a bit.
But beyond that,
it also kind of gives the
the buyer
a little bit of confidence
too, right?
It's like, hey, this seller's
willing to work with me.
They have a little risk in this.
I have a little risk in this,
you know, it's it's actually,
I think a big confidence
booster.
Even if you could get 20% seller
financing.
Yeah, yeah.
And usually I don't,
I don't think I would start
with like on an offer saying,
hey, we're going to give you
15% down.
I don't know how
we got that one to work,
but it seemed to be a great fit
for everyone.
In fact,
we didn't start with that.
We started with, like 35% down
and then they countered and
they were like, yeah, no, I'm
okay taking less,
but I want more balance.
We're like, okay,
so get that counter on, right?
They can get a little bit more
if they do
take a little less down,
you know, we can keep that price
a little higher.
Some cases so yeah I think
they saw the value in that too.
But like I said,
they were imagining this.
They were kind of excited
about their next project
and their other businesses.
Right.
And so sometimes it's
just a timing thing
where sellers want to move quick
and they're willing to finance
more if if the buyer can move
a little faster to.
Yeah,
a lot of times it's, it's speed.
And we had that one deal that
we're working on in New York
that's just taking forever.
And a lot of
that is because of, well,
there's so many reasons to that.
But that one is going
with an SBA product
and it's going to be
all cash close.
And so a lot of it has been like
playing the game of,
hey, SBA, we gave you everything
you needed, everything good.
And then we have to wait
and wait and wait.
And then they get back
and they'd be like,
oh, hey, we want this now.
Okay, you got it.
And then we wait and wait
and they're like,
no, now we need this.
But then another part was
I think the, other
the seller didn't quite
have everything as organized
as originally thought.
And that, that has taken
just so long to get
to get through that process.
Yeah.
I mean, there's all that
complexity to that one, right?
There's multiple entities.
There's but but yeah, SBA,
I think by the time,
you know,
if you've produced the documents
they wanted
and if there's a two week span,
then you need updated financials
pretty much,
you know, so, you know,
I think the other part to
that is working
with someone that really does
a lot of SBA, right.
Working with the lender
that has a focus team.
Even some of the consultants
out there that only do SBA, you
I think we've worked
at a pretty wide range of them.
We definitely have a few
favorites that we've done
multiple transactions worth to.
But but yeah,
the banking partner is critical.
I think what this one there was
like maybe a local introduction
and,
you know, maybe not immediately.
Some miliar with the industry,
but very familiar with SBA.
We have some lenders
that are overly familiar,
specifically with property
management businesses
and SBA products to help
property management companies.
So pretty,
pretty interesting little niche.
It's probably not
easy to find those people
unless you're doing a lot
of transactions in the space.
But but yeah, SBA
with that one,
that one's probably taken
a little longer than most.
I wouldn't say that was typical.
That's probably a one off.
I hope it's a one off. Right.
Because it's been the longest
one we've worked so far.
Yeah.
I think, the SBA, though,
it's it's a great product.
A lot of people
don't realize this
that that it's available
or how it works.
The SBA again, they're ensuring
the the note with the bank.
And so the bank says, hey,
the SBA requires
that you have 10% down
whatever that purchase price is.
You got to come to the table
with 10% down
where that 10% comes from.
I don't think they really care.
That could be your money.
That could be, friends
and family, other investors.
We've we've had deals like that.
Yes or no?
Do you know. Yeah.
So, but it's a great option.
And so people tell me, like,
how much money do I need
to to buy a business?
And I say, don't,
don't worry about that.
Find the business first,
find your deal,
and then
you'll be able to figure out
how does this deal make money.
And then what are my
my financing options on this?
Right.
And it's I'm always comparing it
back to like,
what if I were to get an SBA now
and I needed to find 10%?
What what does that look like?
That's my my patina.
My best alternative
for how we're going
to finance this deal.
And it's like SBA is
is the last resort in my mind.
Can we find another way
that still makes sense?
And then I compare it
back to my better
what would my monthly payment
what what would my rate
be on a SBA product.
So that's how I structure it
when I'm when I'm like
structuring seller
financing options,
I'm comparing it
back to that, that now.
Yeah.
But I, I think the big is
you kind of into
that was like
the sourcing piece.
Like finding
the money is not the hard part
like finding the right deal.
And both of those two reset
transactions,
those are active buyers.
They've been hunting for deals.
They've been
I mean one of them is closed.
Probably seven transactions,
in multiple states,
across multiple states.
And so so yeah, I've been
finding the right deal.
They've said no
to a lot of deals too.
So it's not to say, hey,
those buyers
just found one deal.
And you know,
they closed the one.
It was probably,
you know, the
result of hunting for,
you know, months in some cases
to find the right deal
passing on ones
that weren't to get that
maybe they were overpriced,
maybe they didn't like the,
the portfolio
or the management structure,
or maybe there was too much risk
in the portfolio.
Maybe there was one client.
What, you know, 60% of the
the property spreads like
there's
a lot of different pieces.
And those so
those were two that close
that, were strategic buyers.
I mean, they were intentional.
They knew that they could find
the money to get it done.
One one SBA one
didn't for different reasons,
but, both were able to close,
which is awesome.
Yeah.
It's that that one
that was in the the southeast.
That deal I'm
pretty sure we, we reviewed like
3 or 4
deals the
month before that one came up.
Like we,
we walked away just in 30 days
before the one that they closed
on walked away
from 3 or 4 of them just before.
So it's like, yeah,
you got to be prepared to,
to look at probably ten deals
to close on one.
Right.
Sometimes we
we hit it lucky
and we're just like,
yep, we're closing on this
and this and this and this.
And I guess that's actually
kind of the unique thing about
us is, is with PMI,
we can look at any property
management business
across the whole country.
And, you know,
it could be a book of business
that's really only worth
like 50 grand,
or it could be a 2 or $3 million
business.
Doesn't matter to us because we
can look at it and we can say,
no, this business isn't worth
anything next.
Or we can say,
yes, this business is worth
something and it's going to fit
this buyer,
but not that buyer, right?
So that's
kind of a cool thing that
gets us so many of these At-Bats
with, with these businesses.
Yeah, I think just having
multiple buyers
in a single
market is pretty interesting.
Right.
And then there's
some alignment
that needs to happen
with buyer and seller,
like we talked about kind of
that cultural mess
that needs to happen.
You know,
some of the portfolio splits
that we've seen where, hey,
maybe there's one buyer
that does a lot more multifamily
and that portfolio might fit
their needs a little bit better.
But you mentioned southeastern
and kind of that recent deal,
some of the deals
we had passed on down there,
we're actually smaller
transactions, right?
They didn't have the team
that we needed in place.
Maybe not the best neighborhoods
with some of the portfolios.
And so I think
a lot of people have issues with
you know, what what size
business do they need to buy?
And so that one down there
was a larger
business, had more team members,
had, you know, really good
market share, I would say.
And so they passed on
some of those smaller ones
because they were entering
this market for a new
because
that was a new market entry.
So they didn't want to start
with a platform
that had, you know, a 100 doors.
They needed something that had
a team larger portfolio.
I think it's a little easier.
And maybe you have
some comments on this to
to sometimes start
with the larger purchase, right?
Some people, some buyers
think, oh, I need to scale up
and, you know, by
something like $50, $100,
you know,
maybe it's 2 or 300,000 first
before they go
after $1 million transaction.
So that's a big I know there's
some heartburn around that.
But let's talk about
starting with bigger deals,
because I think it's actually
a little more exciting to.
So yeah, it's
you're taking on more risk
because you're going
to have to pay a lot more.
It's not as cheap, but there's
a reason for that, right?
I remember
walking through an example with,
with one of our franchisees in
Houston that he was like, well,
I want to buy a $300,000
business.
Walk me through the numbers.
What does that look like?
And I was like, okay,
we're going to buy
a $300,000 business.
That one is likely making
netting somewhere around
85 to $100,000 a year
of that.
You're
going to have debt service,
so you're going to do all this
work, right?
And I spelled out like, here's
all the things that we're going
to do during due diligence.
And that's a lot of work.
You're going to do all that work
for a $300,000 business
that you're going to get
for really cheap,
but you're going to have to
take over
a lot of the responsibility,
because that's
what the owner was doing.
And it's like after
debt service,
he was like after debt service.
I'm getting maybe $30,000
a year off of this.
And I was like, yeah,
now let's do it on like a 1
or $2 million business
that has more resources,
more people.
It's got more revenue.
It's it's a bigger system.
And it's like,
yeah, you're paying a lot more.
You're paying sort of 300,000.
You're paying 1.5 million.
But at the end of the day,
after debt service
and everything, it's like,
yeah, you can
you can still walk away with
you know, a six
figure salary from that.
you got that team though
to build on right now.
That smaller deal
makes a lot more sense because
maybe you don't need to staff up
to take on that smaller,
more folio. Right.
We talked about that
all the time.
Like, hey, what's the capacity
of the current team?
Like how much more can they do
before we need to hire
someone there locally?
What can be, you know, utilized,
you know, can we put some type
of virtual assistant
or remote team member in there?
You know,
that's kind of the fun part,
but I think a lot of buyers
do think
to step into that smaller
deal first,
just because they've never gone
through the acquisition process.
Maybe,
maybe they don't have a team
like us
to, like, guide them through it.
So it's just a little bit
simpler
in their mind
to step into that small thing.
It seems easier,
but it's like we read that book
ten x
is easier than two x, right?
And that book is great.
It goes so well in line
with what we're talking about
here, buying a, A2X business,
a $300,000 business.
That owner is wearing
every single hat
that business cannot afford.
Team members to take off
some of the workload.
but a seven figure business.
Same amount of work
to get that one done as it is
to do a $300,000 business.
But that business has resources.
It has better systems.
In order for a business
to get to that spot where it's
doing over a million in revenue,
it's got to have good systems,
processes.
People like resources
so that when you take it over,
you're not wearing every hat.
You're the CEO, right?
You can step in as the CEO
and not the technician as,
as the E-myth would put it.
So it's it's
so much easier to do though.
So yeah, team's
such a big part of it. Right.
You know,
I think some of the businesses
we've looked at that have had,
you know, great teams in place
that would mesh well kind of
with our culture that we have
on the buyer side with PMI.
Like there's
a lot of value in that.
It doesn't always equate
when we're looking at PNL,
but for the clients to have,
you know,
some familiar team members
through a transition
to a new buyer, like, I mean,
I can't think of a business
we've worked on recently that
we haven't kept everyone on.
Right. Like, team is valuable.
Like, that's a huge part of why
we do step into
some of these larger deals,
because we don't want to go hire
five people.
We want the five people already
be there in that business.
But yeah, I mean, that's
that's something
that a lot of people
should think about
when they're looking
at that $300,000 business
and they think, oh,
I'm going to have to.
The seller said he's working
40 hours a week.
That means he's working 65.
And, you know, you're
buying yourself a full time job,
not really
working on the business,
but working in the business.
And those bigger deals
just give you that flexibility
to maybe delegate
a little bit more.
You know, obviously
benefit from some of those,
those add backs
that are potentially
in the business,
but also you're merging
two businesses typically.
And, you know, for the buyer,
there's some other advantages
for them to you.
our franchisee that you know,
we've done a couple of deals
with them out here.
They they literally
tell me like,
yeah, we're buying the business
because it's it's making money,
it's revenue.
It's got a good portfolio.
No. The thing we want,
we want the team,
we don't want to go and hire
and train new people.
We want experienced people.
We want the team who
already know what they're doing.
They're like, it's for them.
It's almost like it's easier
to just buy a business
that has a team than to go out
and hire and train a new person.
Yeah. So
and they've
done all of their transactions
pretty much
in a single market too.
And you know,
you look at some of our buyers
that are buying
in multiple markets,
where some of those resources
might be used
across multiple offices.
In both of those scenarios,
like,
we need people like it's
still a very,
you know,
people forward business,
you know, property management,
you can utilize some of those
resources and technologies
to simplify things.
But,
you know, a lot of our clients
still want to meet with people,
and they're still on the,
you know, boots on the ground
type work that needs to be done,
but does.
Yeah, I think that gets
overlooked sometimes.
I've seen some smaller deals
where they've had to hire
pretty quickly and,
you know, the time and energy
and money spent doing that.
You know, it's
something that you really gotta,
you know, way out
and see if that's something
you want to tackle.
Or do you go after something
and just target businesses
that have,
you know, that that built
in experience team already?
Yeah.
It's I'm thinking about our,
one of our franchisees
out in Colorado that, you know,
this is acquisitions
is a great way to build out
your business, right?
He had, you know,
was he a one man shop?
His business was doing
about two, 300,000 in revenue.
Couple Vas, I think
a couple of remote team members.
Yeah,
a couple of remote team members.
But then he did a deal
for about 1.5 million,
and then he did
another deal a few months later
for 1.7 million.
Now he's got a business that has
over 3.5 million in revenue,
that has a team
structure in place that could it
that just instantly elevated him
out of kind of like
the property management seat
to now I'm
the business owner, I'm the CEO.
And now he's got teams
that are doing what he was doing
before.
Now he can focus on
bigger picture strategies
and building a, you know,
a system that's
going to be more valuable later.
So it's it's
such a great way to acquisitions
are just a great way
to build your business.
I think every business needs
to have an acquisition strategy.
Totally.
And I think his just to speak
to that franchisee
like his intent
even with the next deal
because he's not done right.
I mean, I think he's actively
targeting
a number of businesses,
but he does have some goals
around that, right?
He's trying to get more
out of the business than he is.
You know, the next deal
coming along with, you know, a
general manager role,
whether that's
an existing team member
that gets elevated into
that spot or even a new hire.
But, you know, some of that cash
flow from this next deal
is intended to go towards that
GM type role
and, you know,
get that franchisee
out of their business
and letting them focus
more on the fun stuff, right.
On growing and and adding value.
Another way
is, yeah, it's interesting.
Like,
I feel like the most successful
business owner, like franchisees
who are doing this,
they're when they're
buying businesses,
they're not looking at them as,
oh, I'm going to increase
my paycheck, right.
It's like they set that ceiling
for what
they're going to take home.
And then anything above that
they're investing
into their business okay, great.
This business,
if I buy this business it's
going to add an extra $400,000
in cash flow
that I could take home,
or I can invest in
building my management team
to run the operation
and take care of,
you know, I'm
going to
remove this off my plate
and this off my plate,
and I'm going to build up
my team
to now
become a well-oiled machine.
And, that's that's really
what it's about.
So, you know, they're looking at
acquisitions in terms of like,
if I do this deal,
I can afford a president
for my company or a GM.
Right.
And so that's that's a great way
to, to build up your business.
Yeah. And we've seen that.
Now just thinking
from the seller's perspective,
some of the client relationships
and services
that those sellers provided,
not all of them
are kind of up to speed
with industry norms too.
Right?
Oftentimes
a lot of these clients
are actually benefiting a lot
from this.
The sale that happens right now,
they get access to
more team members.
Now there are additional
resources available to them
as an investor. Right.
Maybe they're getting access
to some of the off market
investment opportunities,
you know, through our buyer.
Right.
And so it's, there's two sides
to that, right?
Some of these companies that
haven't quite kept up to speed,
a lot of things have changed
in the last, you know,
even five years, in this space.
But, you have to have,
you know, a business with good
team members and good clients,
you know, that's
that's a huge piece to
to the valuation, right?
There's kind of like art versus
science of, you know, valuation
and kind of the good, well,
elements tied to the client
bases and employees.
Sometimes that gets overlooked.
I don't think, we overlook that
because we really need team
members always.
It's something interesting
to think about, like not
not removing team members
to show a higher net income.
Like,
we've seen some sellers do that
where they're just like, oh,
I'm going to run a really slam
because I'm going to
sell in the next six
months or 12 months.
It's like, we need the team
that's there.
If they can handle more work
and you're a little overstaffed
right now, like, that's okay.
Like we'll still
we can show that value with you.
But yeah, just just kind of
interesting perspective.
Some people have different
thoughts on that.
Yeah.
My thought
when I'm looking at businesses,
because we've looked at a lot,
we have like over 400 deals
that we've looked at
just in the last
like two and a half years.
Right.
And I think about this
all the time
when I look at a business
that's running really slim.
Hey, yeah,
we've got a million in revenue.
And we're walking home with,
you know, I've got 50% margins.
I'm looking at that like,
okay, you're operating too slim.
You only have like
three employees,
maybe two employees, and then
you're doing everything else.
And I'm like,
no, it's not a good sign.
It's not a healthy business.
If the owner is doing
everything right, I want to know
that, like, can the owner
take a two week vacation?
Does the business keep going?
If the owner's out
right for two weeks?
And if they can't, I'm like,
oh, they're
they're just went you're
multiple sorry. You know.
But a lot of times they think,
well yeah,
if I can just have my,
my cash flow really high
and my margins look amazing,
my business will sell for,
you know, three and a half acts
and I'm like, no,
because if you're doing
everything that's less valuable,
like, right.
Yeah, that's a tough one.
Like you really have to ask
some of those questions
during valuation, right?
And sometimes
people underestimate
how much time
they're really spending
on their business.
and so yeah, that's something
we need to be careful about
because do
we have to include a salary
for another manager,
for example? Right.
You know, that
that kind of hurts
because
also we need to go source,
you know, find that individual,
hire them in some cases,
train them to some extent,
like it costs
more than the $60,000 salary
that someone in that role
could have been taking.
Right?
I think some of the industry
projections are like,
you know, 25 to 35% loss.
As far as, you know,
time, money goes for that
new hire role.
So, yeah,
I mean, there's it's easier
for us to show a better value
with the right team in place.
Yeah.
Like there's been times that we,
we look at a business that
the owner and their spouse
work in the business and they,
they're like, well, yeah,
we we take $200,000 each
or total for family income.
That's SD.
And I'm like, well, no,
because Jimmy is the one
buying your business
and he can't do everything that
you and your spouse was doing.
You know, like like you're
both working 60 hours a week
and Jimmy can't do 120 hours
a week, like he's
gotta hire
someone to backfill that.
And so,
yeah, those
the owner can't be responsible
for doing everything.
If the spouse or partner
is in there,
their salary
has to be factored in.
Somebody's got to replace
what they were doing right.
Yeah, I totally agree.
I don't think that yeah,
that expectation like
that's all I, we like to talk
to people early to.
Right.
Like there are ways
that you can,
really
prepare your business to sell.
Like, what are buyers really
looking for?
You know, you know, are there
certain like, high value items
that they really need to prepare
on that team being one of,
you know, we talked about, like,
contract assignment last time
and like,
there are a lot of things
that we can guide people on,
especially if they have
that plan to say, hey, I'm
going to sell in the next year
or two.
Like, there's a lot you can do
if you're saying,
oh, what can I do to
you know, improve my valuation?
I need to sell in three months.
It's it's going to take a little
longer than that typically.
And that's
also because you need to show
12 months of those improvements.
Right. Especially
if we're going to the bank.
And we need at least 12 months,
you know, after those kind of
cleanup items
or, or, changes have been made.
But, yeah, it's
not going to happen tomorrow.
The value may not increase
in 30 to 60 days.
So let's put that out there
just so people don't know.
Yeah, it yeah.
It takes a while right.
Yeah I talked earlier like
there's a lot that we can do.
There really is
and that's why some of the deals
we've done too,
like I think about
when I started doing
property management
business acquisitions like it
was, it'll be nine years
and in two months.
And so, there's a lot of people
that we've helped sell
and our franchisees
have bought years later.
Right.
Like we've been prepping people
for their exits for years.
And,
you know, I'm trying to think of
there's been more than a few
that were 3 or 4 years, right?
Where we gave them
some guidance.
You gave them a valuation.
The number wasn't there.
They said, hey,
how do I get to a higher number?
How do I get to X?
I need to sell for a million.
Like we've guided them on
how to do it.
Hey, you don't want to sell
today. That's okay.
Come back to us after
you've made these improvements
and we'll get you to
your number.
So it's
just an interesting play
because that relationship piece
I mean it's
still like every month
we probably have a conversation
with someone
that, you know, a six months ago
or a year ago or longer.
And now they
we just kind of got that,
that idea planted with, like,
hey, there's there's good
value in your business.
Some people don't realize how
valuable their business even is.
Until we really give them
an outline to say, hey,
we went through a valuation,
we did a 300 business and
and Tulsa this year.
This is what we pay.
It's actually worth this now.
So so yeah,
I think it's interesting,
but people really should
go through a valuation,
even if they're not selling
tomorrow.
They should understand
what their business is
and then build a goal around it,
like build an exit number,
like what's
it going to take to sell.
And then,
you know, work towards that.
But you do a fair amount of that
coaching too.
I know when you send out
your valuation reports
to a lot of people, sometimes
that's just a reality check.
But we also give some guidance
to, to say these are the things
you need to improve on
before you before you exit.
I like to do that
because there's
there's been times
that I'm like,
yeah, to your business.
It's not quite there.
rather than I put in the sweat,
you put in the sweat.
Fix it
and I'll pay you more later.
And I'm happy to do that.
I would love for them
to do that, but
I want to see the business
look better.
And, let's use an example.
Right now, we have a business
under contract here in Arizona
that I look at the financial
statements on that super clean.
Right. I've only had two.
There's only been one item
that we're like guessing
like, hey,
can you give us a little bit
more detail on this?
But then we look
at other businesses
that they have,
all these personal expenses
mingled in there, and it's like,
and how are we going
to figure out
what that bottom line is?
And, you know,
we had one in California
recently that the guy was like,
no, I pay myself 500,000,
600,000 a year on this business.
And I'm like, dude, the business
only grows is like 800,000.
How are you doing that?
Like, but like he's like, well,
I hide all my personal expenses
in there
and it's oh, man, trying to dig
through these finances.
It's like, no, clean up
the books make this look nicer.
And that not only for us, it
makes it easier for us to value,
like the deal that we're under
contract with here in Arizona.
They had clean books
and it's like great, clean.
You're organized.
I like the way this looks.
We're willing to
to stretch higher on this one.
Right. Versus
the ones that are messy.
Not only does the bank
not like to fish
through all that,
they are not generous
with their add backs.
But it it hurts the value
because it's like
it's telling me
you're not very organized
and it's a lot of guesswork.
I don't want to have to guess
at what that number is.
So yeah, your value goes down.
Yeah.
Totally undervalues like the
real potential of that business.
And, yeah, it's like,
how does a bank look at it?
You mentioned that, right?
Like we can see the value.
Hey, you're going to sell
or finance this.
All right.
We can walk through
does add backs
and understand where our numbers
are going to be.
But to your point,
the bank is not as,
you know, creative as we are.
And they're not going to take
some of our projected values.
You know, if the books aren't
within, like, a reasonable
margin, right?
Some of them have just
crazy margins
projected, but they're not there
in the financials. So.
So yeah.
And I think you're right
that that one in particular
was interesting
because it was a pretty large
transaction.
And, I think this operator
had just been like growing it
naturally and kept the portfolio
at a decent size,
had team in place,
like he really should have
started working
with someone
to prepare his business to sell,
because there's a huge value
there.
Now he's going to be,
you know, a year
or more away to clean things up,
maybe two years
really to get where he wants to.
So. Well, yeah,
that it's quite a bit.
And I think people get siloed,
they get busy in their business.
And you know, they saw
like something on Google
that said their business
should be selling for six x
or some number
that doesn't really apply
to their size business.
And maybe we run into that
quite a bit, right?
Hey, this tech company
sold for 20 X.
Like, you know, like my,
you know, $200 property
management business itself or,
you know, whatever it is.
But yeah,
I guess
that you should go through
if you want to go through
evaluation
just to understand
what the market's like,
get some comps.
Like we have a lot of comps
we share based on closed
transactions.
If we haven't done a deal
in your market,
we probably have a comparable
market we could share on to
and just know what
your business is trading at.
And if it's not there yet,
then how do you get there?
And if that's going to take
a year or five years, you better
start start on it now.
All right.
Let's just throw this out there
just to set the record straight,
because a lot of people think
they're like,
oh yeah, I heard businesses sell
for like three X
and they're like, yeah.
So three times my gross revenue.
So my business is worth $3.5
million.
And I'm like, sir, sir, back up.
Your business is where
it would take 15 years of me
paying myself
nothing to pay off that.
No, like your business is worth
like 800 grand at best.
It's not a gross.
If you've got a service
based business
like not talking software.
Like not a tech company.
You've got a service
based business,
you're looking at a multiple
on your bottom line,
not your revenue. Right.
You can use revenue
to find comps, but the valuation
is not going to be like
three times gross revenue.
Like if you can get two times
gross revenue.
Whoa.
Because that's wild.
Like it's going to be
a multiple on the bottom line,
not the top line.
Parlay.
And I think like deal size has
a lot to do with it too right.
You know I think, you know,
most of what we look at
is a lot of sub 5 million gross
sub two seven,
3 million primarily.
And so there's definitely
a range to those multiples.
But you know, that
that kind of 2 to 4 x space
is where a lot of
these transactions are landing.
I shared a whole bunch
of closed deal data.
With Peter Lohman, who's
I think I'm saying his last name
correctly
or giving me if I'm not,
is pretty.
I mean, I'd say well known.
It does a really great
newsletter for,
the residential, actually,
real estate services in general,
but a lot of, the residential
focused side of things.
And, I shared a lot of close
deal data with them
just to compare to you.
I know he's
putting a lot of that together
based on other transactions
outside of our space.
We have 400 plus deals to,
reference, so that was easy.
I didn't
I gave him a small sample,
I don't know,
probably less than 100.
But, you know,
across our brand, across
multiple states, you know,
I don't know if those deals
were in like
30 or more different states.
You know, that two to forex
space, 2 to 3 and a half
really was the price was the
majority of those transactions.
And like I said,
those are a lot of the sub,
you know, $2 million deals.
So, you know, I think there's
a lot of transactions
that happened in that space.
Not just in our PMI group,
but across the industry.
A lot of,
you know, it's a small, small,
property management companies.
Yeah, that that the multiples
are always difficult
because I think that's
what people ask a lot.
Like, are you guys offering
like 2X3XY.
And they just start there.
They don't.
You really need to define x.
You know,
what is your your EBITDA.
What is your cash flow.
What's your seller's
discretionary earnings like.
What does that really include.
So a lot of it
is kind of hand-holding
through that process.
And it's good. Right.
Because people need to know
and not to kind of set false
expectations, also to set
like appropriate goals.
Right?
Like,
you know,
if you're
trying to hit an exit number
and this is what a buyer
wants to see, right?
So I think we do a fair
amount of that. I know you do.
And I know, you know,
there's always a handful
those calls every week.
But I mean have
I mean like monthly.
How many do you think you kind
of walk through that process?
Man, how many a month, how many
evaluations do I do a month?
I couldn't even tell you.
I'm like, there's probably a lot
that we could pull up.
Data.
Yeah, well, but it's like
people will ask me.
I'll be on the calls with them.
It'll be like, just.
Just ballpark it. Like,
what's what?
What kind of multiples
are people going for it?
I'm like, oh, solid question
2 to 4 times 2 to 4 x.
You know discretionary earnings.
And they're like dude
that's a huge range.
And I'm like
yeah yeah it's a huge range.
Let me dive deeper into this
because I'm not going to just
like oh yeah your businesses.
Yeah.
They're like well
I have a 1000 doors.
What what kind of what kind of
multiples should that be?
And I'm like, probably, you
know, a couple unknown cards.
I don't know, like, we,
we kind of
we got to dive into it to really
give you a solid answer.
Otherwise it's,
you know, we're going to say,
yeah,
your business is worth A3X,
but maybe it's worth, you know,
like this, this one in southeast
that we looked at that
they ended
up with a forex right.
Maybe it's not a great shape
and it's worth two x
like I can't I can't tell you
without looking into it.
The financials
looking through the financials.
That's the
the science of the valuation.
But then there's
so many other variables like
talk to me about the team.
What are your roles.
What's the market look like.
Right. Like
you know, it's
kind of interesting.
We're looking at a deal
in, in Oregon right now
and another one in Virginia,
and it's like their rents
are going down
and their vacancies are going
up, like people are leaving.
The population is decreasing
there.
And that's, you know,
that's a threat to the business
right now.
It's you know, it's
not just your business
that we're looking at.
It's like what's the market
look like right there. Right.
So it's there's so many factors
in every, every deal.
Yeah. Retail's
probably a little different.
It's kind of it's interesting
to say that because we look
at some that share the same door
count in the same market,
totally different revenue,
totally different portfolio
or charts.
Totally different like that.
We do really need
to lock through that.
And, you know, for some sellers
to you, because,
you know, obviously there's
some confidential information
that they share with us.
We go through evaluation,
we sign NDAs
like we do get some of that
old back to say, what's it?
They ask what it's worth
and and don't want to provide
all the details.
Right. All the financials.
So I mean, all that information
is confidential.
We sign non-disclosure.
You know,
these two sets of eyes
right here under
you and I were the only two
that look at these.
And then if someone at that
point goes through valuation,
they're comfortable
with the price range
that's provided or the price
tag based on a number in place.
They want to talk
to a qualified buyer
and they have a separate
non-disclosure,
or confidentiality agreement.
You know, with that buyer
we just
we share information with you.
That's it.
That's all confidential.
And, if it goes nowhere
and you're like,
hey, I'm going to keep I'm
going to go build some more.
Great. Right?
None of that is something
we hold on to.
It's just confidential between
both parties.
We offer that as a free service.
And, if I say that on here,
I think we're going
to be extremely busy with
people sending them, sharing
the. I
mean, we do that quite a bit.
I'm trying to think of,
you know, just myself alone.
It's probably 2 to 4 businesses
a week, you know, all sizes.
Right?
We closed one recently.
I was 29 doors,
small little portfolio.
Thankfully closed one on Friday.
That was just under 400.
And now it's like a combination
of home launch and
and residential.
So just kind of a variety
of different businesses.
But when you look at valuation,
it really in the PM space
there's like all these different
areas of PM right.
There's commercial
there's association HOA is condo
associations short term
rentals, mid term rentals,
which until a few years ago
I didn't know what that was.
But mid term rentals that are,
you know,
that really got popular
I think out of some of these
super saturated stock markets
and then and then home launch.
Right, which is something
we're now diving more into.
And you'll see certain regions
that have more like kind of home
launch service,
property management companies.
So, so yeah, they're all
a little bit different.
And unless you talk to someone
that's got experience
going through these transactions
and all these markets,
like you might be getting too
generic of information,
something you buy Google
and it's not giving you maybe
the true value of your business.
So that might be
my warning is to say like don't
undervalue your business either.
Right.
Like get a fair valuation
done on it.
And you know,
put those expectations there.
But but yeah,
I mean it's a lift.
It totally is.
But for us
it's like it's a trust builder.
Like we're in this
for the long haul.
And you know,
if it takes a few years
for you to build
and come back to us
and that's
that's all good for us.
Yeah.
It's interesting.
I've come to
come across people
that they were hesitant
about sharing their financials
with me.
But it's like
we're not operators where
I don't have
a property management business
that I'm running, like, I
what am I going to do with this
information?
I'm going to give you
a valuation, kind of a ballpark.
If I were the one buying
this business,
this is what I would pay for it.
But other than that, it's like,
I'm not using
I don't share this information
with the other departments
at PMI.
I don't share it
with franchisees.
I don't
I don't give it to anybody.
It's like just me
and you that look at this
until the seller says, like,
I'll do the valuation.
I say, hey, this is kind of
where we would come in at.
What do you think?
Do you want to meet our buyer?
And they say, yeah,
that actually sounds great. Yes.
Let me meet your buyer.
And I'm like, great,
can I share all this information
with them?
And they say, yeah,
let's go. Right.
I don't share anything
with anybody
until the seller gives me
the green light
to introduce somebody
into the conversation here.
And so everything stays
confidential. And.
Yeah, we we do this a lot.
Don't don't try to Google
what your business is worth.
Right.
You're not going to get
an accurate representation.
I don't even know if my friend
chat ChatGPT can give a, Yeah.
I mean, I, I don't know, I've,
I actually haven't
used ChatGPT to assist me
on any of my valuations.
I feel like that
might be a breach of like NDA.
I can't really share that
with my friend. Chat.
now I'm really curious of like,
I wonder what would happen
if I ran some of these
through chat, see what he says.
But yeah, it's it's
we've done this a lot.
We really know property
management acquisitions.
We have so many of these comps.
Every time I send out
a valuation to somebody,
the last page is like,
hey, here's like 12 comps
that match your business,
and here's another
like 12 comps
that are similar sizes,
like we have
so many comps to lean on.
actually I've seen this too.
I've seen business brokers
kind of posting
their closed deals
and it's always across like 10
or 20 different
industries. Right?
I think one thing
that might be really cool,
I know we're starting to do that
on the acquisitions website.
PMI acquisitions.com to show
some of our past
closed transactions.
And, you know, that list
is going to continue to grow.
It'll be really
cool to put more comps on there.
There's the deals
that are on there offering
reset transactions.
But, as we close
on, we're going
to keep posting them on there
so people can see,
here's
what a closed deal sold for
and what market here is
the revenue like.
We'll share as much as we can
without giving
confidential information away.
But those are just on closed
deals.
But I really think that website
going to be a huge, success.
Just the amount of content
we'll be able to share on there.
The valuation tool
that is on there, already,
where people can go
and put in some,
some calculations
on their business to provide
a range.
That range also include it's
an invitation to get, you know,
more detailed information
to do a stricter,
you know, valuation
process with our team.
But it
kind of takes some pressure off
that if you're just looking
to get super high level
and maybe you want to know
that number before you talk
with someone on our team,
that's an option.
But like I said,
I don't want to undervalue
anything like that
to would be great to for someone
to go through that tool,
understand
a range on their business,
and then work with our team
to really hone in on, you know,
the true market valuation
for their business.
Yeah.
I'm just going to keep pushing
people towards that website.
Yeah,
that it's like looking that
we've spent years
developing that tool.
The valuation model.
And, you know, Kyler,
our guy in the chair,
has really put a lot of work
into building that out,
putting it into our website.
We specifically made it
so that it does
have kind of a wide range.
And like that ballpark,
it's a big ballpark, right?
But for a reason.
Because like what
we've been talking about,
there's so many variables that
go beyond just the financials.
And it's like, okay, that's
kind of our starting point.
Now jump
on a conversation with me
and let's
see if we can narrow that down
and get you get you something
more precise.
Oh and by the way, we have
someone that would buy that.
Right.
Which is kind of a,
an interesting thing, you know?
And it's it's
not self, self-motivated.
It's if you're thinking
about exiting,
like we would love to help you
achieve that goal.
We've got someone right now
that is willing and ready to.
They're capable.
They're capable operators.
They're capable at,
getting the funds
together
to buy these businesses.
And, you know,
it's it's a win on both sides.
The seller gets what they want.
They get to
to exit their business.
They get a nice big paycheck.
Our buyer gets to,
you know,
change their family's life
where they were doing
300,000 in revenue
and now they're doing,
you know, 3 million in revenue.
It's like it's it's
just a great process.
So yeah,
I think there's still
a lot of people
trying to get kind of familiar
with our model and how we're not
brokers in this.
We're not listing your business,
we're just connecting you
with a qualified buyer.
In some cases,
we have multiple qualified
buyers in the same market.
Like, I've had to do this before
where I said to the seller,
hey, here are the three buyers.
Here's
a quick background on them.
This is what their current
portfolio looks like.
This is what team
they have in place.
Like who do you think
your clients would would work
well with?
And maybe that's
the first conversation we have.
So I mean, ultimately
it's the seller's choice
to, you know, what buyer do
they want to work with?
We have multiple buyers
that are qualified
and can do a deal of that size.
And we're confident
in their ability.
We just give the seller options
and say, hey,
maybe they might even know
that that local buyer from,
you know, Nabil,
there's a lot of,
you know,
Nabil, contacts out there.
Where?
Oh, yeah,
I've seen him at meetings.
He's great. Yeah,
I like what he does.
And so they can choose
at that point.
But we do pre-qualify
our buyers.
We're not going to introduce
someone
that we're not 100% confident
in, that either has the money
or could get the money
through the bank.
And so yeah, it's just
kind of it's a unique position.
I don't think
there's other people out there
doing what we're doing.
We just went through that
in Florida,
working a deal right now
that I introduced, we
we introduced one of our buyers
to them.
And, you know, our buyer,
they're they're qualified.
They they can operate it.
They can get the funds together.
But when they met buyer
and seller,
the seller came back to me
and was just like, yeah,
it wasn't really a fit.
And so, you know, we
we talked about it.
We were like,
well, we've got another one,
you know, like
we've actually got another one
that that could be a good fit.
Let's get you guys introduced.
So it's it's
it's kind of
we're an interesting position
where it's like we start off
working with the seller
but we disclose to them
like full, you know
hey, full disclosure
I'm helping you out for now.
But at some point
I'm switching over
to the buyer side of the table.
But it's it's like we're doing
the valuation.
It's just us working
with the seller.
Hey, this is kind of the
the fair market range
for this business.
This is if,
if I get my buyer in here,
this is what I'm going
to recommend.
They pay for this business.
What do you think.
And if they say yes
now I switch over
to the other side of the table
and I'm like, hey,
do you want this business?
They've agreed to these terms.
I want you to go
meet that person.
You guys see if you're,
you know, you're a fit together
and you want to do business
together.
It's it's such a cool model.
Yeah, that's got to be
that kind of fit, right?
People need to get along.
And that's why we usually
we push people to an in-person
meeting like as soon as we can.
Like, yeah.
Is it going to be a good fit
and we can figure out the number
side?
That's fine.
But like, hey,
why don't you two go meet,
talk about the team, talk about,
the clients.
Maybe there's some good overlap
there.
So, yeah,
that is a big part of it.
You know, it's,
it's glorified matchmaking.
I think that's what,
we're going to get one
of those Netflix documentary
shows now.
1 or 1 of those game shows.
Yeah, it's a little bit of that.
But I mean, it's fun.
It's fun for me.
I've you know,
I've enjoyed doing this and,
you know,
we just try to find a set.
If it's a good segue. Great.
Hey, if not, that's
okay too, right?
We shared some information
with, you know, what that seller
about how we work
and where we think
their business is.
And at the end of the day,
if they take that and go grow it
or nailed it or you know, maybe
sell it to someone
that it's a better fit for,
hey, that's okay. Right?
So the transparency on our side,
like years ago, I thought, hey,
how cool is this?
We do this in-house.
It was like a secret weapon,
you know?
Like, we know we have
all this data behind these deals
and we've just realized, like,
the more we share, like,
the better
these businesses
are for us to buy it too.
So, like,
we're going to keep pushing out,
you know, our practices
and how we view things.
And hopefully that helps people,
you know,
prep their businesses to sell.
And, but yeah, in the end,
like, we want people to have
a strong exit,
get paid for a good business.
And, you know,
we want our buyers to
to grow too, right?
So yeah,
it is an interesting piece.
Like,
like I'm trying to think of,
anyone else in other industries
that maybe have this kind of,
kind of platform,
but yeah, it's
a little different,
but it's pretty exciting.
Like, I think the market for PM
or our natural and specifically.
Right,
like there's all these other
ancillary businesses
that kind of touch
property management too.
So we do
primarily property management,
but I would not be surprised
if we start stepping more
into what we've talked about,
like these ancillary,
you know, the cleaning companies
for the short term
rental maintenance.
We've done some, maintenance
and construction, landscaping.
There's so many different pieces
to the property management
and kind of aligning
industry businesses too.
But yeah, more to come on that.
I think maybe on another,
another episode we could do an
ancillary business,
you know, buy this business to,
to to contribute to, to your,
your residential management
company or whatever it is.
That could be fun.
we could talk.
We could literally talk all day
about this stuff.
Like, this is
I think I had knowing my wife
sometimes because you get
I'll text you. She'll,
she'll be like 100.
Stop texting Aaron.
It's like 1130 at night.
But I'm just like,
always just like,
hey, I've got this idea or like,
what do you think
about these numbers
that I'm looking at?
Like it's we're just constantly
doing this.
I don't respond, that means,
dude, I'm too tired to hear
about your great idea today
at, like, check on me tomorrow.
But, yeah, I
mean, there's just I think it's
it's still kind of untapped.
And I say that a lot, right.
Like, hey, we're barely kind
of scratching the surface.
I think our whole industry has,
you know, it's been improving.
You know,
I think businesses got smarter.
I think valuation has gotten
stronger, too.
You, but, but yeah, I mean,
we'll have to think about
even some more topics
to dive into.
Maybe beyond the typical
property management
business acquisition.
I really like that idea.
The maintenance
piece is the one that's
stirring in my head right now
quite a bit.
And, the cleaning companies,
which,
a lot of our short term
rental offices, we've done
a couple of them already,
but that's one underserved.
So, yeah, for another,
for another episode, for sure.
Hey, thanks for joining us.
Hope this was helpful again.
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