Manage to Exit

What does it actually take to buy or sell a property management business ? And what are the questions the PMI acquisition team gets asked every single week? After 450+ closed transactions, Aaron McElhiney and Hunter Goodall have heard them all.

In Episode 5 of Manage to Exit, Aaron and Hunter go hosts-only for the first time and answer the 12 most common questions they receive about buying and selling property management businesses. No guest, no script, just the team that facilitates more PM acquisitions than any other group in the country giving direct answers.

They cover what a PM business is actually worth and why cash flow — not doors and not revenue — is the number that matters, how to increase your valuation before selling (including the two-week vacation stress test), how long the process realistically takes from first conversation to close, why confidentiality protects both sides and when to finally tell your team, whether you need a broker and when to skip the 10–12% fee, the three buyer profiles and which one gives you the best price and the smoothest transition, how to structure seller financing the right way, why buying beats building from scratch, how to find deals without a listing app or a broker, and how SBA financing works for your first acquisition.

If you have ever had a question about buying or selling a property management business — and wondered who to ask — this is the episode.


Chapters:

00:00:00 — Cold open: don't buy a business alone — stakes, risk, and the expert case
00:00:35 — Introducing the hosts and the Q&A format
00:00:52 — Q1: What is a property management business actually worth?
00:06:15 — Q2: How do you increase your valuation before selling?
00:11:22 — Q3: How long does it take to prepare and close a deal?
00:13:00 — Q4: Should I keep the sale confidential — and for how long?
00:18:27 — Q5: Do I need a business broker to sell?
00:23:37 — Q6: Who are the right buyers for a property management business?
00:29:55 — Q7: How do I structure the deal — and what does seller financing look like?
00:43:00 — Q8: Buy vs. build — which is the smarter path into PM?
00:47:15 — Q9: How do I find the right business to buy (and what are the red flags)?
00:55:07 — Q10: How do you finance a PM acquisition?
01:01:13 — Q11: Should your first deal be in your own backyard?
01:03:39 — Q12: Franchise vs. independent — what is the real advantage?
01:09:06 — Closing: the single biggest mistake to avoid

Ready to know what your business is worth?
Book a free, confidential valuation call with Hunter ➔
No broker fees. NDA-protected. Only you, Aaron, and Hunter until you decide to move forward.

What is Manage to Exit?

Manage to Exit is a PMI Acquisitions Team podcast sharing practical playbooks for buying, building, and preparing your property management businesses for successful exits.

You know,
finding the right businesses.

It's not about public listings,
like we said.

there for people that don't know

what type of business
they want to buy,

you already know
what type of business

you're looking to buy, right?

You're looking for a property
management company,

You might know how to run
a property management business,

but if you've never bought
a business,

This is a big investment.

you might be taking out

a loan, personally guaranteeing
a few million dollars.

And if you fail,
you lose your house.

you aren't the expert at it,
don't try to do it by yourself.

Hey, welcome, everyone,
to the Managed Exit podcast.

You got myself, Aaron

Mcelhenny, and we've got Hunter
Goodall here today.

And we are going to go over the
top questions that you all have

about property management
business acquisitions.

So let's get after it.

All right, let's go.

Okay. What is a business worth?

It really is going to boil down
to cash flow, right.

Even our cash flow or SD,
whatever that is depending

on the business.

We need to figure out what that

business is making per year
for the owner of that business.

And it is going to be
some multiple of

of that cash flow number,
that EBITDA number,

that seller's discretionary
earnings number, SD.

Every business
is a little bit different.

So we like to dive
in, understand

what it's making per year,
and then also compare it

to closed transactions
that we have done.

We've done over
450 transactions.

So we have a

a really good indication of what
the value of your business is,

what multiple

you should be earning for the,
the sale of your business.

Yeah,
I think that's that's mostly it.

You know,

people don't don't confuse the
idea of a multiple on revenue,

right? The banks aren't
going to consider that.

It's it's multiple of cash flow

because the cash flow
is the ability to pay the note.

Right.

So yeah, whatever that cash

flow number is,
that's the starting point

for how you figure out
what that business is worth.

This is a great question.

And I think people ask this one
all the time.

Someone just called me yesterday
asking like, hey,

what a property manager.
What's the multiple

for a property
management business? And,

it's it's funny, everybody in

property management always
wants to jump to the door count.

Is it is it a price per door?

Is it a multiple on the doors?

It's like no, that's just that's
just one of the variables

that go into the multiple.

But the standard multiple
it could range.

You know three x
is usually a good benchmark.

But that's not the
you know, the go to number.

It's like what you said
just a second ago.

You got to figure out what
that cash flow number is.

But there's a lot of variables
that go into it.

Beyond that, the cash
flow number

just kind of like paints
the picture

for what
that operation looks like.

But then you got to
look at all these variables

and including your own
the buyers risk portfolio.

Like what are they willing to
put into that.

And that's why
it could be anywhere.

Usually we're seeing anywhere
from 2 to 3 and a half times

cash flow on these property
management businesses.

That's a big range.

But it's because there's
a lot of variables

that go into it beyond just
the financials of the business.

Sure.

So that's why,
I mean, going into a valuation,

you know, you're that person
conducting the valuation, like,

something our team would do.

They really need

to have a good understanding
of the quality of the portfolio,

that of the business, that
of the employees that are there.

The owners, you know, role

in the business, how much time
they're spending in it.

All of those are going to impact
the the multiple.

So, yeah, every deal

like I mentioned before
is a little bit different.

And that's why it's critical,
when going through a valuation,

not just to go

and do a quick Google on, hey,
what is a business worth and,

and use some number
that could have been pulled

from another industry, another
business size or business class.

You know, more recently
someone was mentioning A5X

multiple

that they had seen

on another business
that was in another industry

that was in a

completely different ballpark
as far as revenue goes to.

So you need to compare your
business to other businesses

that are of your size and,
you know,

obviously

diving into it with the team
that has a database not just of

closed transactions,
but even, market specific data.

Right?

The multiple may vary by market,
right?

Top tier markets
with great rents versus low,

you know, sub tier type markets.

There's a lot of variable
in there.

Like I mentioned, the quality
of the portfolio, the location

of the business, the org chart,
the the team that's in place.

All of these things
will absolutely impact value.

And those multiples being used.

we have a, a model that we've
built a valuation to own.

And it's.

PMI acquisitions.com
is where you can go in and

and you know
fill in some data from your own.

You know panels
your own revenues

and cash flows on your business
for the last three years.

That is really meant to give
a good starting point, right?

Aaron just went through
a lot of different variables,

a lot of things that we look at.

But the financials, we always
start with the financials

to get that starting point.

Like I said earlier, that

that financial
the financials of the business

just paint the picture of how
strong of an operation there is.

Right. That gives us
our starting point.

Then we can jump into all these

other variables
the transferability,

the infrastructure risks,
can they be mitigated?

The market competition,
all these factors

that go into that multiple.

But, we start
with the financials to

to tell the story of how
strong of an operation this is.

And then let's go from there
to figure out

what kind of multiple
do we feel comfortable with.

So that's why

there's a range
on these multiples.

And some buyers
might be comfortable

with the higher multiple.

Some might be hey they can only
have a lower multiple.

But yeah, the use that that
website PMI acquisitions.com.

And you can

you can check out the

free valuation tool
to get that starting point of,

hey based on the financials
it should be in this range.

Let's dive in deeper right.

there's a few different things
that I think you should really

look at, to increase the value.

We had a call with someone,
and one of the Carolinas

today who's looking at exiting
the next two years or so.

They went through evaluation,
didn't get a number

that they wanted,

and now have a bigger target
to say, hey, I want to aim for,

you know, this, this new target,
this bigger exit.

And, you know, ultimately,
it resulted in him,

you know, figuring out that,
hey, he's going to have to,

know, grow this business.

He's going to have to continue

to remove himself
personally from the operation.

That's a big piece,

that we work
with a lot of sellers on where

they're an owner operator,

and much of the business relies
on their involvement,

and they're working
full time, full time, plus.

And, so I would suggest that
remove yourself,

you know, from the operations

as much as you can get the right
team, the right systems,

the right vendors, the right
partners, and say in the

in the business
to help kind of minimize,

you know, your involvement

so that ultimately
that's going to help transition

you out of the business sooner.

Right?

It's still increasing,
the value of your business.

And, and now multiple

because you are, you know,
taking maybe a semi absentee

type element to the business.

But there's a lot of things

we could talk about
as far as increasing the value.

Maybe
you have a couple ideas. Hunter.

I have some thoughts. Yeah.

So step one I would say clean up
the financials.

Messy, unorganized

financials are a clear
indication

of how the rest of
the operation is run.

And if the business is littered
with personal expenses.

And we got to go
and do a bunch of add backs

as we're
making adjustments on this,

that's not as clean
as we would like to see.

We get excited when it's like

there are minimal add backs,
adjustments that need to be made

to this business, right?

You know, the quick
get the boat off the books,

all your personal expenses,
get them off right.

Because then you have cleaner
financials

and that paints a good picture
for the rest of the operation.

It it really makes the business
stand out of like,

oh look, this is a clean,
organized operation.

But to Aaron's point,
get yourself out.

Like go
take a two week vacation.

And if you can't do that,
why like put some standard

operating procedures in place,
document everything

and then go take two weeks off.

If you can't do that,

your business is not going
to have as high of a multiple.

We just did a deal
where the owners frequently like

six times a year, take 2 or 3
week vacations with no internet.

That's a business
that we can get excited about

because the business
is not dependent on the owner.

It still runs at full capacity.

When the owner was was gone
right.

So that's a good stress test of
can you leave?

Can you take two weeks off?

And will this business
still keep going without you?

That's
how you can increase the value.

If you can't,

then do an assessment
to figure out why

you can't take two weeks off.
Right.

And I think the first step to
that is documenting

all the standard operating
procedures of every role

and seeing where the gaps are

and, how you can fire yourself
as much as possible.

It's counterintuitive
because it's going to cost

you more and payroll
to fire yourself and hire

somebody to take over
different responsibilities.

But overall, that makes
your business more valuable.

That gives your business
a higher multiple

when you want to,
when you want to exit.

I love that idea of the
the stress test.

It's definitely going to help
identify some of those pieces.

Ultimately, it's giving up,

you know, some responsibilities
to the other people

or like I mentioned,
team members or other.

But ultimately
that's going to happen

when you sell this business.

And if you can kind of
put that pressure on it now and

kind of, build

more of a reliance on the team
than yourself,

it's only going to help you
more, too.

So not only will it
increase the value,

but it's going to help
with the transition

of the business post
close as well.

So buyers will see that
and see the value in that too.

So. I'll give you an example
of two similar deals

that that we're looking at
right now.

One, that their cash flows
are pretty close to the same,

but one of them was because
the owner does everything.

They have really high margins
because the owner is doing

everything is in the weeds
versus

another one
where the business hires.

They have a lot of people there,

but their cash flow
is about the same.

But one of these
has a much higher multiple,

and they're selling
for about double

what the other one
is selling for.

And it's because, you know,
they invested

and putting people in place
to do a lot of the tasks.

It's not as dependent
on the owner

less risk, right, versus
the one that is dependent

on that owner.

And that owner is doing
everything.

It's higher risk.

What happens when that owner is

gone is are they
the special sauce?

There's so much uncertainty
because that owner

can't even take a vacation,
can't even step away for a week,

you know.

So it's like it's like, yeah,

this business is is the cash
flow is about the same.

They're not taking home

as much as they could
if they were doing more,

but they're exiting for way
higher

because they've built up
the infrastructure around them.

you know, if you've got clean
financials and,

you know,
I've done some prep to,

to, you know,
have the disclosures ready.

I think, you know, a
3 to 6 month window is fair.

That's going to allow
for any kind of bank

financing
that might be required.

You know, ideally, you're

not immediately rushed
and have to sell tomorrow.

It's like, hey,
you've got some time to prep,

and I think we'll have.

So another question upcoming
about finding the right buyer.

This will definitely
lead into that.

But let's say
you found the right buyer

and they're qualified to buy a
3 to 6 month window

is pretty fair.

Yeah, I'd say just
what we talked about earlier is,

clean up your financials,
get them organized,

get the boat off the books,
get all

of your personal expenses
out of there.

Stop. Plan.

Like, if you're looking to sell,

you want two,
maybe three years of runway.

Get the boat off the books,
sell it, like, pay the taxes.

You know, like you're not trying
to reduce your taxable income

when you're trying
to sell your business.

Yeah, let me rephrase that.

You're not trying to
to minimize taxes.

Just suck it up
and pay the taxes

when you're when you're trying

to get your business ready
to sell like

you want it

to at least a two year runway
of having clean financials,

showing a net income,

because that will make
your business a lot cleaner.

You'll have a couple years

of history of showing clean
financials and profitability.

So that would be step one.

Step two would be take
a two week vacation.

And if you can't document
your SOPs and figure out

who needs to be doing what

so that you can take a two week
vacation.

Oh yeah.

I mean, this is, a big
a big point to hit on here.

I mean, we do have,
nondisclosure agreements

in place between buyers
and sellers at all points.

Even if our team's going

through valuation,
we still have an NDA in place.

But confidentiality
is everything.

The last thing
we really want to happen through

the process is for our team,
or for clients to figure out

what might be happening here
in the background.

Especially when it's just going

through a discovery type
period. Right?

It may not even be, you know,
this is all the work

before an ela y or, or initial
letter of intent is even signed.

This is just initial diligence

where confidentiality
must be upheld.

It's it's critical.
It also goes both ways.

Right?

A lot of sellers think, hey,

well this buyer is going

to be learning
a lot about my business.

Well hey you're going to be
learning

a lot about the buyers
business to you.

And that indeed
is there for a reason.

And it's it's critical.

It's strict, strict
for a reason.

And and it really is
kind of the, the,

the backbone of trust
between buyer and seller.

Both of them have the intent
to do a deal together.

And, you know, find the win win.

But but yeah, confidentiality
is everything.

Protect your clients, protect
your team.

Do everything you can do
to make sure that your

I mean, you must maintain
that confidentiality.

So absolutely critical.

But like you said, it's
also on both sides of the table.

Like sellers are always worried
that the buyer

is going to slip up
and say something.

The buyer is just as motivated
to keep that confidentiality.

They do not want the employees
finding out too soon that

they're talking about possibly
doing this acquisition, because

then all of a sudden you got

the buyer has to worry about,
well, it's the team.

They're all freaking out
thinking that this

business might be sold.

They're going to go job
hunt like nobody wants that.

So it's,

you know, it's
mutually beneficial

on both sides of the table
that buyer and seller maintain

that strict confidentiality
and keep it that way

as long as possible.

Oh, my gosh, that is loaded
right there.

I mean, you know,
I would say the typical process

there is, you know,
there may be some key

individuals on a team
that could be part of it,

but ideally not until I purchase
agreement is signed.

That's not to say
that money is transferred

in changed hands yet,
but we need to have

a solid agreement in place
before

any kind of disclosures are made

to, team
members on either side.

And clients.

It's usually not until closing
that that,

that kind of open openness
is there for team

members and clients, but,

but yeah, I mean, Hunter,
you and I have dealt with this

quite a lot. And, you know,

I'm sure you have some opinions
on this too.

I think yeah.
You don't want the employees.

Neither party want the employees
finding out too soon.

When they find out too soon,
they start to panic.

They start to search
for other jobs,

and next thing you know,
they all quit, right?

When closing happens.

And there goes a lot of the
value of the business, right?

So usually we say, hey,

Mike, the last week before
closing, maybe two weeks before

closing, that's when the buyer
should be introduced.

The seller should introduce
the buyer to the team.

definitely not before that,
except when there are critical

key people that the seller is
confident are crucial

and will likely stay for the new
the new buyer.

We have done that in a
in a few scenarios

where, you know,

the buyer comes in
and it's like,

hey, out of these 15 employees,

you should probably be talking
with these two

because
they're going to be critical.

So let's let's start
those conversations early.

And that way
they don't feel blindsided.

They feel like excited that
they're part of the process.

Like don't
let any of the other staff know,

but you two are in on this.

But it's because we got to
we got to strategize.

We got to interview them
and talk through,

you know, how
this is going to be

and how they should

how we should handle
this operation moving forward.

So I say

hold off on on

introducing team and clients
as long as possible.

But with that, I mean,
there are some deals where

a lot of the contracts

they're they're not assignable
without prior written consent.

So it's like you probably
you have to put a rush order

in like that.

Last week before
closing of getting new contracts

signed by the, the client
saying, hey, by the way,

we've got this new buyer,

they're taking

over these contracts
next week, and,

we need you to sign
this consent.

You know, there's

there's language around it
of getting that consent, but,

yeah, you want to hold off
as long as possible

before letting others in on the,
transaction.

Yeah.

Just another quick
comment on that.

I mean, it's it's

really something that needs
to be agreed to by both parties.

I've seen it where a seller,

you know, at their discretion,
decided to inform team members,

and it negatively impacted
the deal.

They notified them too early.

It wasn't the buyers.

it wasn't to their advantage.

It wasn't their idea at all
to, to do that.

So I would just say any decision
around client and employee,

communications,
whether that's before clothes

or post clothes,
all of that communication

needs to be agreed to.

but by both sides. Right.
You'll know.

The seller will know
which clients

are going to need
extra attention,

which employees may need extra
attention.

but yeah, I would say typical
process is not, you know,

no communication of the,
of the sale until post clause.

We talked about business brokers

all the time, and I'm
not going to be negative.

When I talk

about business brokers,

because I think there are a lot
of good

business brokers out there.

I would just say

it really depends
on the seller's position.

Right.

Are they heavy
into their network?

Do they already know
other potential buyers?

Can they already provide
clean financials

or in just in my experience,
a lot of business brokers,

you know, that I've worked with
have guided sellers

through valuation through,
you know, preparing

their business to sell.

And they're going to take ten,
12% sometimes more.

And so, I mean,
I think to a sellers advantage,

there are so many resources
that are available to them now,

including free resources,
not just our team,

but there's others too, that
they can get valuation from.

And I don't think you need
a business broker

to sell your business.

In today's day
and age, just do it.

In our space, I see 98% of them
transact without a broker, and

I see all of them getting fair
value on their business.

And that might

just be my opinion.
I think they can be used.

I think there's a space
for them.

Someone that doesn't want to,

you know, facilitate, a seller

that doesn't want to talk to 10
or 20 different buyers

and just wants a broker
to do that.

And if they're willing
to pay the 10 to 12%, go for it.

But I don't think it's
necessary in our space.

I'm a little torn on this.

Depending on which which route,

which seat I'm sitting in,
if I'm.

If I'm selling a business, my
my thoughts are

stay in your lane.

Unless you're an expert at it
staying online.

Because don't try to Google

what your business is worth and
and then try to sell it

off of that right.

So either
you could either talk to brokers

or get a valuation

I think I think the brokers
could really do a lot to help

sell that business.

They could probably do a better
job of selling your business.

And then you could in most cases
because this

this is what they do website.

On the buy side,

I prefer not buying businesses
through brokers

because I know what to

we know what to target

so we can just go straight
to him and bypass that.

Kind of the benefit
of working with PMI if

if you sell a business to PMI,
we waive that fee.

You know, we're not going to
charge a 1,012% transaction fee,

but you're still going
to get the same deal

that you would have
if you had a broker involved.

So that's kind of the benefit of
of selling to one of our PMI

franchises is,
you can save on that 10 or 12%,

but if you're not selling
to one of our PMI franchises,

don't know, do
you know how to sell a business?

Like if you do, great,
go for it.

If you can get get experts
to help you like

I think I don't know, I'm
I'm torn.

Aaron's looking at me like,
how dare you No, I.

I'm thinking if

if you're not the expert
at selling a business, hire

an expert to help you
sell your business.

Know you actually made me
think more about it, too,

because I was thinking
about someone

that, you know,
maybe they've gone

through an acquisition

themselves like this person
I spoke to earlier today

who has actually done
two acquisitions themselves.

And so I guess
the experience of the seller

is the big factor here, right?

Are they familiar
with the transaction process?

Do they understand
business valuation.

And I see
why the resource is there.

And like I said,
if that's something that

someone wants to hand off
to a professional, I totally

I totally understand it.

But I do think that there's
a lot of property management

specific business owners
that are very involved,

not just in, you know, industry
networks, but they have access

to a lot of different valuation
tools, and resources there.

So I think you could do it
yourself

if you're confident
in your ability

to do that and you're up on,

you know,

if you're paying attention
to the resources

that are out there
providing this, great.

But, but I'll tell you,
you do like it,

could definitely simplify
the process.

You can still earn
a great dollar

by selling it yourself.

There's plenty of guidance
around this.

I also kind of say
there's probably a, like,

level of sophistication
of the business, too.

I'd say a lot of the deals

that we look at
that are kind of sub $3 million,

you know, you know,
I could imagine

someone looking at that
5 to 10 mil or plus space.

There's there's some

added sophistication to that,
that not just a business broker,

but you're turning

your CPA are all going to be
working together in that way.

So, probably depends

on the sophistication
of the business

that the seller is working with.

And,

and yeah, I wouldn't force feed

a business broker in there,
but I think, I think if you're

if you're capable
and you're confident enough,

then you can find a way
to sell your business

and forget all about that
10 to 12%, broker fee Yeah.

So there's a few different
buyer profiles

if you think about it.

Everybody dreams of selling
to institutional buyers,

private equity companies.

You got to have a really strong
business for private equity

to be interested. Right.

I read a book called
Maximize Your Multiple

and in that they were like,

yeah, the reality
is, institutional money

doesn't care until there's 10
million in revenue, right?

So and in that case,
get a broker.

So the private equity buyers,

they pay big

money, but it's hard to hit.

It's hard
to get their attention. Right.

And you have to have a really
strong operation for them.

The next is on the low end.

You've got the entrepreneurs.

You know, there's right now
there's a lot of kids

coming out of college
who want to buy businesses.

There's a lot of,

push on social media for,

you know, executives
at their companies.

Leave your job,
go buy a business.

But they have no experience
buying a business.

They don't have an operation

that they can fold this into
and get some synergies from.

So they're going to be limited
on what they can offer.

So they're going to be on the
lower end of, of that valuation.

And then the middle ground is
sell to one of your competitors.

Right. Sell.

If you've got a property
management business,

you're like,
I don't know who to sell to talk

to the other property management
companies in your market

because
they can give you probably

they can give you a better price
than the entrepreneur

through acquisition people.

And they're going to do

a really good job

of taking care of that operation
as opposed to, you know,

kind of a property or private
equity model is typically buy

a business and slash
as much cost as possible.

A lot of times
that includes headcount, right.

But your
your competitor down the street,

they typically want to buy
the business for the contracts

and the people like they
they want that business

and they can

blend that in and be like, hey,

I don't need two leases,
I don't need two

marketing budgets,
but I do need your payroll.

I need all your people there.

So it's it's ideally
that's your best strategic

buyer is somebody who's already
operating in that space

and could just absorb
your business.

They're going to be able
to give you the best price,

and it's going to be the best,
smoothest transition.

Yeah, I'd
say a lot of the times,

you know, sellers are aware

of who the really good
operators are in their market.

These may be personal contacts
that they already have.

They might be groups

that are down the street
that they've never talked to.

Case in point, the deal
we just closed two weeks ago.

Large transaction, over 700
doors, multimillion

dollar business.

Their offices

were like a seven minute ride,
car ride from each other.

They did not know each other
existed.

They probably driven past
each other.

They probably go
to the same Starbucks.

There are great operators around
you that are potential buyers.

And, so if you're not involved
in your network already

and kind of prepping like, hey,
who are the buyers

that I need to be talking with,

maybe building relationships
with before they even,

you know, formally, you know,
offer their business to someone?

This is all part of this,

you know, idea
that you can prepare to exit.

You don't need,
you know, potentially

you don't need a business broker

to help funnel those buyer
leads to you right there.

Those buyer candidates are out
there.

They're probably already
in your network.

And if not, they're ones
that you can start having,

you know, a relationship
with now.

And essentially filtering
through. Right.

There might be 3
or 4 different groups

that could be buyers,

and you could get to know
each one of them

and figure out who is the best,
the best buyer candidate

that you want to work with.

Now let's let's throw another

plug in there real quick
for for working with PMI.

Not only will we waive
any kind of broker fee

and we'll we're a free resource
for our franchisees.

If you work through us
we can identify hey the

we have like three really good
operators in this area

who already know
property management.

You're not going to have
to hold their hand

and train them on how to run
a property management company.

We've already identified
these ones would be great fits,

but I'm going to let
you guys meet each one of them

and determine

who do you feel best
about selling your business to.

So it's it's
kind of a, a great situation.

We've got franchise partners
all across the country.

So, know, it's

it's rare
that we come across a business

that we're like,
oh, I don't have a Yeah.

Yeah.

It's just kind of interesting
timing

to like, know, more recently,
there was opportunity,

I'll just say,

on the Pacific coast,
without giving it away, but,

but, yeah, we had three buyers
for the one seller

and the seller at their

at their option, they decided
to interview all three of them,

and there were two that
kind of stood out initially.

And then,

you know, they went through
a financing element and one,

you know, was a clear stand out.

And so they selected,
you know, that that buyer.

But, there

definitely was kind
of a courting period between it.

Right. It's not to say,

hey, this person is qualified
to purchase it.

It's hey,
is that a good fit? Right.

Is this buyer,
you know, a cultural fit

for the team
that I have in place?

Like,
we can definitely shortcut that.

You know, we've got obviously
a network of buyers

and we can align with the right
buyer for the business.

And it's sometimes more than
just is it the right market?

It's hey, is that a good fit

for the buyer and
seller or is it a win win?

But yeah, like
I said, it doesn't have to be

a rush process.

Finding the right
buyer is critical.

You know, start on that now.

Right?

Even if you're going to exit
in two years,

you really should start
whittling that down.

If you're trying to, you know,

get the most value
for your business.

That means selling it
to the right buyer

who sees the vision
for it, understands the,

the the upside for them
long term.

And, like I said,
it's it's a process

that doesn't need to happen
overnight.

You can build relationships

with the right buyer candidates
and, and get a fair dollar

at the end of the day.

model is, is we like to
you know,

part of our discovery
is we'll have a conversation

with the seller and be like,
and what are your motivations?

What are the things that
you care about? What's next?

And it's not like
we're doing this to try to like

get some negotiation edge
or something like that.

It's we want to know what's
what's your next thing.

How can we factor that into
how we structure our offer?

Because like,
we want to build the offer

around

both sides of the table of like,
hey, what's

what's really going
to make this awesome

for you as well as for us?

And so we our motto is

we give an A, B option, option
A, hey, we're going to come in.

Here's the full cash at close
option And option B is well,

rather than paying the bank,
we'd love to pay you

if you if you want to be the
bank, here's a different option.

And here's how
we can structure it around,

you know, your goals and your

your objectives
of what you want to do next

and how we can factor that in to
make sure that this, you know,

is really sweet.

If you will finance this for us,

we can sweeten the deal
even more so rather than than,

you know, going through the SBA
process and, and,

you know, cost of capital.

And it's like

if you work with us,
if you if you have finances,

we can find creative ways
to make it even sweeter for you.

Yeah.

I would just say
I mean, for the,

the seller to be upfront
about what commitments

they need, right?

They may have a new project
they're getting into.

They might have some commitments
to the family.

Right. Like I've
this is an early reference.

But there was someone

that,

was exiting their business

and they had

promised their spouse

they were going to pay off
a property and also,

buy a boat.

So kind of a funny thing,
but they had some, some minimums

that they needed cash
it closed for,

and they were open about that.

And we were able to get them to
that target.

I would also just say
sometimes they have an exit goal

that, is maybe larger
than the true business value.

And so,
you know, it's interesting,

but we can get pretty creative
on how to hit those targets.

Right? Maybe there's
other metrics we can include.

Maybe there's some targets
we can set for the business,

other growth, you know,
kind of rewards or bonuses.

You know, sometimes let's say
you're halfway through a year

and they project the year
end out to be a certain dollar.

And so if we hit that
dollar in year one,

you know,
another amount could be due.

So I mean,

we like to work backwards
from your, from the goal.

Right.

If they've got a goal of X
the seller has a goal of X.

We try to figure out
a way to hit it.

And if we can't, we'll be super
upfront on Y. And

you know, any other constraints
around bank financing?

The one comment

I'll leave in to that is,
you know, in this scenario that

the bank doesn't get excited
about

lending on the deal
based on the the seller's needs.

Right.

Let's say it's
$1 million business and the bank

says, hey, it's we won't fund
anything over 700 on it.

That's their opportunity
to to sell or finance the deal.

You know,

our buyer is either going
to pay the bank interest

or the seller,
and we'll be super upfront

and transparent,
you know, about that process.

So like I said it for us,
we want them to get a win.

Right.

The seller deserves a solid win.

You know, they worked
hard for their business.

They should get paid for it.

But the cash flow scenario
is typically based

on what
the bank's going to finance.

And if they're not willing to

finance it at that seller's
needs, then, hey,

let that be the seller's
opportunity

to make more than what
the bank would earn on it.

Right? So, you remember I want
to do that. We worked out where,

I think it was out here
in Arizona where the seller,

we were like, hey,
you're selling your business.

You're still pretty young. Like,
what's next?

And they're like,
oh, I've got this idea

for this e-commerce business
that I want to do.

And I was like, great,

talk to us about what
your cost of living looks like

and what kind of seed capital
you need.

And we tried structuring and,
seller

note on this around like here's
some some money down.

Plus we're going to cover
your living expenses

while you get your e-commerce

business ramping for the next,
you know, how many years.

And so we were really building
our offer around like sweet.

We would love to support you
in your your next venture.

And here's how we think
this will help lift

some of that burden
off your plate.

At the end of the day,
they're like, oh,

I'll just take the cash offer.

But at least it's like

we're very collaborative
in that process.

But a caveat here, if you're
trying to sell your business,

I think the best scenario
for doing seller financing is if

you're selling to somebody
who's already

operating a property management,

it takes a lot of trust
to do an acquisition.

Like both parties
really have to trust each other.

But if you're going to sell
a finance that,

that means the seller is sharing

in the risk of this,
this transaction here. Right.

And that's also part of why
the buyer is like,

yeah, I'll pay more

if you're sharing in the risk,

because now
we're both incentivized

to make sure
that this is a success.

But if, the buyer already knows

how to operate
a property management business,

it's a little bit
less risky for the seller

because they already know
what they're doing.

They've been doing this
for years.

They're already successful
at it.

Chances of them tanking

this business are a lot lower
than somebody

who's never run a property
management business, right?

So if you're going to sell
a finance,

you should probably be seller
financing.

Somebody who already knows
how to operate this business.

Totally.
I couldn't agree more. Yeah.

I mean, seller financing it
for someone that's in the space,

that's proven in the model
like that.

That makes a lot of sense to me.

And I would say even if we
reference the data behind our

our seller financed deals,

you know, I'd say

the majority of those are going
towards an experienced buyer,

an experienced operator
in the industry and,

you know, seller financing
on, you know, a deal

that's smaller, let's say
the buyer's business is larger

than the,
the, the seller's business.

Right?

They've got a proven,

you know, operation in that,
in that market.

So so yeah, that's a big trust
builder piece.

And I would say
finding the right buyer

kind of leads into that too.

Right.

It's someone that
that you'd be confident enough

in to potentially sell
or finance.

Even if that's not the
ending terms of your deal.

Yeah, it's an opportunity.

And there's there's definitely
some risk on both sides of that.

And it's good just to know
what your options are.

So looking at kind of like an A
and B structure

like Hunter mentioned
like see what the difference is.

See what all cash it closes.

Consider kind of the tax
implications of that too.

We've worked with some sellers
even one right now

that says hey
I cannot close on this in 25.

I've got to wait till at least,

January to to close on this
just for tax purposes.

And so, you know, it's
that diligence process is,

is critical.

Understand
the tax implications of a sale.

And you may want to structure
a seller finance option,

you know, to your own advantage,
not just for a higher

multiple, but,
for other tax purposes, too.

All depends on really
the sellers involved

in, in the business.

And, you know, I would say

the size of the business
to you, right?

The obligations that

they have to help transition
this business to the buyer.

You know, I would say typically
that could be anywhere from,

you know, 2 to 6 months,

you know, the sweet spot
in there's

probably around three month
window to help with transition.

You know,

if the seller is fairly removed
from their business already,

you know, that transition period
might be smaller.

But for an owner operator
that is, you know, deep

in the operation
of their business,

you know,
they really need to think

about that three month window.

That doesn't mean

three months of full time,
you know, clocking in every day.

It's really more of, hey,
the first

month, full time in person
and maybe the the following

two months could be available
by email or phone call.

I'd say that's pretty common
with,

with the deals that we've done.

I'd say it also comes back
to those three

different buyer profiles, right.

Like if you're selling
to an entrepreneur

who is has not operated

this kind of business
before, well,

they're going to need
a lot of hand-holding.

They're probably going to need
six months, maybe more.

Right.

If you're selling to one of your

your competitors
down the street, somebody

who already knows how to operate
a property management,

a lot less hand-holding.

It's more so all they need you
to do is hand off relationships.

So it's like we typically do
like three months at the most,

but it's really taper.

It's like, hey,
for the first few weeks,

yeah, you're going to sit down
with us full time.

But that's

because you're going to show us
how you've been operating

compared
to how I've been operating.

And then it's really just
hanging off the relationship.

So it's it's really tapered,
you know.

But if you're selling
to a private equity group,

remember they they typically
if you can get their attention

and they want to buy
your business,

they can typically offer
a much higher price tag.

But a lot of times that comes

with strings
attached in the form of

but you're going
to keep working here

as an employee of the business
that you created

for the next two, three,
five years.

Right?

So it it all depends on who
that buyer profile is.

And so, that time frame of what
you should expect for

transition depends
on who you're selling to.

Yeah, that's a great point.

I think we saw, some feedback
from a seller the other day,

and they had received some offer
from someone else

that was slightly higher
than the valuation that we had

put on it.

And, you know,
I think behind all of that,

a buyer that's willing to pay
that for that business

probably is going to keep

that seller in it for at least
a year, like Hunter mentioned.

And a lot of those payouts,
when they get into those higher

multiples, there's
definitely more of a post close

revenue kind of contingency
or performance metric that's

tied to that compensation.

So it might be $1 million payout
when it's all said and done.

If this revenue
target is on trend,

if the percentage points up
every month, if that target

has been hit annually,
there's other language there.

So it really does depend.

But, you know, if a seller

is willing to stay in
their business for a year or two

with another owner in place,

the feedback

I've usually received is,
why wouldn't I just stay

and own it for another two years
and grow it?

So, so yeah, there's a lot
to consider there for sure.

But you know, like I said,
you know, a three

month is probably the maximum
that I would typically suggest.

Anything beyond that,
you know, it's pretty rare

just within the transactions
that, that our team sees.

You know, I think there's
got to be a plan in place

for your team and clients
well, before closing.

And so when we go through our
extensively long due diligence

checklist that Hunter has,
been the mastermind behind,

there is a piece in there
that's going to relate to this.

And so, when it comes to.

Clients and, you know,
employees typically are buyers.

And when we're looking at it,
we need the team, right?

Like, we want good team members
that are in place.

You know, we want quality
clients that are great to work

with.

Our goal isn't to ever,
you know, for our buyers,

we don't want them to stir up
any dust.

We just want to make sure
that they're

continuing
a very high level of service

that they've been receiving
from the seller.

And, you know,
we kind of have an internal,

you know, question around this.

It's like, hey,
if we're going to get into this,

Joe, we need to be confident

that we can provide
equal or better service

and, you know, so
client and employee

retention,
is everything for us.

Sometimes the seller might
give us an indication that, hey,

there's a team member that's
not a good fit for the business.

Now, they might choose to make
a change before they even close.

But but ultimately, we love
the team that's in place.

We want them to
just keep doing their job.

We want to make sure
the clients are taken care of

and that no one's
really noticing a huge shift.

You know,
we're going to continue

that high level service.

And, you know,
I'd say it's a rare transaction

for us that we we don't have
the team coming over.

We typically
always want the team.

So we lean pretty heavily
into that.

Even in valuation
when we walk through,

the sellers org chart and,
you know, identifying,

you know,
maybe there's some areas

we need to add team members
to versus actually

remove or replace. Right. So.

I mean, we deal
with really both sides of that

within our network.

You know, so, you know, I think
my own bias would suggest that.

Okay, how much time do you have?

Right.

Like, in my opinion, I don't
I wouldn't want to spend three,

five plus years building
something purely organically.

I think there's a healthy blend

of acquisition that stimulates
organic growth.

So when a lot of people
talk to me,

they always assume
that I'm only talking

about acquisition growth.

But I realize
that my organic growth

is actually really heavily
based on my acquisition growth.

Can I get into a business
within the next 12 months

and help stimulate
organic growth,

you know, through acquisition?

I think so,

and that's
what I've seen proved out,

you know, over the years
that I've been doing this.

But, I think you can do both.

It really
depends on the operator.

You know, we've got some people
that just come in

and they want to have a very,
you know, I'd say, you know,

like curated portfolio of,
of management contracts.

They're very specific
on what they take

that they, you know,
they're not concerned about,

you know, scaling as quickly
as some of us are

with acquisition.

But I'd absolutely lead
towards acquisition growth,

not just because I see it
every day, but, also

just because
I've understood the industry

and this may be true

of other small businesses,

but I think if you want to
get into the space,

you should absolutely start
with an acquisition.

That's just,
you know, my opinion.

This one's fun

because my bachelor's degree
was in entrepreneurship.

And you want to know something
that I learned 90 something

percent or 95% of businesses
of startups fail, right?

Most of them are gone
within three years.

And then the rest kind
of trickle out after five years.

But there is a theory
that I can't remember

the name of this theory.

And it goes that if a business
has been around for ten years,

if a business hits that ten year
mark, chances are

it will keep going
for another ten years, right?

So I'm definitely a big fan of,
like,

the idea of starting a business
from scratch seems risky to me.

You know, the failure rate
is just so high.

Chances like the the odds
are stacked against you.

But if you buy a business
that's already been around

for ten years, as are,
it will continue onward.

Why not start with that business
and grow from there?

Right?

So, to me, starting a business
seems much,

much riskier than buying
a business, even though it

it doesn't feel that way
when you're the one taking out

$1 million
loan to buy that business

because you're like,
man, that's a lot of debt,

but you're buying a business
that's already proven itself

and already has revenues
and cash flows coming in.

It's already got to
someone already

did the heavy lift
to get it to that point.

And my, my mindset is start
there because like,

there are some people who are
built to start a business

out of out of the clouds
and they can get it to

to this point, that's
as far as they can take it.

And there are special breed
like not a lot of people.

Everybody wants to be
an entrepreneur.

Not a lot of people
have the ability to do that.

Start with zero
and get it to here.

But a lot of people like that's
as far as they can get it.

And then there's a lot of people
that are like, well,

I could buy it from here
and take it to here, right.

And so my view is starting
a business is is a lot riskier.

And you really have to be
a special breed

to be able to start a business
and get it

to that point of sustainability.

So why not buy a business

that already made it to
that point

already has infrastructure
and systems.

Someone already did
the heavy lifting to get it

there,
start there, grow from that.

And then also, you know,
conversely, people are like,

well, I've built my business
and I got it to here,

should I buy a business

or should I put that money
into a marketing campaign?

And my mindset again is, well,
your marketing campaign

is still just a theory
that if you dump

all this money into marketing,
that it will work.

Or you could put that money
into buying another business

that is already proven
to be working.

Right.

So I'm definitely biased,
but I'm definitely

a fan of buyer business
and build from there.

Totally.

I don't know how to you and I
are absolutely aligned

on, you know, we both read,
you know, Walker Daybell's

five and build.

If anyone has them,
they should add

that to, add that to your book
list.

But, yeah, I mean,
starting with some framework.

It's not to say that
the business

you buy is absolutely perfect,
but it absolutely gives you

the framework to improve on
and build on

and opportunity
and immediate market share.

Right.

There's some markets
that I wouldn't consider

organic growth in.

First,

I know some organic growth
can be easier in some markets.

But acquisition growth

you can take advantage of that
in any market.

So I think that's
where your opportunity is.

And and that mean that maybe me
leaning more towards

my experience in the property
management industry.

But I think it's true of most,
industries too,

you know, buying first
and then building,

you know, and in my experience,
you know, has a higher

success rate.

Are we giving away
secret sauce here?

I mean, there's no secret sauce.

That's the truth.

You know,
finding the right businesses.

It's not about public listings,
like we said.

You know, public
listings are for those.

And we probably said it before
on other episodes here.

I mean, there for people
that don't know

what type of business
they want to buy,

you already know
what type of business

you're looking to buy, right?

You're looking for a property
management company,

like talking with sellers
directly,

not going through the public
listings.

That's
kind of typically channeling you

through a business broker.

Just go talk to the owner.

Talk to the business owner.

This is true of any industry.

You know, go talk to the people
around these businesses.

That's how you find them.

There's no secret sauce.

There's no, you know, magic.

You know, it's a app
that does this for you.

It's text messages, it's phone
calls, it's meeting in person.

It's having lunches,
having coffee.

It's networking.

Don't complicate it.

We see people trying to

complicated all the time, and,
we just tell them,

let's go meet in person.

That's how relationships form.

That's how you find sellers.

And, that's what

that's that's
what's been working with for us.

For you know, for years now.

It's all in person.
It's all local.

Yeah, think
think about the customer.

How the customers find them.

Okay. Go through that customer
journey.

Be be a customer. Go find.

How do you find another property
management company okay.

Well now go contact them.

Go talk to them. Right.

We always
say like people are like,

what property
management business should I,

should I buy,
how do I find them?

And we're like,
well how many other property

management cell phone numbers
do you have?

All right. You don't have any.

Well how are you going
to get something like go,

go knock on doors, go walk in
and introduce yourself

like go to networking events
because

business acquisitions
takes a ton of trust

on both sides of the table.

The best deals are going to come
from those

that you already have
relationships with.

So have it start

building a relationship
with your competitors. Go.

Go talk to the other property
management companies.

Get their

the owner cell phone number, buy

them much,
talk to them, talk shop

and eventually that's you know,
that's more than likely

where your deal is
going to come from.

Yeah, it can take time,
but I think just,

you know, I have some fair
expectations as a buyer, right?

A seller,

a potential seller
maybe isn't going

to share financials
with you at the first meeting.

Maybe they don't have
a price tag.

You know,

they've never
maybe they've never gone

through this process before.

You gotta kind of build
that relationship first.

Ultimately,
sellers are always going

to give a lot of information.

They might answer some questions

that you didn't even know
you had right?

Just like Hunter mentioned.

Talk about their business.

If you're already
in the industry. Right.

It's it's really easy

to just compare notes like, hey,
what are you going through?

Hey, are you seeing vacancies
at the certain rate right now?

Any local, you know, legislature
that's going on in the space,

like you're already
in this space.

Talk to them
about what you're going through

and what your business
looks like.

They're going to share a lot
about their business,

but don't expect to get price
tags and financials

and rent rolls and contracts
on, on the first date.

It's just not going to happen.

you know,

financials are really

just something that can be
looked at easily and upfront.

And if they're not clean,
you know, if they're not

organized,
that's an immediate red flag.

It's probably an indication
of other things in the business.

You know, just

I'm also trying to think
about the contracts, right.

You know,
we've got all their contracts.

If there's

not assignment issues,
if they have limitations as to,

you know, flat rated fees,
like a flat rate

fee business versus a
a percentage fee business.

The org chart, I mean,
I start with Google reviews.

I mean, I'm
looking at their presence.

I'm trying to understand,

you know, how
they operate in this space.

So it's not to say that
there can't be some,

some bad, reviews on there
from, from a tenant issue

that maybe that tenant
wasn't being realistic to.

But if they've got bad Google
reviews,

like, that's the one thing
I actually encourage,

you know, sellers to work on
when they're trying

to increase their value to like,
you're not soliciting

your clients
and tenants for good reviews.

So if they've got bad reviews,
that means they're

they're not proactively
going after good ones either.

So, yeah, 100.

You probably
have some other ideas too.

I know I hit a couple of them.

Yeah.

The first red flag is

is contract to sign ability
because that makes the deal

tougher, right.
That adds complexity

if the contracts
are not assignable.

When looking at financials,
property management

businesses are typically
pretty stable, right.

There should not be
a lot of volatility in these.

And so it's
if there is volatility like the

revenues are everywhere
or the revenues are declining.

Why like what
the heck is happening?

It's okay
if the cash flow is declining

because that could be explained
away with like, well,

we hired headcount
because we're growing.

Look at our revenue growth.

But if if revenue and cash flow
are declining, what the heck

are you losing contracts
also high margins, right?

When we start looking at the
like if the businesses over

35% profit margin,
that's telling me

I think the owner is doing a lot
in this business, right?

They're they're handling
a lot of the roles.

So, that's that's
another red flag.

If if the owner is doing a lot,

you know, that
that key man syndrome

that you've probably heard
people talk about.

So I think those are

the first red flags that we're
also that we're looking at.

But another one is
is client spread.

Right.

If you've got a portfolio
of 500 doors

that you're managing well, what
if one owner owns 100 of those?

Right.

That's a big
risk element of like, well,

is that owner only here
because they're golf buddies

with the
with the business owner.

Like what happens what happens
if I buy this business.

Is that how likely is that
person going to stay.

Because if they leave
that's 20% of the portfolio.

That's a huge hit.

So, that's another red flag
you want.

You want diverse clients
spread like an average of,

know, 2 or 3 properties
per owner.

You don't want, you know,

10% of the clients
to own 40% of the revenue.

No, that's a great one.

I was thinking about,

we were dealing
with the valuation on a company

that, like, was primarily
servicing one client.

I don't know if you remember
that one. Hunter.

But but, yeah,
that's a big piece, right?

There's got to be a fair
spread in there.

One other red flag that you.

And obviously when when,
when when

you are in, our diligence,
you know, looking at

trust accounts and reconcile
trust accounts

and how they're handling
maintenance,

like there's some industry
norms, right.

That should be upheld.

And we can pretty easily
tell when someone's in touch

with the industry and not,
you know,

someone that's
been managing for 20 years

and never updated, management
agreements.

So, agreements absolutely.

That assign ability
that Hunter mentioned

and I would definitely lean
into that.

That's another great thing
that sellers can work on,

improving on and modifying,
whether that's through addendum

or new agreements, if they do
have non assignable agreements,

and if they are thinking
about selling in the next 6

to 12 months,
then they should be working

right now to make sure
those agreements are assignable.

It's going to be more valuable
for them.

It's going to be a smoother
transition process.

And but yeah, that's a short
list of red flags.

there's a lot of ways to put
these deals together, right?

There's really a hundred
different ways to structure it.

You know, I think bank financing
now more than ever,

there's
been great lenders out there

that we work with
that are excited

to lend on property management
businesses.

You know, I'll, I'll name drop
Live Oak Bank in here right now.

They've got a great team,
with Jordan and Graham and,

and the others on their team
that have a property

management specific

team in house vertical within

the bank that only handles

property management,
business transactions.

So there are banks that are
excited about these deals

that, you know,
like I said, that in combination

with other purchase options,

including seller
financing, including,

you know, profit share revenue,
shares, earn outs.

There's, like I said,
a lot of ways to do it.

I think you had some good points
in there.

Live out there.
Great to work with.

They've got a team
specially dedicated to working

on property management,
acquisitions

and lending for those,

there's so many different ways
to to finance a deal.

One thing
that I'm going to point out,

like there's so many online
gurus out there, like

preaching that you can buy
a business with zero down.

And I'm like, if you can,

if you can do that, like you're
an absolute rock star.

But in my mind, the seller
deserves something at closing.

You know what I mean?

So don't go in expecting that.

You can buy a business with $0.

You could buy a business with
zero of your own dollars, right?

That doesn't mean, like,
you could go find an investor

and be like, hey,

I'm buying this business

and I need X amount
for a down payment on this,

and I'll give you some equity
for it. Right?

That's that's one way.

There's so many ways
you can get creative with it.

But I would say your

your banner
your that's a negotiation term.

Your best alternative
to a negotiated outcome.

Or a negotiated agreement
is I fall back on an SBA loan.

Right.

We can get creative
with how we want to do

any kind of seller
financing here, whether,

hey, I've got some money and
I've got this family and friends

that have some money,
and then we're going to go get,

you know, a bank loan,

a conventional loan
for like 200 grand or something.

And we're going
to put this all together.

And then the seller's
going to finance, there's like,

there's so many different ways
you can do this.

But your best alternative
to negotiate an agreement,

your fallback is an SBA loan
okay.

You can get an SBA loan and
they're going to pay for 90%.

They're going to finance
90% of this acquisition,

meaning you have to find 10%
down to put on this.

And so,

you know,

whatever kind of business
you're looking at,

if you're like, hey,
I only have ten grand

to put on a down
on a business acquisition,

you probably want to go find
some more capital,

whether that's from you
or uncle Jerry or whatever.

Like I like to tell people like,

can you put together

if you needed to,
could you put together $100,000,

whether from your own money,
I hillock or friends or family

or you have some, some investors
that you're aware of, like,

could you get 100 grand that
you could put on a down payment

for an SBA loan? Right.

Because that's your best
alternative to negotiate

an agreement is getting an SBA
loan.

They'll finance
90% of that deal.

Or can we figure out some sort

of creative financing
where the seller

is financing this deal for you?

Right. Yeah.

The only thing

I'd probably add to that

is, you know, we've worked
with some buyers on

a number of transactions,
you know,

I mean, one up to ten deals.

Another one that's done.

Three fingers crossed.

A fourth one in Colorado.

And I, you know, I would say,
you know,

getting into the space,
if it's your first deal

and a seller, maybe.

Is it as apt to finance?

Maybe you need to go SBA
for deal number one.

It's not to say
you need to go SBA for

or go with an SBA back
loan for every deal.

But if you're a new buyer
in this space,

that's really a great card
to play when a seller, you know,

is maybe trying to get some more
confidence in you as a buyer,

you know, and, wants to get
a larger check at close.

So, SBA is a good option
for the right deal.

It's also just a good, idea
to qualify

each opportunity against a bank
loan to understand,

you know, how they view
the business versus, hey,

maybe your risk tolerance is

different than the banks, and
maybe the sellers is as well,

and they're willing
to finance it.

But,

but yeah, I, I think every deal

you should look at bank
financing

and maybe it's even more
than, you know, 1 or 2 banks,

maybe it's 2 or 3 banks and,
you know, shop that around

a little bit and understand
what your options are.

And realize

you may not need
to use it on this deal,

but you might do a second
or third transaction

where those banking
relationships are going to come,

you know, into play.

to be clear,
the SBA has a cap of $5 million

so they can finance anything up
to $5 million.

And so that's why it's like
if you're buying

a small business
up to 5 million,

that's your best alternative
to a negotiated deal, right?

That there's you're bad
enough for financing.

And if you're a first time
business buyer and you're

trying to buy something above
5 million for your first deal

that maybe start with
with an SBA range deal first.

So you understand
what's going on

before you're like, hey,

I'm going to go buy
a $10 million business,

even though
I've never done this before.

All right.

So that's why it's like
the SBA is a great product,

especially for existing
operators, existing business

owners,
to go and buy other business

and expand their business
through acquisition.

Awesome, awesome tool
that you have at your disposal.

I love it.

Especially like the expansion
loan element to that is key.

So yeah, you should
definitely be talking with,

you know, a number of banks
and just educate yourself

through the process. Right.

One bank
might be a better fit for you

for one deal than another one.

So, yeah, like I said, 100, 100,
maybe a million ways

to put those deals together
for sure.

The general rule
maybe not rule, but from what

we encourage is your first deal
should be in your backyard.

Get familiar with the process.

Financing transition.

Don't buy a business
that's a five hour flight away

for your first deal.

You can do that one later,
but your first deal needs to be,

you know, I would say ideally
within a 45 minute drive,

at the most,
if it's in your backyard,

if it's down the street,
even better.

Yeah. 45 minute drive.

That's
we tell people all the time,

if you can't drive there
in 45 minutes

for your first one,
it's too far.

The reason being like,
let's let's be real and honest.

Business acquisitions.

It's a great investment
asset class, but it doesn't.

It's not risk free like there
are definitely a lot of risks.

And I'll say
every business acquisition

will come with fires.

Something will come up.

You will have to put on your
volunteer firefighter helmet

and just get to it. Right.

And so if if that business,
if you if you live in Colorado

and you're buying
a business in Florida,

like man,
if something happens, an issue

comes up,
a fire arises in that business,

what are you going to do
about it? Right?

You just you're you're
causing more,

more risk for yourself
and more problems for yourself.

You're making it harder

if you're buying outside
of your market.

There are so many businesses
for sale.

All over the place.

In fact, 100% of businesses
are for sale

for the right price,
in the right terms, right?

But there are so many companies
in your market start there.

Like there are
so many businesses,

so just start with your market
first.

Get get your feet wet
with your first acquisition.

And then if you decide, hey,

this was awesome and I'm totally
for buying in another market,

go for it. Be my guest.

But for your first deal,
I definitely recommend

buy where you're at, right?

If you want to go buy a business
in another state,

you better be prepared to move

to that other state
and go live there.

Like be where you buy.

Totally.

I think we have
that conversation

with buyers pretty regularly.

And we always have to put
a lot of pressure on that.

Like,
we've seen both sides of that.

But, you know, ultimately
get familiar with the process,

whether it's down the street.

Let's prove the model right.

Prove that you can buy, own,
operate a business

down the street,
and then then be more up

into some of those opportunities
that are there.

They may even be

in the neighboring market,
or they might be states away.

Either way, do the first deal
down the street.

I mean, we deal, with businesses
of both independent,

PM companies and
and also franchise models,

of course, with PMI.

But, you know, there's
a lot of pieces to the franchise

that a lot of people outside of
it don't understand,

for example, the resources
that they get purely

just from our team,
which is a small

portion of the 100 plus team
we have on the corporate side,

you know, we have,

this acquisition resource
that's available

to franchise partners, people
within the franchise network.

We don't third party
out our services.

We're not business brokers,
so we don't charge any

of those fees.

And so I, I'm still amazed
at what the corporate side

does provide on the acquisition
front

and everything
that's available to them.

I would also just say we talked

about Live Oak Bank
and other lenders,

the lenders that we work with,
they like working with our PMI

franchise partners
because there is a team

behind them
and their local team.

There is this national team,
this PMI corporate team

that provides

an amazing amount of resources

and not just help
with diligence, but negotiations

and transition and software and
all these other moving pieces.

It absolutely takes the team
to do these deals.

So I think there's a lot of
benefits to the franchise model.

I don't know of other franchises

that do what we do in our space.

I know there's other brands out
in the PPM

side in the franchise world,

but I don't know
of any other groups

that do acquisitions
on the scale

that we do not meant to be.

Mostly just, reflection.
I guess. But.

Yeah.

I think one of the reasons

we talked
about buyer profiles earlier,

and you know, you have the this
crowd of enthusiastic people

who want to get into
entrepreneurship and being,

you know, buy a business

even though
they've never done it before.

And,

I think that's the highest risk
profile with buyers is people

who have never operated
this business before.

The benefit of working
with PMI again, my humble plug

and go with PMI is,
when our franchisees

buy businesses, they either have
years of experience themselves

or they have an entire franchise
network behind them

with years of experience.

So that's why

it's like
there are other people out there

who are buying businesses
on their own,

not part of a franchise.

They fail all the time. Right?

We have yet to have a franchise
buy a business that defaults

because they're not alone,
right?

It's it's not Jimmy by himself
buying this business.

It's Jimmy.

It's like the
those old Verizon commercials

where the guys like,
can you hear me now?

And then behind him,
there's like a

whole army of people
like like good.

You know,
that's kind of what it's like.

That's.

That's why people would buy
into Pmi's franchise of, hey,

I'm going to be backed by
this, this resource.

So it's

it's kind of a benefit.

It's like, what do you want?

Do you want extra support

through a franchise
or do you want to go it alone?

One of them is
riskier than the other one path.

Right.

I think that's why people choose
to, to go through PMI

is because the benefits of, of
not just the acquisition team,

but it's like we have
whole departments

that are dedicated to
to making sure

that they are successful
with operating their business.

So, Yeah, there's a lot
to unpack there for sure.

I just,

I think

just on the diligence
side of things,

like people really need
to understand

the industry, understand

what resources they have
with whatever business it is.

You know,

so even if that's

the existing team
that that's there,

I would say the success
of our transactions, it's

not just because
we have a great local buyer, but

even on the corporate resource
side, like

our acquisitions are successful

because we have all of these
other team members to help,

you know, solidify that
and ensure that it's going to be

a smooth transition, ensure

that we're following
the best practices.

And so

so yeah, I say on the diligence
side, learn a lot

about all of the resources
in it,

whether it's a franchise
business that you're buying

or not, understand
the team, understand

the resources, understand
the expenses to that as well.

And that's something

I get questions on a lot
regarding franchises,

you know, and and any type
of royalty type elements.

Those are expenses that
are there within the business.

And if the business is operating
smoothly and profitably

and there's,

you know, some obligation
to your franchise brand,

this is in property management.

And within the real estate
world, right?

There's plenty of franchises
in the real estate space.

You know,
you think of all the Keller

Williams, the Caldwells,
the wine cards.

There's a list of them.

And I'd say it's probably,
only adding to the value

of these businesses
now when they are in a network

like ours,
because we have plenty of buyers

that are looking specifically
for PMI franchise resales.

So so there's a lot of value
in the brand in the network.

And yeah, biased opinion.

But I think there's there's
great businesses out there

that are within franchises
and outside of franchises.

I think that's absolutely true.

Single biggest mistake to avoid.

I would say going into the deal
by yourself, like

you don't want to just do it
alone.

We've seen people try to do
that.

We've seen people fail at that
and then come to us

wanting to sell their business
to a PMI office.

You know, just don't do it
alone, you

know, have people in your corner
use the right team,

attorney, CPAs, if you've got,

you know, franchise, you know,
acquisition resources like us.

Of course you can do that.

But just don't do it solo.

You need a separate a second set
of eyes on everything.

And that might be a spouse, but
it should also be someone else.

So get a couple sets of eyes
on every deal that is,

that's my advice.

You might know how to run

a property management business,

but if you've never bought
a business, this is.

This is a big investment.

You know,

you might be taking out a loan,
personally guaranteeing

a few million dollars.

And if you fail,
you lose your house.

You know, like don't
if you aren't

the expert at it,
don't try to do it by yourself.

Get the right team of experts to
help you through this process.

That's that's the best advice
that I can give.

Like, that's the biggest mistake
that people make.

The people
who are filing bankruptcy

because they bought a business
and failed

are the ones who tried to do it
themselves.

There are people
who can be successful at it.

They can buy a business,
they can figure it out

some of their way through
and they'll be okay.

But is that a risk
you want to take right?

Would you rather just hire
the right who's that can help

you make sure that

you eliminate mitigate
as much risk as you can.

So if you're not the expert,
get a team.

Get people

that that know
what they're doing

that can help you
through the process.

That's
that's the best piece of advice.

Yeah.

I just want to thank everyone
for joining, this episode.

I think that

there's a lot of value
we can provide to this network.

I hope, that listeners
and viewers are engaging with it

and can appreciate,

that there's a lot of hard work,
but it's really fun for us.

And so, you know, we talk about
this all the day, all day long

and our slack channels
and our zoom meetings.

And I'm just excited
that we can, share

more of that with,
with the outside network, but,

but yeah, that's it.

I just want to sign off
from there and look forward to,

seeing everyone on the next,
Manage Stacks podcast.

So I appreciate
it. Thanks, everyone.