00:00:02.000 --> 00:00:03.000
\nAlright! Welcome everybody! So our next panel is going to be on Msp<\/p>\n
00:00:03.000 --> 00:00:13.000
\nValuations, and I hope kind of some angles that you probably haven't seen on most presentations. You go to.<\/p>\n
00:00:13.000 --> 00:00:14.000
\nBut first let me thank Asigra for sponsoring this conference.<\/p>\n
00:00:14.000 --> 00:00:21.000
\nAsigra is the leader in ultra secure backup and recovery.<\/p>\n
00:00:21.000 --> 00:00:22.000
\nLast month Asigra named to CRN Magazines.<\/p>\n
00:00:22.000 --> 00:00:28.000
\nCoolest data protection vendor list for 2023.<\/p>\n
00:00:28.000 --> 00:00:33.000
\nIncrease your profits and your client security by engaging today at Asigra.com
\nI'm getting to be like Paul Harvey here.<\/p>\n
00:00:33.000 --> 00:00:38.000
\nNobody here's old enough to know who that is, but that's all right.<\/p>\n
00:00:38.000 --> 00:00:39.000
\nRight.<\/p>\n
00:00:39.000 --> 00:00:40.000
\nSo let me introduce these folks. I'll just go in the order.<\/p>\n
00:00:40.000 --> 00:00:45.000
\nThey're on my screen. So Rayanne Buchianico<\/p>\n
00:00:45.000 --> 00:00:51.000
\nRuns an Msp In Florida. She sits on the board of the National Society of It Service Providers.<\/p>\n
00:00:51.000 --> 00:01:00.000
\nShe's an enrolled agent, and she is an accountant, and I have literally have no idea how she has time to even be here today, let alone talk to us.<\/p>\n
00:01:00.000 --> 00:01:01.000
\nBut I'm grateful that she's here.<\/p>\n
00:01:01.000 --> 00:01:10.000
\nShe also is part owner in sell. My Msp. With Amy Babinchak, and so she's got a good perspective. There.<\/p>\n
00:01:10.000 --> 00:01:30.000
\nErick Simpson has been telling people what to do with their business for as long as I can remember, I I think we kind of launched our our co-productions together in early 2,006 in Islip New York, and we have been promoting each other ever since then<\/p>\n
00:01:30.000 --> 00:01:46.000
\nErick helps both vendors and partners, but in for what we care about today is he has helped several companies, both buy and sell their managed service businesses with an eye towards maximizing you know the outcome for his clients.<\/p>\n
00:01:46.000 --> 00:01:58.000
\nGeorge Sierchio has been a coach at least 15 years. I think I bought his receded audio programs at least 15 years ago.<\/p>\n
00:01:58.000 --> 00:01:59.000
\nLong time.<\/p>\n
00:01:59.000 --> 00:02:05.000
\nMaybe 20, and is now, I think, full-time helping people with mergers and acquisitions.<\/p>\n
00:02:05.000 --> 00:02:08.000
\nAnd so everybody's got a slightly different perspective, and everybody's got more years in the industry than shows on the the hair on their head.<\/p>\n
00:02:08.000 --> 00:02:22.000
\nSo I'm the other one, admitting my age here with the hair, but so we wanna talk about is some of the other side of mergers and acquisitions.<\/p>\n
00:02:22.000 --> 00:02:43.000
\nIf you were to casually glance at Linkedin or Facebook, you would think that everybody's getting 12 x their revenue, and they're all retiring instantly, and everybody's got a yacht except me, and I think there's a different perspective so let me have<\/p>\n
00:02:43.000 --> 00:02:48.000
\nyou each give about 2\u00a0min of a further introduction of yourself, and then we'll get into a panel.<\/p>\n
00:02:48.000 --> 00:02:51.000
\nDiscussion bring in. You wanna kick us off.<\/p>\n
00:02:51.000 --> 00:02:54.000
\nI will, and I don't have a yet, either.<\/p>\n
00:02:54.000 --> 00:03:00.000
\nJust, you know, putting that up there. My name is Ryan Butiana Coin.<\/p>\n
00:03:00.000 --> 00:03:09.000
\nCarl did a fabulous job, and introducing me, and I have a accounting firm in Clearwater Fororida, a Psa.<\/p>\n
00:03:09.000 --> 00:03:16.000
\nEmpire is a Psa. Consulting company along with some Imsp, and and most days.<\/p>\n
00:03:16.000 --> 00:03:40.000
\nI don't even know how I have time to time my shoes, but otherwise it's all good stuff, because I love everything that I do, and one of my passions is helping Msps understand their profitability, and the value of their company, whether or not they're looking to X so to answer your<\/p>\n
00:03:40.000 --> 00:03:43.000
\nquestion. Carl. No, not everybody is making 12 x.<\/p>\n
00:03:43.000 --> 00:04:09.000
\nAs a matter of fact, the you know, it's really interesting how companies, you know sometimes you've got big money that comes in and they see a company that has an amazing offering or some you know, some really attractive skill sets or some attractive clients and there's something really<\/p>\n
00:04:09.000 --> 00:04:13.000
\nabout that company that that another company wants to. That's where you're going to get the extreme.<\/p>\n
00:04:13.000 --> 00:04:29.000
\nMultiples of your even numbers, you know, if you're if you are a an it generalist, and you've got an oak business, you know. That's just kind of been squeaking along.<\/p>\n
00:04:29.000 --> 00:04:35.000
\nProbably not expecting a large multiple. You know, but there are things as I'm sure that my co-panelists will describe in a minute.<\/p>\n
00:04:35.000 --> 00:04:42.000
\nThere are things that can be done, you know, to improve that overall value.<\/p>\n
00:04:42.000 --> 00:04:47.000
\nIf that's what you're looking.<\/p>\n
00:04:47.000 --> 00:04:50.000
\nEric, thank you.<\/p>\n
00:04:50.000 --> 00:04:53.000
\nThanks, Ryan. Hey, everybody, Eric, from Eric simpson.com.<\/p>\n
00:04:53.000 --> 00:05:00.000
\nAnd yeah, I started and sold one of the first Msps in the industry.<\/p>\n
00:05:00.000 --> 00:05:07.000
\nBack in back in the early 2 thousands, early, early 2 thousands, and made all the mistakes and figured out how to sell what we called flat rate.<\/p>\n
00:05:07.000 --> 00:05:15.000
\nIt services back then. We didn't even know there was, you know, an acronym for it, but you know, just having to be in the right place at the right time.<\/p>\n
00:05:15.000 --> 00:05:26.000
\nAnd was able to then profound Msp. University, where we grew a consultancy, and helped about 30,000 Msps.<\/p>\n
00:05:26.000 --> 00:05:31.000
\nIt providers all over the world over like 8 years, you know.<\/p>\n
00:05:31.000 --> 00:05:41.000
\nTransition, or begin the journey to become an Msp. And we did workshops and boot camps all over the world, and online webinars and masterclass and things like that.<\/p>\n
00:05:41.000 --> 00:05:47.000
\nIt was crazy times back then, because everybody was kind of rushing towards it, I don't like everyone's rushing towards, you know.<\/p>\n
00:05:47.000 --> 00:05:58.000
\nCyber security now. And you know, Carl, you mentioned how you and I became, you know, fast friends early on, you know you are one of my.<\/p>\n
00:05:58.000 --> 00:06:01.000
\nBest and oldest colleagues and friends in the Channel.<\/p>\n
00:06:01.000 --> 00:06:12.000
\nNow all the folks that I had been working with and helped through all those years are getting to the point in their career where they're looking to exit right today.<\/p>\n
00:06:12.000 --> 00:06:30.000
\nI work with Msps and vendors and manufacturers to help, you know, improve business performance, and I help Msps prepare their organizations to maximize their valuation at when an exit opportunity happens to come and sometimes it's unexpected so I know<\/p>\n
00:06:30.000 --> 00:06:37.000
\nGeorge is, gonna you know, speak a lot about how you know some of these accidental opportunities.<\/p>\n
00:06:37.000 --> 00:06:43.000
\nIf you're not prepared for them, can actually hurt your total evaluation over time.<\/p>\n
00:06:43.000 --> 00:06:54.000
\nAnd you know, I think today because of the macro economic stress that we see and the uncertainty in the economy.<\/p>\n
00:06:54.000 --> 00:07:05.000
\nValuations have dipped a little bit, and we saw pre-pandemic is, you know, we had this tremendous motion.<\/p>\n
00:07:05.000 --> 00:07:10.000
\nThe increase in M. And A. We had, you know, private equity money coming in, and we saw a lot of folks doing these roll ups I've worked with about.<\/p>\n
00:07:10.000 --> 00:07:15.000
\nI've been engaged with about 3 dozen M.<\/p>\n
00:07:15.000 --> 00:07:29.000
\nAnd a engagements over the years over time, some successful, some less so, and sometimes the advice that we give clients is, you should not by that company right, or you should not sell to that buyer.<\/p>\n
00:07:29.000 --> 00:07:32.000
\nSo I look forward to getting into that conversation today as well.<\/p>\n
00:07:32.000 --> 00:07:39.000
\nBut I think what happened was, you know, in during that really that ramp up to all this excitement about M.<\/p>\n
00:07:39.000 --> 00:07:48.000
\nAnd a pre pandemic. We saw acquisitions happening, you know, below 5 million dollars, you know, between 5 and 10 million dollars, 20 million.<\/p>\n
00:07:48.000 --> 00:07:59.000
\nThen we saw really large opportunities, and I think what I've seen. Anyways, I've tracked this the last few years is, you know, there's still a lot of M and a activity.<\/p>\n
00:07:59.000 --> 00:08:06.000
\nBut the smaller opportunities, the below 5 million dollar below 2.5 million dollar, 3 million dollar.<\/p>\n
00:08:06.000 --> 00:08:15.000
\nThose are the ones that have suffered the most like. Now, buyers are looking for the larger the larger value.<\/p>\n
00:08:15.000 --> 00:08:20.000
\nAnd I'm thinking, you know, 10 million. And above, we still see a lot of activity there.<\/p>\n
00:08:20.000 --> 00:08:25.000
\nAnd of course, you know there are organizations that are looking for larger and Msp's as well.<\/p>\n
00:08:25.000 --> 00:08:34.000
\nI hope that we see some recovery, you know, next year, but of course, next year's an election year, so I'm be interested in the interested to hear what you know.<\/p>\n
00:08:34.000 --> 00:08:38.000
\nOur other esteemed panelists have to say about the forecast in 2024.<\/p>\n
00:08:38.000 --> 00:08:41.000
\nAlright! George!<\/p>\n
00:08:41.000 --> 00:08:42.000
\nHello, Buddy George! From coaching growth partners, as Carl said.<\/p>\n
00:08:42.000 --> 00:08:54.000
\nI don't even know how long I've been doing this in the space that did start out helping other Msp's before the word Msp. Actually was there.<\/p>\n
00:08:54.000 --> 00:09:04.000
\nAnd then that came into play, and I probably met Carl and Eric round the same time while I was doing that, and inside of that there was it wasn't much M. And a activity.<\/p>\n
00:09:04.000 --> 00:09:07.000
\nActually, the term Msp. Started the whole. I'm M.<\/p>\n
00:09:07.000 --> 00:09:09.000
\nAnd a activity in the space. There wasn't much saleable break fix isn't something that most people would buy then nor now.<\/p>\n
00:09:09.000 --> 00:09:25.000
\nSo as recurring revenue became a thing. You know, that changed things up, and then so about 11 years ago, I completely went solely into the M.<\/p>\n
00:09:25.000 --> 00:09:38.000
\nAnd a space, instead of helping out on the operations of financial sites, I took all that with me, came to coaching and executive vice President and one of the partners here at the company for that long with the company's been around since 2,010 so about a year and<\/p>\n
00:09:38.000 --> 00:09:42.000
\na half. 2 years after they started I came in the do that.<\/p>\n
00:09:42.000 --> 00:09:46.000
\nIt's, you know, it's interesting, because it's solely in the It services space.<\/p>\n
00:09:46.000 --> 00:09:48.000
\nSo that's all all we know. And it's not all.<\/p>\n
00:09:48.000 --> 00:10:00.000
\nMsps. Obviously, there's so all kinds of things in there that we deal with, and we've seen a hundred 60 plus deals in that timeframe of all different shapes and sizes, and nothing to given.<\/p>\n
00:10:00.000 --> 00:10:04.000
\nThat's for sure. And you know, things are different, obviously, from 11.<\/p>\n
00:10:04.000 --> 00:10:14.000
\n12 years ago. What the buyer profiles are completely different, about 90% of what we do is buy side.<\/p>\n
00:10:14.000 --> 00:10:18.000
\nSo we were mostly looking at things from the lens of a buyer.<\/p>\n
00:10:18.000 --> 00:10:24.000
\nWe'll do some sales side if people come to us, and the other thing has changed in the last couple of years is the M. And A.<\/p>\n
00:10:24.000 --> 00:10:29.000
\nJust didn't exist, not in our world, anyway, and it has to come to us. We can't look for that.<\/p>\n
00:10:29.000 --> 00:10:35.000
\nSo if somebody's trying to emerge and ostrich parties have to come together and ask us to do some help.<\/p>\n
00:10:35.000 --> 00:10:48.000
\nSo that's been a thing more often than not, especially because of some of the stuff that both ran and Eric said about the people, the values that people are getting where they're trying to buy companies.<\/p>\n
00:10:48.000 --> 00:10:49.000
\nAnd they're they don't know how to get money.<\/p>\n
00:10:49.000 --> 00:10:53.000
\nThey're trying to get more leverage. And you know, 4 million dollar company might not be big enough.<\/p>\n
00:10:53.000 --> 00:10:57.000
\nBut you put 2 of them together. Let the the stitches heal.<\/p>\n
00:10:57.000 --> 00:11:13.000
\nSo you know a little more cohesive, and they maybe can go get some banking, or find other kinds of money, or you're a more juicy target for a buyer that you weren't before another thing that Eric mentioned so a lot of different things that happened leaning<\/p>\n
00:11:13.000 --> 00:11:24.000
\nup to the pandemic. One of the things that pandemic certainly proved is that the space is certainly not bulletproof, but it's got some great body armor on it, and it's not going anywhere.<\/p>\n
00:11:24.000 --> 00:11:29.000
\nIt's necessary. Yes, security. And what's next? Around the corner?<\/p>\n
00:11:29.000 --> 00:11:32.000
\nAs the next thing that everybody is gonna have to have some.<\/p>\n
00:11:32.000 --> 00:11:33.000
\nSemblance of services in who knows? But it'll keep happening?<\/p>\n
00:11:33.000 --> 00:11:42.000
\nThere's still open to buy. To get into the space without throwing a lot of money out.<\/p>\n
00:11:42.000 --> 00:11:44.000
\nAs long as you know what you're doing from the technical side.<\/p>\n
00:11:44.000 --> 00:11:49.000
\nAnd so the space will continue, being refragmented.<\/p>\n
00:11:49.000 --> 00:11:51.000
\nAnd as that's happening, it's gonna keep changing.<\/p>\n
00:11:51.000 --> 00:11:58.000
\nBut Eric made a really good point about bigger companies are the ones that are being bought more often.<\/p>\n
00:11:58.000 --> 00:12:13.000
\nNot that there's not a market for what's more, the vast majority of the space of, let's say, 5 million, and under in revenue, depending on what you're doing and who's looking at you but you know if you want to get bought by a bigger company that's a little<\/p>\n
00:12:13.000 --> 00:12:17.000
\nharder to do when you're smaller. That doesn't mean you can't get a good deal by a different company.<\/p>\n
00:12:17.000 --> 00:12:23.000
\nSo there's different options out there. But yeah, the buyers are getting bigger, and they're looking for bigger things.<\/p>\n
00:12:23.000 --> 00:12:28.000
\nAnd so the reason why the price tags are gonna stay up a little bit more is because there's not that much inventory at that space.<\/p>\n
00:12:28.000 --> 00:12:37.000
\nBut the lower market there is more, but it's it's still a good market for everybody. I think it's gonna be good for one.<\/p>\n
00:12:37.000 --> 00:12:42.000
\nYou know one of the reasons that I started doing. What I do is that I met.<\/p>\n
00:12:42.000 --> 00:12:46.000
\nI went to conference after conference, after conference, and in the Smb.<\/p>\n
00:12:46.000 --> 00:12:54.000
\nSpace. I kept meeting people, not just one or 2 dozens, and dozens of people who had worked 20 or 30 years in their business and had essentially no equity.<\/p>\n
00:12:54.000 --> 00:13:12.000
\nThey? They had no reason to sell, because all they could do is walk away like nobody like you said nobody wants to buy a break fixed business where you start every month with $0 in the bank and so I think it's good.<\/p>\n
00:13:12.000 --> 00:13:13.000
\nI think managed services is awesome and recurring, revenues awesome, and contracts are off.<\/p>\n
00:13:13.000 --> 00:13:20.000
\nEsome so that you've got a thing that you can value, and you can sell.<\/p>\n
00:13:20.000 --> 00:13:25.000
\nBut the question. Everybody has the number. One question is unanswerable.<\/p>\n
00:13:25.000 --> 00:13:29.000
\nYou know what? How much is my business worth, you know. So you know.<\/p>\n
00:13:29.000 --> 00:13:42.000
\nWhere do? Where do you even start with an anchor, you know, because, you know I would go to my tax guy, I would always say, Okay, if I signed this deal, and I did it done. I had $300,000 to the revenue what does that mean for my taxes.<\/p>\n
00:13:42.000 --> 00:13:47.000
\nAnd I'm hoping for a one sentence. Answer, and he's like, well, you know.<\/p>\n
00:13:47.000 --> 00:13:50.000
\nLet's schedule a call. Let's schedule some time.<\/p>\n
00:13:50.000 --> 00:13:59.000
\nThat's a 4\u00a0h discussion, you know. So you know, that's a 4\u00a0h discussion, you know. So you know, that's maybe that's just my guide. But I think that's the world of finance. Right.<\/p>\n
00:13:59.000 --> 00:14:01.000
\nThere is no answer to how much my business is worth without the context of the economy.<\/p>\n
00:14:01.000 --> 00:14:09.000
\nThe market, whose buying, who, how much they have, what kind of interest rates they can get at the bank, and so forth.<\/p>\n
00:14:09.000 --> 00:14:20.000
\nSo how do you begin this conversation? Cause I know half the people on this call are interested in someday selling, and the other half are interested in buying.<\/p>\n
00:14:20.000 --> 00:14:29.000
\nSo we're do. We start?<\/p>\n
00:14:29.000 --> 00:14:30.000
\nThank you.<\/p>\n
00:14:30.000 --> 00:14:31.000
\nWell, I'm just gonna jump right in and say a business is where exactly what somebody is willing to pay for.<\/p>\n
00:14:31.000 --> 00:14:44.000
\nYeah, and that value, you know, what is that seller bringing to the table for that buyer to, you know, to encourage them to pay a premium for that business.<\/p>\n
00:14:44.000 --> 00:14:57.000
\nIt. There has to be some sort of differentiating factor that said, like, okay, you've made X number of dollars this year.<\/p>\n
00:14:57.000 --> 00:15:06.000
\nNow, you're asking me to pay a premium for future money that may or may not be there what's in it for me? Right?<\/p>\n
00:15:06.000 --> 00:15:09.000
\nSo that's really what we're talking about when we're talking about multiples.<\/p>\n
00:15:09.000 --> 00:15:19.000
\nIs that it's a premium based on future earnings or future estimated earnings of whatever that special sauce is that the seller brings to the table right?<\/p>\n
00:15:19.000 --> 00:15:21.000
\nAnd I don't wanna steal the entire answer from Eric and George.<\/p>\n
00:15:21.000 --> 00:15:36.000
\nBecause I'm watching them both nod. So I know they have a lot to to add to this.<\/p>\n
00:15:36.000 --> 00:15:38.000
\nI'll go next. Few on Eric. Okay.<\/p>\n
00:15:38.000 --> 00:15:39.000
\nPlease.<\/p>\n
00:15:39.000 --> 00:15:49.000
\nSo, yeah, one of the worst things that we have in this industry is people just hearing multiples and saying, that's not what's the biggest one you can yell out there, that's me right.<\/p>\n
00:15:49.000 --> 00:16:02.000
\nAnd they don't hear anything around anything else but where it came from, and Henrietta actually easily laid out just a couple of simple things that really just blow past people most of the time, that you know, hey?<\/p>\n
00:16:02.000 --> 00:16:07.000
\nYou're doing $500,000 to the bottom all the time. For the last 3 years.<\/p>\n
00:16:07.000 --> 00:16:11.000
\nIt's not the same thing as somebody that was 4 in it last year. It's 500 this year.<\/p>\n
00:16:11.000 --> 00:16:12.000
\nIt's gonna be 600 next year and can prove they're gonna be 700 the year after that it's all about.<\/p>\n
00:16:12.000 --> 00:16:27.000
\nAnd one of the things that we do all the time is modeling, and one of the models that we have for smaller companies usually is called Groundhog Day cause that's you got what you got, and especially if that owner wants to leave and if that owner's doing all the<\/p>\n
00:16:27.000 --> 00:16:31.000
\nselling. Then whatever happened before, it's not gonna happen again.<\/p>\n
00:16:31.000 --> 00:16:36.000
\nAnd people don't understand. That is the difference between well, hack on. This guy got 8 expert.<\/p>\n
00:16:36.000 --> 00:16:38.000
\nYou're telling me that I'm gonna get 5 x.<\/p>\n
00:16:38.000 --> 00:16:45.000
\nWell, your comparing apples to pineapples, I mean, there's 2 different companies, 2 different sizes, maturity of the company, all kinds of different factors.<\/p>\n
00:16:45.000 --> 00:16:46.000
\nAnd then what are the shiny objects like? Grann was talking about?<\/p>\n
00:16:46.000 --> 00:16:53.000
\nAnd it's really tough to be honest with you to have a shiny object in your company.<\/p>\n
00:16:53.000 --> 00:16:56.000
\nThat's going to get that super duper premium.<\/p>\n
00:16:56.000 --> 00:17:02.000
\nIt's just. It's not that often, but you know, generally in this space it's there's still a lot of value, even if that isn't there.<\/p>\n
00:17:02.000 --> 00:17:07.000
\nBut the key is! How stagnant is the company versus what's you know?<\/p>\n
00:17:07.000 --> 00:17:14.000
\nWhat does the future look like? And yes, a buyer is buying the future, but the believable future, and not what they're going to put into it.<\/p>\n
00:17:14.000 --> 00:17:18.000
\nIf you're not putting anything into it, it's there's just a whole lot of factors. I'll leave it at one last.<\/p>\n
00:17:18.000 --> 00:17:28.000
\nThing is that multiples are basically Rand, you'll probably appreciate this. It's the simplest version of a discounted cash flow you can get to.<\/p>\n
00:17:28.000 --> 00:17:37.000
\nSo, if somebody says 5 x, there's a whole lot of other math that went on there, and a B, C, d, E, and F all have to be true for that 5 x to actually make sense.<\/p>\n
00:17:37.000 --> 00:17:41.000
\nAnd, by the way, is that in a check, or is there notes involved?<\/p>\n
00:17:41.000 --> 00:17:47.000
\nAnd no answer involved and everything else. So it's just a lot more complicated than people actually.<\/p>\n
00:17:47.000 --> 00:17:57.000
\nAnd what a great discussion! I'm gonna try to share a slide real quick and get everybody's a feedback on it. Here. I've got to see if I can do this alright.<\/p>\n
00:17:57.000 --> 00:18:05.000
\nSo I wanna there's a link here that I'll provide you, Carl, that you can post and send everybody.<\/p>\n
00:18:05.000 --> 00:18:15.000
\nThis is a great article written by Paul Dippel from service leadership on connect wise website and kind of I took these these numbers and statistics from this.<\/p>\n
00:18:15.000 --> 00:18:22.000
\nTo kind of talk about adjusted Ebitda. That's what we're talking about now.<\/p>\n
00:18:22.000 --> 00:18:23.000
\nThere's there's, you know, and that's another conversation.<\/p>\n
00:18:23.000 --> 00:18:30.000
\nRight? How do we get to adjusted? But that's pulling a lot of things out of what you know.<\/p>\n
00:18:30.000 --> 00:18:33.000
\nYour net profit should look like, so that it is.<\/p>\n
00:18:33.000 --> 00:18:42.000
\nIt's a way to evaluate, you know, a true, a more objective view of what your true profit is, and you know, based on what we're seeing.<\/p>\n
00:18:42.000 --> 00:18:47.000
\nThis is post pandemic here, and you know.<\/p>\n
00:18:47.000 --> 00:18:53.000
\nSo take this with a grain of salt. Right? This is not financial advice by any means, but just looking at, adjusted either.<\/p>\n
00:18:53.000 --> 00:19:00.000
\nWe look at 2 types of things when I'm looking at helping a partner kind of determine what their value is.<\/p>\n
00:19:00.000 --> 00:19:16.000
\nIt's kind of adjusted. And then the breakdown of different revenue streams and the valuation of each dollar of that revenue stream, and I'll share that, too, and then we kind of you know, add those together, and divide them and come up with<\/p>\n
00:19:16.000 --> 00:19:19.000
\nsome range, right? It's a very unscientific kind of a thumbnail.<\/p>\n
00:19:19.000 --> 00:19:23.000
\nFirst view, without doing a lot of digging and and financial due diligence.<\/p>\n
00:19:23.000 --> 00:19:28.000
\nBut, as you can see here, you know, 6 times 7 times 8 times E.<\/p>\n
00:19:28.000 --> 00:19:39.000
\nBut it depends upon what your Ebita percentage is, and before the pandemic these numbers were higher. Okay?<\/p>\n
00:19:39.000 --> 00:19:46.000
\nBut this is kind of just based on this analysis and assessment by Paul Diptz. Service leadership.<\/p>\n
00:19:46.000 --> 00:19:49.000
\nYou know, this is kind of where this data comes from. And then I'll share one more slide.<\/p>\n
00:19:49.000 --> 00:19:54.000
\nSo this is kind of the first barometer we say, Okay, what's your adjusted?<\/p>\n
00:19:54.000 --> 00:19:59.000
\nAnd what percentage does that represent of your total revenue?<\/p>\n
00:19:59.000 --> 00:20:02.000
\nAnd then the second is the revenue. Mix valuation, and you know, as my esteemed calleagues.<\/p>\n
00:20:02.000 --> 00:20:11.000
\nHere, Rayanne and George will attest all. Revenue is not valued. The same.<\/p>\n
00:20:11.000 --> 00:20:19.000
\nIf you take a look at product resale, it's point 1 5, you know, of a dollar.<\/p>\n
00:20:19.000 --> 00:20:24.000
\nIt's 15 cents of a dollar. Obviously managed services.<\/p>\n
00:20:24.000 --> 00:20:37.000
\nIs king. Right? A dollar 45 before the pandemic I was tracking about a dollar 67 per dollar of managed services.<\/p>\n
00:20:37.000 --> 00:20:39.000
\nRevenue sold. So it's dropped since because of you know what we're going through right now.<\/p>\n
00:20:39.000 --> 00:21:00.000
\nBut, as you can see, not all revenue is valued the same so when I'm working with a client, I'll say to them, Hey, take the perspective of the same perspective that you do when you're evaluating your client base, right when we say hey?<\/p>\n
00:21:00.000 --> 00:21:05.000
\nWe have a clients B, client, C clients, and we wanna exit our C customers right?<\/p>\n
00:21:05.000 --> 00:21:11.000
\nThe ones of the noisiest, the least profitable, that are preventing us from scaling, and report them with more.<\/p>\n
00:21:11.000 --> 00:21:30.000
\nA clients do the same thing with your revenue streams, and look at and Stack rank them, and say, what's the least profitable revenue stream, or the revenue stream that adds the least value to your overall company's evaluation and start maybe you know stop doing<\/p>\n
00:21:30.000 --> 00:21:37.000
\nthose things and deliver more managed services, since that is the highest, a revenue stream valuation that we're seeing today.<\/p>\n
00:21:37.000 --> 00:21:43.000
\nSo let me ask the next impossible question, and with luck we'll get a short little answer for each of these.<\/p>\n
00:21:43.000 --> 00:21:47.000
\nBut the next impossible question is, Who is who is retiring?<\/p>\n
00:21:47.000 --> 00:21:50.000
\nAnd when should you start thinking about selling? Is it? Is it?<\/p>\n
00:21:50.000 --> 00:21:56.000
\nWhen you think you're 3 years out, or you think you're one year out, or you know what I mean.<\/p>\n
00:21:56.000 --> 00:22:01.000
\nLike you don't even have to be retiring. You might just be tired of being in this damn business and decide you wanna go to something else for a living.<\/p>\n
00:22:01.000 --> 00:22:06.000
\nSo, but you know how far in advance should you start planning?<\/p>\n
00:22:06.000 --> 00:22:14.000
\nI know. Rayanne just finished in the middle of a class on, you know, basically a start today, even if you're gonna sell in 20 years.<\/p>\n
00:22:14.000 --> 00:22:18.000
\nSo is there a number? Is there a, yeah, yeah.<\/p>\n
00:22:18.000 --> 00:22:26.000
\nCan I? Can I go for? Because I need to throw something out there before we get past?<\/p>\n
00:22:26.000 --> 00:22:35.000
\nWhat Eric said. Oh, I love dearly, but I'm gonna say something about that first slide that you set up that I fight every day of my life for the past 11 years.<\/p>\n
00:22:35.000 --> 00:22:40.000
\nAnd I love Mister Dipl, too. Yes, retiredness.<\/p>\n
00:22:40.000 --> 00:22:44.000
\nHe? What's missing from that whole thing is, and this is why fight people with all time.<\/p>\n
00:22:44.000 --> 00:22:53.000
\n15% to the bottom, for a million dollar companies, not the same as 15% on the bottom for a 10 million dollar company.<\/p>\n
00:22:53.000 --> 00:22:54.000
\nBingo. Thank you. Thank you. Thank you. George. Yeah.<\/p>\n
00:22:54.000 --> 00:23:06.000
\nSo you cannot back to apples, and that yes, yeah, you gotta put the whole context back to ABC, DNA is missing on that one right off the bat going on.<\/p>\n
00:23:06.000 --> 00:23:07.000
\nAnd that's the thing that most people have to make sure that they're not.<\/p>\n
00:23:07.000 --> 00:23:09.000
\nI call it the Charlie Brown teacher. Thing!<\/p>\n
00:23:09.000 --> 00:23:22.000
\nSo so I'd say, 15% get you this. And then somebody says, 15% gets you this. And then what? You don't get the rest of the story cause you're like that's me like, oh, no, he wasn't talking about.<\/p>\n
00:23:22.000 --> 00:23:24.000
\nYou know, that's a minimum of 4 million and recurring revenue.<\/p>\n
00:23:24.000 --> 00:23:28.000
\nAnd all this other stuff that wasn't said.<\/p>\n
00:23:28.000 --> 00:23:32.000
\nSo we got that then I'm gonna bring up a a pass, a blast from the past.<\/p>\n
00:23:32.000 --> 00:23:33.000
\nSince Carl brought this up, and my motto is still running like you're gonna sell it.<\/p>\n
00:23:33.000 --> 00:23:53.000
\nThing, so I don't care when you started it. It's best if you started on day one setting things up like that, so that if you can run things to maximize your profitability and money going in your pocket without going overboard, and we're not i'm not tax man when<\/p>\n
00:23:53.000 --> 00:23:55.000
\nwe're doing deals. I really don't care.<\/p>\n
00:23:55.000 --> 00:24:08.000
\nBut if you're, you know, doing a bunch of hiding and tucking of money and stuff that's not going to help you. But if you can really run it the way somebody from the outside looking in would like to see and take the money from there, then you're prepared at any given moment to<\/p>\n
00:24:08.000 --> 00:24:15.000
\nentertain, and offer whether it's something that came out of the blue, and you only been doing it for a couple of years, or you're 15 years into it.<\/p>\n
00:24:15.000 --> 00:24:17.000
\nThat's that's my thought. Because we run into that all day long.<\/p>\n
00:24:17.000 --> 00:24:25.000
\nOf 10 million dollar companies and 2 million dollar companies, not having a great setup inside of what we're looking up.<\/p>\n
00:24:25.000 --> 00:24:26.000
\nAnd it's it's kind of amazing how that happens.<\/p>\n
00:24:26.000 --> 00:24:34.000
\nBut it's it's very common practice that Ryanne, I'm sure, can attest to.<\/p>\n
00:24:34.000 --> 00:24:36.000
\nOh! Since he called me out. And, Eric, do you mind if I go next?<\/p>\n
00:24:36.000 --> 00:24:38.000
\nYou're up!<\/p>\n
00:24:38.000 --> 00:24:39.000
\nOkay.<\/p>\n
00:24:39.000 --> 00:24:44.000
\nStop being nice to each other. We set up this fight for a reason.<\/p>\n
00:24:44.000 --> 00:24:45.000
\nNot yet.<\/p>\n
00:24:45.000 --> 00:25:07.000
\nAlright! Where's my glass? So a couple of things that both Eric and George said that I kind of wanted to touch on first way back a couple of conversations ago, George said, when thing that really jumped out at me, and that the the value is not based on what the<\/p>\n
00:25:07.000 --> 00:25:10.000
\nbuyer could do with the company. It's what the company will do with or without the seller.<\/p>\n
00:25:10.000 --> 00:25:27.000
\nSo. And that's really important. Because a soldier times I've talked with potential sellers saying, Yeah, I just haven't gotten ahead of time to do the marketing.<\/p>\n
00:25:27.000 --> 00:25:30.000
\nBut if they, you know, they really could take this and run with it.<\/p>\n
00:25:30.000 --> 00:25:36.000
\nWell, but they're not going to and they're certainly not going to pay you for something that they could, you know.<\/p>\n
00:25:36.000 --> 00:25:45.000
\nDo for you right? And so that's a really important designation to make when you're talking about what's the value of a business.<\/p>\n
00:25:45.000 --> 00:25:47.000
\nAnd and then George just mentioned again a few minutes ago, you know, like, Hey, hey?<\/p>\n
00:25:47.000 --> 00:25:56.000
\nThe people that like to run a bunch of personal expenses through the company.<\/p>\n
00:25:56.000 --> 00:26:00.000
\nAnd you know here, let me just check this in here, and let's tuck that over there.<\/p>\n
00:26:00.000 --> 00:26:06.000
\nNobody is going to notice. Well, if the the buyers will notice right.<\/p>\n
00:26:06.000 --> 00:26:19.000
\nSo either you want to be the person with the high value business that pays income taxes or you wouldn't be the person with the lifestyle business that doesn't pay a lot of income taxes.<\/p>\n
00:26:19.000 --> 00:26:26.000
\nNow, which one of these humans do you want to be? Because I'm not sure that you can be both right, and there's always the you know.<\/p>\n
00:26:26.000 --> 00:26:30.000
\nYou can adjust your even a number and things like that.<\/p>\n
00:26:30.000 --> 00:26:32.000
\nBut you have to understand that that the more personal expenses you pull out of your business as an adjustment.<\/p>\n
00:26:32.000 --> 00:26:50.000
\nYou that just tells a story to who's ever looking at the numbers, you know of the quality of your management skills, the quality of of the way you run your business.<\/p>\n
00:26:50.000 --> 00:26:51.000
\nAnd if you're going to cut corners here, where else have you cut corners?<\/p>\n
00:26:51.000 --> 00:27:01.000
\nSo it's the whole pitch that that everybody is looking at.<\/p>\n
00:27:01.000 --> 00:27:02.000
\nAnd when you say, When should you start thinking about it? Okay?<\/p>\n
00:27:02.000 --> 00:27:10.000
\nSo. I love George's answers. Start on day one, but that's not realistic, you know.<\/p>\n
00:27:10.000 --> 00:27:15.000
\nWhen you first open your doors, you first go into business for yourself.<\/p>\n
00:27:15.000 --> 00:27:19.000
\nYou are literally accepting any doc that walks in the door right?<\/p>\n
00:27:19.000 --> 00:27:25.000
\nSo it doesn't matter what kind of business your customers in, or how many seats they have.<\/p>\n
00:27:25.000 --> 00:27:32.000
\nYou're looking for volume and for cash, so that you can start your business after a couple of years.<\/p>\n
00:27:32.000 --> 00:27:33.000
\nYou start getting real tired of driving all over town trying to fix this problem.<\/p>\n
00:27:33.000 --> 00:27:39.000
\nYou know, and and patch this 2,003 server, because they don't want to buy another one, you know.<\/p>\n
00:27:39.000 --> 00:27:51.000
\nBut and then you can start to really look at your business and say, Where do I really enjoy working?<\/p>\n
00:27:51.000 --> 00:27:57.000
\nAnd what do I want to focus on? And who do? I want to work with?<\/p>\n
00:27:57.000 --> 00:28:11.000
\nAnd that's when you start to really pay attention and focus on your business as a business, and not so much of a replacement of your job or someplace to hide your personal expense.<\/p>\n
00:28:11.000 --> 00:28:20.000
\nAnd those are. Those are really, really great comments Rayanne and I wanna tag in and add, You know, to something you said in the beginning, you know. Hey?<\/p>\n
00:28:20.000 --> 00:28:31.000
\nIf my business isn't performing optimally if I know I'm missing something, if I don't have my processes, if I don't have the right platform if I don't have my processes, if I don't have the right, platforms if there's something there not<\/p>\n
00:28:31.000 --> 00:28:39.000
\nwithstanding kind of, you know I'm missing something. If I don't have my processes, if I don't have the right platforms, if there's something there not withstanding kind of you know Ibita Tom foolery let's say buyer savvy buyers that are looking for bargains, are looking<\/p>\n
00:28:39.000 --> 00:28:53.000
\nfor organizations, that with a little bit of their secret sauce, their 11 herbs and spices, they they can buy it for low, and then add add their special sauce, their process, their magic, whatever it is.<\/p>\n
00:28:53.000 --> 00:29:01.000
\nAnd actually, you know, really increase the value of that organization with their savvy, and know- so don't let that happen to you.<\/p>\n
00:29:01.000 --> 00:29:08.000
\nIf you want to sell your business, put the time and energy, energy and effort in now, so that you can command the highest evaluation.<\/p>\n
00:29:08.000 --> 00:29:29.000
\nAnd another thing that I'll add is, a lot of the partners that I'm working with now are looking at acquiring other organizations, not because of anything other than trying to acquire the staff because of the tech shortage it is so hard to hire folks and salaries and things like that what are you guys seeing out there<\/p>\n
00:29:29.000 --> 00:29:43.000
\nbecause that I'm seeing a lot of that like boy. If we could just grab, you know, a whole technical team and a couple of sales folks that's the value that we're looking at, and they're kind of maybe even to their detriment overlooking some of this due<\/p>\n
00:29:43.000 --> 00:29:46.000
\ndiligence stuff, that they should also be looking at.<\/p>\n
00:29:46.000 --> 00:29:47.000
\nYeah.<\/p>\n
00:29:47.000 --> 00:29:56.000
\nSo, yeah, and you touched on something. There are a lot of fire sale buyers out there, you know, and you.<\/p>\n
00:29:56.000 --> 00:30:01.000
\nSo if if you heard anything that Eric said, pay attention to, you know to why are you selling?<\/p>\n
00:30:01.000 --> 00:30:25.000
\nAre you selling? Because your absolutely burned out, or you're just desperate to get out from under whatever yet, because there's plenty of buyers out there that are looking for that fire sale, and they will you know they might offer you 25 cents on the dollar and depending on<\/p>\n
00:30:25.000 --> 00:30:33.000
\nyou know how many dollars we're talking about. You might just start seeing dollar signs in your eyes and you're like, where did I sign?<\/p>\n
00:30:33.000 --> 00:30:39.000
\nI question you to do that because, you know, there's probably a lot more that you can do.<\/p>\n
00:30:39.000 --> 00:30:40.000
\nNever make this decision, you know, from an emotional, you know, desperation, standpoint right?<\/p>\n
00:30:40.000 --> 00:30:56.000
\nAnd what are we seeing out there? There are lots of mergers or acquisitions coming through, based because of the staffing.<\/p>\n
00:30:56.000 --> 00:31:01.000
\nHi! Have you seen that, George? Because I know that I have?<\/p>\n
00:31:01.000 --> 00:31:07.000
\nI I've worked on 2 separate yeah, 2 separate acquisitions.<\/p>\n
00:31:07.000 --> 00:31:15.000
\nAnd they were all about the staffing, and it was had very little to do with the bottom line earnings.<\/p>\n
00:31:15.000 --> 00:31:28.000
\nHmm! Now I it's definitely vast majority of our clients which range from huge to 10 million dollar Msp to pea back companies to peas looking for platforms.<\/p>\n
00:31:28.000 --> 00:31:33.000
\nIt doesn't matter. There's always a talent related thing to that.<\/p>\n
00:31:33.000 --> 00:31:45.000
\nBut on top of that, and to Eric's other point that can't be the only thing to buy for, and it also can't be the only thing Eric is just as bad saying 5 million.<\/p>\n
00:31:45.000 --> 00:31:53.000
\nAnd how do I get the 10 well, then, I go by a couple of companies that Will doesn't farewell.<\/p>\n
00:31:53.000 --> 00:31:58.000
\nWhen you do that it's gotta be. We deal with what we call mandates.<\/p>\n
00:31:58.000 --> 00:32:06.000
\nSo it's a criteria of what you're looking for, and pretty much you're not going to be a client of cogent if you have one main thing, you're looking for, because it's just not going to work.<\/p>\n
00:32:06.000 --> 00:32:14.000
\nIf it's bottom line or top line or staffing, it doesn't make any sense, because the biggest mistake most people make is for one.<\/p>\n
00:32:14.000 --> 00:32:31.000
\nI just wanna buy something I can afford, and the odds are what you can afford is probably not something good to buy if you're looking in the smaller end because you're not helping your company if you work so hard to get to the point where you're doing things a certain way for certain types of<\/p>\n
00:32:31.000 --> 00:32:34.000
\nclients and charging certain amount of money but you're only looking to buy something you can afford.<\/p>\n
00:32:34.000 --> 00:32:44.000
\nThen you're not looking at the fact that none of that fits this we call the sandbox that you're in, and your sandbox is not getting better.<\/p>\n
00:32:44.000 --> 00:32:50.000
\nYou're going a wrong direction back to where you were 5 years ago, and it's going to cost you a lot more money than you think.<\/p>\n
00:32:50.000 --> 00:32:56.000
\nThe $50 you paid for that company is going to cost you 500,000 in the end, and you're going to get nothing and probably mess your own company up.<\/p>\n
00:32:56.000 --> 00:32:57.000
\nAlright!<\/p>\n
00:32:57.000 --> 00:32:59.000
\nSo talent is very big, but it can't be.<\/p>\n
00:32:59.000 --> 00:33:01.000
\nIt is common, but it can't be the only thing.<\/p>\n
00:33:01.000 --> 00:33:02.000
\nLet me change directions a little bit, because private equity was mentioned.<\/p>\n
00:33:02.000 --> 00:33:14.000
\nAnd it's one of my hot buttons, and that is, has private equity been good or bad for this industry?<\/p>\n
00:33:14.000 --> 00:33:19.000
\nBecause, you know, on one hand oh, we got the money and we can do whatever the hell we want.<\/p>\n
00:33:19.000 --> 00:33:24.000
\nOn the other hand, you do have people who are literally bottom feeders, like oh, well, we pulled our money.<\/p>\n
00:33:24.000 --> 00:33:27.000
\nWe got 50 million dollars, and then they make low ball offers to everybody.<\/p>\n
00:33:27.000 --> 00:33:28.000
\nAnd it reminds me of that, you know. Oh, we buy ugly houses right?<\/p>\n
00:33:28.000 --> 00:33:37.000
\nWe buy ugly ofs, you know, if you're willing to take 20 cents on the dollar, you know.<\/p>\n
00:33:37.000 --> 00:33:38.000
\nHook me up, and you know we'll give you some money, and then you can just go do something else.<\/p>\n
00:33:38.000 --> 00:33:47.000
\nSo, and you know, and at the same time I love the comment about the stitches.<\/p>\n
00:33:47.000 --> 00:33:59.000
\nI haven't healed from charge that sometimes, when you merge 2 companies, first of all, there's no such thing as a merger, somebody buys the other company, but then you have to like, okay, what are we gonna do with the staff?<\/p>\n
00:33:59.000 --> 00:34:03.000
\nWhat are we gonna do with the offering? What are we gonna do with the licenses and the Estp's?<\/p>\n
00:34:03.000 --> 00:34:04.000
\nThere's literally this period of complete confusion that's no less than 3 months right?<\/p>\n
00:34:04.000 --> 00:34:13.000
\nAnd so are you serving your customers? Are you providing good service?<\/p>\n
00:34:13.000 --> 00:34:18.000
\nI know that's like 12 questions in one. But the environment is not great.<\/p>\n
00:34:18.000 --> 00:34:25.000
\nIf you're a seller today, and it's not particularly great if you're buyer, I'm not sure why anybody is doing any of this.<\/p>\n
00:34:25.000 --> 00:34:29.000
\nComments, questions.<\/p>\n
00:34:29.000 --> 00:34:30.000
\nHi!<\/p>\n
00:34:30.000 --> 00:34:32.000
\nA lot, to unpack Carl. My goodness, take take a breath, sit down!<\/p>\n
00:34:32.000 --> 00:34:33.000
\nHey! Here! Wait!<\/p>\n
00:34:33.000 --> 00:34:38.000
\nHas Piggy been good, has been good or bad, for for the industry, I mean.<\/p>\n
00:34:38.000 --> 00:34:42.000
\nMy goodness, I guess it depends on where you sit. You know that is a very broad question.<\/p>\n
00:34:42.000 --> 00:34:48.000
\nIf you're, you know, if you're if you are PE backed and you did a bunch of roll ups and you exited that bad boy and are now sitting on a beach, you know, drinking a corona.<\/p>\n
00:34:48.000 --> 00:35:00.000
\nThen I would say, Well, it's probably good for that person, but you know there's a lot of you know other stories there, and I, you know I really don't have an opinion about the general.<\/p>\n
00:35:00.000 --> 00:35:09.000
\nYou know the motion of what P is happening.<\/p>\n
00:35:09.000 --> 00:35:15.000
\nI know it's disruptive. I know it's it's cost a lot of, I think a lot of Msps.<\/p>\n
00:35:15.000 --> 00:35:22.000
\nAnd business owners to think that their companies may be worth more than what they are, and they try to.<\/p>\n
00:35:22.000 --> 00:35:36.000
\nYou know, attract the attention of these folks, and I don't think that a lot of these folks that are out there looking to buy Msps or doing themselves any favors when they're just blasting everybody with emails.<\/p>\n
00:35:36.000 --> 00:35:40.000
\nI mean, I'm on every list, I think, on the planet, in our industry.<\/p>\n
00:35:40.000 --> 00:35:47.000
\nAnd I get emails daily, almost from different folks asking about, Hey, you're connected with a bunch of Msps.<\/p>\n
00:35:47.000 --> 00:35:55.000
\nDo you know any of them that want to sell? And it's just this kind of a it almost feels like, I think that's the being done very poorly.<\/p>\n
00:35:55.000 --> 00:36:03.000
\nBut I think you know the folks that that are trying to do right by the clients that they serve, you know, and do it right.<\/p>\n
00:36:03.000 --> 00:36:08.000
\nProbably have a place here, but you know I haven't heard any personal horror stories.<\/p>\n
00:36:08.000 --> 00:36:13.000
\nI yet I mean George Rand.<\/p>\n
00:36:13.000 --> 00:36:20.000
\nNot in the P. Sector as much, I mean, like you.<\/p>\n
00:36:20.000 --> 00:36:25.000
\nI get D emails and then I get the day. Then I get the follow up spam just bubbling this to the top of your inbox.<\/p>\n
00:36:25.000 --> 00:36:31.000
\nYou know, like cause I haven't heard from you from the last 7 times.<\/p>\n
00:36:31.000 --> 00:36:36.000
\nI've sent you an email and we all we all get those.<\/p>\n
00:36:36.000 --> 00:36:40.000
\nAnd I'm not sure that even if I did know an Msp.<\/p>\n
00:36:40.000 --> 00:36:42.000
\nLet to sell, that I would send them to them, you know, just based on their you know, that kind of like.<\/p>\n
00:36:42.000 --> 00:36:51.000
\nYou're not even trying to, you know, in, you know.<\/p>\n
00:36:51.000 --> 00:37:07.000
\nStart a personal relationship. I mean, you know, just at least look like you're trying because if you're treating me like this, and you want me to send you business, then what are you gonna do to the client right now, I'm the bad guy because I sent them.<\/p>\n
00:37:07.000 --> 00:37:14.000
\nTo you, but so far I have not seen an awful lot of negative fallout from PE.<\/p>\n
00:37:14.000 --> 00:37:32.000
\nThe one good thing about them is, you know, they have the money they and you don't have to sit around for a bunch of financing and wait until the Sba approves this loan or that loan and this bank, you know, is given right so there's quick cash and<\/p>\n
00:37:32.000 --> 00:37:52.000
\nthere's quick clothes, but Carl's got an awesome point about how the integration of the 2 teams, the 2 companies, you know, come together, and it's slow, and it's painful in many and in many cases what are you seeing George?<\/p>\n
00:37:52.000 --> 00:37:57.000
\nWell, man like, I said. Probably about half my clients are PE oriented.<\/p>\n
00:37:57.000 --> 00:38:03.000
\nI know Carl also has issue, and I have a little bit issue with peas in the Channel, which is not the same as PE's. Here.<\/p>\n
00:38:03.000 --> 00:38:08.000
\nYou know those buying the vendors that's kind of a little different story.<\/p>\n
00:38:08.000 --> 00:38:23.000
\nI have nothing to do with that, by the way, 0, but you know not all peas are created equal, or also vast majority are not monsters, like some stories come out, and they have to deal with the same problem.<\/p>\n
00:38:23.000 --> 00:38:32.000
\nBelieve me, there's not one Private Equity Company that wants to pay several millions of dollars to not do well, so they're not.<\/p>\n
00:38:32.000 --> 00:38:46.000
\nGonna it's actually a when you really get into, I get what you're saying around.<\/p>\n
00:38:46.000 --> 00:38:47.000
\nHmm!<\/p>\n
00:38:47.000 --> 00:38:49.000
\nBut you know the emails and all that, but when you actually talk to them, and if somebody truly likes what they see it's a bad honor that doesn't mean you need to do a deal with them, because there's not one P. On god's green earth that's gonna<\/p>\n
00:38:49.000 --> 00:38:54.000
\ndo any. They're not venture capital people. They conflict those things.<\/p>\n
00:38:54.000 --> 00:39:04.000
\nVcs are total. Different animals. Peas don't do anything that aren't already making money to the bottom, not the top, and that are going to bet to do better and make them better with whatever they're trying to do.<\/p>\n
00:39:04.000 --> 00:39:07.000
\nThere are investors. They're trying to make more money.<\/p>\n
00:39:07.000 --> 00:39:08.000
\nIf you had enough money to put money into a PE fund, you would want them to do the same thing.<\/p>\n
00:39:08.000 --> 00:39:19.000
\nThat's just how it works, but they're still running a company, that's just the how it works. But they're still running a company, and they still they're not operators.<\/p>\n
00:39:19.000 --> 00:39:20.000
\nSo they need you to run the company. So that's the good part.<\/p>\n
00:39:20.000 --> 00:39:22.000
\nThey don't really interfere with things.<\/p>\n
00:39:22.000 --> 00:39:26.000
\nSo for the most part I don't hear any horror stories either, about my clients.<\/p>\n
00:39:26.000 --> 00:39:31.000
\nI mean, you're gonna get some unhappy people here and there. That doesn't matter.<\/p>\n
00:39:31.000 --> 00:39:40.000
\nI'm sure every one of us can add an unhappy person, including Carl, that has done some work with them before, and it's just because you can't make everybody happy.<\/p>\n
00:39:40.000 --> 00:39:43.000
\nBut I I don't think it's all that bad.<\/p>\n
00:39:43.000 --> 00:39:47.000
\nIt actually is the good news for the actual It service providers.<\/p>\n
00:39:47.000 --> 00:39:57.000
\nIt's keeping. The price is up be honest with you. PE's do not have. This is another thing.<\/p>\n
00:39:57.000 --> 00:40:02.000
\nI'm sure Carl is gonna bring up. They don't have as much of a problem with the interest rates.<\/p>\n
00:40:02.000 --> 00:40:05.000
\nDon't let that fool you. Every PE uses Leverage.<\/p>\n
00:40:05.000 --> 00:40:12.000
\nThey don't want to use their barrel of cash, but the bank doesn't charge as much money, because they know they have a barrel of cash that they can pay them with.<\/p>\n
00:40:12.000 --> 00:40:19.000
\nIf something goes the wrong way, and, like, I said before, very slim chance of peas doing anything that's going to go the wrong way.<\/p>\n
00:40:19.000 --> 00:40:22.000
\nIt's just not going to happen they don't give away money like candy.<\/p>\n
00:40:22.000 --> 00:40:27.000
\nSo there is something that has to work well, and they're usually pretty good at stitching things together eventually.<\/p>\n
00:40:27.000 --> 00:40:42.000
\nIt is not that easy, and some of them don't complain don't completely stitch things together on purpose, especially if they're very geographically dispersed, because you know that Austin, Texas and Los Angeles California are not the same thing, you know you just can't.<\/p>\n
00:40:42.000 --> 00:40:46.000
\nYou can't miss those flavors of where people are located.<\/p>\n
00:40:46.000 --> 00:40:51.000
\nSo not necessarily always bad news at all when it comes to Ps.<\/p>\n
00:40:51.000 --> 00:40:55.000
\nHmm great conversation. I'd like to tag in on the post merger integration process.<\/p>\n
00:40:55.000 --> 00:41:04.000
\nI'm certified in that, and I do a lot of that for clients, and the number one, I think you know, once you know, all things being equal, right?<\/p>\n
00:41:04.000 --> 00:41:09.000
\nThe deal looks good, due diligence is, you know, good.<\/p>\n
00:41:09.000 --> 00:41:18.000
\nCompany is acquired. The number one reason that an acquisition is deemed a failure.<\/p>\n
00:41:18.000 --> 00:41:24.000
\nAfter the fact is because of poor integration after the acquisition.<\/p>\n
00:41:24.000 --> 00:41:25.000
\nThat's it. And so there are a lot of I mean, that's where the real heavy lifting begins.<\/p>\n
00:41:25.000 --> 00:41:40.000
\nAs we've been talking about, and I've been involved in in integration projects that have gone well longer than 3 months longer than 6 months longer than 9 months, depending upon the size of the integration.<\/p>\n
00:41:40.000 --> 00:41:42.000
\nThe geographic, you know, orientation platforms, integrating platforms and processes.<\/p>\n
00:41:42.000 --> 00:41:51.000
\nNot so much, but the platforms and the vendors, and then the people right.<\/p>\n
00:41:51.000 --> 00:41:54.000
\nSo as long as there's good cultural alignment.<\/p>\n
00:41:54.000 --> 00:41:57.000
\nThat's one thing you know, that I'll share with folks that are, you know, interested in either buying or selling their organization.<\/p>\n
00:41:57.000 --> 00:42:13.000
\nTheir chances are pretty good that if you're a seller they're gonna want you to stay on for a little while unless you write some kind of sweetheart deal that says, Hey, the minute I turn the keys over to you I'm done good for you but you know chances are to<\/p>\n
00:42:13.000 --> 00:42:20.000
\nmake you the maximum, you know, you know, to receive the maximum value.<\/p>\n
00:42:20.000 --> 00:42:21.000
\nYou're gonna be on there for a little while at least.<\/p>\n
00:42:21.000 --> 00:42:28.000
\nThrough, the transition. Maybe there's an earn out that allows you to earn even more than what the strike prices and things like that.<\/p>\n
00:42:28.000 --> 00:42:33.000
\nBut you're gonna wanna make sure that the culture between the organizations is sound and that's the people component of it.<\/p>\n
00:42:33.000 --> 00:42:52.000
\nBut after that, what takes the most time in my experience is integrating these platforms, and then these vendors and things like that, especially now in the world of Oh, I'm buying Microsoft azure licenses through this vendor I'm buying them direct cause I'm a Csp from microsoft and I'm<\/p>\n
00:42:52.000 --> 00:42:59.000
\nbuying, you know. Here's my firewall vendor, and here's my firewall vendor, and here's my bar and all of that stuff, and then the especially the consumption based licensing stuff.<\/p>\n
00:42:59.000 --> 00:43:09.000
\nYou know that stuff tends to take a long time and financial accounting systems and platforms to like they're running different systems that need to be integrated.<\/p>\n
00:43:09.000 --> 00:43:12.000
\nAnd then the sales process and all that. So you know, that's where the heavy lifting begins.<\/p>\n
00:43:12.000 --> 00:43:18.000
\nIt's not, you know, all wine and roses after the deal is done in a checks or cut.<\/p>\n
00:43:18.000 --> 00:43:21.000
\nThat's when and you'll work the hardest you've ever worked.<\/p>\n
00:43:21.000 --> 00:43:27.000
\nIf you're at the point of selling your organization at that point, you'll work the hardest you've ever worked.<\/p>\n
00:43:27.000 --> 00:43:32.000
\nThe first 3, 6, 9 months after the deal is made. In my opinion.<\/p>\n
00:43:32.000 --> 00:43:36.000
\nYup. That's opportunity. First fit, last up turning first money last.<\/p>\n
00:43:36.000 --> 00:43:40.000
\nIf you don't do that, I don't care who's the seller and the buyers is never gonna work.<\/p>\n
00:43:40.000 --> 00:43:44.000
\nAnd that's same thing. Just because a PE offered you a bunch of money.<\/p>\n
00:43:44.000 --> 00:43:46.000
\nGo back that that't mean. That's a good deal.<\/p>\n
00:43:46.000 --> 00:43:50.000
\nIf you know it's gonna blow up in your face and all your employees know where you live.<\/p>\n
00:43:50.000 --> 00:43:51.000
\nMaybe you don't want to do that deal alright unless you're gonna move somewhere else.<\/p>\n
00:43:51.000 --> 00:43:57.000
\nSo not gonna find you it's got to work, Eric.<\/p>\n
00:43:57.000 --> 00:43:59.000
\nThat's an awesome point. And that's going to help with the integration. Obviously.<\/p>\n
00:43:59.000 --> 00:44:12.000
\nI had a client about 30 years ago that he sold a big chunk of his company into a, but before that he talked to several companies, and he just said his first question is, How are you gonna treat my people?<\/p>\n
00:44:12.000 --> 00:44:21.000
\nAnd he would not sell to a company until he had in writing how his people were going to be treated, and you know, because he sort of felt like I built this business.<\/p>\n
00:44:21.000 --> 00:44:27.000
\nIt's got 75 employees. And I'm not gonna leave them out in the cold, you know.<\/p>\n
00:44:27.000 --> 00:44:29.000
\nSo that's that's nice to know that those people exist. So.<\/p>\n
00:44:29.000 --> 00:44:45.000
\nThat's a good consideration, though really just, you know, to what is going to happen to not only the clients, but also the people that have supported you throughout the entirety of your business.<\/p>\n
00:44:45.000 --> 00:44:46.000
\nYeah.<\/p>\n
00:44:46.000 --> 00:44:51.000
\nYes, it's great to have that payday, you know, and go riding off into the sunset.<\/p>\n
00:44:51.000 --> 00:45:01.000
\nBut don't forget those people that have supported you, and you know, when you're talking to whether it's a PE company or some you know, some other Msp.<\/p>\n
00:45:01.000 --> 00:45:05.000
\nDown the street. You know what with one of these companies, is more closely aligned with the values that you've built for your company.<\/p>\n
00:45:05.000 --> 00:45:18.000
\nYour team, your clients, you know, and which one is, gonna be the right. That's a huge consideration.<\/p>\n
00:45:18.000 --> 00:45:19.000
\nYeah.<\/p>\n
00:45:19.000 --> 00:45:27.000
\nSo we have an anonymous comment here that says, I, don't want to talk about this publicly, but a colleague is looking at a merger with another Msp.<\/p>\n
00:45:27.000 --> 00:45:36.000
\nBecause of PE. Firm says they want a larger Msp. To provide tech services to the PE acqu acquisitions, but they don't want the merged Msp.<\/p>\n
00:45:36.000 --> 00:45:43.000
\nTo work with their own clients. This sounds like a questionable arrangement, since there's no guaranteed income from the PE firm.<\/p>\n
00:45:43.000 --> 00:45:44.000
\nDoes that make any sense?<\/p>\n
00:45:44.000 --> 00:45:46.000
\nIt sounds like a can of worms. It sounds like a can of worms. Yeah.<\/p>\n
00:45:46.000 --> 00:45:59.000
\nRight. If the little. If the little hairs on the back of your neck stand up when you start to read this, you know, or maybe you're smelling burnt toast and walk away.<\/p>\n
00:45:59.000 --> 00:46:00.000
\nYeah, that's a whole different. They want something different.<\/p>\n
00:46:00.000 --> 00:46:01.000
\nThat is.<\/p>\n
00:46:01.000 --> 00:46:02.000
\nYeah, absolutely.<\/p>\n
00:46:02.000 --> 00:46:03.000
\nThan what we're talking about here. I think in this conversation.<\/p>\n
00:46:03.000 --> 00:46:09.000
\nWhat that is. Yeah, I've heard 2 companies merging together because if they're not big enough to be a platform for a pee, and they're trying to do that.<\/p>\n
00:46:09.000 --> 00:46:16.000
\nAnd a PE might be okay with that not really typical back to the whole healing of the stitches.<\/p>\n
00:46:16.000 --> 00:46:17.000
\nThing, but that does not sound like what you're talking about.<\/p>\n
00:46:17.000 --> 00:46:19.000
\nThat sounds like totally different. Mumbo Jumbo!<\/p>\n
00:46:19.000 --> 00:46:23.000
\nSo all right. So, George, one of the things you mentioned was that, and let me just make sure I got this right.<\/p>\n
00:46:23.000 --> 00:46:31.000
\nThat so the interest rates are not as big of a factor as we might think, because I think about like a house.<\/p>\n
00:46:31.000 --> 00:46:32.000
\nThe difference between 3% and 6%. I'm gonna buy a lot less house right?<\/p>\n
00:46:32.000 --> 00:46:45.000
\nBut the PE doesn't have to worry about that, because they've got enough money that they can still get a lower interest rate from the bank interest rate.<\/p>\n
00:46:45.000 --> 00:46:50.000
\nYeah, yeah, so anybody, yeah, it doesn't matter. I mean, if it's a huge company a 500 million dollar company versus a 50 million dollar company versus a 5 million dollar company.<\/p>\n
00:46:50.000 --> 00:46:57.000
\nThey're all going to have different banking relationships.<\/p>\n
00:46:57.000 --> 00:46:58.000
\nPrivate equity is completely different, because they all know how much money they have sitting in this barrel over here.<\/p>\n
00:46:58.000 --> 00:47:10.000
\nThey're going to pay higher rates. But it's not gonna be the same thing as a regular company that needs really needs the loan from the bank.<\/p>\n
00:47:10.000 --> 00:47:16.000
\nIs there? There's supplement they're using that leverage instead of all their equity.<\/p>\n
00:47:16.000 --> 00:47:30.000
\nSo they don't have to. And so the other thing they can do that most people can't is, if if I have to get a 10 million dollar loan to do a company to do a deal with the company, and they still need they need 10 million dollars, and they're usually doing 50%<\/p>\n
00:47:30.000 --> 00:47:34.000
\nleverage. And it's a little bit too high with their interest rates.<\/p>\n
00:47:34.000 --> 00:47:39.000
\nThey can always shift, and only do 30 or 40% of that deal on leverage.<\/p>\n
00:47:39.000 --> 00:47:44.000
\nIf they want it to, and if it's still works within their math, because there is always math, that's there.<\/p>\n
00:47:44.000 --> 00:47:51.000
\nSo that's what I was saying. It's still the interest rates are higher, and it's causing even private equity to tighten the screws.<\/p>\n
00:47:51.000 --> 00:47:55.000
\nSo the due diligence is a lot tighter if they're okay with hey?<\/p>\n
00:47:55.000 --> 00:47:59.000
\n6%. Mrr, at a minimum. And you're at 58%. They would do it.<\/p>\n
00:47:59.000 --> 00:48:02.000
\nYou do it now, at 59 and a half they might go.<\/p>\n
00:48:02.000 --> 00:48:03.000
\nProbably not gonna do that, you know. 16 and a half. Okay.<\/p>\n
00:48:03.000 --> 00:48:14.000
\nAnd so they just they change their zeitgeist to make sure that their math still works, and they could still do the same kind of of a deal, whereas others that aren't you know, don't have that luxury.<\/p>\n
00:48:14.000 --> 00:48:19.000
\nThey're tightening the screws as well, and getting rid like I need to do a deal this year.<\/p>\n
00:48:19.000 --> 00:48:20.000
\nThat's part of my my plan, but it's gotta be closer to perfect than I was willing to do 2 years ago.<\/p>\n
00:48:20.000 --> 00:48:24.000
\nIs what's coming down.<\/p>\n
00:48:24.000 --> 00:48:34.000
\nDoes this? Does a deal like this sort of look like a house in the sense of when you're gonna send it off to the funding people, you better have this paperwork in this paper.<\/p>\n
00:48:34.000 --> 00:48:41.000
\nWe're gonna like these things all have to be in order.<\/p>\n
00:48:41.000 --> 00:48:42.000
\nThat's the only thing I've encountered.<\/p>\n
00:48:42.000 --> 00:48:43.000
\nAnd we're looking for this. And you know that you have to find certain things. We're not interested.<\/p>\n
00:48:43.000 --> 00:48:47.000
\nYeah, I never equate any of the stuff to buy in a house, for sure.<\/p>\n
00:48:47.000 --> 00:48:51.000
\nBut but as far as if you're getting a loan, yeah, they're gonna be in your knickers big time you're gonna have everything set up. You had any little hiccup from a couple of years ago.<\/p>\n
00:48:51.000 --> 00:48:58.000
\nIt's all going to be the especially for getting up doing an Sba loan which has his own problems.<\/p>\n
00:48:58.000 --> 00:49:03.000
\nSome, you know, mentioned that before, and and most people don't understand that once you go to a bank you have no control over the deal structure anymore.<\/p>\n
00:49:03.000 --> 00:49:15.000
\nNow, all of a sudden, you know you had something set up or are we gonna do this and haven't earned out, and we're all good and I'm gonna pay 5 million in bank goes one.<\/p>\n
00:49:15.000 --> 00:49:21.000
\nIt's worth 3,000,002. Alright. Well, that just you probably should have known that beforehand.<\/p>\n
00:49:21.000 --> 00:49:36.000
\nAnd then you also find out how much it's gonna cost you. So yeah, there's a lot of paperwork involved of prepping. And you're gonna have to put a lot of information in data and work into doing that as the buyer never mind the seller.<\/p>\n
00:49:36.000 --> 00:49:37.000
\nI guess I guess, to a quite something to kind of a house purchase, using Carl's analogy.<\/p>\n
00:49:37.000 --> 00:49:58.000
\nMaybe the home inspection and the due diligence right so the home inspection is basically the due diligence of going through the house top to bottom to making sure that everything within code and noting any deficiencies and all that for the appraisal the due<\/p>\n
00:49:58.000 --> 00:49:59.000
\ndiligence, that's done on a company is a hundred times more more invasive.<\/p>\n
00:49:59.000 --> 00:50:21.000
\nRight from top to bottom, but it's meant to do the same thing to get an objective appraisal of the operations of that organization in order to establish, you know, some the beginning of you know, confirming what we think the value might be and and based upon the due<\/p>\n
00:50:21.000 --> 00:50:26.000
\nDiligence. The offer will change right, we may say, Hey, you're representing that like you said, I George, hey, it's 60% margin.<\/p>\n
00:50:26.000 --> 00:50:34.000
\nThat's just one easy one, right? Well, and no, it's it's actually 57% margin. Okay? Well, you know what?<\/p>\n
00:50:34.000 --> 00:50:42.000
\nWe're gonna knock off a little bit of our evaluation, because through our through our due diligence we found these other things, and maybe we found even more things.<\/p>\n
00:50:42.000 --> 00:51:02.000
\nAnd so, you know, that's where the negotiation take, you know, can take a different turn and I will say back to the post merger integration process, the integration planning process begins happening before the deal even closes right it begins happening during due diligence like we're preparing our<\/p>\n
00:51:02.000 --> 00:51:07.000
\nteams, right for everything that has to be done, post merger into to integrate.<\/p>\n
00:51:07.000 --> 00:51:14.000
\nBecause, you know, during that discussion during the you know, the sale discussion and the transaction discussion part of the valuation is okay.<\/p>\n
00:51:14.000 --> 00:51:19.000
\nWell, what are we going to achieve? What is the new combined entity?<\/p>\n
00:51:19.000 --> 00:51:25.000
\nWhat are the new entity going to do? We can't just say, Yeah, I love the you know folks that say, Oh, we're not changing anything.<\/p>\n
00:51:25.000 --> 00:51:32.000
\nYou guys just keep doing what you're doing. Well, you're missing a ton of synergy there you're allowing bad habits to continue your lat. You know.<\/p>\n
00:51:32.000 --> 00:51:36.000
\nIt's just bad news you've got to integrate some things at some point right?<\/p>\n
00:51:36.000 --> 00:51:43.000
\nBut that whole post merger integration process. It is a project that most of us, if it's our first and you know, business or Msp, we've never done a project that big there are so many charters.<\/p>\n
00:51:43.000 --> 00:51:55.000
\nThere are so many timelines. There are so many people that have to be involved, you know, and I'm speaking from doing this all the time with clients.<\/p>\n
00:51:55.000 --> 00:51:59.000
\nIt is. It's a monster. So it's not something that you know.<\/p>\n
00:51:59.000 --> 00:52:01.000
\nYou should take a lightly.<\/p>\n
00:52:01.000 --> 00:52:05.000
\nCan I just jump in for a second because Eric was talking a great deal about the due diligence, and you know and I'm teaching this class at it.<\/p>\n
00:52:05.000 --> 00:52:19.000
\nSpu, right about positions positioning your firm for growth or sale or exit.<\/p>\n
00:52:19.000 --> 00:52:30.000
\nBut the due diligence piece and one of the handouts in that class is a 3 page checklist of due diligence.<\/p>\n
00:52:30.000 --> 00:52:34.000
\nQuestions from an actual, you know, acquisition transaction, and there's a work paper.<\/p>\n
00:52:34.000 --> 00:52:48.000
\nThere's a question. There's a document for everything, and, like Eric was just saying they are as they're going through the information in your data room.<\/p>\n
00:52:48.000 --> 00:52:59.000
\nIf that has everything from your your standard operating procedures to your ests and your employment benefits, and you know your your employee, handbook and personnel policies.<\/p>\n
00:52:59.000 --> 00:53:12.000
\nYou know all of that. They are preparing to to take your people and integrate them with their people and their policies.<\/p>\n
00:53:12.000 --> 00:53:18.000
\nSo it's not just a matter of let's say your balance sheet. Does it balance?<\/p>\n
00:53:18.000 --> 00:53:22.000
\nYeah. Okay, good to go. Know what? What is every number on that balance sheet?<\/p>\n
00:53:22.000 --> 00:53:27.000
\nWhat is this security deposit, and how much longer do you have on this lease?<\/p>\n
00:53:27.000 --> 00:53:34.000
\nYou know, and where are your leases? And there's new rules about now.<\/p>\n
00:53:34.000 --> 00:53:36.000
\nFrom that financial accounting Standards Board in the United States.<\/p>\n
00:53:36.000 --> 00:53:44.000
\nThe Fasb, where you are required to put on your balance sheet.<\/p>\n
00:53:44.000 --> 00:53:52.000
\nThe liability of the term of the lease, right? So there's a there's a lot of things that go into the entire process.<\/p>\n
00:53:52.000 --> 00:53:59.000
\nAnd again, there's no better time to start this due diligence list and update it annually at the very least.<\/p>\n
00:53:59.000 --> 00:54:12.000
\nAnd go through it, and make sure that you have your information ready, because when that time comes, you know, and somebody comes along with your your golden parachute.<\/p>\n
00:54:12.000 --> 00:54:16.000
\nThen you can say that you're ready for you.<\/p>\n
00:54:16.000 --> 00:54:17.000
\nYou know it's like Bill Murray and Ins.<\/p>\n
00:54:17.000 --> 00:54:18.000
\nScrooge I'm ready for it now, you know.<\/p>\n
00:54:18.000 --> 00:54:22.000
\nSo!<\/p>\n
00:54:22.000 --> 00:54:23.000
\nSo we're almost out of time. But let me see if Jeff Pont wants to join us.<\/p>\n
00:54:23.000 --> 00:54:40.000
\nSo Jeff's our next speaker, and just happens to have gone through a merger that includes A, his telecom company buying, among other things, an Msp.<\/p>\n
00:54:40.000 --> 00:54:49.000
\nSo it's an interesting world, and the differences in evaluations are quite significant as well.<\/p>\n
00:54:49.000 --> 00:54:51.000
\nYeah, I'm in the middle of that right now.<\/p>\n
00:54:51.000 --> 00:54:59.000
\nSo I actually signed this to merge my company with another one on the our twentieth anniversary.<\/p>\n
00:54:59.000 --> 00:55:03.000
\nBy the way, so that was kind of interesting. And I'm right in the middle.<\/p>\n
00:55:03.000 --> 00:55:12.000
\nThat was April fifth this year, right? So I'm in the everything. I'm right in the middle of all that right now.<\/p>\n
00:55:12.000 --> 00:55:13.000
\nGood to see you.<\/p>\n
00:55:13.000 --> 00:55:16.000
\nIt's all. It's a financial system stuff right now, right?<\/p>\n
00:55:16.000 --> 00:55:21.000
\nBecause their Salesforce House, and they've spent a lot of money. Be their cells.<\/p>\n
00:55:21.000 --> 00:55:24.000
\nThey build everything, including the commission platform on there and in our world.<\/p>\n
00:55:24.000 --> 00:55:33.000
\nOn the telecom side, the master agent, side or Tsd, as we're called now, you know my favorite saying came from Caesar right?<\/p>\n
00:55:33.000 --> 00:55:41.000
\nAn army moves on its stomach, and if you screw commissions you might as well just close your doors and go away.<\/p>\n
00:55:41.000 --> 00:55:45.000
\nSo you know, we're making sure. And we built our own system.<\/p>\n
00:55:45.000 --> 00:55:47.000
\nSo everything we've done was kind of built from scratch.<\/p>\n
00:55:47.000 --> 00:55:51.000
\nAnd and so it's an interesting process, for sure. But.<\/p>\n
00:55:51.000 --> 00:55:59.000
\nAlright. So I'm gonna give each. Yeah, Eric, George and Riannan, 1\u00a0min you get 60\u00a0s on the clock.<\/p>\n
00:55:59.000 --> 00:56:05.000
\nSo final words for folks before we go.<\/p>\n
00:56:05.000 --> 00:56:06.000
\nOkay.<\/p>\n
00:56:06.000 --> 00:56:11.000
\nOkay, I'll go. So one of the questions on the chat is, What are the top?<\/p>\n
00:56:11.000 --> 00:56:20.000
\n3 things that an Msp. Should focus on over the next 3 years so I'm going to start with cleaning financials, regular and steady growth.<\/p>\n
00:56:20.000 --> 00:56:27.000
\nAnd you know and organizing your organizational documents right?<\/p>\n
00:56:27.000 --> 00:56:28.000
\nHmm!<\/p>\n
00:56:28.000 --> 00:56:32.000
\nSo those are the probably the top. 3 things focus on your bottom line.<\/p>\n
00:56:32.000 --> 00:56:33.000
\nFocus on the cleanliness of your books so that you can.<\/p>\n
00:56:33.000 --> 00:56:42.000
\nYou, you can intelligently explain what every number is.<\/p>\n
00:56:42.000 --> 00:56:43.000
\nAlright!<\/p>\n
00:56:43.000 --> 00:56:50.000
\nNice. I posted number one. The percentage of your revenue that's managed services.<\/p>\n
00:56:50.000 --> 00:56:55.000
\nPercent represented the length of your agreements, and I'm gonna throw in.<\/p>\n
00:56:55.000 --> 00:56:56.000
\nI have a free valuation calculator. Again, for entertainment purposes only at price.<\/p>\n
00:56:56.000 --> 00:57:04.000
\nPrice, my msp.com, I just chatted it to everybody.<\/p>\n
00:57:04.000 --> 00:57:15.000
\nIt takes the those statistics that I showed you on those slides and it lets you put in your own numbers and kind of figure out, you know, again for fun, for giggles to see where you might.<\/p>\n
00:57:15.000 --> 00:57:20.000
\nMy Amanda!<\/p>\n
00:57:20.000 --> 00:57:21.000
\nOh, I'm sure I'm sure you might have other things to say to me.<\/p>\n
00:57:21.000 --> 00:57:23.000
\nI might do that just to entertain myself and call you up and laugh.<\/p>\n
00:57:23.000 --> 00:57:24.000
\nHuh!<\/p>\n
00:57:24.000 --> 00:57:30.000
\nYeah, can I ask one question to the panel because this one comes up a lot in my world?<\/p>\n
00:57:30.000 --> 00:57:31.000
\nSo look. Oh, I'm sorry, George.<\/p>\n
00:57:31.000 --> 00:57:34.000
\nLet, I mean. George gave his his 6\u00a0s first.<\/p>\n
00:57:34.000 --> 00:57:39.000
\nOh, that's alright! I'm not to screen with anything that ran through out there, or Eric.<\/p>\n
00:57:39.000 --> 00:57:42.000
\nAll those things are absolutely important stuff to deal with, you know, I'm gonna go back to real old school again.<\/p>\n
00:57:42.000 --> 00:58:02.000
\nCarl run it like you're gonna sell it. If you sell your company to somebody, think about you buying your own business or somebody else, so because it's amazing how many people I talked to and are like, look, I did my analysis, I did all the modeling for you we don't do all that<\/p>\n
00:58:02.000 --> 00:58:07.000
\nstuff that coaching. This is what it the good deal price and the purchase price is not just that.<\/p>\n
00:58:07.000 --> 00:58:11.000
\nIt's the deal structure as well, not because most things, by the way, aren't.<\/p>\n
00:58:11.000 --> 00:58:15.000
\nHere's a check go away. Don't work like that for 90% of companies out there.<\/p>\n
00:58:15.000 --> 00:58:21.000
\nAnd you turn that back around on yourself, and you'd say, you know, would you sell for that?<\/p>\n
00:58:21.000 --> 00:58:22.000
\nAnd they go. Well, now, I want twice as much as that will. Why, you know.<\/p>\n
00:58:22.000 --> 00:58:28.000
\nSo the think of it the same way the thing same way you would buy a company.<\/p>\n
00:58:28.000 --> 00:58:35.000
\nYou'd want to look at yourself in that same light, if you know. So someday you can sell, and and we do market analysis, too, if you wanted to.<\/p>\n
00:58:35.000 --> 00:58:38.000
\nVery good, alright! So we're almost at the top of the other. So, Jeff, I am.<\/p>\n
00:58:38.000 --> 00:58:43.000
\nGonna let you ask your question. But first I'm gonna stop the recording.<\/p>\n
00:58:43.000 --> 00:58:44.000
\nSure!<\/p>\n
00:58:44.000 --> 00:58:48.000
\nAnd I wanna thank the our 3 panelists, and I know that this could have gone on for another 3\u00a0h.<\/p>\n
00:58:48.000 --> 00:58:51.000
\nSo I hope that folks are patient with us. We can't do 3\u00a0h presentations. But anyway, so thank you.<\/p>\n
00:58:51.000 --> 00:58:55.000
\nI appreciate. Yeah.<\/p>\n
00:58:55.000 --> 00:58:56.000
\nIt's a lot of fun, Carl. Thank you.<\/p>\n
00:58:56.000 --> 00:59:00.000
\nThank you all<\/p>\n
<\/p>\n","handouts":[],"handouts_-_links":[],"topic-session-relationship_to":["889"],"speaker-session-relationship_from":["701","700","699"]},"_links":{"self":[{"href":"https:\/\/smbonlineconference.com\/wp-json\/wp\/v2\/session\/586"}],"collection":[{"href":"https:\/\/smbonlineconference.com\/wp-json\/wp\/v2\/session"}],"about":[{"href":"https:\/\/smbonlineconference.com\/wp-json\/wp\/v2\/types\/session"}],"wp:attachment":[{"href":"https:\/\/smbonlineconference.com\/wp-json\/wp\/v2\/media?parent=586"}],"wp:term":[{"taxonomy":"conference-day","embeddable":true,"href":"https:\/\/smbonlineconference.com\/wp-json\/wp\/v2\/conference-day?post=586"},{"taxonomy":"conference-year","embeddable":true,"href":"https:\/\/smbonlineconference.com\/wp-json\/wp\/v2\/conference-year?post=586"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}