Walker Deibel 10:26
Yep, let’s talk about it macro. And then we’ll get specific if that’s okay. Sure. You know, basically, it’s one of these things where, during my MBA, I was trying to use it as sort of a career shield to start a business from scratch. Right. And, you know, we were in competition for, you know, the the award and like, had some investors lining up. And, you know, we had a net national customer who wanted to buy and rollout our product and all the rest of it. And it was just one of these things where there was this Achilles heel on the business, and sure enough, that we didn’t own the IP, and the license was pulled from us, right at the end, right. And so the whole business went to zero immediately. Years later, I sort of tried it again, but the point was, in a major way, right? Like, like, you know, like, recruited an executive from Microsoft oversubscribed, the capital, raise all the things right. And, um, you know, what I learned was that I was not very good at startups. Right. There’s a couple other I’m not even mentioning. And, you know, the truth is, is that I feel like we all sort of go into startups, kind of, like, you know, Han Solo flying into an asteroid field. It’s sort of like, don’t tell me the odds, like, I’m fine. I’m gonna make, right. Right, right. But the truth is, is that all you need to do is look at the data to understand quite blatantly, that, you know, starting a business from scratch, and m&a succeed, is just punishment for not understanding statistics, like the odds are very, very much against you, and you engineer it in a much better way than like, Hey, I have this dream, and I’m gonna hustle for a while and then solely Google, right? It’s just like, that’s not gonna happen, right? It’s just not. And I hate to crush dreams. The other thing that was going on was, um, you know, I was getting my MBA at Olin School of Business here in St. Louis. And, you know, I’d walk up and down, you know, like, white on Boulevard, like one of the most well, you know, or a drive thru Laduma, like, top 10 richest neighborhoods in the country. And, you know, although Silicon Valley was sort of getting all of the attention, and all of the magazine covers and all of the everything, I would look around and be like, I’m in one of the top 10 richest neighborhoods in the country. And there’s not a single Internet entrepreneur living here, like not a single tap, like, what are they doing? And they’re not doing any of the stuff that we’re reading about. They were, you know, just salt of the earth kind of companies. And it was like, Okay, well, look, I mean, you know, this guy makes I remember sitting next to this guy, and he made the, you made the, you know, that the outer rim of light bulbs, real light fixtures, yeah.
John Corcoran 13:01
That a game getting displaced by digital technology.
Walker Deibel 13:05
Yeah. And, you know, it turned out there was like, two players in the space. And he was one of them, you know, and, okay, this is awesome. Like, I need to look, no one’s looking. Right. Um, so I, you know, when I graduated, I was like, Alright, I’m going to try to buy a business. And you know, what, the first thing I noticed was,
John Corcoran 13:21
first of all, let me let me pause on that. Was that crazy? Because it often depends on the MBA program, you know, some MBA programs, everyone’s going into Wall Street, or one’s going to a big, firm, but but were you like, kind of the black sheep, if you’re like, off going, I’m gonna start it by a business right now.
Walker Deibel 13:36
I mean, John, no one was doing it. Okay. There was there was a few people doing it in Cambridge at that time, okay. And I had heard of this concept of a search fund that was sort of originating in Cambridge, but like, it was, it was not anything. In fact, I had an MBA Professor tried to talk me out of it told me it was stupid, right. It’s always a dumb idea. I loved that I relish in the fact that 17 years later, I went back and launched the entrepreneurship through acquisition class at my alma mater, but whatever it was bought, it was nuts. And John, the thing is, is that like, as I started to look for a business to buy people, like, Oh, it must be nice, you have a lot of money. And I’m like, No, I don’t have any money. And they’re like, What are you? And I’m like, well, it has like earnings. And like history, like, I’m just gonna go to the bank. And they were like, what, like, it was, you know, what are you talking about? I’m like, well, there has to be a way to do this. Right. So you know, the thing is, is the first thing I realized was that your I am coming out of B school, right? There’s no organized information on this kind of like lower middle market, mainstream private business stuff. And
John Corcoran 14:43
literally didn’t have a course that had a section on it. Nothing,
Walker Deibel 14:47
nothing. There was nothing and so it’s one of these where, you know, in 2018, I published Buy Then Build, it’s really the book I wanted in 2004. Right? And it was like, how do we do this? Right? So, you know, the concepts here just to answer the question just to land this, when you buy an existing business, I often think of it as, like Moneyball for entrepreneurship. Right? In other words, you’re stacking the odds in your in your favor kind of thing already by getting on base, right? Yeah, starting with existing revenue, I’m starting with product market fit. I’m starting with, you know, specialized knowledge in the head of employees, I’m starting with infrastructure, I’m starting with, you know, profits and cash flow, right. And then, and then just to make it even sweeter, in my opinion, a lot of people look at me, and they’re like, that’s so risky. But here’s the thing, the cheapest capital out there is from a bank. Okay? SBA loans today are like, you know, 11%, maybe even higher, I don’t care, it’s still way cheaper than going and raising money from a bunch of investors. If you take money from an investor in my book, you owe that money back to them. Right? It’s not like, oh, there’s like, we’ll just kind of good thing they believed in me. Hopefully, I’ll make it you know what I’m saying? Like, you cannot take that money unless you have every intention of returning it. And hopefully, with a really good return, right? That’s, that’s why they’re giving it to you not not because they’re like, oh, yeah, just go for it kid. Like, that’s not that’s not what people are saying. Yeah. So, you know, and, you know, if you’re buying these businesses that, you know, let’s just let’s give you a big range, right, like two to five times earnings, that’s two to five years of earnings, getting a bank loan, right? And then buying that infrastructure and taking it over, then, slowly, or not. So slowly, making it yours. changing the culture, changing the paint, and growing it, right. Yeah. And what it does is it brings real estate economics to entrepreneurship.
John Corcoran 16:48
What do you mean by that?
Walker Deibel 16:51
When you buy a building, right, what you’re doing is you’re saying, Hey, I’m gonna go to the bank, I’m gonna get a mortgage, small down payment by the building, then I’m gonna put someone in there who’s going to rent it, and their rent is going to pay down my mortgage, and over time I get the equity build up, right? And I get to go sell it. Right. So the difference is that when you buy a building, you may have a 2% appreciation over time. And when you have a business, not only are you buying, like on a building a cap rate might be saying number 6% 8% 10%. If you if you equate cap rate, if you’re familiar with this term to to, you know, business acquisitions, you’re talking about, like often a 35% cap rate. I mean, it’s way cheaper for the cashflow, right. And then your upside potential is not 2% a year in terms of what’s the external market and allow for appreciation. It’s what do I bring to the table? And how am I going to grow this business? Hmm, yeah.
John Corcoran 17:50
So there’s so much I want to ask about here. But in terms of the search, searching for a company to buy, where do you recommend people start? Obviously, there are companies like Quiet Light that have listings, there’s also just doing, you know, a search in your geography or in your network. There’s evaluating what you’d be good at and what you should go into what do you what do you advise to companies in terms of where they should look and what industries they should look at? Sure.
Walker Deibel 18:19
So there’s a lot in there. I’m
John Corcoran 18:21
sorry, I tend to ask really big questions that are.
Walker Deibel 18:25
Let’s see. Let me give it to you two ways. Okay. The first is let’s talk about deal flow. That’s the first thing everyone wants to know about, right? Like, where do I go to get this deal? Flow? Right? Here’s what I’ve learned in almost 20 years of actively doing this. I’m go to business brokers. Okay. Because Business Brokers are the ones that have the deal flow, and they spend their entire careers generating deal flow. Okay. Moreover, they’re working with sellers who a want to sell, which is like, more than half of the situation. Okay. II, B, they’ve been coached on what to realistically expect in terms of evaluation. Okay, which is
John Corcoran 19:13
an important point, especially right now. Yeah. unpack that a lot. Yeah. So
Walker Deibel 19:18
those two things alone, you’re already 80% of the way home just by opening the thing right. Now. Now, third, I think people that don’t have experience with this will will underestimate grossly underestimate this. I’ve been in so many deals, like I think I’ve done over. I’ve been in some version, I’ve touched over 200 deals we figured out last week, and I’m in every single deal. There’s a moment in time where either the seller or the buyer, like they just have to walk away, right. And there’s this thing in m&a, which is like oh, if the deal doesn’t fall apart two or three times and it’s definitely not going to close. And it’s interesting that like, it hasn’t fallen apart and we’re going into closing I’m actually pretty stressed Something like, second of all, it’s too smooth, like, what’s the broker? A good broker, okay, and there’s a difference. But a good broker is the person who coordinates the mutual goal of the buyer and the seller. Okay, and just having that person there, to get it across the finish line. So as a seller, I have sold two companies with a broker. And if I sold again, I would use a broker. And every time I’ve been amazed at how they accurately price it, find a buyer and get the damn thing closed. Right? Sellers, just so you know, if you focus on proprietary deal flow, which even back in 2004 to 2006, people I was talking to were like, oh, yeah, I don’t go to brokers. It’s all about off market deals, I tend to think that this is sort of adopted in real estate thinking, right, and like, people want to find that off market deal, because you buy all this kind of stuff. I think you make money when you sell in, in business acquisitions. And I think that I’m finding someone who’s going to sell it to you, you know, three times or times, like, come on, like, whatever. You know, people say like, should I buy this deal looks a little expensive. I’m like, it’s expensive. You know, what do you want to get into? Like, oh, like, you know, I want to I want to buy it at 3.2x instead of a 3.7. I’m like, Okay, I’m out, like six months of earnings. On it, right, you know, like, down like, are you really just nervous about the risk you’re taking? Like, let’s, you know, anyway, the point is, is that sellers go to brokers, when they eventually want to sell, like, more than 90% of time, even when I talked to traditional search funds, like people who we talked about that is, you know, people who raise money to run a search, and then they raise money again, to buy a business, okay, two step process. They’ll spend 24 months and they’ll spend, you know, they’ll spend a month doing broker outreach, and then they’ll spend 23 months working full time cranking, trying to do proprietary deal flow. And every single one I’ve ever met in person, and I’m like, Yeah, where do you find that deal? They’re
John Corcoran 22:12
like, broker to broker. Yeah.
Walker Deibel 22:15
Yeah. And often, often, it’s like, oh, it’s someone I talked to two years ago, and then they decided they were ready to sell. And so they went to a broker, and I found the deal that way. Yeah.
John Corcoran 22:23
It may be perhaps, it might also be like, you hear sometimes these lore of like, Warren Buffett or someone like, you know, he was at the tennis club with so and so and, like, struck a deal, you know, and you think that there’s kind of like, a myth to it, you know,
Walker Deibel 22:39
it happens, it happens, right? And it’s, and the thing is, is like, you have to you have to be thinking about what are the sensational headlines, the sensational headlines are, hey, I started a business from scratch and grew to a billion dollars and went public. You know, I, I met a guy at the, at the restaurant and bought his company, I have a friend, I have a very close friend, who got a phone call from someone he knew who I think it was a CPA or an estate attorney and can’t remember. And he said, Hey, there’s been a death. And there’s a business here. And I’m just like, in it’s like, something in E commerce. Do you want to maybe buy it? And it was like, you know, for the 40s, right? death, disability, drugs, disabled, and whatever it is. So divorce. So um, he gets a call, he’s like, Well, you know, what’s the situation and the guy the owner, died in his red, Porsche 911 convertible, with a large volume of cocaine in the trunk. Three guns in the trunk is a million dollars in cash in a briefcase. And literally, it’s one of the best businesses I’ve ever seen for sale. And he just got the call. He was like, what is it? He bought it from the widow, and he had never bought a company before? Wow. You know, sort of three times, you know, yeah. Let’s,
John Corcoran 24:07
let’s get back to your printing company. Because I imagine there were some things you wanted to improve about it. And one thing that I hear frequently, a lot of times, when I over the last four or five months, as I’ve been looking at acquiring businesses and talking to different people, a lot of times they’re like, when I describe another business, and we’re like, Well, you shouldn’t buy it because it’s got such and such problem. And people love to point out those, you know, problems that exist, but then again, that’s where the opportunity lies, right? You know, not every business is going to be perfect. So, talk a little bit about, you know, that approach and also in specifically in the context of you acquiring this printing company at a time when people everyone was kind of thinking about digital printing.
Walker Deibel 24:47
Yeah. So I mean, just to Yeah, okay. So you know, okay, two things there. So one, when you know, when people are when you know, The entrepreneur, the entrepreneur minded person is is optimistic, opportunistic driven hustle growth mindset, I’m going to solve this No one can stop me and bulletproof. Right? And the investor mindset is, let me explain to myself why I can’t move forward. So it’s really like the accelerator and the brakes. Right? And, um, you know, I think that you have to, I’m not like, I almost didn’t publish by them build, because, like, even though it was done, it was done. It was I completed writing it, I think in well, in first quarter 2018, if not 2017, and it wasn’t published until September. And that’s because I waited. So I was like, I don’t know, someone’s gonna read this and go buy a business.
John Corcoran 25:48
And you were you felt like too much weight on your shoulders? Yeah, it
Walker Deibel 25:51
felt like, Yeah, I mean, no one was talking about this is, you know, right, John, but one of these where, you know, I mean, I mean, it’s very easy to be pessimistic and explain why someone’s not going to work. So what I always do, when I’m looking at for business to acquire, what I want to understand are, what are the risks? Okay? They’re every business I’ve ever seen has them, okay, every single business in the world has a reason why it’s going to completely fail. Some of them three or four, right? I want to know is what are you going to bring to the table as the CEO to own and grow this business moving forward? Right, because that’s the thing, it’s the act of management of a business. That is the thing that makes it go and move, right. It’s that entrepreneur part? So, um, I lost the thread there. It was a two part question.
John Corcoran 26:39
Yeah.
Walker Deibel 26:40
I think, Oh, well, buying it buying a printing business when No, everyone was. So this important, like, I really want to explain them that what was going on in the world right now. This was one where no one in our age group, I’m probably a lot older than you my age.
John Corcoran 26:57
I’m 47. We’re probably I’ll be 47 in 60 days. So
Walker Deibel 27:00
there you go. You only look 45. But so it’s one of these where this was like 2008 When I closed on this print is dead was like the headlines that were going on. Right? Like, like, I bought the company. And then it was, it was within the year like the Kindle was released. Right? Yeah, it was, like 24 months after, you know, I bought the company that Steve Jobs released the iPad. Okay. printing companies were going out of business at a rate of 36 a week. Okay. bookstores were going under, right? Remember borders? Like I mean, you know, all of this stuff kind of went away. And there was a couple of things that I saw, okay. And you couldn’t find them anywhere in the in the sort of public dialogue. Number one. People were very much still buying books. And it was like trillions. It’s like $2 trillion, or 100 billion, or whatever it is. I mean, it’s a huge number, like every single year, right? So the industry during that time, and I’m going to make this upsetting. Look at the numbers right before we got on the call. But you know, it basically was like, people instead of buying 100 billion in in books, they were buying, you know, 98 billion, and maybe, like, massive market, Okay, number two, printing companies were owned by FatCat, gray haired people complaining that it wasn’t the 1990s anymore, okay, none of them needed the business anymore. They had already put their kids through college. So just like the profile of people that own these companies, right. And the little thing that I think was really making the big difference was that if you’re familiar with Clayton Christensen’s Innovators Dilemma, there’s a point in time where a new technology just peaks above, into the range of this is acceptable now for everybody. Okay, you might remember early digital cameras, it was like, boy that’s grainy. And then a year later, they just killed you know, film, it was the exact same thing happened in what’s called digital book printing, which is ultra low run. Okay, book printing. And so what I saw was the impact that digital printing was going to have on the entire publishing industry, okay. Just to reiterate, so or just to go deeper, number one, if I’m a publisher, okay, I might have 3000 titles, okay. But only 600 of them are going to be worth actually printing, because I have to print, you know, 1000 or 5000 copies that you know, $1 or two apiece in order to make my margin on them, right. But I’ve got these other, you know, 2400 titles that I own the IP but like, I can’t actually print them because like I did that
John Corcoran 29:40
back then that required more work and typesetting and stuff like that. Yeah.
Walker Deibel 29:44
That was huge. And so if you’re familiar with how the how the Internet sort of developed in the longtail right of this keywords of like, hey, Batman is covered like these people have it, but if you’re looking for this really obscure, you know, sort of documentary over you know, it’s sort of over here on this You know, on the search term, and you can get it, I saw the same thing happening publishing. It’s like, so what I did was I bought the company. I knocked out the pre press department put in a bunch of digital book printing company, digital book printing machines, called all of the existing customers and said, Hey, we offer this now. And you know, within 18 months, it was like 20% of our business. And as the, and then the great recession hit, right. So pre recession, books, printing companies going out of business bookstores going to the newspapers started calling our customers and saying like, hey, like, I’m about to go bankrupt. Can I give you this really cheap pricing to get your printing? And so like, we were fighting that for a little while? Yeah. It was terrible. And yeah, and so it was, it was, it was rough. And it was hard. Like, this game is hard. This game of entrepreneurship. I don’t care what version you you have, what version you adopt, it’s hard. It’s not simple.
John Corcoran 30:55
Yeah. And in a sense, you had a great advantage. And that you it was a company that had a client base, right? It was rather than like a brand new company has no client base.
Walker Deibel 31:03
8 million in revenue. Yeah, I go to I hung out with entrepreneurs, and they’re like, oh, man, I’m just trying to hit a million this year, you know, and it was like, well, like, I got that covered, like, still worried. Right? Yeah. Right. Yeah. And, you know, you got debt on the business and all the rest of it, you got I, you know, 50,000 square feet, employees, and, you know, all the rest of your thing change and, and, you know, I was 30 years old, and I bought that company, and I I look young, right? And and so at that time, I probably looked like I was right, week three, and
John Corcoran 31:33
let’s talk about that. Because you write about it in the book, what is your approach and your advice for after a company is acquired, coming in and implementing changes? Is it something that should be done all at once one fell swoop, if you’re gonna lay people off, laid them off? But in addition to that, things like equipment purchases and changes like that?
Walker Deibel 31:52
Yeah, I mean, I think the sort of rule of thumb is don’t do anything for a year. Okay. And that’s kind of what I did the first time I bought it. Um, I don’t really remember what I wrote. And by the end bill, but here’s what I would say, Now, I’ve seen, I’ve seen it go a lot of different ways. And I’ve seen people wait a year, because that’s sort of what they were told. And they want to keep the integrity of what’s there. I’ve seen other people roll in and make change, drastic change within a few weeks of buying a company. Okay. Um, am I going to do I might, without without spending too much time processing, I’ll make an I’ll make the extreme case that every single time I’ve seen people come in and make extreme changes within weeks. It’s never been a good thing.
John Corcoran 32:40
Elon Musk at Twitter recently got headlines around that. Yeah,
Walker Deibel 32:43
there you go. So, you know, I have a feeling he’ll land on his feet. But you know, that’d be okay. But I think the thing is, is that like, there seems there’s kind of a sweet spot, okay. And I really regretted not making change sooner, right? Because you hang out and everyone’s like, okay, nothing’s gonna change and then like, try to change things. You find yourself buying Michel Porter’s leading change, because you’re like, Wait, now I can’t get people to move now. You know. And when people when you buy a company, and you show up, and you’re like, Hey, I’m the new guy. Everyone wants to kind of get a read on you. Everyone wants to kind of know, like, Okay, how do I make this new employer happy? Right? We’re all scared that they’re all going to quit, right? By that everyone’s going to quit. The truth is, is that if they find out before the sale happens, they’re all polishing up their resume. After the sale happens, everyone’s like, Okay, well, I might need to be polishing up my resume. But let me give it a minute. Let’s see what this number is all about. Right? And they all stay it’s their job, they’re getting a paycheck, right? You know, it’s not like, you know, and you know, just don’t come off like a tyrant and you’ll, you’ll be fine.
John Corcoran 33:48
So, let’s finish that thought and then and then okay, you good?
Walker Deibel 33:52
So I would say, I would say there’s a sweet spot where like, you still have everyone’s attention, you still have the high energy. I spent the first 90 days focused on you know, people product people, products, processes, right and then if you’re going to implement change, I really think that much afterwards. Go easy go easy. You bought the company because of what it does. Yeah, don’t don’t overreach don’t over it.
John Corcoran 34:17
Alright, so I did taking it out of order here. But I realized I didn’t ask about actually strategies for putting in an offer, especially in this type of market that we’re in so for context, for those are listen to it in the future. We’re recording this in May of 2023. It’s been a weird economy, the last, you know, six months or so. And business valuations have gone down. Well, I’ll let you you know, put put context to that. But it seems like that’s been the case. And yet expectations seem to be stuck in where they were a year ago. valuations were a year ago. So talk a little bit about strategies for putting in an offer and getting it accepted.
Walker Deibel 34:53
Sure. So um, you know, I like on my brokerage role, okay. I spent And I only will will spend time brokering online based businesses. Okay. And what I mean by that is ecommerce content, SAS Mobile Apps, Amazon businesses, etc, right? I have brokered brands, you know, products that aren’t actually selling online, but like, you know, you leverage distributors and things like that. Um, so I think the prime example of this is in the Fulfilled by Amazon space, okay. And what happened was was, by the way, you know, these aggregators came out, and in a very short period of time, they raised 12 to $14 billion, okay? I had a front row seat to this whole thing, total sidenote, I met the founder CEOs of three different aggregators that all said, they read by them build, which gave them the idea to do the roll up in the FBA space. So but I’m the sorry, take credit for the whole thing.
John Corcoran 36:00
But you’re, you’re getting the drink at the bar? Yeah,
Walker Deibel 36:04
exactly. Yeah. But it’s sort of like, you know, they really, when I saw them coming in, I saw, I was like, oh, man, this is going to be terrible. This is this is going to be really bad. And what happened was, first, the early ones, you know, if we went to market and I got, let’s just say three offers every single time this FBA aggregator was the worst offer, because, you know, they’re, you know, they’re trying to like, do deals, buy the books, or trying to, like, do all this, like, you know, middle market stuff on these, like sub $5 million transactions, or whatever. And it was like, you can’t get this out as work. So there’s this weird learning curve. And they were sort of, I don’t wanna say bottom feeding, but it’s sort of like they were buying below average businesses at favorable terms, rather than, you know, if you if you go all the way to like, you know, the Harvard search fund investors, they’re like, find a great business and be fully prepared to overpay for it. Like, that’s why this was sort of like the opposite, right? That’s, then they got really loud, and all the money came in, and all these firms started fighting over each other, and the valuations just went way up. Because there was not enough business, there’s not enough Amazon businesses to satisfy, you know, $14 billion in, in capital, it’s just not available. And so, you know, people started saying, Hey, if you refer your friend and we buy your business, we’re gonna give you a Tesla. And so they were basically telling people, I will give you a Tesla, if you don’t use a broker. That’s a clue. Just so you know. So everyone’s aware, okay, yeah. But but the thing was, was that, um, you know, valuations went way up. And then they all started overpaying, and I saw it happening. And then they all got upside down, we’ll call it with their lenders, and they couldn’t get their terms. And so all the deals stopped closing. Right, and now the valuations for those businesses have come right back down. Okay, here’s, here’s what I want to underscore. I’m gonna get to your to your exact question. Um, in 2018. When I would list an Amazon business, other e-comm entrepreneurs would say things to me along the lines of more often than not this was it. Why on earth would I buy an Amazon store, I would just watch my a product myself, right? And I was like, hey, it’s up to you, you know, this is a great product, five stars, the multiples were were probably about a 2.4 times. And at that, at that time, it doesn’t 21 People were getting between five and 10x valuations. Now, there’s a lot of terms along with a lot of deferred, but I mean, the valuations were huge, and they were getting, you know, maybe three and a half to 4x, cash at closing. Right, and then all this others, you know, deferred stuff. And what’s happened now is that, you know, valuations have come down from this peak, which was completely obvious that it was going to happen, happened more than I thought. But, you know, it’s still above where it was before this all started, right. And the popularity of buying existing companies has increased COVID Especially in this space. COVID was a good one, where people are like, why now? I just want to be at home all the time. So can I buy a four hour workweek? Yes, yeah. You can buy one, right. But the thing is, is like when sellers you know, get this idea in their head that like, oh, okay, my business is worth, you know, 10 million instead of 3 million. It really messes up the market for everybody. Yeah, yeah. So you’re in you’re in this period of time where it’s not yet
John Corcoran 39:45
I wouldn’t say it’s a it’s I wouldn’t say it’s a buyers market yet. Right. I mean, there’s the sellers still have you know, it’s there’s fewer supply that meets demand in this space. And
Walker Deibel 39:59
and specifically Talking about the FBA space. Yeah. And the you know, the valuations are, you know, it’s just, I agree there’s a separation between where the seller thinks it is and where the buyer is willing to pay, but the buyers are the correct ones. So what all the sellers know that I mean, I’ve seen this market for 20 years. And I know like, you know, the buyers are correct right now. And so there’s a little bit of a gap while the sellers needed to come down their expectations. And all the sellers need to do is look at their year over year performance to prove it to themselves.
John Corcoran 40:31
Yeah, it’s interesting, because a mentor of ours recently said, you know, I don’t think that it’s a good time to buy a business right now, I would wait three months and see what shakes out just because it’s a weird transitory period now, where expectations are kind of coming down, where I am mindful of the clock here. And I want to ask about acquisition lab, because this is fascinating. You built this incredible community 500 or so members now, all who are interested in buying and selling businesses, obviously, I think it came out of Buy then Build, so talk a little bit about what you’re doing there.
Walker Deibel 41:04
John, thanks for asking. Um, so okay, what have I shared that I got this idea for Buy Then Build in 2004? Right. It was about 2008. When I was at the printing company, news about 2010, I was at the printing company, we got a new customer. Okay. And this customer was Veritas Prep. And we printed all of their books, okay. And they basically were kind of like the premium. They were the elite test prep option for people taking the GMAT, right. So it’s like, Look, if you want to go to an Ivy League school, you know, and you’re going to take the GMAT where you can do Go Go study with Kaplan or Princeton Review, like everyone else, like you need something better, you need something sort of elite. But we’re not elitist. Right. But here’s, here’s the, here’s the your path. And I saw that, and it really inspired me to think like, wow, what if there was kind of like, an accelerator, right for business buying that, like, taught people how to do this, right? And so I got that idea in 2010. And sure enough, after buy them built came out. You know, to this day, I probably get, you know, 10 to 12 people a week that are like, Hey, can we jump on a call, like when we pick your brain or, you know, get like, I’ll get like an email from someone I know, around St. Louis. It’s like, hey, you know, I met John, he wants to buy a business. Maybe I see a coffee or something. I’m like, like, I can’t. Yeah, so I said to myself, Okay, I like all of us have been in these sort of, like, you know, masterminds or whatever, where you go in, and it’s like some version of Here’s a Facebook group of a bunch of blind leading the blind, and no one’s actually going to take action. And the person who won was the person who started the mastermind who got all our money. Critically important to me that that is not what we’re building. It was like, how do I build the sort of Harvard? How do I build the Y Combinator, right? How do I build the Elite version of this? Now the irony here, John, is that I was also the first. And there are, I shouldn’t use the word copycats, but I don’t know what else to call it. So so like, there’s, there’s options now, like, we like why should I pick you and says someone else and I’m like, Who who’s someone else, we’re even talking about them finding out about a new competitor. Exactly. So we sort of engineered the premium option from the beginning. Number one, it was vet. So to this day, the highest acceptance to application rate has been about 30%. Okay, we’re just looking for people who we think can actually do it. Okay, and access to a little bit of money. If you come in and say, I’m going to spend $0 of my own money, I want to buy a business for no money down and all the rest of it, it’s really hard for me to help you succeed. Because you’re bringing no skin in the game and like you want everything for nothing. And that’s just like we talked about things like that happen, but like, I can’t fill a classroom of people and get all of them that result. That’s crazy. Yeah. So so I’m looking for the right people. And our bar is really low. I don’t want to scare people away anyone listening this podcast is in trust me. But but the thing is, is like so vet and get a good, strong community. The community is such that I can’t even believe I’m a member right now. Like it, like just so strong.
John Corcoran 44:11
How much of the community is like, what would you say like professionals, like they’re in private equity, or they’re doing multiple acquisitions? And how many are like, yeah, newer people?
Walker Deibel 44:21
It’s so there’s a few profiles. My absolute favorite is like, Hey, I started a business from scratch I recently sold and there’s no way in hell I’m doing that startup part again. Like I know that person because they we all know how hard it is to start from. It’s hard. So it’s like they want to skip that part. They know how to operate they get it I’m like, okay, this person the second I call them the Always a Bridesmaid. So the person who you know, as the CFO, you know, there’s somewhere between you know, whatever 45
John Corcoran 44:52
For run the business but not owned it before. Yeah, exactly. They
Walker Deibel 44:56
made everyone else rich, probably twice a year. I mean, they’re like wait, like why? So that’s it. Exactly. Yeah. And then it’s just sort of like, you know, successful mid career professionals, right. And even some people who, you know, like I like there’s a guy in our group that has taken company companies plural public on the NASDAQ. You know, it’s just like, he’s like, I don’t understand the sub $25 million marketplace. So I need I need to get up to speed. And so you also attract people who are looking to be investors in the space, too. Yeah. And so, you know, so step one was just, you know, create a vetted group, someone who I can go to a business broker and say, I have the strongest group of business buyers ever put together. And we have that at the lab right now. And by the way, that’s maybe a little spoiler alert for what our next step is. But after we’ve vetted group second was get amazing reviews. So it wasn’t until we got 4.8 star reviews from our members that we decided to start advertising, that we had it okay, because it was just people who would come to me right, then it was get results. In the last 18 months, our members have acquired almost almost 200 million in transactions. And the data is directional. And I probably shouldn’t say things like this. But the evidence suggests that you’re about 250% more likely to buy a business with the acquisition lab than on your own. There’s some, you know, that’s a really hard metric to come up with, right, but it’s sort of directionally What’s the idea here? Yeah, I want to buy that is, is about 25% of our members have already transacted on something, right? So now we’ve got, no, we’ve got results. And now the next step is okay, can we scale this a little bit? You know, so everyone else is really good at marketing. And we’ve been, I think exceptional is trying to build the best product, and we’ve been pretty quiet about it. Right? And so now it’s like, okay, can we be a little louder? Not too much, but just a little bit, building stronger infrastructure around what we have? Well, I think,
John Corcoran 46:59
I think it’s fascinating. I mean, you know, in, in the United States, in America, there’s the American Dream, which is by house, right. But as we’ve tracked towards more self employment in this country, more entrepreneurship, you know, maybe one day we’ll get to the point where the American dream is not just to buy a house or in addition to it, it’s to buy a business right? You know, I mean, I think that’s not that crazy idea that we could get to that point.
Walker Deibel 47:25
John, the original first chapter Buy Then Build was was called something along the lines of American dream and it was it was all about like, the, you know, the the framework of America and like in like, what we’re made up of, and like, what did it you know, and my my editor Tucker, Max, you know, he’s very blunt. And, you know, he called me was like, I don’t know what this like, some people just like it, when you get to the point, you need to eliminate this whole chapter. Like, grandiose like, you know, we’re Yeah, I love that. I love Yeah, yeah.
John Corcoran 47:57
I know, we’re just out of time. So and I love asking people about this gratitude question. I’m a big fan of gratitude, especially expressing gratitude to those who have helped you along the way, especially peers and contemporaries, however you wanted to find that could be other authors, could be other entrepreneurs, could be other acquisition entrepreneurs, who would you acknowledge? Who would you want to thank for helping you in your journey?
Walker Deibel 48:19
I mean, John, it’s a long list. Um, you know, like, just to rattle off a few names on the top of my head, I don’t know if I would choose from my, my grandfather, my, my dad, my business partners. Gary Rogers, who is a business broker that I work very closely with for about seven years. Mark Daoust a quiet light, you know, but the one that sort of rising to the top, Howard Smith, I would throw it to the one that sort of rising to the top in my mind is Chad Troutwine. And Chad was like, we we brought him up earlier. He’s the founder, very co founder of Veritas Prep. And, you know, he was in the, in the publishing space and sort of coming out of Yale business school, and I was in the printing space coming out of, you know, Olin Business School. And we were the only people. He was like, the only one I interacted with him. It wasn’t like a gray haired publishing, you know, and we just sort of hit it off, right, and he was my customer. So we built a friendship. And after I ended up selling the business in 2013, I was doing a lot of different things, flew out to him, pitched him a couple things that I was working on, and just sort of wanted to stay close to him because I saw someone who he’s not 10 years older than me, but he’s sort of, he’s older than me. He’s a few steps ahead of me. He was more advanced in his career. He was doing things that was sort of the next level, but within reach. And along the way, we’ve become partners in a number of different things. So he’s been my customer. He’s been a close friend. He’s been a mentor. He’s been, you know, an advisor. Um, he’s been a business partner. And you know, I just got off the phone with them about 15 minutes before our call started. So we’re very much involved in a lot of different projects. And you know, there’s a few people in life that, you know, all of this is about just having fun. Right, John? It sure. Yeah.
John Corcoran 50:20
Not even fun while I do it.
Walker Deibel 50:22
It’s like, even like, I’ve always been driven by money. It’s just something that’s like, hey, like, what’s the game? You know? It’s Super Mario Bros. I don’t I don’t want the coins. I don’t care. I just want the end. But you aren’t over time. Like, Hey, I gotta get the coins. Because like, you know, like, that’s how you get the extra life to get to the end. Right? Like, you know, I’ve always been financially driven. But the thing is, is that once you get to a certain point, it’s sort of like, you know, what, why are you doing this? And Chad has been one of those people that has opened doors. Made it made it incredibly fun along the way. That’s great.
John Corcoran 50:54
Walker, this has been such a pleasure talking to you. Where can people go to check out the book, buy them build and acquisition lab?
Walker Deibel 51:00
Sure. So BuyThenBuild.com will pretty much get you everywhere. Um, I’m not too active on social media, but I seem to reply to my YouTube comments by them. Okay, so on LinkedIn, yeah.
John Corcoran 51:14
Okay, so if you have a question, go pose it as a question or a comment in YouTube. Walker. Thanks so much.
Walker Deibel 51:21
Thank you, John.
Outro 51:25
Thanks for listening to the Smart Business Revolution Podcast. We’ll see you again next time. And be sure to click Subscribe to get future episodes.