Cameron Herold explains the idea of "Rembrandts in the Attic": hidden or underappreciated assets within businesses (packaging, branding, signage, customer databases, proprietary tools/data) that can substantially raise a company's value to strategic buyers. He uses examples — a house with Rembrandt paintings in the attic, a Vancouver auto-body shop whose high-profile signage added hundreds of thousands in value, roll-ups in the collision-repair industry, and data/products repackaged as subscriptions — to show how to find, package, and sell these assets to command higher prices than buyers focused only on P&L.
Chapters
It's a really interesting way to think about your business when you're positioning to sell or businesses that you're looking to buy is what are the Rembrandt paintings that are in those businesses that they don't know are valuable that you can actually ensure that you buy that no other buyer is necessarily looking for? A lot of the Rembrandts that we have is our packaging, right? It's our website, it's our office space, it's our branding, it's the culture stuff that we can do. So let's say that we're in Santa Monica and we're on the ocean and there's a home for sale. And Jesse and I have both come into some money and we're both looking to buy this home. I look at the home and it's up for sale for $10 million. And Jesse looks at the home and $10 million, and Jesse says, you know, I'm going to offer 10 million, 200,000. I'm going to come in above asking price. I can offer 10, 2. And I come in and I offer 12 million. And Jesse is like, Cameron is on crack, like Camero, way overpaying for this house. So why would I offer $12 million for a house that is on the market for 10 million that Jesse is offering 10.2 for? I actually went up into the attic when I was touring the home, and I noticed a couple of Rembrandt paintings in the attic of the home. So the Rembrandt paintings are each worth $2 million, $3 million each. So the home is worth 10 million. The two paintings are worth between 4 and 6 million at Christie's auction. So I know if I offer 12 million, I can sell the paintings for 4 to 6 million. And I've now bought the home for about 8 to 6 million total. After I sell the paintings, I've noticed a strategic reason to buy this home, and it's called the Rembrandts in the Attic. And it's a really interesting way to think about your business when you're positioning to sell or businesses that you're looking to buy, is what are the Rembrandt paintings that are in those businesses that they don't know are valuable that you can actually ensure that you buy that no other buyer is necessarily looking for. And that's one of the reasons why strategic buyers will pay more than a private equity buyer. Private equity buyers tend to buy based on the P and L and the balance sheet. They tend to buy based on current cash flow and the current Numbers and the current story. What your job is is to find the Rembrandts and package those up in a way that, that show a lot of additional value there. Or if you're doing some buying is to look for a couple of different opportunities to buy with some opportunities. So years ago I was doing some acquisitions for what is now called Gerber Auto Collision in the us it was called Boyd Auto Body in Canada. I was a partner in the business and we were rolling up the collision repair industry. It's now a $2 billion company publicly traded. And one of the companies that I wanted to acquire was in Vancouver and it was called Dean Brothers. It had been there for 70 years as an auto body shop. And it was good. It was fine. It had a good location, lots of parking, you know, great space. It's where we needed to have a location. But it was right beside the exit ramp from Vancouver Airport. I mean it is a busy freaking exit ramp and you literally have to slow down as you're coming off the ramp and your car is facing the sign for about 20 seconds. I mean it is as a high profile signage as we could ever get in the city. So forget about the actual location itself, which was only doing $2 million a year in auto body. If I thought about the value of the signage at $5,000 a month, that's $60,000 a year times five years. That signage for five years was worth 300 grand. So there was so much value. Now we bought that company in 1989. So for the last 30 years they've had $2 million worth of signage or more. There was a Rembrandt that the company didn't anticipate or that didn't see as the value. I didn't care about the auto body shop. I could have turned it into a pizza parlor as long as I had that signage. That's the opportunity for you to think about some of the Rembrandts in your attic. Think about a company that sells sporting goods online or supplements online. A company like Organifi would die to have a 200,000 database of people that are loyal, that can sponsor your leagues, have their logos on all the jerseys and be able to market the Organifi products to that group. That's a strategic Rembrandt inside of your business. That's different from your revenue and your profit number. If you think about, let's say the JAM group wanted to sell the company and you know that you could sell for, you know, one times revenue. But that strategic is an opportunity. If you could go out and buy 10 other sport and social clubs at one times revenue and figure out what's the value of each of those members. To a strategic buyer. Is it $10,000? Is it $5,000? You all of a sudden have an incremental value which allows you to go in and pay more for the acquisitions than you would if you were buying just on the P and L. What you're trying to do is to buy for X and to sell for Y. You don't want to tell the people that you're buying that there's value, there's. You want to diminish that value. The key is to sell that story to the buyer that will be buying you. One of the logical buyers for college Pro painters would have been a painting company, right? Another painting company would buy College Pro Painters. That would have been an obvious. Another one would be a paint manufacturer. You know, if you could get 9,000 people that are painting houses using your paint, that would be a very big strategic buyer. We also found that there was a group called first service that did a roll up of all of the service industries. So they bought California Closets, Chemlon Superior Pools, Certapro Painters, College Pro Painters, Paul Davis Systems. They did a roll up of service brands, and then they started buying real estate companies. They ended up buying Colliers Macaulay, the big real estate company, to have all of their service brands service all the real estate that they owned. That was a strategic roll up. There's a jewelry company that makes pretty nice jewelry, but it's not like the highest end in the world. But they have an incredible brand. What's the jewelry company? I'm thinking of Tiffany's little royal blue box, the robin egg blue with the white ribbon. Women literally go, oh my gosh, I've got it. It's. It's like average jewelry packaged in this little pretty box. A lot of the Rembrandts that we have is our packaging, right? It's our website, it's our office space, it's our branding, it's the culture stuff that we can do. I have a friend of mine, Jason Dorsey, known as the gen Y guy. And for years he was doing research about gen Y for his just so that he could be a better speaker and consultant. And then finally he's like, I am sitting on all this data and all this stuff. He decided to create a monthly subscription for $50,000 a year for companies to subscribe. And now he's running like a $10 million business, selling his old data that he needed for his business anyway, and he pushes it out the door as a PDF to these companies. Again, all of these things are huge, not only to sell the company, but also it could be additional revenue that we're sitting on right now as well. Yeah, I was speaking with a client that I'm coaching yesterday, and they have been using CHAT for the last 14 months and they built out this internal tool for them to be able to use it. So this month they decided just to start selling the tool. And he thinks he's going to be able to raise money at a $10 million valuation day one, just because they actually had something internally that he didn't even see as value to the external market.
