$102 MILLION On the Line! How THIS Strategy SAVED IT ALL!

Foreign.

Hello everyone. This is Tom Powell with a Powell perspective. And joining me today is Casey Minshew. And Casey and I have a long standing friendship. We've done a number of business together. As a matter of fact, I believe I was one of your early funders for one of your early ventures.

That's right.

If that's accurate. And we had a successful exit on that one. Actually ended up going public, I think through the sale.

That's correct. Yeah, it was. Yep. It was on the Toronto Stock Exchange. So it's not like it was the New York. But it went public.

You know, it's an exit. It's a positive exit and it's, it's a win in the win category. All right, well, I've known you for a long time, you know, lots of, lots of adventures. A lot of ups at different times, not because of either of us that we caused Most of it was actually because we just didn't know what the hell we were doing because we were trying something new. But tell me about this M. And a launch pad podcast. That was the first thing you. You've got a podcast?

Yeah, absolutely. No, thank you. And Tom, thanks for, you know, letting me be here and to your listeners. You know, you're one of the people I admire. Been a longtime, you know, friend of yours. But since the day we met, you know, you've given me time, you've given me great advice and. No, man, I appreciate you for having me here. It really does mean a lot and excited for the next ventures.

Yeah, well, that I'm excited about and hopefully I understand my son in law is coming. You've got an event, right. So not only do you have a podcast, but you've got an event that you're teaching some of the things we're going to talk about here. When's that event?

Yeah, and I'm gonna, I'm gonna say that, but I gotta, I gotta carry this one thing. So the event's on October 26th, but you're the part of the reason why all this is happening. You told me about, you told me about a book and you had me read it when I first came on over at rcp and the book was who not how.

By It's a Dan Sullivan.

So at the end of the day, I started thinking, okay, I'm not the smartest. You know, I'm not the most creative. I started going through all of the things that I feel like and then I started thinking about the things that I'm good at. Right. And I started to say okay. So I need to surround myself with people that can help me do the things that I'm not good at. I mean, it sounds simple, but you have to do some self. You have to really look at yourself and say, wow, like, who am I? What am I good? And then by the time I got up with my list, I was like, damn it, Tom, I'm not that good. At most.

It really is an ego bust, right? I mean, you're like, nope, nope, there's somebody better than me that, nope, I can't do that. No, I really suck at that.

Exactly. And so I went on a round after I made my first acquisition. I ran across Ben and Ferris, who are good friends of mine. They, at the same time we did energy funders, they did disrupt equity, and they scaled to about 900 million of assets under management in multifamily. And I stayed in great contact with Ben and Ferris and they said, hey, it's a perfect time for us to go out and get into the M and A space. And we've been looking for somebody like you. And so it kind of came together. And so the first thing, you know, one of the partners wanted to do was create a podcast and then create an event. And so our podcast is focused on business acquisition, it's on entrepreneurship, it's hey, what did you buy it for? How did you buy it? We're interviewing people and it's pretty amazing just to hear, you know, the stories. And then kind of wrapping that up, we're doing the M and A launchpad event where we're focused on the lower middle market. So people that are looking to buy companies that are a little bit bigger than what you could buy with sba. And how do you get that capital, how do you raise that capital, how do you deploy that capital? And then what do you deal with? And there's so many facets, as you can imagine.

So these are general, these are cash flow flowing businesses, profitable businesses, especially when you add back in owner's comp onto that. Right? And if I remember your original business plan and correct me wherever I'm wrong on this, because I don't want to, I don't want to assume anything. Generally it's this aging group that we've talked about that has built a company and the, and it's almost still all guys, it's going to over time become women that are doing this as well. And there are probably some women owned businesses that you come across, but it's the 65 to 75 year old that's built a company, they have a nice lifestyle, they want to exit and their kids don't want to do it. And that's who they were building it for.

That's it. And right now, by 2029, what, 20% of the US population is going to retire. That's basically 10,000 baby boomers a day, 70,000 a week. So. And believe it or not, Tom, the baby boomers own 46% of the small businesses in America today.

Wow.

And they don't have exit plans because let me ask you, how many of your friends said, hey, I can't wait to go work with my dad, right? It's like no one wants to take over their parents business now some do and I think that's great. But a lot of the people that I've met that were raised by entrepreneurs tend to not want to go and work for that entrepreneur.

Yeah, they may be entrepreneurs themselves, many of them. It's also really interesting of how rare it is that an entrepreneur raises an entrepreneur.

I will tell you, my son, I don't know, he's 18, you know, he's going to school, but he's doing engineering. He's going to join the military. I mean, he's really like, dad, I don't want to do what you do. He's told me that. And I'm like, you know, good for you, son.

But you and I wouldn't do anything different. I mean, you know, this, this one flames out or this one's wildly successful. It's like, okay, take a little breather. And it's kind of like putting the ship back out to the ocean again. That was a big storm and, but we made it. And that was kind of thrilling and. Or those were calm seas, kind of boring, but you know, whatever. But it was very fruitful and profitable. And we do it again.

Yeah, absolutely. And so one of the other things about these, these, these companies, right, the people that are looking to sell, a lot of the time if they work with traditional private equity, you know, those guys have a playbook. It, it either fits in the box, it doesn't. You know, they're not really concerned about the legacy. The family, they're not willing to do creative structure. So the seller may not have to deal with huge tax. I mean, they're very much, hey, this is how we play the book. We have to buy the assets, we have to do this well. What we do very differently is we're working more on legacy. The companies that we're talking to, the owners that we're talking to, they love their businesses. They just don't have, they don't have a child or somebody that wants to take it to the next level. And so where we have found that what we fit really well is, you know, going, hey, what's best for you? So I'll tell you about a company right now that we have. We're under contract to go to close hopefully in October, November. This seller, 65, has built a great business. His son came into the business seven years ago and left two years after it. He said it made him too stressed. So he then went on, he went on a growth spurt to try to grow and sell the companies to find a partner. But when we were sitting down talking, the seller says to me, hey, you know, I might be interested in owner financing this to you, because I see the interest that the bank's going to get and I would rather have that. So then what do I say? I'm saying, well, have you ever heard of a deferred sales trust? And he's like, no. And so our good friend Paul Nick had sent me an article on the deferred sales truck. I sent it over to him. Week later, he's like, hey, this is amazing. Like you mean. And so for your listeners, a deferred sales trust allows you to sell your business and move the cap, the profits, the money into a trust and defer capital gains for up to 10 years.

Right.

The only time you pay taxes is if you draw from it and you can invest in that vehicle. You can use that vehicle as your investment vehicle. It's pretty amazing.

So, so just to walk through this, for simplicity purposes, you sell, you don't pay the taxes up front. I mean, eventually you pay some taxes on this scenario you're going to pay, but you get access to that capital to do other investments.

The deferred sales trust will be the finance, will be the, will be the bank. And so not only are we making mortgage payments to his, and he knows this product better than any other person on earth, he knows what it can generate. And especially if he's still there running the business with us for five years, he's sitting here saying, hey, I'm making money four different ways. And so when I throw out the deferred sales trust, he's like, oh my goodness, you mean I don't get hit with the tax burden?

So you're looking for companies to buy and you're looking for entrepreneurial people to come in and help run those type scenario. Is that what is your, what is what, what's your ideal group that you're looking for on both sides of this equation.

So who not how? I'm gonna go back to the Tom Powell, pat me on the back, told me, hey, you know, who not out. So once we get in, I'm good. I'm good at putting the deal together. I'm good at getting it financed. I'm good at those things. I'm also good at, you know, making your ideas better.

Right.

I'm good at those things. I'm good at brainstorming, whiteboarding and going through those things. What I'm not technically good at is operating. I'm not an operator. Okay. I'm not. I'm not the grinder day to day. I'm a visionary. And those are the worst. Right. I need integrators.

Yeah. So you, you could have gone to work for McKinsey if you'd done one of the Ivy League school type scenarios, because you'd be perfect on that scenario. Right. You can tell people how to do it. You can see things that they can't see. But God forbid we have you implement it.

Oh, my God. Because I have my ADD kicks in and it's everywhere, you know, But. But like when you sit down and you go through also finding the right people. Right. Because so we're then looking for the right operating partner. And what I have found is that operating partner is typically somebody that has been, let's just say, overlooked for a CEO. CEO role. They've been in a business for, you know, 20, 30 years. They're really good at managing the business. The numbers and all the above. They just haven't had next level kick. Maybe someone's in their path and they're not.

They're not necessarily entrepreneurial. They don't want to have all of the risk. They're risk oftentimes risk adverse in that scenario.

And there's a tremendous amount of risk, right?

Yeah. Yeah. Even on a fully functional great business. Guess what? There's the economy, there's the government, there's just litigation. There's all sorts of different things that you can have happen.

Yeah. And, you know, and I'm a. I'm a big reader of a group called ITR Economics and itr, by the way, I was turned on to them by a guy that does workouts. And so he was in the private equity side, and he comes in and he fixes companies. He's a fixer. And he said that he lives and breathes by ITR Economics. Okay. So I went immediately go to itr, start reading their stuff, you know, and they're calling a 2030 Great Depression. Like that's the first thing I read. Like, oh my God. And they start talking about similar to what Ray Dalio book's talking about is that, you know, we're at the top of the credit cycle. What's next? The next part is devaluation and this is just how the credit cycles work. So you'd go, why are you buying in today's time? Like why would you take that risk?

I'll give you a macro micro in both ways. So it sounds funny that I'd say both. But if you look at the student loan and what everybody's complaining about is that is a microcosm of this overall economy. Right. For this generation that's come up through college and is saying, oh gosh, we've got all this debt. Which they do. They were funded easily just like the housing of 2006. What was really started back in the 90s, right. Became easier, easier credit. And so the schools are building and building and building because they've got all this student that is easy to get their money. And then all of a sudden somebody's got to pay that, that burden. Well, what does the government say is we're going to wipe it out. Right. And this is on a global scale of what Dalio has been talking about. So ITR is also doing this is saying about that.

Yeah. And they had a really good two hour webinar I got on and man, I was like, wow. You know, and they're very bullish. They are very bullish. Between 2025 to 2029.

Okay.

They're bullish housing, they're bullish. Energy, they're bullish. I mean they're bullish. So to kind of go through that, I didn't expect that. But they think it's the top. It's going to sizzle until it, until it goes.

And that's, that's roaring, roaring 20s look. And then we head into the 30s.

You got, you know, and it's kind of funny you say it's almost, it's 100 years.

Yeah.

It is a, it is a cycle.

It is a cycle. It is a cycle. That's interesting. Well, okay, so tell me about One Love. Dan Sullivan. I've been a member of Coach strategic coach for 24 years now, which is just crazy. And that is the person who really taught me about who, not how. Because one of the, one of the problems that an entrepreneur has is they move fast in many cases and they see opportunities that oftentimes other people don't. See, and so then they jump in. Right. So it's also a problem of entrepreneurs that it's usually the hold my beer and watch this scenario. Right, exactly. But because they're the, who sees the vision, they're the only one that can start moving in that direction until other people start following them and get, and getting, you know, involved in it. So they have to wear all the hats in the beginning, but they really aren't very good at any of those hats in most cases.

It's very true.

So what you're cutting out is you're, you're actually finding the person that wasn't a successful entrepreneur or not necessarily an entrepreneur, but a business owner that built a business. They may have been entrepreneurial, but many cases they were a business owner that built a business. They saw an opportunity. And you're, if I remember correctly, you were really looking inside of the manufacturing, something that's very tangible. These aren't service businesses. Right, right. The 65 year old wants to leave, they want to buy out. They still want to be somewhat involved. Like you said, legacy. There's all sorts of reasons. Right. They don't need the money necessarily, but they also want the money. I mean they want to, they don't just want to throw it away or give it to the government.

Yeah. And they, and they're very much attuned to all of, they've gone through Covid, they went to, they went through 2008. They know what's on the backside of this. Right. They know that there is tremendous risk. You know, we are, we are investing in a risky time and so they know these things. Right. It's not like we're walking in blind, taking it. We understand. So there's things we look for, you know, we look for a company that does over 10 million revenue. We look for a company that's over 10 years, we'd like to see closer to 20. And there's a reason why less than 1% of the businesses in America make over $10 million a year. So why would I not fish in that pond? Right?

Right.

Most businesses, all the businesses starting right now. Right. What is it? 85% fail in the first five years. That 15% that doesn't fail, only 1% of those go over 10 years.

Right.

So I'm eliminating the startup and all that kind of risk. The risk that I'm playing with is leverage. Right. You know, the markets, the timing and can we transition with the people from, from a family ran business to a corporate led or more of a management led business. Can we make that shift. And all of those are tremendous risk. I mean, there's risk involved.

There's. There's always risk. And you know, it would be funny when we were talking about when we'd meet entrepreneurs, you and I would be meeting with entrepreneurs at times it's like we have taken out all the risk. And I said, well, if you're taking out all the risk and there's no opportunity left, there's always risk. And by the way, tell the dinosaurs that are living in the sunny day and all of a sudden an asteroid hits the. Hits the planet, there's always risk, right? There's. There's airplanes that have flown into buildings by terrorists. There's always risk. You cannot take out all the risks. Those risks you can't really necessarily plan for or do much about in. I mean, an asteroid hits us, it's. We're pretty much toast. But the other risks, you're right. When you've got a seasoned entrepreneur, business owner, 20 years, they've seen a lot.

They have.

They have really. They've seen, they've seen the credit crisis of where that they did nothing. They weren't part of the housing industry at all. And all of a sudden their bank closes and their line of credit is gone. And they have receivables that they're using that line of credit for. And so all of a sudden they can't make payroll. It had. Yeah. And it has nothing to do with anything that they were doing, right?

Yes, it's there. And that's part of, you know, why when we sit down and we talk with these. We're real. Right. We're talking about these things together. So they understand that we're not just some, you know, we're not just coming it. We understand what we're up against. We have some plans and we're financially backed. So we've got a good group of partners behind us. So, yeah, that kind of. It allows us to have a really good working relationship and put together a deal structure that's a win win. And that's what we target for. That's the key.

That is awesome. Tell me about this October event that you have and how people find out about it. You've got a couple of seats left that you're reserving for friends of mine.

Absolutely. For those with a foul perspective. Yes. We will have. I believe, Ben, if I'm correct about a. There's a. There's a discount. We will give you guys, all the listeners, a great discount code. We'll send it to you. Can Put it into the podcast information.

Awesome.

But it's October 26th, it's going to be in Chicago. And we picked Chicago because it's a great lower middle market environment. A lot of, a lot of investment firms that are focused around this place where we're in. When you finance these companies, it's typically private credit. If you're going to go through a private credit, private equity, but they lend credit and it's a different kind of world. And so we're in that space. That's why Chicago is a good place. We just had our event here in Houston which was on May 11th. We had over 300 people. Wow, credible day. And so we're going to take that focus on Chicago. We still got some, you know, seats available, but the key is going to be we have Walker Dibel who wrote Buy Them Build. He will be our headliner. And we have a lot of other people speaking that not just are talking because they, these are people that have actually done it and they're sharing the, what they did, how they did it. And then there's just a tremendous amount of networking. One of the things that my partners are very key about is not selling stuff at these events. Right. You go to these events, we keep the ticket prices low because we want to get a group of like minded people together to network and take advantage of and that's why we've been successful with these events.

Oh, that's awesome. Speaking of. And I'm going to put this plug in there. So your event is October, in November. I've told you about Genius Network and I think you need to come to that event as a guest for us. It's again another started out of somewhat out of Dan Sullivan and Coach, but Joe Polish is amazing and the people that are in the room are the reason that you go. So you know, oftentimes people would ask me like what was the benefit of? You know, Harvard was so amazing. You've got all these great profess and these case studies and everything else. I said yes, all of that, that's true. However, the people that I was were my colleagues and classmates and where it's taken me around the world. That's the amazing part of it. Right. And it's nothing like when I'm in an entrepreneurial group even. Right. So that's, that's even the next level up. So you know, it doesn't take the McKinsey MBA to be able to figure out how this stuff works. Nothing wrong against McKinsey MBAs, but it is the people that have Actually done it. Been out there and know how to do it. It's about being able to see the vision. So, all right, here's. Here's the closeout piece I think I mentioned to you. And again, so enough to be dangerous. You're old enough to know what that means, right? So, yeah, it's just. It's just good enough to get started. And then you are a danger out there. And until you learned about who, not how, you went out and started a whole bunch of different companies and various things along there or bought a company the first time you tried it, right now you're getting the team together. So tell me about what you're doing and where the who is in that. And so that people are learning that it's not a DIY type of product, it's a done for you, or you need to bring in the team. The who in this space, you're buying a company. What's the. Enough to be dangerous where, you know, I'm in over my head and I need the right team.

Yeah. Enough to be dangerous is when you find that seller or you're talking to that friend or that family member and he says, hey, I'm looking to sell my business, and your brain starts going, wow, that. I would love to buy that. I mean, look at their lifestyle. It's been phenomenal. My friend. My friend went to an Ivy League school or drove a fancy car, of course. I mean, why wouldn't I? But. But the piece that they need to understand is why aren't the kids buying it? Right.

Because they saw that parent, they saw that person struggle to build that business, and they don't want the pain.

Yeah.

You know, so if that person runs across that opportunity, it's definitely a key to one. Dream about it. Think about it. But the other part is you can learn a lot in these books. You can. But until you do it right, until you sign that personal guarantee or until you do that piece, you really won't know what it's about.

You know what the hardest part? I love that. I love that. What's the hardest part about $102 million personal guarantee? It's not the first hundred million, it's the last 2 million. Because, by the way, when it comes time for that, you're having to liquidate all the best assets that you have. You don't get to liquidate shit. You get to liquidate your best assets, and then you're left there going, oh, I still owe $2 million. Right. Spoken from personal experience. So it's always. It's always fun stuff out there. Well, that's awesome, Casey. Thank you so much. Again, they contact you where?

Yeah, so they can reach me. Website Equity Launchpad. The conference is the M and A Launchpad conference. And, and also our podcast, it's on Spotify, so someone can just go to Spotify, itunes, look up M and a Launchpad podcast. And if you're interested in this space or investing in this space, because a lot of our assets, we syndicate the capital with investors, so it's a place that investors can participate with us.

That's awesome. Well, I thank you. We're going to have another show here in just a minute, but we're going to, we're going to wrap up this one because we try and keep these two about 20, 25 minutes because we think that the ADHD people can't really last much longer than that. Or that's for me. And I can't last much longer than that on one topic. But Casey, thank you so much. Love having you on the show. It's been such a pleasure doing business with you over all these years and continue to see you grow. And that's just exciting because that's one of the main things that brings me a lot of pleasure, is helping other people get launched in this space and watch them grow and surpass me, which is awesome. And I love what you're doing. You're listening to the PAL Perspective. Thank you for joining us today. And again, it's the enough to be dangerous kind of segment in there. We'll be back with Casey on another podcast here, but enjoy. You can follow the links. I think they'll put these in the chats. I do want to say thank you to my producers and studio people for putting this together and thank you. Have a great day.