The Deal Lifecycle with Roland Frasier

What do we really want the businesses that we are hoping to acquire to look like, and we do that in advance, then it'll save you a tremendous amount of time. It will help focus you when you're looking at determining where do I want to look to find these deals.

How much more successful would you be if you had lunch once a week with insanely successful entrepreneurs who share their biggest secrets on how they think and achieve success? Grab your seat at the table because this is Business Lunch with Roland Frazier and Ryan Deiss. Welcome to another episode of Business Lunch and today's a Snackable episode with Roland where he's going to get into some more tactical strategies that you can start using to live a rich and happy life. If this is the first snackable episode you're hearing, I'd encourage you to go back and listen to some of the other episodes that Roland has put out. And if you want to get notified every time we release a new episode, go to the new businesslunchpodcast.com website and we'll send you detailed notes along with every episode. That's businesslunchpodcast.com www.businesslunchpodcast.com and you can sign up for the free email newsletter where you'll be able to get all the highlights and resources from the episodes.

So now I'd like to talk with you about the Deal Life cycle. So the Deal Life cycle is what are generally all of the steps that we'll be going through as we look to find and fund and close and then vet the deal that we want to acquire. So there are several steps in the Deal lifecycle. The very first one is going to be pre planning. So this is when we're just kind of starting to figure out what is our mindset around what we want to accomplish. Once we do that, we'll go into determining what is our acquisition criteria. One of the biggest things that I see as a challenge for people who are thinking about going into the acquisition of businesses is they don't really set out in advance the specific qualities or traits or even numbers that apply to the kinds of businesses that they want to acquire. The thing is, is that you're like a kid in a candy store. Once you learn the strategies that you're learning here in the EPIC program, you're going to be able to go out and acquire any kind of business. And I've had people acquire. I think the biggest one was I think we had one person that went and within about 30 days of going through the program acquired 16 businesses. I've got several that have acquired 8, 9, 10, 12 businesses. But if you don't think about how are those businesses going to interact, how are they going to work together? You could find yourself with a dog walking company and a hotel and a chair manufacturer and a digital marketing agency. And none of these things seem like they go together. It's if we take the time instead to think about what are our acquisition criteria, what do we really want the businesses that we are hoping to acquire to look like, and we do that in advance, then it'll save you a tremendous amount of time. It will help focus you. When you're looking at determining where do I want to look to find these deals, who do I want to network with? What kinds of relationships do you do? I wanna develop? Who are the professionals that I should be getting together to get on my team, who are the referral sources that will be able to send me the kinds of deals that I want? And then also importantly, when I see a deal or a deal comes my way, how will I know if it's one that I should follow up on? If it doesn't meet your acquisition criteria, if it's not in the right industry, if it doesn't have the right amount of sales, if it doesn't have someone there that can run the company, if you're not looking to be an owner operator, if it doesn't have a profitability level that meets your minimum requirement, if it doesn't have any of these things, then it's not going to be a company that you want to waste your time with. So one of the biggest advantages I think of having these acquisition criteria is that they'll guide you in determining whether you should even take the time to vet a company, whether you should go on and have a deeper conversation. Now, just because something doesn't meet your acquisition criteria doesn't mean that it can't turn into money for you. Because there's lots of people, including over 1400 in our active deal community at Epic, that are looking to do deals. And so your deals that don't work out, your trash could be somebody else's cash, right? It could be exactly the kind of deal they want. And then you could get paid a finder's fee for referring it out to somebody else. So just because something doesn't meet your acquisition criteria, don't get depressed and say, oh, I wasted my time, here's the deal. You can make money off of that simply by referring it out, without going through the process of finding out ultimately that it's not what you want. So having your acquisition criteria is a huge advantage. It really helps you to know, what should I do, what I should, what should I pass on, what should I say no to? Okay. Or at least not now. And the next thing would be positioning. So we talked a little bit about that. We talked about positioning yourself out there in the world as an investor. That's really important. And refining that positioning in terms of how do you want to attract the businesses that you've defined as desirable when you created your acquisition criteria? That's why these things go in a line, right? Once you know the kinds of businesses that you want to acquire, you can begin to position yourself as a player in the industry that you're interested in. And I do recommend highly that you identify some industries because it'll help you a lot, especially as you're getting started. You eventually can be a generalist and say, you know, I do deals. But even private equity firms typically focus on one particular area. You'll have a company that focuses and you'll see as you get in some of the bonus materials, our list of private equity companies and investment banks and stuff, that when you go to sell a company, you'll find that funds specialize in acquiring companies in particular industries. It might be as broad as SaaS, as software, as a service, or as niche as Amazon FBA sellers like Thorasio, which is a big fund that buys Amazon FBA sellers. So the cool thing about this is that you get your acquisition criteria together and then that defines how you're going to position. You're going to position as an acquirer of businesses in that particular industry with those particular characteristics. So those are very, very interrelated. Once we've got our positioning, then it's good for you to say, okay, what's the ideal size deal that I'm going to do? What are my financial goals with respect to this deal, both in terms of the revenue that it's going to be generating as well as the profits that it's going to make. Because if it's not, if it's not especially making the profits that you want it to make, to be able to pay you for your time and to be able to fund the development and the investment and the growth of the business, then it's something that. That you're gonna have to find additional capital for. And that might be mean that you then need to think about having credit that the company has, preferably not yours. It might mean that you need to bring in outside investors, which would dilute your ownership interest. So if you can find a business that already has the things that you know you want to be able to go forward to pay yourself and to have the ability to invest in the growth of the company. That's gonna really save you a lot of time and hassle as well. And why not buy a company that already has what you need versus one that doesn't. The next step would be figuring out what is the ideal type of target. This might mean what type of entity is it? It might mean what location is it in. It might mean is it a structure of a business model that meets your criteria. These are the things when we're talking about business type. And then there's lots and lots of ways to go about finding deals. I can tell you that I have found many ways that I would I say the wrong way. The truth is they're just inefficient. It's very inefficient to go about trying to find deals one at a time by luck. It's very, very efficient when you have everything together and you have a plan of how you're going to find deals. And so we'll talk about how to do that. Mistakes I've made along the way that I've learned that really, really make it harder to do it at speed. And then all of the things that I found that work really, really well as well as the things that I've learned from you guys and from other people. The next thing that we'll do, the next step will be now that we've got all this stuff together, right, We've got, we've pre planned, we've got our acquisition criteria which allows us to position ourselves. Now we've positioned, we've got deal flow coming. And now the deal flow is coming in. We're saying, okay, is it the right size, is it the right type? We've got our systems in place for finding deals. Well now we're gonna identify the specific target businesses that we want to acquire. Okay, we've done all the pre work, we've got our deal flow system working and now we're looking at some of these deals and we know which ones we want. Cause we did our acquisition criteria. Now it's time to say these are the specific deals that we want to target. Once you've targeted them, it's gonna be time to reach out and find out who do you talk to about acquiring the business? Well, who are the players, who are the owners, who are the advisors? So we have very specific tools and strategies for identifying who those people are. After we've done that, we've identified those people. How do you contact them? Like, what's the best way to reach out to them and what are you going to ask and what are you going to say that's going to be most efficient and most effective in not scaring them off? Because a lot of people that we reach out to, you'll find that I teach it's way better to reach out to people who aren't on that expectation curve. Remember a few videos back I talked about this expectation curve. When you first list a business for sale, that's the time that the seller's gonna want the most for it. After they've experienced a lack of buyers then, and only 20% of them find those buyers, then the listing falls away. The expectation curve is dramatically lower. So knowing what to say is going to be very, very important. And what we do then is I'll give you templates specifically for each situation that you're going to have. Whether you're communicating with direct mail, whether you are reaching out by telephone or you're sending messages through social media or whatever. I'm going to give you everything that you need, script wise and template wise, you in each of those situations so you know exactly what to say to each of these people to get the best chance of having a reply so that you can go forward and have a conversation which I'll also tell you how to have to do the deal after that. We need to know what are all the deal strategies as far as how we put these things together, like overarching deal strategies. So I'll run through that as well. Then we'll talk a little bit about data gathering and analyzing each of the deals that you've got. You need to see, once you get in there, is this a deal that makes sense? And even if you don't have accounting experience, even if you're not a numbers person, even if you've never done this before, I'm assuming you've never done this before, I'll give you everything you need. It's also done in a very simplified way to make them feel the most comfortable sharing information with you in a natural way as opposed to a give me your financial statements and I'll sign an NDA, all that wheel. You'll find that I've got some really good strategies for just making that not so legal feeling. Then we'll get into the deal structure. So how is the deal going to actually be structured? How do we get this thing to happen? Do we buy stock? Do we buy assets? Do we, you know, do we do this in a company? How do we actually structure our deals? And then one of my favorites, probably my favorite part of the whole course, near and dear to my heart, because it's the most creative, is what we call the deal stack. Now the deal stack is where we say, how many strategies is it going to take for us to get the money that we need to do this deal? And here's what that looks like. So let's say that we've got a deal that's a $1.5 million acquisition. Well, the way that I like to do this is I just write on the left side of the page 1.5 million. And then down at the bottom I write zero. And, and my gap is what I have to fill to be able to pay this, right? To be able to pay 1.5 million for the deal, I need to fill this gap. So what I then do is I like to. The reason I call it a deal stack is that then it's going to be, well, what strategy is going to get me the closest to being able to have this 1.5 million? And I'll go in great detail as we get into the program. But let's say just for simple purposes here, I'm like, well, what would be great would be if the seller was, would finance a significant part of this. And so let's say maybe I can, and let's actually say a million dollar deal because I can do the math easier in my head. So it's a million dollar gap. I've got zero right now and I need to get to a million. Well, if I can get the seller to finance 50% of that deal now I'm only 500,000 away. So the first block in my deal stack would be seller financing. And that would take care of half of what I need. And, and then maybe the next block is that the seller has significant accounts receivable. And again, I'll give you these strategies in great detail when we get to the deal stack section. But let's say now I need to have, I need to see can I get the seller some cash. So then I go to the accounts receivable and I say, oh, the seller's got $400,000 of accounts receivable. And I know I can get 80% financing on a $400,000 account receivable. Well, 80% of 400,000 would be 320,000. So that gets me another 32% of the way there. So now I've got my 500,000 from the seller financing. And I've got 320,000 by factoring the accounts receivable and then the balance, the remaining, what do we need? 180. The remaining 180,000. Maybe I can do that as an earn out and don't worry about knowing what an earn out or accounts receivable even is. I will cover all of that in great detail. But what I've done there is I've just basically said my deal stack is the three strategies in that case. And again I've got about 220 of them. But those three strategies helped me fill the gap and that when done, gives me the money that I need, the million dollars to buy this business. So that's kind of what the deal stack is. That's like I said, one of the most fun parts of what you'll learn and also definitely the most creative. For once we get that deal stack done in our mind, then we go to the negotiating table and we go back and forth with the seller to collaborate. And I prefer calling this collaboration not negotiation, but we'll collaborate to get a price that makes sense to the seller on the terms that make the most sense to us. Once we've got that done, we'll document that in a term sheet. Sometimes that's also referred to as an loi. An loi is a letter of intent. This is a non binding outline of the deal points of the deal. And then we'll go through something called due diligence where we'll actually verify that the things that the seller is telling us about the business are in fact the things that are what's going on in the business. And there's three basic kinds of due diligence. There's legal due diligence, kind of being sure that the contracts are done properly and the employment agreements are done properly and the intellectual property that it might own is owned by it. And that kind of stuff. There aren't any lawsuits or outstanding things like that. That's legal due diligence or ldd. We also do financial due diligence or fdd. And financial due diligence is where we're looking at the books and records of the company to be sure that they are in fact accurate and represent what's going on in the business. And then last but not least, there's cdd. And CDD is commercial due diligence. And this is where we're looking at things that are particular to the business itself that might market share. How happy are the clients that the business has, how happy are the employees, what Is the product market fit these kinds of things. And then once we've done that, we'll sign a final agreement and close the deal. So that's really what the deal life cycle looks like. And we'll be going through quite a bit of this as we get deeper and deeper into this program.

Ever wondered how some people build real wealth through acquisitions while others just sit on the sidelines? Well, I'm here to tell you it's not about luck. It's about having the right system, the right deals and the right guidance. And that's exactly what we give you in the EPIC Deal Fast track. If you've been thinking about buying a business, but you keep getting stuck, whether it's finding the right deal, structuring the financing, or negotiating with sellers, you are not alone. Too many people waste months, even years just thinking about acquiring a business while the real opportunities pass them by. The EPIC Deal Fast Track is not another course. It's actually an implementation program and it's designed to get you from the idea to the acquisition in just 16 weeks or less. We work with you one on one to help you find, fund and close your first or next deal. And once you do, we're going to plug you into our elite EPIC board community so that you can keep scaling through acquisitions. We install three powerful systems in your business. The first is the deal flow engine so you always have high quality off market deals coming to you. Number two, we give you our offer and funding system so that you can structure offers that get accepted and fund them creatively many times with no money out of your own pocket. And number three are closing and integration systems so that you don't just buy a business, you actually successfully run and scale it once you have acquired it. Plus you'll have direct one on one support from an EPIC Deal Advisor every step of the way. And that's people that have actually come up through the system and done these deals themselves. That's the only way to become an EPIC Deal Advisor. And if you're serious about acquiring a business this year, don't just sit on the sidelines, just text I'm in to 334-458-9034 and we'll get you in. So text I'm in to 334-458-9034 will get you in. No fluff, no wasted time, just real deal making from people that are actually out there doing deals right now.

I'll see you there.