#343 Podcast Highlights 2025 Part 2

Hi, this is Jonathan Jay, and welcome to Business Buying Strategies, the number one podcast for people interested in buying a business without risking their own cash. And welcome to 2026. Now, as has become a tradition with this podcast, the first two episodes of the new year provide the chance to look back at some of the podcast highlights from 2025. so here's our second Extended podcast review of the year.

On this week's episode, you're going to hear from my long-term lawyer, John Andrews, who recently spoke to my mastermind audience about the legal issues and the pitfalls of buying a business. Yeah. Just a brief background, so I've worked with Jonathan Jay for. Probably the last six, seven years, I've been at two, three firms in that time and we've completed 200, 250 deals for people that have been on the DEALMAKERS course.

So we're pretty well experienced in Jonathan's methods, how these deals are done, and it's been a real learning experience over that period of time. To say a little bit about my firm, we are a top 50 law firm. We have offices in Manchester, Liverpool, and London. I head up the London office and all of the.

Deal maker work is done under my supervision in my office. My job today is to give you a whistle stop tour on doing m and a deals, the structure of them, the process, and really tell a bit about how to engage with your lawyer. And I know you're probably all really keen to have an understanding of what these things cost, most importantly. So I'll, I'll do my best to give you some parameters on that.

What I say is this is when you sign out on this journey, and Jonathan will tell you you're invariably gonna do these acquisitions of our limited company. So you will set up your holding company, and if it's just you being the only shareholder and the only person doing the deals, then all well and good. You can buy an off the shelf company and leave it as it is. What I would say to you is at the very outset, if there's gonna be more than one shareholder or if you anticipate in the future.

This'll be more than one shareholder. Then the very first document your lawyer should be telling you to do is to put together a shareholder's agreement, and it's a document most people either don't know about, think they'll put it off to a later stage because they're expensive to draft, and I think it's not necessary. One thing I would say to you is this, of all the documents that you'll put together when you're doing these deals, if you're going into partnership with somebody and you're gonna have more than one shareholder, more than one director, then the shareholder's agreement is absolutely essential.

And my advice is get that done at the earliest stage possible. Now, what does a shareholders agreement do? It's a private contract between the shareholders and the business. And the reason you need it is that if you set up a limited company and you just unlock shares to 1, 2, 3 people, including yourself, there's two consequences of that.

First of all, once those shares have been lost, you can't get those shares back. So if those shareholders decide that they're not gonna take any part in the business. If they wanna retire from the business, want no involvement in it unless that's something you intended, they are entitled to retain their shares. Once they've left, they're entitled to a proportion of dividends.

If they got 50% of the shares, they get 50% of the dividend. And when you eventually exit the business, they're entitled to 50% of the exit price. So you'll see that there are a number of scenarios where you would not want that to happen. So a shareholders agreement, the first thing it does, it says, in certain circumstances, remaining shareholders have the right to acquire those shares back, and you can fix the price for those shares a number of ways.

It could be market value, it could be a prefixed price, where it could even be a nominal price if the depart shareholder is a bad lever. So even bad circumstances. That's the first thing a shareholders' agreement does. The second thing that a shareholder's agreement can do is it can create obligations between the parties to it so you can set out what the obligations of each shareholder are in participating in the business.

And this goes beyond any employment agreement or service contract that you might have with them. The third thing that the shareholders' agreement can do is address the, the issue of different share classes. Now, when you set a company up off the shelf, all shares rank equally, so you just have one class of share. They have equal voting rights, equal proportionate entitlement to dividends.

So again, if you're gonna be quite sophisticated on the, at the beginning of your journey and there's gonna be more than one shareholder, you might want to create different classes of share. They're called Alphabet Shares Common Leisure, class A, B, CD. Creating these shares involves amending the articles of association. Or having bespoke articles drafted at the very beginning.

Articles of association are the rules of the company. All limited companies have them. If you just buy a company off the shelf, there will be standard articles with one class of share. If you're gonna be sophisticated, you will acquire that company and you either adopt brand new articles on the day that you buy that off the shelf company, or you will amend those articles to create the classes of share.

The reason you create classes of share is you can then have different rights in terms of voting and different rights in relation to, to dividend different rights, to buy shares back. Again, quite complicated at the outset, but if you are gonna go into business and and acquire businesses with a number of colleagues, partners, whatever you wanna call them, then creating these separate classes of shares, something you wanna consider, and then within the shareholders agreement, you can set out additional rights as to how those shares will be dealt with in the event of disposal.

In the event of a, a dispute between the parties. So shareholders agreement at the very outset should at least be raised with you by any lawyer that you're gonna speak to. And that probably brings me onto to the most important point of today. M and a work is really specialized.

I've been doing it for 30 years, and I can always tell when a lawyer on the other side is dabbling. Now, doing MA work is a mixture of knowing the law. But it's also really a question of experience. I've made lots of mistakes in the past, all lawyers have.

But you learn from those mistakes and you also build up a commercial awareness on these deals. What, what, what feels right? And if you don't do these deals day in, day out, then you're not doing the best for your clients. So I would say this, don't always be driven by price, be driven by experience.

Price is important. I get that. But ultimately, a bit like buying a house. This is a major acquisition you're gonna do.

You wanna get it right and you want a lawyer that knows his way around the documentation, importantly from a legal perspective, but also from the point of view of negotiation and doing the deal for you. And I say that because there are, there are a number of times that we're doing deals, and at the beginning of your journey, you probably are gonna be motivated by how much these deals are gonna cost you. And some lawyers will spend hours arguing one word in a contract and. What you need is a lawyer to say to you that's, that is really important.

That is, that's a deal breaker. Or you do, or by the same token you need, a lawyer says, you know what? We can let that go. We can part that.

The chances of that actually going pear shape for you are fairly minimal. So the commercial side of the negotiation from your lawyer's perspective is just as important as the legal side of it. So get a lawyer that that is an m and a specialist. The other thing I'd say to is this, if you acquire the business and a seller hasn't got a lawyer, then make sure he's getting an MA specialist.

'cause otherwise we've got no control who the other side use or how sensible they will be over their, their negotiations. What I often do, if I'm active for a buyout, even for a seller, I've got three or four lawyers I've worked with on a number of occasional deals. We like working with them. Th they know how we draft our documents.

They know what we will accept, what we won't accept, and vice versa. What that does is it speeds the deal up. It makes it cheaper because we're not arguing over city points. 'cause more or less, we know what the documents are gonna look like at the outset, and it means ultimately the whole transaction is less stressful for you guys.

So having two good m and a lawyers on each side is important. And as I say, if the seller hasn't got a lawyer. Then pushing towards a lawyer that's got no experience or your own lawyer may be able to make a recommendation to who they've worked with on the other side before. I've gotta keep an eye at time leaving on to the various aspects of the transaction once I should come back to, actually we didn't do, I didn't hear how much shareholders' a agreements was gonna cost today.

Lawyers never liked sticking their neck out and say what it's gonna be for a straightforward shareholders agreement. You are probably looking at somewhere between three to 5,000 pounds now. Quite a big investment. At the very upset of your buying journey, but the costs it can save you in the long run are significant.

I, I won't give you some of the examples I've come across where shareholders agreements haven't been put in place, but I can tell you that I've done some litigation where the costs were 200,000 each side. We won the case in the end, but 200,000 pounds of probably 18 months of this person's life. So really, for the sake of three to 5,000 pounds of the vessel worth making. More sophisticated agreements, which you probably won't want at the outset, probably anywhere between 10 and 15,000 pounds.

But that's when you're further down the journey. Perhaps when you're bringing private equity investors into the business, you can revisit your shareholders agreement and make it a little bit more sophisticated. / Now in my experience, negotiating the best deals takes preparation, a creative and positive mindset, as well as strong selling skills. A few weeks ago, one of the best negotiators I know in the circle, member Martin, spoke to my audience about how to acquire these specific skills and more.

It is a negotiation masterclass, and I hope you enjoy it. So if you look at where we commonly see people make mistakes, what a thought is, we go through those first. Now, the number one issue I see when we speak to people is mindset. So hand on heart.

Who believes here that you can buy a business with no money down? Is there anyone who genuinely has that little doubt going? Well, everyone else is doing it, but am I good enough? Okay, so we have a cool, we've got a couple of people.

I thought no one was gonna say we've got at least one liar in the room, but fantastic. Okay, cool. Just so you know, you are good enough. Now, let me ask you a different question.

If I would've told you that you could do a deal with no money down and walk away with over a quarter of a million pound on day one, would you have believed it? That's why listening and sharing here is really important. Because no one thought you could run a mile faster than four minutes until Roger Banister did it, and then it's something like 30 people did it in the next six months. It is crazy.

So in your mind, you have to be confident that you can do it. And if you don't believe you are, there's a really good technique that is look in the mirror and just tell yourself every day, I am good enough. And if you do that for two minutes, I guarantee at least half of you will end up crying until you keep doing it. Because it's that barrier that's stopping you and why.

The reason that's so important is when you're talking to people and discussing people and dis negotiating deals, do they trust you? If you're really meek and you're really, but but they don't do they? Whereas why do you think Tim got the deal across the line? He just ooze his confidence, doesn't he?

Look at when will came up earlier. Will's deal is absolutely fantastic. Does willing instill confidence in you that he is a safe pair of hands? The biggest secret to making this work is being a safe pair of hands, and that's where the finance comes in.

That's where the deal structuring comes in. That's where the whole thing comes in in the negotiations, is if you are the confident one, you are the one taking control, and if you take control, they will take your lead. So does anyone know the number one way of taking control? Ask questions.

If they ask you something you don't know and you need time to think, should you sit there and go, mm mm that stammer? Or just say, that's a really, really good question. Could you tell me what you're really looking for and what you're thinking? So I get answer the question that you're asking, not the question I think you're asking.

Now, there is another real secret here to position yourself as that power player, and if you genuinely don't know the answer, do not. Bullshit. It's really simple. Don't make it up.

If you're talking to someone and they say, that's a really good question. I don't know. Let me go and check with one of my advisors and get back to you tomorrow. Do you respect them more or do you respect them less?

More? And that's why I would say when you're looking at financing and you look at the deals that we're helping people in the room with right now. It is because they've got the ammunition upfront. We can look at the financing options.

We can help you with the deal structures and how much more confident do you know when you sit down with that person where you already know what the maximum you can do. Or if they turn around and say, I want 3 million, and you can say, well, there's just absolutely no way I could do that. Or if they turn and say, a want 1.5 million and we've discussed a 1.

5 million pound option and gone, you could do 1.5 if you did it over five years like this. And they go, and I want 1.5 over three.

Now here's the key thing. You can't show you're too prepared. 'cause if you go, I can't, but I can do it over five. They're going, well, why didn't you gimme that first?

So one of the things is also get good at sales, get good at acting. But if you sit there and you go, let me just run a few numbers in my head for a minute, and you start jotting down a few things, it doesn't matter what you jot down and you go, I'll need to check with my advisor. But if we could. Do 1.

5 over five years, do we have a deal all of a sudden? Does that sound like you're really trying to help them? And you can only do that if you know the truth. If you know what you can finance, if you know what you can fund.

Now, can I ask, how many of you role play with someone else in this room on a regular basis? No. None. Okay.

It's a shame Tim's not here. Me and Tim role play pretty much most days, we'll, we'll go back and forth about how we could present different deal structures, how we could get 'em sold, how we can role play. I can honestly tell you guys, how many of you think I am pretty slick when it comes to this negotiation stuff? It those you have heard me?

That's not for my ego, because I'm gonna tell you the backstory of how I got there. I started off in sales and every time someone answered the phone, I threw up in a bucket for three weeks and I already had a really good job at Shell. And my friends around and went, why are you putting yourself through this? And I was like, because if I do not learn how to sell, I will never achieve my goals.

Selling is the number one thing in whatever you do, and it is really important learning how to do that because selling is not about selling someone something that's worth dog, that's worth uselessness. It's about getting people to agree with you on a fair deal. 'cause every negotiation you do should be a good deal for them and a better deal for you, if that makes sense. The other benefit of getting us involved, looking at the finances going into it is not only do you know what the options are, we can discuss how to structure it with how to limit the pgs, how to mitigate the risk of pgs if you have to give them.

The other big mistake I see people doing is making offers with no knowledge. So actually just had a friend of mine who's looking at buying a business and he's been on a few of these sessions, not in Jonathan's, but in just looking YouTube stuff and thinks he knows it all 'cause he's watched YouTube videos. And he sent us deal, go. We're just then going, I've got a deal on the hook.

It makes 3.4 million a year. The asset is 2 million and he just wants 1.8 million for the assets.

Can you get us the financing gigs? 2 million quid? And my answer was, well no. We could probably get about 1.

6 without over exposing you, but what's the net profit? He's like, what does that matter? I was like, okay, well what's the net profit does? I wanna guess what this 3.

4 million pound business was that he was gonna wanting to use to raise 2 million quid, 57,000. And when I said, you can't raise it against that business, his answer was, well, why not? You can't service it. And this is where putting it all together really, really matters.

So if you take a deal fee and you put the business at the point where it is risking solvency. And you haven't factored in seasonality. You haven't factored in. If the market turns against you, you could be asked to pay that back because you've taken it outta the business.

As a director, that actually goes for almost every penny you pay yourself. That doesn't pay away. And if you're paying yourself too much, they can still come after that and say You've inflated your salary. As a director, you have a responsibility to run the business ethically, responsibly, and sustainably.

Now, if you can look at this and go, I can afford to lose 20% of my sales and still meet every requirement of the business from a debt perspective, is anyone gonna think that's risky? You're pretty confident at that point, you're not gonna have an issue. The other thing is, if you take a deal fee out, be prepared to pull the escape card quicker. Rather than run it to the end.

So how many of you know people who've run a business into the ground, either intentionally or because of incompetence or because of the market conditions? Every single business owner who's done that almost without exception, should have pulled the escape cord earlier, but they didn't 'cause they thought they could fix it. They didn't have plans to do, they didn't know what to do. And this applies when you buy the business as well, when you're looking at your costs.

Whenever you buy a business, you cannot cut your costs fast enough. And in business in general, I always say to people when I'm coaching them is if you are thinking, should I fire this person for whatever reason? The very fact you're asking the question means the answer is yes. If you're asking, should I do the, should I cut this expense?

You should have already cut it before you finish that sentence. / Now this week we have something a little bit different every few weeks I run a coffee morning on Zoom with about 25 attendees answering their questions on business buying this week. You can listen in to part of that Coffee with Jonathan Webinar. So welcome to everyone in the next, I don't know, 40, 45 minutes, as long as it takes, really, I'll be answering any questions you've got about buying a business.

I don't have any PowerPoint slides. I don't have a presentation, I don't have an agenda that is going to be decided entirely by you. So this is interactive. This is for people who, who really wanna get involved.

So I thought this would be a great opportunity to talk about buying a business and any questions that I can answer because you've told me that you listen to the podcast, you read the books, you watch the YouTube videos, but that's kind of like a bit one way, isn't it? That's not interacting with me. So what can I help you with? What challenges have you got?

What can I help you with? What can I answer? Mika says, do you help in setting a company structure required to run it smoothly and then you've put in brackets bald? Okay, that's kind of two things in one question.

Company structure. I interpret and our sort of terminology around company structure is using the right holding companies with the correct articles of association, the correct SPV structure and so forth. So the answer is absolutely yes, but then you kind of change the question a bit by putting the word board, which presumably is short for board of directors, said Michel. Tell me a bit more what you mean by board of directors, just so I can make sure I'm answering your question.

He says, also access to trusted and accountable accountants. You don't see that very often. An accountable accountant. I know you've got a reliable lawyer.

We've actually got three law firms. And the equivalent accountants who are very proactive, but you need more than a lawyer and an accountant. So, Mika's, board of directors. So I'll stick with Mika's question, then I'll move on to yours, G And Satya, I can see the other questions coming through already.

So questions for me? This is interactive. This isn't passive. This isn't just you listening to everyone else.

You're here to have a question answered. So let's, let's make the, let's make the most of it. So Mika says, how do you set up the board of directors? Okay.

I always know when someone talks about a board of directors at this stage who hasn't bought a business, talks about board of directors. I know you've been listening to someone on YouTube who's very, very elderly, who's I believe 80 years old and has a sort of a rather. Different approach to me. So we've got hundreds and hundreds of business buyers in our community.

None of them go out and find a board of directors because you don't need to, you know, you, you do not need to do that. Okay? So if you've been spending time looking for a board of directors, unfortunately you've wasted your time with that because you don't need that. Okay?

You just need you. You need a deal team. But they aren't directors of the business. They're people that you pay for their services as and when they are required.

Alright? And you, and you've named an accountant and a lawyer. So what I would say, mial is that if you don't know anything about the business that you are buying, you need to find someone who does. Because you probably need someone on your side as an advisor, but that doesn't mean that they, they become a director of the business.

Now, they might do, but they probably wouldn't start off that way. But anyone who's going out there, I get messages on LinkedIn saying, Jonathan, will you join our board of directors? And I thought, I don't know you. Why would I do that?

And I know where they've got that from and it's kind of bad advice that's out there on the internet. And the internet is obviously brilliant. For getting information for all different people, but is really bad when it comes to buying a business because there's so much misinformation. I've never seen so much misinformation than anything else on buying a, buying a business.

Mika, hopefully that answers your question. Let me just whiz down the questions here. Yeah. Uh, Mika has just told me who he is getting the advice from.

Yeah. It's out of is outta date. Yeah. And Phil says, using chat GP as GPT, as a as a business consultant.

Yeah, it, it, I dunno whether you're saying that tongue in cheek, Phil, or you're serious about that, but, um, I think it can only take you, uh, it can only take you so far and Mika says, I see what you mean now. Thanks for the clarification. So I've helped one person this morning so far, going down a track that basically would just waste you months of your life, would massively overcomplicate it and will not help you buy a business. Okay.

So Mika, I think you've got your, you've got your money's worth, uh, from this morning's webinar. So I'm gonna go to my next question, which is, mark, what is the best way to protect yourself and other businesses you own when buying another business to run alongside existing businesses? Brilliant. Okay.

I kind of part answered it already. It's in your corporate structure, so it's in the way you set up the company. So you never buy a business in your own name. You never use your existing company to buy a business.

You would keep it in a completely different holding company structure. So it's understanding that Mark. So presumably you've got businesses already, which is brilliant. You know what you're doing.

So it is all about a separate company structure. Uh, and as you probably have realized, again, people in business know this pretty quickly and pretty early on. You want to avoid personal guarantees, you don't want personal guarantees. Personal guarantees can absolutely sink the ship and can be absolutely disastrous for you and your family.

So when you say protect yourself, I would say it's the correct company structure. It's no personal guarantees. And the third element of protecting yourself, mark, is the correct amount of due diligence. And I see people.

Sometimes who should know better skimp on due diligence. So due diligence is the checking that we do to make sure the company is what we think it is because the seller could say anything, right? And and they do. So we need to verify.

We need to run cashflow forecast. We need to factor in any finance and the cost of that finance, and maybe changes in interest rates as to. What the business can afford. What you don't want to ever do is over-leverage is very easy to do, and then sometimes you can do it.

You know, you, you, you, you can, uh, put in a lot of debt into a business. Uh, and, and if the business can afford it, that's absolutely fine, absolutely brilliant. But if business can't, then that's a problem. So this all comes out, mark, in the due diligence.

So Mark three ways. Corporate structure. No personal guarantees and due diligence. Mark, just send me a quick message to let me know that you heard that and if that makes sense to you.

Okay. While Mark is doing that. Phil said, why would it run alongside and not integrate it? The integration, I think, could come later once you know what you've got.

So let's say you've owned it for a year, but you've contained it within a corporate structure that's separate to what you've got, and you put it almost like in an, in an incubation. Is that the right word? What is it when you go through. During COVID when you were put in like an isolation.

Yeah, that's, yeah. So you keep it in isolation, uh, and then when you know exactly what you've got, all the skeletons that come out the closet, it's running well, then I think an integration works better and, and that's me being super cautious, that's me being super cautious. So hopefully Mark, you heard that and that made sense to you. Uh, Mike says, yes, perfect sense.

Been bitten by PGS before. Never again. Yeah, absolutely. Yeah.

Anyone who's been in business for a while just knows how. That is never a good thing. So is sometimes in an acquisition, a PG required? Yes.

So you take a judgment call on that or you say, no, I'm not gonna do it. I'll just find another business where there isn't a PG required. So you might look longer, look for longer, but you are reducing your risk dramatically. Sounds great.

Mark, it, it, it sounds like, you know, you've got businesses already. Now is the time to do a deal by the sounds of it. Let me move on to someone else with a different question here, so let me just take that out. So I've done that one.

Alan. Hi Alan. Alan says, most sellers want cash free, debt free. Now, Alan's question continues.

Okay, that's not the question. That's an opening statement. Alan, do you mind if I challenge that just a little bit because I don't agree with you? Most sellers do not know what Cash free debt free is because they've never sold a business before, so they don't know.

So don't ever, I'm talking to everyone here, don't ever assume something, because I believe that when you know the right way to buy a business, you want people to fall in line with you. You are not gonna fall in line with them. So let me just read the rest of Alan's question then. In stock sales.

Okay. So Alan, I think you are outside of the uk, aren't you? Because I think you, you, let me just sort of translate that if you like, for the, for my UK listeners. Uh, so you are talking about a share sale.

Alan, you are outside the uk, is that right? He says yes. Yeah. Oh, you're in Spain?

Yeah. Okay. Yeah. So just wanna make sure, 'cause when we say stock in the uk, we typically are talking about what's on the shelves in the warehouse.

So I just want, I just wanna make sure that we're talking about the right thing. So in share sales, so share, purchase, if the liabilities are reasonable, should it be considered in the price? Yeah, absolutely. So you, you can adjust for the liabilities.

So actually there's a slight contradiction with the first part of what you're saying there. When you say most sellers want cash free, debt free, uh, if it was debt free, there wouldn't be any liabilities. Right now I like, I, I don't want to do cash free, debt free. I want the cash because I can use that as part of the, the, uh, the purchase.

And I want the debt because that reduces the purchase price. I can refinance it, I can let it sit there. Yeah. Debt debt.

As a consumer usually means a bad thing. You've got credit cards and whatever. Debt's a scary thing, right? But in business debt is your mechanism to leverage for growth.

So Alan, I think the answer to your question is yes, but I wanted to give a little bit more flavor around, um, around that. / So in this episode here is Jonathan talking us through the rookie mistakes first time deal makers make and how to make sure you avoid them yourself. first is. You get all your information from the internet, and I think that anyone who's been on the internet more than six minutes knows that so much on the internet just isn't true fake news as we hear all the time.

Now, the problem with internet information is you don't know who's giving you the information. So I see information about business buying from people who've bought. Literally one business one. There's one guy out there at the moment, one business, and he bought it three months ago, and now he's teaching other people how to do it.

That's just the craziest thing. You've gotta be very cautious and very careful about where you get your information. But the other challenge with learning information from the internet is that there's going to be conflicting advice. You may have discovered this already, and the way I, my analogy for this conflicting advice is that let's say you are going to cook a meal and you start with a Gordon Ramsey recipe.

You know the celebrity chef, you start with a Gordon Ramsey. Recipe and you do the first few parts, part one, part two, part three, following the Gordon Ramsay recipe. But then you get distracted and you realize you've got a Jamie Oliver Cookbook with the same type of meal in the Jamie Oliver. So you forget Gordon Ramsay.

You move over to the Jamie Oliver Cookbook and do the next part of the recipe following the Jamie Oliver approach right now. Even if we just stopped there and we didn't go to some other celebrity chefs. And we just mixed up two approaches. Do you think that's gonna come out as a good meal?

Probably not. And that is the challenge when you get your information from the internet. It's a video here, a podcast there, a blog there, and it's this mishmash of, of information what you need. Is a linear process.

You need a step-by-step system. Uh, and those of you who know me from other webinars, you know that I teach a 21 step system. Uh, and this is where you don't have to go out and piece it all together by yourselves because that's fair is hard work. As long as hard work, that doesn't really work.

But when you've got a linear system, you start here, you go here, you do this, you do this. Then it clears up. All that misinformation. So the internet is a great way of getting inspiration.

It's certainly not a great way of having a business buying system. Now, some of you have been around me for a while, have, uh, believed that the only way to generate deal flow is to send out letters. And I meet people at my public events who tell me that they've sent out letters. And I said, how did that go?

And they say, well, not well. I said, well, I guess that's why you're here, right? And they say, yeah, that's exactly why I wanna spend a couple of days with you, or three days with you, or whatever it is, because I tried to do it by myself and it didn't work. Now sending letters was brilliant five years ago.

Uh, now we can combine it with other methods. In fact, I teach people seven different ways of, of finding businesses to buy. And, uh, six of those don't cost, uh, anything whatsoever. But if you've tried sending letters, please would you stop.

And I'll tell you the reason why. It's not only you're probably sending the wrong letters to the wrong people in the wrong way. That's. Quite an important part of it, but if you don't know what to do in terms of actually getting the deal done, then you are raising the hopes of sellers who are then going to be disappointed that you are just kind of dabbling at it a little bit and just seeing what happened, but you don't know how to get a deal done.

There is a big difference between deal sourcing and getting deals done. Now I'm on LinkedIn and I look at LinkedIn every day. Uh, maybe I'm connected. If I'm not connected with you on LinkedIn, send, find me on LinkedIn.

Send me a connection request. And I post most days as well, by the way. But I see a lot of people talking about deal sourcing. They're all talking about deal sourcing.

Well, deal sourcing is the easy part. Doing the deal is the hard part, right? Uh, it's, it's, I dunno, what's it like? It's like climbing a mountain.

And saying, oh, we're gonna do the first couple of steps, right? But the first couple of steps, they're easy. It's when you've done the the a thousand steps, it starts to get a little bit more difficult. The deal flow bit, the easy part is what everyone talks about, but not many people get past.

It is just the tip of the iceberg. So please, if you're sending letters, stop, do it properly. Now the third mistake that people make is they dunno how to value the business. As a result of not knowing how to value and hope.

You're writing these things down, by the way, as a result of not knowing how to value the business, they overpay for the business and potentially over-leverage. Lemme tell you why those two mistakes are real bad ones. First of all, when you overpay, you are always going to be playing catch up. You've paid too much and I saw someone recently not.

Someone on Mastermind, someone I haven't worked with, but he was telling me about this because I do some public events and people come up and they talk to me about things that they've, they've done typically that haven't worked. And they, and he said that he ended up realizing that he'd paid six times the profit of something for a business that really was only worth two, two and a half, me at a pinch three times. So I said, why didn't you know? He said, and this is one of my points later, it's partly the due diligence, but I just didn't understand.

How to value the business. The other challenge, which is point number two, was the overleveraging. Overleveraging is where you borrow too much money to buy the business, and as a result, all you are doing is paying back the bank or the lender. You're not making any money yourself.

You get a dip in trading, you can't pay back the lender and the business ends up folding. So this valuation piece is really, really important. And we could spend. An entire day, an entire weekend talking about how to value a business.

Because if you don't get this bit right, nothing else matters. And I've seen new business buyers skimp over that and say, I'll worry about that later. No, you need to worry about it now. Now, number four is you believe what you read about distress businesses.

Let me tell you what you might read about when it comes to distress businesses. You buy the business for nothing, for a pound dollar. And you don't do any due diligence. This is, this is the advice.

This is not from me, by the way. This is advice out there. You don't do any due diligence because who cares? You've only bought it for a pound.

Your risk is a pound. You then do financial engineering, sounds a bit dodgy to me, but to make the business profitable and then one day you sell it for a fortune. Oh, if only it was that easy. Oh my goodness, we'd all be doing it right now.

The thing is, you might not pay any money for the business, but you will pay in time, stress, sleepless nights. And the chances are you have to put money in to rescue the business. Unless you've got spare cash, which you're prepared to risk, it's not gonna work. And by the way, no lender will ever lend on a business that's distressed.

Why would they lend to a business with a chances of getting their money back are very low. Indeed. Now, I've got an alternative for you. I'm not trying to give you problems here when I give you solutions.

The alternative is you buy businesses that make money. I know it's a, it's a earth shattering revelation, but buy a business that makes money. 'cause isn't that why you are doing it? You are not buying a business.

To be a hero and to prove that the old owner, the previous owner, didn't know what they're doing and you are far cleverer than them, which is the message buying distress businesses and turning them around. That's really what the message is. I don't want you to feel you have to be a genius at business. Just be someone who buys a business that makes money the day before you buy it.

So that it makes money the day after you buy it. It really is as simple as that. Please ignore distressed businesses. So one of my deal club evenings in London, on Tuesday, I was talking to uh, two guys who have bought 11 businesses between them, which is absolutely magnificent.

And I was having this exact conversation with them and they said, oh yeah. We got our fingers burnt on this. If you want to have a painful experience in business buying, if you wanna have a painful experience, buy businesses that are distressed, that don't make any money, rather than buying businesses that make money. I can see some of you sending me questions.

I'll get to those later on. Okay. Uh, number five is you don't have any credibility with the seller. You don't have any credibility with the seller whatsoever.

You've never bought a business before. You've got no background in business. You don't own a business, you've got no business experience. Why is someone gonna sell their business to you?

It's a really good question. Interestingly, if you know how to deal with it and you know how to, what we call position yourself prior to interacting with the owner, that is not a problem. It comes down to what you say and the way you say it. So what we found very helpful is to have what we call a credibility website, which the seller sees before they contact you.

So by the time they contact you, they know who you are. They clearly like what you are saying and what you are about. Otherwise, they wouldn't contact you and you don't have any of those awkward questions around what's your. Business history and you know, what's your experience and uh, and those sorts of things.

Now, what the credibility website also does is that it gets over that hurdle of, to put it in its bluntest terms, how much money do you have, which is what sellers owe. Sellers are curious as to whether you can pull this deal off. Can you, have you either got the cash or can you get the funding? You know, they don't mind whether it's cash or funding because as long as they get what they want.

They're happy, but this credibility issue is prevalent with brand new buyers who've never bought a business before. But I can tell you that it's never stopped any of my Mastermind clients because we have a way of dealing with this, partly the credibility website, but partly what you are saying and what you are doing. / Now on this week's episode, something a little bit different that you are going to hear some of a live seminar I did for a group of business owners a little while ago where we talked about different deal structures and different ways to buy businesses, and also a little bit of my backstory as well.

I hope you enjoy it. Good morning. Good morning. So what we're gonna be doing over the next few hours is finding out how to buy an existing business, all of their customers, all of their contracts, all the hard work that they put into that business.

Sometimes a large business, sometimes a small business, and we're gonna be doing it. Without spending any of your own cash. In fact, I will not allow you to put any of your own money in the deal. You can keep that money in the bank and I'll show you how to buy this business, take it over, and transform that business to grow your existing business because I'm guessing.

That you've got some big goals, some big plans, some big numbers that you want to hit, and all the organic growth is great. You know, running the Facebook ads, doing the TikTok videos, all the things that you're doing now, they all work, don't they? But sometimes it feels one step forward, two step backwards, you gain the customer, you lose one, you gain one, you lose one. But what we're gonna do with what we talk about today is how to take your business from where it is now to where you want it to be far faster.

Than you ever thought possible by acquiring someone else's customers. Because let's face it, when we look in the mirror, none of us are getting any younger, are we? So why spend another 10 years doing something when you can do it in the next 18 months and you can get started right now and you can make it happen Right now, especially this, this time of year is brilliant to start thinking about acquisitions because as we come up to the end of the year, this time between now and the end of the year is the getting ready for it.

January is when people come back to their office after time away, spending time with the family, and they say, why am I doing this? Especially people at retirement age. Why am I still doing this? I can't face another year.

And that is the perfect opportunity for you to be speaking to those people. That is the, because we've all done it right. We've all come back into the new year and go, oh, another year of doing this. Those are the people that you need to be speaking to.

And the typical timeline, just so you're aware, is if you want to buy multiple businesses and then plan and exit is 36 months. So that's three Christmases, three. Summers, but you've gotta start now. So if you want to buy, build, and exit, you've got a 36 months timeline, but you start now.

Don't start in month 24 and wonder why it hasn't happened. Okay? So with all of this, the sooner you start, the faster you get the results. Now you'll hear me talk and I've got loads of examples for you today of people that I've worked with who've bought lots and lots of businesses.

But I don't want that to put you off. You don't have to buy lots and lots. You could buy just one. See, one deal can change your life.

And again, I've got great examples here today. Great case studies that I'm gonna share with you of people who bought one business and one acquisition changed everything. So the question you might be asking yourself, is it really possible? To buy a, an existing profitable business.

So a business that's making money, not a business that's struggling, but a business that's making money without spending a penny of your own cash. And the answer is a resounding yes. But if right now you're sitting there being a little bit cynical, you're thinking, how is this possible? It sounds too good to be true.

And if it sounds too good to be true, it probably is. I don't blame you. That was me at one point. And then I realized that I could do this and it changed everything for me, and it will for you too.

And if you have some property knowledge, if you are a property investor, and again, this probably doesn't apply to people today, business acquisitions gave you a greater return than property. I am gonna teach you a strategy later of buying the real estate, the property, alongside buying the business. Now, why would you do that? Well, we all know that businesses go up and down.

You have good years, you have not so good years. We get that property over time, always increases in value. So if you can develop. A commercial property portfolio alongside a business portfolio, then the business produces the cash flow that pays for the holidays, pays for all your living expenses, and gives you the good life and the property portfolio.

Appreciating over time is your children's and grandchildren's inheritance. So just to give you a little bit of biography, just so you know who I am and, and what really gives me the credibility to talk to you. 25 years ago, 1999, I sold a publishing company. We published magazines and it was one of those businesses where we made a bit of money one month.

He made a bit of a loss the next, then made a bit of money, then made a bit of a loss, and it went up and down, up and down. Very, very stressful owning that sort of business. And then someone came to me and said that they'd be interested in buying the business. Now, I'd never thought of selling it, but he said they'd like to buy it.

It was a company called Marcus Bon Associates. And, uh, within a few weeks we did the deal, and when I sold the business, I made more money the day I sold it than I'd ever made of two and a half years of turning up at the office six days a week. And I, I hear this time and time again where people make more money when they sell than when they've actually owned the business. So right now, you might not be thinking about selling at some point in the future, but maybe that should be on your.

Things to think about list, because you'll multiply up whatever you are earning now, depending on the size of the business. 7, 8, 9, maybe 10 times. Uh, I then started the business in adult education. Both of my parents were teachers.

Uh, I started a business in accredited adult education where as qualifications, uh, for adults. And then in 2006, so what's that? Eight? Yeah.

18 years ago I bought a competitor. Now, this was a multimillion pound competitor and they were our main competitor. If you've ever had a competitor who every single day they're kind of nibbling at you, you, your staff, mention them all the time, every time you hear their name, it sets your heart racing with with annoyance. Anyone got a competitor like that?

A few of you. You're right. Yeah. So I'll tell you the answer.

You buy them. That's the way to do it. So the owner of this company phoned me on a Sunday. And I had his number in my phone, so I knew who it was, and I was, uh, I was a little, a little frosty when I answered the phone.

I said, yeah, yes, Peter. And he said, I've got a proposition for you. Would you come up to, to see me in Wve Hampton tomorrow afternoon? So I went up to see him on the Monday afternoon, met him and his son at a, uh, uh, hotel just down around, down the road from their office.

They didn't want anyone to know that he was meeting me. And, uh, we put together a deal. And by Friday of the same week, which is actually four days. So I met him on Monday, Tuesday, Wednesday, Thursday, Friday, four days later.

I owned that business. The following Monday, I went into the office for the very first time. No one knew. And you should have seen the looks on people's faces.

I mean, one, one person just stood and just walked out and never came back. Just that, that because I was the enemy, had bought their business Now. When they started, it was actually started by people who've worked for me and now they work for me again and I could fire them. Oh, it was a, it was a, it was a wonder.

It was a wonderful feeling. It was karma. It had taken many years for this to happen, but Karma had played its part. So I owned that business.

I closed down the Wolverhampton office. Some of the staff came down to London with us. We diverted the phone lines, sent all, sent all the web traffic over to us, and our business just grew and grew. You see, we were competing with them on Google AdWords every single day.

This is pre-Facebook, Google AdWords, every single day. Who's gonna get the top position? And I was spending a fortune Who does AdWords? On Google.

Yeah. You can spend a fortune, right? It's really easy. That credit card gets whacked every few days, right?

And I was spending more and more always wanting to be top and they were trying to do the same, but now I didn't have to because we were always naturally gonna be top 'cause I'd removed. The competition. So all the friction, all the, the sales team who were saying, right, okay, they're gonna go with this company because they're a bit cheaper than us. All of that just went overnight.

It was amazing. So as a result, the profit went up. Revenue went up, profit went up, and I sold that to a private equity firm in 2007. I never could have done that if I hadn't bought my competitor, and that was a life change changing deal.

That was 17 years ago. 17 years later, the sale of that business still pays my holidays, still pays my living expenses because I took some of the money from that and I put it into real estate. Into property, and the returns from that. Pay for everything.

What, nearly two decades later. So when I say to you, one deal can change your life, that was the deal that changed my life. You listen to the podcast, but maybe you are not sure about the next step, you can have a call with one of Jonathan's team, a one-to-one Zoom call 10, 12, 15 minutes in duration. Where you can discuss your particular situation, what it is that you want to achieve, and maybe how we can help get you there an awful lot faster.

So if you're interested in having a call with one of Jonathan's team, then find the link in the podcast description, book your time and date, and get some clarity about your business buying journey. A few other highlights that people always find interesting. A few years later, I bought seven online marketing businesses doing SEO websites, pay-per-click, all of that stuff that you probably all spend money on. Uh, I bought that from a, a London based private equity firm for one pound.

It took me 12 weeks to negotiate a deal where all I gave them was a pound. You'd think you could do it in a day, right? It took 12 weeks to get to that one pound, uh, that one pound deal now. The business was losing money, but I restructured the group and I sold it 324 days later for 1.

25 million pounds to a company called Ad Media Group up in the northwest of England. So as a return on investment for that one pound to the 1.25 million, that was a really good return on investment. Now, did I have to work hard during that time?

Yeah, of course I did. Yeah, of course I would. Was it stressful at times? Yeah, of course.

It was, it was really stressful. One of the advantages of buying and selling businesses, you don't have to work all the time because you get a nice cash injection there, you can take a couple of years off. That's actually when my daughter was born, uh, in 2019, I bought 53 businesses and 48 of those were during the pandemic. And people often ask me, Jonathan, what is your advice about buying 48 businesses during a pandemic?

And my advice is don't buy 48 businesses during a pandemic. That was super stressful. Incredibly stressful because you are basically, you're buying turnarounds. The staff weren't there.

No one wanted to come into work. It was, it was chaos, wasn't it? It's easy to forget how chaotic it was at the time. That's physically a mentally burnout.

I exited in a management buyout to my business partner, uh, a couple of years later, and I've been helping other people buy business since 2016.