SELL YOUR BUSINESS FOR MILLIONS
SELL YOUR BUSINESS FOR MILLIONS
What criteria should business owners use to evaluate acquisition targets?
We focus on companies with at least a million dollars in EBITDA or cash flow. We don’t look at deals below that level. I receive offers for businesses with $500,000 to $750,000 in cash flow, but it’s about understanding the value of my time. We want to invest in companies where we can maximize returns and use our time efficiently. Acquiring a smaller company with $500,000 in cash flow doesn't provide enough runway to hire the right management team.
However, with a company generating over a million dollars, we have the flexibility to hire and pay the right people properly. This allows us to grow the company strategically without being constrained by cash flow issues. I learned this lesson after buying my first company for $350,000, thinking I could do it all. I quickly realized I had to run the company myself. Now, when acquiring a business like the one in Chicago, with over a million dollars in cash flow, we know we can cut expenses and add value. Additionally, we can raise prices if they are currently too low. For anyone looking to get into M&A, it’s crucial to carefully evaluate pricing when acquiring a company.
How can an equity-based exit strategy provide a significantly higher return in the long term?
We can offer sellers cash upfront to secure them as the first exit. Additionally, they would receive equity in our company. When we eventually sell the entire company, they would realize a larger exit than if they sold independently. For example, if your company generates $1 million in cash flow and you sell it on the open market, you might get $2 million to $3 million, or up to $3.5 million if it's a solid company.
However, if you sell to us, we could offer $500,000 upfront and 10% equity in our company. In this scenario, instead of a $3 million exit, you could potentially get $10 million. This is far more than selling it yourself through a broker. The idea is that instead of a 3x multiple, you could achieve nearly a 10x multiple by getting equity in our company.
How can business owners bounce back from major setbacks?
I acquired my first company, and it was wildly successful. My second acquisition, however, was a disaster—I lost a million dollars in South Florida. After that, I was in a dark place. I called a guy named Mike Kiko and told him I felt like I had reached the top of the mountain, only to be pushed off and fall back to the bottom. I needed help finding inner peace.
During our long conversation, Mike said something that struck me: "Josh, we’re all going to die one day. Everything you've done will be forgotten, and people won't care. So, why are you stressing about this?" He said, "If you’re lucky, you have another 40 years. Enjoy the journey, learn from your mistakes, and don’t repeat them."
That phone call flipped a switch in me. I realized I could figure things out. I had done it before. I needed to attack the problem and stop feeling sorry for myself. From that day, I shifted my mindset and began living from a place of creation, not scarcity.
What is the power of manifestation and networking to find deals?
Things happen for a reason, and they always work out. After losing money on a company, I sold some real estate to pay back investors. I had $300,000 left and needed to buy another company. I started telling everyone I spoke to what I was looking for, putting it out into the universe. My mentor, Mike, taught me to manifest by speaking about my goals and being ready to receive when the opportunity comes.
Three weeks after I started this exercise of asking for a deal and more cash flow, an opportunity arrived. Someone brought me a deal I had passed on three years earlier. The seller was in financial trouble, so I made an offer: $150,000 in cash, which was the money he used to buy his company with an SBA loan. I also assumed his $1 million in SBA debt. It may sound crazy—losing a million dollars and then taking on another million in debt—but it worked out.
*This interview has been edited and condensed for clarity.*
