00:00:00:00 - 00:00:35:15
Unknown
Hello and welcome to our weekly livestream recording of The Amazing A podcast series devoted to acquisition entrepreneurs, search funds and how co builders in the UK and EU. Discussing the topics and challenges to impact SMB succession, M&A was exploring the highs and lows of searching, acquiring, owning and operating small and medium sized businesses. And we are here this week with another ever popular buy side breakdown.

00:00:35:18 - 00:00:58:32
Unknown
But before we get into that, we've got a very busy, very busy week, haven't we? Out last week was our inaugural Serial Acquirer symposium. My goodness. I'm not sure we've yet recovered. It was a lot of prep, a lot on the day and a lot of love and post-event activity. So yeah. And then I managed to fly out shortly afterwards.

00:00:59:01 - 00:01:31:01
Unknown
The weekend before you get stuck. So managed it managed to find a way back to the UK now but yes, it was, it was amazing. Our symposium was just, I mean, surpassed all of our expectations and they were fairly high. 230 people in attendance. We had keynotes from peers Lennie, about implementation and post deal value creation. We had Lizzie Arnold who told us all about how to tackle the first hundred days from her spirits help researchers.

00:01:31:03 - 00:01:58:07
Unknown
We had Ibrahim Abdulrahim from Mumbai Capital giving us the outlook for Europe and the scene in the next five years. I mean, it was interspersed with panels and discussions and live plugs and loads, loads of stuff that happened. So thank you everybody that kindly contributed, sponsored, participated, attended. Yeah, really was incredible and spurred us on to do the next one.

00:01:58:07 - 00:02:20:23
Unknown
Alfie. Absolutely. With a bit of rest. It was a really, it was a really great day. There was a really excellent buzz in the venue. Everybody that I've spoken to since has told me how much they enjoyed it and how much value they got from it and people from all different, you know, parts of the journey. I spoke to people whose it was the first ever event like this thing is fresh from an MBA.

00:02:20:23 - 00:02:37:12
Unknown
You haven't done a search before, just getting into it. Also spoken to some sort of seasoned M&A pros who've been doing this for a decade plus. It still felt like they learned something from the day. So that was particularly special. And there was a real sort of feeling of excitement at the final sort of networking with we at the last couple of drinks.

00:02:37:12 - 00:02:59:20
Unknown
Everyone I spoke to left them with a newfound enthusiasm for each day, and that was really what was all about. Yeah, it's an amazing community. It really is collaborative. Got a can do bias for action. Yeah, it was. It was vibrant. What can I say? It was a real honor to host them for the day and the first of many, I'm sure.

00:02:59:22 - 00:03:18:23
Unknown
So, yeah, so back by popular demand, here we are with by site breakdown. In fact, it was mentioned by a number of people in the room. Why don't you do another one of those? We like those. So here we are before we start releasing lots of the content from the event over the next few weeks. Let's, let's get stuck into one of these.

00:03:18:26 - 00:03:47:04
Unknown
What are we got? Well, interestingly enough, we've got a very different type of business this time. We are looking at a creative and digital agency based in Warwickshire, listed on businesses for sale dot com and listed by Knightsbridge based in the West Midlands, asking price of 3 million quid for turnover of £814,000, undisclosed net profit, but adjusted EBITDA of about 132,000.

00:03:47:07 - 00:04:13:00
Unknown
Like I said, there's some businesses for sale dot com will include the link at the bottom of this episode. So if you want to go and take a look for yourself and follow along, please do. Great. Okay. Anything specifically stand out? I'm looking at the link. I can see couple of locations, two leasehold premises. From what I can tell, from trying to decode who this is, it looks to have sites in Warwickshire and London.

00:04:13:02 - 00:04:42:10
Unknown
Yes, they. They mentioned specifically that they are an echo partner. Yeah. So that should make it relatively easy to dial in. Can't be too many of those in these days. So what do we know? We know that they're they're making about 100 grand out of about 800 grand. That's I mean, this is typical of an agency model, particularly, you know, of this age.

00:04:42:10 - 00:05:19:25
Unknown
I guess this that interestingly, there's quite an appetite at the moment amongst consolidators to to pick up agencies of this sort of size, you know, circa 1 to 2 million in revenue. This is just just shy of that. But to sort of put them together, roll them up, create almost a multi-disciplinary kind of offer. So I know we've got a number of buyers on pitch crunch that are looking specifically for digital agency is actually be a three day marketing be they brand be they social media web design these guys team to do a few of those things.

00:05:19:28 - 00:05:42:19
Unknown
Obviously the the standout thing that keeps leaping out to me when I whenever I look at this space is here we are at the sort of a revolution. Is that is that a threat or an opportunity? Is that going to cannibalize this sort of business, this sort of market, or is it going to supercharge it and enable, you know, better margins, etc.?

00:05:42:19 - 00:06:05:03
Unknown
What do you think? I think and people ask me this question about I all the time, I think it comes down to the operator. I think you can choose which way it goes. I think if you if you don't adapt, implement and include it in your strategy, then it will cannibalize the business. So I think that you need to think about smart ways to, you know, adopt it and make it part of your process.

00:06:05:03 - 00:06:24:33
Unknown
And I'm not saying that you should replace your incredible, you know, creative output with AI based, but, you know, there are lots of things that you could do, especially for this kind of agency. You know, initial drafts and mock ups could be based before passing moments for senior designer, you know, cutting down time efficiencies. There's so many things that could be brought in.

00:06:25:01 - 00:06:51:24
Unknown
I do think that it would potentially be a slight risk to some of the staff there, because I do think that that's partially where some of these efficiencies are going to be made. I think you do need less boots on the ground to get the work done if you are going to be more efficient with the AI. But I do think that would probably go some way to improving the gap between the, you know, 800 K incoming to only 100 K earnings.

00:06:51:27 - 00:07:25:16
Unknown
Yeah. I mean, we don't know how they manage their mean what goes through the PNL, etc. So but yeah, it does feel a little bit underwhelming at 12% EBITDA. I imagine that you know the agency could grow its EBIT either through D costing some of the back office and I could be, you know, super helpful there or using AI to augment the staff and increase the capacity of the business to do more of a take on more clients without having to grow the overhead.

00:07:25:16 - 00:07:51:18
Unknown
And that in itself will grow the returns. Yeah, Look, there's absolutely room for growth here and not the figure that really jumps out to me is that this company has been alive since 1988, same as me. And in that time they've managed to grow to 100 k year recurring revenue. That feels low to me. I don't know if you saw I come from a SAS background where recurring revenue is, is is key and is a little tough when it comes to agencies.

00:07:51:18 - 00:08:13:30
Unknown
But a lot of agencies have, you know, longstanding customers. And there was another point to be made here about how many of those are tied to the owner and we can come to that later. But there's definitely room for growth there. And because, I mean, what are we looking at here? So 700 K a year is having to be found by a sales team or incoming queries is a lot of legwork done there.

00:08:13:33 - 00:08:39:05
Unknown
Sounds like it. And if that's the case, you know, if that if they are generating that kind of pipeline to create that sort of new business non-recurring thing every year, why stop there? Why are they only delivering that number? But how much of that could be converted to recurring on contracts and frameworks, etc.? Who knows? But if there's like a project based business in that sense, rather than necessarily having a regular throughput, I would say is a positive.

00:08:39:05 - 00:09:06:15
Unknown
They obviously do have a good sales process there because if they are bringing in 700 K of new business every year, that's that's great. So if they could supplement that with a bit bit more recurring revenue, there's definitely some, some money to be made. Yeah. But I think that my read is they're taking on what they're comfortable working to, what they're working with rather than necessarily, you know, going hell for leather to, to grow the top line or the bottom line.

00:09:06:23 - 00:09:27:23
Unknown
And that's, that's, you know, fairly customary of agencies of this sort of size. Some of them have got huge ambitions, but the majority are subsisting, you know, enjoyable, intellectual kind of challenges, if you will, for the team. And that's all good. There's no there's no right or wrong in that sense. It just does make it a little bit more difficult to to sell on.

00:09:27:26 - 00:09:54:02
Unknown
Obviously, you mentioned the age of this business and the listing does say that it's a retirement driven sale. But I guess the elephant in the room we need to address is get old Knightsbridge. They've done a number on them here because 100 K in EBITDA has somehow translated to a 30 times earnings, 3 million asking price. Where the bejesus does that come from?

00:09:54:05 - 00:10:18:22
Unknown
I, I have no idea. And this is, you know, all jokes aside, this is something that we really do need to tackle in the ACA. Well, because I speak to so many searchers who, you know, contacts of business, you know, even if they do off market and that business might go away and talk to someone like a Knightsbridge and they give them a crazy inflated asking price that obviously the search is never going to match because that 3 million isn't realistic by any stretch of the imagination.

00:10:18:22 - 00:10:38:26
Unknown
But now, you know, retiring business owner is expecting that, you know, it is already sort of counting that check and imagining the sangria on the beach that they'll be drinking with their with their earnout. And and when the search comes along and offers them, you know, at times like this, it's going to be a shock. And those are the kind of deals that fall apart.

00:10:38:26 - 00:11:22:22
Unknown
So, yeah, I, I have no idea where that figures comes from. There's going to have to be some serious movement there. I think. Well, thankfully, someone has appended to the the listing the words offers invited. That's good. They'll take an offer on their 3 million on their 30 times earnings. Yeah. I mean I don't want to, you know, be disparaging, but in pursuit of listing fees, sometimes you hear of sellers being sold disproportionate multiples and being blissfully unaware of the fact that a company like this probably trades at 4 to 5 times earnings to a strategic acquirer, given it's an agency given some recurrence.

00:11:22:25 - 00:11:43:00
Unknown
But even that is, you know, steep in in what is probably a business with some concentration risk around the the senior ownership. I would think that a and I don't know if I'm going to low here but I would probably say that a realistic starting price for this would be closer to half a million quid rather than the three.

00:11:43:02 - 00:12:06:19
Unknown
That's where most people will probably begin. And that's probably why this will struggle to transact, because it's it's such a country mile away, it's opposite poles of the earth from reality versus the dream that perhaps these sellers have been sold. And I, I really do feel for them because you see, this time and time again. But look, who knows?

00:12:06:19 - 00:12:30:33
Unknown
Without digging into the business and understanding what the potential is, which you'd hope it would have shown signs of being able to achieve over 37 years. You know, it's difficult to say what premium, what upside, what potential you could be you could be talking about here. But I would you know, you typically hedge your bets, right? And you're buying past performance proven, which hopefully will deliver the same performance or more going forward.

00:12:31:04 - 00:12:53:15
Unknown
But can we extrapolate it that much to say this is going to become a, you know, £5 billion company in order to justify that, sorry, a £5 million revenue company? No, there is so there's some information in the listing that says that they're currently £200,000 worth of upcoming projects quoted. And I'd be interested to know what their conversion rate on that is.

00:12:53:17 - 00:13:15:28
Unknown
It also it does feel like there's a disconnect between they've got 200 grand's worth of pipeline, but they're somehow, you know, bringing in 700 cars with a new business every year. So is that just for a quarter's worth of quoted business? I'm not I'm not sure, you know, where is that coming from? Also, one thing that I do know about the agency model is there's going to be a lot of money tied up in invoices.

00:13:16:00 - 00:13:58:31
Unknown
I would imagine a lot of that. Right. Well, I think the balance sheet certainly proves that out. And you can see that the assets are basically trade debtors, about 380 grand of trade debtors. So, yeah, I mean, I'd wonder about credit control That feels like that's getting on for 50% of an annual revenue that's outstanding for payment and yeah, I'm not sure what was going on there but at year end I would look for that to be as captured as possible right.

00:13:59:00 - 00:14:22:28
Unknown
And to to be pulling in the note, putting in that money. So yeah, very odd that it would happen. I mean, is that normal, Alfie, can you speak to that. Whether those sort of credit cycles which look protracted to me is the norm in agency. What I'm I mean, having slightly longer cycles is fairly common in agency work, but perhaps not to this scale.

00:14:22:31 - 00:15:00:26
Unknown
I'm unsure as to what's happening there. I mean, you can uncover anything when you start to dig into this. It may be that they have long standing relationships with some of these customers and they have a give them a little bit more leeway on this or payment terms. I would like to hope they have some really solid cash flow management going on there because otherwise it feels a bit precarious that we'll go back.

00:15:00:29 - 00:15:35:06
Unknown
It also appears the creditors are sort of in step with that, those debtors to some extent because there's about 180 days worth of creditors. They're out of the 380 K, if you like, of debtors. Okay. You'd sort of think, okay, the margin, the gross margins, not unhealthy, but yeah, maybe they're just carrying that forward waiting to get paid before they pay their creditors, which is I guess, again, normal.

00:15:35:09 - 00:16:06:19
Unknown
And they seem to have about the case with the cash on hand according to the balance sheet which again existentially you'd wonder about that. So yeah, not the most not the most encouraging of financial results of the last year. And to suggest that it's worth paying that sort of premium for. No. And I think that where we're having these, these kind of conversations and we're putting up some negatives, if this was more reasonably priced, I think I would feel a lot more comfortable about a lot of this.

00:16:06:22 - 00:16:27:19
Unknown
I think that we're, you know, some of these risks of being pegged against that, that inflated asking price. And I think that makes some of this seem maybe a little worse than it is. I think if this was priced at half a million quid, I wouldn't be so nervous about some of these some of these things. I mean, obviously there is still some risk there, but it's what's an acceptable risk at the price, I think.

00:16:27:22 - 00:17:01:14
Unknown
And again, you know, what's the what's the loyalty of the customers like? Of course, the loyalty, the what's the the US piece of the business like. I mean, you know, there are things to consider if this goes all in on on you know one year end of numbers. But what I can tell the website if it is the business that we think it is, you know they're doing it doing work, video, social media and SEO, general marketing, experiential exhibition marketing.

00:17:01:17 - 00:17:35:08
Unknown
So it's quite a broad church. It's quite a, you know, multi-disciplinary agency, which actually I think is quite exciting. But but what kind of deal structure do you end up doing here? You know, it's got to be ahead of a lot of contingent deal. You know, I think I think whenever I look at marketing agencies, I, you know, tip my hat to the Martin Sorrell approach of WPP where there was a lot of contingent, you know, in the in the deal structure where, you know, he was acquiring 100% of shares, but the sellers didn't get much of their money out unless they continue to grow the company.

00:17:35:11 - 00:18:15:15
Unknown
And that was, you know, to an extent genius from a hedging of downside risk, but also from a capital efficiency perspective. He did some great, great deals. Well, what we would have to look at here, if particular if you're going to pay a premium for it, is, you know, very little upfront by comparison, but liberating the owners to step away from the business but still enjoy the fruits of the cash flow, if you will, by way of dividends for the, you know, X number of years that you agree on the deferred contingent consideration right now.

00:18:15:17 - 00:18:41:23
Unknown
So where do you see this being a cash deal? No, no, very likely no. And, you know, if we go back again to the fact this seems to be a single owner that's retiring and the age of the business, another reason that I would want to keep them on hand for as long as possible and make some of that contingent is how much owner dependency is there, because it's likely that after such a long tenure that the owner is probably a sort of key figure in these client relationships.

00:18:41:23 - 00:19:09:00
Unknown
And as we know, you know, retirement can pose a bit the key person risk. You know, how many of those clients, how many of those recurring revenue clients are tied to the owner? I mean, obviously we don't know. But I would imagine quite a few after 37 years. And moreover, you know, what's that client concentration? Because I've worked with agencies over time and they said they have sort of circa 58 clients.

00:19:09:00 - 00:19:36:08
Unknown
But, you know, if one of those is 20, 25% of their revenue or more, that is also a pretty big risk. And these will be things that I would factor into, you know, earnout contingency, how long I want to keep the owner around for? yeah, totally. Yeah. did the same. And you know, you do your standard due diligence here of requesting sort of an an anonymized list of the top 20 customers.

00:19:36:11 - 00:19:58:06
Unknown
And if they can't come up with 20 customers, then you've got a problem. But if, if, if one of them accounts for sort of, you know, 25, 30% of the business, you do have quite a risk on your hands. And I know that is the business we think it is. It's a husband and wife ownership, you know, to pieces, to owners.

00:19:58:08 - 00:20:38:01
Unknown
BOTH Yeah, 60 odd years old. And so I can see some one picking this up, taking it forward, utilizing AI, digitally transformation, digitally transforming the business. I do I do see this having some potential. But I think the question is whether a deal gets done because it appears to sail quite close to the wind and the expectation for consideration.

00:20:38:03 - 00:21:03:16
Unknown
The valuation is so high by comparison to what maybe someone would actually pay to take this on. Yeah, yeah, I agree. Look, this isn't going to be a business that is going to make you a very rich person. I don't think. I think that if you were beginning a serial acquisition process that was going to roll out a number of agencies or you'd already begun that process, I think it could be a useful addition.

00:21:03:19 - 00:21:24:09
Unknown
That's probably where I would see the not the 3 million valuation, but that's probably where I would see this fitting since if you already offer some of these services and there is some consolidation that you can do, you know, they have inroads into the local market in some in London and perhaps you're in another part of the country and you want to bring some some of these businesses together.

00:21:24:09 - 00:21:46:02
Unknown
I think that's probably where I would see this fitting best. And another thing that I would raise, though, this is another another risk and I'm sorry to keep bringing up negatives here. There's a bit of a technology focus risk because they have a technical niche in Umbra code, which for those that don't know is a specific CMS think WordPress but a slightly less popular version.

00:21:46:04 - 00:22:02:17
Unknown
And it's a bit of a double edged sword because it sets them apart in the fact that not all agencies, in fact very few agencies do the number of code projects. I don't come across them very often, but it does also mean they rely on the ecosystem staying relevant. So obviously WordPress is the dominant force for semi websites.

00:22:02:19 - 00:22:31:27
Unknown
Ambekar has been around since the early 2000s. I haven't used it in a very long time and I don't see it very often, but obviously a lot of these CMS and website building companies to bring it back to AEI are being kind of pushed out by AI. And you think about even your lover boards and what have you, and I would like to know what percentage of their revenue comes from these specific unrecorded projects, because I would see that as a potential risk going forward.

00:22:31:30 - 00:22:54:20
Unknown
Yeah, What, you mean a concentration risk into a particular provider or technology sector or whatever? Yeah, Yeah. And like I said, it's a double edged sword. It may be that they're doing particularly well from it because not, not many other people do that. But yeah, like I said, you know, how long do they survive having a dependency on another platform that is in a area that's ripe for disruption is a risk.

00:22:54:23 - 00:23:32:03
Unknown
Yeah, I think we should turn our attention to some of the positives though, because I'm flicking through their sort of portfolio of work and it's pretty, pretty impressive stuff to be honest. Actually. They got some some nice marquee clients in, the sometimes top tier sports clubs, you know, various co-working digital equipment firms. I would say there's a lot of merit in the client base, depending on how much of this is sort of continuous recurrent, you know, work that they get.

00:23:32:06 - 00:23:55:33
Unknown
But also looking at the team, the team really looks to have you know, quite a lot of, I guess, youth dynamism talent within, you know, within the roster. So I, I feel it's like merit and potential to this firm. Definitely. It's just it's just a question of finding the right home for it really. Yeah. But it's got a strong foundation.

00:23:56:02 - 00:24:21:02
Unknown
I totally agree. Lots of really great clients. And if it is the company that we think is not, I'm fairly sure that it is. The work that they produce is super impressive. And it may it may be the case that if they are producing work of this caliber for clients of this kind of but they might be slightly under charging for the revenue that they're bringing in, I would expect projects like this for these kinds of companies to be worth a bit more.

00:24:21:02 - 00:24:41:21
Unknown
So maybe there is room for someone to come in there and make some efficiency changes and up the price is a bit and maybe there's some more margins to be made. There because are some really, really great high level work prestige clients and a great portfolio for anyone that does take this on and, you know, wants to go on and win new clients.

00:24:41:21 - 00:25:03:15
Unknown
So I'd be quite happy working with a company like this for my creative and digital work. Yeah, likewise, I think there's definitely some merit in here. So I guess who buys it? Does it have to be a roll up? Could it be an acquisition entrepreneur? Could it be somebody? I mean, we speak to a number of them that are looking at this space.

00:25:03:18 - 00:25:22:24
Unknown
Do you see a deal getting done by, you know, an MBA or a career changer at this level? It's difficult because that the size that it is, I would say that it might be a great sort of first, you don't go in over your head, don't buy something too large and expensive, learn the ropes, and then perhaps, you know, go for another acquisition down the line.

00:25:22:27 - 00:25:45:24
Unknown
However, I would say that is probably maybe a little bit difficult to hit the ground running with something like this unless you have a lot of experience. I think if you've got deep industry experience and you've run an agency before, it could be a great first acquisition. I think if it's bread and butter and you know, and, you know, creative and digital super well that maybe this is a great place to start, obviously you need to do some work on that valuation.

00:25:45:24 - 00:26:14:25
Unknown
But if they could come down to a reasonable price, I think it's got a lot going for it. So someone that's been in a commercial or design role within an agency but now wants to run their own show and own their own outfit. Yeah, I see that definitely being an angle here that you'd caution against coming at this if you weren't experienced in running an agency doing marketing digital projects, I would say.

00:26:14:25 - 00:26:30:20
Unknown
So I would, you know, I would think that if the people that run this company obviously know very much what they're doing, and this is where they've managed to take it 37 years, I'd be surprised if somebody with very little industry knowledge could come in and improve it vastly in a short space of time. That's would be my thoughts.

00:26:30:20 - 00:26:47:05
Unknown
I think someone who is yeah, dynamic that's been working in this environment for a while that knows what they're doing. And like you said, wants to run their own show. I mean, it could be a great candidate for a management buyout. You know, maybe there's someone on their team that that could be the right person to do that and wants to take over themselves.

00:26:47:05 - 00:27:13:06
Unknown
I think somebody like that I think could do very well with this. Yeah. You wonder whether maybe even employee ownership trust is a way of getting this away for the for the owners. Like, you know, if you've got some faithful, loyal staff here that have got the ambition to, you know, to own some equity. Well, actually, what could be the route?

00:27:13:08 - 00:27:40:00
Unknown
Obviously, you have to have a high percentage of your staff that back that idea. But the tax efficiency of an entity is definitely worth considering because, you know, the the owners could depart. It has to be a, you know, significant majority disposal. So they're not really able to retain much in the way of rollover equity. But, you know, everything they get in terms of continued payout from the business over the course of a few years is is I think basically tax free now.

00:27:40:06 - 00:28:02:28
Unknown
So yeah. So it's it's a nice, nice thing to do but a bit of cost and complexity to set them up. And there is a question over how onward sellable they are, you know after the seller there's been paid off. Sure. You know if, if the EOT wants to exit. That's a little more cumbersome. That's not, it's not as well trodden yet.

00:28:02:31 - 00:28:31:16
Unknown
Not impossible but Yeah. So you wonder if maybe what is, is a route here. But you know, I think it looks on the face of it like a nice company that it's got some potential that if it embraced that sort of technology revolution that's coming around the corner, we'd have a window of time to really capitalize. Yeah. So thumbs up or thumbs down?

00:28:31:19 - 00:28:54:12
Unknown
It's it's a difficult one for me. I think if I think with a better valuation expectation, I would give it a thumbs up. I think at the 3 million it's a thumbs down. I think if we were looking closer to half a million, it would be a thumbs up. So I'm sorry, I know that's not a definitive answer, but if we're going to say, as the listing is today, it's a thumbs down for me.

00:28:54:15 - 00:29:29:05
Unknown
Yeah, I always think it's worth a negotiation to see what a compelling, you know, proposition really could be. I would worry about concentration risk in terms of the customer acquisition and customer relationship management if that's going out the door with the sellers, then what are you buying? But it looks like they've got an account director and so they've sort of taken some of that, I guess, off of the owner.

00:29:29:08 - 00:30:07:03
Unknown
So I think it's it's worth a conversation. It looks like a nice business. The quality of work, the quality of team looks strong. It's not worth 3 million and it kind of lives or dies the deal. I mean on whether a common ground accommodation could be found under a million for a business like this. So, you know, it might at best go for approaching one times revenue, but with a long tail on an earnout, I think to make this affordable to to take over, it's going to be difficult to raise debt on a business like this.

00:30:07:05 - 00:30:33:05
Unknown
Yeah, absolutely. For anyone listening, Gareth, if you are you know that business owner in that position, do you think that there is more that they could do to push brokers to give them a more reasonable valuation? I know that they obviously want the best price that they can, but is there more that, you know, the business owners could be doing to do their own research and not come to market way overpriced and put buyers off?

00:30:33:08 - 00:30:59:29
Unknown
There is an increasing amount of data available to sellers if they look at deals. We did a great job. The suite did a fantastic job of releasing a report which had some useful information around multiples in different geographies and different verticals. Right. And I recommend that to any seller's reading so they know what you know. Typically companies are changing hands.

00:30:59:29 - 00:31:30:05
Unknown
Full spoilers. It's not 30 times earnings. So yeah, I think, you know, information is key, knowledge is power. I think unfortunately a number of sellers believe everything they're told and are lambs to the slaughter in that sense from which I mean the deals don't get done because they're so far apart, you know, it's sort of doomed from the outset because the expectations are inflated and everything is just going to be naturally disappointing.

00:31:30:08 - 00:31:47:10
Unknown
So it's I think, single handedly responsible for so many businesses just going. I might as well wrap it up then, because I you know, I'm not going to get what I was promised for it. Well, also, you know, how much money have I spent on listing fees over the last year and nothing's come to fruition. You know, they're not cheap.

00:31:47:12 - 00:32:22:08
Unknown
Well, I would have one the other day. I've been paying five years worth of annual listing fees. I've heard of listing fees up to ten K a month. I mean, not with this. Not for this size of business. No, no. But still, you know, it adds up over a year. Yeah. Does it. And so I think you know, only come to market when you're ready and you're convinced you're going to be able to sell, have sensible expectations, do your homework, look at what businesses like yours are changing hands for.

00:32:22:11 - 00:32:57:17
Unknown
And yeah, make sure you're working with a representative and intermediary that's actually going to run a proactive process for you. It's going to bring you ultimately deals succeed in favor of the seller with the highest possible kind of market valuation if there's a competitive process run. So if you've got multiple people knocking on the door and are on a time constrained process, you know, full of final sale bids, by this day, that momentum optimizes your exit value as a seller.

00:32:57:20 - 00:33:23:19
Unknown
What we've got is a lot of set and forget kind of going on in the market where thanks for your fees, we'll stick it on a listing website. We'll see what the market says. That doesn't get anybody anywhere and it just leads to disappointment and erosion of value. Yeah, I think also it's you know, it's a great shot for for for sellers for business owners to look at, you know, exit readiness practitioners and courses in any of those things.

00:33:23:19 - 00:33:45:31
Unknown
I think that sometimes they might rather not add another intermediary and they feel that they're going to lose some you know, there's going to be some cost associated stop. I think that's a false economy. I think the money in the time that you would spend getting properly exit ready would make a huge difference. Nicely evaluation, but you would be more prepared for, you know, a better, you know, more realistic valuation at the end.

00:33:45:33 - 00:34:06:27
Unknown
And you know, all your ducks in a row and when the when the you know, the right structure comes along, you've got everything prepped and ready and the due diligence is easier. And I definitely advocate for that on a per cent exit readiness is is the key to getting a deal done, taking advantage of that momentum and ensuring that you're not going to, you know, fall over during the due diligence.

00:34:06:29 - 00:34:28:10
Unknown
And yes, if you can do exit readiness and then have a good advocate that's bringing a number of people to the table, you might get something approaching the exit value that you're looking for. So yeah, anyway, in this case, this business looks like it will find a home with somebody, if not the staff at some point in the future.

00:34:28:10 - 00:34:45:28
Unknown
And we, I wish them well. I think, you know, there's a future here. I hope it goes into good ownership. I need to because they do great work and it would be a shame to it would be a shame to lose that. Excellent. Okay. So we are I don't know if we're going to get definitive answers. It's a thumb.

00:34:45:28 - 00:35:01:02
Unknown
It's it's a sort of thumbs in the middle. I guess I'll go with the thumbs in the middle. Thumbs in the middle of this week. Okay. Well, I'm sorry to your listeners who wanted a definitive answer, but please, do, you know, leave your comments below the video and on LinkedIn and let us know what you think and you know what you think.

00:35:01:02 - 00:35:23:01
Unknown
Maybe this should be valued and what you'd be happy to pay for it. In the meantime, I have a little bit of base crunch news to share, so obviously I like to talk this product whenever I can. We've got some exciting new features on the way, including the Base Crunch Virtual Data Room, which I've been sneak peak trialing showing certain demo uses recently.

00:35:23:01 - 00:35:43:12
Unknown
So if anybody's interested in that, please let me know. There'll be obviously a big sort of launch and fanfare around that. So I tease that to our listeners, which is very exciting stuff and it's all part of our drive to become the operating system for SMB M&A. So we currently find outreach and track that will soon be due diligence and and beyond.

00:35:43:12 - 00:36:04:12
Unknown
So I'm very excited about that. And if you are looking for that service, come and talk to me and I'm happy to give you a peek behind the curtain. Yeah, well said, Alfie. I mean, everything we're doing is trying to catalyze more deals, you know, more succession of assemblies going into new ownership to go into that new era of growth.

00:36:04:15 - 00:36:29:22
Unknown
That's important for Western economies. It's important for, you know, the staff of those businesses. The reward for those ambitious founders and acquirers, you know it. If we can get deals done in greater number, more efficiently, then, you know, more power to everybody. So, yeah, exciting that we're just gradually ticking off things on our roadmap in order to achieve that objective.

00:36:29:24 - 00:37:00:33
Unknown
Absolutely. Well, that's all from us this week. Thank you, everybody, for tuning in. Please leave your comments on with your thumbs up, the thumbs down or a tentative thumbs in the middle, you know, and it's not middle fingers, but so then as I keep on crunching.