Dustin Struckman is the owner of Digital Acquisitions, a web-based business brokerage that specializes in Digital Agencies and SAAS. Dustin’s concierge-style approach to providing exit services has allowed his company to become one of the leading brokerages in the world today.
In this episode, Dustin shares the all-important details in exiting a Digital Agency. From deal structures to what buyers are looking for, learn how you can prepare your agency to make a successful and lucrative exit.
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Joe: 00:00 Hey everybody, it's Joe Troyer and welcome back to another episode of show me the nuggets. And guys, I'm super, super excited for today's episode with Dustin Struckman. So Dustin and I actually met in passing through a mutual acquaintance of mutual, a business associate and a, and I was really excited. I want to chat with Dustin, but I literally had to run to another meeting and it was at an event in New York City, you know how those things are like, it's just utter crazy. And we didn't get a chance to connect in and we reached out after and wanted to pull him on the show. So you guys are in for a treat. So real quick before we have Dustin on, for those of you guys joining us, Dustin essentially owns a brokerage that focuses on selling agencies and also SAAS businesses. And at the end of the day, I wanted to pull him on to, to pick his brain for each and every one of you guys to really think about what it takes to sell an agency and really think about starting with the end in mind and building an agency to sell. So, Dustin, I'm super, super excited to talk to you today.
Dustin: 01:05 Yeah, man. Thanks for having me on. It's good to, good to
connect. I look forward to talking.
Joe: 01:09 All right, perfect. So man your quick bio you run you're a
partner at digitalacquisitions.co and what my team found is that you guys are kind of a concierge brokerage service. Can you talk about kind of what, what types of businesses you work with, what you don't, who's your right fit?
Dustin: 01:27 Yeah, so we work with a, primarily, like you said, SAAS and
digital agencies. So those are our kind of two main businesses we work with. We also work with eCommerce businesses and in content sites, but the main two are SAAS and digital agencies , we find a pretty hungry market for both of those.
Joe: 01:45 And that's really interesting. And a point that I think we'll dive
into, but I don't see a lot of digital agencies for sale out there by a lot of brokerages. So I'm really interested where you're finding these, where you're selling them because I don't see much inventory, so I'm excited.
Dustin: 01:58 Yeah. Yeah. I'll just tell you the first one happened by accident.
You know, I was, like I said, I'm focused on, on SAAS, but through LinkedIn somebody connected with me and it was like, Hey, I have a friend with an agency that, that wants to sell it, can you help? And I was like, well, you know, I'll give it a shot. And through that process I found that we had a lot of buyers in our database that wanted agencies. And then the second one came as a result of that one. He's like, Hey, I saw that you have
an agency for sale. I have an agency. Do you want to sell mine? I was like, sure. And that's just sort of how it, how it started. And through that, again through that process. I mean that particular one we had I think five bidders who were disappointed that they didn't get it. So, you know, we, we found, okay, we, we have a market for agencies and so then we started actively looking for agencies that might want to sell.
Joe: 02:47 Perfect. Yeah. That's beautiful. So then it looks like you guys
have a service escrow trade. I'm assuming that kind of helps you guys run through the escrow service and escrow process.
Dustin: 02:55 Yes. Yes. Escrow.Trade, yeah, that's a sort of a sister company
that yeah, that we, we use to close the transactions and, and yeah, escrow is to protect everybody involved.
Joe: 03:08 All right, perfect. Then, then my podcast head producer,
Eduardo found that you're actually the co founder of another company called only call.
Dustin: 03:16 Yeah, I have, I have a number. I have a number of projects. I've
been, I've been doing this for, I mean I've been, I've been self employed since I was 19 and I think that was before the internet even existed. It was just in the early days. So yeah. You know, since 95, I've 1995, I've been starting and selling online businesses, which is how I actually got into the brokerage. I sold I think four or five businesses through this brokerage before I became a partner. And then over the course of a couple of years I ended up buying out the the original owner of the business. And now it's just mine.
Joe: 03:54 Perfect, man. That's awesome. So let's, let's draw, let's let's just jump right in. So what, what makes digital acquisitions and your brokerage different than other brokerages? Like what's, what's kind of your unique spin or what do you guys do differently?
Dustin: 04:08 Yeah, we take a very hands on approach. I can't speak for every
brokerage out there. I'm sure there are others that, you know, take a similar approach, but the ones that I know about, the kind of the bigger ones that you might know about it seems like they're more of a kind of a directory approach where, you know, to take on any number of listings and just to have a big directory that's full of listings, whereas we work very hands on. I personally won't do more than three listings personally at a time. And same for all of my brokers. So we work, we work tirelessly to get the deals close because we only have a limited number of deals at any given time. So it's not like, Hey, let's put a hundred deals up and if you know, three of them close, great.
And we don't care about, you know, the, the 97 that don't, cause we've got three that closed, I'm working on one, two or three at a time. So I care about each one of them. So I feel like that, that, that's why we call ourselves concierge That gives us more of a personal touch and yeah, really, really invested in, in every deal.
Joe: 05:11 Yeah, that's perfect. I find that brokers are a dime a dozen, but I
wouldn't say based upon what you just said, concierge brokers. I, I haven't had the pleasure of dealing with many concierge brokers. Usually the brokers I'm dealing with, I feel like I'm educating them, you know, Hey, there's a problem in the P and L, this doesn't add up. This doesn't make sense, you know, this business structure is asanine, what do you mean? You know, the profit margins, 30% net I'm like educating the broker, like, Hey, did you see this? Like that doesn't make sense. Like, so, so man, that's refreshing.
Dustin: 05:44 Yeah. We feel like that sets us apart. And I think I think that I
win a lot of deals because of that. Because you know, even even from the initial, the initial stages, you can tell that I'm invested and, and really care about about the deal.
Joe: 06:00 Awesome. So when somebody brings a business to you, Dustin,
like what, what are some of the kind of qualification criteria? Like what are you looking for in order for it to be one of those one, two or three deals that you take on at a time? Obviously I'm sure you get hit with a lot of deal flow and obviously you're gonna have to turn on a lot of those down. What are the things that that people need to be doing now so that they can come to you and make sure that they can work with somebody that's, that's a good broker and not representing, literally dozens and dozens if not hundreds of different businesses.
Dustin: 06:33 Yeah, that's a really good point. And that's, that's exactly right.
That's the other side of that hands on approach is that we're very selective in the businesses that we, that we work with. Two things. I, I have a, an ebook called exit on demand that or white paper actually I call it that, that goes over everything you need to do to make sure your business is ready for sale. High level, you know, broad strokes, stuff that is actually accomplishable, not down to the nitty gritty. Sometimes we have to refer people off to a consultant that's gonna work with them for a year to get the financials in order and get a, you know, a growth strategy that makes sense so that the business is sellable, but high level, there are some basic things that you need to do that are covered in, in that white paper.
Dustin: 07:20 And then what I'm looking for when, when I'm evaluating a
business is I like to see a business that has profit. A lot of, there's, there's kinda, there's a couple of couple of points of education, right? And, and I think before I get into into that, let me dispel some of the, the confusion out there where SAAS businesses in, in particular, and I know that most of the audience here is, is is agencies, right? But SAAS businesses in particular have this notion that you can sell a business without, without any profit. And that is true once it gets to a certain size. So M class businesses are, are fairly unique in that, that once they get to a certain size, you can sell it based on a multiple of, of top line revenue. But even SAAS businesses and, and every other kind of business is only going to trade on a multiple of profit.
Dustin: 08:18 So if somebody comes to me and says, yeah, I've got this great
business you know, it's, it's, it's not making profit yet, but there's a ton of potential that's not something I can sell. That's something that, you know, you might be able to go to a VC and convince them that you've got this great idea and all they need to do is give you money to get it profitable that that meant that may work. But that's not my world. So buyer, people who want to acquire businesses, they want to buy on a multiple of profits. So that's the first thing is that the business needs to be profitable. And for a smaller business, say a business that's making less than 500,000 a year in net profit, that can be the definition of profit can be a little bit more flexible. It doesn't have to be a, a really rigid EBITDA.
Dustin: 09:01 It can be SDE or S, you know, seller discretionary earnings. So,
but once you get above about 500,000 in net profits, it needs to be more formalized and it needs to be EBITDA, which means that that in the profit is after, after someone running the business takes their salary. So under that, under that price range, it's acceptable that, that you consider the money you are taking out of the business personally to be profit. But above that, it really needs to be, it really needs to be formalized with, you know, a CEO or somebody, a salary in place. And then profit is after that. So that's the first
Joe: 09:39 So the key number is 500,000.
Dustin: 09:41 Yeah, around there. You know, it's nothing
Joe: 09:45 I've seen like a mill, mill and a half and it's, it's all SDE and
they're trying to pull out their multiple on, on SDE. And I'm like, what do you mean there's no team here? The owner's working
like 80 hours a week. Like I don't want to, I don't want to buy a job like no thanks
Dustin: 10:02 Right. Yeah. That, that doesn't fly. That's exactly right. And, and the, you know, and it's just, it's just this is all coming from what the market, what the market will bear. Right. And this is something that I, I spend a lot of time educating my brokers and then also educating sellers on is that this is not my opinion. This is not, you know, just like Dustin's rules, this is, this is what buyer buyers say to me when I put up a business. And I said, yeah, it's six 40 top line and, and six 30 net. And you're like, no, but exactly like, you know, we have to, we have to make allowances for somebody to actually run that business. So maybe the case you may be, you may be running your business with, with no one in place. And there are SAAS businesses, not agencies, but there are assessments that can coast for a year or two without anybody running it.
Dustin: 10:52 So, yeah. And so let's, let's let's talk about maybe the next
criteria which applied very quickly to two agencies. And this is something that is important for agency owners to think about, which you talked about is to have a management team in place, right? If you're, if you're trying to sell a business and claiming that there's more than 500,000 or four or 500,000 in profit, there needs to be a management team that is running that business. Cause that's exactly right. If somebody is going to pay a million and a half dollars, they're not trying to buy a job. They're, they're buying a business. And so that business, it's, they absolutely are going to come in and they're going to provide vision and leadership and you know, make, make plans and strategies. But there needs to be a team in place that's, that's executing the daily operations of the business.
Dustin: 11:42 That's a second thing I look for in, you know, is a business
sellable? Is it actually a business or is it just a job? And at a smaller level you can't, you can sell the job. There are who just want to be self employed, right? And maybe they cashed out the 401k or they got an inheritance or you know, any number of ways they have a, a chunk of cash and they don't want to go get a job working for somebody else. It's a great lifestyle business to make three or $400,000 a year and actually work in the business. That's, that's fantastic. But a above a certain level, that investor is looking to buy a business that then they can scale and that means that they're not working in it on a daily basis. So that's the second thing I look for. Is there a team in place?
Dustin: 12:27 And, and part of that is, are there systems, right? Are there
systems in place that support that team and are the systems documented? You know, like that's, that's a, that's a huge thing I learned in selling my own businesses was that I would either, I would either have to support the buyer for two years afterwards. You know, even if we agreed to three months they'd be calling me and emailing me, well, how does this work and how does that work? And so after a couple of those, I started documenting everything. And this is something is, this is in the white paper, but this is probably the single biggest piece of advice I can give to a business owner, is if you have to do something more than once documented and if you can automate it, but at the very least document it so you can outsource it. And also then when you go to sell it, every single process, anything have to do more than once. It should have a process and technically is a process. Right? And if it's documented, then it can be outsourced or, or an employee can handle it or potentially it can be automated. So yeah, systems, team documentation. Those are, those are some, some big things that make a business a business versus just ajob.
Joe: 13:40 Yup. Perfect. Fantastic.
Joe: 13:48 So those are some, some great criteria. I'm curious like who's,
who's buying agencies right now? Who's the persona of kind of the buyers in the marketplace, so to speak?
Dustin: 13:59 Yeah, it's a, it's a couple of different, it's one, it could be just an
individual who, like I said for, for whatever reason, has some, some cash or can get an SBA loan, has some collateral and can get, you know, that's, that's a really great way to buy a business. And agencies are right for SBA loans. SBA is happy with, with agencies because they understand the model better than they do some of these other digital businesses. So it can be an individual who, who wants to own a business and it could either be their first or maybe they have a history of owning businesses and, and they see opportunity in the agency space. It could be a portfolio buyer who has a number of other businesses or services that an agency fits with so that they can kind of dovetail the agency services with the other services they're offering, which could either be professional services or software services.
Dustin: 14:57 You know agency services are a great upsell for software do it yourself software. So that's another kind of buyer. And then a third kind of buyer would be a bigger agency that doesn't do what this specific agency does. Maybe, maybe they are a PPC agency and you're an SEO agency and they don't and they don't
have SEO or you focused on social media and they haven't gotten into that yet. So they want to buy the systems and the processes and the teams, which is why it comes back to is it actually a business and asset that they can acquire and immediately plug into their customer base. So those are kind of the three kinds of buyers.
Joe: 15:32 Perfect. and why do you think that the three types of buyers
that you're seeing in the market, why do you think that they're buying instead of building?
Dustin: 15:42 Well, I mean, I think, I think that's the same for, for any, any
business, any buyer who's buying instead of instead of building is time to market and a proven proof of concept, right? So yes, they could just go out and, and, and, and a lot of times that will be an, especially with, with agencies that will be kind of the, the question buy or build, right, is like, is it less expensive and or faster, which means I can make a better, a quicker return on investment to buy it versus building it. So, yeah, I mean it really comes down to the value of, of the agency and whether it makes more sense to acquire it versus just go out and duplicate it.
Joe: 16:27 Okay. And you've talked a little bit about systems and processes
and how important they are kind of team. So we talked about some things that kind of make an agency attractive to buyers. What are some other things, like something that comes to mind is like, is niching down a big deal or is productizing a big deal?
Dustin: 16:49 Yes. That, that that's, that's super important. And yeah I think
that it depends on the size of the business as far as niching down, right? A smaller difference should, should be more niched. And then once you get to a certain size, it probably makes sense to start offering additional services and, and spreading out
Joe: 17:09 In terms of, in terms of niching down we run a lot of marketing on behalf of agencies, white label fashion, that invisible PPC up there. So we get the question all the time, like, will you come help me do marketing? Will you run Google ads for me as a marketing agency? And we're like, yeah, that's fine. Who's your target? Well, people that want your services. Okay. Like you're one of how many, right? But what makes you different? Oh, well I worked with you guys. Well that doesn't make a difference. So what we always come down to is like if you pick the niche and you have a standard service offering and you could prove that you could close clients from cold traffic, you
know, one, one and two or one in three from a strategy session into a monthly recurring deal, then of course we could right.
Joe: 17:57 But if you can't pick a niche, you can't stay in a lane. You can't become an expert. You're just like everybody else. Like you're gonna, you're gonna fail and no, we can't do it because we know that you're going to fail. And it's hard. Like it hurts me to tell people that. Right? Like it's very harsh. So always looking for ways to tell people like, Hey man, you got to pick a niche because of this. It's not just about me. It's about you. Like, you know, you gotta be able to advertise and not, not sink. So I'm curious, you know, your thoughts on niching down and really having them, that's all. I mean, I would assume that that's really important when you go to sell, you know, proven sales process that they could follow up and down is probably going to be a huge, huge, you know, lever on your multiple, I would think at the end of the day.
Dustin: 18:46 So I, I wouldn't say that it, that it has a huge effect on the
multiple as much as it just determines whether you can sell the business at all or not. So yeah. And that's, that's the case in a lot of across all the different kinds of things it says. So yeah, there are things that, that, that maybe from the outside you would think, Oh, this is going to affect the multiple. If I've got, like for example, in a SAAS business, if I've got like really, really good technology, then I'm going to get a better multiple. Well, no, if you have, if you have yes, there, I mean a little bit maybe between three and four X, it'll change. Right? But if you've got really bad, really bad tech, you're not gonna be able to sell it is the bottom line. So, same thing, same thing with a PV with a, sorry, with an agency is okay, if you don't have a system to convert leads into, into clients, you're just not gonna be able to sell it. So yeah.
Joe: 19:44 And what do you think like volume or that sniff test is that you would want to see? Right. For that to make sense? Like adding that process is like, yeah, I had that process. Right, but what's like the real, you know, black and white, yes you have that or no you don't like what are you going to want to see?
Dustin: 20:03 Do you mean like conversion percentage? Is that what you're
Joe: 20:06 The conversion percentage or like, Hey there's, there's
strategically onboarding a client every two weeks or how would you say like, yes, they fit that bill. Yes. They can turn on campaigns and bring on customers or know they can like what are you looking for? What's going to pass that sniff test?
Dustin: 20:22 Yeah. So that, that usually will be the best metric for that is, is
growth. Is, is the new customer acquisition a new revenue acquisition outpacing the churn of, of existing, existing customers and clients. So if the business is growing, if the, you know, month over month, year over year revenue is increasing, then that proves that they have a model in place that is repeatable and scalable.
Joe: 20:49 Okay. So let's talk about the opposite. What scares the shit out of your buyers and an agency at the 10 yard line, you're pulling your hair out going, why didn't I know this sooner? You know, what are those problems? The big ones?
Dustin: 21:04 Yeah. So I'll tell you the, the main, the main things that'll, that'll
make an agency unsellable is high client concentration. So if more than 20 ish percent comes, 20% of your revenue comes from one client. That starts to get scary. As you get up into like the 50% range, then it's almost impossible to sell. So unless you have a longterm contract, like yeah, they're 50% of our revenue, but we have a three year contract which has renewed every three years for the past decade. It's still not great. So client concentration is one thing. And then the other thing would be a really short, really short life span of a client. If somebody comes in and, or the, you know, if the average customer is only staying for a month or two months, then you know, that's, that's a red flag as well. So the things that make it more attractive are to have a large number of clients making up your revenue and that they stay on for, you know, six, seven, nine months or more. You know, some, I've had, I've seen some agencies where they've had clients that have been on for seven years, you know, it's like that, that's a really good sign, you know,
Joe: 22:25 So I'm going to pick on the gorilla in the room, the 500 pound
gorilla, the digital marketers of the world, right? Teaching to go sell businesses, these huge consulting packages right out of the gate, right. As kind of a pre-qualifier before you ever really do anything or really engage with them. What, what are your thoughts on, on that in the real world and an agency or somebody wanting to buy a business like that? It just seems like the stick and the retention is almost not there. It's like almost just all front end revenue instead of recurring revenue.
Dustin: 22:58 Yeah. I think it depends on what your goals are, right? So I mean
those guys are smart guys. You know, they, they built amazing businesses and, and they, you know, they teach people how to make money. So it depends on if you want to, if you want to maximize your, your income or if you want to build a business that's, that's sellable. And it also really, I think also depends on
your personality, right? One of those, he's a very, very high touch, very hands on sales process and the other can be turned into a system that can be run by a team and to a certain extent, automated. So, you know, I think that you can make a ton of money doing [inaudible], that model that you just described. If that's your personality and your goal is to make, you know, make money right now, but you're the one doing it, you know, like it's, it's, you're, you're, you know, you're in sales, you're a, you're a high high ticket sales person. So yeah, there's, I think, I think, I think both models work just depends on what your goals are and, you know, and your personality
Joe: 24:06 Yeah. I would a hundred percent agree. I see a lot of people that
I work with hands on, very successful agencies running campaigns like that for companies, very high dollar but everything lives or dies with them. It's so fickle. It's not even funny. You know, it's like getting a text message like woo, 20 grand more a month and the next day or that afternoon, woo crap. You know, I just lost 50 grand a month, you know, it's just yes, new systems and processes and if you're looking to sell, we're not going to be able to most likely,
Dustin: 24:48 You know, a couple other things or at least one that makes a
business more difficult to sell is, and unfortunately, I think a lot of agency owners do this unknowingly when they start their agency as they branded around themselves. You know, even sometimes the domain name is like Chris and vacancy, you know, you're like, well, I mean it's going to be hard to sell that my friend, you know, because of you. And now this is, this is funny. I did, I, I had a consulting business. My most recent business that I sold before, before I got into digital acquisitions, it was a consulting business and I sold it to someone named Dustin, but the odds, and so like it was, it was so, you know, I had, I had like 50 plus glowing customer reviews. Like Dustin's amazing, Dustin and his team, you know, Dustin did this for me, it doesn't do that and I happened to sell it to somebody named Dustin
Dustin: 25:45 But the odds of that happening are very, very slim. So don't
brand your agency and I wasn't branded to me, but all of the testimonials where you know in my name and they were all on a third party site cause I was, I was an expert a, you know, an expert in one of these, one of these, you know, big form directories and all of the testimonials have my name in it. But that I think is, is very much a exception to the rule. So don't brand your agency around your name or your personality because it's going to make it harder to sell it.
Joe: 26:15 That's a big one for sure. Definitely. All right, so talking about
kind of multiples what, what are you seeing in the space today in terms of multiples for agencies?
Dustin: 26:26 Yeah. I think anywhere from like two and a half to two, maybe
three and a half on the high end is, and this is on profit, right? This is on annual net profit would be the range that agencies trade in. And then that range is dependent on a number of things that we've kind of covered. All, all of the things that we talked about, they make a business sellable do affect the multiple a bit. But three, three X on, on profit is, is a really kind of a standard for for agencies.
Joe: 27:00 Okay. Yeah. And is that up over half a million a year in order to
get that or like what are kind of the, what are the main things in order to get that three X right? Like kind of any black and white scenarios
Dustin: 27:15 Yeah, no, nothing's ever black and white. It's always, it's always
a an art and a science kind of melded together to come up with, with a, with a, a multiple or, or an asking price. And the reality is that the market will always determine, and it's amazing how, how accurate the the market is. When you have offers coming in, they're not going to be all over the place. They're going to be concentrated around a very narrow range. So you know, around three X for pretty much any size business, even, even if you're making 150,000 a year and it's, it's pure SDE you know, that could go, I mean that could go for anywhere from 300 to 450,000 depending on the particulars of the business, but yeah, a business doing 500,000 in net profits should go for, you know, 1.2 to 1.5 pretty easily.
Joe: 28:08 Okay. And then are you seeing in the market place today with the, with the agency transactions that you're doing, like what percentage of deals are done with cash versus financing versus like what should somebody expect to expectations be, right? If I'm going to sell my business today for 1.2 to 1.5, what's that going to look like versus a smaller transaction? Is that going to be mostly cash or mostly seller financing or help me understand kind of what's happening.
Dustin: 28:36 Yeah. I think, I think if you were to go and try and sell your
agency on your own, you would, you would more likely end up with a majority of it being seller financing. When you, when you sell with, with, with a brokerage like mine, we will get multiple offers that will for the most part end up with cash. A majority of the, a majority of the purchase price cash at closing. And when I say majority, I mean like 70 and 80% cash at closing. But the
funds could be coming from a number of different, it could be an SBA loan, it could be a standard bank loan, it could be cash that the buyer has. So the source of the funds can vary. And then the, but the terms of the deal will most likely be at least 80%, 70, 80% cash at closing. And then the rest would be either a, you know, either an a note which would be subverted if it were an SBA loan. Or it could be, it could be a, a hold back in escrow to, you know, hedge against a certain risks. So there, there are a number of ways that the structure of, of that remaining 20% could be handled. But yeah, that's, that's a, that's a good expectation for, for breakdown of cash at closing versus versus anything else.
Joe: 30:00 Okay And in terms of agencies, again, kind of exclusively,
what's, what's a timeline to sell a business and the agency business? I'm sure that there's all kinds of scenarios, but what, let's say it's actually ready to sell. Everything's right. There isn't a ton of work to be done when they come to you. The books are clean, everything's on, you know, audited you, you've got you know, systems and processes. It's all laid out really nice. You just get like, here you go, Dustin, here's, here's everything you need. What's going on a deal like that?
Dustin: 30:31 If it's, if it's a, if it's a great business, and like I said, typically only
businesses we take on are going to be great businesses. We'll see offers within two to three weeks, like solid offers within two to three weeks. And that's enough time for us to market. Kind of do the initial round of questions, do some, some light due diligence, have a calls between the buyer and the seller. We'll do initial calls with the buyer to feel, kind of feel them out and do the preparatory work. So for all of that to transpire and then get to a solid offer, a written offer, anywhere from two to three weeks for, for a good business. And then closing after that depends on the source of, of financing. Typically, so like an SBA loan is going to take probably 60 days to, you know, to get, to get approved and funded and then, and then closed.
Dustin: 31:28 And you know, that's, and that's a things go, that's a things go
according to plan that, you know, deals are not a straight path, so, you know, 60 to 90 days for, for an SBA loan. And then other sources of funds are probably about the same, the same timeline, although they're, they're taking that amount of time for different reasons. It's more formalized with an SBA loan, whereas private funds just, but you know, could close, could close in three weeks, that would be very fast. And then on the long end, if it's a, if it's a bigger deal and there are more moving parts than maybe maybe a part of it is equity and the bigger company those can take, those can take longer. It could be
three to six months. So, but it shouldn't, the whole process shouldn't take more than more than nine months. And on the short end it could be, it could be as, as little as three to four months.
Joe: 32:27 Yeah, it makes sense. Yeah. We just had somebody on not the
last episode. I think the episode before Steven Speer talking about SBA financing, which I found really interesting. Crazy how many deals in marketplace, so to speak, marketplace for being financed ecom businesses, agencies with SBAs. I never had the slightest inkling that was really happening
Dustin: 32:47 I know it's such SBA loans are like, they're like magic. You know,
the buyer puts down 10% and buys a business that the cash flows more than their loan payments. It's like, how is this even possible?
Joe: 33:08 That's crazy. Then we talked a little bit about what's the name?
Rob's where you take a 401k and you pull that out and that takes us some ownership in the business with Steven and so you can actually use that as the down payment out of your 401 K and it's completely tax deferred. So like you don't have to have any money, like literally you can pull it out of 401k
Dustin: 33:29 SBA Loans are incredible
Joe: 33:30 Yeah, absolutely insane. Are you finding that people are pretty
open to SBA loans and non-cash deals when you're representing buyers ?
Dustin: 33:43 I'll be honest with you. Two, two competing offers, all things
being equal. A cash buyer is preferable to an SBA buyer. So you know, that's, that's just the reality. So if we have multiple offers there at the same price, the same terms, and one of them is going to go out and try an SBA loan and the other one has cash, we're going to go with the cash buyer always.
Joe: 34:05 Yeah. Yeah. But if the deal's a little bit better, it's a little
sweeter, you know, potentially they'll take the SBA deal. So
Dustin: 34:12 We feel quite confident that the buyer's going to be able to
secure the loan. So, you know, that's, that's the only, that's the only problem with SBA loans is, is it's outside of everyone's control. And you know, I've had, I've had SBA deals where the day before closing the bank decides that the buyer doesn't have enough experience and it's like, well what have you been doing the last 45 days? You know, like we're ready to go. You know, or
like this, this happens to, you know, some, somebody leaves the job cause they work at a bank, right. And, and you know, they're, they're not committed. They're for life. And you know, like two weeks before closing, somebody in the underwriting department leaves and a new person comes in and they don't like the deal. The other guy loved it and then this person doesn't. So SBA loans are always less preferable, but when they work, they're incredible.
Joe: 35:08 Oh, for sure. So I'm gonna make sure and put a link to your little
white paper in the show notes here below this.
Joe: 35:20 In wrapping this up, I'm trying to make sure that I didn't skip
anything. I think definitely the, the, the one thing I would advise people beyond just going through your white paper is go sign up for your deals. I saw that there's a, a listing. So any new deal that you get, you send out a notable asset. Looks like, like, I'm going to sign up, I want to start looking at these agency deals. What's good, what's bad? You know, what's the multiple look like? Right. So I can get a better finger on the pulse of the industry. You've helped us do that a lot today and really appreciate it. But nothing's going to help us or prepare me. I know more than actually looking at the deals themselves. So yeah, definitely would recommend you guys to take a look at those
Dustin: 35:59 And that white paper will, will really help a lot as well. It, I
mean, look there, there's some things in there that are very basic, but at the same time I've seen businesses that haven't done them and it's like you don't have a separate bank account for your business. You can't sell it, you know, like you're running it through your personal bank account. Like nobody's going to, it's not sellable. So like there are some very basic things in there, but it's surprising the number of businesses that know them. They're also, you know, some things that maybe you haven't thought of that. So that white paper will be really helpful. I've been, I've been really jealous of you the whole time. You've got your, your brand behind you and, and you know, I've just got my living room. I do have my, I do have my digital acquisition shirt on so,
Joe: 36:39 Well this is just because we sponsor events, right? So this is our
same setup that we take to the events. Right. Or backdrop.
Dustin: 36:47 Yeah. I think I should, I should get that for my, for my next
interview. Cause I can't just stand here like this the whole time, but I guess, yeah, it's a good framing and then you can see my,
Joe: 37:02 I'm curious. Let's talk, let's shift the boat a little bit. Let's talk
about the opposite. We've been all like, rah rah, rah, let's sell agencies. Yeah, maybe selling's a bad idea.
Dustin: 37:17 Oh, that's a good question. I, I think you should only sell your
business if you have something better to do. And that could be any number of things. I, I sold an agency because the, the owner wanted to spend more time with his kids. So it doesn't have to be start a new business. It doesn't you know, it doesn't happen to be a new idea, but don't just sell your business because you can. Because you know, if you don't have something to do with the cash or something else to do with your life, then you may find yourself three years down the road you've spent all the money and now what are you going to do? So only sell your business, if you have a good reason for it. And also I will say that it's much harder to sell a business if you don't have a good reason for it. Cause the buyer will go, if this is such a good business then why are you selling it
Joe: 38:06 Yeah. Right. It's like the, the question, like as soon as you start
to understand the business, it's like, all right, well what's wrong with this thing?
Dustin: 38:13 Right. Why, why are you trying to get rid of it? And if you don't have a good answer for that, it's, it's a, it's an uphill battle. And it's hard to, you know, it's hard to explain why, you know, I just, I just want to, well why? So, yeah, I think only sell your business if you have a good reason to do so. And that could be, I've got a new business, I don't want to start. And, and realistically it can't just be wishy washy, you know, like I have a new idea. It's like I really am very committed to this, to this new project, so much so that I'm willing to let go of this great business that I already built. Or like I said, you know, I have two young kids, this is a real story. You know, I have two young kids and I feel like I never see them and I want to spend more time with them and that's, that's also a perfectly reasonable reason. Yeah.
Joe: 39:01 Yeah. That was a brilliant way to say it. I think like I would
answer it like one is selling a bad idea when, when you don't know without a shadow of a doubt that you can replace that income in three years or whatever your multiple is. Like, if you can't do that, then why would you sell it? That's the way that I look at it, I guess.
Dustin: 39:22 Yes. Yeah. Yeah. It's kind of the same way of saying two, two
ways of saying the same thing.
Joe: 39:27 Yeah. Yeah. Yours was a little more eloquent though. We'll take
that one, put it in show notes. So all right. So Dustin, where, where would you go if you were on the hunt to buy an agency for yourself? Where would you go to find an agency or agencies? Prospecting agencies?
Dustin: 39:43 Yeah. I mean, look, realistically, I would talk to somebody like
you, I would talk to people who work with agencies and you know, who, who talked to agencies every day. So you, I mean, you know, a lot more agencies than I do. I know the ones that, that I specifically represent or that have talked to me about selling your, you're talking, you know, you're working with agencies all the time. So then this is, this is, I think true for, you know, for any kind of, any kind of search for, for an acquisition is the people who, who deal with those kinds of businesses as their clients.
Joe: 40:21 Yup. So how many suppliers, yeah. Find their vendors. Yeah. So, yeah, it makes perfect sense. All right, great. All right man. So in wrapping it up, one last question. It's been great. I feel like at the end of every podcast episode, there's always like, Hey Dustin, what, what three books do you recommend? So we do things a little different here at show me the nuggets. So we always ask what's the, what's the one book that you're looking at today you see has made the biggest impact on the way that that business is set up? The way that it runs, the way that it exists today.
Dustin: 40:57 Yeah. the one book I would recommend to everyone is it's
called getting to, yes. I don't know if you've heard of it, but it's a book on negotiations and how to do what he calls principled principle-based negotiations, which is just a brilliant take on negotiations and it works. What's, so, what's so beautiful about this process is that it works just as well. If everyone is aware of the framework for the negotiations. It's not like you have the upper hand. If you're, you know, like you're, you're doing the hard tactics and the other, the other party, everyone, everyone benefits by using principle negotiations and even if even if the other party isn't, you still benefit from knowing these techniques and using them. And I think negotiations, you know, it doesn't just apply to buying and selling a business. It applies to everything you do every day of your life. So yeah, getting to yes would be the number one book I'd recommend to anyone, not just business owners.
Joe: 41:58 Awesome. I'm excited. Most of the book recommendations I
get, I read a and actually haven't read that one. I've heard of it. So I appreciate the recommendation. I can actually go consume
it. I'm kind of like, you know negotiations is so key. Sales is so key. Even not in sales. Like everything in life is a sale. Like it is like, you know, honey, will you take the kids out for dinner tonight? Like as a sale, right? Will you watch the kids tomorrow so I can go to the gym is a sale, like ah, we should be good at negotiating.
Dustin: 42:26 Totally. Totally. Yeah. And, and what I really love about, about
getting to yes is it's not just about, it's not just about getting your way, it's about getting your way in a way where everybody wins. And that's kind of the principle of negotiations and, and yeah, so you, you'll love it. It's a great book.
Joe: 42:47 Well, thank you so much Dustin and man, I really appreciate you
spending the last 45 minutes or so with us. I know everybody's going to love it. So I'll make sure to link up to everything in the show notes and have absolutely fantastic rest of your week, Dustin.
Dustin: 43:00 You too, man. Good to talk to you.
Joe: 43:02 All right guys. Joe, Troy here from digital triggers and show me
the nuggets signing out.