Full Transcript:

Here he is. Bro? My man. How’s it going?

What’s up, man? Let me get a, how are you, by the way?

I’m awesome, man. Yeah. Really good. Let me get a better background here so I actually look like I’m on my green screen.

Yeah. No worries. How’s it going?

Oh, dude. Everything’s great. I’m looking forward to seeing you in a few days, man.

I know. It’s gonna be baller. It’s gonna be baller. Well, yeah. Hey, well, we can catch up at the event.

I’ve started the recording. We’ll edit the first few minutes out. Let me just do the intro, and then, let’s, yeah, let’s just riff for like thirty, forty minutes.

Love it. What you’ve been up to.

Hey, guys. It’s Carl Allen. Welcome to today’s dealmaker creative dealmaker podcast show. I’ve got one of my favorite dealmakers today. He’s actually my dealmaker of the year. He was our twenty twenty-three dealmaker of the year out of over a thousand of my proteges. So welcome to the show, Nikolai. How are you doing, man?

Oh, man. I’m great. And I appreciate that. When you told me that a few weeks back, I was honored, honestly. There’s so many amazing people in the group, Carl, that it’s like, you know, I’m just there trying and putting in the work and doing what I can, motivating myself every day to get out there. So it’s pretty awesome.

You’re kicking ass, dude, and we’ll talk about some of the deals that we’re doing. But just, just for the listeners, and obviously, like, we stream this on YouTube as well. So, for the viewers and the listeners, like, just give us your backstory. You’ve had a very interesting career, I think, until you started coming into this and doing deals. But, yeah, just tell us where you came from and some of the experiences you’ve had along the journey.

Yeah. I’ll try to go quick. Out of college went to college at Florida State. I played professional golf out of college. I traveled the world playing professional golf and it was great. It was awesome. I played with some of the most incredible players in the world and competed against a lot of those guys. And, as good as I was, I had an injury and I came to the realization, man, that two things. One, as good as I was, I wasn’t better than them. And they’re just there’s just a different level. And although I was close and I can compete here and there, I couldn’t compete day in and day out like these guys. And, two, I was tired of being broke because it’s not a glamorous life unless you’re one of the top twenty players in the world. So, I had that realization.

And through that, I was always doing little businesses here or there just doing stuff. And I started a company, a marketing firm, actually, in the solar industry, which was the main part of it. This was back when that was like the wild, wild west, not like it is now. We were one of the largest marketing firms for the solar industry at the time. NRG, Sunrun, SolarCity, which is Elon Musk’s company, they were all my clients. And we were operating on four different continents at one point.

Yeah. So it got pretty big pretty quick. The problem with that industry, though, is that it’s very much based upon government incentives, things that are happening in the overall economy, things out of my control. And I saw that changing. So we started going into some other things as well, just diving in marketing-wise and getting into other industries, which was good. And I ended up selling that company to a competitor at one point, which was great because I saw the writing on the wall where things were going, and I didn’t like it. So I was able to do that.

Yeah. Yeah. I did. Thank god. And, from there, you know, did a lot of other stuff and always had a lot of companies. Then I started an insurance company. That got started from zero. At the same time, I took my marketing background and started another marketing company for the insurance. So I had kinda two companies side by side running parallel with each other. And, was able to grow that pretty large. I mean, within two and a half years, we went from zero to about thirty million in sales.

Wow.

Yeah. So it grew quick. It grew big. It was awesome. I met a lot of great people and was able to build a really large salesforce. I ended up selling that company to a very large private equity firm. And, you know, I’ve always been intrigued by PE. I live in Boca Raton. There’s a lot of PE here. A lot of people that have done PE deals. One of my good friends, his dad, growing up was Wayne Huizinga’s right-hand man. So I got to see stuff with waste management and all the sports teams and it was really cool.

I didn’t have that. My family is super middle class, man. I grew up with, you know, very little, but I grew up in a great place. I remember sleeping on the floor of on a mattress with my dad when my parents got divorced for a while. I thought it was cool because I was a young kid. I was seven years old. And I thought it was great sleeping next to my pops. Looking back, I can only imagine we didn’t have a bed frame, just a one-bedroom apartment on a mattress, you know. But I was able to see a lot growing up where I grew up. And so when I was able to have that exit with the insurance and the other marketing firm, I stayed on for a couple of years, grew that from thirty to just under a hundred million in two years. We had about seven thousand agents.

Were you on a note as part of that excess?

Yes. Yes. That was part of my deal. Yep. Yep. Yes. It was. And and stock and some other stuff as well. I left there, a year or so ago for certain reasons. I just wasn’t, we weren’t aligned, I guess you could say.

And so, you know, but through that, you know, before that, during that, the acquisition space was always in my mind. You know? It was always something there. And so, I ran across you, contacted you at one point. I went through your ten-day. And, you know, for me, a lot of it, Carl, if you want me to get into it a little, but, a lot of it was I knew the process. I knew ninety-five percent of it, but I was missing something, and I didn’t know what it was. And I knew I needed help. I’m smart enough to know that I’m not that smart, and I need to have help from people that have done it.

And so that’s when I got in touch with you and the team, and I was able to put together what I was missing within the first week, honestly, which was great. So, it’s been awesome.

I remember the welcome call. Right? You and I — I don’t go on them anymore, right? But I remember back a year ago, like, once a week, we’d welcome all the new proteges into the program. I remember you telling your story, and I’m thinking, like, man, this guy’s got the chops. And then when you told me about the professional golf thing, that really convinced me that you were gonna really crush this and you have.

Because one of the things I’ve found with people that come into the program, right, often, you know, people that have taken big exits, they’re financially secure like you are. Sometimes they don’t have the motivation and the discipline to kind of do this stuff. But when you’ve come from a professional sporting background or someone that’s retired military, you have a grit and a mental toughness about you that allows you to keep going and pushing through. And I’ve seen that with you in the last twelve months. So, like, just talk about that for a little bit. Like, how are you transitioning? Are you using a lot of that discipline that you know, to become a top golf player, you know, you’ve gotta have some discipline. Right?

And I think that’s the biggest thing that most dealmakers miss. Like, they don’t have that mindset to just keep going when things get tough. You’ve obviously mastered that from your background. But how important do you think that is?

So, it’s funny because, you know, when I was playing, I didn’t realize that that would actually translate later in life. I didn’t know. But you’re right. I mean, especially in golf, it’s an individualized sport. I have no coach calling me to get me up. I have no teammates calling me saying, “You better get your butt here to practice.” That doesn’t exist in that world. Right? It is self-driven. So, I do think that tailored me and got me ready for business, looking back. I didn’t know at the time, obviously.

But yes, dude, I’m extremely disciplined. I’m very, you know, in golf, you have to be extremely focused on a routine. Routine is everything. Right? And so that taught me that through, I think, business and life where I’m still to this day routine-oriented. I’m four o’clock in the morning, I wake up. I don’t have to, but I do. And there have been times where I stop that and I feel lost, honestly. And I don’t like getting up that early. I don’t want to. And I’ve tailored it. You know, I used to get up and kind of pray, write down goals, visualize stuff, and then I’d go to the gym. Once my kids started getting a little bigger, they crawl in bed with me and my wife now here and there, and I don’t want to miss that because there’s gonna be a time where they’re not gonna do that.

So, I’ve tailored myself now to where I’ll still get up that early, but instead of going to the gym from four to seven or so, I’m knocking out work right off the bat. Then I’ll take them to school, and then I’ll go to the gym. So, I’ve tailored myself and my schedule. But, it is the most important thing, man. Discipline. I’ve seen it over and over.

And I like that you talk about routine. So, like, one of the things we do in Protege, as you know, is we try and get everybody into the routine of, on a weekly basis, doing three things consistently. You’ve got to originate deal flow. You’ve gotta meet sellers, and you’ve got to make offers. And if you’re consistently doing that on a week-by-week basis, you can’t fail to close deals. It’s like going to the gym, right? You know, you work out a lot. You’re pretty jacked. But, like, for you to build muscle, all you’ve got to do is do the reps and the sets multiple times a week and recover properly. And if you do that, it’s biologically impossible not to build muscle. And I think deals are the same.

If you’re intentionally originating deals all the time, you’re intentionally meeting sellers all the time and getting the information you need to vet the deal, and then you’re constantly making offers on multiple deals in your funnel, you can’t fail to close deals.

Yeah. You’ve gotta raise capital, and then, yeah, you’ve got to get the deal closed, but, you know, there are loads of resources for that. But, I think that routine piece is really, really important. I think those are the two things that separate guys like you from other dealmakers that don’t win: number one, they don’t have the mindset to keep going, and number two, they don’t have a routine that they can map out to do the things that they need to do.

Right. Yeah. I agree. I mean, I’ve seen that in my other business too. You know? I had roughly seven thousand agents that worked with me and one of my companies, and they’re all independent contractors. So, I saw it over and over and over. We would do calls like this or training calls all the time. And we always talked about routine and discipline, and that’s what separates anyone from having success in an area versus not.

And the thing is, with the deal-making and buying businesses, dude, I’m having the most fun I’ve ever had by far. There are challenges, and that’s the fun part. But honestly, it’s easy. Like, it’s simple. And I shouldn’t say it’s easy because nothing’s easy. It’s simple. Once you understand it, someone like you who’s been doing it for so many years, for you, it’s like putting your shoe on in the morning at this point. But, I mean, it is fun. It is so much fun.

So, let’s talk about some of the deals that you’ve done. I know that you’ve targeted the CPA industry. You’re doing a roll-up of CPA firms, which is an absolutely amazing thing to do because I think it’s so right for consolidation. But just walk me through your process of some of the deals that you’ve done. How did you close them?

They’ve all been a little different at this point. You know, the accounting firms came very organically, honestly.

Let me know if you need more formatting or further assistance with this!

So we get in, I have a meeting, a first seller meeting through Zoom. The company is actually local to me, which was nice. The gentleman was fantastic. It was a broker deal, so the broker’s on the first call. We had a great convo for about twenty-five, thirty minutes. I needed some more financials. They sent them over and I said, “Hey, I wanna schedule a time to go to the office or to the warehouse, and I wanna sit with you.”

So we go, we sit, and we’re talking. Great guy. His biggest concern, he’s sixty-six years old. He wants his legacy, but he actually still wants to work, which was a little concerning, but I didn’t mind it. He wants the name, he actually trademarked his name. He’s worried about that, and he’s worried about the employees, just like you always talk about, just like these owners are.

He started talking to me about taxes and how he doesn’t like to pay taxes. He immigrated to this country years ago, became a citizen, but he’s always done everything he can to minimize taxes. He depreciates whatever he can or buys a bunch of stuff by the end of the year to avoid paying taxes. So he started going into that, and I asked him, “Are you open to getting creative on the financing?”

He had a deal on his desk. It was two and a half million dollars upfront and a one-million-dollar note over three years. He could’ve signed it and been done. But he didn’t take the deal. One, he didn’t trust the people coming in. Two, he didn’t want to pay taxes on the two million. He already knew he’d have to pay his broker and a bunch of money on those taxes upfront.

So I asked him again, “How creative are you willing to get? Are you willing to get creative enough where I can get it so you’re paying almost no taxes?” He looked at me and said, “That’s what I’m talking about.” And right then, I knew I had him.

I laid out four different deal structures. I laid out a ten-year full annuity deal at five percent interest, repayment anytime I want, full repayment anytime I want. I laid out a fifteen-year option, which I never thought he would take, at five percent. Then I laid out two options that gave him a little bit of cash upfront, smaller amounts, just to show him what that would look like.

He came back and chose the fifteen-year deal. I couldn’t believe it. The fifteen-year deal was the highest valuation. I gave him an extra half a million dollars over the extra five years. So it was seamless and simple to get done. We had a couple of issues with the lawyer—his lawyer was his friend, who was hesitant—but we worked through those issues.

The fact that I was able to recognize what he wanted and build great rapport was key. He knew I would take care of the company and grow it the way he wanted. I even retained his main guy and gave him a small percentage of the company, two and a half percent to start, and potentially another two and a half percent if we grew it to a certain level.

That sounds so cool, man. And it’s important to give equity to people running the business because it changes their psychology. They start acting like business owners instead of just employees. They’ll work harder because they have a vested interest in the company’s success. I remember when I first started doing deals and realized how giving even a small percentage of the company to a general manager changed their mentality. They became killers, driving the business as if it were their own.

And that’s what an annuity deal does. It creates a long-term relationship where both parties are invested. I call it an annuity deal because it’s like creating a very long-term selling arrangement. One day, I was on a phone call with a web design agency, and the guy wanted a five-and-a-half times multiple for his business. It was double the market rate. I asked why, and he said, “My wealth manager told me to ask for that.” I had to explain that wealth managers aren’t qualified to value businesses.

He said, “Well, I called my wealth manager, and I told him, ‘I’m gonna retire this year.’

I’m gonna sell my company. I need twenty thousand dollars a month to live on for at least the next ten to fifteen years. What do I need to sell my business for to pay tax, pay fees, then invest that money into a market product that’s going to drive an annuity payment structure for me for twenty thousand dollars? Because I don’t want to change my lifestyle.

So, the wealth manager reverse engineered, did the calculation, and said, you know, you need to sell for five million dollars. I can’t remember the exact number. And that then translated into a five times multiple of EBITDA. I was doing a million dollars a year, right? So, I said, “Well, dude, that’s not how it works.” But let me tell you this: what if I said I can give you that valuation, but why don’t I just become the annuity provider? I’ll just pay you twenty thousand dollars a month for ten years out of this business.

He said, “You would do that? I don’t need to pay tax?” I said, “Yeah.” He said, “Well, how quickly can you close that deal?” I said, “Tomorrow.” You don’t need to go to the SBA and spend five months. So then, like, how much due diligence are you gonna do? I said, “Well, practically not much, right? I’m gonna check you’ve done your tax returns. And if I’m buying the stock, not the assets, my attorney is gonna spend a couple of hours just making sure I’m safe to buy your company. There’s nothing crazy.” I said, “But I can get a contract drawn up. We can do that.” And then he said, “Okay, let’s do that.”

Then he said to me, “Just one thing though, Carl. What if you don’t pay me? What’s my comeback if you don’t pay me?” I said, “Well, have you ever bought a car on financing?” He’s like, “Yeah. I just bought a Tesla X with the falcon-wing doors. I’m paying eleven hundred bucks a month for this car.” I said, “Well, what happens if you don’t pay that money? Elon’s either gonna come for his car, or knowing Elon, he’ll self-drive the car away from your house and back to the dealership.”

I said, “So you’ll have the same rights over the business. If I don’t pay you within seven days, you can take the business back. You can have full view of the financials. I’ll leave you with access to the bank account, but this is a super quick deal. You’re gonna get a lot more money for the business. You’re gonna pay hardly any tax because it’s crazy. People sell a business, and they get this big, huge closing payment because they want the money, right? In some cases, they’ll pay fifty percent tax on that exit. Half of the money’s gone. And if you’re paying all the money at closing, they’re getting a low valuation.”

“So in theory, you can end up with three to four times the net money over a ten, fifteen, or twenty-year period. And this is really kind of changing the market. But I think what you did in your example, which is really clever, is you gave him multiple options. What always happens most of the time is they gravitate to the highest offer. The longer the term of the annuity, the higher the valuation because you’re paying them over a longer period. They want to go to the golf club or to the bar with their buddies and say, ‘Yeah, I just sold my company for five million dollars.’ They won’t tell them they’re getting the money over ten, fifteen, or twenty years.”

“But it’s really interesting because a lot of these sellers, and you mentioned baby boomers before, they don’t really want a big capital gain. They want income. They want that income for the next ten to twenty years to help them not have to change their lifestyle. I found out a really interesting statistic a few months ago from the Exit Planning Institute. The average 401k of those millions of baby boomers that are going to retire in the next ten years, their average retirement pot is only two hundred and two thousand dollars. Seventy to eighty percent of a baby boomer’s net worth is tied up in the business.”

“And what’s nuts is that some people will sell their business for a lower amount, take all the cash it flows, pay an absolute boatload of tax, and then find they don’t have an annuity that’s enough to live their lifestyle. We can do a deal that allows them to retire more comfortably by paying them over a longer period of time while giving them full security over the business like Tesla has over the cars you lease from them. And I think this is a massive change in what we’re doing.”

What I love about you is that you took my coaching on it and my example of the deal that I did, and now you’re off doing all these different things, which is crazy.

It’s awesome, man. There’s so much opportunity right now in the market. I’m doing a lot of deal origination, just trying to get a bunch of deals all the time. I’m helping some other people do origination too. I have a person who’s looking for an HVAC company, and I called a lead two days ago. It was crazy. This guy said, “I just moved to Texas. I’m running it remotely and thinking about shutting it down.” It wasn’t a large company, doing about eight hundred thousand dollars in revenue, with about three hundred and fifty thousand in EBITDA. There are so many people, whether it’s baby boomers looking to retire or businesses like this, where the opportunity is endless.

I know, and you’ve hit on a really important point. A lot of people stay away from places like California because it’s expensive, labor taxes are high, and it’s not an ideal environment to run a business. But to your point, so many people are leaving California for lower-cost states where it’s cheaper to live, and they’re leaving their businesses behind. Many are just closing them down and getting liquidation value.

If that’s an eight hundred thousand dollar revenue business, it might have two hundred thousand dollars in cash flow, but it might have a balance sheet worth fifty thousand dollars. So that’s all they’re going to get if they liquidate the business. You can offer, “We’ll take your business. It’s doing two hundred thousand dollars a year, and we’ll pay you a three times multiple—so six hundred thousand dollars—but we’ll pay you over ten years, sixty thousand a year, five thousand dollars a month for ten years.” They’ll get ten times more money than if they just close the doors and turn off the lights. Why wouldn’t the seller do that? Even if they only get paid for one year, they’re still making more.

In fact, it’s painful to close a business down. It takes time. Sometimes when people shut businesses down, it costs them money to do it. If they’ve got a big lease on the building they’re renting, they can’t just walk away from it. They’ll have to negotiate a termination. Sometimes people have to pay to close a business. So, any money we can give them over an extended period of time, they’ll thank us for doing those deals.

Absolutely. It’s everywhere, man. So, you did the CPA deal, you’re doing a bunch of other deals—what’s the vision? What’s your five-year plan? How many deals do you want to do?

Yeah, I’ve got a lot of plans. On the accounting side, I want to get that to a million in top-line revenue within the next three years. I’m buying these firms, and they’re operating at thirty-five to forty-five percent EBITDA margins when I buy them, and I’m getting them to fifty-five percent. The only real expense is staff, and I can centralize everything. I want to grow that to a fifty-million-dollar top-line revenue, which translates to about twenty-two to twenty-five million in EBITDA. That’s a quarter-billion-dollar exit, but I’m not planning to exit that one right away. If something happens, great, but that’s more of a long-term hold.

However, I do have plans for a few acquisitions I’m doing, like the hardscaping and backyard fencing companies. I’ve got a three- to five-year plan to build those up to ten or twelve million dollars in EBITDA, which isn’t difficult, and then sell them for ten to twelve times that. So, selling that for a hundred and twenty million or so is definitely in the cards. It’s just too easy of an opportunity not to take.

I’m also doing a lot of real estate investing. I’ve been heavily involved in that, and one of my partners has over ten thousand doors, so we’re in the middle of raising a big fund for that. It’s going to be a fun project, for sure.

As you mentioned, I could bring a lot of people into the space with my network. I agree, and I want to do that strategically at the right time. I’m sitting on the sidelines a bit until the right opportunities arise, but I want to do deals with you, Carl, and the others in our group.

Let’s go! I love it. Deal-making is so much fun. I love getting in there, talking to sellers, and negotiating deals. That’s where I thrive.

Nice! You know what’s really cool about buying CPA firms? Not only are you rolling up an industry and getting all those economies of scale, but CPA firms also provide what I call a “Trojan horse” deal funnel. These firms handle a lot of businesses’ financials. When someone decides it’s time to sell, before they go anywhere near a broker, they talk to their CPA. So, you get the leads first.

Exactly. We’ve been starting to see that happen. I’ve already got ten customers asking for advice on selling their companies. It’s a great deal funnel for sure.

Absolutely. It’s amazing when you can buy a company with access to business owners. When they’re ready to sell, you’re their trusted advisor. It gives you a constant flow of potential deals.

Totally. We’re building to that point. I’ve talked to my staff about it, but right now, we’re in the middle of tax season, and they’re working seven days a week. It’s crazy, but I’m not in the weeds with the work itself. I’m managing and strategizing, but I’m not filing tax returns—I don’t even know how, and I don’t want to!

That’s the beauty of being an owner-investor. You don’t have to work in the business. It’s about managing and leading from the top.

Exactly. So, what’s next for the professional side of things?

Well, I’ve got big plans for upper echelon events, diversifying assets, and a lot of exciting developments coming. I can’t wait to dive into it further.

So, as you know, being dealmaker of the year, we comped you into our big sixty thousand dollar mastermind, Upper Echelon. We launched it late last year, and we’ve got our first big event coming up this weekend in Orlando. Super psyched to see you there again and have you join us.

One of the really cool things we’re doing this weekend is something called the Pitch Room. We’ve got about thirty-five people attending, and twelve to fifteen of them are bringing solid deals. We’ve already pre-vetted these deals through our Red Light, Green Light process. They’re going to pitch those deals to a room full of people like me, you, Ross Turner, Abraham Gray, Wes Grant, Derek Barton, and all the other dealmakers with capital. Plus, I’m bringing in debt funds, SBA loan brokers, and a family office.

We’re setting it up like a “Shark Tank” where each person has ten minutes to pitch their deal, and then we’ll go down the line to see if we’re interested in investing, either as equity partners, hard money lenders, or something else. I’m really excited about that because, for us, it’s no longer just about going off and buying businesses on our own. It’s about partnering with people and building relationships.

All of the twenty-six companies I own today, I’m partnering with people from Protege. That’s why I built the program—not just to generate cash flow, even though it cash flows four to five million dollars a year—but to bring people like you, Ross, Wes, Derek, Abraham, and all the ballers in the group into my ecosystem so we can do deals together. I wanted to teach people my methodologies for doing deals and then partner with them. You know, when someone pays a bit of money for mentorship, they take it seriously and learn the tricks of the trade. Then we can partner on some amazing opportunities.

We’re close to hitting a billion dollars in deals closed through Protege, which is just insane. If you’d told me two years ago that by 2024 we’d be hitting that milestone, I wouldn’t have believed it. It’s crazy. One guy alone did a one hundred and forty million dollar acquisition. Amazing.

But yeah, I’m stoked to see you at the event. We’ve got a massive dealmaker mansion—eighteen bedrooms, a pool, bar service, caterers, everything. It’s going to be a blast. Are you coming down Thursday night or Friday?

I’m planning to come down Friday morning, but I might make it Thursday night if I can flip my schedule. And, seriously, Carl, thank you for the comp. You didn’t have to do that, but you did, and I really appreciate it. I was telling my wife Adriana about it, and I’m just so honored you thought of me. It’s really humbling.

You’re welcome! I wanted to do it. And, honestly, anyone who listens to this or watches this—if you’re looking to do acquisitions, there’s no one better than Carl to learn from. Whether you’re brand new or seasoned, you’ll get an amazing network of people and the knowledge you need to level up.

For me, I felt like I was already doing deals, but there were gaps in my approach. After working with you, Carl, I realized that I was missing the finer details, and the network you provide is just unbeatable. Wherever you are in your M&A journey, Protege and Deal Maker are where you need to be.

I appreciate that! It’s been a pleasure having you in the group, and I can’t wait to see you at the mansion. Text me when you get in. It’s a big house, so I’ll come find you, and we’ll have a drink to kick things off.

Sounds great! Thanks again, Carl, and I can’t wait to keep crushing it with you and the rest of the group. Deal making is just the best.

Absolutely! Thanks for being on the show, and I’ll see you soon.

That’s it for today’s episode of the Creative Deal Maker podcast. Until next time, bye for now!