This episode of the Creative Deal Maker podcast, hosted by Carl Allen, features an interview with Michael Garvey, a successful entrepreneur and dealmaker. Michael shares his journey from humble beginnings, growing up in a “poor middle-class” family, to eventually becoming a successful business owner. He discusses his career path, which included various roles in the technology sector and law enforcement. His most notable success was starting and eventually selling a SaaS-based business, License Monitor Inc., for twelve times EBITDA, an experience that laid the foundation for his career in buying and selling businesses.

Michael emphasizes the value of learning from industry mentors and being strategic in career choices. He speaks about how his experience as a police officer led him to identify a unique business opportunity in monitoring suspended and revoked driver licenses, which eventually led to his successful exit from the company. During the acquisition process, he learned the importance of due diligence and the complexities involved in selling a business to private equity. This experience was crucial in shaping his future endeavors in business acquisition and consulting.

After selling his business, Michael spent time investing in various ventures, including real estate, startups, and cryptocurrency. He began to focus on buying businesses, adopting the strategies taught by Carl Allen in his Deal Maker Wealth Society program. Michael successfully applied these strategies in acquiring two businesses: a pizzeria and a licensed home care agency. He describes how he structured these deals using “annuity deals,” which involve paying sellers over time rather than a lump sum, thus making the acquisitions more manageable and beneficial for both parties.

Throughout the interview, Michael and Carl discuss the psychological aspects of deal-making, emphasizing the importance of understanding a seller’s motivations. Michael credits Carl’s teachings and emphasizes the need for consistent effort, time management, and the willingness to adapt to different circumstances when acquiring businesses. They highlight the importance of rapport-building and values alignment between buyers and sellers to facilitate creative deal structures, such as the annuity model.

Michael concludes by offering advice to aspiring dealmakers, stressing the importance of continuous learning and applying the principles from Carl’s program. He underscores the value of maintaining a disciplined lifestyle, focusing on health, and staying committed to the deal-making process. This approach, combined with the strategies and psychological insights discussed, has enabled him to succeed in his business acquisitions and investments.

Full Transcript:

I didn’t know we were kind of poor middle class until I started asking for things like Nikes and members-only jackets, and Lee’s and Levi jeans, and my parents were like, “I don’t have money for that.” I was very blessed. My father, through the best man at my wedding, his father had a connection out in Cupertino, California. I had one of the first Apple IIe computers ever in the country.

It was a process, but at the end of the day, the offer they made me was well more than anything I ever dreamed of having. So I sold it for twelve times EBITDA, which was just remarkable. Really? You’re gonna have to tell me if we’re gonna work together who gave you my cell number? And he goes, “You know, the guy who gave me your cell number said you were gonna say that.”

A very warm welcome to the Creative Deal Maker podcast. I’m Carl Allen. I’m your host, and I’m gonna be interviewing expert guests sharing investor strategies that will completely and utterly disrupt the market when it comes to buying and selling businesses all over the world.

Hey, guys. It’s Carl Allen. Welcome to the Dealmaker podcast. Got a really special guest today, one of my favorite protégés, and I would absolutely call him one of my buddies. It’s Michael Garvey from Upstate New York. So, Michael, thank you so much for joining me today.

Thrilled to be here, Carl, to be called a special guest. I’m honored. I absolutely appreciate it. Thank you. We’ve had some great conversations over the last couple of years since you started coming into the program. You started doing deals, and I wanted to talk about some of the things you’ve done because I think there are a lot of lessons inside of what you’ve done that can be very important to a lot of my other Dealmaker listeners to understand.

So before we get into it, I want to talk about the pizza shop. I want to talk about the licensed home care agency. I want to talk about all that other stuff. Just tell my guys your background because you have a really interesting kind of backstory. But just tell everybody who you are, where you’re from, what you have done in the past, and what got you into that kind of deal-making zone in the first place?

Sure. First of all, thrilled to be here. Really excited, Carl. Anything for you. I consider myself honored to call you a friend after all this time. I love hanging out with you. I love chatting with you. The energy and what you’ve put together is just, you know, I bow down before you, and you’re just gonna start tearing it up over the next few years, seeing what you’ve done.

I will share my background as far as my career and then how I got introduced to you and your whole program. Very briefly, you said Upstate New York. That’s actually up by Canada. I’m in Rockland County, about forty minutes outside New York City by the Tappan Zee Bridge, so we consider ourselves downstate. But, if you’re in New York City, they think Rockland County is upstate. I think, like, Buffalo is upstate.

Again, I’m right outside New York City. Background, you know, first-generation Irish American to go to college, graduate university. I was raised, “nobody can outwork you.” I didn’t know we were kind of a poor middle class until I started asking for things like Nikes and members-only jackets and Lee’s and Levi jeans, and my parents were like, “We don’t have money for that.” So, anyway, I was kind of raised that nobody can outwork you. And if you want to make it in this country, get an education because there’s no greater return on investment and outwork everybody.

That’s kind of like was my upbringing. When I graduated university, my father was ecstatic. His son, you know, first generation to go to college. His brother had had sons who graduated ahead of me, but my older sister graduated from college as well. But, obviously, it was a proud moment for him, and I just remember him saying to me, “Now go get a job with benefits.” I was like, “Benefits? What are benefits?” He goes, “Don’t worry about salary. Get benefits. Health care. Dental.” Never not had benefits since then.

I started out in the private sector. I was lucky enough to have a couple of mentors early on, you know, with the career coaching and things like that that I got at my alma mater at Fairfield University. There were kind of two routes to go. Start off at one of the big IBM, NCR, you know, one of these big corporations, work your way up over thirty years, become managing director and make big money that way, or kind of take the entrepreneurial smaller business approach. And I was a big believer that the earlier access you can get to smarter people than you, the better you are.

So, I started looking for smaller companies in industries that I kind of believed were on the uptake. I got out of university and I started out in computers. Then I jumped on to pagers and beepers, not to date myself, but I’m fifty-six years old. And I rode the pager beeper wave. Then I rode the cellular phone wave, then I hopped on the Internet.

And then what happened was I ended up losing a job. And, growing up in my family, I always took civil service exams. My father was a custodian engineer in the city of New York, and he said, “Listen. You can always make a killing in the private sector, but the public sector is something that is a great career as well.” And a part of me always wanted to be a fireman or a policeman growing up. I had uncles and cousins who were firefighters and police officers, and I ended up taking a county test up here and ended up becoming a police officer.

I was very blessed. Again, we’re in Rockland County outside of New York City. I drew my weapon probably three, four times over my career. Only once or twice was I really, really scared. I grew up in the town that I was a police officer in. I remember one of my field training officers showing us this cut in the fence where kids would run down to have keg parties back when you got quarter kegs. My friends and I, with my father’s bolt cutter, made that cut, so I knew the cut fairly well. But, anyway, it was a great career. I loved being a cop. I really it was a side of me. I always lived my life with kind of a moral compass and was raised with integrity, and it was like a gang of good guys.

It was a well-paying job. Made great lifelong friends. The ending of my career is a whole other story for another podcast. The good news is that, while I was a police officer, I was studying for supervisory exams, and I actually got promoted to sergeant, and I actually supervised twenty guys. During one of the exams, while studying for one of the exams, I found a section of the vehicle and traffic law, which is about three inches thick. And when you’re studying for these public sector exams, there’s the standard questions that everybody studies, and then there’s these four or five eliminator questions.

And the caliber of police officers that my town and Clarkstown got were through the roof. We have lawyers. We had accountants. We had nuclear engineers. We had really, really, really highly educated cops. So you had to study really hard for these exams. And on one of the exams, I was studying for what’s called eliminator questions, and I came across a section that essentially said, “At the request of a local chief of police, the commissioner of motor vehicles will forward to the chief of police a list of all suspended or revoked driver licenses in that jurisdiction.” So I kind of highlighted it, thinking that might be a good question on the test.

But in the back of my mind, I’ve always been kind of a computer nerd, and I’m like, wow, what a great list to have. Long story short, I didn’t get promoted to sergeant on that test. I did get promoted on the next test. But that section of the vehicle traffic law gave me the idea to not start the business that I sold. But in a law enforcement capacity, computers were just starting to go into police cars. And I requested from my chief of police permission to request from the commission of motor vehicles a list of all these suspended and revoked operators.

Ran into a lot of resistance. A lot of people didn’t understand it. A lot of people didn’t know how to get it to me. And I was like, “Listen. It’s in the vehicle in traffic law. I have a letter from my chief of police requesting it. I want it.” So with some help from some local politicians, a couple of trips to Albany, I ended up getting shipped to me, again, dating myself, Carl, a stack of, like, those thirty-five, not the big floppy ones, but the little square ones, the three and a half inch, there were thirty-five of them.

Slapped them into my forty-pound laptop with Lotus one two three. And out of eighty thousand residents, I had a few thousand suspended and revoked operators. And my arrest numbers went from two or three a month to thirteen, fourteen, fifteen a month. It was like shooting fish in a barrel. So I started handing these things out to all my fellow police officers. I was featured on the news. It was huge PR. A lot of these suspended, revoked drivers were committing a lot of felonies and causing a lot of accidents, getting into chases and stuff.

I did that as a police officer, and then I realized the libertarian in me, I just armed law enforcement with this handheld strategic nuclear weapon. I figured I would try and start a business selling this data. So I went to my chief and my town council at the time. They gave me permission to start a business. I’m super creative, so I called it License Monitor Inc. The data as a private business won a national business plan competition, grew it to several million dollars, you know, Con Edison and KeySpan and Cablevision, claims adjusters, pest control, anybody with drivers. I had three hundred fifty out of seven hundred school districts in New York State.

So I grew that, and then I sold that to private equity. And so, anyway, I’m rambling along here. That’s my background. Is that Great. So this is really interesting. Right? So a couple of things. Right? Two takeaways for me is I think, you know, a lot of people, like, mistakenly think that public sector work is, like, it’s the wrong thing to do if you wanna make a bunch of money being an entrepreneur. And for you, you discovered a gap in the market. You had an opportune moment, and you were able to become an entrepreneur, which if you’d not have been a police officer.

And, yeah, mindset, discipline, productivity, you know, that flows from that kind of role, and those are great skills that you can feed into, like, deal-making. But you would never have found that opportunity if you hadn’t have been in that No. Had I not been studying for that exam, I never would have come across that section and had the background in IT that I had. I was very blessed. My father, through the best man at my wedding, his father had a connection out in Cupertino, California. I had one of the first Apple IIe computers ever in the country. I know I had one of the top three or four in New York State, at a, you know, no hard drive, five and a quarter inch floppy, sixty-four K of RAM, a little Apple IIe.

So it’s a very early kind of computer nerd guy. And then every semester of high school and every summer of high school and every semester and summer of college, I had to work. If I didn’t have money, I didn’t have money for books or beers, and I wanted to have money. So I worked in a lot of different industries, a lot of the computer industries.

So let’s talk about that exit of the company to private equity. Like, what did you learn through that process that gave you some chops, some insights to a future career as a buyer of businesses? Like, what did that PE deal kind of teach you? Well, I’ll tell you. I learned a lot. I’m kind of a knowledge junkie, but the process in and of itself was, I don’t know how to say it, it was a pain in the ass, man. These guys crawled up one side in, back down. Yeah. I mean, they analyzed everything. They understood things about my business that, you know, I hadn’t even thought about.

I mean, they discovered one of my sales reps, I gave permission to change something in one of our standardized agreements. And I guess he changed it in Word, and it became the new standard on the server, and it just kept going. It wasn’t that big of a deal. It was one minor thing. But, anyway, they made me go back to all of my customers that signed that agreement and resign them to do the purchase. The level of detail, the level of due diligence, it was simultaneously impressive, but also a complete pain in the ass because as you know, Carl, you’re either working in your business or on your business.

And having these people in your office and flying in and, like, take your books and your so it was a process. But, at the end of the day, the offer they made me was well more than anything I ever dreamed of ever having. So, it was very, very exciting. You know, I sold it for twelve times EBITDA, which was just remarkable. Really? Yeah. Until I found out one of my competitors sold for twenty-two times, but that was, like, three years later. We’re not in that market anymore. Like Yeah. No. No. No. No.

This was a B2B, B2G SaaS model. So, you know, the SaaS models are nice. You just keep collecting the revenue every month. I love B2B B2G SaaS model. That’s great. How long did the deal take start to finish? Did they approach you, or did you Yeah. I got a so I had a general manager who’s since passed away, a very dear friend of mine. He was running my day-to-day operations, and I was on my way back from a meeting in New York City. I’ll never forget it. I was crossing the George Washington Bridge, and a young man from the company that ended up acquiring us got my cell phone.

And he was like, “Mike, my name is Delon.” And I was like, “Delon, two things. Number one, I’m very impressed that you have my cell phone number. I’m not sure if I’m interested in selling, but you’re gonna have to tell me if we’re gonna work together who gave you my cell number?” And he goes, “You know, the guy who gave me your cell number said you were gonna say that.” And it turned out, there was this guy, Tony, that, you know, he had some conversations with him, and he knew I needed to hear what kind of numbers and valuation they were talking.

They had a much bigger vision. The company, when I left it back, a few years ago, you know, I grew this thing from the back of a napkin. I won a national business plan competition. I still am dear friends with all the guys that helped me start out because, as you know, when you start out, you don’t have a lot of money. You have stock shares and give away equity. So I had a lot of people working for equity and believed in my vision. And, so I ended up selling to these guys. And when I left, we were doing close to thirty million a year, with SaaS software margins, as you know, were north of sixty, seventy percent. It was a great business.

So let’s fast forward a bit. So when was that exit? My exit was two thousand twelve. I stuck around for thirty-six months because they gave me a really, really lucrative earn-out. I don’t know if a lot of your people in your program know about earn-outs, but, basically, they want you to stick around to transition the business over, and they gave me a very aggressive if I could land a million two in EBITDA in the thirty-six months, it was worth three dollars for every dollar in EBITDA in my own pocket. So you talk about motivating somebody.

I remember calling the M&A guy in California going, “Am I allowed to cut my own salary?” And he’s like, “No.” And I’m like, “Can I fire people?” He’s like, “No.” I’ll work for zero. I’m flying coach. I’m going Right. I mean, Southwest. I swear. This is a true story. Somebody came to me because something in the back office needed batteries, and they were gonna put it through on our credit card. I’ll dip it in my own pocket. I was like, “Here. Just go buy batteries. Like, do not put it on the company.”

Isn’t that and we all do that. Right? No. Listen. Every dollar of EBITDA was three bucks, you know, earn-out. So Isn’t it? Seventy-four I mean, I was told by the I’m still friends with the guy that did my M&A. We weren’t friends during the process. It was a pretty ugly process, but we’re still friends to this day. I remember saying to him, oh, shit. I just lost my train of thought. No. It doesn’t matter. But it was a great deal.

I did tell them that, you know, oh, here’s what it was. Out of seventy-four global acquisitions, this company was on a tear. They were buying everything that had SaaS in the risk management and trucking space. They actually grew too fast. But, anyway, out of seventy-four global acquisitions, I was the only one to hit my entire earn-out because I was driven. That’s amazing. Yeah. So you closed that deal in twenty-twelve. You had a three-year earn-out, so that’s twenty-fifteen. I met you in twenty-twenty, and then you started doing all the deals we’ll talk about in a minute.

What did you do in that five-year period? So, not a lot. I did whatever entrepreneur does on their first exit. I spent a lot of money redoing my house. I bought the ski house out west. I bought a beach house down in Nicaragua on the ocean, the Pacific Ocean. I bought nice cars. I bought my wife jewelry. Like, I did what anybody does when they have an initial exit.

And I just started investing myself. I have this saying, “I bet on jockeys, not horses.” I wasn’t prepared to start my own business again, but I loved the idea of investing in businesses that I believed in. So I got involved in Bitcoin very early on. I was mining it back in two thousand thirteen and fourteen. Whole another story to tell you about. You and I are both big believers in crypto. And I still have all that crypto. I’ve invested in some great restaurant groups in New York City. You and I have talked about that. Fantastic operators.

Every time they do a raise, it’s between four to five million dollars. They always go back to their original investors. And when you have you know, I’ve always raised my children, and I was raised always to spend less than you make so you can build up capital. And in capitalism, you have to have some capital to be able to invest. And when you can start doing fifty, hundred thousand dollars, hundred fifty to two hundred fifty thousand dollars investments in things, not all of them work out, but when they do, they’re awesome.

So, during those five years, I was basically investing in businesses. I’m big into the startup community. I do a lot of coaching. I’ve got a lot of business clients that I consult with their executive leadership teams and CEOs. But to cut to the chase of this podcast and how we became fans, you know, I tell everybody that I work with, we only work half days here. You’re gonna whatever you do with the other twelve hours is entirely up to you.

You have to be able to put in the time and the effort. It’s not easy. It’s a lot of work. But the financial rewards are amazing. And one of the things that I decided to do when I was a police officer and also running my business, I made a conscious decision. I never wanted anybody to ever accuse me of using my position in law enforcement for profit. So my Salesforce was not only not allowed to close any business in the town that I lived in, but I expanded it to the entire county. And I didn’t care if they wanted to do business with us. We just told them it wasn’t available.

So after four or five years of that, I ended up I have lots of business in the town and the county. But very early on, I didn’t want anybody to ever think that I was utilizing my position in law enforcement to influence any kind of decisions like that.

Let me ask you a question. So when you and I first started jamming on this stuff, and we used to have our calls, right, which I really miss, by the way. We set our calls. Like, twenty-twenty in COVID, we started having our conversations. You joined one of my mentorships at the time, and we’d have our calls. And I’ll never forget that first time that I started talking to you about the concept of an annuity deal.

I’m a seller, highly motivated, wants a large selling price, but the only way we can justify that is by paying them out over an extended period of time. And I remember telling you that, and you’re like, “Man, that’s not gonna work.” Right? I’ve gone through an exit. I got most of my cash at close. But you weren’t a motivated seller. You were a seller that, like, every business is for sale. They wanted me. They threw a line on you. They were dancing towards you. They wanted to stay at your home, not the other way around.

And I remember you telling me about the pizza shop. And you said, “Hey. I’ve found this deal. It’s really, really good. It’s a great business. But this seller, he really wants to kind of exit. He’s a little bit downbeat.” I’m like, “Dude, give him an annuity deal.” And you’re like, “That’s never gonna work,” but then tell me what happened.

It was, listen. One of the other things that I like to read and listen to is people that have been there and done that. Like, the professors I loved in college were the ones that had businesses and came to teach. And, honestly, this is how I came across you. I’m not on Facebook. I never had any social media. I sold the Internet company, my SaaS business was an Internet-based company, but I never had Myspace or Facebook or Twitter or anything online. I had Gmail or text messages.

But to stay on top of local politics, and some news in the area, what’s going on, my wife was on Facebook. She’s not on there much anymore, but I came across your, I think it was your ten-day business buying challenge, and I was in this mode of investing in businesses and investing in real estate and in investing in startups and doing all these things. And I’m like, “Buying businesses. That sounds awesome.”

So, again, much like I rode the pagers and I rode the cell phones and I rode the Internet, now I’m riding blockchain and crypto. And with the licensed home care, I’m buying the aging of America and people getting older. I like to, like Wayne Gretzky. I read one time Wayne Gretzky said, “I don’t know. I just always skate where the puck’s gonna be, and when I’m there, I’m able to score.” So you it made such sense to me. If there’s two and a half, three million businesses for sale and only ten or twenty percent I know that you’ll do it.

I was like, wow. That’s another trend. Lo and behold, I have a reputation locally about being a CEO coach. My standard fee was a burger and a beer. You buy me a burger and a beer, we’ll talk business. If I like you, I’ll take you on as a client, what you can afford, what you can’t afford. Hell, I’ll work for free if I like it. I literally love doing this so much. Nice. Yeah, it is.

And so, anyway, a very dear friend of mine. So the pizza shop first, and then we’ll do the Alexa. So, yeah. So take your ten-day course. A ten to ten-day course. You’re over here as one of my best books ever. I’m telling you everything you said was true, but you’re resistant to it because it just didn’t feel right.

So, anyway, a buddy of mine comes to me that I had lent hard money to twenty years ago in his first pizzeria. We did very, very well, got all my money back, lots of free food. It was a wonderful deal. He ended up selling that. I had no equity at the time. I hadn’t taken your course. Anyway, he sells that business, goes off to England. He starts in his family’s business, and he, about three years ago, bought his first pizza shop about three miles from here, four miles from here on the other side of town. And then the pizza shop where I met him and grew up with him and knew him from, we heard was for sale as well.

And he’s a very dear friend of ours, a guy named Jimmy. He wasn’t a pizza guy. He wasn’t a restaurant guy. This was more of a hobby idea for him. He was doing well, but he wasn’t doing great, and he was just very eager to sell. So, I spoke with my business partner, Tom, now, and I said, let me handle the M&A piece of it. And Carl, honest to God, like everybody on your podcast, I just followed your steps. Exactly.

Like, prior to this call, I don’t know if I can share the screen, but I pulled up the offer document because I hadn’t looked at it, and it was basically, you know, the two types of offers. Both of them were annuities. I got from Tom what he thought the business was worth. And, you know, after we did my due diligence, P&L balance sheet, trailing twelve months, cash flow, all those things. Whether you’re good or not or not, you can find people in the Dealmaker Wealth Society that can help you. And I wasn’t good at it to start with, but I’m much better now.

And it looked good on my numbers. And then, you know, Tom taught me that in the restaurant and the pizza business, in addition to the P&L and the balance sheet and cash flow, you gotta look at pizza boxes ordered for the last twelve months, cheese ordered for the last twelve months, sauce ordered for the last twelve months, and the soda ordered for the last trailing twelve months. And based on his pizza analysis and my financial analysis, we came within a few of, like, tens of less than fifty thousand dollar difference in what we thought the business was worth.

So then this seller, knowing me and knowing Tom and wanting to sell, around the corner, another pizza shop had opened up. So he was very eager to sell. They were trying to recruit some of his staff. And I just said to Tom, my business partner, let me handle the M&A. You stay out of it. So I basically went in and, you know, offered him several hundred thousand dollars less than he wanted, and we got to a real number. And then out of pocket, we are out of pocket, honest to God, fifty grand, and the rest we’re paying off over nine years at about two grand a month.

So, I went back to Tom, and I said, well, we bought it. He’s like, well, how much is it gonna cost me? I go, fifty grand. He goes, well, how much in total? And I’m like, well, in total, it’s about all in two hundred fifty, three hundred thousand, but don’t worry about it. You just need fifty grand to buy it. So, as it stands right now, I own a third of a pizzeria. It is doing very, very well. Got my son involved, you know, and we watched.

So I’m a lot of these small businesses out there are so busy working in their business. They don’t have time to work on their business, which I love to do. Tom’s one of the hardest-working guys. Like I told you, I bet on Jackie’s. This guy’s up at he’s at Restaurant Depot at six in the morning. He’s buying fresh produce. He’s got two pizzerias now. I own a third of one of them. And, you know, he works till nine PM at night, closes one shop, closes the other shop at ten PM. He’s off one day a week on Sundays, goes to mass, spends time with his wife and his kids, and he’s back at it Monday. And he’s never made more money than he’s ever made in his life.

I have taught him all about cash flow and management, you know, investing, and he’s doing great. We launched our own app. I got him on the news. We’ve got all sorts of marketing programs going. I’m so cool, man. So you’re welcome. It’s us. And I’m so glad. I never would have had anything to do with this business had I not taken your ten-day course. And then, of course, once I took your ten-day course, I went through your entire program. Now I’ve got my son back in it. It’s literally been amazing. And it worked again, the licensed home care one that I told you before we started this call.

I just struck another annuity deal. They are a lot of work. Like, don’t don’t think it’s not a lot of work, but, once they’re done, man, it’s just great because you’re gonna work really hard no matter what. You’ll work hard for a business that you want a piece of. Of course. So let’s talk about the new deal. Let’s talk about the licensed home care deal because I know you’ve been looking at a deal for a little bit now. So tell me how you structured it.

So this letter of intent has been almost… we wanted to close this in August, and it just closed last week. No, two weeks ago before Thanksgiving. So, and again, I think I don’t know if it was on the call or not, but a lot of it had to do with the fact that it was a smaller business. It was doing about a million four, million five top line, about three, four hundred thousand dollars bottom line. There was a lot of medical issues with the owner. He’s in his sixties. His children are all grown with their own careers. They didn’t want to take over this business. But let me just back up for a second.

So I met this, the guy that owns the business with me, the licensed home care agency, again, through a referral of a friend that wanted to start his own business. I said, burger and a beer. I’d love to meet with you, get to know you. And much like you, Carl, you know, you bet on a good management team over a great company with a bad management team. This guy Noah checked every box you could ever imagine. And, after, like, two or three months of coaching and working with him, he goes, so we’re gonna start one? I said, nope. He goes, oh, but I thought things were going great. I go, we’re buying one. He’s like, I don’t know how to do that. I’m like, don’t worry. I know how.

So, anyway, utilizing your techniques again, Carl. This time, I went through and I went through about four or five different broker deals. Now what happened at the state level, these licensed home care service agencies, there was a moratorium for twenty years that just got lifted. So the value of these licenses plummeted. It was, like, almost like taxi licenses prior to Uber and Lyft. Yeah. So they were very valuable. But what happened was a lot of them were selling because, again, the owners were older. They had nobody to hand the business off to.

And this business, after Noah and I went through about five or six broker calls through all the biz buy sell and all the business, sales companies, at the end of it, Noah was like, which one are we buying? And I’m like, none of them. He’s like, what? I go, we’re gonna find one off market. And we got a list of every single LIXA in New York state, and we started starting right where we are in Rockland County and just started expanding concentrically. And we finally got this guy, Gordon. It turned out that he owned a licensed home care service agency that was licensed in Rockland and Long Island. He was one of the ones that was just gonna let his business expire. He had nobody to pass it down to. He wasn’t gonna sell it. He was just gonna try to find it down. It’s nuts.

So, we ended up agreeing on a price and, you know, I’ll give you exact numbers. It’s about a half a million dollars. And I said, great. Pay your full asking price. We’ll give you fifty grand a year for ten years. And he basically says, I’d like to enjoy it. I’m sixty-eight years old going through a medical issue that forced me to sell this business. I was winding it down for medical reasons. And I was like, well, you have kids and grandkids, like, in a state. He’s like, well, can we decrease the amount of time? And I said, sure. But I can’t give you the full asking price.

So at the end of the day, we agreed for four hundred thousand dollars. We took a little bit of a risk outside the norm of what you normally do. We gave him a ten thousand dollar nonrefundable for him not to go to market to let us finish this deal. And we did a six-year three hundred fifteen thousand dollar note at about four percent where we take control of the business. And we’re already we’re hitting the ground running, dude. It’s what a great deal.

So in terms of the licensing, right, like, does he have to stay? Like, did you leave him with a couple of points of equity to leverage his license, or have you… The way we worked it is it’s a unique deal in a sense that this deal has to be approved by the Department of Health, which could take two months to twelve months. We don’t know. But right now, what we did was we entered into the purchase sale agreement. We are basically managing—we have a management consultant agreement where we’re running his day-to-day operations for his business while we wait for the sale to go through. If for some reason the sale doesn’t go through and it will, you know, if the DOWH doesn’t approve it, it has to be because, you know, Noah or I are felons or we were convicted of Medicare fraud. There’s nothing that’s gonna stop that from happening.

But the backup plan for that is he’ll always own one percent of the business, we’ll be the management consultants that manage and own and run for the operating greeting ninety-nine percent of it. Yeah. Perfect. It’s a bit different. So that’s really cool. So let me ask you a question. Right? It’s really important. So you’ve obviously come into my community having had some chops as a seller, obviously, got some capital, did some angel investment deals, and then you started going through primarily leveraging annuity deals. Right?

For someone that’s like a rookie that’s coming in and is like, you know, I wanna be a deal maker. I wanna buy businesses. I wanna make money. All those different things like what kind of advice would you give them? Like, what are the things that you’ve done or you’ve seen other people do that you know, these are like the killer steps that people need to make? So what’s the best advice you would give somebody that’s new to this?

Yeah. They’re gonna think you’re paying me for this, but I’m telling you straight out. I have no financial relationship with Carl whatsoever. Read Carl’s books. Like, take his course. The deal maker the ten-day program that I took on Facebook was just an epiphany to me. You know, like, if there’s two… Carl, what are the numbers right now? There’s, like, two million businesses for sale or two and a half million businesses for sale. Two point four million companies in the United States alone that offer sale. There’s ten thousand baby boomers retiring every day. A third of them are business.

There’s millions and millions and millions of businesses. And do you know what’s really interesting? The average retirement savings of a retiring baby boomer is two hundred and two thousand dollars. Right? So they can’t retire on that money. Eighty percent of a baby boomer’s total net worth is locked up in the value of their business. So if they can’t sell it, they can’t retire. Right? Much like people’s equities tied up into their homes. Until they sell their homes, their mortgages that pay up thirty years, that’s their retirement.

So, yeah, I honest to God, like, I would say because what I did, look. Once it worked once, now it’s worked twice. Personally, what I would do is… okay. Most people have to work for a living. I had the benefit over a few years to have a job in law enforcement where in the public sector, one of the benefits of the public sector is when you’re done with your day’s work, you’re done. You there’s not a mental connection to your accounts receivable, accounts payable, your employee that wants to quit, or your employee wants a raise, you know, your client who’s past ninety days, your client that’s looking to fire you. Like, when you own a business, you’re connected to it.

In the public sector, one of the beauties of I loved about being in law enforcement was I worked my eight hours. I did my job. Even if I had a prisoner being processed, it was being handled by the next guy coming in to work the next tour. So, I think the fact that you have to work… what I did was I had to give something up. I decided to give up television. I gave up. I wasn’t a big sports guy. The only time I would ever watch TV is when I was doing something good for myself. So when I wanted to watch Peaky Blinders or… Love Peaky Blinders.

Yeah. I love Peaky Blinders. You gotta watch it with the text at the bottom because the cockney accent is thick. So then, Ozark, all those Netflix bingeable types of things, I would do it while I was on the treadmill or on the Stairmaster while I was working out. So I was, like, treating myself. I would never allow myself to have just veg out downtime because I wanted—I still had to work for a living to provide for my mortgage and my family and my kids. So decide what you’re willing to give up and put time into making offers because I like to team up with people.

I’m fifty-six. I’ve done well for myself. Me starting my own business from scratch and working sixty, eighty, hundred hours a week… Those days are behind me, but there’s a lot of people like me, ten, twenty years younger that are willing to do it. And with coaching from you, coaching from guys like me, buying businesses, it’s all doable. It’s all doable. So I would say allocate one set time. You’ve just gotta put in the reps.

And I always use, like, the gym analogy. So, like, people wanna build muscle. If you go to the gym three, four times a week and you’re doing reps and sets, you’re putting the right feeling to your body. If you’re intentional and consistent with that over a period of time, it’s biologically impossible for you not to build muscle. Right? You just you can’t prevent it. It’s the same with deals. The reps as a deal maker is you’ve got to originate deal flow. You’ve got to make sellers and build rapport, and then you’ve got to make offers.

And if you consistently do that week in, week out, every week… you can’t fail. You just can’t fail. You will buy a… There’s an old saying. Consistency beats perfection every time. Right? Consistency percent. So one of the things that I’ve embraced at age fifty-six, now I’ve got three great kids, and I just wanna live longer to see them and have a legacy for them is, there’s an old mentor of mine worth really, like, north of a hundred million. He was really a great guy, but he was German. And he said to me once, he goes, you Americans. I can’t figure you guys out. He’s like, what? He goes, you spend the first thirty, forty, fifty years of your life sacrificing everything, your family, your loved one, your health to make money, and then you spend the end of your life spending all your money trying to get your health back. He’s like, why you don’t just hold on to it to begin with always shocks my mind.

So I believe very strongly, and if you talk to Tom, the pizza owner right now, he’s down forty pounds. We have a personal trainer we go to once a week. I will not work with somebody who does not take their energy and their physical fitness and their health seriously. Because I don’t know if this is proven somewhere, but I believe very strongly there’s a direct correlation between being physically fit and having the energy to be a good business owner and profits. Right? Completely agree with that. And I believe that on an even wider scale, and I use this a lot in seller negotiations.

I call it values alignment. People, the best way to build rapport with somebody, and the more rapport you can build with a business owner, the more creative you can get in the terms of the deal structure. Right? There’s a direct link between the level of relationship rapport, no one can trust, whatever you call it, and the amount of creativity you can get with deals. And part of that negotiation is… I call it value alignment. So people like to be with people that they share the same values, whether it’s children, sports, like, whatever it is. If your values are completely aligned, like, those are the kinds of people that you can do deals with.

And as you know, I teach my proteges how to spot what someone’s values are and how to align yourselves to them and kind of mirror them in a way. And then it’s like an ethical mind control technique. They get to know you and like you even better, then you can get a lot more creative on doing those deals. And I’m the same in terms of, like, my own personal values. If I look at, like, all my friends and all the people that I partner with in business, they’re very similar to me. They’ve got the same values around family. They’ve got the same values around health. They’ve got the same values around discipline and wanting to get things done. So and I think there’s a lot of truth in that.

And the whole backdrop of this, which, you know, I’ve been talking about this for a long time, but most people think I’m crazy. Right? But it’s so true. When I was a Wall Street guy back in the day, and I worked on some, like, really large deals. And it’s all financial engineering. Right? You know, if you’re buying a billion-dollar company, and I’ve bought lots of billion-dollar companies for other people, it’s all math and tax and legal and process. If you’re buying a pizza shop or you’re buying a licensed home care agency or you’re buying a restaurant or you’re buying a marketing agency, it doesn’t matter what it is. A main street deal is more about psychology than it is about math.

It’s understanding, like, the motivation. Why does that business owner wanna sell? And, like, one of the really cool things about a negotiation is when you’re talking to a seller, hardly speak. Like, listen. Let them open up and tell you what they really value, what they really care about. And then if you can build a deal around some of those things, like, the money piece almost becomes, like, arbitrary. This is one of the great things about an annuity deal structure. People think it’s crazy you could buy a business like you would lease a car. You’re just paying for every month out of the cash flow, and you have to bring little to no money to the closing table from your own pocket or from the bank.

When you think about the benefits of that type of deal structure, number one, they’re really fast. Number two, very, very light touch due diligence. Number three, the seller will typically get more money because you’re paying them over time. That’s gonna supplement their retirement income. Number four, they pay so much less tax. That’s huge. The less tax is huge, but it’s crazy. I almost moved my family to Florida when I exited my company, and I couldn’t pull it off. I mean, my wife… it was just we couldn’t pull it off. It was hundreds and hundreds and hundreds of thousands of dollars I paid in New York taxes. Hundreds of thousands of dollars. It still boils me.

It’s crazy. It’s not always been like this, but the IRS changed the tax code several years ago, and they allowed you it’s called an installment sale. So if you sell a business over as long as it spans over two or more tax seasons, right, tax years, the IRS will only tax you when you physically receive the cash. It used to tax you all upfront. So if you were selling a business for a million bucks, right, whether you were getting all the money at closing or you were spreading it out, they tax you on the million. They don’t do that anymore. But if you sell the business for a million bucks and you get it all upfront, you might lose half of that in taxes.

So then you’ve only got half a million net. Spread that million out over ten years, and you’re getting, I don’t know, eighty-something thousand dollars a year. You might pay ten percent tax on that money. So your tax burden… not only are you getting more money on an annuity deal, you’re paying a lot less tax. You could end up with two and a half to three times the actual cash flow. And this works so well with baby boomers. It doesn’t work well with, like, young entrepreneurs that they might scale an ecom brand and they wanna go off to the next thing. They want the cash now, and then they’ll figure out some way of reinvesting it on a ten thirty-one exchange and getting the tax break.

But a boomer that’s got little to no retirement savings, they don’t want a capital gain. They want monthly predictable cash. And one of the things I did, I adopted one of your ideas. I’ve always had this saying. And, look, a lot of this comes down to the trusted hands. Like, you’ve gotta be a good moral… if you’re… I mean, it’s a podcast. If you’re a scumbag looking to rip people off, don’t do this. Like, it’s just it’s not gonna work. You’re gonna fail. If you genuinely… like, I genuinely wanted the guy to sell the pizzeria to my guy because I knew it was good for him. He wanted to go back to his career, and he got his career back doing athletics in a school district.

This guy, Gerard, you know, he wanted to sell his business, but he was just gonna wind it down. I have this saying called open kimono, and I jokingly say, like, you don’t wanna see me open kimono, but I’ve opened kimono with my books. Both the pizzeria guy and the licensed health care guy, all our bank accounts, they have the ability much like an accountant would to do quarterly taxes to log in and see their business that’s paying them an annuity. The first few months, they’ll log in like crazy. And as long as the money keeps coming, then they stop logging in. You can see it.

I’m kind of like an upfront. But, again, if it go… if you have any experience in sales and if you’ve been involved in business in a capacity, there’s two people in business. People that bring in the money and make it rain and the people that support the business and cost the business money. So I always say to people when I’m talking about buying businesses like you are, it’s about having that funnel. I’m going back to my old sales days. You gotta keep the funnel full, and the more that you keep piling on top, the more offers you make, the more deals you have going, stuff will drop out, and some will fall through. Not all my deals have gone through because they wanted more money. They wanted more money upfront, but you’ve gotta keep… you just gotta apply yourself.

And I think it comes down to time management and devoting a certain amount of time to doing the actual making of the offers and following your… I could show you the two offers we made the guy. One was a very small amount upfront with a bigger dollar figure. One was, you know, the fifty thousand with a smaller dollar figure. He ended up choosing the fifty thousand with a smaller dollar figure. I love the fact you’re using that two office structure. I stumbled on that probably about six years ago when I realized that I really started to study a lot about psychology. When I understood that small deals were more psychology than actual math, I started… I’m a student of psychology.

I studied NLP, and I went to a whole bunch of Tony Robbins events and really got into kind of psychology because I was interested in it. And, like, when I learned how the brain works. Our brains are two million years old. They’ve evolved over time, but our brain is still conditioned to deal with binary outcomes. So it’s like if I said to you, do you want a glass of wine? You’re gonna say yes or no. It’s like five PM eastern time right now. But, yeah, you might say yes or no. But if I said to you, do you want a glass of red wine or a glass of white wine, you will pick one of those, and you will have a drink because your brain is used to a binary one-zero answer.

So if you make an offer to a business owner and it’s one offer, they’re either gonna say, yeah. They’re either gonna say no. If you make two offers side by side and you deliberately make one offer super attractive and the other offer less attractive, their brain psychologically will gravitate the more attractive offer. You can design what that offer looks like. You can reverse engineer it based on what… It also allows them, if neither one is good, to understand bookends to work within. Like my guy did. Can you shorten the time frame? Yeah. But then it’s gonna be less money. So it allows you to work on a deal that both sides win.

I know, man. That’s awesome. Well, hey. I’m gonna let you go. I got a call in another three minutes, so, I’m gonna let you go. I’ll ping you offline. I’m flying up to New York tomorrow on a capital raising tour. I’m raising money for a whole bunch of different cool things right now. So, I’ll text you. Hopefully, we can connect at some point. I fly in Wednesday. If you got time for this trip, I’ll take… I’ll make time on my schedule. I’d love to grab a drink with you. You can meet my business partners as well, so, it’ll be really, really good. But thank you so much for coming on the show today.

Really enjoy… Anytime, Carl. Man, I miss our rift conversations. Let’s get that back on. Even if we just chat once a month for an hour, like, love it. Fair enough, man. I’ll connect with some math, and I’ll find time in your calendar. Thanks, man. I appreciate all the time words. Alright, buddy. I’ll see you soon. Bye-bye. Yep. Take care. Bye-bye.