Full Transcript: 

Firstly, the transition from you being in the business to on the business to exiting within the space of effectively twenty-four months. It’s bloody incredible just to say that. When you made that decision to build the team, what was the first thing you did?

Let’s just be fifty-fifty partners. And he’s like, are you crazy? I’m like, no. I’ve painted the picture of what I wanna do, which is basically create a one billion dollar online education roll-up. Money doesn’t matter to me anymore. The irony is since making that mindset shift, I’ve probably made ten times my net worth.

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. Well, hi, everybody. It’s Carl Allen. Welcome to Dealmaker podcast. Got a very special guest on the show today. Very, very good friend of mine, one of my massive peers in the M&A industry. It’s my very good friend, Nick Bradley. How are you doing, buddy?

Hey, Carl. It is a pleasure to be here. About time you bloody started a podcast. I know, man. I was on your podcast. It was in COVID, wasn’t it? I think. You know what? I’ve been running my show for, like, five years now, and you were one of the first interviews actually because I only started off by not doing interviews. It’s just me talking to the microphone, but then I had to get you on to talk about all things acquisitions back then. I know. I remember it vividly. I was in COVID. I was working from my house. I was on the third level of my house, and it was so freaking hot. Remembering COVID, it was, like, really, really hot in England. I was in England at the time, not in Florida where I am now. And I remember having to open the vent, and literally, I was sweating profusely.

I can remember that now. It was a hot day. That’s right. Because I had, like, I live in an old place with thick walls, so we don’t quite have that. But yeah, that was COVID. It feels like a lifetime ago, mate. But yeah, it was a few years back now. I know. Cool. So, obviously, we’re good buddies. I know everything about you. But for my listeners on the podcast, and this obviously goes on YouTube as well, so for all of my peeps, like, tell us who’s Nick Bradley. I know, like, what are you doing now? But then where did it all kinda start for you?

I’ll give you the brief version of what’s a long story. So I started a business back in the day when I was in my late teens, about nineteen years of age. It was a personal training business. This is back in the early nineties when having a personal trainer was an exclusive thing, right? So you had high net worth individuals, doctors, lawyers, stockbrokers, and all that sort of thing. So I managed to build up this clientele of very influential people. But because I was stuck in a place called Adelaide, South Australia, I didn’t realize back then there wasn’t much hope for me to be doing much there. So I sold that business three years later. And I joke about this sometimes. I sold it for three thousand Australian dollars, Carl. Really? Three thousand dollars. Starbucks coffee is probably more expensive in certain parts of the world, Australia. But I joke about it because I say that was my first exit. My first experience of selling a business for three grand. I’ve redeemed myself over the years.

What ended up happening is because I had those high net worth clients, I got introduced to Rupert Murdoch, and that allowed me to move from Adelaide to Sydney. I worked for a subsidiary of News International, which was called Murdoch Magazines. I started off in marketing, but then started to get involved in corporate finance and some of the more strategic nature of how they were kind of growing. A lot of that was acquisition. So I started to get involved in joint ventures and acquisitions around the mid-nineties. From there, I moved to another media company that’s based in the UK called Emap. They were the second biggest consumer publisher in the early 2000s. I went from Sydney all the way over to London to work in the strategy department. I was the marketing and strategy director for the second biggest division of that group, which was a whole heap of magazines, like car magazines and golf magazines. We acquired twenty-five separate brands while I was there over eight years. We had around forty-five brands in total across all sorts of sports and interest levels.

What was interesting about that is the business got sold in 2008. It was one of the last big exits before the market crash. I was involved in the internal deal team. I learned a lot about how you need to restructure companies and how you profit up before you exit. We ended up getting broken up and sold to a private equity firm. Then we got sold partly to a big corporate called Bauer Media out of Germany. From there, I got a taste for this interesting world of private equity. I went to Getty Images in New York. Again, I was involved in the corporate strategy area there. We did forty-five acquisitions while I was there. I was involved in some of the integration work more so than the actual deals. Some big deals too, willing to nine figures, a couple of them. What I learned in that experience was how private equity really scales companies, how they think about them differently, the mindset. Long story short, I’ll finish there. That took me on a road to working in private equity for a number of years, almost a decade, up until almost pre-COVID when I made a change.

So my background is private equity, scaling companies, turning them around, and exiting. When you and I first met, I was sat at the back of a coach in Tenerife, Spain, at the Tony Robbins Life and Wealth Mastery event. You walked up to me, and you said, “Hey, I’m Nick Bradley, and I’m in one of your programs.” I was. So I closed a deal. Just wanted to say hello. And then we became really good buddies at that event. We were jumping off trees and doing all that kind of crazy stuff. It was so much fun, wasn’t it? It was so much fun. But I remember at that event, some of the work that we did in the room. I think you were going through that transition at that point?

Yeah. This is why I think we’ve become such good friends as well because that was a pretty full-on experience for me. I started a Tony Robbins journey, and that was, I think, the last event I was going to. I’ve done Date with Destiny, whatever. But yeah, man, I was reprogramming a lot of stuff over that time. Me too. Like, I remember my Tony Robbins journey. I remember one night, I think it was 2018. I don’t know why, but I went to bed that night, and I just wasn’t feeling great. And I’m goofing around on Netflix. I’d read a Tony Robbins book. On Netflix, it served up to me that documentary, “I’m Not Your Guru.” So I watched it. Have you watched that, “I’m Not Your Guru?”

Oh, god. The reason I’m smiling here is that I was watching that with my wife after one of the exits I was involved in didn’t go as well. I said to her I watched exactly that, and I said, “You know what? I need to get to an event.” I actually looked up the next event, which happened to be in Chicago about a month later, and I booked tickets. Same thing for me. I watched that documentary, and I’m thinking, “I have got to go to Date with Destiny.” So it was January of 2018, and I’m watching this. So I went straight on the website on my phone, like, how do I get a ticket? He tells you in the show it’s like five thousand dollars. Worth it. And then I thought, dang. He’s just had the event in Palm Beach. It’s December every year, I think. And I’m January, and I’m thinking, well, I don’t wanna wait eleven months. So I’m looking at all the events. They said, hey. There’s an event in March of this year. Unleash the Power Within is in London. So I thought, right. I’m gonna go.

So I went. Insane. Four days, walked on fire, all that kind of crazy stuff. At the event, I dropped the ten thousand dollars, I think it was, for what’s called Mastery University. So you have to do Date with Destiny, Life and Wealth Mastery, and Business Mastery. So I bought those. I did exactly the same thing. In fact, at the same time, I went to the UPW in Chicago in June 2018, and I ended up buying the ten grand thing, which is awesome, and then ended up going to Date with Destiny in December 2018 in Palm Beach. And we didn’t know each other at this point. No. Well, there’s five and a half thousand people. So I was at that event. I was at that event, and my very good friend, Jesse Ecker. You know T. Harv Eker?

Yeah. I know of him. I don’t know Jesse. Is Jesse his son? Harv Eker’s son, Jesse, who runs all of his dad’s companies. I got to know him. He was an affiliate of mine for my business acquisitions program. So he was an affiliate selling what was then the Business Buying Accelerator, which I think is what you came into. Now it’s Prodigi. That program way back then, he was my affiliate, and I knew he was going with his wife. I don’t know if you remember at that event. He’s the guy that won the Harley Davidson. Oh, I do remember. I remember it was clear as day even though it was five years ago. Because you’d already started your acquisitions business back then. Ninja Acquisitions was initially. I started Ninja in 2016, and we were kinda doing all the stuff. So I did Date with Destiny, and then I think one of the most powerful events, I did that in December 2018. In January 2019, I did Business Mastery back at West Palm Beach.

I’ve never done that one. That’s the only one I haven’t done. I haven’t done that or Leadership, and I think you’ve done both of those. Yeah. So Business Mastery is really cool. The content itself is a lot beneath where you and I are at, but it’s not designed for people like you and I. The big takeaway I got from that was that I need to be an owner-investor of Ninja, not an owner-operator. The big switch in my brain that day was I’ve gotta get out of the way of my business and build the team to kind of execute. What that meant, and I think this will be a great segue into the rest of the conversation, is because before that time, I had a business that had zero value. I’m not saying I didn’t have EBITDA. I was probably cranking a million dollars of EBITDA at the time in what was Ninja, but it had no transfer of value because I was the business. Everything was in my brain. Without me, the business was not gonna work.

And I made that switch at that event to say, well, if I wanna sell this business one day, and I didn’t at the time, but if I wanna get out of the deal, and get some value, I’ve gotta work on the business and make the business work without me being inside of it. So that’s what Business Mastery taught me. Then fast forward to the Life Wealth Mastery event where I actually met you, I signed the deal at that event, to sell my business to Agora. I remember that. I remember exactly that point because it happened pretty much at the event. What was really cool about that event is I wanted to join the Platinum Partnership, which was like a hundred and fifty thousand dollars a year when you factor in flights and all the other events. It’s like eighty-five thousand to join, then you’ve gotta pay to do all the other stuff. Right?

So I’m thinking, well, I don’t wanna drop a hundred and fifty grand until I sell this deal. And the deal closed while I was there. So I joined, and last day, I’m wearing the hat and did all that stuff. Never actually got to do by the way because of COVID. But what was good about that event was it leveled me up just to perform at a different level. The Business Mastery event got me really dialed into I need to be separate from my business so I can sell it, which I did. At the Life and Wealth Mastery event is when the deal closed. Then I had a pretty interesting time with Agora for about nine months.

This is something that you and I talk about a lot is sometimes culturally, deals don’t work. I always look at deals. Like you, I came from the world of big M&A. So HP, Bank of America, like monster deals. We always used to look at deals through three filters, and we used to say, well, what would have to be true for this acquisition to work? Well, number one, it’s gotta have a strategic fit. Can we cross-sell products and services and get cost synergies? Number two is, is there a systems fit? You probably remember the old deal where TSB and Lloyd’s merged, and the reason why that deal just completely never worked is the technology inside of those two banks could never talk to each other.

And the deal didn’t work. Then the third deal breaker is cultural fit. What I think was evident with Agora, being a billion-dollar company, buying a small multi-seven-figure company, I just kinda fell through the cracks. So I ended up getting the business back from Agora on creative terms. They rebranded it to become DealMaker Wealth Society away from Ninja Acquisitions. Obviously, now Dealmaker through partnering with Chris Moore, who you know very well. We’ve seven times that business since we took it back.

Let’s just play with this for a second because there’s a couple of things I’m gonna ask you. I’m gonna, as a podcast host myself, I’m gonna ask you some questions. Firstly, the transition from you being in the business to on the business to exiting within the space of effectively twenty-four months. It’s bloody incredible just to say that. When you made that decision to build the team, what was the first thing you did? How did you identify what you needed? How did you go and find the right people? How did that look?

So what I did is I discovered the EOS model. Gino Wickman’s Traction. I read all those books: Traction, Get a Grip, Rocket Fuel. I architected in my brain. It was kind of like the old Michael Gerber stuff. I got to know Michael Gerber very well, about five, six years ago when I’d read E-Myth. When he talks about the entrepreneur, the operator, the team, EOS talks about the visionary, the integrator, and then the three-legged stool of the business. So first thing I did was create that. I just bought my company back from Agora. There’s me plus a couple of VAs. Everyone else is gone. They got rid of most of my team when they acquired it, which is what you typically do.

So I thought, well, for me to rebuild this business, I don’t wanna work in this business anymore. I’d already retooled it to sell as an owner-investor. Like, for me to continue with this business as an owner-investor, I need to build a team. So I determined, first of all, that my business was a three-legged stool, so I needed a marketing person, I needed an operations person, and I needed a finance person. Then I needed an integrator that would drive the bus on a day-to-day basis. And it was a freak of nature, really, that Chris Moore was, like, he literally, just as I’ve done the deal, he calls me.

He was a partner in a big marketing agency, and he called me, and he just wanted some of the box. So I was kinda coaching him through that deal. Then he closed that deal and he exited, and then he went through a period of illness, which he recovered from. He just called me out of the blue one day. And I’m like, hey, dude. What’s going on? He said, well and we had a mutual friend because I met Preston, Todd Brown’s top one mastermind. There were a bunch of us that remained really close friends. He was talking to Sean, one of our buddies, and he said to Sean, like, you know, I wanna do something amazing now. The only person that I can think of that I would ever wanna partner with or do something with is Carl.

Sean says, well, call him. So he called me. He’s like, where are you with Ninja, Dealmaker? I wanna get involved. And I said, let’s go. So you were looking for someone at that point effectively? Looking for somebody that would get a hold of my business. Understand my visionary map for what I wanted to achieve, and then basically just take that, execute, build the team, and just get on with it. And that’s how it turned into, like, the Batman and Robin. I remember I flew out to Nashville. We had a crazy weekend in Nashville where he introduced me to moonshine. That dude can drink.

What is moonshine? It’s like a really full-on whiskey or something? It tastes like diesel. It’s like eighty percent alcohol liquor. It’s probably, I think, it’s what got made in the prohibition years back in the day. When they couldn’t get anything legally or whatever else, they had to make stuff from petrol. I think it’s really good for two things. Number one, degreasing engines, and number two, killing brain cells. So I’m drinking this moonshine stuff, and it destroyed me for a few days.

Anyway, I remember he then invited cars are in the states. One of the guys I work with in Detroit has got this monster truck that goes as fast as a Porsche. Yeah. So Chris has got one of those. So we’re driving in his truck down to Alabama, and I just said to him, “Chris, let’s just be fifty-fifty partners.” He’s like, “Are you crazy?” I’m like, “No. I see talent in you. We have an incredible business chemistry. You’re the classic integrator. I’m the classic visionary. I’ve painted the picture of what I wanna do, which is basically create a one billion dollar online education roll-up.” We’d spent the whole weekend kind of mapping that out. I said, “I absolutely know you are the guy that can execute on that, and we can be partners. I’ll just split the business down the middle with you.” He was like, “Wow. That’s like I wasn’t expecting that.” He’s thinking, like, I might give him five percent or ten percent or vest him in over.

What was your thinking there? You know the whole thing Hormozi says about making an offer that someone can’t say no to. Was that part of the thinking, or was it just that you thought, you know, it had to be that way for you guys to operate because then you weren’t the boss, so to speak. Yeah. So I thought, yeah, I wanna give this guy complete day-to-day control of how this business is gonna work. He completely understands what I want. And for me, we had to be partners equally to give him that responsibility, that incentive to absolutely smash this out of the ballpark, which is what he’s done. If I’d have just turned around and said, well, I’ll give you ten percent and we’ll vest you up a little bit more from there, I think he still would have blown this up and done really, really well. But, like, one of the things that Tony taught me when I went through Date with Destiny, I went into that event being very selfish, being very money-motivated, being very material in nature.

I realized in that event that those were the things that were really holding me back. I came out of that event reprogrammed thinking, well, I wanna be a really good coach. I wanna focus purely on transformation. I wanna impact people’s lives, and I wanna spread the knowledge and the insights that I have. Money doesn’t matter to me anymore. The irony is since making that mindset shift, I’ve probably made ten times my net worth just from that shift whilst focusing on money. It’s crazy. It’s what Zig Ziglar says about helping enough people get what they want in life. If you help them enough people get what they want in life, you’ll have everything you want and need in life. My belief pattern changed at UPW because of that one quote. And it’s true. Right? Because you don’t have to worry about money if you’re providing that much value into the world.

Since I made that shift, what I’ve noticed, is not only my own personal wealth scenario, but some of the people a lot of people that have come through my programs. These guys have made nine figures. To pay for the story, one of my students, Mike, lived up in Boston. He was one of my early students in Prodigi. He calls me up one day. When there were like a thousand people in my mentorship now, but back in the day when there were like ten, they could call me up. Right? So he calls me up. He’s like, hey. He bought a wealth management company. He bought an MMA facility, a kickboxing gym, you know, done all these deals. So he was a solid deal maker. He said, I’ve got this really awesome deal, and I’m really gonna need your help. What is it? He said, it’s a medical cannabis company. I didn’t know anything about the industry at the time.

I thought, well, major problem. It’s might be legal in the state, but it’s federally illegal. You can’t go to any SEC organization. You can’t go to a bank or a traditional fund. They’re not gonna lend money into cannabis. You gotta go to Canada or you gotta raise private money. And I was doing a whole bunch of other things at the time, and he said to me, do you want a partner? I said, well, no. I’ll help you, I’ll coach you, but I don’t. So he said, well, how much would it cost me to get you on a plane tomorrow to fly to Boston, and I was in England, to help me with this deal? So I just threw a number out there, and he’s like, right. Cool. Booked the flight, went and did that deal. So I wasn’t a partner in that deal at all. I could have been, but I wasn’t.

Did you help to what? Negotiate it effectively and just distribute it? I did it for a fee because he was my friend. He just paid for my time. He’d be paying a lot of money, but it’s neither here nor there. But he scaled that business up. What we decided to do was to leverage his wealth management business to get private money lenders in to fund the acquisition.

And the acquisition, he bought two pieces of paper. That’s all he acquired. There was no business at the time. It was a couple of farmers. They wanted to build a growth site, and they wanted to open dispensaries to sell the medical cannabis products. All they had was they bought two pieces of paper.

So it’s a creative deal, and all the capital raising was to basically build the company. The two pieces of paper, which is all you need in this market, was a permit, and a license to grow, and a license to dispense. So that’s what he acquired. How hard were they to get at that point? Very, very difficult. So that was the barrier to entry. That was the moat, if you will, what Warren Buffett calls the moat around your business. That was the moat.

So he did that deal, scaled that up, leveraged all of his wealth management clients to fund the build of the site, and then they exited that business two years ago for a hundred and fourteen million dollars to one of the massive aggregators in the medical cannabis specs. And do you ever look back at that and think, you know, getting five percent in that would have been nice? Yeah, or more. I know. Right? Crazy. Crazy.

But because I’ve shifted my brain into wanting to help people. And now he’s an angel investor. He has his own family office, and he’s funding a lot of my protege’s deals. My protege’s are buying deals where there’s a closing payment required. Not all deals need money upfront, as you know, but a lot of them do. He’s an investor that’s coming in and partnering. And as an investor partner, he’s not just providing the capital, he’s also providing a lot of entrepreneurial skills and a lot of mentorship. So for my business-buying students, it’s like they’re getting double value. They’re getting the cash so they can do the deal, plus they’re getting a partner that’s invested and is incentivized to help them.

There’s a lot of that happening in what I see in my world now. If I look back at how private equity has changed over the last, say, five years, there’s about double the number of firms that are there now versus pre-COVID. There’s a lot of cash too. But what’s interesting, the definition of a private equity firm has changed. So what you just described there is family office-type of private equity structure, which has made the traditional private equity firms have to get better. Because if they don’t get better, they’re gonna get locked out by these people who know how to do deals, have the cash to do it, and have been successful in their own right with their businesses. So they offer more value than just the finances.

What’s cool about private equity, I suppose, is if you’ve actually got capital of your own, you’re better off becoming a family office and investing in the deals, then you’re getting all the returns. The problem with private equity, while it’s got so competitive now, is technically you’re not investing your own money. You’re going out there, you’re raising capital from limited partners, whether they’re family offices, banks, high-net-worth individuals, pension funds, all those guys. They get management fees on the money just deployed. But if you factor in what’s the IRR hurdle rate, unless you’re blowing businesses up to the moon and selling them for big multiples, you’re not really gonna make a lot of money.

That’s the big change because we used to measure it by a factor called MOIC—multiple on invested capital. And it’s a different equation from return on invested capital because you’re looking at the multiple of the value over time, and time doesn’t really come into it. So the internal rate of return piece becomes secondary. On average, if I’m a private equity guy, I want to get at least a three times multiple on invested capital, but ideally higher than that, five or six times.

Is that deal-by-deal basis or on the fund? It’s on both, to be honest. On a deal-by-deal basis, you get a little bit more the way it works. Right? And I’ve got this coming out in my book very soon. I talk about what it’s like to go into a private members club in London. That’s a private equity club. You’ll like the chapter because I put it out there and say, for one night, you’re gonna go behind a secret door, a door in London that you’ve never seen. There’s a club there. It’s a secret wine club.

I’ve been behind a few of those in my time. I’m sure you have. I’m sure. Yeah, exactly. But just for everyone listening who may one day enter one of those clubs when they sell their business, this is what happens. If you’ve had a business that sold for, say, two times MOIC, so let’s put some context to that: you’ve put fifty million into a business, acquired something, bolted other things on, and then you sell that for one hundred million—that would be a two times multiple. But you wanna try and get to a five times. If you put a hundred million into something, you wanna get a five hundred million return. Those are the sort of numbers.

If you get a two times in that club versus the guy next to you at the table who’s done a five times, you’re the schmuck. You probably wouldn’t even go out because everyone’s gonna laugh at you. So the point I’m making here is there’s a lot of competition and arrogance. And the reason they could do it like this is because the cost of capital was so low. No interest rates debt. Exactly.

And this is where the trends—I’ve been writing about this a lot lately on social media because people need to know. When the cost of capital is low, you can go out there and put heaps of debt at pretty high interest rates. In other words, the interest rates that the private equity firm puts and labors on the business. And then you make a return on everything. But when the cost of capital is high, as it is now, all the private equity firms don’t know what to do. Because when interest rates were at three percent, that fifty million that the fund puts in five million of its own equity capital and puts forty-five million in of debt, they’re buying that debt for three percent. They’re charging the business twelve percent. They’re getting income, they’re getting a yield, and they’re getting the capital return when they exit.

So they might make eight times their equity and two or three times the overall investment. They’re making a lot of money from multiple sources. The final deal I was involved in, the principal on that deal held the business for eight years, he took out three hundred and forty million dollars, personally, from that deal. And that was a deal that went for almost three billion dollars. But now, with interest rates, I’ve just been in a deal where I borrowed money at the high eights to do that. So now, even if you’re charging the business twelve percent or even fifteen percent, that’s not a lot of margin to play with.

So now, your focus is… one of the mandatory listening for my proteges. After you kindly spoke at one of my events and then came and spoke to my advanced group, we made it mandatory reading or listening for everyone to listen to your podcast episode “Fifteen Reasons Why PE Won’t Buy Your Business.” Obviously, we’re not playing in the middle market you’re playing in. You’re in the ten to a hundred million dollar deals. Pretty much. The mid-market for me, to be clear, starts at about thirty to forty million, and that’s lower mid-market, but it goes up to about two hundred to two fifty. It’s quite a big part. It’s not the billion-dollar exits; it’s that lower nine-figure at the max.

If you’re in the Premier League, let’s have a soccer analogy. We’re in the championship. My guys are doing one to ten million dollar acquisitions, probably two to five is that sweet spot. But a lot of the rules are very similar. Now, you take a business, and your goal is to rapidly accelerate the shareholder value, which is a phenomenal thing that you do. But a lot of those principles still apply for these smaller deals. They probably apply a lot more because one of the things that we talk about a lot in my mentorship is that if you go to business brokers, and you go to anybody else in the market that’s really valuing deals—like CPAs, business brokers, even attorneys—they only look at valuation through one lens. And it’s financial valuation.

They’re missing three other big lenses. Number one is deal structure. One of the things we looked at is I looked at fifty of the deals that I’ve done in the last ten years, and I looked at a couple of hundred of the deals that were done by people in my protege program. I built a model and analyzed all those deals. What I found was that the more creative the buyer gets on the deal, the more of the deal that goes into the future. We call it seller financing in America. The more of the deal that’s in the future, the more you’re gonna have to pay. It’s like when you go and buy a Tesla. You can rock up to Tesla, drop fifty thousand, and buy it for cash. Or if you want to finance it over five years, you might pay seventy thousand. It’s the time value of money.

The more of the deal you put into the future, the more you’re gonna have to pay. The second lens was seller psychology. If you look at two businesses side by side, they’re identical financially and strategically. But you’ve got a distressed seller that maybe is sick, tired, bored, frustrated, wants to come out, and then you’ve got an entrepreneur. I own twenty-six companies today. Some of them I hate. I would sell for a dollar down all day long, but I’ve got others that I’d want a crazy multiple to even consider selling. That’s got nothing to do with the EBITDA. It’s got to do with how I feel and what my psychology is about that business. No one thinks about that.

The third lens, which is where I think PE really shines and we’re trying to put this into our own deals, is what we call the transfer of value. Again, imagine you’ve got two businesses. They’re identical financially. The EBITDA is the same. But one business is high growth, high margin, has low customer concentration, has a management team, has fully dialed-in KPIs, and the owner is nowhere to be seen inside the business. That surely needs to have a much higher multiple than a business that doesn’t.

Margin is the key thing. This is the key thing. I call it transfer value as well. There are a few more bits, but just to build on what you said, I will talk about how the private equity thing operates too because I think it’s important for people who have a business who want to exit one day to understand that world. Financial value is an academic equation from over fifty years ago. When you do things like net present value and all this sort of stuff, years ago, that was the only way that anyone looked at a business. They didn’t look at the culture; they didn’t look at the recurring revenue.

What happened in around the late 90s, early 2000s, certainly exposed quite a lot by digital and the fact that we could get access to metrics that we didn’t have. Back in the 50s, 60s, 70s, there wasn’t access to the metrics that we have these days. You can get very dialed in. So, you’ve got this weird thing that happened. The market has caught up in certain ways, but in other ways, it hasn’t. You’ve got the financial value, usually a multiple of EBITDA, sometimes revenue. Then you’ve got the transferability of the asset. This is where we end up with this concept called the range of the multiple.

Same industry, same profit, one business sells for six times EBITDA. The other business sells for twenty times EBITDA, which does happen. Particularly if you sell to a strategic who wants you and all these things. What’s happened there? What is the difference? Because on paper, they look the same. Everything in that podcast you mentioned covers some of it. But there is one last point, and I call it prize versus prey. If you have the mindset, the psychology, you understand how the game is played by sophisticated buyers, you can actually control the emotional situation that happens through a deal.

I’ve been involved in transactions where I’m gonna hit the trigger on the financial valuation. I’m gonna get the transferability because I’ve built the business the right way, but I’m gonna get an extra bump on the negotiation because I’ve outplayed my worthy opponent. If you understand those three things, that’s how you realize a very high-value exit. When you look at multiples, we talk about the range of multiples, and a business owner can’t control what the range of multiples are. I think they’re really determined by the capital markets.

One of the things I sometimes do in business is let’s say you’re an education business and the range is six to fourteen. But you could be positioned as a data services business, and the range there is ten to eighteen. You can actually change the positioning of the market you’re in as well if you give yourself enough runway to work on it. What people don’t understand is that while the business owner can’t control the range of multiples, they can control where they land within the multiples, or to your point, how they position it to that target buyer.

Do you remember when the PS5 came out? I had to go and buy the thing off the gray market. So did I. Fifteen hundred bucks. Right? I paid three times the going rate because you just couldn’t get them. It’s like if you wanna go and watch the Lakers. I’m a huge basketball fan. I’m seeing the Celtics play in two weeks. I’m a Celtics fan. We might have a fight about that. Even if you go watch the Celtics, you’re probably paying double or triple on StubHub what those tickets really cost. It’s just supply and demand in the market, and I think that’s what drives crazy exits. If you’ve got a really unique business that’s got massive strategic and financial value to multiple buyers, people are gonna bid that up.

I saw that in my corporate days. I once paid forty-four times EBITDA for a software company that was gonna completely transform HP’s game in the data center, which was being dominated—this was 2005—dominated by IBM. HP was getting slapped all over the market, and we knew if we could buy this company, it would change the game. So who were we bidding against? IBM. Because IBM thought, well, if these guys buy this company, we’re gonna be in for a fight. Is it not worth us buying this company and then just basically putting it in a box and taking HP out of the game? So they threw in the towel at forty-four times EBITDA, and we persevered.

Some of the numbers, if you look at the big exits over the last five to ten years, like the WhatsApp acquisition by Facebook or when Motorola was sold, the multiples go up to high double digits, like eighty-six times EBITDA and stuff like that. Sometimes the multiples don’t exist. Look at Salesforce’s acquisition of Slack. Slack never made any money. It has no EBITDA. So they bought it on a multiple of eyeballs, I think, because it was also done on the people without this whole acquihire thing.

What’s the message? The message is important for anyone who’s acquired a business. You want to have a business that is exit-ready. You want to have a business that you can sell at any point in time, if you want, on your terms and timeline. Even if you don’t plan to sell it immediately. If someone calls you up and says, “Hey, I wanna buy your business next week,” and you can say, “I’m ready. Come in today.” Imagine the power you have, the choice.

That just happened to me, actually. I’m doing two big roll-ups right now. My goal for these two roll-ups is to then be both publicly traded, billion-dollar valuations. One’s in the health and beauty e-commerce space. One is in the online education space, which is targeting business owners, investors, and entrepreneurs. It started with Ninja, which was sold to Agora, bought back, and is now DealMaker. We’ve made four acquisitions. We bought a real estate coaching company. We bought a marketing growth coaching company. And then we’ve bought transactional businesses to help our students accelerate faster.

We’ve bought a CPA firm because everybody needs financial help. A marketing agency so people who want to grow the businesses they buy can plug our marketing agency in. They’ll take care of ads, funnels, opt-ins, and all that kind of stuff. We’ve got a machine, and we’re probably doing about five million dollars of EBITDA run rate. It’s a nice business. I got a call two weeks ago from a PE firm that’s also doing a roll-up. They want to roll up the five million dollar EBITDA businesses. I’m rolling up the half a million to two million EBITDA.

There are two thresholds. You’ve got the five and the ten in the mid-market. If you get to five million EBITDA, you’ve opened up one layer of private equity. Sometimes people have businesses that are too small as a standalone. They can never exit. That statistic of two in ten. The reason is they’re not opening up the market. Five and ten are the thresholds in terms of EBITDA. If you go to ten, you’re likely to get well into the higher end of the mid-market for a nine-figure exit.

So they called me up and said, “We’ve been looking at what you’re doing. We know DealMaker is a really cool brand. We love what you’re doing. You’re putting all these dealmakers into your program, and you’re buying all these other businesses. We’ve been watching you.” They said, “We’d love to acquire you in your current state and put you into our giant roll-up.” I’m a big Star Wars fan. If you remember the very first Star Wars movie, Episode IV, where right at the start, Princess Leia’s in the rebel ship and Darth Vader’s big ship comes and swallows it up—those are the guys now that are circling around me. They’re coming in and getting me with their tractor beams.

They asked, “What’s your EBITDA? We think you’re probably in the four to six range.” I said, “Yeah, I’m right in the middle. Probably run rate doing about five million recasted EBITDA.” They asked, “Do you wanna sell?” I replied, “No. I don’t wanna sell. My goal is to probably get to twenty million of EBITDA over the next two, three years through a buy and build strategy. I’ve got my next six or seven deals mapped out. We’ve raised tons of capital to do those deals. A lot of my own students have even invested in this as well.” As a dealmaker now, we’ve diluted over fifty percent of our own shares. We’ve got probably a hundred other micro investors now that are people in our programs who really believe in what we’re doing.

We’re doing all these deals, and my goal is to get to twenty million. If I do it properly, I’ve got a great story for the market where we can buy an OTC shell, uplist to the Nasdaq, and then I can act as capital probably at a ten x multiple, leverage that up with debt. So my buying power is at a twenty times EBITDA multiple, and then I can buy businesses in the four to eight range and just keep going. I’ve got the team that can buy the businesses and integrate them into the mothership and do what we’re doing. So, I don’t want to exit now. I’m not even started on this journey, but it’s really interesting how PE, they’re watching you. PE and strategic buyers, they’re watching everything that we’re doing.

They see they don’t want to do the work of hoovering up these smaller companies. They only care about scale. Ultimately, that’s why the range starts at that five million. I was working for a firm in London where we had a number of transactions that we put in front of us where the EBITDA was sub five million. I remember the firm principal would say, “I’m not touching that because it takes just as much effort and work, and there’s more risk. So why would I care?”

You’ve got all these acquisition entrepreneurs and all the stuff that’s coming into the market doing exactly what you’re saying, probably the more sophisticated ones. Private equity is sitting there waiting to stop because if they don’t do deals, they close down. Because the money, when you put money into a private equity firm, not everyone knows this. You don’t put all the money in. You make a promissory note. You effectively say, “I’m gonna give you this if the deal flow comes in.” And then there’s a call every time a deal is put in front and you put a bit of your cash in. But if deals aren’t coming forward, then I can remove my note. If I’m a high-net-worth individual, I’m gonna put certain restrictions. So they have to do deals.

People ask me all the time, is the private equity bubble gonna burst? I don’t think it’s gonna burst. I think they’re becoming more creative about how they deploy their money. They’re doing more growth capital and stuff like that. But there’s nine trillion dollars in the latest pitch book analysis. Nine trillion or nine hundred and sixty billion or something ridiculous like that in private equity. If private equity didn’t exist, you’ve got to ask the question, where would the money go? It’s not just all gonna go into real estate and Bitcoin. So I think what’s interesting is that private equity has something like fifty percent of all transactions now because they’re also invested in strategics and whatever. The prediction is that’s gonna go up to about seventy percent. Seventy percent of all major transactions will be private equity transactions in the next three to five years.

That’s crazy. Right? Because all that’s gonna do is drive up the multiples. If you’ve got private equity wanting to do more of these deals in this kind of roll-up aggregation model, and then you’ve got the strategics that are trying to do the same thing, more buyers are coming to the market where there is the smallest number of deals. Simple macroeconomics, that’s just gonna drive multiple streams. It puts the prices up. And that’s why strategics right now, so I’m involved in a number of businesses, and we’re focused pretty much exclusively on strategic exits for the next probably eighteen months. Prediction being early 2025, PE will start to become a little bit more assertive.

The multiples are crazy. If you’re in the right sectors, where there’s a lot of consolidation, if you’ve got a crap business that isn’t transferable, doesn’t have any of those things, you aren’t gonna sell it anyway. It’s just a problem. It’s gonna be asset-stripped. Whereas if you’ve got something that has got those foundations and fundamentals in place, then you have a great chance of exiting for a life-changing amount of money.

What I’m struggling to get my head around is, if you look at the market right now, interest rates are really high right now. The multiples are going higher. Isn’t it then a lot harder for PEs to make money? They won’t leverage as much debt as they used to because the cost of that capital is so high. Right?

What they’re doing is they’re taking more from the investors. This is where it starts to become interesting. I said beforehand that the investors don’t put all their cash in. But I also said there’s nine trillion bucks sitting promised into these private equity firms. So those ultra-high-net-worth individuals, those pension funds, they still have to deploy their capital. They’re deploying more into deals than they traditionally did. Now, what does that mean? That means that the private equity firms have to be super discerning about the deals they do. They have to back the winners.

The other thing they have to do is they have to become more operationally involved in their acquisitions. Instead of like, you know, because I remember when I used to go and do turnarounds when a private equity firm used to buy a company and they got it wrong, they can’t afford that anymore. So they’re starting to bring more people in who can help with scaling, if you like, or optimizing and improving. Right now, let’s summarize that. I do think private equity is in a bit of a weird spot, because they’re trying to reinvent themselves a little within this world of cost of capital being high. But they’ll come back. Some of the smartest people I’ve ever worked with in my life are in those firms. And they’re not gonna sit back and they’re ambitious. They wanna win.

Cool. Well, Nick, I’m really conscious of your time. For all of my peeps that wanna learn more about you, where can people find you online and connect with you? Yeah. I hang out the most on LinkedIn. I pretty much post every day different stuff around private equity and exits. My website is highvalueexit.com. My podcast is Scale Up with Nick Bradley. We talk about yourself there. There have been some great guests like Mr. Carl Allen himself. And the last thing is I’ve got my book coming out very soon, called Exit for Millions. That’s coming out in May. It’s a proper deep dive into how private equity does this.

What I wanna do is get that private equity thinking, being accessible to business owners before they would ever entertain going into that world. So it’s kinda like going into a gunfight with a knife. I’m trying to give the business owners the bigger gun. I love that. My book’s out in March. It’s called The Creative Deal Maker. It’s a fable. It’s not a technical book like my existing book. It’s about a buyer and a seller. The buyer is frustrated, wants to buy a company. The seller, looking to retire, wants a legacy. The story teaches all the core principles of what I do, which is how to find, negotiate, raise capital, all that stuff.

By writing a fable, you can capture the drama and the emotion. You’re a hundred percent right. It’s probably not as prevalent where you play. Those nine-figure deals are a bit more mechanical. When you’re doing a four-million-dollar acquisition and you’re buying it from a retiring baby boomer, there’s drama, emotion, and psychology that go into that. You can’t capture that in a technical book. By telling the story of how it works, people get it.

It does happen with big deals as well, but it’s just hidden a little more. There is drama. You don’t hear it as much as you do with smaller transactions. I’ll send you a copy of my book when it’s out. Let’s get you back on my show. We can chat through that as well because I think that will help a lot of my listeners.