Carl Allen introduces his “Deal Reviews” series, part of his Deal Maker Protégé program, where he analyzes anonymized deals submitted by his students. In this episode, he reviews a tutoring business specializing in K-12 education, including ADHD support. The business operates a learning center in a large U.S. metropolitan area and offers in-home and online tutoring, with a strong reputation built on word-of-mouth and formal marketing campaigns. Carl highlights its scalability, especially through group coaching and online education, as a significant growth opportunity.

The tutoring business shows promising financials with potential for global expansion. Carl emphasizes its ability to scale due to a high demand for specialized tutoring, particularly for children with ADHD and autism. He shares his personal connection to the sector, discussing his son’s journey with autism and how he used Neuro-Linguistic Programming (NLP) to help him. He sees this as a passion-driven sector with substantial social impact potential and notes its multibillion-dollar market opportunity.

Carl proposes a creative financing approach to acquire the business, suggesting a performance-based annuity deal to align with the seller’s motivations. He emphasizes the importance of framing the deal around social impact and long-term growth. Carl envisions the potential for franchising and expanding the business globally, leveraging partnerships with schools, retired educators, and group coaching strategies.

In addition to financial growth, Carl highlights the importance of creating a culture of learning and meaningful impact. He reflects on the success of a similar business that developed effective programs for dyslexic students. The importance of a well-structured curriculum and scalability of operations is emphasized as critical factors for success.

Carl concludes by encouraging viewers to subscribe and engage with his content. He underscores the educational value of analyzing these deals, as it helps identify patterns in valuation, seller psychology, and deal structure. He invites feedback and questions from the audience to tailor future content to their interests.

Full Transcript:

Hi. It’s Carl Allen. In this playlist, I’m gonna be doing some deal reviews for you. So part of my deal maker protege program, we review our deal maker student deals on a weekly basis. They’re anonymized.

We put them on a Zoom call. We break the numbers down. We look at the growth opportunity, valuation, what a deal structure might look like, interpreting the seller psychology and how that maps in to a desired outcome in terms of a deal structure. We’ll then also look at what the exit options might be for you as a new business owner after you’ve grown the business and you want to go to market and liquidate the asset.

So every single week, we review a bunch of these deals. And my favorite deal of the week, we’re actually gonna showcase for you on this channel. So absolutely check these out and don’t forget to like and share these videos and definitely hit the subscribe button so that you’re getting these deal reviews as soon as we release them. So enjoy the video.

I will see you soon. Until then, bye for now.

I will go up to the disclaimer. I won’t read it, but I will point out that it does equally apply. Yeah. We’re not giving advice in these deals.

This, that’s still one. I gotta press on two. Yeah, this is, this is an interesting deal as well. This is Murali’s deal.

So what’s this thing all about? This is a tutoring business and I don’t know. Tutoring businesses to me could be very, very good business. I know two teachers, one of them teaches grade one to grade three, the other one I think teaches like the grade four or grade grade fives.

And the disaster that they were describing in terms of Ontario education at this point in time and how devastated the pandemic was for kids that were just getting started in their education. I mean it’s just horror stories.

So you know the ability for tutors to fill the gap, I mean is it there? I mean that’s one of the things I think would be interesting about this deal. But let me go through the you know the basics before I before I do. This is a tutoring business. The customers, yeah they provide tutoring services K-twelve.

Know, it’s a grade school, high school. They specialize in ADHD tutoring, but in fact, do all tutoring. They have three one on one tutoring sort of types or categories. They have a learning center, so you can come in there and, and get tutoring there. They’ll come to your home or you can do it online. They didn’t give a revenue breakdown on the three, but they’re active in all three of them. So they do have one brick and mortar learning center.

They always give the default. I guess I must have the default Canadian center. I don’t usually spell it that way, but I guess that’s what the word puts when they figure you’re Canadian, give you the re. They have one brick and mortar learning centre in the suburbs of a major US metropolitan area.

This is big, you know, this is kind of like a Toronto, Chicago, Phoenix sized market. And they sell into that local market. The business has been listed for two months. The ask price is four hundred ks.

No property involved in this transaction. They’re leasing the premises.

The ownership story, not a lot of details given on it but maybe there really aren’t that many details to share. This business was founded in twenty nineteen by Dirk, he’s thirty five now, he was thirty one then. He owns a hundred percent of the business, He’s active in the business as a general manager, works every day. Motivation for selling?

Dirk wants to change careers. He fancies himself being you know more productive and happier in a consulting role. Didn’t really share what kind of consulting but that’s where he wants to go once he exits this business. I had no real interest in preserving the legacy of the business.

It wasn’t really a big issue for him. He’s owned it for four years. I guess the bonds to the business and the attachment really aren’t there. This business sells tutoring services to white collar parents, parents in white collar jobs who make one hundred and ten thousand a year.

They’ve got the numbers on that, they’ve got the stats, and they reside within a ten mile radius of the physical bricks and mortar learning center. That’s their customer base. Marketing is mostly done by word-of-mouth. That was mentioned in the submission.

They kinda base it on their reputation for improving education outcomes in their students. They also run some formal marketing campaigns. And their reputation, when we get down to the very end and we take a look at their, their Google rating, their Google review rating, it’s pretty good. But they also do formal marketing campaigns using SEO, e blast, social media networking.

Right? With professionals, the networking is with professionals who work with children and adolescents. So on one hand, they’re saying it’s mostly word-of-mouth they’re getting customers from but then they’re also describing like you know a fairly sophisticated marketing campaign. So you know maybe Murali can give us a little bit of a background on that when we bring them on.

No salespeople but the office managers do return sales inquiry calls. Thirty tutors but they only pay when they get when they work, so probably a part time gig, I would think, for most of those. Two admin people only. There are five hundred families in the customer database.

About one hundred and fifty of those five hundred are active. The business averages about two hundred hours of tutoring sessions per week. They have the capacity to 3x the business in the current facility. You know, I think 3x’ing or 4x’ing or 2x’ing a lot, depends upon how much of their business is in that learning center because obviously you’re just limited by the tutors that you can secure and the customers that you can generate in the other two.

A competition, there are four competitors with learning centers in the same general vicinity along with, of course, tons of online tutors and solo tutors, you know, who work on an in home basis. They do, however, have a formal relationship with fourteen private schools and fifteen public schools.

There was a stimulus deal, and I went through it to try and get a better idea on what kind of relationship it is, what the connection is. You know, it’s kinda like schools sign on for a year, but I didn’t get a good feeling for if I sign on for a year as a school, what I can what am I exactly getting? But, obviously, those formal relationships are part of the customer base and part of the revenue that’s generated. About fifty percent of their business comes from high school students. You know, the rest, they kinda break into, you know, you know, k to k to three and, you know.

John, how many how many children do they teach on an annual basis?

Yeah. The only numbers that were given were the five hundred families and the hundred and fifty families are active. How many kids from each family? They didn’t say.

Maybe one or two. So, well, could we come up with three hundred maybe? I don’t know. But that’s the only numbers they gave on that.

Google reviews. I mean the website average could be more professional given their white collar clientele, but it was fine. I mean it was not a horror show by any means. But five out of five on over a hundred reviews, that’s pretty good.

You know, if you can actually put some value add in terms of the education of these, of the people. I get a feeling from the state that this business is in, that the the pandemic disruption would not be as bad as it is here in Ontario. We were absolutely slammed, these schools were like shut for two years. It was an absolute education disaster we’re dealing with here in Ontario.

This state I don’t think is really that bad. The MUD score I would say is below average. I mean the motivation is middling. This guy is young, he’s got a nice little business here.

He wants to get into consulting but we’re not dealing with someone with a ton of stress or urgency in my opinion. So a tutoring business, thanks, Marelli, for, submitting it. Kind of interesting. We’ve looked at these kinds of businesses in the past.

Carl, what do you think of this one?

Oh, I love this business.

I really like this business a lot.

I’ll tell you why. So three reasons.

Four reasons, actually.

Reason number one.

Nothing bad about this for me.

Four reasons I love it. Number one, autism is a an industry, that appeals very high to my values. Right? Why is that? So my fifteen year old plus one day son, some of you know him on Facebook.

He’s an absolutely incredible, super smart, amazing kid.

When he was five, was diagnosed with, with autism, autism, ADHD, all those different things. And I actually trained to become a master NLP practitioner to Curin.

No one would help him in the UK. So I did all these NLP exams, spent four years. I’m an NLP ninja. A lot of it I’ve deployed into deal making, but, my son’s the only person I ever treated, and he’s now went from probably sixty percent autistic and ADHD to probably one percent. You wouldn’t know, apart from the occasional temper, which, hey, he’s fifteen. They all have it.

He’s he’s completely, a normal child now, which is amazing. So so this is a sector that appeals to me quite a lot. What I also love about this deal is you can scale this like absolute crazy. Right?

So what these guys have done is focus more on the in center in home versus online. And, you know, with the amount of coaches that they’ve got, these guys need to go group coaching, focus. Because if you think about it, right, there’s, the seventy four million children in the United States. This is just the US market, by the way.

I think this could be a global business. Seventy four million children in the United States. There’s, one in forty four have at least ADHD or autism. So that’s one point seven million children.

And if they’re paying, the families are paying, you know, around fifteen hundred dollars each for the in person and you ended up charging them, say, a thousand dollars a year to go online, you know, it’s it’s it’s a north of a billion dollar business. Now clearly, I don’t think you build a billion dollar business out of it, but I I think it could be tens of millions with the right marketing strategy and the right coach enrollment strategy and pivoting it more to group coaching. Because what you’ll find in these conditions, eighty eighty to ninety percent of the conditions that these children have are all the same.

So you can build a group coaching curriculum around this. And, John, do you remember that business we looked at a couple of years ago that was, like, the biggest golden buzzer deal we’ve ever seen, and it sold for tens of millions of dollars.

I remember right. I called her Angela. Yeah. Absolutely. Unbelievable. Stellar business. Yeah. Stellar business.

This this business could be that good. Right? So phenomenal growth opportunity.

The valuation is kind of spot on, I think. The margins are great. It’s growing. If you take the average of the last three years of EBITDA and you multiply it by three, you get to about half a million dollars of enterprise value.

And then there’s not a lot of cash in it and there’s no working capital. So if it if you said half a million dollar enterprise value and you adjusted for a hundred k, give or take, working capital shortfall, I think four hundred k for this business is is is great. What I would do, though, is I’d offer him half a million on a ten year annuity, and I’d give him maybe ten percent retained ownership, and I’d give him a little earn out kicker as I scale this business going forward. The whole key to this, people that build businesses like this are building it for social impact.

Right? Not about money. So to sell this guy, you’ve got to talk about your passion for this industry, your strategy to scale it and help more families, impact more children, make the world a better place. I would literally get him on the I’d show him videos of my son when he was six, and I get my son on a Zoom call right now, and he could see the difference. But clearly, you know, I I thought about doing this, by the way, years ago, building online training for this stuff, through my NLP credentials.

But as you know, I don’t start businesses. I buy them.

So this is a massive green light deal for me.

I would absolutely Morale, if you wanna partner on this, I I could turn this into a ten million dollar business within a year. No joke. And I got the passion to do it as well. So I love it, John.

Nothing nothing bad again. I’m trying to think of something bad I don’t like about it, but it’s got great margins. It’s growing. It’s a passion play.

I think you could do an annuity deal on this. You could get really creative and flexible with the seller on a deal. The market, it’s a multibillion dollar market if done right. I think this can scale globally.

This just doesn’t have to be US. I think UK, Canada, Australia, most of the English speaking worlds, you could translate the content into other countries. There’s autistic children in China. There’s autistic children in India.

There’s autistic children and ADHD children in every country in the world. I think you could do something phenomenal with this. So, if you haven’t guessed, I really like it. Big, big, big, big green light for me.

Yeah. Might even be a golden buzz, John.

An interesting deal. Now one of the things that I find most attractive about this deal is the five out of five. Because if we go back to Angela, you know, she’s in our hall of fame. She had an incredible business.

She taught dyslexic kids to, to read, and she also started with her own. Couldn’t get help, severely dyslexic dyslexic at eight. You know, she hit the research stacks in the library. She came up with, some development psychologists from the forties and fifties who had approach to dealing with these kinds of, you know, students in terms of teaching them to read.

Nobody really picked up on their work. She got intrigued. She she she reviewed the, the the research that they did, became an expert on it, created a program that actually taught dyslexic kids to read. And that’s the key in these kinds of businesses is something that actually works.

And what she did worked. It worked so well that not only was her own sort of tutoring business absolutely exploding, all the public schools in her area were buying her resources too. I think at the by the time we looked at that deal Carl, like something like forty percent of our revenue just came from public schools, right? Who didn’t know how to teach dyslexic kids to read.

Yeah. So they were bringing her materials in. So to me, some some of these tutoring systems are kinda babysitting. You know, I’ve got a a high school son who, you know, he wanted to go to mathnasium here in Toronto, but I think it was just a way for him to spend some time with his girlfriend and get dad to give him forty bucks so he could go get a milkshake at the local store.

I mean, he wasn’t really that weak in math. I mean, they said just do your math homework. But those, some of these places were babysitting places, you kinda go in, you put your time in and nothing really happens. But if you’ve got some place that you can send your child where there’s a real before and after, there’s real impact, there’s real learning, absolute goal, I totally agree with Carl.

Now on the marketing side of this, in terms of growing a business like that, I’m gonna go to my kind of, you know, resident guru on, you know, blowing up these online businesses, you know, to through SEO and all the rest of it and get JR’s take on this. JR, would you green light this deal? Do you like what you see?

Yeah. It’s funny.

David and I were talking this morning, or last night, sorry, about different ways to leverage organic traffic. And if I take that conversation from last night and and extend it to this business, there’s really no limit.

And and and to Carl’s point, there’s definitely no geographic limitation. So you build a curriculum, you scale it out. It’s just like software. You build it once, you can scale it and grow it a million times.

So from a Facebook perspective, Murali, Facebook is is ideal for something like this from a targeting perspective. And then video, video, video, create tons of video. There’s ways to break down that video into, you know, a hundred different small snippet shorts, TikTok, Instagram, etcetera, and you’ve got a a a really large footprint. So, yeah, I I love it.

I think it’s an awesome business. Any any business like this that can scale in the way that this can is a a great model, and the model is the kind of the optimum word there.

Yeah. I’m I’m kinda curious about that because to me, when I look at the big huge education home runs, the people who really make a difference, right, it’s so culture driven. It’s so much about educators being able to create a culture, a learning culture that people embrace. There’s a private school running one of the worst, most disadvantaged neighborhoods in New York City where everybody that goes to school, like, basically goes to college and graduates high school because the cult the learning culture there is so incredible based upon the principle of that school, right?

You know, who learning is a vocation or an avocation not just a vocation and he has put together a program around a culture, you know, that really works and you know, let’s take a look at jump mathematics, right? A jump the jump program in math, right? Brilliant program. The guy who invented it, you know, incredible learning culture and absolutely teaches kids mathematical skills.

But when you’re trying to scale, right, you can the materials you can kinda scale, but can you scale the culture? Do you get the same kind of impact? I’m not saying yes or no on that but it’s something that, you know, I wonder about. You know, those five out of fives, what is it that’s that’s responsible for that?

Is it the culture? Is it the program? Is it the approach? I’d love to find a little bit more about that.

Let’s get Murali, I’m here before it’s too late though and get his take on that great deal, Murali. Anything you can add to, the comments that have been made so far?

Sure. Thanks. Thanks, John. I think a couple of questions there. It’s not a franchise and it’s a direct deed from the sellers, so there is no broker involved. So I’m directly talking to them. So that’s a good thing.

From motivation point of view, he’s a a young guy, but he has a family obligation. So he wanna exit, and he is an m and a consultant. So he knows what what he’s selling. So it might be tough to negotiate.

M and A consulting. Okay.

Yeah. That’s what he told me. So, but I I mean, I love that kind of business because I have two kids. I spend so much money on tutoring, so that’s another point I wanna say. Like, there’s so many parents who wants that.

Yeah. I I think franchising Morale could be part of the growth strategy, for this. I think once you’ve got a critical mass I think once this is a three to five million dollar business, I think you can turnkey the model and potentially franchise this out and then get a rip on a lot of their different things. What I also love about this, I think it was Chris McGraw that, kind of helped me answer the only question I had in my head, which was the easiest thing in the world is to get the students into this. The challenge is finding the coaches. Right?

And what’s interesting is, he was talking about retired school teachers, but as well, I think a lot of active school teachers could do this as a way to supplement their income. Like like Netdoctor, you know, the doctors out there that don’t moonlight in the evenings, all these online, like physician and, like pharmacy type models that are out there where, you know, you pay fifty hundred bucks and you can get an answer from somebody. I think you could you could pay these teachers, you know, twenty, thirty dollars an hour to do this stuff in their spare time and coordinate the classes around their schedules.

And, you know, again, a lot of it is they want to give back and they want to help. So I think the business model needs some serious kind of thinking and planning, but, this would be an amazing business. And I think if you sell it in the right way to him, Morali, and you really focus on the impact piece and you cut him in on the growth and show him I I personally I I I would think twice of writing him four hundred thousand dollar check for business like this. I really wouldn’t, but I don’t think you have to do that.

In the spirit of creative financing and deal making, I think you can do this on an annuity, give them a piece of the upside, demonstrate the growth and the skills and the model to him, and then, he could make millions out of this, because he might be a good silent partner for you as well, as you take this business forward, somebody from that industry. Like, it’s easy for someone like me. I’m I’m an NELTA qualified NLP practitioner, master practitioner, so my credentials would transcend. But for somebody that doesn’t have that, he would be your subject matter expert.

So NLP, Bernadette, is neuro linguistic programming. Mhmm.

It’s a scientific methodology of understanding a human being’s operating system.

So it’s a lot of what Tony Robbins does. It was invented by John Bandler and Richard Grinder back in the seventies and eighties. You know a lot about NLP, John, don’t you?

Yeah. Tony Robbins is big into that too as well. Right?

Yeah. He is. I I I got into NLP because I saw a video of, I think it’s called Paul McKenna, a UK NLP practitioner. I saw a video of him somewhere once where he was, he was on TV, where he was curing an autistic child through non new programming.

And I thought, well, I’m gonna rather than take my son to somebody, I’ll just learn it. And I did. It took me four years to learn it. And I what I did is I I transformed my son into believing that, his autism was a superpower.

So I gave him, like, an identity upgrade. And as we know, we all operate at the highest levels when it’s in our identity.

So I I made him believe that, he was a superhero having these powers and that his mathematical memory and his brainpower and his phenomenal soccer skills were all down to him being autistic. So he went from being averse to talking about it to almost bragging about it. Like, people would say to him, wow, Josh. You know, when he got into academy soccer, people were saying, wow.

You’re so good at football, yet you’re so gifted at math and at school. He says, yeah. Because I’m autistic. That’s what you’re proud.

People were like his his friends were like, woah. I wanna be autistic. So he took it from a taboo subject to being like, I’m a power play. Now think about it.

A lot of the a lot of the rock stars and superstars in the world that we know were autistic. The greatest football that’s ever played the game, Lionel Messi, is autistic.

One of the greatest entrepreneurs to ever walk the planet, Steve Jobs, was autistic.

Mark Zuckerberg was autistic is autistic.

So and I I showed my son all these images and told him the stories about these people. He knew about Zuck. He knew about Messi. He didn’t know much about Steve Jobs.

But when I told him the guy that designed the iPhone was autistic, he’s like, well, that will do for me. And, so NLP helps you understand people’s maps of the world. We’ve all got different maps of the world. Right?

And it’s it’s allowing people to understand their own map. And and I think there’s a little tiny bit of autism and ADHD in us all, in helping us understand how we process information and our filtering mechanisms, is is really, really important. And and, you know, I’m really passionate about this as you can see. So I think this is a crazy, crazy cool business.

Sure. One question. One concern there is, like, the it’s not EBITDA. It’s an SD. So which means probably is a hundred k is what he’s making.

So valuation wise, I know he’s on the higher end. Probably might go somewhere around three hundred. So that’s what I was thinking.

But I I I think you could pay him his ask or maybe a little bit higher on on some sort of annuity type deal structure. I I go back to him, and I I’d say, hey. I wanna pay at least a million dollars for this business. And he’ll go, what?

Here’s the deal. I’ll pay you forty to fifty grand a month for ten years or a year for ten years, and then I wanna keep a piece of the equity in there for you. And here’s my model to grow. Here’s my model to market to a group coaching model.

Here’s where I’m gonna get all of my tutors. Here are the countries and things I’m gonna attack. I talk about maybe a franchising model down the line. For him, if he doesn’t care about the impact, he’s just in it for the money, which I don’t think he is.

If he was an m and a consultant, why is he running a business doing a couple hundred grand a year? You know? It’s really, really weird.

So I think he’s more I I think he will probably have an autistic or an ADHD member of his family, which is why he’s doing this.

And for you to play that incredible impact story where you say, hey. Literally, there’s one point seven million children in America who’ve got this illness or or this condition, should I say. Let’s go cure them all and then let’s spread to the rest of the world. Yeah. I think that would work. I really like it.

Alright. Let’s at least get one kind of random person to come on and give their score, and I usually like to pick on at least somebody we’ve never, heard from before or I haven’t anyway. So I’m gonna put my magic finger here and ask, Christina Atkins to unmute. Give us a red light, green light.

Christina.

I knew it was going to be me.

I just had a feeling.

I would Well, there was a couple of there was a couple of choices, but, yeah.

We’d love to hear Hands up if you love Christina.

I, I would give it a green light fifty because, I think it’s a great business. I have, an autistic cousin who is just absolutely amazing.

He can put Legos together like you would not believe. And just some of the talents that he has is absolutely amazing.

I give it fifty because I don’t really know that much about it and the things that I would need to do to, you know, grow it. But I think it’s a great business, and I think he found a real gem here.

Yeah. Yeah. Great take great take. Thank you, Christina. Mhmm. Okay. Let’s give ourselves some time for Mona’s deal, which is deal number three.

Thank you for that, Mirelli, and good luck with that deal. Keep us, keep us in the loop.

Good luck.

So I hope you enjoyed that deal review. Definitely subscribe to this channel. Hit also hit like and share so that you’re getting the very best content from me in real time. Every time I wanna announce my deal of the week, I want you to see it so that you can understand it.

And what’s interesting is the more of these deal reviews that you go through, you’ll start to see the patterns. You’ll start to see how seller psychology and valuation and deal structure all kind of combine. We’ll start to see common patterns when we look at the financial analysis. You’ll start to see common patterns in kind of red flags and what the growth and exit opportunities might be if you bought a business like this and you took it forward into the marketplace.

So definitely keep watching these, and I will see you soon for the next deal review. Until then, bye for now.

Hey, guys. I’m Karl Allen. I’m the founder of Dealmaker Wealth Society. I’ve done tens of billions of dollars of deals over the last thirty plus years.

If you’re new to my channel, definitely hit like and subscribe so that you can get all of my amazing DealMaker content in real time. You’re not gonna miss any of the outstanding information that I’m gonna share with you. And if there’s a question that you’ve got, got, if there’s something that you want to know the answer for, you want me to speak to it, definitely hit me up in the comment section, and I will record those videos for you, and I will get them on this channel as soon as possible. So love having you part of this YouTube community, and I can’t wait to serve you