How Acquisitions Fuel Long-Term Market Leadership

0:00This is going to be something that you'll find that you return to time and time again. And it's one of the most valuable tools that I've ever created for doing this. And it really helps when you're running a company and you're thinking about where is the next place that I want to acquire and why. And so I'm very excited to share it with you. And I think that you'll find it's tremendously helpful, not only in determining what kinds of businesses categorically you want to acquire.

0:33the next tool that we'll go through is called the acquisition wheel this is going to be something that you'll find that you return to time and time again it's one of the most valuable tools that i've ever created for doing this and and it really helps when you're running a company and you're thinking about where is the next place that i want to acquire and why and so i'm very excited to share it with you. And I think that you'll find it's tremendously helpful, not only in determining what kinds of businesses categorically you want to acquire, then breaking that down into the specific individual actual target businesses that you want to go after, but also in identifying how do I get growth in the companies that I have acquired?

1:21Where do I acquire next? It's just so full of valuable information and it's very, very simple. And those are typically the best tools. So that's, that's really what I want to go into now is the acquisition wheel. So if you look, you'll see that there are seven boxes in seven categories that we're going to be looking at. And what I like to do is take this in terms of what is my goal for either myself or the company I've got. So if you've got a company that you're already working with, that you already own, then this is really, really helpful because you can see in the middle, it says, this is a, what am I looking for kind of basis.

2:07So in the middle, you can say, I'm looking for competitors to acquire competitors so that I can get more market share. So if I go out and I acquire my competitors, this is typically called horizontal integration in the fancy business schools. But if I think about it just really simply, if I've got a business selling blue jeans and I want to get a bigger base of business to own more of the market share, maybe I own 20 % of the market right now. If I can go out and find somebody else, some other company that's already got a 20 % market share, and I acquire that company, then I've instantly doubled my market share overnight the minute that I close that deal.

2:51That's the power of acquisitions. And it's also why I think it's really good to take a look at what is my objective with my existing company, because that's going to determine, when you know the objective, that's going to determine the kind of acquisitions that you're going to be looking for. Now, if you don't have a business currently, you probably want to start with a single business, but here's something that's interesting too. You can use this acquisition wheel, even when you don't own a business to say, well, would I like to go out and capture some market share? Because if I would, I'm going to just identify the category of company I want.

3:26In my example, it's blue jean companies. And then I'm going to say, who's got the biggest market share? Well, Well, maybe it's Levi's. I don't know who it is these days, but that's probably going to be outside pricing of something that you're going to want to go after. So then you're going to say, okay, well, I would like market share just to get in. And I'd like the ability to expand the company by acquiring others. So I'm going to need to find a few competitors to Levi's and those competitors to Levi's that are lower, smaller companies are going to start popping up in your brain and in your research.

4:00And that's going to help guide you as to potential companies to acquire. So even though you don't own anything right now, and even though you're not ever going to probably acquire Levi's, you're going to have a really good base to say, now I know I just should go look for competitors and I'm going to look for small competitors so that I can get my foot in the door, get a tiny bit of market share. And by the way, when you go to sell, you can use this acquisition wheel as well, because it works in reverse. Who's likely to buy my company? Well, who's got the biggest market share, that's a pretty good opportunity to acquire.

4:31So that's how I want you to look at this. So this first category is in the middle and it is how can I increase market share? Well, if I acquire competitors, then I can increase my market share instantly. If we go then to the upper left, this is how can I get more leads? So if my need is that I've got a company already and I would like to generate more sales. And I know that to get more sales, I have to have more people coming in the door. And to have more people coming in the door, whether it's a virtual door or a physical door, I need to have more leads. And so what if I'm able to identify companies that already have my ideal customer in droves?

5:15What if they've aggregated a whole bunch of my ideal customer in a company or in a media? that's going to be super, super helpful. And I'm going to give you examples of all this in a minute, but I like starting at this high level because this tool is surprisingly robust given how simple it is. So if I don't have a business and I'm thinking about acquiring something, then one of the best places to go to ensure you do well would be to go and start with an acquisition of the leads that you would like to have for the company that you would like to buy. Leads and media are typically one of the most inexpensive things to acquire.

5:56So it's a really good category for us to look at. So then we move to the right at the top. So we're in the middle on the top box, and this is teams and systems for infrastructure. So let's say that you own a company and you're thinking about expanding. And you want to get more leads, but you also know that your people are working double shifts. They're working overtime. Everybody's burnout. They're frazzled. You can't really put more on them right now. Well, one of the easiest ways to grow very, very fast to grow a team is to just acquire one that already exists in another company. As a matter of fact, it's so common that there's a term in the investment banking community for it called acqui-hire.

6:45This is that we're going to acquire to hire. So we're looking for companies that already have the teams or the systems or other resources that we would like to have for our company. And we just go acquire that and merge it into our company and boom, we've got exactly the team we want. I'll give you several examples of that here in a minute as well. Moving to the right, upper right corner, we think about, well, if we would like to increase our LCV, LCV stands for lifetime customer value. LCV or lifetime customer value is the ultimate value that a new customer is worth based on how much they'll spend over their lifetime of over the lifetime of their relationship with your company.

7:30So if you typically have somebody that comes in and spends a thousand dollars in year one and spends that same amount for another five years, the LCV would be the five years times the average spend per year of$1 ,000 or$5 ,000. Well, if we'd like to get more value from the customers we've got, we are going to increase the LCV. We don't have to actually go out and get new customers. If we could get our, all of our existing customers to spend twice as much, we can double the size of our business simply with the same number of customers we've got. One of the easiest ways to do that is to add additional products and services to your product mix.

8:09So if you only have one product that customers are buying and they're spending a thousand dollars a year and typically stay for five years, that's great. You have a$5 ,000 LCV, but if you could add another product or another product or a service or another product and another service to what you've already got, and that would then cause the people who are currently buying from you to buy those as well. And now that goes from a thousand dollars a year to two. Well, now you've doubled the LCV of your customer. You've also doubled your sales and maybe you've even doubled your profits. That's the magic of acquiring additional products and services.

8:47And so you can acquire a company that owns additional products and services, or you can acquire the product or service itself from another company. Okay. So then we go down under that to the lower right box. The lower right box says, well, how can we get our margin up? So maybe your issue with your company is that you want to make more profit. You don't really care about more sales so much, but you just want to make more profit. One of the easiest ways to do that is through something that the investment banking community calls vertical integration. Vertical integration is acquiring your supply and distribution chain.

9:27So if you are someone who sells jewelry, I had a private consult with a client last week who sells about$60 million worth of jewelry a year. And he started by dropshipping. And dropshipping is where you look online and you go find other people that have products and you buy those products in bulk and then you find buyers for them and you send the addresses of the buyers to the dropshipper and they ship directly to the buyer. Well, when he started, he was doing that, but then he realized that he was paying for the people who were manufacturing these jewelry items to be able to have a profit for themselves, which they should.

10:08But if he was going to manufacture those himself, then he would capture the profit that was currently going away to the owners of the manufacturing companies and his company would ultimately make significantly more money. So that's what he did. He started manufacturing and he acquired manufacturers. He did the same thing on the distribution side, initially selling through retail stores who would take a significant margin and then saying, oh, what if I can go direct, right? What if I can go direct to the people who are buying my stuff? Well, that is vertical integration. And basically what it allowed him to do, and it will allow you with businesses too, is to cut out the profit that's being made before you get the product or service, and then cut out the profit that's being made after you sell as well, so that you capture 100 % of the value chain, 100 % of the profit that's being made.

10:59So if you want to increase your margin, we're looking at how can we acquire suppliers and distributors for your existing products or services. And keep in mind, this can be, and I'll give you examples, but this could be like a supplier might be the people, the agency that's running your ads. It could be the outsourced firm that is creating your creative for your content or a content publishing house. It could be, it doesn't have to be like the people that are giving you the widgets that, or the ingredients that go into whatever you're making. You don't have to be in a manufacturing business to be able to acquire supply chain.

11:34Distribution chain, same thing. How do you get closer to selling to the ultimate end customer? That's really the question to ask. How do I get all of the margin away from anyone that I am paying that's going to make a profit for my company to create the thing I'm going to sell? And then how do I get as close to the consumer as possible so that I'm selling directly to the ultimate end user? If you can accomplish both of those things, you'll own 100 % of the value chain and you'll own 100 % of the profitability. So next would be, how can I adapt my product and innovate so that I will not get left behind?

12:11How can I not end up being the ice house that goes away when people invent refrigerators? How can I end up not being the buggy whip manufacturer who goes away when automobiles come into play? Those are two classic examples. So the way that you do that is you acquire other people's intellectual property and you can acquire companies that have that intellectual property like Apple bought Beats from Dr. Dre, right? So that he, so that Apple would have the streaming music service that Dre and Beats created, which then ultimately became Apple Music. Google did the same thing when it acquired the company that originally had the first version of AdWords.

12:51They call it something different, but Google bought that. And so Google didn't create AdWords and Apple didn't create Apple Music. They both acquired the intellectual property or the companies that had the intellectual property that allowed them to be innovative and to have new products and services to offer to their customers. So that's another thing you can do. And then last but not least, that category that is in the lower left corner, this is when we start thinking about if we want to be able to get capital easier, we want to be able to get people to invest in our company, whether it's to acquire our entire company to give us the maximum capital that our company could generate or to use our equity or our ownership in our existing company to acquire more capital to be able to invest to grow our company or to do a recapitalization to take some money off the table for ourselves as well.

13:43We're in the process of doing that with one of our companies right now. Or we simply want to be able to get loans to be able to finance our growth. To get capital, one of the best things that you can do is to increase your monthly or annual recurring revenue. The money that comes in every month or every year, whether you go out and sell new people or not, meaning that you're selling something that people will buy again and again and again. They'll subscribe to it, or it'll be something like software that they're going to integrate and buy and then stay and continue to pay for year after year, month after month.

14:16And this tool and these seven categories that we've just covered can solve almost any challenge that you have with the business. and let's look at that. Well, I need more customers through market share. I need to grow bigger because I want to own more of the market share. Easy, buy your competitor. I need to get more leads because I've got to grow sales. I'm having a hard time. Sales have stalled out. How do we get more leads? You buy media. So those leads already exist. You've got them. I need more infrastructure. I've got to get more people to be able to run the company to handle the business that's coming in.

14:50No problem. Aquihire. You acquire tools, excuse me, teams and systems for infrastructure. I need to get my customers to be worth more because I've really tapped out the number of customers and I got to figure out how can I get more from the customers I've got. No problem. Acquire additional products and services. That increases your lifetime customer value, your LCV. I'm making good sales and I've got the people I need, but I'm not making enough profit. We're actually losing money or the profit margins are too slim to justify the ability to grow or get more capital. No problem. Vertically integrate.

15:21Acquire your supply and distribution chain. That will increase your profit margin. We have great products and services and good people and everything we need, except our product line is getting a little dated and stale and we're afraid these competitors are coming out with some new cool stuff. No problem. Acquire innovative products and services through acquisition of intellectual property or intellectual property companies. We want to be able to get some chips off the table, or we want to be able to have a higher valuation because we'd like to sell the company. No problem. Get monthly or annual recurring income.

15:54Anything that you do, any major challenge that you've got in your business can be solved by acquiring through the companies and categories of companies that you identify using this tool. It's really, really powerful. It can really, really help you.

16:27I'm here to tell you it's not about luck. It's about having the right system, the right deals, and the right guidance. And that's exactly what we give you in the Epic Deal Fast Track. If you've been thinking about buying a business, but you keep getting stuck, whether it's finding the right deal, structuring the financing, or negotiating with sellers, you are not alone. Too many people waste months, even years, just thinking about acquiring a business while the real opportunities pass them by. The Epic Deal Fast Track is not another course. It's actually an implementation program and it's designed to get you from the idea to the acquisition in just 16 weeks or less.

17:08We work with you one-on-one to help you find, fund, and close your first or next deal. And once you do, we're going to plug you into our elite Epic Board community so that you can keep scaling through acquisitions. We install three powerful systems in your business. The first is the deal flow engine. So you always have high quality off-market deals coming to you. Number two, we give you our offer and funding system so that you can structure offers that get accepted and fund them creatively many times with no money out of your own pocket. And number three, our closing and integration system so that you don't just buy a business you actually successfully run and scale it once you have acquired it.

17:49Plus, you'll have direct one-on-one support from an Epic Deal advisor every step of the way. And that's people that have actually come up through the system and done these deals themselves. That's the only way to become an Epic Deal advisor. And if you're serious about acquiring a business this year, don't just sit on the sidelines. Just text I'm in to 334-458-9034 and we'll get you in. So text I'm in to 334-458-9034. We'll get you in. No fluff, no wasted time, just real deal making from people that are actually out there doing deals right now. I'll see you there.