How to Buy a Profitable Business that Cash Flows Over $500K Per Year Even if You Never Bought a Business Before with Leo Landaverde

0:01Light that spark fire nation. JLD here and welcome to Entrepreneurs on fire. The only daily show interviewing the world's top entrepreneurs seven days a week. Today, we'll be breaking down how to buy a profitable business that cash flows over$500 ,000 per year, even if you never bought a business before. To drop these value bombs, I brought Leo Landaverde into EO Fire Studios. Leo helps people get out of the rat race by buying profitable businesses. His students have bought $50 million in businesses in the last 12 months. And today, Foundation, we'll talk about the new economy we live in. We'll talk about why would someone sell a business if it's so profitable?

0:39We'll talk about the upcoming silver tsunami that's happening and the four pillars of business acquisition mastery and oh so much more. And a big thank you for sponsoring today's episode goes to Leo and our sponsors. Fire Nation, this is your year to get unstuck and to grow a successful business. Attend the world's highest rated business growth workshop taught personally by Clay Clark and now featuring football star Tim Tebow and President Trump's son, Eric Trump at Thrivetimeshow.com slash EO Fire. Again, request life-changing tickets today at Thrivetimeshow.com slash EO Fire. Leo, say what's up to Fire Nation and share something that you believe about becoming successful that most people disagree with.

1:22What's up, Fire Nation? Leo Landaverde here. I don't believe anyone is self-made. We all get help from somewhere. I am a man of faith and I believe in my faith in God, but also my wife's faith in me. And I've been successfully married for the last 25 years. So yeah, people say I'm self-made. The reality is there's always someone behind you with the wind beneath your wings. I love that. It's kind of interesting. I actually had my wife, Kate, watch the movie Beaches for the first time ever, which is where that song originates from. A little Bette Midler. What a movie. If you haven't seen that for a while, Leo, go back and watch it.

2:01It really does stand the test of time. It's a classic. I loved it. And Fire Nation, we're talking about how to buy a profitable business that cash flows over 500k per year, even if you've never bought a business before. Now, Leo, you believe that our jobs are not safe in today's new economy. Tell us more. You know, the timing couldn't be better for this podcast because you don't have to look very far. Just look at the news today. What's happening in the world today? You know, what used to be a safe job is no longer. The private sector was not immune a few years ago. Now, even if you're a federal employee, you will have a hard time.

2:37And to illustrate that story, the genesis of everything that I do today dates back to 2004. when I was laid off after a corporate merger, a bigger company bought this company I was working for. That was a regional vice president for an IT staffing firm. And I got nothing but my last paycheck, a pink slip, no stock on the new company. I was completely laid off, let go. And I had two babies at the age of two and two mortgages. And let me tell you at the time, John, what was the worst thing that ever happened to me? And in hindsight, the best thing that ever happened. Yes. I mean, Fire Nation, you really need to realize there's a reason why I call this the baby effect.

3:17And now that I have a 16-month-old son, I totally get it. I mean, I've always gotten it, but now I really get it where it just seems like when I interview people and they talk about their aha moment, their moment that just launched them into the success that they're having now. A lot of times, of course, not all the times, but a lot of times, there's a baby involved because guess what? You might be scared of hearing the word no. You might be scared of failing. You might be scared of a lot of things when you're just a human being and an entrepreneur. But when you're a parent, you're much more scared about not providing security for your child, for your family.

3:52And so you go and you do what needs to be done. Now let's talk about profitable businesses. Like how realistic is it, Leo, to buy a profitable business? Because, you know, one of the first things that comes to my mind is like, why would somebody be selling a profitable business? Exactly. Right. And you know what? It's a lot more realistic and simplistic than you think. Now, here's the thing that most people don't know. The world of mergers and acquisitions, and I've been involved for over 10 years. I'm a licensed M &A advisor. It's actually dominated by the private equity groups, the family offices, and the institutional investors who have been buying up private equity for years and years and years, decades.

4:29Now, why would a cash flow in business, and I've seen businesses north of a million dollars worth of cash flow. Why? Many reasons. You know, sometimes you have a 60, 70, 80 year old, very successful entrepreneur with no heirs, no kids to take over the business. Sometimes it's illness, right? Think about it. If you're, if you're at the end of your life and you know, you build this great business, nobody to take it over and you're sick. What are you going to do? You can't keep running anymore. You may have the best, especially if you didn't do a good job as an owner, just building the systems of procedures, right?

5:00So an employee could take it over. So many, many reasons people get into business, John, not necessarily knowing how to actually create a legacy business, but they're making a lot of money. They just don't know to unload it. They don't know how to do that. And divorce, painful. There are painful circumstances that force a very successful person to walk away. Life happens and change is inevitable. Think about a senior successful roofing contractor who, you know,$7 million business. And all of a sudden, his kids are grown and they're in New York and they, you know, kids and grandkids move to Florida and he's there by himself and his wife.

5:35It's, you know, it's going to happen. Something's got to give, right? At some point in somebody's life, money is not the only thing that matters anymore. Fire Nation, there's so many things that influence people's decisions. I love to say, why are you assuming that a person is not going to want to sell a profitable business? Why are you assuming that you can't acquire an incredibly profitable business? Leo just went through a lot of reasons why you can. You just have to be bold, be brave, and most importantly, ask. Now, I want to talk about the upcoming silver tsunami. I mean, first off, what the heck is a silver tsunami and why is now the time to buy a business?

6:12I'm not sure when this silver tsunami, when the term was coined, but, you know, Forbes magazine has talked about it. I mean, every major news outlet has been talking about it. So you've got the baby boomers, right? 1946 to 64, who have now grown in their 60s and 70s, who experts estimate that there is anywhere from five to 10 million businesses in the U.S. that will exchange hands in the next five to 10 years. The greatest transfer of wealth in the history of the United States, it's going to happen now because of the same things that we talked about. These baby boomers are aging and they need to divest of those assets.

6:52They may not have an error and then they need to, you know, be able to make some money and sell them. Right. So this interesting thing is that a lot of them will not be able to sell. There's going to be a glut of businesses for sale and not enough people to get them to buy them. And hence, I think there's an opportunity to take advantage of that. Now, silver tsunami, because this is inevitable, this is going to happen. And if you look at what's going on in the world, wouldn't it just make sense, right? You're having a vulnerable job situation. Not everybody is vulnerable now. I don't think there's one employee that can look you in the eye, John, and says, hey, I am safe.

7:27I am a teacher. I'm a government contractor. I'm a federal employee. I work for the major IT, Fortune 100. Can you actually say you're safe? Now, if you're looking at what's happening in the world and what's going to happen with all these cash-flowing businesses, it only makes sense, right? But you know what? The truth is that only 10 % of buyers that actually want to buy a business end up buying it for many reasons that I'm going to explain to you later. But that's what the domain of the Ivy League schools teaching their students, the MBAs, how to actually take those businesses off the market and actually buy them before they even hit the market without a broker.

8:05Man, Fire Nation, if you're not starting to get a little tingling in the ends of your fingertips and maybe in the back of the hair of your neck, it's time to get a little bit excited because we have a lot more to talk about, including the four pillars of business acquisition mastery. When we get back from thanking our sponsors. Fire Nation, this is your year to get unstuck and to grow a successful business. Are you looking to learn the proven processes and success systems that have been used to create thousands of millionaire success stories? See thousands of success stories and testimonials from real people just like you who Clay Clark has mentored and coached into prosperity at Thrivetimeshow.com slash EO Fire.

8:40Clay's proven business coaching program is month to month and costs less money than hiring a minimum wage employee. Yes, it's month to month and costs less money than hiring a minimum wage employee. Schedule your free personal 13-point assessment with Clay Clark himself today at Thrivetimeshow.com slash EO Fire. because Clay only takes on 160 clients and only allows 300 attendees to each business conference, you will interact with Clay directly. See thousands of real success stories and learn about attending the Thrive Time Show two-day in-person workshop featuring football star Tim Tebow and President Trump's son, Eric Trump, today at thrivetimeshow.com slash EOFire.

9:16Become the next success story. Schedule a free consultation and request tickets to join football star Tim Tebow and President Trump's son, Eric Trump, at Clay Clark's next business conference today at thrivetimeshow.com slash EO fire. Leo, we're back. And I did tease this before the break. So break it down for us. What are those four pillars of business acquisition mastery? Great point. So the four pillars, this is something that I started as I started helping students who didn't have knowledge on the M &A world that I do have. And I started to realize there is systems and processes, and I call it pillars.

9:54Number one, buy box. Number two, deal flow. Number three, deal analysis, mastery. And number four, a deal team. So let's unpack that. Buy box. Here's where most buyers buying a business go wrong, John. It's they go to biz by sale. Bizbysell.com is the largest website in the world to procure businesses for sale, right? Whether it's for sale by business owner or represented by a broker. Now they go to it and if you've ever gone to a website like that, there's not a lot of room for you to shine, right? Where you can actually raise your hand and look better than everybody else, because it's going to ask you for your first name, your last name, email address, and maybe 30 words or less.

10:34How do you actually stand out against the competition? Now, the reality is that there is actually 15 good buyers, cash buyers in the market today for every good cash flowing business. So what is the buy box? We call it the tip of the spear. Think of it as a professional resume, a personal financial statement, statement on net worth, and a lot of collateral materials and the endorsement of banks, basically making you a cash buyer that gets, we deliver into the hands of those who are either the seller selling the business by themselves or the actual brokers to have the listing. I am a licensed agent.

11:14I've been on the other side. I know what it's like to have a business for sale. So when I'm looking and talking to buyers, I want to know one thing, John, can you be a, will you be the one to close? Are you going to be the one close in this business? I can talk to a hundred buyers, but I have to be able to discern as a broker who is the best candidate only takes one. But if I choose the wrong buyer, I'm not going to close this business. Guess what? Business brokers are not going to get paid. So the buy box is this tool. This think of it is, is this this PDF basically where you shine. I don't know if you, if Seth Godin, you know, Godfather of marketing, the purple cow.

11:51I don't know if you read that book, it came out of 20 years ago. Such a great book. It changed the way I look at the world and come with, when it comes to marketing and the thing is we think about it right what is it the book talk about you're driving down the highway or the freeway wherever you're at and you see you know rolling hills a lot of green and you start to see black and white cows and they're everywhere you look and then all of a sudden you just become numb to them because they all look the same until you see a purple cow this purple cow looks different and immediately you pay attention that's the effect that having And a buy box creates on the mind of the receiving end.

12:26When somebody looks at a document that basically answers the questions, the who, the what, the why, the how, and the how much, before questions are even asked, you are answering them. It makes you rise to the level like you know what you're talking about. You're not competing with the big boys. So that's buy box. Now, deal flow. Now, there is a golden thread, John, weaved in the process of emergence and acquisition. When you're buying a business, everything is correlated. Now, the deal flow, which is, you know, when you're looking at deals and you're starting to get traction on deals, it's a direct correlation between your buy box.

13:06You know, in the buy box, we teach, like, you cannot be a subject matter expert or everything. You can't be a jack of all trades and you're trying to buy a business because of these things called management experience. Now, if you go to an SBA lender and try to buy any business, hey, you know, you and I have been pretty good. You know, I don't have a lot of things, but can you and I buy a dentist practice? We're not dentists, right? At least I'm not, right? How can I actually justify buying a dentist practice? So there's a know-how, John, how to buy a business. You've got to understand your strengths, your purpose, your passion, your profits, which is gleaned from your resume.

13:39So we'll make a circumstantial case as to how to, your buy box, you have the best chance by picking three industry NAICS codes, you know, the six digit code that, that basically tabulates every industry. You come out from a position of strength. So you naturally go to market, not necessarily to shop us on the market. Here's the thing. Do you know that most businesses, John, are already pre-sold when they hit the market? That's crazy. Pre-sold. And you know what? I do that all the time. So what I do is I shopped around my deal, which, which you can, as a business broker to my thousand buyer list and actually shop there, get offers, get, you know, get, look at, everybody is privately looking at this deal before we make it public.

14:26That's where the money is at. So when you're actually looking at deals that are off market and you, and you do that, but you go to market, not necessarily to look for and shop for what is there, but what's most important, who is behind the listing? We actually want to know who the broker is and we want a relationship because Because who does business with who? People who know, like, and trust you. How can they trust you if they don't know you? If they don't know you, how are they going to like you? Our job is to shine with those who have the list, whether it's a full-stirmed owner or the actual broker.

14:59And then we take that relationship to the next level. We know, right? If you've never met this broker, chances are this list is pre-solved. But what we want is that relationship for the deals that are coming next. Do you see where this is going? I see where this is going. and I'm personally excited. Keep it going, brother. So think about this. So you get to befriend somebody. There are brokers out there that are closing 20, 30, 40 million dollars in purchase transactions of businesses. The thing is, these people have the goods. I have at any point in the market over 10 million dollars worth of listings for sales.

15:34Now, that's the thing. You want to develop a relationship with a guy like me and there are brokers out there who are very successful. You want to work with the top 1 % brokers. Now, once you have a relationship with them, you're going to get the VIP treatment. You're going to be included in their buyers list and then you develop a relationship. But we don't stop there. We go off market. We teach our students in our group how to actually have eloquent, smart conversations using the acronyms that the sellers use when they're not even thinking about selling a business. We come way before they even, we plan, just like the movie Inception, we plan the seed so they get to talk to us before they talk to a broker.

16:16So that's number two, John, deal analysis mastery. Now, once you have deal flow and the deals are coming in, whether they're on market or off market, deal analysis mastery is knowing how much is this business worth? Because he can say, hey, it's got a million dollars worth in that income. It's irrelevant. Here's the truth that you need to know whatever the broker or the seller thinks a business is worth it's irrelevant to us why do you think right and the reason for that is because we make our own valuation we are going to create our own valuation we're going to put a technical banking valuation we are actually pre-underwriting the deal before we actually make an offer we're actually getting the lenders to prevent a deal that may be on market or market our own lenders we're actually looking at sba preferred lenders who are looking at this deal and vetting it and we understand cash flow over debt service yes john there are thousands of businesses in fact last year we closed over 50 million dollars worth of business acquisitions some of those deals had over one million dollars worth of net income in their tax returns now you're a very successful guy john right you know what a good tax return looks like, right?

17:31Oh yeah. So, you know, if you're following in an S Corp, if you have a million dollars bottom line and you, by the way, you have a little officer comp of$200 ,000, you pay your fair share of taxes and that's okay, right? Because you're profitable, you're successful. You need that to show those kinds of, you know, net income in order for you to get a loan. So we know how to spot that. And we come within$50 ,000 of an actual valuation that people would pay thousands just by doing it right. That's how we make offers. So when we're working with brokers, we know, and they know that we know what a good valuation is.

18:06And we usually come under their market valuation, which means instant equity to any buyer. But there's more, right? So listen to this. I told you that this is an ecosystem. There is no way anybody can buy a business by themselves. Buying a business and getting into this game is not a solo sport. You're going to need an M &A attorney. You're going to need a diligent CPA. You're going to need an M &A advisor like me to guide you along. It's a community. And that's what the pros, the private acuity groups, the people who have$100 million, who actually write millions of dollars checks, they actually have a team.

18:52And so when you think about it, when you're going alone, try to buy a business, the wins, basically everything is against you unless you know how to play the game. That's what I found over and over again, Fire Nation is how good is your team? This isn't everything you do. And how Leo lays it out for this specific scenario to me, it's so true in this one as well. Because if you have the right team, you're going to get the right product, you get the right product at the right price, you are set up for success. But now the reality still is, Leo, that 90%, and that's a crazy number, 90 % of acquisition entrepreneurs fail.

19:26Your students have a much higher success rate. Just give us one BAM success story. I could tell you just one that is just going to make everybody think. I got a guy, his name is Tony, who was a fireman, got injured. He had no choice but to pivot. Long story short, he ended up buying a business doing a million dollars worth of cash flowing per tax returns business, move across state lines, and is now the CEO of a company doing $6 million a year in revenue. Now, why did my students succeed? Because we have built the ecosystem. Now, it's not a solar sport. You need accountability. You need connections.

20:11and you need community. And I know you're big, John. You're big on community. Big time. Eagles tend to fly with eagles. I am big of that. So, you know, and I think that, and there are many stories like that. But here's the thing that I need to understand. Buying a business is not the easiest thing. Now, people think, oh, yeah, I bought a couple of properties, even buy commercial real estate. Buying a business shouldn't be any different. Oh, that's the farthest thing from the truth. So where, why do you think 90 % of people fail? They go at it like thinking that they're going to, I got a resume and I got$100 ,000 in the bank.

20:48I'm going to go shop for a business. And they're going to hit their face over in the wall over and over again. And I always say this, I know this is something that you and I discussed before, but why you're buying a business to me, it's more important than how you're going to buy a business. Why, right? So here's the thing. It's not easy, right? As we established before, right? And I always tell them, we probably talk to 400 people a month wanting to join a group, 400 people a month. And we only select those who can look us in the eye, me and my team, and say, look, when, and I don't know if you heard this quote from Tony Robbins before, change happens when the pain of staying the same, it's greater than the pain.

21:39Yes. Yes. You heard that, right? Oh yeah. And that's exactly what we tell people is like, look, Oh yeah. I want to buy a business. You know, I've been working with the same company for 20 years. You know, it would be a good idea to buy a business very nonchalantly, you know, yeah. You know, if I buy gray or a bunch of properties, when somebody is like not nonchalantly about buying a business, go, why are you even a fault? Why are you here with us? Right. Because let me tell you, if you think it's going to be easy to buy a business, you got something else coming. And we tell them you're never going to be able to buy a business, right?

22:08Because I want you to think about buying a business like breathing when the pain of change, right? When you realize you have to change. Now, I just think about the story that I told you in 2004, when I was laid off, I have no money. You think I was desperate at that time? That's all I could think about. How am I going to feed my family? You know, you have a, you have a newborn. Can you imagine as a father? What, how am I going to provide for my family? I did it on my own. It took me six months to buy a business that at the time was doing$50 ,000 a month, maybe about$600 ,000 a year in revenue.

22:42And it may seem like a lot, but then that was not the net income. That was just the revenue. And I turned it into the largest non-medical franchise in the U S and back in 2008. And I was featured in entrepreneur magazine. Now I did it because my why is my family, my wife, my kids, I needed to prove something to the world. That's why I did it. Now, if somebody tries to buy a business and there's nothing in their gut, the fire in the belly, they stand no chance. Guess what happened? That is the 90%. They cruise around, they browse around, they get some listings, they get a couple of notes and get what they, what do they do?

23:19Oh, maybe mine, a business is not for me because their, their, why is not hardwired into their heart. Fire Nation, I really hope you're taking in what Leo's breaking down because man, this is inspiring stuff from somebody who's been there, done that, I started at the ground level and worked his way up to where he's at now. So Leo, Fire Nation's listening. They're hearing you. They want to connect with you. What is your call to action for our listeners today? Connect with me. Get to know me. Get to know our team. I know you're going to drop the link on the show notes, John, but Instagram, my handle is Leo E.

23:55Landaverde. By the way, I have a YouTube channel and I have 400 videos out there. 400 videos. I've been teaching this stuff for years, John, since 2020, at the beginning of COVID. You can look me up. If you could just look up my name, Leolanda Verde on YouTube, subscribe, follow me, get to know me, get to know what we do. And just go to businessacquisitionmastery.com, businessacquisitionmastery.com to know more. If you're ready to change your life by buying a profitable business, we can totally help you. We just need to be aligned with your why. Fire Nation, you're the average of the five people you spend the most time with.

24:33You've been hanging out with LL and JLD today. So keep up that heat. And for links to everything we talked about, Instagram, the YouTube channel, the URL, visit eofire.com, type Leo, L-E-O. In the search bar, the show notes page will pop right up, businessacquisitionmastery.com. Leo, thank you for sharing your truth, your knowledge, your value with Fire Nation. For that, we salute you, brother, and we'll catch you on the flip side. Thank you. It was a pleasure. Hey, Fire Nation, a huge thank you to our sponsors and Leo for sponsoring today's episode. And Fire Nation, what can 4 ,000 of the world's most successful entrepreneurs teach you?

25:10How about how to become, how about how to achieve financial freedom and fulfillment? My first traditionally published book, The Common Path to Uncommon Success, is a revolutionary 17-step roadmap that will lead you to the lifestyle that you've been dreaming about. This book took me 10 years of accumulating the genius of the world's top entrepreneurs, and you can get it all in one place when you visit UncommonSuccessBook.com. I'll catch you there or on the flip side. Fire Nation, this is your year to get unstuck and to grow a successful business. Attend the world's highest rated business growth workshop taught personally by Clay Clark, and now featuring football star Tim Tebow and President Trump's son, Eric Trump, at Thrivetimeshow.com slash EOFire.