1874 – Helping 10x business value and cash out tax-free with Marc Adams

0:28Hey there, thoughtful listener. million in revenue. Just head to upmyinfluence.com and watch my free class on how to create endless high-ticket sales appointments. You can even chat with me live and I'll see and reply to your messages. Also, don't forget, the thoughtful entrepreneur is always looking for guests. Go to upmyinfluence.com and click on podcast. We'd love to have you.

0:58with us right now mark adams mark you are an author and speaker and you help businesses 10x their business your book is secrets to 10x in your business and cashing out tax-free doesn't sound like a bad proposition your website is acquisitions the number for you so acquisitions for you.com. Mark, thank you so much for joining us. Thank you for having me, Josh. It's a pleasure to be here. Yeah, well, so, okay, I'm intrigued. I'm leaning forward. Tell me, how does 110X our business? Well, perhaps I could just give you a little bit of a backstop as to why. And so my background is corporate and investing.

1:40And what I tended to find, if you go back to 2020, before the pandemic really kicked in. At that point, I was looking at 90, 95 companies that were in our pipeline of businesses that we would, if you like, from a private or private equity point of view, like to do more with. But unfortunately, you tend to find that nine out of 10 companies in the SME sector, so let's call that 3 million to 30 million. Of course, it's zero to 30 million, but for this conversation, 3 million to 30 million tend to come to market and they don't sell within a year or they don't sell within two years and they come off the market.

2:22And there are reasons for it. One of the reasons does tend to be when you think of the broker community in the SME space, it's a little bit like real estate agents where they'll overprice the business to get the listing. And then that like a property, if you're overpriced on a property, it's going to be on the market for a long time. If you're underpriced on a property, it's snapped up immediately. And if you get it about right, you're into a three, six-month cycle. In most normal markets, in today's market, you'll probably be there for longer before you're able to sell it. And that's a real problem because in that SME sector, there is going to be a huge change of ownership of wealth in the next decade or so, but mainly around the baby boomers that are coming up for retirement.

3:14And those guys kind of get stuck because a lot of the time that a value is put on a business, it will reflect the blood, sweat, years and tears that they've put into growing that business, 10, 20, 30 years or more. But it doesn't necessarily reflect the profit level in the business, which is then got a multiple that gives them a value. And so my son, who was then 10, and I were chatting one day, In fact, if you look behind me, although this won't come out on audio, of course, there's a little picture of three kids, the one in the middle, the one on this one here, the one on the furthest that side, who was 10 at the time.

3:56In my attempt to teach them the ways of entrepreneurialism, because I want them all to run their own businesses, he and I were talking about these companies. And he said to me, you need to be helping the nine out of 10 companies that don't sell that. and I said but they're difficult to buy because they're too expensive and what private equity normally does is wait for a couple of years for the price to come down because they want to buy low and then they'll add some value to that company hopefully and then they'll sell it high it doesn't always work but that's the principle and so I said well why he said well because the companies that sell don't need it in the words they don't need the money he said the ones that don't sell do I said why do they need it he said because what are they going to do to look after of their kids.

4:37At this time, he's thinking Lego sets, right? And I'm thinking, but it planted a seed with me because I'm not in a scalable business. We're currently oversubscribed with the companies that we help. We only help five or six at a time. So I started thinking about how would you cover that gap? And what would you do? Well, you can either wait for the price to come down, or you could start thinking about how would you work with a business owner to improve the value of it and help them exit that business with 10 times the amount of money in their pocket. Now, the title of the book's a little bit misleading because it says 10x the value of your business and cash out tax free, but it really should say 10x what's in your pocket or in your bank account.

5:22And so what we find, and I think most people in private equity would tell you this, is people that run these businesses are brilliant at their thing. But they may not know anything about, well, I'm a classic. I was in mergers and acquisitions for a number of years doing all the due diligence on the technical and some commercial on the back end, working for other people before I went out on my own. And for a lot of that time, I thought you had to write, you know, companies like Thomson Reuters, like EMC as they used to be, or Dell. You know, you'd have to have a big deep checkbook and write a check to buy a company.

5:59Come to find out that's not how it's done at all. A lot of acquisitions are done on an initial consideration and a payout over a period of time based on future earnings. So how do you cover the gap between what the owners of the business need and what they would like and what they need for the business and what it's currently worth? Well, you tend to find that they may not be doing that much in the way of marketing their business. For example, I can normally look at a company set of accounts and normally look at their website and say to you that's probably a 10 15 uplift in revenue there particularly from a website because you'd be amazed at how many companies don't use a pixel and so anybody that visits their website and then leaves doesn't get retargeted because they don't even know so there's an opportunity for uplift there it stunned me when you find this out and you'd be amazed how much is sort of left on the table in terms of how they might be spending their money for example although outsourcing has become much, much more popular and a core part of business, too many companies look at it and say, we're taking jobs away from America, but you're not.

7:08You're putting lower cost resources outside of the States and outsourcing to generate more revenue, which employs more people back in the United States because you can't outsource everything, right? So just looking at those two things is normally a low hanging fruit as two things you could start to look at from the socials, from the digitals, where the older generation, not in all cases, but in many cases are not doing enough and not listening to the younger people that might be on their team, especially if it's a boring business where a lot of younger folk don't want to work. So, and then they start to think about, you know, I don't know whether you've done any acquisitions in your career, Josh, but you can sometimes double the business in terms of size and profit in a day when you make an acquisition.

7:49Yeah. But you're doing it with other people's money. So just those three things might help an organization or business owners a long way down the line of 10x in their value because you then start to find that anybody doing half a million or less than a million in profit rough and tough you're probably going to be worth one times your profit in the UK and maybe 0.7 times your revenue in the US those are rough and tough numbers look at this by sell if you want to get a more accurate multiple by sector but less than a million you're worth a lot less as a multiple than you are more of a million nobody's going to argue with that so if you can get the business to 1.4 1.5 million in terms of its EBITDA profitability and you can start thinking about what you're doing in digital for example I'm not saying that is going to be the case but you look there and how you might save some money and you start thinking about maybe you don't take a holiday and run it through expenses because it might save you on the P &L and the tax this year but it's hurting your valuation next year those kinds of things it doesn't take too much to sort of five, six, seven, eight X to value with the business just there, because you're going to get a multiple if you're selling privately that takes you from, say, let's call it one to two times sub a million in profit to five, six, seven times above a million in profit.

9:08These are rough numbers, but it's a formula. And then if you can take that to over 2 million, 3 million, 4 million in profit, because you're requiring and bringing in other ways of driving revenue into new markets, cross selling and upselling and those kinds of things, you start to get the opportunity to sell to a public company where your multiples will be 10, 12, 14, or 15 potentially. These are all rough numbers and none of them apply to all companies. They're just a direction and a formula that most business owners, baby boomers in particular, may not be thinking about when they start to think about what could they do to grow and sell their business.

9:43And then the other piece of it is when you sell it, how do you sell it in a way that minimizes or zeros out your tax. Now, we do have a formula, which I'm kind of shy about revealing, that does allow a company, if they follow the system that we suggest or the guidance that we offer them, the potential to cash out tax-free. But if they don't, there could be lots of reasons why they might not. For example, unfortunately, when you get to the baby boomers retiring, you're also going to get to the point where people are coming up to the end of their life. So they may not have the luxury of a year or for 18 months to or two years to take the steps that you need to take to 10x and tax free but you could still tax minimize and so many business owners don't have that knowledge and unfortunately when you're talking to an average cpa their average accountant wouldn't have this knowledge either so you've got to go to sort of specialist so i can't help everybody and that's why i put the book together so that following the tips and tricks and the areas that they're in that And there are just 12 areas in the book.

10:49We've talked about three or four of them in a very broad brush outline in this conversation so far. But you could follow along and adapt three or four of those things into your own business and significantly increase the value of it and put yourself in a position where you could then cash out tax free. So I didn't write the book because I wanted to make a lot of money because you don't make any money when you write a book. But I did want to do more to help other people help themselves. And it's a selfishly driven agenda, if I'm really honest, because I want my kids to run their own businesses and be financially free.

11:21And my youngest said to me, I'd like to be financially free, but I don't want it to take me as long as it took you, Dad. Thanks a lot, Tommy. But for him, and so with that in mind, in order for them to see, you know what it's like with kids and parents, they'll listen to anybody else except their parents. Oh, of course. Yes, of course. so the legacy i want to leave them is going to be in the form of youtube videos which if people find value in or the book if people find value in they might when they're ready and they're not at the moment the teenagers um start to pick up on some of this stuff and if i can show that it's helping other people or has helped other people it'll give them more confidence to move in that direction itself so to help my kids which is my selfish agenda i want to teach them to fish but not give them the fish i've got to help other people first and that's why i put the book together, try and help other people.

12:11And so far, I'm not JK Rowling. This isn't going to sell millions of copies. But so far, it's been out on Amazon for just over a month now. And it's had some, I'm privileged to say, some nice reviews and a couple of really good reviews from industry experts in the M &A field that I respect. So I was kind of delighted and not expecting that. But I'm not going to be JK Rowling. This isn't a book that sells millions of copies. This is a business book that's designed to help people. Now, to my surprise, I have found an awful lot of people that I wasn't expecting in the younger generation. You tend to find, or I'm finding, let's say those that are over 35.

12:46No, those that are over 55 and those that are under 35. I can't speak to the middle band. But anybody that's young coming through these days because of social media understands wealth creation and understands branding like it's on the back of their hand. They just don't have any issue with it. But the older generation don't think that way. They've come through from a business point of view, running P &Ls successfully and building profitable businesses from the numbers point of view. And so they don't understand brand creation as fluently as the younger people do. So what I'm finding with the youngsters is they don't understand the steps that they might take to put together the backbone and the nuts and bolts of running a successful business.

13:25If it's outside of something that you are not talking about the Kardashians that have made a fortune on the social media side of it and well played to them. I'm talking about the more traditional people that are running, if you like, boring businesses all over the world, let's say, or traditional businesses, not boring, but traditional businesses. You know, those kind of people, especially the older ones, understand P &L a lot more as they go on their journey, more than brand creation. What surprised me with the book and some of the YouTube shorts that I've been putting out is that group are coming through and asking questions because they're seeing it as a stepping stone to what do they do to put the building blocks in place like Lego bricks to, you know, take that next step.

14:03I wasn't expecting that. I wrote the book for the retiring generation because so many of those deserve more when they sell their company. But unless they take some simple steps to improve the performance and the profitability of the company, it's going to be difficult for them to get it. Yeah. The book, Mark, is Secrets to 10xing Your Business and Cashing Out Tax-Free. Your website is acquisitions for you. Again, Mark Adams, you're the author of Your book, it's on Amazon, I assume. Yeah, it's Amazon, Kindle, and Audible. Excellent, excellent. All right, great. And when someone goes to acquisitions for you, what would you recommend that they do?

14:41Well, acquisitions for you is a mirror of my personal brand. And so I started the acquisitions for you business as doing exactly what I've done in the book. I'm in the process of switching it now, Josh, to build my personal brand an awful lot more because people buy into individuals, not companies. So when you think of me and the company, They're joined at the hip and they're at one at the moment. So everything that we've just spoken about is what you're going to see on the website. But any of your readers are listening and it makes sense for you. And if it doesn't edit this piece out, I'm quite happy to say through you, you know, the first 10 that come to you and say, I'd be interested in the book, I'll give it to them for free.

15:15It's not a profit making exercising. I don't have a QR code or anything I can offer you for that. We'd have to figure out how that would make sense. All good. All good. Just make sure to our friend, just note that on the contact form. Again, the website acquisitions for you. Mark Adams, again, thank you so much for joining us. Again, your book, Secrets of 10Xing Your Business and Cashing Out Tax-Free. Mark, thank you so much for joining us. You are welcome, Josh. It's a pleasure to be here and thank you for having me.

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