And so we're going to cover what's the difference between a stock purchase agreement and an asset purchase agreement because they're, they're pretty fundamental and often in the LOI or the letter of intent, it's going to be listed whether they want to do a stock purchase agreement or an asset purchase agreement.

And so as both a seller and a buyer, often if you don't know which one to do, and I'll give you exceptions to the rule before we get through the entire video. But I like asset purchase agreements and there's some fundamental differences, and I'm going to go into those right now. So an asset purchase agreement means you're buying the assets of a company.

So you're going to set up another shell company and are going to buy the assets and you're going to put it in there. So. Uh, for example, when I was buying a, I personally bought a boat company I boat manufacturer for, for fly fishing. And many of you that know me know that I love to fly fish and we're up here in my mountain house right now and it's a raining day.

And I decided it's probably good to get some work done. So I bought it with an asset purchase agreement. And so when you do that, all you have to do is just get the assets of it and put it in there. So the differences are the liabilities of the old company. Don't transfer. So if they owe the bank $100,000 you buy the assets and you put them in there and they're unencumbered, and then they have to pay off the debt. https://vimeo.com/389028622

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Put an operations manual together to make the transition as easy as possible. And all of this is going to be, is going to help you when you put the right team. Find the right appraisers, find the right brokers, and if you need any help with this, give us a call here at freedom factory. You know, please hit like and subscribe and thanks for watching.
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Find out more about Robert Hirsch

Freedom Factory
5500 Greenwood Plaza Blvd., Ste 230
Greenwood Village, CO 80111
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Hi there. It's Robert Hirsch from Freedom Factory again, and I want to talk to you today about what I see as the most undervalued asset class on the planet. And that's small business. If you're to go buy a small business, and let's say it's making $200,000 a year and it's in an average industry, and you know an average thing, you might be able to buy it for three times earnings.
And what that means is the purchase price of the company would be $600,000. Now a lot of guys are watching saying, you know, maybe I don't have a $600,000 check or a 6 million check or a 60 million check. Put whatever size is appropriate for you, but you can go get things like small business loans.

You can do seller carry notes. Often you can buy a company throwing $200,000 a year, for only a hundred or $200,000 into it or less. And when I look at the stock market, let's say a company is trading for 20 times earnings. So if it's earnings or $1 million, it's trading for 20 million is its market cap.

Well, it's much more interesting to buy a company at three X. They want a 20 X, and you know the math is pretty obvious. But if you have an entrepreneurial skillset and you're willing to work hard and sales and marketing and entrepreneurship. There isn't a more undervalued asset class on the planet. You know, me personally, I've made all my money from buying, selling, and operating small businesses over a 28-year career.

If you have any questions about any of this, please give us a call it freedom factory. Thank you so much for watching. Please hit like and subscribe and we'll see you soon.

Freedom Factory
5500 Greenwood Plaza Blvd., Ste 230
Greenwood Village, CO 80111
Phone: 844-MAX-VALUE (844-629-8258)
www.FreedomFactory.com
g.page/freedom-factory-denver

5500 Greenwood Plaza Blvd., Ste 230
Greenwood Village, CO 80111
Phone: 844-MAX-VALUE (844-629-8258)
https://www.freedomfactory.com/
https://g.page/freedom-factory-denver
Also Follow Freedom Factory here
https://vimeopro.com/freedomfactory/business-brokers

And, you know, and long story short, I became a broker because the whole situation could have gone better. And so what I learned was that that brokers, all they do is sell businesses and primarily entrepreneurial businesses. And sometimes they sell it to other entrepreneurs, sometimes they sell it to private equity firms, smaller private equity firms, sometimes venture capital's, sometimes small roll-ups.

But they're really focused on helping entrepreneurs get the maximum value for their business. Now, investment bankers and I don't know, they're just very different. And part of our team here at Freedom Factory are people that came from an investment banking background and they did really large deals, you know, primarily, you know, deals over 100 million and many deals that are five, 10, 15, 20 million are way too small for them.

Or they just, you know, essentially the fees aren't high enough to make them pay attention. So it's estimated that roughly 80% of all M&A deals are done by brokers, but roughly 10% of all M&A revenue is done by brokers. And again, you know, our average selling price are companies that do EBIDTA of roughly two to 20 million.

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Freedom Factory 5500 Greenwood Plaza Blvd., Ste 230 Greenwood Village, CO 80111 Phone: 844-MAX-VALUE (844-629-8258)
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And it's not time to sell your business. If you're not sure about that, I would think a little bit harder, and I would dive in and say, do I have the right vision? Do I have a clear vision on where

I'm going to take my business in the next one, two, three, maybe even five years? What do I need to do in order to resolve it and feel great, and feel like I've accomplished what I've accomplished? Now, if your business is growing 40% a year or 50% a year, you probably have a clear vision. You're probably executing really well and you probably feel in flow. On the other hand, if you've been growing at 5% for the last five years, well that's a little bit more difficult, and perhaps somebody else can do it better than you.

Whenever my business is growing at 5%, I'm looking to sell. I'm saying, okay, I need an operator. I'm more of a strategic guy. And how do we focus on really creating something that is amazing, where you're on point and on purpose, but your growth rate will be a big indicator of that.

And the final thing is, you have done what you came to do if you, if you went into your business, when I came to the business brokerage business, i knew I wanted to change the way that entrepreneurs buy and sell businesses. I've started three of the largest brokerages. I hired, one of them, or I've acquired them to get the people, and I've really made it a much more efficient market. And that's what I set out to do when I came here.

But if you left your current business and think about this for a second, would you feel resolved or would you feel like you didn't finish the job you came there to do. So I looked back at it and I say, okay, is my business serving me. Am I clear and engaged every day?

Do I have anything left to accomplish and do I have a fresh set of ideas to really implement that vision? These are the things that walk you through it. It's a bit of an imprecise science, but overall it's really a gut check. What do you think? Do you think it's time to sell your business?

Because usually if I think about selling it, it's about six months too late. So if you have any other questions on this or anything else, it would be our privilege to help here at Freedom Factory. So just give us a call, please like and subscribe. I'm Robert Hirsch. Thank you for watching and we'll see you soon.

Freedom Factory
5500 Greenwood Plaza Blvd., Ste 230
Greenwood Village, CO 80111 Phone: 844-MAX-VALUE (844-629-8258)
https://www.freedomfactory.com/
https://g.page/freedom-factory-denver

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Bankers don't speak entrepreneur and entrepreneurs ure don't speak banker. This was a different type of guy. He just wanted me to grow it  and the way he sold it, and I'm not 100% sure, I think he called five or 10 guys that he went into business school with and his list of usual buyers., and he sold it to them. When I look back at it, I realized, I sold it way under what I could've sold it for, and I left a lot of money on the table. If I went back to do it again, that certainly isn't the way I would do it. So anyway, long story short, fast forward here and I've started three of the largest brokerages.

I've hosted a TV show on  A&E and history on selling businesses, and all I do is help entrepreneurs sell their business. The number one thing that really drives the sales price is deal tension. Right? And so there's a couple of ways to think of it. One, you want to get as many interested parties as you can before you get into the LOI phase or the letter of intent phase.

Two, you want to get them to raise their hand at the same time, right? So if you have, if you have two buyers at the same time, they're going to be competing for your business and there's only one, and ultimately that's going to drive up the value for you and your business and your family. If you have two buyers at different times, that doesn't affect it at all, right? It doesn't give you, you know, the deal tension. If you have one guy or gal that wants to buy your business and you have another one three months later, that doesn't help you. So how do you run a process and how do you get buyers to fit to your timeline as opposed to you trying to fit to their timeline?

That's what an exceptional broker will do. They're going to create deal tension. They're going to get people interested. I'll give you an example. One of the things that we do is when we do a a month where we do questions and answers before we give any management meetings with the entrepreneur and what that does, let’s say a buyer sends in six questions and we send back 92 responses.

They say, well, why'd you send me 92 responses? I only asked six questions. Well, the answer for that is really simple. We want to give everybody the same information to put forth their best letter of intent or LOI, and it also psychologically readjust the buyer's thinking to understand that this is going to be a competitive deal.

They're not going to be able to steal your business. And two, there are other people interested and this is a valuable commodity. So our whole process is designed like that all the way through because anybody that's been doing this for any period of time is going to understand that time kills deals.

And what we want to do is drive it through. Have the buyers fit to our process and we want to run it as smoothly as we can. And that's why we do 147 day process here at Freedom Factory where most businesses, not all, it depends. Sometimes businesses are more complex or a little bit larger, but we really try and drive it through and 147 days, which is, pretty exceptional, when it can go from agency agreement to getting the biggest check of your life in five months. So anyway, I went in a little bit more detail on that, but specifically, finding the right broker is so critical. One other thing is some brokers are like real estate agents or transaction brokers.

They're going to represent both sides. They're going to represent sellers or buyers. At Freedom Factory, all we do is represent sellers. All we do is get the maximum price for the business. We don't represent buyers. We don't take both sides of a deal. We don't recuse ourselves. We just are in the entrepreneur's corner.

That's the reason that we get up every day. So a couple of other quick questions on selling your business. How do you find a buyer? And I'll tell you a little bit about what we do. We advertise through 27 different channels online, which is good. We go through all the databases.

We find strategic buyers. We do an outbound campaign, and we synchronize that to the inbound campaign. But we also do a marketing campaign for your business. We put together a video, a sizzle reel. We put marketing dollars behind that and we get as many people interested as we can.

One other quick question, right? So let's say we go through the process, we create deal tension. We get you an LOI that you're ecstatic with. And ultimately you control the deal. You control whether it makes sense for you or not to sell it. But a lot of entrepreneurs say, how do I know if I'm doing it right?

Maybe my contracts and you get into the nitty gritty and the contracts are one of those things that if you haven't seen a lot of them, either a stock purchase agreement or an asset purchase agreement, if you haven't seen a lot of them, there's a lot of little things that can kind of sneak in there that really affect the sales price.

And that's why you want an exceptional broker in your corner. That's why you want someone, and again, I'm not an attorney, I see a lot of contracts. We certainly recommend using a transaction attorney, but also we can understand what standard, what's not, what's typical, what's atypical. And we can point that out to you.

And as you go through the negotiations, part of it isn't just finding the highest price. Part of it is finding the perfect fit. And what I've found is the more people that are interested, then the more letters of intent you get, then it allows us to define just the right buyer and allows us to find the perfect fit for you.

So if we can help you out with this or anything else, please give us a call at Freedom Factory. Please hit like and subscribe. Thanks for watching and we'll see you soon.

Freedom Factory
5500 Greenwood Plaza Blvd., Ste 230
Greenwood Village, CO 80111 Phone: 844-MAX-VALUE (844-629-8258)
https://www.freedomfactory.com/
https://g.page/freedom-factory-denver

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As entrepreneurs, we usually have one thing that we do better than anybody else. And I've mentioned this in a few other videos, but, people really wanted me to spend more time on it and show you exactly what I'm talking about. So, as entrepreneurs, there's two things that really help, mentors and a peer group.

I've been a part of the time what was WYO and is now EEO or young entrepreneurs or entrepreneurs organization, a young presidents or YPO and also Tiger 21 but there's great groups to figure out of entrepreneurs and build that peer group and there's great mentors and there's a skill set to being a great mentor and also to being a great mentee, and this all adds into it.

And then you can also do a lot of self work and a lot of testing for cognitive or things that you think such as Myers Briggs or an enneagram or cognative, or things that don't change or instincts. The best test I've found for that is Kolbe and Kathy Kolbe has done a great job putting all that together.

And, and what's different about a cognative as opposed to a cognitive is it doesn't change if you take it, whether you're seven, 47 or 77 years old. But taking those tests, understanding what you're your best self is, and also getting an understanding of your shadow self or your stress self, and understand the triggers from when you go from one to the other can really help your efficacy, not just as an entrepreneur, but as a leader and a manager.

Getting really clear on that can really allow you to bend time. Or as I tell a lot of my consulting clients, I help entrepreneurs bend time. What does that mean? Right? So we're familiar with the 80/ 20 principle - 20% of what you do produces 80% of the results. Well, I think when you become an expert at something, it really turns into 95/5 but the way that works is, so let's say we'll just take 80/20 for simplicity of numbers, and let's say 20% produces 80% of your results.

If you can get rid of the other 80% of things occupying your time, maybe things that you're good at but not great at. For me, I'm a great leader but I'm a mediocre manager. I got rid of all my management. I've got great business partners that helped me with that, and I just focus on that 20% and if I could do that 20% five times, which is 100% of my time, I can create 400% of the value.

Now, if you subscribe to my line of thinking, which is 95/5 and 5% produces 95% of your value. Well, if you can get rid of the other 95% and just do that 5% 20 times, all of a sudden that's 1900% of your value, or almost 20 times. It's 19 times, almost unbelievable. The sharper you get there, the easier and the more effective you can be. I think about it almost like a video game. Now, when I grew up playing video games, I had an Atari, my controller had one button. I play games against my kids and there's 20 buttons and I'm not very good. So for purposes of this conversation, let's think about it as one or two buttons on the controller.

Like a Nintendo, and so you have the stock move, the move that everybody can do, kind of a button, punch or kick or jump. But every character has their special move or what I like to refer to as the B button. This guy breeze fire. This guy does a back flip. This guy does blankety blank.

But figuring out your stupid human trick is really figuring out your backflip. And once you figured out your backflip, stop doing everything else and just do your backflip over and over and over again, and you can produce disproportionate results in your company. And that's really how you can shift the line.

And instead of growing at 10% or 15%, you're growing at a hundred or 150%. So again, figuring out the one thing that you do better than anyone else provides tons of value to your company. It'll make you a better leader. It'll make you a better entrepreneur. If you have any questions on this, why don't you give us a call it Freedom Factory.

Thank you so much for watching. Please like and subscribe and we'll see you soon.

Freedom Factory
5500 Greenwood Plaza Blvd., Ste 230
Greenwood Village, CO 80111
Phone: 844-MAX-VALUE (844-629-8258)
https://www.freedomfactory.com
https://g.page/freedom-factory-denver

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But what freedom really is, is being able to make a choice every morning when you wake up, being able to be on point and on purpose, where purpose and passion really come together and understanding what that looks like. A lot of people think that freedom, they say, well, Robert, are you free? And I certainly defined myself as a free and sovereign man. They say, well, why are you doing Freedom Factory? Why did you do all these brokerages? Why are you doing the TV show on A&E and history? What's going on? And I think I define freedom differently than other people.

Some people that ask that question, they think that freedom means doing nothing. And the reality is, I'm up at my mountain house and it sure is beautiful and I love to come up here to get away and go fishing, but I couldn't do every day. I would be bored. And I would feel like if Robert fell in the forest, is it going to make a sound?

It's not what really drives me. I love to work. So when people think about freedom, they think it's disconnecting from everything that they love so that it doesn't matter anymore. And in fact, I think it's just the opposite. So when I think of freedom, I think of it. What is it that I have to do? What is it that I cannot do? What drives me? If you think about it like an oxen, right? An oxygen driving a cart, pulling a cart, it's got this big yoke over its shoulders and people think freedom. They just want to get all the yolks off of them. They want to fire their boss and they want to fire their customers and they wanted to do this. And that's almost the opposite of what I see freedom as.

What I see freedom as is, what do I have to do. What do I want to do with the rest of my productive life? What can I not do? What am I going to attach my yoke to? And so many entrepreneurs, they would come to me for consulting and to sell their business and they'd say, I have no idea how to do it. For me, it came down to who's my tribe? Well, it's people like us. It's the entrepreneurs in the world, and what can I do for them? I can help them stick the landing and put resources and time and money in their pocket, and change not only their family and their own destiny, but I can allow them to build what it is that they find most important.

As entrepreneurs, we're the builders and what is it that we need to do? And that to me is freedom. It's not how do I free myself of everything and just float alone in the ether. It's how am I free to wake up and help my tribe every day? Now, if you have any questions on this or anything else, why don't you give us a call at Freedom Factory. And thank you so much for spending your valuable time with me. Please hit like and subscribe. I'm Robert Hirsch. We'll see you soon.

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Freedom Factory
5500 Greenwood Plaza Blvd., Ste 230
Greenwood Village, CO 80111 Phone: 844-MAX-VALUE (844-629-8258)
https://www.freedomfactory.com
https://g.page/freedom-factory-denver

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A lot of people talk about EBITDA, which is for taxes, and that can be adjusted into the seller's discretionary cash flow. But you figure out how much your businesses is worth based upon how much it earns., and it depends. There's a lot of factors, what industry are you in, how long has it been around? Do you have a customer concentration issue? What that means is, do you get 80% of your sales from Walmart, or do you get no more than 20% from any one customer? There's a lot of intangibles that go into it. BUt if you have a smaller business, let's call it a million in earnings. In general, it's worth roughly three to five times earnings.

Now, that is super rough, and it gives you just kind of a thumbnail that you can use. And of course, we can answer it in more detail when we look at it, but what that means is, let's say you have a customer concentration issue, let's say you have, whatever it may be, you have some, you have some competitors that are taking business away from you aggressively, you're probably going to be on the bottom end of that. Now, if you have some intellectual property that's defensible, or if you’ve been around for an awful long time, or if you have some sustainable, competitive advantage, the way I like to think of it is how big is the moat around the business or how big is the moat protecting you? Then you're going to be on the upper side of that.
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So there's always a range, and the intangibles really take you up and down that range. Now, a big fear that a lot of entrepreneurs have is, what if I undervalue my business when I go to sell it and this is my largest asset? For a lot of people, they say the home is the largest purchase you're going to make.

Now, if you're an entrepreneur like me. That's not exactly true. It's your business and buying your business and selling your business, and you're trying to think specifically, Hey, how do I not leave money on the table. And conversely, you don't want to overprice it and get people not interested.

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Freedom Factory
5500 Greenwood Plaza Blvd., Ste 230
Greenwood Village, CO 80111
Phone: 844-MAX-VALUE (844-629-8258)
https://www.freedomfactory.com
https://g.page/freedom-factory-denver

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