SEO Rockstars 2026: Day 1 - Joe Lau
Video: https://www.youtube.com/watch?v=HN68eAX7yHk
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[00:04] How's everyone doing? Good.

[00:06] How's this morning section? It was

[00:08] amazing, right? I learned so much.

[00:10] It's been a while since I was uh I'm I'm

[00:12] attended to like a expert kind of event.

[00:14] So, thank you for having me here. So, um

[00:17] today I'm going to tell you some I'm

[00:18] talk to you about something different.

[00:20] It's all about valuation. Let me ask you

[00:23] this question first. Who here is who's

[00:26] the first time here? I am only. Oh,

[00:28] there you go. Who's been here at least

[00:30] three times? Amazing. Five times.

[00:34] That's amazing. Why you guys keep coming

[00:36] back? Is it for the networking? Raise

[00:38] your hand if it's for the networking.

[00:40] Who use it for the knowledge?

[00:43] Who's here to try to make a lot of

[00:44] money?

[00:46] All right. So, that's it. No one here

[00:47] trying to make money on that side. All

[00:49] right. I hope you like to make money

[00:51] because this section is about making

[00:52] money. So what I'm about to show you

[00:54] today is how how do you two to four

[00:57] times your valuation without a single

[00:59] dollar without spending a single dollar

[01:00] on marketing. Who's excited about this?

[01:04] All right, let's do this. So I know your

[01:07] time is precious. I promise not going to

[01:08] waste your time. I'm going try my best

[01:10] to give you the best information I can

[01:12] compounding with 23 years experience of

[01:15] I have into just about 40 minutes. So

[01:17] but I need you to play full out. So for

[01:20] the one at home, if you can type in yes

[01:22] in the chat to play full and just give

[01:24] me 40 minutes, I promise it will worth

[01:26] your time. For the one that's here, can

[01:27] you give me a yes? You play full with

[01:28] me.

[01:29] All right. Thank you for the confidence.

[01:31] So in this presentation, I'm going to

[01:33] give you three things. The first thing

[01:35] is I'm going to show you what your

[01:37] business truly worth today and how do

[01:38] you actually figure it out and calculate

[01:40] it. The second thing I'm promise you is

[01:43] we're going to identify what is going to

[01:45] drive the value of your business so you

[01:47] can two to 4x your valuation when you

[01:49] decide to exit. And the last thing is

[01:52] we're going to figure out an actionable

[01:54] score for you so you can figure out what

[01:56] you need to do to implement to get the

[01:58] needle mover to get that valuation that

[02:00] you dream of.

[02:02] So real quick here there's no tracking.

[02:05] I don't even know how to do that. Uh I

[02:07] just want to take a have you guys take a

[02:09] quick poll here so I can kind of get a

[02:11] gauge on where are we in terms of sizes

[02:14] of your business and um you don't even

[02:17] have there's no optin for that email I

[02:19] just want to see where you are at two

[02:22] question what is your uh any revenue

[02:24] range and the second question is uh if

[02:26] there's an exit timeline that you

[02:28] thought about and I'll have a live poll

[02:30] right here and share with you in a

[02:32] second

[02:34] just two question to All

[02:38] right, let's see here. I got eight

[02:41] responses.

[02:45] Let me know when you're done too so I

[02:47] can check the result.

[02:52] All right, looks like most of you done.

[02:56] Okay, so looks like about might even

[02:59] need my glasses.

[03:01] Okay. About 47% of you do a little bit

[03:04] less than a million a year. About 27% of

[03:08] you do about1 to3 million in revenue.

[03:11] 16% do three or seven. Great job. And

[03:15] about 5% do about 7 million. So amazing.

[03:18] Amazing. And then about uh let's see

[03:22] here 10% want to within exit within 12

[03:25] months. 10% want to exit within 12 to 24

[03:30] and 15% exit in about two two to three

[03:33] years time frame and then wow 63% have

[03:37] no idea

[03:39] I love it this is a good crowd all right

[03:42] so personally I have found multiple

[03:45] companies failed many many times lost

[03:48] millions of dollars and luckily I was

[03:50] able to exit three of the company

[03:52] starting from scratch all the way scale

[03:54] to exit and here are the lessons that I

[03:56] personally have learned. Now, the very

[03:59] first time I exit, let's talk about the

[04:01] cool stuff first, right? To kind of show

[04:03] you what it's look like when you exit uh

[04:05] successfully. The very first time I

[04:07] exit, the first thing I did is I bought

[04:09] my uh uh wife a ring to engage. I bought

[04:12] myself two cars and a house. All right?

[04:14] So, that was in my 20s. And then the

[04:16] lessons I learned from that particular

[04:18] exit is seller finance structure. When

[04:21] you sell your business, most of the time

[04:23] depend on the price. If you sell more

[04:25] than a million, there's a big chance the

[04:27] buyer is going to ask for sell finance,

[04:29] meaning that you're playing bank. They

[04:31] want to, you know, like retain some

[04:33] percentage and then you only get it

[04:34] after a certain amount of time. So

[04:36] that's what happened. The lessons I

[04:37] learned is I did have a lawyer and

[04:40] accountant in that time, but I did not

[04:42] structure the deal properly. So when

[04:45] they default on not paying me, I lost

[04:49] hundreds of thousands of dollars. And

[04:51] not only that, I was stupid enough

[04:53] because I didn't know it was my first

[04:54] exit. I did not know to put in a clause

[04:56] to claim some assets back or personal

[04:59] guarantee like get the business back or

[05:01] takes his house. So he just walked away

[05:04] and still operating the business and

[05:05] just not pay me. So that's my first

[05:08] lessons and the lawyer would not tell

[05:10] you that and accountant will not tell

[05:11] you that. This is just personal

[05:12] experience. It happen all the time in

[05:14] seller finance. So that's my first

[05:16] lesson.

[05:17] Wait, why wouldn't it?

[05:19] Say what? because it's is in the

[05:22] contract when you the way without going

[05:23] into too much detail when you sell a

[05:26] business with seller finance basically

[05:28] what they give you is a personal note

[05:30] and in that notes whatever terms they

[05:32] put in that's what it is so in that

[05:34] terms I did not put in personal

[05:36] guarantee I did not put in what happened

[05:39] if you default right I put in the closet

[05:41] if you default I charge you 10% right

[05:44] that was it but then they can not pay

[05:47] and then you just wait and wait and wait

[05:49] and just to give you a tip. If someone

[05:51] not pay you any money, if they threaten

[05:52] to go bankruptcy, this pretty much done,

[05:55] right? Because the house, the bank, they

[05:57] might have a house, they have a

[05:58] mortgage, those are the first lean,

[06:00] right? So for personal note, usually you

[06:03] got nothing. You're the last in line,

[06:05] right? So that's the first sentence I

[06:06] learned. That cost me hundreds and

[06:08] hundreds of thousands. All right? And

[06:10] there and a cool story to tell. So this

[06:13] is my first exit, first lessons. Don't

[06:15] do that. So the second lessons I learned

[06:18] well on the second exit what it got me

[06:20] is it gave me the choice to really focus

[06:22] on a business that I was so passionate

[06:24] about at the time are multiple things

[06:26] going on right so my second exit allow

[06:28] my allow me the freedom to just hone in

[06:30] on one thing that I'm really passionate

[06:32] about which focus it really is the key

[06:34] to grow anything substantial and the

[06:36] lessons I learned from that business on

[06:38] exit is I ran the business for about 10

[06:41] years make lots of money great but

[06:44] toward the year eight and nine I started

[06:47] to get burnout because it wasn't

[06:49] exciting anymore right it's kind of like

[06:51] everything is great system is in place

[06:53] automated so I saw it at a flatline not

[06:56] dipping just flatline and before that

[06:59] since the first year I have almost

[07:00] double digit and triple digit growth

[07:02] year to year so it's become compounding

[07:05] pretty big but just because the last two

[07:07] years was flatline I got major discount

[07:10] by the by the buyer and and result I

[07:14] lost two multiple. Now, because of NDA,

[07:17] I can tell you exactly what was it, but

[07:19] let me just give you the math. If I was

[07:22] selling at a multiple, whatever that is,

[07:26] and my earning was a million dollar a

[07:27] year, that cost me 2 million just

[07:30] because I was selling flatline. If I

[07:33] would sell it on an uptrend, like let's

[07:35] say two years earlier, or continue

[07:37] maintain a little bit uptrend, I would

[07:38] make at least 2 million more with that

[07:41] hypothetically speaking. So, that's the

[07:43] lessons. Do not sell a flatline. Don't

[07:45] do that. So, last lessons I learned um

[07:49] from my last exit is um

[07:53] it's pretty cool. So, I was able to

[07:55] retire my wife fully and then I was able

[07:58] to move to for Miami and then put my

[08:00] kids private school, not work for many

[08:03] years and just truly find a passion

[08:06] project and I become investor and that's

[08:08] what I love to do and helping company to

[08:10] exit. So allow me that lifestyle choice

[08:12] and but that's also a lesson to learn.

[08:14] You would think like after exit two

[08:16] times, right? You got to be good at it.

[08:18] No,

[08:20] I mean I don't know why I didn't learn.

[08:22] Just so much going on. So what happened

[08:24] on the last exit is

[08:31] I did not sell on the flat line. I sell

[08:32] an uptrend, right? I structured it

[08:34] really well and this time was a cash buy

[08:36] and what it was what I left on the table

[08:38] was a little bit on the timing at that

[08:41] time the industry was getting hot and I

[08:45] made a personal choice that okay my

[08:46] business was designed to exit but I

[08:48] didn't ex I didn't exit in the best

[08:51] timing could be chances chances are you

[08:53] cannot time the timing but I did not

[08:55] exit because the business was ready I

[08:57] exit because I was ready I I was done

[09:00] you know for personal reason I was done

[09:02] so that left three eggs on the table.

[09:05] Remember that three eggs times the

[09:07] earning. So again, if that business was

[09:09] doing $2 million now, the six

[09:12] threex more.

[09:13] Yeah. Well, three three times more. So

[09:15] three three eggs more.

[09:16] Yep. Going on up trend. I mean many many

[09:19] reason for that but that was how much it

[09:21] cost me. So as you can see these lessons

[09:24] here is costly. It's very expensive.

[09:27] Wait that didn't cost you make more.

[09:30] I did not. I could have make more but I

[09:32] sell it right before

[09:35] I sell it when I was ready not when the

[09:38] business fully ready. All right. So

[09:40] that's what happened. So as you can see

[09:42] it if you have a chance to exit these

[09:44] are lessons just right off the bat. And

[09:46] there are many more I'm sure I'm going

[09:47] to make again mistake exit number four

[09:49] and five and six. It's just so much

[09:51] going on exit that your lawyer will not

[09:54] tell you. They might not even know. Your

[09:56] content would not know. Like it's just

[09:58] one of those things that you have to

[10:01] look out for this kind of thing for

[10:02] yourself.

[10:04] So when is the right time to sell? All

[10:07] right. The right time to the wrong time

[10:09] to sell for sure is when the owner is

[10:11] ready, which is kind of like my last

[10:13] couple exit, right? When you are

[10:16] yourself is ready to sell, chances are

[10:18] you're either tired, done, or burn out.

[10:21] Have anyone of you felt that way before

[10:23] when you run a business? Bad time to

[10:25] sell. Don't do that. talk to someone.

[10:27] Like seriously, you need a therapist,

[10:29] right? This is the worst time to sell

[10:30] because when you do that, what happen is

[10:33] the buyer will see it. They'll

[10:35] understand. They look at the number. You

[10:36] cannot lie about it. You get low

[10:38] valuation. And not only that, it will be

[10:40] a heavy earnout. What heavy earnout

[10:42] meaning that they they're going to

[10:44] structure it to a way that they're going

[10:46] to protect themsel. So you're going to

[10:47] get a little money up front and you have

[10:49] so much on earnout. Meaning that oh, if

[10:51] your business is doing let's say a

[10:52] million, they're like, okay, I need

[10:54] proof for two years in a row. someone

[10:56] pay you the last x amount of percentage

[10:58] why when the business truly do that. So

[11:01] that's what earn mean and you also have

[11:04] limited buying interest meaning no

[11:05] bidding war. Who here have sold a house

[11:07] before

[11:09] is the best time to sell a house when

[11:12] the market is hot. When's the best how

[11:13] do you get the best price? We have

[11:15] multiple bidder right business exactly

[11:17] the same thing. So if you sell it

[11:19] because you are ready not because the

[11:21] business ready no good. So obviously

[11:26] when you want to sell is when the

[11:27] business is ready. What does it mean

[11:29] ready? This could take like months to

[11:31] talk about it. But I only have 40

[11:32] minutes so I'm going to be quick.

[11:33] Ideally is in a growing trend like

[11:35] uptrend right and you have a very clean

[11:38] uh financial is auditable like audible

[11:41] ready literally right the three level of

[11:44] your bookkeeping is the first you have a

[11:46] bookkeeping. So you have some kind of

[11:48] organization of your finances. The

[11:50] second level is you have a CPA that you

[11:52] know put a stem on it. I I verified this

[11:54] is good. The last level is audit. So you

[11:56] hear a lot of IPA like you know you hear

[11:57] a lot of like public trade company they

[11:59] audit it. That's what it is. That's the

[12:01] highest level. But when your company is

[12:03] being audited here's a little secret.

[12:06] When your company is being audit and

[12:08] your book can prove it you're no longer

[12:10] selling on trilling 12 months. You're

[12:13] selling a forward 12 months. So if you

[12:16] can prove yourself that let's say for

[12:17] example let's say you run a really good

[12:20] business for the past three years you

[12:21] have your book being audited by some

[12:23] accountant firm right they put a stamp

[12:25] on it and you can prove that I can

[12:27] predict my business grow every year by

[12:29] 20%. So when you the year that you sell

[12:32] it, usually for most businesses they

[12:34] look at the last 12 months how much you

[12:35] make. But if you can prove that other

[12:38] and the predictability of the growth

[12:40] instead of selling at the last 12 months

[12:42] you sell 20% more because now oh this

[12:45] business is so good your prediction is

[12:47] accurate. So do the math. If you have a

[12:51] you have if you have a business doing a

[12:53] million dollar net profit a year, you

[12:55] sell it at four multiple, right?

[12:58] Normally is $4 million. But if you have

[13:01] the track record of predicting 20%

[13:02] growth, now all of a sudden you're

[13:05] selling you're selling under $1.2

[13:07] million times four. Now you're selling

[13:09] almost $5 million. You just make a

[13:11] million dollar extra doing absolutely

[13:13] nothing but prepare for the exit and pay

[13:16] for the audit.

[13:18] Who would like to do that? spend five to

[13:19] 10 grand a year to order and make a

[13:21] million dollar more.

[13:23] We all love that. So therefore, you get

[13:26] premium prices and you have multiple

[13:29] bidder, right? Some industry is super

[13:31] hot. Like you'd be amazed how crazy it

[13:34] is. So Brian and I have some adventure

[13:35] together. We're getting into the mass

[13:37] spa space. Mass spa right now is selling

[13:39] at eight multiple eight.

[13:45] Isn't it insane? So they are is selling

[13:48] is no joke the money is absolutely there

[13:52] and depend on what industry you are and

[13:54] agency as well. So we'll talk about how

[13:56] to get you to that four to you know two

[13:58] to 4x extra.

[14:04] So don't sell when you're ready sell

[14:06] when your business is ready. So let's

[14:08] talk about how valuation actually work.

[14:11] It's actually a very simple thing. All

[14:12] is a private equity. All is a money guy

[14:14] trying to scare you. It's actually very

[14:16] simple math. Your valuation is equal to

[14:18] your earnings which is a fancy word for

[14:20] net profit times the multiple. So

[14:25] earnings and multiples is there's so

[14:28] many thing is going to affect those two

[14:29] factor right some are controllable some

[14:32] are not controllable. Today we're only

[14:34] going to talk about the thing that you

[14:35] can actually control. I'mma I'm gonna

[14:37] briefly mention what you can control and

[14:40] what you cannot control so you don't

[14:41] waste your time and Julian want to think

[14:42] that damn why do I not have that and the

[14:44] other guy have it because I personally

[14:46] knew someone that were chasing multiple

[14:48] it cost him a divorce because it took

[14:51] three years at the end he make $15

[14:54] million more but then the whole family

[14:56] like like gone it's it's a roller

[14:58] coaster when you start a business so

[15:00] let's talk about what can you control so

[15:05] again I only have about 40 minutes.

[15:06] These are the thing you can do to affect

[15:11] on the earnings and the multiples.

[15:14] There's about 11 things you can do to

[15:16] change earnings which which mean

[15:18] increase your profit margin. We're all

[15:19] business owner here. You know there's a

[15:21] lot you can do. This will be actually

[15:23] sums up to this 11 category. The other

[15:26] 15 is on the multiple side. As you can

[15:28] see at the multiple side has a lot more

[15:30] thing can do and usually on the multiple

[15:32] side a lot of them is not so much of

[15:35] work it's planning the right way.

[15:40] So take a shot of that and then we're

[15:41] going to talk about what really going to

[15:43] give you the biggest needle mover

[15:45] without spending a lot of money.

[15:52] So who here know the term SD? There you

[15:55] go. Right? Mike should know Mike, right?

[15:57] We talked about it the other day. So SD

[15:59] is stand for seller discretion earning.

[16:02] There's only two analogy when it comes

[16:04] to like selling. Seller discretion

[16:06] earning meaning that you still operating

[16:09] the business. The business still need

[16:10] you. You're the boss. You're the man,

[16:12] right? Everybody look up to you.

[16:13] Everybody come to you ask for

[16:15] information. You are the expert. And

[16:17] this is what multiple you're going to

[16:18] get. If you are running a business that

[16:21] you are the one the decision maker and

[16:25] everything rely on you you will sell in

[16:28] about two to 3x on the multiple

[16:32] then there's another level it's called

[16:34] IBIDA

[16:36] earning before interest tax depreciation

[16:39] and mortization those are the prof what

[16:41] that mean is you your business is

[16:43] professionally managed when your

[16:46] business is professionally managed it

[16:47] could be the exact same business. The

[16:49] only difference is are you the key man

[16:51] or is the business professionally

[16:53] managed? If your business is

[16:55] professionally managed for the exact

[16:56] same business, you can sell anywhere

[16:58] between four to eight multiple.

[17:02] So again, if your bottom line is a

[17:04] million dollar, if your SD exit is about

[17:09] two to three million, if you turn it to

[17:12] professional management, you can sell

[17:14] for about four to eight. Now my mentor

[17:17] always said to me extra million every

[17:19] million helps right?

[17:22] So here's a real life example.

[17:25] If you run uh ASIS agency with SDA,

[17:28] let's say your earnings half a million

[17:30] dollar two to three multiple you sell

[17:31] between one to 1.5 million that's

[17:34] awesome you know it's still awesome it's

[17:35] great but if you spend let's just say

[17:39] it's not free right we all know you hire

[17:41] people there's expense I call investment

[17:43] turn it to professional management you

[17:45] have a professional manager managing for

[17:47] you let's say cost you a third of what

[17:49] you usually make look at the multiple

[17:51] with $350,000 exact same business you

[17:54] pay 150k Okay, for professionally

[17:56] managed, right? You sell for 4 to 6x,

[17:59] you end up selling for 1.4 to $2.1

[18:02] million.

[18:07] That's extra 400 to1 $1.1 million. Is it

[18:11] worth your is it worth it? You spend

[18:12] 150k to make either 400k or $1.1

[18:15] million. Is it is who who's happy with

[18:17] this return if it's investment?

[18:20] That's the power on turning the to. And

[18:23] that's what we're here to talk about

[18:24] today. That's the biggest needle mover

[18:26] without changing anything about your

[18:28] business in terms of like what who you

[18:30] serve, how much you charge, right? You

[18:32] literally just have to have someone

[18:34] professional manager for you. So buyer

[18:37] if you understand what is behind a

[18:40] buyer's mind and I learned it from the

[18:41] hot lessons, right? I sold three

[18:43] business owned

[18:46] more than hundreds or hundreds of

[18:47] businesses as an investor. This is what

[18:49] two things is only really care when it

[18:51] comes down to is ROI. They only care if

[18:56] I buy this thing, how much money would I

[18:59] make? That's it, right? And the next

[19:02] thing they wouldn't care is the risk.

[19:06] How likely is this not work based on the

[19:08] number you show me? And this is very

[19:10] important. They look at not work. They

[19:13] assume the worst. They don't they will

[19:15] never assume, oh, what if it's working?

[19:17] That's not how investor or buyer thinks.

[19:20] They think what if it's not working. You

[19:22] heard the term risk management, right?

[19:24] If you talk to private equity firm, they

[19:25] literally have a department. People make

[19:27] millions just to do risk management,

[19:30] right? And this is the guy you go up

[19:31] against when you sell your business.

[19:33] They want to make sure that what are the

[19:35] risk? Can you minimize it? So the key

[19:39] for our job is two thing. We want to

[19:41] make sure the ROI is clean and clear so

[19:44] they can understand it and we want to

[19:46] minimize the risk so they can feel good

[19:47] about it. Right?

[19:50] So there are four things you can do

[19:52] right away to make sure that happen. The

[19:54] first thing is earnings quality. What's

[19:57] earnings quality? Meaning that how clean

[20:00] your book is. Who here want because of

[20:03] tax purposes you want to save some money

[20:04] on tax that you put your vacation on

[20:06] your book. You put your lease of the car

[20:09] on the book. Maybe sometimes your meal

[20:11] on the book sometimes whatever whatever

[20:14] you want to put on the boat that you

[20:15] know you shouldn't right but I do the

[20:17] same thing all the time for the longest

[20:19] time and that is not clean earning you

[20:22] actually hurting yourself down the aisle

[20:24] because let's say for example u you know

[20:26] how like you saw a lot of Tik Tok video

[20:27] they say oh you buy a $6,000 pound I

[20:30] mean 6,000 pound car like the G Wagon

[20:32] you can write off the tax I don't know

[20:34] the extra payment maybe it's two grand a

[20:36] month so a year you what you write off

[20:38] $24,000 That $24 that $24,000 that you

[20:42] save because of tax purposes. If you

[20:45] exit, that's four times. It's worth 100

[20:46] grand. So do the math. Is it worth it? I

[20:50] don't know. So earning quality is about

[20:53] clean. Everything has a reason for the

[20:56] business, not for you. That's what

[20:58] earning quality mean. Second thing is

[21:00] only dependency. Only dependency like

[21:02] like you said, if you walked away for 30

[21:05] days, is the business still going to run

[21:06] or is it going to collapse? Is it going

[21:08] to grow or is it going to stay flat?

[21:10] That's what owner dependency is and you

[21:13] don't want to have that. And the third

[21:14] thing is revenue quality. Revenue

[21:16] revenue quality is just what a fancy

[21:18] words about predictability. How

[21:21] predictable your earning is. Is it

[21:24] oneoff project majority of the income or

[21:27] is it recurring? Right? Can the buyer

[21:29] buy it and figure out oh in the next

[21:31] three years I can predict this income is

[21:33] going to come and why is that? So your

[21:36] your risk is uh have a profile on that.

[21:39] We're going to go deep on the revenue

[21:41] quad and how do we fix that. The last

[21:43] but not least is system and data system

[21:46] kind of like what we talked about like

[21:47] Dan so brilliantly have the whole AI

[21:49] system to automatically done like retail

[21:52] arbitrage that system in place right

[21:54] with AI with all the software is really

[21:56] easy to create system to train your

[21:58] staff to sure make sure that everything

[22:00] is off your head on paper. So when the

[22:03] buyer buy it, they know that okay, I

[22:04] don't need you anymore. The system is in

[22:06] place. And data really just mean that

[22:09] how clean is all the contract in place.

[22:11] You know, you have client, you have

[22:12] vendor, you may be white labeling

[22:13] somebody, right? So how clean your

[22:15] contract is? Are they all documented

[22:17] clearly transferable to the new buyer?

[22:20] That's what they mean on system and

[22:21] data.

[22:23] So we're going to talk about earning

[22:25] right now.

[22:27] So earning the mistake for earning we

[22:29] kind of briefly mentioned is the tax

[22:31] optimizer right if you are the owner

[22:34] you're the most important person in the

[22:35] world you most likely optimize earning

[22:38] based on tax saving right and that's a

[22:42] mistake and the quick win mean for that

[22:44] is you want to quickly figure out like

[22:46] remove those things and not only that

[22:49] you want to pay yourself a salary that

[22:51] is not you know how like okay I done it

[22:53] before for years my accountant asked me

[22:55] like oh how much you want to pay

[22:56] yourself. I'm like, what are my options?

[22:58] They're like, well, if you pay yourself

[23:00] a lot of money, you got to pay a lot of

[23:02] social security tax. But if you pay

[23:04] yourself minimum, you can take the

[23:05] distribution, you pay lower tax, right?

[23:08] So, that's what I mean. But the buyer

[23:10] want to see is like, no, how much is you

[23:13] really going to pay the market rate,

[23:14] right? When you go to Indeed, how much

[23:16] is it cost going to hire a campaign

[23:18] manager? Right? That's what they want to

[23:19] care. That's the market rate I'm talking

[23:21] about. So when you do that the buyer the

[23:24] buyer say okay now the book you're

[23:26] earning is truly representing the

[23:29] business not what you want to save right

[23:32] they don't care about your tax saving

[23:33] they care about how much they going to

[23:35] make so that's the tip about earning

[23:38] quality

[23:40] second thing is about owner dependency

[23:43] so I love to go camping with my kids so

[23:45] I call this the tax right so if you gone

[23:49] away for 30 days what breaks Let's be

[23:51] honest, something is going to break,

[23:53] right? What is going to break? Three

[23:55] things you want to look out for. New

[23:57] sales. When the new client comes in, are

[23:59] you the one that closed the deal? Let's

[24:01] be honest here. Who? Raise your hand.

[24:02] Who who closed the new client deal here?

[24:05] There you go. That's the first thing you

[24:07] want to look into. Second thing,

[24:09] strategy. Okay. When when Google have a

[24:12] new update, right? Well, like Ted was

[24:14] talking about, right? When Google have a

[24:15] new update, who made the decision to

[24:18] pivot and figure out what to change?

[24:20] Raise your hand if you're the one that

[24:22] making the decision.

[24:24] There you go. This one you look out for.

[24:26] The last thing is the relationship. Who

[24:29] here served the the big client with a

[24:31] monthly meeting, weekly meeting? Is your

[24:33] staff doing it or are you doing it?

[24:35] Who's doing it here right now yourself?

[24:38] There you go. So these are the thing

[24:40] that shows you that you have a owner

[24:42] dependency risk and the buyer don't like

[24:44] that. So what you want to do to fix that

[24:47] is same thing as the earning. You put a

[24:50] market rate uh manager on the book to

[24:53] make sure that that person can handle at

[24:55] least 80% of what you're doing. You can

[24:57] still make decision you know to de-risk

[24:59] a little bit as much as possible but you

[25:01] definitely want to have that layer and

[25:03] then same that the person need to be

[25:05] going on do most of the day-to-day

[25:07] communication so that when the buyer

[25:09] look at you they're like okay if I look

[25:11] at your calendar you're not like 247

[25:13] running this thing

[25:15] the last thing we want to do is document

[25:17] your process and also decision making

[25:20] now so we all here have SOP right a lot

[25:22] of you you know great SEO have a lot of

[25:24] technician you documented your process

[25:26] what When was the last time you document

[25:28] how you make decision,

[25:33] right? I I've never done that for the

[25:35] first 10 years of my life. I when I

[25:37] first heard my mentors, I'm like, what?

[25:38] You need to document how you make

[25:40] decision. How do you do that? But funny

[25:42] thing is documenting how you make

[25:43] decision is a lot easier than you think.

[25:46] Trust me, next time when you make a

[25:48] decision, just say out loud and record

[25:50] it and have AI analyze it. You'll see

[25:52] the pattern. like you do it 10 times you

[25:54] find out oh that's how Brian make

[25:56] decision that's how I might make

[25:57] decision and therefore you can train

[25:59] your staff this is how I make decision

[26:03] the next you want to talk about is

[26:04] revenue quality now the key factor about

[26:07] revenue quality is you want more on the

[26:10] retainer versus project this feels like

[26:13] a no-brainer but sometime it's a lot

[26:15] harder than execute than you think but

[26:16] it's actually a lot easier to ask than

[26:18] you think sometime you just have to ask

[26:20] right I know a lot of people that you

[26:22] know one great agency to see don't who

[26:24] who here has that retainer with client

[26:26] versus oneup project. Is it hard to do?

[26:29] You just have to do more of those.

[26:33] And second thing is client

[26:34] diversification. You don't want to have

[26:36] any single client that is claiming 15 to

[26:39] 20% of your revenue because if they're

[26:43] gone or suddenly like of the business no

[26:45] good or the sudden want to take over

[26:47] they you want to shut down the business

[26:48] 20% of your revenue is gone. So, who

[26:51] here have a client like that? A big

[26:52] client. There you go.

[26:54] I got a big issue.

[26:55] There you go. There you go. So, these

[26:58] are real. These are real. And the last

[27:00] thing is the term and stickiness. Now,

[27:03] while now that you have some uh like a

[27:07] retainer client or maybe in contract,

[27:09] not just on project base. What you want

[27:10] to do is see if you can increase the

[27:12] length of it. Even though if you have to

[27:14] give them a little sweetener like for a

[27:16] little freebie on it, you know, give

[27:18] them a little bit discount because when

[27:20] you plan to sell, that looks good on

[27:23] paper and that increase your multiple.

[27:25] Remember, selling is a long game, right?

[27:28] If you tell me, Joe, I want to sell in

[27:30] three months and you come to me, the

[27:31] only thing I can tell you is like, good

[27:34] luck. It is a process. Usually a good

[27:37] time to plan an exit is about about 24

[27:41] to 36 months. then you can really do a

[27:43] whole bunch of thing as I show in a few

[27:45] slide but there's 26 things you can do

[27:48] to increase the valuation and if this is

[27:50] the only business and after that you

[27:52] just like sail to the sunset move to the

[27:54] beach this is your last big act right so

[27:56] take advantage on that don't go to waste

[28:00] so the quick win is talk to your next

[28:02] big three take talk to your uh big three

[28:04] client and ask them either for from

[28:07] project base to retainer if you're

[28:09] already on retainer see if you can work

[28:10] out a deal that instead of 12 months do

[28:12] 24 months just ask right if they say no

[28:16] then the perfect thing I love to say

[28:19] sometime is what can I do to make it a

[28:22] yes you'd be amazed they would tell you

[28:27] all right last but not least the fourth

[28:29] level system and data now when it come

[28:32] to system and data how many of you like

[28:35] document everything that you do on paper

[28:37] or have a system in place or is this

[28:39] still is it still in your

[28:42] There you go.

[28:43] All right. You got to document it, man.

[28:44] You got to document it. So, the quick

[28:48] way to do is just start with the one

[28:50] pager. Look at your calendar on the next

[28:53] 14 days. Look at what you actually spend

[28:55] time doing on and just pick one small

[28:57] area and just start documenting that one

[28:59] test at a time. Right? Again, this is a

[29:01] process. If you if you're a jack of all

[29:03] tra for a long time and you're running

[29:05] mostly everything and just you know have

[29:07] a few contractor this process might take

[29:09] longer but once you're done you're done.

[29:11] And the beautiful thing is when you're

[29:13] done with this process you'll find that

[29:15] the quality of your work increase as

[29:17] well. The output is much better and you

[29:20] will absolutely find way to trim down

[29:22] the steps so you'll be more effective.

[29:24] Just give it a try.

[29:26] And also tip number two is every week

[29:29] you want to look at these five things on

[29:32] a metrics that you can actually follow,

[29:34] right? How you run the agency like your

[29:37] uh MLR, right? And then your your net

[29:39] profit, your new client coming in and so

[29:42] forth and your turn rate. These are the

[29:44] things that what you should be looking

[29:46] at on a weekly or monthly basis.

[29:49] Now what I want to do right now, what I

[29:51] say before this is a very interactive

[29:54] opportunity. So we can do a quick um

[29:57] survey kind of self assessment so you

[29:59] can see where you're at right now. Are

[30:01] you all ready?

[30:02] All right. So I'll we will be four

[30:06] question one question per each area and

[30:08] then you just have to rate yourself from

[30:10] zero to three. Zero is is not true the

[30:14] statement and then uh three is

[30:16] absolutely true 100% true all time. So

[30:19] ready to go everybody someone you can

[30:21] take on not looks on that.

[30:24] So the first question is about earnings.

[30:27] How confident are you from 0 to three

[30:30] that your financial is clean? You

[30:33] separate from your se personal spending.

[30:35] You clearly profitable and that you show

[30:39] a healthy three years uptrend and that

[30:42] when a buyer look at it they can

[30:44] understand within 24 hours not 24

[30:47] months. So just rate yourself from zero

[30:48] to three and let me know when you're

[30:50] done with this question.

[30:55] Are we all good?

[30:56] All right. So, question number two, only

[30:59] dependency. If you step away for 90

[31:01] days, right, which with your current

[31:04] with your current team right now, not

[31:06] your new team that you're thinking about

[31:07] doing, right? Implementation, right?

[31:10] It's current stage with your current

[31:12] chart relationship that you have with

[31:14] your vendor, key relationship with your

[31:17] big client, all those things, right? How

[31:19] confident are you that your revenue and

[31:21] operation was still running without you?

[31:25] Zero, no confident. Three, 100%

[31:28] confidence.

[31:30] Everybody good?

[31:33] Question number three, revenue quality.

[31:35] How confident are you that your revenue

[31:37] is diversified across clients? So no

[31:40] concentration risk more than 15 to 20%

[31:42] per each client and that most of your

[31:45] work is repeated and contract based not

[31:48] one project and everything is well

[31:50] tracked repeatable and no one is

[31:54] depending on the single source lease.

[31:56] How confident are you on that?

[32:00] All right

[32:01] we will have a rating at the end. So

[32:03] make sure you take your score. We ready

[32:05] to go on that?

[32:07] All right, last one. How confident are

[32:10] you that your process are documented

[32:13] your key legal and financial document

[32:15] are organized and you can quickly

[32:17] assemble a buy a packet and then you

[32:20] have a plan for exit.

[32:24] All right, fun story for this particular

[32:26] piece. So about um 24 months ago I was

[32:30] doing a deal that we're going to buy

[32:31] this uh e-com we're going to buy

[32:34] e-commerce business actually only sell

[32:36] online and then I was simultaneously

[32:38] going to buy uh also e-commerce not

[32:40] e-commerce business but a product

[32:42] business in the exact same niche but

[32:43] they don't sell they don't sell online

[32:45] but they have all the distribution

[32:47] channel right so when one deal is about

[32:50] to combine in the other deal what my

[32:52] thought was okay great if I buy the guy

[32:54] that only sell online and I buy the guy

[32:56] to sell offline. When I combine that, I

[32:58] literally just double this business and

[33:00] double this business, right? The plan

[33:02] was supposed to work until until we

[33:06] spend six months in due diligence, tens

[33:09] of thousand dollars on lawyers fee and

[33:11] then we find out one thing from the guy

[33:14] that have the distribution channel. It

[33:17] turns out that he has a partner of his

[33:21] business. And not only that, that

[33:23] partner, he owed that partner millions

[33:26] of dollars.

[33:27] And he was going to restructure this

[33:29] business to kick that partner out

[33:32] silently and sell me that business.

[33:36] And I did not find out because the data

[33:39] room wasn't cleaning up. We had to dig

[33:41] and dig and dig and dig. He buried that

[33:44] document. So good day. I had a pretty

[33:46] good lawyer and I'm pretty thorough

[33:47] myself. And we find a document. We're

[33:49] like, "Wait a minute. You have a

[33:50] partner?" They're like, "Oh yeah, I kind

[33:53] of forgot the mansion." Like, "Is it is

[33:56] it is it clean? You guys own 50/50?"

[34:00] "No, he's 60." Like, "Huh? Can we talk

[34:04] to him?" "No, he's already, you know,

[34:07] like living somewhere else. We're not in

[34:08] contact." I'm like, "Okay, why is that?"

[34:10] Like, "Well, it's personal reason." Da

[34:12] da da da da. I was like, "Okay, let's

[34:14] look into it more." Then we ask him like

[34:16] do do you owe him is it clean? Do you

[34:18] owe him money? Oh yeah, we owe him about

[34:21] 5 mil.

[34:23] The deal of course fell through, right?

[34:25] And that cost a lot of time. So if you

[34:27] don't want that to happen, be honest up

[34:30] front. Organize all your legal document

[34:32] in place. So that's a little side story.

[34:34] So ready on this one. All right. So

[34:37] let's see the score now. If you have any

[34:39] from one of those area if you have any

[34:42] area that score zero to one that in the

[34:47] buyer's eyes it mean that okay this

[34:49] business is risky it's not an asset and

[34:52] the result is you can get low multiple

[34:54] high earn out and there even no offer

[34:58] all right so if you have any area that

[35:01] is a yellow meaning that is you get a

[35:05] two right you get a two and then the

[35:07] buyer will think okay this is a decent

[35:08] isn't enough business there may some big

[35:10] risk to do I will take a discount on

[35:12] that because it's h work to do but it

[35:14] may be worth the risk when that happen

[35:16] what that mean is you're going to have

[35:18] some cash up front and then you're going

[35:20] to have a whole bunch of string attached

[35:23] who wants a cash offer

[35:26] I want a lot of money up front right but

[35:29] if you have any tools they will have

[35:31] legitimate reasons say okay I'm not

[35:32] gonna pay you all that because I don't

[35:34] believe 100% I believe you enough but I

[35:36] gota trust by verify let's do uh three

[35:38] years, five years seller finance on 50%.

[35:42] And then you just like hope banking they

[35:43] don't mess it up.

[35:45] Last but not least, if you are mostly in

[35:47] green, congratulation. They're going to

[35:49] pay premium price for that. The what you

[35:52] want to do by that time is you want to

[35:54] figure out how to put yourself in a

[35:55] position that will be like breeding

[35:57] frenzy, right? That's called strategic

[35:59] buying, right? So you can like one guy

[36:01] beat on this, one guy beat on this and

[36:02] keep on going to happen. is it's amazing

[36:04] when that happen is it's it's just very

[36:07] fulfilling like damn right it's really

[36:09] cool it's kind of like selling your

[36:10] house if like your agent tells you we

[36:12] get another offer we get another offer

[36:14] but this in the in the business usually

[36:16] in the millions level very fun

[36:20] so

[36:22] from my experience after looking at

[36:23] hundreds of businesses these are the

[36:26] common area that a seven figure agency

[36:28] bleeding on the quality and the earning

[36:31] quality usually

[36:33] people scored around two to three and

[36:35] what that mean is they have some tax

[36:37] write off right they optimize the book

[36:39] based on saving and then the bias see is

[36:42] not clean so on the owner dependency

[36:45] level unfortunately I've been there for

[36:47] many many times zero to one you're the

[36:50] key man risk that's one of the biggest

[36:53] common challenge for agency people

[36:55] because we all start as almost like a

[36:57] technician we are really good at

[36:58] something and we start doing thing and

[37:00] we know we are the one to do this and

[37:03] then we have a hard time letting go of

[37:04] power. Now, not that you can let go 100%

[37:06] but chances are my bet is 60 to 70% of

[37:10] your work could absolutely document and

[37:11] repeat by someone else to do it for you,

[37:13] right? So, usually people score a little

[37:15] bit lower on that side. And revenue

[37:17] quality, again,

[37:20] key factor, you know, when you have a

[37:21] whale client, it's like celebration

[37:23] time, right? It's awesome. This guy, you

[37:25] know, pay me like 20% of my revenue.

[37:27] Like, hallelujah. But when you're

[37:28] selling it, the buyer is like, "Uh,

[37:30] that's not what I want." Because if that

[37:32] guy's left, I just lost 20% of what I

[37:34] pay you. Last but not least, um,

[37:37] document. Usually it's is afterthought.

[37:39] You create a system, you're running it

[37:41] for a whole year, two year, three years,

[37:43] it's still in your head because you

[37:44] still try to improve it and you tell

[37:46] yourself, you might be telling yourself,

[37:48] one day when I perfect this system, I'm

[37:50] going to put on a paper. Well, for

[37:51] example, if you are doing only SEO, you

[37:54] know, like that system will never be

[37:55] perfect because Google keep messing you

[37:57] up, right? So, you got to put something

[37:59] on the paper and start going and

[38:00] changing it.

[38:02] So, the create the real risk here is uh

[38:05] the buyer don't believe your story. The

[38:07] buyer look at your your your earning,

[38:09] they they don't believe it. And they

[38:11] look at your risk, they don't believe

[38:12] this is a safe business. And that's how

[38:14] you get discount and low offer. And

[38:17] again, if you think about it, if you are

[38:19] selling because you're ready, I've been

[38:22] there. You're gonna want you're gonna

[38:23] take the offer, which sucks. So, only

[38:26] sell when the business is ready, not

[38:28] when you're ready.

[38:31] So, here's a quick fix, right? When we

[38:32] did the survey, uh, we pretty much like

[38:35] break out pretty 30 30 on different

[38:37] sector. So, if you're running a 1 to3

[38:39] million agency, u, meaning on the

[38:41] revenue, these are the quick fix. You

[38:43] probably have some foundational fix is

[38:45] you want to clean boat separate your

[38:47] personal expenses and you want to make

[38:50] sure that you know you you can

[38:53] structure your business so point that

[38:54] you cons consistently showing uptrend

[38:56] for three years and then you want to

[38:59] start uh reducing that you are the one

[39:01] that doing everything. So that's the

[39:04] needle mover for agency that size. For a

[39:07] $37 million agency, chances are you want

[39:10] to start de-risking and start scaling by

[39:13] not having a concentration of one client

[39:15] that more than 15 to 20% of your

[39:16] revenue. And then you want to move to a

[39:18] longerterm retainer and you want to

[39:20] build a real relationship with layer

[39:22] meaning that you want to have a have a a

[39:24] manager in between and start introducing

[39:26] those relationship to it. Right?

[39:29] And last but not least, you kind of want

[39:30] to tighten up what a buyer ready mean.

[39:33] Start working a plan out that you know

[39:35] whether you want to really exit or not,

[39:37] but it's all unbiased. Um, have you

[39:39] heard he heard about this little company

[39:41] called IBM?

[39:43] IBM founder has famously said it. The

[39:45] reason IBM is so successful since day

[39:47] one, he envisioned the exit of IBM. But

[39:50] we all know IBM was never exit. It just

[39:53] went publicly. Trey, right? So when you

[39:56] build a when you build a business from

[39:58] the end to the front like that way

[40:01] backward you starting to see things much

[40:03] differently and you start envisioning

[40:05] things are much bigger. So last but not

[40:08] least, the one that doing seven plus

[40:10] what you really want to do, you're doing

[40:11] a lot of things great already. You want

[40:12] to start to anything the idea that

[40:14] instead of just having a CPA having an

[40:17] auditor and start auditing your book

[40:19] again, we talk about instead of selling

[40:21] from trailing 12 months, you're selling

[40:23] a forward 12 months and get yourself the

[40:25] extra 20 30%. just by paying for the

[40:27] audit.

[40:29] And then you can also um put in layers

[40:32] and understanding that you need to

[40:34] position yourself whether it's a

[40:37] strategic buy or roll up something that

[40:39] instead of just selling to a n a next

[40:42] guy that want to buy a job, you want to

[40:43] start planning that who are you want to

[40:45] sell it to, right?

[40:48] And last but not least, I want to kind

[40:49] of just uh inspire you this idea. This

[40:52] is how the um the valuation go with the

[40:55] with the private equity in the real

[40:57] world when you go public trade, right?

[40:59] If you are SDE doing under $2 million on

[41:03] net profit and $10 million in sales,

[41:05] you're roughly trading about two and a

[41:07] half eggs after earning. If you turn it

[41:11] to IBIDA, a professional management, you

[41:13] will trade about four to five 4.5

[41:15] roughly. That's the average. Now look at

[41:17] the next number. Who want to sell with a

[41:20] 15x

[41:22] 15?

[41:23] So if you have a business doing a

[41:25] million and that instead of selling for

[41:26] 4.5 you sell 15 million. Is it exciting

[41:30] that when that happened there's only one

[41:32] thing from IBIDA to that level is the

[41:35] size of the business as you can see it

[41:38] you're already professionally managed

[41:40] right the only difference is the size

[41:42] instead of doing under $2 million IBIDA

[41:44] you're doing above $2 million IDA and

[41:46] let me just kind of throw little hints

[41:47] out there the fastest way to get from

[41:51] IBIDA to the next level to double digit

[41:53] exit is something called the roll up who

[41:56] here have heard roll up before. All

[42:00] right. So, I'm just do it real quick.

[42:01] What roll up really mean is like for

[42:03] agency wise, right? Let's have uh four

[42:07] of our agency that is running at under

[42:10] IBIDA professionally managed doing half

[42:12] a million dollar IBIDA. Let's combine

[42:14] them and sell it together.

[42:16] Because of that, you each not only

[42:20] selling not at 4.5, you could be selling

[42:24] in double digit just because you join

[42:26] force under one umbrella. Look how many

[42:29] agencies here in this room.

[42:32] Can you see a roll up happening? That's

[42:35] how you get to the big buck without

[42:36] doing fundamentally something change

[42:38] structure-wise.

[42:41] So nothing to pitch. I have a 16

[42:44] question test is assessment that more

[42:46] pertain to your to your specific

[42:48] business. So scan the QR code. Uh once

[42:52] you're done with the assessment, it will

[42:54] give you only take five minutes. Under

[42:56] this uh under the 16 questions later,

[42:58] you'll get the buy refac

[43:03] and you also uh will have a prepare list

[43:06] on prepare you when you want to sell

[43:07] between 8 to 36 months.

[43:11] Everybody get that before I change to

[43:12] next slide.

[43:14] All right, take the assessment. It's

[43:16] good stuff.

[43:17] So that 18 36 months is that from start

[43:20] date or from the time you're planning to

[43:22] exit

[43:22] from your plan to exit.

[43:24] So in your uh experience, how many years

[43:28] does it usually take business to get

[43:30] ready for that 36 month?

[43:33] Great questions. So I have seen anywhere

[43:36] between six to 36 months. Now six months

[43:39] is like you know how I was talking about

[43:41] there's four area right each like four

[43:44] area and then there's 26 things to do

[43:47] right 11 thing to do on earning side 15

[43:50] things to do on the multiple side it

[43:52] depend on like how much time you allow

[43:54] yourself to hit all those things right

[43:56] it's really I hate to say it's really

[43:59] depend but I've seen as fast as six

[44:00] months if you come um you know you you

[44:03] tell me like oh I have the key man

[44:05] effective already removed I just want to

[44:07] you know tighten up the revenue and

[44:08] they'll clean up the books all those

[44:09] things those are fast right but if you

[44:11] say oh I'm still the you know the guy

[44:13] that running everything now that takes

[44:15] time to hire the a player to train the a

[44:17] player to think like you make decision

[44:19] like you right that that's what usually

[44:21] take the longest time does make sense

[44:24] right so I would say at fast is six

[44:26] months um 18 months is the medium 36

[44:29] month you pretty much get it done pretty

[44:31] good

[44:34] yep

[44:37] I was just going to ask like on a

[44:39] business or category that's hot like

[44:41] that spot is there a time reduction

[44:45] like you sell it in six months because

[44:47] it's hot

[44:49] great question

[44:50] Joe can you repeat the question

[44:52] all right the question Chad asked is on

[44:54] a very hot market like Masbar right like

[44:57] can you reduce the time to get ready to

[45:00] get the highest multiple right the

[45:02] answer is it also it depends think about

[45:04] it the highend of that category right

[45:08] now is 8x. You could be the low end and

[45:11] 5x. So you have a range, right? It's

[45:14] always a range, right? So what I mean by

[45:17] that is you never chase the number of

[45:20] the multiple because it's never up to

[45:22] you, right? We who here own a house or

[45:26] own a house before, right? What is your

[45:28] house market value? What's your house

[45:30] value?

[45:33] Exactly. business is exactly the same

[45:35] way, right? That mean some crazy people

[45:38] think, "Oh, you know what? I'm really

[45:39] looking at the industry. This is my 15.

[45:42] It happens." But those are off, right?

[45:45] You can never control the actual

[45:48] multiple number, but you can control the

[45:50] range that you'll fit in at that one

[45:53] given time market. Does that make sense?

[45:56] Great question. And you have a question.

[45:58] So a couple slides ago you showed that

[46:00] if you go back just a couple slides, the

[46:02] one where Yeah, that one. So how come

[46:05] that third one is 15.2 times when it's

[46:09] growing at a 32% increase? Why is the

[46:13] next one 21.3%

[46:15] when there's no change?

[46:17] Yeah, it's because you're the big boy.

[46:19] The private equity bought you. They they

[46:22] saw your track record. They're going to

[46:23] take over

[46:25] even though it's not showing the same

[46:26] growth. You have to have the 32 already

[46:29] to start.

[46:30] Yeah.

[46:30] Yeah. Sorry about the confusion but yeah

[46:33] you have to maintain the three years

[46:34] growth with that number then like okay

[46:36] after we take over we can grow 200%.

[46:40] Like you'd be amazed the resources like

[46:42] private equity has that they they really

[46:44] know like they don't mess around you

[46:46] know if they buy a company for like $10

[46:47] million they will turn around make 50 in

[46:50] a year like it's crazy what they can the

[46:53] resource the talent they have because

[46:55] they have money they buy the best like

[46:57] expert and this and they combine it they

[47:00] do some crazy stuff.

[47:06] All right. Well,

[47:07] just one question obviously here today

[47:10] so many people are going to walk out of

[47:11] here changing

[47:13] what Ted talked about versus something

[47:16] like a med spot where the turnover and

[47:18] the technology change in your in terms

[47:20] of their daily practices might be 10% a

[47:22] year or pick a number whereas we might

[47:24] change 40% with the AI versus two years

[47:27] ago we're almost 80 70 80 90% different.

[47:30] So, how do we get that degree of

[47:31] certainty? Someone's still going to want

[47:33] to buy us. It's because of the the value

[47:34] of the retainer because we have such

[47:36] high turnover on the day-to-day

[47:37] practices of what we're doing.

[47:39] Yeah, love that questions.

[47:41] What you want to do is that's two level

[47:43] of SOP. The first level SOP is the tech

[47:46] technical SOP, right? How do you

[47:47] actually do this thing? You've forgotten

[47:50] today. You're sitting here spend your

[47:52] time to come to come to this event and

[47:53] learn this thing. It's a yearly thing,

[47:55] right? That is SOP.

[47:58] That's how you learn, right? That's SOP.

[48:01] If you have a manager, that's what you

[48:02] would do, right? Every year go to SO

[48:04] Rockstar and learn the thing and

[48:07] implement that. You see what I mean?

[48:08] It's like a SOP on that's how you run.

[48:16] So, so the education, the ability to

[48:18] handle the turn around changes.

[48:20] Yep.

[48:20] That's we document that as part of the

[48:22] SOP on paper and then train the person

[48:24] starting to think like us.

[48:26] Yes.

[48:26] Thank you. Like what like like I feel

[48:28] sorry I said before right the decision

[48:30] tree how do you make decision and here

[48:33] that's what you're doing here you

[48:34] collect information right something

[48:36] brilliant everybody say t say right then

[48:38] you make a decision on okay which one

[48:39] I'm going to implement first you have

[48:42] that in your you know you're not going

[48:43] to implement everything today you know

[48:46] how you prioritize you just never

[48:47] documented it and AI literally is going

[48:50] to help you recognize my pattern

[48:53] recognition on how I make decision this

[48:55] how I make the last 10 decision

[48:58] they always see a pattern and that's

[48:59] trainable.

[49:01] Yep.

[49:02] So if you have a business um and you

[49:06] talked about separating the personal and

[49:07] the business, but what if the business

[49:09] also has assets for example that

[49:13] may or may not be attractive to a buyer?

[49:16] You're using agencies that let's just

[49:18] say you have an

[49:26] agency that's an asset, but it can also

[49:28] be separate. So, can you when you're

[49:29] when you're doing your business, do you

[49:31] would you separate it two separate

[49:33] things?

[49:34] You see the smile here? I love that

[49:36] question. This is cool. I'm going out

[49:38] with that a little bit. So, the answer

[49:39] is yes and no. Let me ask you this

[49:41] question.

[49:42] The earning there for your agency is

[49:45] that we how how much is contribute

[49:47] because of this 6,000 link you have. If

[49:50] without the 6,000 link, can this

[49:52] business still make the money like it

[49:54] is?

[49:54] Yeah.

[49:55] If the answer is yes, then

[49:56] congratulation. You would do a cough

[49:58] out, what they call a cough out

[49:59] internally. You want to have a separate

[50:01] entity, right? Create a separate entity,

[50:04] own that 6,000 link, right? for whatever

[50:08] you need to do because you you tell me

[50:09] the agency don't need it for that. So

[50:12] you would remove that to the entity

[50:14] first and just sell the book of the

[50:16] agency. So that way you still keep that.

[50:18] They call it like you asked me that. You

[50:22] asked me that, right? Mike asked me that

[50:23] when we're doing the valuation call. Um

[50:25] there's another story. Super cool. Um

[50:27] that's called um the goose and a right.

[50:31] If the 6,000 link is what give you the

[50:33] power to do what you need to do in terms

[50:35] of ranking wise that's the goose the

[50:38] eight is the agency because of this

[50:40] 6,000 you're able to serve the client do

[50:42] ABCDFG so what is the beauty part of

[50:45] this you keep this a

[50:48] buyer buy I mean you keep the goods the

[50:50] buyer buy the the buyer buy the egg

[50:52] they're still going to have to pay you

[50:53] for this thing and you can still you

[50:55] know use this to monetize and provide

[50:57] services for other things and so this

[50:59] thing you should never Well, like that's

[51:01] why Taylor Swift bought all her album

[51:04] right back cuz those are the goose.

[51:08] Great question.

[51:10] Yeah.

[51:11] Will that lower your valuation if you're

[51:13] keeping the goose? Will the buyer be

[51:15] like, well, if I have to buy if I have

[51:17] to buy this from you, it's going to cost

[51:20] more.

[51:21] Yes and no. That's why the the key

[51:23] question it really is everything you

[51:26] say, everything you provide on the boat,

[51:28] you it has to be defendable. If I the

[51:30] buyer is gonna ask the same question.

[51:32] Okay, great. And so you're telling me

[51:34] that um the agency is going to run exact

[51:37] same way, create exact same result and

[51:40] income without your link. Prove to me if

[51:44] you can prove that then there's go. It's

[51:45] a separate entity. I'm not selling you

[51:47] this. Sorry. I'm selling you this. Now

[51:50] if you want to buy it, we can make a

[51:51] deal. Right? It's all making a deal. So

[51:55] that is really depend on can you prove

[51:57] that story, right? Whatever you put on

[51:59] the book is there's a story to tell. Can

[52:02] you defend their story? Like literally

[52:04] not like trick them, you know, with

[52:06] manipulation. It's truly defend the

[52:07] story. If you cannot, don't do it

[52:10] because you just break the trust. You

[52:11] break the trust, they're going to walk

[52:12] away. You have to understand that this

[52:14] big time buyer, you know, hopefully

[52:15] you'll all get to the level selling for,

[52:17] you know, tens of millions. That's my

[52:18] goal for you. They understand. They

[52:21] understand. They're not a lot of them

[52:22] are pretty honest about it actually.

[52:24] They're not here to game you. They just

[52:26] really try to understand because they

[52:28] have invested in they have investor to

[52:30] answer to themselves, right? So you have

[52:32] to able to defend whatever you tell

[52:34] them.

[52:36] Go ahead Pete first. Sorry. Go ahead.

[52:38] Do do vendor relationships or vendor

[52:41] stability come into play at all?

[52:42] Absolutely.

[52:44] Yep. So let's say you have for example

[52:46] the only thing I can think of you know

[52:48] correct me if I'm wrong. The vendor

[52:49] relationship for any agency you have is

[52:51] either a um maybe service provider like

[52:54] the white labeling right or a software

[52:57] right so as long as you have a contract

[53:00] clearly say this is transferable

[53:04] right this is transferable then the blog

[53:06] is like okay it's transferable no

[53:08] problem

[53:10] and

[53:11] actually

[53:13] I assume correct me if I'm wrong if you

[53:16] had a carve out you would want to move

[53:18] that separate entity as part of the

[53:20] carel process or it's part of the

[53:21] cleanup process.

[53:23] Yes.

[53:23] Y

[53:24] so like you're talking about a bunch of

[53:26] URLs that they become a vendor for your

[53:30] agencies.

[53:31] Yep.

[53:32] And then when somebody buys your

[53:33] business, they could choose another

[53:35] vendor theoretically if they wanted to.

[53:38] Yes.

[53:38] Correct.

[53:40] That's great question and statement

[53:42] right there too.

[53:43] Ideally, if you do cough out like that,

[53:46] you better make sure that the agency can

[53:48] really function without it. Really like

[53:51] if they want, let's say you own a

[53:52] software company, right? Let's say you

[53:53] own a software company, doing a whole

[53:55] bunch of awesome ninja co SEO stuff and

[53:57] you own the agency that you actually pay

[53:59] the software company money to use it.

[54:01] You better make sure that the agency can

[54:03] function and produce the exact same book

[54:05] without this software. Meaning that you

[54:07] can if you go to if they choose to go to

[54:08] your competitor, so be it. That's how a

[54:11] clean cut out need to happen.

[54:14] So you she so you disclose whatever your

[54:16] other entities are the end.

[54:18] You do. Yeah. Because it's on the book,

[54:20] right? Like for your case, right? I

[54:22] assuming there'll be a line item on your

[54:25] book saying that okay, I'm paying this

[54:26] software I don't know this 6,000 lane

[54:28] 200k a year,

[54:30] right?

[54:30] actually my my example although I do

[54:33] play pay

[54:34] some people in here for just like that

[54:37] and things like that but I was referring

[54:39] more to if I have domains and I have my

[54:42] own PBNs if

[54:43] what's that

[54:44] I'm sorry if I just have if I just have

[54:46] my own uh network

[54:48] okay

[54:48] and maybe I do le I don't pay anybody

[54:52] well I can help Joe because I don't have

[54:54] but what I'm saying is I I own this

[54:57] has to be able to rank without it and so

[54:59] if you take your link I don't know what

[55:00] my question is.

[55:02] I don't have to remove a link. My

[55:05] clients can keep the link. I own this,

[55:06] but I I may link to it uh industry A, B,

[55:11] C.

[55:12] Now, if I'm a buy your agency and I see

[55:14] them incoming links, I'm going to say,

[55:15] hey, what is this? And then I'm going to

[55:17] ask you and be like, why wasn't this

[55:18] part of the acquisition? So, there's a

[55:20] way around it, I'm sure, but it needs to

[55:23] be really

[55:23] So, you're talking about link. I'm

[55:24] talking about the property. Just let's

[55:27] say it doesn't have links. Let's just

[55:29] say that I'm selling SEO Superstar and I

[55:34] have a link that's SEO Superstar Texas

[55:38] and I don't have anything on there. I

[55:40] have no I just own a domain

[55:42] and I have tons of domains.

[55:44] No, that's your is a brand trademark.

[55:47] That's all yours.

[55:48] That's yours.

[55:48] That's all yours. Now, you wouldn't be

[55:50] able to go like work on that brand that

[55:52] you just sold them

[55:54] would be yours

[55:55] that lasted four minutes.

[55:56] Correct. So the bottom line is the buyer

[56:00] is buying your book of business, right?

[56:03] It could be branding, it could be some

[56:04] IP in place, but whatever they buy from

[56:07] the book, right? There's some numbers

[56:09] contribute to the bottom line, right?

[56:11] The expenses, the revenue. As long as

[56:13] you can prove that whatever you coughed

[56:15] out, that number, the meth the

[56:18] mathematic behind it, the formula,

[56:20] whatever, right? The number that comes

[56:22] out is still the same. Then you're good

[56:24] to go.

[56:26] Anyone

[56:29] else questions?

[56:30] Thank you, Joe.

[56:31] Oh, one more question.

[56:34] One question. So, I've told businesses

[56:36] before, like smaller businesses, but

[56:38] when you get to private equity, does it

[56:40] have to be uh like uh uh on the stock

[56:43] market list or how do you get these

[56:44] private equities to look at a business?

[56:50] The connection.

[56:52] Yeah, it's not pitch, but it really is

[56:55] connection. Like

[56:56] are you a broker?

[56:57] I'm not a broker.

[56:58] Like I'm what I mainly do is I'm

[57:00] investor myself, right? My goal is to be

[57:02] part of the exit. But before that I we

[57:05] need to vet people, right? Not everybody

[57:06] can, you know? So what I do is I'm exit

[57:09] planner. I'm help you plan the exit so

[57:12] you can get the most out of it, right?

[57:14] Like we did the evaluation call like the

[57:17] whole thing that I show you about the

[57:18] 26. I mean it's 26 things. How do you

[57:22] know which one to do first? Right?

[57:24] That's a path as each business is

[57:26] unique. There's no like one size f but

[57:29] those 26 thing it is the 26 things. It

[57:31] just matter of which business need to do

[57:33] what first to create the most result and

[57:35] get to the other like a compounding

[57:37] effect right so that's kind of really

[57:39] kind of like what you guys doing with

[57:40] SEO like do you do the map thing first

[57:42] do you do the link first right it's

[57:44] that's that's the right order of doing

[57:46] things but each business is a little bit

[57:47] different so to answer your question

[57:51] you can get to private equity

[57:54] mostly because of relationship because

[57:56] they also want to trust they private

[57:58] equity job is to buy deals

[58:01] Right? They don't lack the job is not

[58:04] they don't lack of money, right? They

[58:05] have infinite I don't know why, right? I

[58:08] wish I do. They have infinite amount of

[58:10] money to buy things. So the job is to

[58:13] figure out what is a good deal. So you

[58:16] can see the bottleneck, right? The

[58:17] bottleneck is junk deal. That's the

[58:20] biggest cost. Like you know, long story

[58:23] short, you know, I shouldn't tell the

[58:24] story. It's recorded to ask me after the

[58:26] call, not recorded. I'll tell you story

[58:28] then you like boom. Right? Like one last

[58:31] things um to kind of give you an idea on

[58:33] who buy agency. Literally this la not

[58:36] last Monday this past Monday I just

[58:38] talked to uh one company they sold to

[58:41] Fiverr.

[58:44] An agency did.

[58:45] Yeah. Agency sold to Fiverr. Fiverr by

[58:48] agency.

[58:49] Were they already on Fiverr?

[58:51] They were. And then if you Google

[58:53] literally Google right now like Fiverr

[58:55] acquisition that's Fiverr spent eight

[58:57] figure by agency. it happened. Now I'm

[59:00] not saying all will be qualified but I'm

[59:03] saying it could be engineered to make it

[59:05] happen now that you know five or five

[59:06] people. Yeah.

[59:08] So if like med spas are the hot thing

[59:10] right now in private equity that's like

[59:13] something like the agency market

[59:17] where does that rate in terms of being

[59:19] kind of hot or cold?

[59:22] The truth is it's is

[59:24] no control is it's like AI everything is

[59:28] AI is hot right let me give you an idea

[59:30] for a while have you heard of a company

[59:32] orange fury

[59:34] it's pretty it's pretty good right they

[59:36] they got something cool you need to

[59:37] figure it out at one point oh last tips

[59:40] at one point well sorry let me rewind

[59:44] back if you have two companies side by

[59:46] side one is regular company moms and pop

[59:48] runs right and one is under franchise

[59:51] Okay, doing the exact same thing, same

[59:53] book. Chances are the franchise one will

[59:56] sell at least one to two times more on

[59:57] multiple and the reason for that is the

**[01:00:00]** risk fan. What the franchise have beside

**[01:00:03]** the brand systems? They have a flawless

**[01:00:06]** system in place. You would argue, right?

**[01:00:08]** And that's why McDonald can turn out

**[01:00:10]** like nothing Subway. That's why the

**[01:00:13]** system what I'm showing today is what

**[01:00:15]** makes to eBay, right? It's the system in

**[01:00:17]** place. That is the same effect as if you

**[01:00:20]** buy a franchise. So to answer your

**[01:00:23]** question, you really don't know because

**[01:00:26]** even orange free like it's a gym. How

**[01:00:29]** much can you sell at one point? Orange

**[01:00:31]** pe will sell for 20 eggs. It's a

**[01:00:34]** freaking gin.

**[01:00:35]** Oh my gosh.

**[01:00:37]** But no one can ever game this kind of

**[01:00:39]** market unless you you you your market

**[01:00:42]** maker, right? Like you know I work with

**[01:00:43]** a lot of you know my mentor like some of

**[01:00:45]** them are market maker. What that is is

**[01:00:47]** um let's say uh I share with Brian the

**[01:00:49]** other day so I'm not going to go in

**[01:00:51]** detail a little bit. Um let's say uh

**[01:00:53]** mass buy is hot. All the private

**[01:00:54]** equities like oh this is hot. I'm going

**[01:00:56]** to buy all up I'm over bidding on that.

**[01:00:58]** Right. They are they are there deal

**[01:01:00]** maker out there quietly making a new

**[01:01:03]** class of industry and repackage it and

**[01:01:06]** show it to the public equity something

**[01:01:08]** that maybe in regular people eyes is

**[01:01:10]** like oh yeah I'm going to pay you one or

**[01:01:11]** two if you're lucky but when they're

**[01:01:13]** done the public I'm gonna pay you 10 for

**[01:01:16]** that that's the real game comes and

**[01:01:19]** that's financial engineering

**[01:01:26]** thank you thank you Hey yo.