This is my exact reason why I want to sell my Spa . Stay on with no responsibility. I’m tired, I can’t find a buyer because massage therapist, manicurist don’t have any money. This video helped me a lot. Catherine
I have to disagree. Many baby boomers have good businesses for sale and have no buyers so rather than just shut their doors and sack all their staff, they would be open to a no money down deal. You just have to find their motivation. for many people its NOT about the money
Yep, it all depends on the business itself, the owner and how the buyer position himself. However, having at least some career, knowing the field and adding a little value can help.
business brokers have no motivation to do it since they are greedy mothafuckjers who would rather destroy a whole economy than help two parts like a seller and buyer find common ground and make the marketplace a better place after all most world economies are made up and maintained by small and medium sized sector companies between 5 and about 200 employees not google not amazon not british petroleum or ford or toyota they all care about their commission and that;s it and inflating the egos of poor naive entrepreneurs who haven't bought or sold not a single business telling them lies about how valueble their business is most businesses are overvalued anyways especially after two years of pandemic and in central europe or easterne europe nowadays of fear of war with russia on one side and nato the other rising interests rate hard credit to get from banks spiraling inflation this is not a environment for overvalued business or realestate only suckers or newbies put 100 % down payment or even40 its too much the best way a seller to sell fast his business and get it done is to have realistic expectation and walk a bit in the shoes of the future buyer by accepting payment in installment with like 1% or 5%or at most 10% down and maybe some trade debtors financing or factoring or investor money a good business will always sooner or later get qualified to have some credit approved eventually if the bank or supplier knows the bizz and trust it in the marketplace and the figures make sense even privat investors persuasion and being chill and calm during those face to face is like getting your first job if you give the vibe that you have many options and being ready to leave the table many times they wil eventually call you back after a few days if not its their loss not yours motivation is key and a flexible mentality perseverence also
Good stuff, thanks Brett. I own a small commercial cleaning company and we are looking at all the different options to grow our business and accelerate our growth, so I have been watching a lot of your videos to get an idea of what is out there. It's good content, really appreciate it.
9:45 exactly the kind of roll up strategy I am executing right now. You create a team and build credibility, second, you associate with professionals like you and industry experts, third you cold call thousands of small business owners and find a very motivated seller, structure the deal and 'fight' with banks, angels, private equity guys, owners (trying to negotiate with them owner finance), running the business and repeating the process. Market must be very fragmented where you can grow. Finally Sell the business to a bigger fish or go public. Easy to say, hard to execute.Thank You Brett!
I'd love to hear more about your strategy, Pablo. That is an interesting approach. Although I haven't seen it work well, I'm convinced it can be a solid strategy. Rollups are deceptively simple. The IBs love them because the strategy is so clear, although that doesn't make the execution any easier than with any other strategy!
@@luigiqetta9710 maybe I misunderstood what you were asking. I thought you were asking if the person I was referring to in the video (that was selling their no money down course) was Dan Pena. It wasn't. Were you asking something different?
Forgot distress deals aka assumption of liabilities if the biz's balance sheet is insolvent (e.g., assume capital leases, interest bearing liabilities, APs) or off-balance sheet operating lease assumptions (big retail distress deals in or out of court)
@@BrettCenkus Sure. Often times a business' EBITDA might be declining or negative and therefore it's tough to service the debt, or maintaining liquidity can be a challenge. The owner might explore reducing footprint, cutting staff, operational adjustments, divest non-core assets, etc. If those don't work, the owner might try to sell the whole business. A buyer can buy the equity (stock purchase) for nothing (and therefore assume the liabilities) if the creditors approve the deal (depending on the terms of the forbearance/amendments/whatever is negotiated up to that point). This is an out of court M&A stock purchase deal with 0 money down.
@@mayare1919 Mehyar, thank you for making this point and explaining it further. I agree that this is a path to no-money-down M&A deals. Personally, I haven't seen this work with anything other than a highly-qualified buyer (a strategic acquirer that has done many deals and has a solid balance sheet). On the one hand, you might think that the creditors have nothing to lose and they might as well take a risk on a lesser qualified acquirer. However, creditors are usually sensitive to trading one problem for another, so they're not the easiest underwriters in this context. Do you agree (have you seen otherwise)?
@@BrettCenkus Yes. I agree with how you describe creditors' risk aversion for sure. In addition to the out-of-court stock sale (assumption of liabilities) I described, I also see 0-money-down deals by PE firms in Sec 363 sales where they bid $0 aka just the assumption of liabilities associated with the assets they cherry pick (and executory contracts) that otherwise would've been shed in bankruptcy (subject to their priority in the debt recovery waterfall, usually vendor liabilities are general unsecured liabilities unless they have some special status). Sometimes these sponsors win the auction, but not often. The senior creditors don't like these bids because they allocate too much value to the unsecureds (vs 'new money' bids for assets where certain liabilities remain behind with the estate). Great content btw.
I am currently doing my research on this whole approach to entering business and after only 2 weeks part time I have learnt enough to undertake an acquisition on my own. If you understand all the paperwork necessary and the financial structuring that is possible then why buy a course for between $4000 and $6000. That was one price of one course I enquired. I can purchase 30 mins with an M&A lawyer and learn the same thing for $250. And don't forget RUclips. Tons of data available.
agreed, there is so much great content out there. That said, I've purchased some expensive courses over the years (not quite $4K-6K expensive, though!) and some were tremendous value. Tough to sometimes tell upfront, though.
A lot of people don’t understand that if the business is ran into the ground or the loan goes into default the owner that is financing the deal now has to foreclose and now they have to waste time and money doing so. Most people don’t want to put the effort in to make it happen they just want to get rich quick and that’s just not the case 99% of the time
We don't see a lot of seller notes go into default. Granted, we don't get brought in to lawyer many businesses trading hands for a few hundred thousand dollars with 100% seller financing, which is an example of a deal that might carry the type of risk that you're describing. We almost always see a seller note behind a bank loan, which is underwritten carefully (i.e., those deals are relatively stable). Sometimes we see them in highly-leveraged deals where the buyer has high-interest rate debt, and the deal is notably riskier than usual, although there the management team and the deal almost always justify the structure. We don't see a lot of "get rich quick" schemers looking to buy businesses for millions of dollars. This particular concern is one of the reasons why banks and investors like to see a buyer have some "skin in the game." A buyer using 100% other people's money, especially if they're new to the industry, would feel risky. As you point out, if the loan goes into default, the seller would need to foreclose, and that costs time and money. And the seller sold the business to get out, not to deal with working out a default situation around it. So, none of that would be a welcome situation. Still, this is typically a manageable (often nominal) risk that I think sellers should view in the overall context of the deal. If the seller note helps get a deal done for a higher price, we encourage sellers to weigh the risk appropriately.
This is great information! I've set a goal to purchase a business, & this really opened my eyes to possibilities. I started a Notary business and I'm getting it off the ground learning the aspects of ownership. I work full time for a global marine company and I am truly passionate in purchasing businesses and assets to overcome the mundane hamster wheel. I want to purchase businesses in the online sector (amazon fba's etc) as well as health and wellness (Med Spa's). As the video states how can someone with no skin in the game go about that? So at the moment I'm thinking raise capital and create a team perhaps? Any insight?
"You structure a deal creatively to get money from those and have a seller carry back note and get a gift...." is it possible you can expound on this? Thanks!
Yes there are 3 ways to structure a deal and it's based on their way of payment: 1. Lump Sum In Full 2. Partial Lump sum with seller funding payed out over a series of years 3. 100% Seller finance over a series of years. This is just base, then the structure is based on motivation of sale: 1. Time 2. Money 3. Expansion Hope this helps.
What would your opinion be on the acquisition mentorship of Dan Pena? Several of his mentees has revealed a very similar business strategy to the last option you referred to. Of basically selling Equity of the future business to pay off the loan to actually buy said business.
I don't know what strategy you're referring to and I don't know a whole lot about Dan's programs generally. From the limited material I've seen, he has some valuable strategies and isn't quite as off-putting (to me) as a lot of the "Buy Businesses With No MOney Down" crowd.
Yes ,u can do NO MONEY DOWN... me personally I evaluate the buisness & situation & let them know,"No one Wants your buisness but me,are u serious....". No Money Down Works!! Make the Calls,fook this guy...
Will SBA 7a, approve of someone with a deal where buyer has no money for down payment, but the seller finances 20-30% ? assuming everything else looks great.
This was a very interesting shed of light on these types of situations, Thank you for sharing your knowledge and experience about seller finance and the similar situations you encountered with them. This is helping me learn more on the subject.
i believe this is the same of analogy of getting your first job you have no experience no nothing just graduated it takes to make a good first impresion at interview and someone with the balls to make a jump of faith to hire frehsmen out of college People tired of rat race and working till 65 or 70 have to start somewhere by taking action and find a motivated burn out entrepreneur of a still profitable running business with employees and some management nad procedures in place. there is no difference almost just in size of money and most people's lack of inner confidence or fear of the unknown rather than technical financial educaiton John D Rockefeller to give and example was an assistant bookkeeper and he knew nothing about oil business but yet he entered the field because he surrounded himself with more intelligent experts than himself by hiring them engineers chemists etc. Read his autobiography Titan Life of John D Rockefeller
Thanks Brett, glad I have subscribed to you’re channel. Totally agree with this and I have learned a lot from all of you’re content. Really appreciate you!
Are you doing that because there is language in the lease that is triggered if the seller leaves? That type of language is usually an anti-assignment clause and/or prohibitions on changes of control (e.g., a sale of all or substantially all of the company's assets or > 50% of its equity interests) and having (or not having) a seller note wouldn't (on its own) speak to that issue in any way.
What is the strategy you recommend the most for business acquisition with no money or previous experience? Do I partner up with somebody who has previous experience?
Mare, it's tough to raise capital without experience and risky. Partnering with someone is a better approach or, although it will be a little slower to get where you want to go, working for someone (as an employee) who is in the industry that you're drawn to (or someone doing M&A deals) would be a great way to get experience and learn what works for you before raising capital to make an acquisition of your own
get financially educated first understand balance sheet and how cashflow works how economy works some psychology aspects of human behaviour would also help why buyers buy what motivates people to act etc etc there are some financial formulas on investopedia on how to analyze a company like ROI ROA ROE IRR and many others technical operational aspects of most business can be learned if the seller is made to convinced to stay onboard to teach you for about 3months or even 6 months during transition a good lawyer can put that into purchase share agreement as legal clause and other types of clause to help buyer mitigate and lower risks' enter a business that you understand it's simple and you like the last part is critical if you won't like it you won't take care of it
Excellent. Great information. SUBSCRIBED. I’m not a “business man” I’m a guy who works a stable “9 to 5” job and makes low six figures, which these days might be considered a living wage. I realize that the only chance I may have to secure my future and give my kid a real chance at life is to take a leap of faith into some type of business venture. M&A seems like it might give me a shot m at obtaining security for me and my kid. That hope brings me here.
@Billy B maybe you’ve never made the low end of 6-figures but if you have then you’d know better. Or maybe your idea of securing your child’s future is different from mine. I make more money now than I did when I wrote this but I’m a frugal person and the low end of 6 figures is a living wage.
@Brett, Great video and funny you call those no-money down strategy gurus....and expose their $997 strategy in a 20 min. video. Majority of the No money (out of buyer) deals are structures this way.... 1. upto 80% financing A/R 2. upto 50% financing the Hard assets 3. Seller carry the rest 4. May be - don't agree to seller's valuation and agree to pay the full asking but as an earn out... Hopefully you get a 100% with the above... if not, 5. Get an investor / equity partner / Family friends..or anything to raise the plug. Worst case buy less 100% of the equity and have the seller as a minority partner and buy him out later
Venkat, great info. I apologize for taking so long to acknowledge it. I agree that your structure is a legitimate way to put together a no money down deal. It's not easy to finance A/R at closing, though, at least from what I've seen. Hard assets are financeable agreed and right there is a great start to gettting a deal done with no (or low) down payment
someone else on youtube won't mention his name does not matter said also to be careful not to over leverage it as it will have to be working perfectly with no down time or periods when sales go down unexpectedly or its the season makes sense when you think about it Now with this pandemic logically would be something that is not that affected by it or by lockdowns or with having a physical location where traditionally individuals came to buy.... research sectors and business that are pandemic proof resistant to some extent no one is 100% obviously... I agree with your ideas
@@BrettCenkus- Great video. So you are kind of confirming that it's possible to buy businesses with a combination of some percentage blend of SBA or other funding source + Seller Financing + Asset Financing, if the seller is motivated enough. In each case the seller does get some money on closing day, but not the 100% of his asking price on day 1. So the core takeaway that you are confirming with the offering of the current crop of training out there is - learn the financing options , learn how to find sellers at retirement age and want to get out, and finally structure the deal so that the seller sees value in offering some percentage of seller financing - perhaps tax savings. If your objection is that sellers may be hesitant to sell to someone not in the same business, that is an assumption that you hold which may be true for some sellers. However it could as well be untrue for some sellers. Would love your updated thoughts on this. Would you like to work together on a video where we can perhaps dissect one of contemporary training program marketing spiels ?
Great video Brett! If I hadn't been binging on your content for the last 2 days, and if I would have just stumbled on this video, I would have totally written it off before I started. 10 years developing business in Panama strikes very close to home. The sheer volume of get-rich-quick schemes that I have run across in Central America has been staggering, and very educational. Even more applicable, I am currently navigating almost exactly the situation you described in which a long-time friend/client is looking for an out and is potentially primed to hand the business over to me with no upfront costs on my part, if I can reasonably ensure that he continues to receive funds from the business to support his lifestyle. In relation to risk on the buyer's part (me), would you have any general input on whether it may be better to purchase the business as a whole with a private note, balanced with some kind of ongoing earn-out to achieve the income he would like to retain? Would you say that there is potentially higher risk in just re-assigning ownership shares and establishing a thorough shareholder agreement to achieve a similar goal? That goal being to seize full operational control to ensure sustainability and growth, while making sure that the founder still benefits in a fair sense.
I'm not just fishing for freebies here! I've done quite a bit of learning and research and I really appreciate your approach. Contact form submission heading your way here to see if your services are remotely in the realm of my budget!
Joshua, thank you for the feedback. Regarding your question, I am not sure I follow the various options you're considering. I recognize that one is to purchase the shares (equity) of the business. But what is the other? Both approaches seem similar to me. In either case you'd have to issue a note for the purchase price right? Is one of the options to keep your friend somewhat involved (i.e., not buy all of the shares)?
@@BrettCenkus I made some moves since this post and ended up offering two options: purchase agreement with him holding the note, or majority acquisition by just assigning shares. Not likely to proceed, but it's on the table...and I'm on to the next project! Thanks Brett!
Hello Brett. Love your content. I’m currently 17 and I dream of owning a holding company one day (obviously it’s a very generic goal). Is there anything you’d recommend learning to attain this? Accounting and M and A law possibly?
Benjamin, finance, accounting, and general business strategy are all great areas of study for you (at your age). I don't see M&A law being on the shortlist of subjects to learn, maybe over time, although not in the beginning. And since accounting and even some finance topics can be a bit tough to grasp with a DIY approach due to their technical nature, don't be discouraged if those areas don't come as quickly to you, in which case focus on soaking up everything you can about business strategy. You don't need a business degree or an MBA to be a great business person, which undermines the value of those degrees (the perception that they're not necessary leads some people to incorrectly assume that they're not valuable), however business strategy is a process, and there are principles you can learn and apply. And learning them is something that you can more easily do with a DIY approach. Even simply reading the stories (history) of great companies and books like In Search of Excellence and Good to Great will help lay a solid foundation for you and, once you get out there and start executing, you'll be able to integrate the lessons you learn with that foundation to form your unique operating philosophy and approach. Best success!
Brett Cenkus thank you, I’ve been learning accounting and corporate finance for the past 2 years so glad I’m on the right track 😊 (I was worried textbook learning would be futile). I’ll take on your advice, best wishes.
@@benjaminsibson4265 That's great! Stay with the accounting and corporate finance topics then if you're getting them. Those are great subjects for you to learn!
Hey Brett, great content.... Is it possible for the acquiring business to be a newly-formed entity with no balance sheet, or history of cash flow itself? is it possible to get an SBA loan based solely off of the performance of the seller's business alone?... Or is it required for the acquiring business to have its own track record?
Yes, the acquirer can be a newly-formed entity with no operating history. Private equity buyers (and others) often like to create a new, clean acquisition subsidiary for precisely this purpose. I don't think the history of the acquiring company matters to the SBA, although I believe all SBA purchase loans still require some type of down payment, so somehow those funds need to come into the deal. If you use a newly-formed acquisition sub, those funds would be on its balance sheet. However, they could have been recently contributed by the individuals who own the acquisition sub for the sole purpose of making the purchase.
You can structure as 90/5/5 in where seller carries a note and investor takes a note in return for a solid cash on cash return. Speak to the SBA about it, the SBA outlines that you don’t have to put your own money in IF the seller carries a note for a certain period of time or something along that. I’m going through commercial lenders and most likely going to structure 60/40 or 70/30 in where an earnout is structure to incentivize and a 12 month transitory period
@@OfficialCxbra I have not seen a 90/5/5 where those amounts are all funds from others (e.g., bank/seller/investor). I'll ask around about that, although it would be a first for me to see an SBA purchase deal that didn't require a down payment from the seller. I have seen deals where a parent or relative gives funds to the buyer (as a gift), and those are the only buyer funds that come into the deal. However, I assume that the SBA looks at the gift funds as the buyer's money technically (i.e., if the parent gives the buyer money to buy a business, they'd give them money for other reasons, and the SBA wouldn't stop a buyer from using gift funds that the buyer received well before closing, so why be concerned with it at closing?)
This video was great. I’m currently in one of the situations you listed and I’m trying to find a creative way of making it work. I would love to pick your brain for a minute
Thank you for the positive feedback. While I want to be helpful, I do not take unpaid pre-client phone calls. I do not have enough time to do that and keep up with paying clients and family commitments. You can ask general questions on here and, depending on what you want to discuss, it may be appropriate for this forum (if you can anonymous the question and it's not super, super specific). You can also book a paid call with me at clarity.fm/brettcenkus. That's quick and allows us to dive right into real, specific issues. It's not inexpensive, but it's easy and low commitment (when you hang up, there are no more charges!).
There are 3 ways to structure a deal and it's based on their way of payment: 1. Lump Sum In Full 2. Partial Lump sum with seller funding payed out over a series of years 3. 100% Seller finance over a series of years. This is just base, then the structure is based on motivation of sale: 1. Time 2. Money 3. Expansion Hope this helps.
Absolutely. At least, I don't know of any countries where you are flat-out prohibited from investing out of or into them. IDK, maybe North Korea is one where you would be prohibited, and I would not be shocked to see prohibitions in other entirely/mostly closed (politically or economically) countries. However, most countries will let citizens buy foreign companies and foreigners buy domestic (in-country) companies. Many countries have some restrictions or notice or approval process, although they still welcome cross-border M&A generally.
non-US citizen owners can get SBA loans. Not every lender allows it, although the SBA doesn't restrict SBA loans to citizens or even green card holders (at least, not programs I've seen). If the owner is not either a US citizen or a green card holder (if there are multiple owners, I believe the standard is for owners holding 51%+ of the equity to qualify, not every owner), there are other requirements related to U.S.-based assets and need to be in business for x amount of time (think it's 12 months - not a whole lot)
Hello, my father in law is selling his UPS store business. I’d like to buy it from him. What are my best options for acquiring funding for the business? I wouldn’t have 20% down and haven’t been in Logistics as a career. He would absolutely help me transition and run the business for the first couple years. What are my options? Thanks!!
If your father in law will let you pay the entire purchase price over time (i.e., 100% seller financing), that would be a great option. Assuming your father-in-law wants or needs money at closing, you should look at the SBA's 7(a) loan program (i.e., contact a lender who offers those). I think they will generally take as little as 10% down, and half of that can be a seller note. That may have changed, or it may be unique to each bank that offers SBA loans (SBA loans come from banks, and the SBA guarantees a portion of the loan), although 5% down would be a good option. If you don't have 5%, you may be able to get that "down payment" amount through a gift from your father in law. I'm fairly certain you could get it from your father, although I don't know about your father in law, given that he is the seller. Those are a couple of ideas. I'm sure there are other creative ways to structure a deal if your father in law is flexible with his needs, although this Q&A forum isn't the right place to go into specific deal advice/tactics, and I don't keep up to speed on all the financing options out there. Best success!
Thanks @Brett, something was very fishy about these courses. I've worked in consulting and crypto start-ups and it made the hairs stand up on the back of my neck. This video confirmed my reservations.
@@BrettCenkus I have looked at a few of his videos - he is very driven but also he does not make any suggestion that it is easy. He is very much into self-development (for the people going into business) and appears to adopt a role of coach as well as M&A advisor. He seems very genuine in wanting for others what he has. Given that he does a lot of adverts you may have seen more of him since 11 months ago?
I paid money for this type of information. My lack of knowledge led me to do so. Didn’t realize I could get this information free of charge lol. RUclips university.
I'm looking to sell one of my businesses, what do I need to do to get it ready to sell and will I need a broker? Where are you located? I'm in California.
I haven't gone through his course material, although I have my doubts about it -- looks "all hat and no cattle" as they say down here in TX! To be clear, I don't know how much value it has. I can tell you that the Buy Businesses With No Money Down pitches are selling a concept that is very tough to execute
hiring new people is risky also life is inherently risky I understand though why many will not achieve financial independence its all about internal inner game lack of self trust lack of confidence or fear of failure or fear of rejection et caetera you have nothing to lose anyways talking with a couple of business owners who want to sell anywasy you will still at least get more financially and entrepreneurally educated at the least even if they refuse your offers if money was an issue than almost no one would get rich yet in USA most millionaires are self made first generation not old money those are just 20% or most 30% start ups are harder and riskier 8 out of 10 fail as most people already know than finding a senior motivated seller of a good profitable business with at least 5-10-15 years market history, good reputation and at least 10-20 employess Richard Branson got rich and famous AFTER he sold his businesses not before and there are more examples of less known successful people who made it big
This is invaluable, and I can't believe this content is available for free! Thank you.
You're welcome!
My sentiments exactly. S/o to RUclips University.
This is my exact reason why I want to sell my Spa . Stay on with no responsibility. I’m tired, I can’t find a buyer because massage therapist, manicurist don’t have any money.
This video helped me a lot.
Catherine
I am glad to hear it helped you, Catherine. Thank you for the feedback!
I have to disagree. Many baby boomers have good businesses for sale and have no buyers so rather than just shut their doors and sack all their staff, they would be open to a no money down deal. You just have to find their motivation. for many people its NOT about the money
Yep, it all depends on the business itself, the owner and how the buyer position himself. However, having at least some career, knowing the field and adding a little value can help.
business brokers have no motivation to do it since they are greedy mothafuckjers who would rather destroy a whole economy than help two parts like a seller and buyer find common ground and make the marketplace a better place
after all most world economies are made up and maintained by small and medium sized sector companies between 5 and about 200 employees not google not amazon not british petroleum or ford or toyota
they all care about their commission and that;s it and inflating the egos of poor naive entrepreneurs who haven't bought or sold not a single business telling them lies about how valueble their business is
most businesses are overvalued anyways especially after two years of pandemic and in central europe or easterne europe nowadays of fear of war with russia on one side and nato the other
rising interests rate hard credit to get from banks spiraling inflation this is not a environment for overvalued business or realestate only suckers or newbies put 100 % down payment or even40 its too much
the best way a seller to sell fast his business and get it done is to have realistic expectation and walk a bit in the shoes of the future buyer by accepting payment in installment with like 1% or 5%or at most 10% down and maybe some trade debtors financing or factoring or investor money
a good business will always sooner or later get qualified to have some credit approved eventually if the bank or supplier knows the bizz and trust it in the marketplace and the figures make sense even privat investors
persuasion and being chill and calm during those face to face is like getting your first job if you give the vibe that you have many options and being ready to leave the table many times they wil eventually call you back after a few days if not its their loss not yours
motivation is key and a flexible mentality perseverence also
I have actually been given an Agribusiness for FREE (deferred payments). I have documented proof of what I am talking about. I am in South Africa.
true
Brett, you clearly have a strong command of business, law, and the M&A space. It's very impressive. Thanks for sharing.
You're welcome, Rikhi. Thank you for the feedback!
Good stuff, thanks Brett. I own a small commercial cleaning company and we are looking at all the different options to grow our business and accelerate our growth, so I have been watching a lot of your videos to get an idea of what is out there. It's good content, really appreciate it.
you're welcome. Thank you for the feedback!
9:45 exactly the kind of roll up strategy I am executing right now. You create a team and build credibility, second, you associate with professionals like you and industry experts, third you cold call thousands of small business owners and find a very motivated seller, structure the deal and 'fight' with banks, angels, private equity guys, owners (trying to negotiate with them owner finance), running the business and repeating the process. Market must be very fragmented where you can grow. Finally Sell the business to a bigger fish or go public. Easy to say, hard to execute.Thank You Brett!
I'd love to hear more about your strategy, Pablo. That is an interesting approach. Although I haven't seen it work well, I'm convinced it can be a solid strategy. Rollups are deceptively simple. The IBs love them because the strategy is so clear, although that doesn't make the execution any easier than with any other strategy!
Dan Pena?
@@luigiqetta9710 no, not Dan.
@@BrettCenkus why not?
@@luigiqetta9710 maybe I misunderstood what you were asking. I thought you were asking if the person I was referring to in the video (that was selling their no money down course) was Dan Pena. It wasn't. Were you asking something different?
Forgot distress deals aka assumption of liabilities if the biz's balance sheet is insolvent (e.g., assume capital leases, interest bearing liabilities, APs) or off-balance sheet operating lease assumptions (big retail distress deals in or out of court)
Not common in the startup or LMM space but still a 'no money down' deal
Can you say a little more about that (flesh out your comment a bit more)?
@@BrettCenkus Sure. Often times a business' EBITDA might be declining or negative and therefore it's tough to service the debt, or maintaining liquidity can be a challenge. The owner might explore reducing footprint, cutting staff, operational adjustments, divest non-core assets, etc. If those don't work, the owner might try to sell the whole business. A buyer can buy the equity (stock purchase) for nothing (and therefore assume the liabilities) if the creditors approve the deal (depending on the terms of the forbearance/amendments/whatever is negotiated up to that point). This is an out of court M&A stock purchase deal with 0 money down.
@@mayare1919 Mehyar, thank you for making this point and explaining it further. I agree that this is a path to no-money-down M&A deals. Personally, I haven't seen this work with anything other than a highly-qualified buyer (a strategic acquirer that has done many deals and has a solid balance sheet). On the one hand, you might think that the creditors have nothing to lose and they might as well take a risk on a lesser qualified acquirer. However, creditors are usually sensitive to trading one problem for another, so they're not the easiest underwriters in this context. Do you agree (have you seen otherwise)?
@@BrettCenkus Yes. I agree with how you describe creditors' risk aversion for sure. In addition to the out-of-court stock sale (assumption of liabilities) I described, I also see 0-money-down deals by PE firms in Sec 363 sales where they bid $0 aka just the assumption of liabilities associated with the assets they cherry pick (and executory contracts) that otherwise would've been shed in bankruptcy (subject to their priority in the debt recovery waterfall, usually vendor liabilities are general unsecured liabilities unless they have some special status). Sometimes these sponsors win the auction, but not often. The senior creditors don't like these bids because they allocate too much value to the unsecureds (vs 'new money' bids for assets where certain liabilities remain behind with the estate). Great content btw.
I am currently doing my research on this whole approach to entering business and after only 2 weeks part time I have learnt enough to undertake an acquisition on my own. If you understand all the paperwork necessary and the financial structuring that is possible then why buy a course for between $4000 and $6000. That was one price of one course I enquired. I can purchase 30 mins with an M&A lawyer and learn the same thing for $250. And don't forget RUclips. Tons of data available.
agreed, there is so much great content out there. That said, I've purchased some expensive courses over the years (not quite $4K-6K expensive, though!) and some were tremendous value. Tough to sometimes tell upfront, though.
@@BrettCenkus hey Brett, what were the names of the courses you are referring to here?
@@gabrielambriz4780 I don't recall the names of specific courses, although one of them was a course by Moran Pober
@@BrettCenkus Id like to know your opinion on the Moran course.
@Tizona Capital LLP Enough with the caps and exclamation points already! lol ;)
A lot of people don’t understand that if the business is ran into the ground or the loan goes into default the owner that is financing the deal now has to foreclose and now they have to waste time and money doing so. Most people don’t want to put the effort in to make it happen they just want to get rich quick and that’s just not the case 99% of the time
We don't see a lot of seller notes go into default. Granted, we don't get brought in to lawyer many businesses trading hands for a few hundred thousand dollars with 100% seller financing, which is an example of a deal that might carry the type of risk that you're describing. We almost always see a seller note behind a bank loan, which is underwritten carefully (i.e., those deals are relatively stable). Sometimes we see them in highly-leveraged deals where the buyer has high-interest rate debt, and the deal is notably riskier than usual, although there the management team and the deal almost always justify the structure. We don't see a lot of "get rich quick" schemers looking to buy businesses for millions of dollars. This particular concern is one of the reasons why banks and investors like to see a buyer have some "skin in the game." A buyer using 100% other people's money, especially if they're new to the industry, would feel risky.
As you point out, if the loan goes into default, the seller would need to foreclose, and that costs time and money. And the seller sold the business to get out, not to deal with working out a default situation around it. So, none of that would be a welcome situation. Still, this is typically a manageable (often nominal) risk that I think sellers should view in the overall context of the deal. If the seller note helps get a deal done for a higher price, we encourage sellers to weigh the risk appropriately.
This is great information! I've set a goal to purchase a business, & this really opened my eyes to possibilities. I started a Notary business and I'm getting it off the ground learning the aspects of ownership. I work full time for a global marine company and I am truly passionate in purchasing businesses and assets to overcome the mundane hamster wheel. I want to purchase businesses in the online sector (amazon fba's etc) as well as health and wellness (Med Spa's). As the video states how can someone with no skin in the game go about that? So at the moment I'm thinking raise capital and create a team perhaps? Any insight?
"You structure a deal creatively to get money from those and have a seller carry back note and get a gift...." is it possible you can expound on this? Thanks!
Yes there are 3 ways to structure a deal and it's based on their way of payment:
1. Lump Sum In Full
2. Partial Lump sum with seller funding payed out over a series of years
3. 100% Seller finance over a series of years.
This is just base, then the structure is based on motivation of sale:
1. Time
2. Money
3. Expansion
Hope this helps.
A question. When taking SBA loan. Is the loan 100% paying of the seller?
What would your opinion be on the acquisition mentorship of Dan Pena? Several of his mentees has revealed a very similar business strategy to the last option you referred to. Of basically selling Equity of the future business to pay off the loan to actually buy said business.
I don't know what strategy you're referring to and I don't know a whole lot about Dan's programs generally. From the limited material I've seen, he has some valuable strategies and isn't quite as off-putting (to me) as a lot of the "Buy Businesses With No MOney Down" crowd.
I actually followed Dan Pena's method and with twigging it there and there I managed to get one business thus far.
I cannot download most of your legal documents. I get errors. I had others complain about the same thing.
Yes ,u can do NO MONEY DOWN... me personally I evaluate the buisness & situation & let them know,"No one Wants your buisness but me,are u serious....". No Money Down Works!! Make the Calls,fook this guy...
Correct!!!
Will SBA 7a, approve of someone with a deal where buyer has no money for down payment, but the seller finances 20-30% ? assuming everything else looks great.
No, I have not seen the SBA accept 100% combined loan to value (i.e., zero down from the buyer)
This was a very interesting shed of light on these types of situations, Thank you for sharing your knowledge and experience about seller finance and the similar situations you encountered with them. This is helping me learn more on the subject.
i believe this is the same of analogy of getting your first job you have no experience no nothing just graduated it takes to make a good first impresion at interview and someone with the balls to make a jump of faith to hire frehsmen out of college
People tired of rat race and working till 65 or 70 have to start somewhere by taking action and find a motivated burn out entrepreneur of a still profitable running business with employees and some management nad procedures in place.
there is no difference almost just in size of money and most people's lack of inner confidence or fear of the unknown rather than technical financial educaiton
John D Rockefeller to give and example was an assistant bookkeeper and he knew nothing about oil business but yet he entered the field because he surrounded himself with more intelligent experts than himself by hiring them engineers chemists etc.
Read his autobiography Titan Life of John D Rockefeller
Thanks Brett, glad I have subscribed to you’re channel. Totally agree with this and I have learned a lot from all of you’re content. Really appreciate you!
Thank you, Chris!
Does the sba want personal tax returns or do i need to own a business?
Any advice for listeners outside the US?
I am trying to structure a deal where the seller carries the note over time but has to stay in the picture for lease purposes?
Are you doing that because there is language in the lease that is triggered if the seller leaves? That type of language is usually an anti-assignment clause and/or prohibitions on changes of control (e.g., a sale of all or substantially all of the company's assets or > 50% of its equity interests) and having (or not having) a seller note wouldn't (on its own) speak to that issue in any way.
What do you think of QLA?
What is the strategy you recommend the most for business acquisition with no money or previous experience? Do I partner up with somebody who has previous experience?
Mare, it's tough to raise capital without experience and risky. Partnering with someone is a better approach or, although it will be a little slower to get where you want to go, working for someone (as an employee) who is in the industry that you're drawn to (or someone doing M&A deals) would be a great way to get experience and learn what works for you before raising capital to make an acquisition of your own
@@BrettCenkus Thank you for the reply, much appreciated!
get financially educated first understand balance sheet and how cashflow works how economy works some psychology aspects of human behaviour would also help why buyers buy what motivates people to act etc etc
there are some financial formulas on investopedia on how to analyze a company like ROI ROA ROE IRR and many others
technical operational aspects of most business can be learned if the seller is made to convinced to stay onboard to teach you for about 3months or even 6 months during transition
a good lawyer can put that into purchase share agreement as legal clause and other types of clause to help buyer mitigate and lower risks'
enter a business that you understand it's simple and you like the last part is critical if you won't like it you won't take care of it
Excellent. Great information. SUBSCRIBED.
I’m not a “business man” I’m a guy who works a stable “9 to 5” job and makes low six figures, which these days might be considered a living wage. I realize that the only chance I may have to secure my future and give my kid a real chance at life is to take a leap of faith into some type of business venture. M&A seems like it might give me a shot m at obtaining security for me and my kid. That hope brings me here.
That’s awesome that you are willingly to do that! what sector did you decide to focus on?
@Billy B maybe you’ve never made the low end of 6-figures but if you have then you’d know better. Or maybe your idea of securing your child’s future is different from mine. I make more money now than I did when I wrote this but I’m a frugal person and the low end of 6 figures is a living wage.
@@bigdap100 six figures a year means you are in top 20% of america if i am not mistaken which is the beginning of rich strata
@Brett, Great video and funny you call those no-money down strategy gurus....and expose their $997 strategy in a 20 min. video.
Majority of the No money (out of buyer) deals are structures this way....
1. upto 80% financing A/R
2. upto 50% financing the Hard assets
3. Seller carry the rest
4. May be - don't agree to seller's valuation and agree to pay the full asking but as an earn out...
Hopefully you get a 100% with the above... if not,
5. Get an investor / equity partner / Family friends..or anything to raise the plug.
Worst case buy less 100% of the equity and have the seller as a minority partner and buy him out later
Venkat, great info. I apologize for taking so long to acknowledge it. I agree that your structure is a legitimate way to put together a no money down deal. It's not easy to finance A/R at closing, though, at least from what I've seen. Hard assets are financeable agreed and right there is a great start to gettting a deal done with no (or low) down payment
someone else on youtube won't mention his name does not matter said also to be careful not to over leverage it as it will have to be working perfectly with no down time or periods when sales go down unexpectedly or its the season
makes sense when you think about it
Now with this pandemic logically would be something that is not that affected by it or by lockdowns or with having a physical location where traditionally individuals came to buy....
research sectors and business that are pandemic proof resistant to some extent no one is 100% obviously...
I agree with your ideas
Exactly. People don't realize this is a skillset
Hi Brett, amazing stuff here! Are you still active on this subject online ?
Starting to shoot videos again after a long hiatus. I expect to start releasing them in a couple of weeks.
@@BrettCenkus- Great video. So you are kind of confirming that it's possible to buy businesses with a combination of some percentage blend of SBA or other funding source + Seller Financing + Asset Financing, if the seller is motivated enough. In each case the seller does get some money on closing day, but not the 100% of his asking price on day 1. So the core takeaway that you are confirming with the offering of the current crop of training out there is - learn the financing options , learn how to find sellers at retirement age and want to get out, and finally structure the deal so that the seller sees value in offering some percentage of seller financing - perhaps tax savings. If your objection is that sellers may be hesitant to sell to someone not in the same business, that is an assumption that you hold which may be true for some sellers. However it could as well be untrue for some sellers. Would love your updated thoughts on this. Would you like to work together on a video where we can perhaps dissect one of contemporary training program marketing spiels ?
Great video Brett! If I hadn't been binging on your content for the last 2 days, and if I would have just stumbled on this video, I would have totally written it off before I started. 10 years developing business in Panama strikes very close to home. The sheer volume of get-rich-quick schemes that I have run across in Central America has been staggering, and very educational.
Even more applicable, I am currently navigating almost exactly the situation you described in which a long-time friend/client is looking for an out and is potentially primed to hand the business over to me with no upfront costs on my part, if I can reasonably ensure that he continues to receive funds from the business to support his lifestyle.
In relation to risk on the buyer's part (me), would you have any general input on whether it may be better to purchase the business as a whole with a private note, balanced with some kind of ongoing earn-out to achieve the income he would like to retain? Would you say that there is potentially higher risk in just re-assigning ownership shares and establishing a thorough shareholder agreement to achieve a similar goal? That goal being to seize full operational control to ensure sustainability and growth, while making sure that the founder still benefits in a fair sense.
I'm not just fishing for freebies here! I've done quite a bit of learning and research and I really appreciate your approach. Contact form submission heading your way here to see if your services are remotely in the realm of my budget!
Joshua, thank you for the feedback. Regarding your question, I am not sure I follow the various options you're considering. I recognize that one is to purchase the shares (equity) of the business. But what is the other? Both approaches seem similar to me. In either case you'd have to issue a note for the purchase price right? Is one of the options to keep your friend somewhat involved (i.e., not buy all of the shares)?
@@BrettCenkus I made some moves since this post and ended up offering two options: purchase agreement with him holding the note, or majority acquisition by just assigning shares. Not likely to proceed, but it's on the table...and I'm on to the next project! Thanks Brett!
@@nomadic_brink Thank you for the update, Joshua. I will aim to be quicker to respond in the future.
Hello Brett. Love your content. I’m currently 17 and I dream of owning a holding company one day (obviously it’s a very generic goal). Is there anything you’d recommend learning to attain this? Accounting and M and A law possibly?
Benjamin, finance, accounting, and general business strategy are all great areas of study for you (at your age). I don't see M&A law being on the shortlist of subjects to learn, maybe over time, although not in the beginning. And since accounting and even some finance topics can be a bit tough to grasp with a DIY approach due to their technical nature, don't be discouraged if those areas don't come as quickly to you, in which case focus on soaking up everything you can about business strategy. You don't need a business degree or an MBA to be a great business person, which undermines the value of those degrees (the perception that they're not necessary leads some people to incorrectly assume that they're not valuable), however business strategy is a process, and there are principles you can learn and apply. And learning them is something that you can more easily do with a DIY approach. Even simply reading the stories (history) of great companies and books like In Search of Excellence and Good to Great will help lay a solid foundation for you and, once you get out there and start executing, you'll be able to integrate the lessons you learn with that foundation to form your unique operating philosophy and approach. Best success!
Brett Cenkus thank you, I’ve been learning accounting and corporate finance for the past 2 years so glad I’m on the right track 😊 (I was worried textbook learning would be futile). I’ll take on your advice, best wishes.
@@benjaminsibson4265 That's great! Stay with the accounting and corporate finance topics then if you're getting them. Those are great subjects for you to learn!
Great info!
Thank you!
Brett, have you worked with Roland Fraiser?
No, I have not
Brett , thank you so much indeed for your time and efforts in posting this video !!
You're welcome!
Hey Brett, great content.... Is it possible for the acquiring business to be a newly-formed entity with no balance sheet, or history of cash flow itself? is it possible to get an SBA loan based solely off of the performance of the seller's business alone?... Or is it required for the acquiring business to have its own track record?
Yes, the acquirer can be a newly-formed entity with no operating history. Private equity buyers (and others) often like to create a new, clean acquisition subsidiary for precisely this purpose. I don't think the history of the acquiring company matters to the SBA, although I believe all SBA purchase loans still require some type of down payment, so somehow those funds need to come into the deal. If you use a newly-formed acquisition sub, those funds would be on its balance sheet. However, they could have been recently contributed by the individuals who own the acquisition sub for the sole purpose of making the purchase.
You can structure as 90/5/5 in where seller carries a note and investor takes a note in return for a solid cash on cash return. Speak to the SBA about it, the SBA outlines that you don’t have to put your own money in IF the seller carries a note for a certain period of time or something along that.
I’m going through commercial lenders and most likely going to structure 60/40 or 70/30 in where an earnout is structure to incentivize and a 12 month transitory period
@@OfficialCxbra thank you for your reply... Why would you go through regular commercial lenders, when SBA 90/5/5 is available?
Rocko Bell SBA doesn’t allow earnouts and they dislike transitory periods. Not viable for us for our first 3-5 deals
@@OfficialCxbra I have not seen a 90/5/5 where those amounts are all funds from others (e.g., bank/seller/investor). I'll ask around about that, although it would be a first for me to see an SBA purchase deal that didn't require a down payment from the seller. I have seen deals where a parent or relative gives funds to the buyer (as a gift), and those are the only buyer funds that come into the deal. However, I assume that the SBA looks at the gift funds as the buyer's money technically (i.e., if the parent gives the buyer money to buy a business, they'd give them money for other reasons, and the SBA wouldn't stop a buyer from using gift funds that the buyer received well before closing, so why be concerned with it at closing?)
This video was great. I’m currently in one of the situations you listed and I’m trying to find a creative way of making it work. I would love to pick your brain for a minute
Thank you for the positive feedback. While I want to be helpful, I do not take unpaid pre-client phone calls. I do not have enough time to do that and keep up with paying clients and family commitments. You can ask general questions on here and, depending on what you want to discuss, it may be appropriate for this forum (if you can anonymous the question and it's not super, super specific). You can also book a paid call with me at clarity.fm/brettcenkus. That's quick and allows us to dive right into real, specific issues. It's not inexpensive, but it's easy and low commitment (when you hang up, there are no more charges!).
There are 3 ways to structure a deal and it's based on their way of payment:
1. Lump Sum In Full
2. Partial Lump sum with seller funding payed out over a series of years
3. 100% Seller finance over a series of years.
This is just base, then the structure is based on motivation of sale:
1. Time
2. Money
3. Expansion
Hope this helps.
Can i buy businesses internationally apart from my home country ?
Absolutely. At least, I don't know of any countries where you are flat-out prohibited from investing out of or into them. IDK, maybe North Korea is one where you would be prohibited, and I would not be shocked to see prohibitions in other entirely/mostly closed (politically or economically) countries. However, most countries will let citizens buy foreign companies and foreigners buy domestic (in-country) companies. Many countries have some restrictions or notice or approval process, although they still welcome cross-border M&A generally.
@@BrettCenkus thanku vry much
This works! Great video! Tons of value 💯👍
Thank you, William.
Very informative.
Do you have to have a US based business or be a person from the US to apply for a sba loan?
non-US citizen owners can get SBA loans. Not every lender allows it, although the SBA doesn't restrict SBA loans to citizens or even green card holders (at least, not programs I've seen). If the owner is not either a US citizen or a green card holder (if there are multiple owners, I believe the standard is for owners holding 51%+ of the equity to qualify, not every owner), there are other requirements related to U.S.-based assets and need to be in business for x amount of time (think it's 12 months - not a whole lot)
Thank You for sharing so much knowledge.
Hello, my father in law is selling his UPS store business. I’d like to buy it from him. What are my best options for acquiring funding for the business? I wouldn’t have 20% down and haven’t been in Logistics as a career. He would absolutely help me transition and run the business for the first couple years. What are my options?
Thanks!!
If your father in law will let you pay the entire purchase price over time (i.e., 100% seller financing), that would be a great option. Assuming your father-in-law wants or needs money at closing, you should look at the SBA's 7(a) loan program (i.e., contact a lender who offers those). I think they will generally take as little as 10% down, and half of that can be a seller note. That may have changed, or it may be unique to each bank that offers SBA loans (SBA loans come from banks, and the SBA guarantees a portion of the loan), although 5% down would be a good option. If you don't have 5%, you may be able to get that "down payment" amount through a gift from your father in law. I'm fairly certain you could get it from your father, although I don't know about your father in law, given that he is the seller. Those are a couple of ideas. I'm sure there are other creative ways to structure a deal if your father in law is flexible with his needs, although this Q&A forum isn't the right place to go into specific deal advice/tactics, and I don't keep up to speed on all the financing options out there. Best success!
$1.00 and then seller finance
factoring or trade debtors or private investor money or a line of credit from a open mided bank
Thanks for the video.
You're welcome.
Great Info Brett! thank you for your straight forward approach. I would love to have a one on one conversation with you.
Thanks @Brett, something was very fishy about these courses. I've worked in consulting and crypto start-ups and it made the hairs stand up on the back of my neck. This video confirmed my reservations.
You heard of Moran Prober?
yes. Not impressed with what I've seen so far, although, in fairness, I haven't been through any of his courses. You?
What about pena? And jim ratcliffe.
@@BrettCenkus I have looked at a few of his videos - he is very driven but also he does not make any suggestion that it is easy. He is very much into self-development (for the people going into business) and appears to adopt a role of coach as well as M&A advisor. He seems very genuine in wanting for others what he has. Given that he does a lot of adverts you may have seen more of him since 11 months ago?
100% owner financing is possible! You just need a MOTIVATED SELLER!
Thank you 🙏
Thank you for the information Brett, I will be contacting you soon.
Thanks for the tips
This is incredibly helpful
Thank you very much for the information. If you start charging money I am willing to pay.
I paid money for this type of information. My lack of knowledge led me to do so. Didn’t realize I could get this information free of charge lol. RUclips university.
thanks
I'm looking to sell one of my businesses, what do I need to do to get it ready to sell and will I need a broker? Where are you located? I'm in California.
What is your company name? And what is the trade?
Many thanks 😊
You're welcome.
How you you feel about Carl Allen. He claims no money down deals on business, but do not provide credible lenders to close the deals.
I haven't gone through his course material, although I have my doubts about it -- looks "all hat and no cattle" as they say down here in TX! To be clear, I don't know how much value it has. I can tell you that the Buy Businesses With No Money Down pitches are selling a concept that is very tough to execute
Yeah, I heard of Carl Allen. I have one word, BOGUS!
Good video!!!
thank you, Jake!
You just saved me $900.00
Were you about to buy a course?
Insightful! Thanks for the honest advice Brett (and infomercials disclaimers :) )
you're welcome, Vishal!
No such thing as something for nothing
This guy is a joke lol
hiring new people is risky also life is inherently risky
I understand though why many will not achieve financial independence its all about internal inner game lack of self trust lack of confidence or fear of failure or fear of rejection et caetera
you have nothing to lose anyways talking with a couple of business owners who want to sell anywasy you will still at least get more financially and entrepreneurally educated at the least even if they refuse your offers
if money was an issue than almost no one would get rich yet in USA most millionaires are self made first generation not old money those are just 20% or most 30%
start ups are harder and riskier 8 out of 10 fail as most people already know than finding a senior motivated seller of a good profitable business with at least 5-10-15 years market history, good reputation and at least 10-20 employess
Richard Branson got rich and famous AFTER he sold his businesses not before and there are more examples of less known successful people who made it big