Buy a Business by Leveraging It's Assets - No Money Down | How to Buy a Business
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- Опубликовано: 28 май 2024
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Why are some people writing me to ask about finding lenders who will lend them ALL the money they need to buy a business?
Why can’t I just roll over and agree that it’s perfectly normal for a broke person with no money to magically be able to go buy a business worth hundreds of thousands or millions of dollars all with borrowed money?
This week I made a video about being realistic in the process of buying a business and how some people will find themselves victims because of their mindset.
I take time out from my vacation to address the unwavering beliefs of one viewer. Watch: • Buy a Business by Leve...
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Watch ‘Buy a Business with No Money’ • Buy a Business with No...
Watch ‘Buy a Business with No Money II’ • Buy a Business with No...
Watch ‘Leveraged Buy Outs’ • How to work a Leverage...
Watch ‘Private Equity in Buying a Business’ • Using Equity Financing...
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There are a few guys that teach in the manner you are criticizing. Glad we have guys like you shining a light on things. It’s a shame that no one has much integrity anymore. Making the sale has been made main priority over integrity.
At the time of this comment, there are 4 dislikes and 4 likes on this video and he just put it out 3 hours ago. This says a lot.
I like your message at the end. Fixing yourself is the key to all success. It is also the keys to business. Fix the people and you can fix companies!
Thanks Carl for the kind words. 👍
Great subject and unfortunately will be lost on those that need it the most. Money is earned and years of incremental growth is no longer appreciated, they want it now. My success started 39 years ago when I was 14. Every years goal was to raise the net worth, no vacations, no new cars, no fancy cloths etc. Wealth is not instance gratification but earned, with sacrifices and persistence effort. Owning your own business is helpful but not necessary. Live below your means makes for a poor music video but really is the secret sauce.
YES- I always love the look on people's faces when I explain that in order to become a millionaire you have to earn and NOT SPEND a million dollars. They don't get it.. they want the Lambo. I'm guessing you loved the book Millionaire Next Door. Do you drive an F150?
@@DavidCBarnett Actually a 1986 Oldsmobile Cutlass Supreme, Ratty as hell but she starts every day and cost me $500 four years ago to purchase. The business does own a 2011 F350 but it is also long in the tooth and is out with the employees every day earning her keep.
David Barnett, You tell it like it is. People get sold on what they can do without any experience. Great audio.
Thanks Gary. Yes, I see this all the time as well.
The main key for a no money down purchase is the seller. You're going to have to find one willing to throw in some seller financing. And there are all kinds of lenders that offer financing on AR. No money down business drals are done everyday. Just like real estate. EBERY DAY. You just have to be willing to keep digging until you find the right deal.
Absolutely Jeff. I also see $0 deals done all the time. Just not by broke people.
Jeff Daily can you help people with buying a business no money down?
Love the video as I'm just about to buy a small ski/snowboards shop. Leveraging the assets, is the best tip I ever heard. Specialy the sallary and the equipment.
Thanks OK, glad I'm able to help you out. If you'd like to share your story once the deal goes down, pls email me at dbarnett@alpatlantic.com
I am glad I found this today. I have been looking at some of these other courses and people you are speaking of and something is just off to me about some of this. I have negotiated 2 deals before with no money down. I have not however done it with finding loans so its a little confusing to me on the lending part. Another thing people need to realize is that a lot of loan companies do require origination fees so the theory of doing it with no money is kind of misleading. I'm negotiating deals right now and learning as I go. The good news is, my mindset has been ready for a long time. Thanks for the videos.
Thanks Melissa. Glad to have you on board.
Other people’s money (OPM) and No Money down are two different things.
Yes. And buying a business when one has 'no money' is another category. If you check out my playlist of videos about equity financing, you can see that I also talk about OPM. I've also made many 'No Money Down' videos and have done many of both kinds of deals. This video is one in a series that addresses the 'programs' online that claim that anyone with no money can buy a successful business. Often these programs are taking $3,000, $5,000, $10,000 or more from people who can't afford it.
I resonate with you. I totally agree that people who do not have a positive can do attitude will be able to buy a business.
I will however continue to search and try to, step by step, prepare myself towards getting the businesses. 😉
The key is to look at yourself and your life as a project. Step by step.
People want the end without doing the work. The book 'Stop Acting Rich' by Thomas Stanley can be a real eye-opener for people who think wealth is all about the bling.
You can find it and other books I like here: www.amazon.com/shop/davidbarnett
@@DavidCBarnett Alright, I will add it to my list of books to read and reference your library. Thanks for the share. I still have my Bodo Schafer Financial Freedom to finish. :)
Love this video David
Thanks Jay! Hope you sign up at www.DavidCBarnett.com so you don't miss any new ones.
Thank you for this! I bought into BBA and after working it so hard, have found that it's not possible without huge huge risk.
Sorry Zachus, what are you referring to by BBA?
@@DavidCBarnett
Probably business buyer advantage
Great insight!!!
Thanks, glad you're enjoying these.
Thanks, I have desperately trying to understand that system & kept coming back to me having to spend well over $50k just to get someone like me with no skill, no knowledge to buy a business. Meaning, I have to bring a lot of people on board just to advise me & teach me. And that is just the first step of the equation. So you are right.
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I love the Negril area and have stayed near Jimmy Buffets 3 times. Couples Swept Away resort is where i stayed and really close to there. Great videos
Thanks. I’m glad you’re enjoying them
Fantastic Advice!!!!
Thanks Corey!
So glad I found you today David... so many fake fast money merchants appearing online at the moment it is scary... hope to be using your advice/services in the next couple years sir...keep up the good work!
Thanks so much! Please like and share the videos you find useful.. It shows RUclips that they're worth watching and makes it easier for others to find.
Thanks David
No problem Tevan. Cheers.
Well said
Thanks
there is a big error in the very beginning of the statement of that "guru".
Where he says the value is 3*4 times the yearly profit. And then if assets are higher than that, you can cover the value by the assets.
He claims value of that business is 3*4 yearly profits.
Actually: value is 3*4 yearly profit PLUS the value of those assets.
So there is the biggest thing where he mislead people
Not quite. The multiple gives you the Enterprise Value which is inclusive of the Capital Equipment and Normal Net Position in Working Capital. The surplus assets beyond these are added... but you're on the right track.
@@DavidCBarnett In basic terms an example of what I mean:
company A is services company. They do not use any equipment (besides the computers) in their services. The profit is X.
company B is services company and they use 1.000.000 worth of equipment to make those services. The proft is the same X as in company A.
So the price of company A (we are basing that on the premise that guru's valuation system is correct) is 3-4 times X.
And the price of company B is 3-4 times X. PLUS the 1.000.000 equipment (not going into detail of how much actually it is worth to the buyer).
So the guru is misleading his audience by pretending you could use that 1.000.000 equipment value to finance the 3-4 X.
While actually that 1.000.000 would be on top of 3-4X
Here I exposed in what shady and sneaky way the guru was misleading and making it sound better than it actually was.
No, you’re incorrect about Company B. You should take the course at www.BusinessBuyerAdvantage.com
@@tomjens2046
Nope, the equipment isn’t added on.
What you were trying to find was the goodwill in the business, but you took the wrong approach.
Purchase price - tangible assets = goodwill
Thank you for the video.
So basically if I want to execute on a LBO, I need to try to partner with an existing private equity company ?
#bedohave 🙌
Maybe build up your own resources and come at a deal with a bit of power and authority of your own.
Hi David, I have watched quite a few videos of yours and I find them chock full of good advice. My biggest challenge so far has been getting a right lender for potential acquisitions. What is perplexing to me is that my credit score is 700+ and 10-15% saved for down payment, but when I apply at lenders that claim they have SBA loans, they turn me down for reasons like that they are not looking to finance anything under $350K. I do not understand that why do they advertise that the buyer needs only 10% as down payment? Where can I find the right lender then?
The SBA program says that you only need a 10% down payment so this is what they advertise. They still have to measure risk/reward and it's hard for a bank to recover it's costs in labor and overhead with a small loan. Have you done the online course at www.BusinessBuyerAdvantage.com ? Being declined for a loan is a normal part of the negotiations and is often necessary to get the seller to agree to the right terms. It's actually not a roadblock.
No, I have not. I am considering signing up. Thank you.
Vendor financing combined with asset refinancing is very doable in my opinion... Other programs recommend both not only asset financing only !
It's hard to get any institutional financing with a balance sheet that has no equity unless there are guarantees or assets outside the deal giving them comfort. I've never said that 100% financing is not possible, only that it is practically impossible for someone with 'no money' to do this type of deal.
If financiers take as collateral the asset and finance only 60% or 70% of its market value, why will they need equity or personal guarantees ?
This video just smash my dreams because I have no money! But I'm going to pick them up and see if I can turn them into reality. It's just going to take longer than tomorrow.
Thomas, it will be okay. These things take time and dedication. You can do it if you stay focused.
That was just ... the shit!! Great vid... great words of advise...
Thanks Anthony. I needed to blow off some steam.
Soo. What if u have industry experts with you doing it?
Industry experts that will work for you for free because you're broke? Maybe if you're a 55 year old industry veteral with the confidence of your colleages who is broke because you just went through an awful divorce. Maybe.
This kind of example is often held up as a way for ANYONE to pull off a 'no-money' deal, but it's a unicorn scenario.
@@DavidCBarnett I am a unicorn. I hope. But industry experts will surely join if they like u or if they have been employees and have not dared take risks? besides, there is very little work in the beginning. only looking at promising deals and then. poof. they have a portion of a good business. free founders equity and all. about that. what kind of numbers or effort do equity partners or others stakeholders like to see?
Do you think this work by buying out say an established Franchise like a Dominos?
If it is really doing badly and the price is low enough, maybe you can borrow enough on credit cards or LOCs to do your deal. But it's likely going to be a business with problems.
Made me laugh hearing people are spending 5,000 to 10,000 on a how to course of buying a business with no money.
Awesome content btw. First time hearing your channel. 👍👍
Thanks for joining us. Please remember to like and share any video you find useful, makes it easier for others to find. Cheers.
When people spend all their effort selling seminars instead of doing deals i smell a rat
I think you’re a bit confused or the ppl are misinformed.
From what I gathered wasn’t that they wanted to leverage the assets to pay off the entirety of the business , rather just the downpayment to the owner, and then let the profits of the business pay back the down payment loan from the bank, and the business owner carrying the balance of the deal. That’s seems perfectly plausible to me.
Aaron, spend some time over here: www.investlocalbook.com/p/buy-business-with-no-money.html
A sobering podcast with a lot of reality. For most newbies what he says is true. However if you develop financial engineering skills,negotiation techniques and group of investor it ix not difficult tp buy businesses with no mo ey. Which is exactly what i did as an investment banker. I now teach financial advisers how$
Could we connect ? would very much like to learn ..
QLA?
I'm sure some of these guys have been over there.
You're obviously talking about Dan Peña's QLA program. Any reason you're so afraid to mention his name or the program? I appreciate your viewpoint but by not addressing him or his program directly you're not providing an opportunity for a rebuttal.
Hi. Nobody has yet complained to me about Dan Pena's program. I looked it up. It costs well over $10,000 to attend. I don't think that this is something a person with no money would go to. I recently met a person who has just gone to the Castle seminar and I'm keeping in touch with him to see how it goes.
Hatbour club promote buying a business for £1 then selling it...any comments?
@@DavidCBarnett Were you talking about Moran Pober?
Go see my latest video to see what one past client has to say about him.
Bill Gates said..."Success is a lousy teacher it seduces smart people into thinking they can't lose"...
Just because you have the balls & the mouthpiece to negotiate & structure a no money down deal doesn't mean you should...
These are all great points to consider David, and any prudent business person will look at both the pro's & con's of any business strategy...
The more life and real experience someone has causes them to put more emphasis on weighing the downside risks in any situation...they have more to lose...where as the person with less skin in the game is more willin to take huge risks despite the risks staring them in the face.
Great points Matthew
Is this what The Harbour club promotes? I am skeptical as he is pushing his seminars hard...
I'm not an expert on the Harbour Club but I did watch an interesting video from them recently that seemed to suggest that they help people buy businesses which are having problems. Of course, it's safer to buy a business that is making money. If you liked this video, find more on this topic here: www.investlocalbook.com/p/buy-business-with-no-money.html
What I've realized that there are two types of experts: one is from 4 hour week fan club and the other is from Gary Vee fan club. Jeremy Harbor make it sound so easy and he is definitely from 4 hour/week club. On the other hand, our David is from Gary Vee club. Btw, I am thinking about joining harbor club as well but it's quite a cost. not sure if it's worth it especially I am an employee and have no business experience.
@@divyangpurohit2718 Don't do that.
why would you do a discount on your business when you are underperforming?
You would do a discount when you are overperforming (meaning no more upside for the buyer).
And no way a discount if underperforming (as there is an upside for the buyer).
Unless you mean a discount compared to what they SHOULD be earning. And not a discount compared to what they earn by underperforming.
Your first question assumes that a seller should be paid for the potential that a buyer has to realize. Most buyers would say that they should earn whatever benefit comes from their efforts.
@@DavidCBarnett What I mean, in a basic terms. Lets say a company in that business SHOULD be earning 1.000.000
If the company is only earning 700.000 - we pay based on 700.000. But we do not make a discount from that.
Because there is a potential - why make a discount.
If we say we make a discount based on what it should be earning (as in discount from the 1.000.000 valuation) - then yes.
but no discount based on 700.000 earning valuation.
And on the opposite side, if the company would be oveperforming at 1.300.000 - in this case we might consider discount, since not much upside when you are already overperforming.
You just had to throw your political bias in there didn't you? I just helped a client acquire a commercial maintenance company in Florida with monthly revenues of 250k+ by bringing on a equity partner and also pulling an Merchant Cash Advance of 10% annual revenue to structure the entire deal. Oh, by the way, he's a Mexican Immigrant. So no, I don't buy your cynical video. You shouldn't tell people they can't do something just because it's never worked for you.
So if the average profit after owner's salary is about 10% in most industries, this buyer is essentially rolling the dice on whether he'll be able to make it or not in the first year since he'll be likely paying 6-10% of revenues to repay this cash advance. This doesn't sound like a prudent deal to me. Watch this video on the true costs of Merchant Cash Advance.
ruclips.net/video/kCLS09fXUE4/видео.html
True, great videos anyways but i bought a transportation business with 600k monthly revenues with no money and at 23 yrs old
Did it come with all the operating capital needed to run the business and pay all expenses before your receivables started to get paid? If you had to bring your own operating capital into the deal, then you didn't buy it with no money. Even if the assets of the business are financed at 100% it is still not a 'no money' deal.
Had all financial statements, worked them with accountant and legal diligences with lawyer. Allowed to have access to nearly all documents.
Called a Loan Company, got Swing loan on assets=250k contracted to proove to the seller that im serious for closing the deal, went to a private equity firm that lent me 400k as debt payable after paying back the bank (so 8 years = in fine), debt is not convertible ;) but 8%...
Called on the sellers banks, first one i got into told me, i work with the company for 5 years, i know it well and your plan is good, how much do you need ? Bank=400k Arguments: private equity firms don't lend money, they did ! 200k in cash at the company bank (i have operating capital). The Banker said yes. Not too much debt on the company for it size/ebitda
Bought it below market value 33.7%
Total 7 year debt swing loan + debt = 650k = monthly payment = 8147€
Total mezza debt in fine=400k (if i can not reimburse, i have to take a loan after 8 yrs)
Cash at the bank=200k
How i pay back the bank ?
Management fees every month with the created holding company that pays out the debt and reduce taxation.
Whole process 4 months...Knew nothing about the a year ago... Never went to school but curious :)
Payed the account by setting up a contract with him = 12k annualy
Payed the lawyer 8k back after 3 months with the holding company :)
The business runs with part factoring on big clients and part cash for maximum security. Transportation businesses in france are payed in 30 days by their clients. idk how it is in USA