How To Buy and Sell Businesses with Ace Chapman

I buy, grow and sell businesses under $2,000,000 – Ace Chapman

Ace doesn’t think you should start a business. He thinks that’s harder. He thinks you should buy a business that is already profitable, but then improve it to create massive wealth. Learn how to find businesses for sale, how to get them at a good rate, whether you should keep the owner on, and what he does to radically improve them as soon as he buys them. You don’t want to miss this one!

Go to AceChapman.com for more info!

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Thanks so much for listening!

Transcript:

Announcer: Welcome to the Eventual Millionaire podcast - with your host, Jaime Tardy. Real talk and real advice from real millionaires, with a sharp focus on you - the Eventual Millionaire.

Jaime: Welcome to Eventual Millionaire. I'm Jaime Tardy and I'm really excited to have Ace Chapman on the show. This is one person that I've never had anything like it online, which is really interesting because this is something that you need to know about - he buys and sells businesses. He's done over 15 offline businesses and 20-something online businesses, so I'm really excited to get into it today with him. You can go to AceCHapman.com. Thanks so much for being on the show today, Ace.

Ace: I am glad to be here with you. I'm a big fan of the show, a big fan of what you do, so it's an honor to be on the show today.

Jaime: We were just talking about how amazing it is that I've done 130 interviews and we haven't really talked about this, which is crazy. How did you get into it?

Ace: It's amazing to me as well. I kind of fell into it. I bought my first business, it was an internet business, which was an online stock market, back when that was cutting edge technology. I was still on dial up and all of that. I saw the potential of this business and I didn't feel like the owners were really using it. I was just a business nerd even when I was a kid. I saw this was a huge opportunity, I love the stock market, so I ended up putting together my first leverage buyout. It was a $60,000 deal, I only had about $3,000, so I cobbled together some credit cards, got a friend of mine to put in some money and bought this business. Back then I wouldn't have called it a leverage buyout, I just called it "I don't have any money and I want to buy this business. How can I pull it off?" So that was my very first deal that I purchased and I wish that it was just a happy ending from that point but that was during the first boom and bust of the internet, back around 2000, and so I ended up growing this business from when I bought it when it had 10,000 all around the world to a quarter of a million users and then the crash happened. We ended up selling the business for about one-tenth of what we could have sold it for before that. To see something come down 90% in value was an absolute shock and terror and, honestly, I went through feeling just terrible, like a failure, depression and all of that stuff. It was a blessing in the sense that after that I was really interested in selling a business.

Jaime: At the right time, too.

Ace: Exactly. I was probably trigger happy - not even necessarily at the right time, just "Okay, let's sell."

Jaime: How long did you actually have that company for? Because from 10,000 to 250,000, that's insane.

Ace: That was over the course of a couple of years. Things were different back then "0if you had a great product and people liked it, a lot of that was through word of mouth, even though we were over 70 countries. Things were a little different than they are now, so marketing tactics and all of that stuff weren't as complicated, to be honest. But,yeah, it was a great business.

Jaime: So you put in $60,000 - did you end up making money on it even though it was only worth 10%?

Ace: I got some money back. At that point we had investors and one of my biggest concerns was making sure that they got their money back, so that made me feel really good. One of the things that was a turning point for me was that I had a mentor at that point and he recommended taking just assets, doing almost like a balance sheet of where I was - my skills,talents and money, all of that stuff on the asset side, and then the liability side, all the downsides and pain and all of that, because one of the things that happened was that I left college. I went to Colgate University and I ended up leaving school because this thing was just way too big for me to run from school. That was a funny story - even just talking to my dad at that point about leaving, it was a hard decision. He was like "How much money are you making from this thing?" because he just thought I was playing around on the internet, so it was "How much money are you really making from this thing?" and I said "Well I just got a check today for $20,000 from some ad revenue from last month," and he was like "A check for $20,000? That thing is not going to cash." He literally walked me from his office to the bank and asked "Is this thing real?" It was from DoubleClick, which I knew was absolutely huge, and they called and checked and said "Oh yeah, they're totally good," so he was like "Yeah, you're quitting school - let's grow this thing!" It was a tough thing but I think the blessing of it was learning how to buy business, seeing that missed opportunity of selling a business and still being really curious about that space.

Jaime: This is awesome. I definitely want to get into how the market is now because, as you said, it's a very different timeframe, but what I want to ask before that is did you actually come up with any money and if you didn't how did you end up doing another deal? What was your next deal?

Ace: I came out with about $24,000 at the end of it and I did some small internet business, just buying those, growing them and selling them, and once I'd got to my fourth business everything transformed for me. It was a business called HomeVestors and they have franchises all over the US that have billboards that say "We buy ugly houses" and there was a unit here in Chattanooga for sale and we ended up buying that business. I was really excited because real estate was all the rage at that point.

Jaime: Another bubble.

Ace: Exactly - let's flip this house, flip that house. I was a lot more level headed that I was during the internet boom, so I purchased this business and we grew it from buying and selling about 20 houses a year and grew it to buying and selling 50 houses a year and I owned that for a couple of years. Unlike before, as soon as somebody walked in my door and wanted to buy that business, I played hardball a little bit and ended up selling that business. I obviously had no idea of what was coming and fortunately he was already a millionaire so I'm glad that I didn't sell it to somebody where it was going to be unbelievable hardship. I ended up selling that business, holding a little bit of equity and that was kind of my model going forward. The huge shock and the transition was a couple of things - one was, when I bought that business, everything was really great with real estate and all of that, but just understanding that these boom and bust things do happen. The second thing was that I had been buying businesses that had been based on a two multiple. Now things have changed a lot, but back then you could buy an internet business for less than a one multiplier. The whole measurement of multiples were done on lots because they would be less than a year, so you could buy things at a five multiple and five was five times monthly earnings. I was selling a lot more internet businesses back then. We were buying and selling in that whole space. You go to offline businesses and you're buying and selling based on a two times earnings, which is still really great, and so I'm in this real estate thing and I'm selling a lot of properties and I'm just like "Man, this is amazing that people are so excited about an asset where you're talking about 15, 20, 30 years before it's paid off, and it's a great method to become a millionaire - just buy $1 million worth of property and wait 20 or 30 years to pay it off." It's just their whole life. Compared to doing the same thing in business, there's just no comparison when you're talking about paying something off in two years. I've obviously had businesses paid off in less, or the worst case scenario, four years. It's a much easier and quicker way to build wealth than a lot of other things. So it was realizing that, combined with the fact that they had done a great job with creating systems around the investment of real estate. I had employees because obviously I couldn't run around to pick houses and manage what we were going to do with them - whether we were going to flip it or keep it as a rental - so they did an amazing job of creating systems around this whole thing of real estate so once i sold that business I decided I was going to do the same thing around buying businesses. I did some really neat things - one of the businesses I bought after that, I didn't have to be very involved; it was another franchise, I sent my employee to the training, they trained her in how to run the business and she came back. So I really started to play around with some of these things with each aspect of the deal, from finding the deal to doing due diligence and valuations and all of that stuff, and creating systems around that.

Jaime: Okay, so of course we now have to ask what these are. One of the things that I really want to know, especially as both of those things seem to be huge trending opportunities, and thankfully you got out of the second one in time, that worked very well, but the question I have right now is if someone is looking to do what you did right now and they don't know whether something is a good opportunity or not, what tips can you give us to know whether or not something is a good idea?

Ace: Obviously buying a profitable business. Or even take a step back - I feel like everybody should buy a business instead of starting one.

Jaime: Really? Okay.

Ace: It just doesn't make sense, looking at the statistics. You go out, you put a lot of time and effort into starting a business from scratch. Day one - you're not making any money. You've got to go out, especially if it's an offline business, build it up, hire employees, train those employees, and that's before you open and do anything on day one. Then, day one, you have to start paying those employees, you have to start paying your lease and your utilities and all of that stuff. Even if it's an online business you're paying for the development and maybe some employees there, plus all of the expenses, hosting and advertising, and you're still not even at breakeven. You've got to work and hustle just to go from zero to breakeven. So even for people that I work with that are interested in starting a business, I say "Find a business that can serve as your platform business. Let's skip the startup phase, because that's where everybody's getting slaughtered." The odds are just way against you and life is too short. So let's start with a profitable platform business that's already creating profit and then build your idea and your startup out of that. Use those employees, use that facility, use some of that marketing. You just end up with a much easier time of being in this thing we call business.

Jaime: So how do we do that? Tell me more about what that process looks like.

Ace: Some of the things that I look for in a business - I own two businesses right now and one of them has been in business for 34 years, which is older than me, I'm happy to say. It's been in business for longer than I've been alive, that's a great thing. The other one has been in business for over 20 years. Those things aren't going anywhere. Some people have their 401K money invested in things like Groupon, where they're still trying to figure out the business model. The only difference is that they happen to be in a smaller niche,but they're just not going anywhere. So that's one thing I look for. I like to target baby boomers - there are a ton of baby boomers that own businesses and there's a lot of supply that's come into the market from those baby boomers because they've got to retire at some point. They want to cash in on their biggest investment which, a lot of the time, is their business, so I love to target those folks. The other part of that is that they're willing to do some self-financing because they want that consistent monthly income, whereas someone who is younger wants to get a lump sum so that they can go on and build something else. Some other things that I like to look for are profit margins and consistent earnings. It was almost scary, with the 34 year old business, how the numbers were the same every year for the last 10 years, so consistency and revenue, and hopefully looking at something that's going to be a good match for your skillset and personality-wise. One of the things that we introduced here recently is doing the skillset test and doing a personality test so that we can match them with things that they're going to be a good match for. An example of that is we did a deal with an amazing lady out of Pittsburgh - she bought a business out of California where their team was great at development, they were great at creating operations and creating this business process and doing a lot of the programming and all of that stuff. They weren't so good at marketing. Well, she came to me and said "I'm on maternity leave from Pricewaterhouse," and she couldn't imagine leaving her kid in four months so she wanted to buy a business so that she could stay at home with her kid and not return to work and she had a pretty big salary to replace. All of the financial things are important, but more important was that she was passionate about this business and the niche that they were in but also her skillset - she was in marketing and did a lot of marketing. These folks had built a business and because they were so great at building a product they attracted a lot of word of mouth advertising and spread that way but had never done any marketing, so that's something that she can take and really grow. We also had a client in South Dakota who bought a business in an area that sold rosemary and those kinds of things and the neat thing there was that because of the niche that she was in, because she was surrounded by people that were also into that niche, she was able to raise the money from those investors into her deal, so we look outside of the norm to see where something is going to be a unique match that makes this deal great for you. Because it's great if you can buy something at 2x earnings or even less, but it's even better when you can buy that 2x earnings and you've got something unique about you that makes it worth a lot more on day one, meaning you're basically getting that 1x earning.

Jaime: I love that. So tell me more about the skillset stuff, because I'm sure people would love to know their personality and skillset. What sort of tools do you use to help people determine that? Because a lot of the time it can be hard to look within and go "I'm good at this."

Ace: We have a doctor who created what is basically an entrepreneur personality and skillset test so we licensed his process for doing that for our clients and we walk them through that process. It gives us a lot of deep feedback beyond just "Hey, here's your personality type," and that kind of thing. It just gives us some deep insight. Bigger than that,though, is the conversation it allows us to have with our clients, because no test is going to say "This is the business for you to buy" but it creates some talking points for me to say "Okay, what do you think about that? One of the things that came back in the test is that you're going to be better at working in the back office than dealing one-on-one in a retail environment. You need to be in a more executive type business as opposed to this type." Being able to have those types of conversations takes us a level deeper and the reason that all of that happened is that BizBuySell.com did a study where they followed some people from looking at buying a business to actually closing on the deal. They surveyed 100 of them, four years after they'd bought the business, and a few things really shocked me. They had a lot of questions in this thing but a few things were really shocking. One was the percentage of people that were happy that they had bought a business. I've talked to a lot of folks and I know a lot of people are looking for a get-rich-quick thing and they think once they've bought a business they'll never have to work again, but it was actually 70% that were happy that they had bought a business, which was shocking to me. The other thing that was shocking was that, when they asked them if they thought they had bought the right business, less than 20% thought that they had bought the right business and the biggest reason is that the whole process is all about money. In this whole thing it's just about what the return is going to be, what's my income, so when we talk about the lady in Pittsburgh, sure, we could have just gone out and got a business that made over $100,000 - that's a lot easier to do - but to find something that's going to be something that she enjoys, something that fits her skillset, something that she can leverage and grow, that takes a lot more work. One of the other big things that I tell people is that the average person looks at six businesses before they buy a business and there are some specific reasons around that - the human brain can only juggle so much information, so when you're looking at a lot of deals the brain can't really make a good decision so what the average person does is they look at a couple of deals, they get some information from a broker, they look at the prospectus, once they give the prospectus back one of them may not seem as interesting as it did before so they get rid of that one and they keep going down - I call this the straight-down process - they keep going down the straight line, they talk to the seller of the deal, then they realize "Well, no, this isn't a good fit," and then they start back at the beginning. This is two or three months down the line, so once you've done that process two or three times you just want to buy a business. What I recommend is that you look at at least 50 deals and the average person that we work with looks at over 50 businesses during our time working together and we've got a lot of tools and things in place that makes analyzing those deals a little bit easier so that you're scoring and that kind of thing, as opposed to trying to juggle all of that information. We see the screens with the day traders and they're looking at them, and I got to meet Timothy a while back, but you see all of these screens and they're looking at all of these deals, you know, Timothy looks at a lot of deals before he decides to buy, he's looking at deals all day long, and it's the same with this - the more you look at a lot of deals, the better the opportunity you have to close something that is going to be a great match.

Jaime: That was Timothy Sykes who I've interviewed and he's amazing and hilarious at the same time which, if you've met him, you know. The question that comes up is where do we find the businesses? I know that there are websites, which I would love for you to explain to us, but would you suggest going online and finding someone who's already planning on selling or do you want to find someone who might not have been planning on selling or haven't put it up yet and try to get those deals yourself?

Ace: One of the things that I tell our clients is that every business is for sale.

Jaime: For the right price!

Ace: Exactly. The easiest way to find businesses for sale are places like BizBuySell.com, they are the largest market place right now. BizQuest is another. There are a lot of places to find businesses online. That's a great place to start and a great place to look for deals. I personally love to look for deals on what I call the hidden market - those are folks that want to sell but just don't want to put their business on the market. There are a lot of reasons why great businesses don't want to put their information online or even just have random people come in. It really is risk with the internet businesses - so just a quick side note for people who are looking for internet businesses, one of the things that you've got to be careful of is that there are people who will sign an NDA, a non-disclosure agreement, get their prospectus and basically copy the business model. One of the greatest motes around an internet business is the fact that no one knows how much money is in that niche. It's fairly easy to go and duplicate any internet business model so once somebody knows the Google Analytics, where the traffic is coming from, the key audience they're targeting, that's all they need, and the person who suffers isn't the seller, a lot of times, it ends up being the buyer who buys that business. I mentioned before the multiples, and internet businesses are moving towards 2.5 to 3, they used to be cheaper than offline businesses but now they're more expensive. There can be some really great deals but when you're doing internet business it's even more crucial to get access to deals that are on the hidden market. It's a huge risk to buy something and find out later that you've got five competitors that are now competing with you. It changes the whole dynamic of that niche market that you're in. We all know that the best deal for everything is never advertise - the best deal for a car or a house or whatever, you're not going to find on a marketplace. It's going to be done between individuals and so we try to line up people to get  access to some of those deals and we've got over 30 different ways and I'll share a couple of them here. Obviously one of the things you want to find out, especially, again, from the internet deals, is getting access to pocket listings, just like you hear about pocket listings on houses, it's the same thing for businesses, even more so because a lot of businesses are just very touchy about it getting out that they're trying to sell. But one of the greatest sources for us has actually been divorce attorneys. Divorce attorneys are a great source of really great deals. We had a deal up in Seattle where a guy bought a business and we almost walked away from the deal because they had basically set up times to meet at the business on three different occasions and the guy just didn't show up so we thought "Man, this guy must just really not want to sell, he's being really flaky." It turned out that he just had so many negative emotions associated with the business, like guilt with his wife, that he just couldn't go back to it, so that's obviously a motivated seller - someone who can't go back to their business needs to sell ASAP and obviously we were able to negotiate a really great deal in that case.

Jaime: That's awesome. Can you tell us one other way? Because that's a great way to find hidden deals.

Ace: Another thing is just the direct approach; networking. Something that we do a lot of is just letting people know that you're in the market to buy a business, even just on a simple basis, building a site and having cards, those kinds of things, but even just telling people "I'm in the market to buy a business." People aren't used to hearing that so it sticks out. They're used to meeting real estate investors or entrepreneurs and it's like "No, I'm not an entrepreneur, I buy businesses that already exist and are growing." The great thing for the folks in our network is that they become the people in their city that are the go-to people when somebody thinks "Okay, I want to sell my business." They become the first in mind - "Hey, this guy buys businesses, you should talk to him."

Jaime: I love that, that's really cool. So then the question is about finance - number one, we want to make sure we're getting a good deal and not getting screwed. Number two, at the beginning you didn't have a lot of startup capital to invest in it, so what are the structures of some of these deals and how can someone do that?

Ace: The biggest problem, what most people do, is they finance a business the way that people finance their house or finance a car and that's just not how business is even supposed to work. One of the things that we also do is we give out 99 different types of financing - not just different places to get financing, but when it comes to business, 99 different types of financing that an entrepreneur can get access to, and the importance of that is not to become an expert in all of those, but just expand your mind - "Here are all of the different places where I can access capital," because what you want to do and what we build is an actual structure of the deal. So when you look at a Fortune 500 company or any kind of business, whether it's penny stocks or a huge business, you look at their balance sheet, they've got different levels of financing, so they might have some equity, some bonds, some equipment, some AR financing and they may have some bank loans. The way that they're used to applying for a loan is just go to the bank and apply and if that bank says no you go to another bank because you saw an ad that said "We're business friendly. We love small business," or whatever. You go to that bank and they say "No? too and you're like "I thought y'all loved small business!" It's just banks, banks, banks. It's not really supposed to be that way in business. What you want to do is build up a deal structure that includes all of the different ways to get access to financing for that deal and then structure it in a way that gives you the best ROI. You want to create a capital structure that gives you a bottom line or an ROI that is the best, not just "What is the one place that I can get access to some money?" and try to figure that out. The great thing that I love about doing these deals is that, in this market, people expect to do some solo financing, so that becomes a great component of how we do deals. People will see some of our stories and testimonials where we've gotten people 100% or over 100% in financing and it's through those methods of putting together the best structure for that deal. It may turn out that it ends up being 100% financing but that's the structure that's going to give us the best out lie at the end of the day. The other mistake that a lot of people make, and I have to talk about this because it is a part of it, is starting from the very beginning. Like I said, it's not like applying for a house, you can't just walk in somewhere and get financing. We start at the very beginning, preparing for financing. We get the entity created, we start to put some lines into a D&B credit profile and build up this entity. Our goal, by the end of it, is, once we're ready to actually buy a business and somebody we work with is putting their application onto the desk of an underwriting, it's just going to stand out among businesses that are under $2 million because we're doing things that are, most of the time, what a $10 million business would do. I was at a conference one time, talking to one of the largest underwriters of SPA deals and one of the things that she mentioned was that the reason that most applications for small business loans are denied isn't some super-secret, some finance method or credit or anything like that, it's that they do small things when it comes to compliance and there's a whole list of ways that compliance can cause issues for a lender and I'll give you the most simple one - you have a guy who decides he's going to purchase an oil change place and he calls it "Uncle Joe's Oil Change" and he goes out, gets the federal ID and that kind of thing, and then he wakes up one night with an amazing idea - he's not just going to do oil change, he's going to do a car wash as well, so he decides he's going to make the name "Uncle Joe's Oil Change and Car Wash." He's already got the EIN number but now he's going to register on the state level and on the state level he goes ahead and makes it "Uncle Joe's Car Wash and Oil Change" and now you've got two entities and basically the entity doesn't exist. There are a lot of things that don't seem like a big deal when you're not a lender and so we try to think about the entity from the lender's perspective, the personal borrow from the lender's perspective and we want to look at deals from the very beginning that are going to be in line with that person's financial situation and the different types of financing that we need to get access to, based on that individual.

Jaime: For your very first business, looking at what you did, $60,000, especially when you're that young, seems really risky, and a lot of people are more risk-adverse. Out of the millionaire I interview, I wouldn't classify them as risky, in general, they're very good at mitigating their risk as much as possible, so when someone's brand new to this, because I bet a lot of people come to you completely brand new, so what do you suggest? Should they be taking money out of their 401K? Should they be scraping to get as much of their own money as possible? Should they find a partner to go with? Or should they try to get 100% financing? Or does it all depend.

Ace: It's hard to give recommendations like that because every deal is different. I'm a little more conservative if somebody is just out there on their own doing this stuff. When we go through due diligence, that's a key part in trying to figure out how to finance the deal, because if you've got a safe, secure deal, it would be a good investment for a 401K, if you've gota business that's been around for 30 years, and that kind of thing, it's a pretty stable investment. The really great thing about this stuff is that high velocity of money is so crucial, so I would rather have a pretty risky investment where I'm going to get all of my money back in a couple of years than a semi-risky investment where I have to wait 30 years and then year 15 we're all in trouble. So that's how I look at this - as long as you're structuring it the right way, even if you have some basic due diligence knowledge, the thing shouldn't be crashing on day one. Then you've got a lot of other things to consider, so let's say you make it through the two years and things do crash, one of the things we try to focus on is having assets that we're going to be able to sell. If you're starting an internet business you can put a lot of time and effort and money into something and if it doesn't work after a couple of years then you have nothing. The great thing about this stuff is if everything does hit the fan you've still got assets that you can sell to make money. The great thing about buying offline deals is that a lot of the time you're still going to sell at 2x earnings but those assets are going to be included. So you buy the cash flow but you've got assets as a bonus. You really have to assess your skills, you have to know what you're getting into. One of the quick stories I'll tell, another thing that I'll give as an option, is just investing in businesses - I love taking equity stakes in business. I like investing in businesses where there's low hanging fruit. This wasn't an investment, this was actually a purchase, but one of the great things with these businesses that really goes back to that question of where's the risk - I bought a tennis line where they had a 14,000 person database of people who had actually come and done business with them and they had never e-mailed, they had never called, they had never sent direct mail, they had never contacted them in any way. So I literally doubled the income of this business just by targeting their own customers. When you find those opportunities like that, you've got to assess "Hey, can I go in and do this?" It's more of a personal assessment, a lot of times, than a business assessment - "What can I do with this business?" Another example of that was I had a clothing retail store that I sold and we were doing about $600,000 a year in revenue, maybe a little bit less, probably around $575,000 to be exact, and I felt that I was doing pretty good, I've been doing this business thing, just a little clothing store, I was going to sell it to these guys and as long as they can maintain it, that's great. I kept an equity stake in that as well. I'd been getting checks on a quarterly basis and they were getting bigger and I was like 'Man, these guys must be doing well." I didn't realize how well until they called me and they wanted to sit down and they said "This year we broke the $1 million mark, we took it to a little more than $1.1 million," and this was a business where I thought $600,000 was great. They said they were going to go and get another location, they wanted to expand and get more square footage. But the downside is that they wanted to buy me out because they were tired of sending those checks to me every quarter. So they bought me out and all of that. It's something where you have to assess, and obviously I had idea that that business could do as well as it did but that's what they brought to the table and obviously for them it was all of their attention. I had a lot of different things going on, I'm always buying and selling, so I really just wanted to pay the business off and sell it. So that, in a way, is a lot of different answers and a lot of different perspectives to assessing the risk and determining how to structure a deal.

Jaime: I love hearing the stories too. That's really helpful, to put it in perspective for people. Especially the e-mail thing, going "Oh, that's a huge opportunity that I know I can serve very, very easily," so I think that's great. We have to start wrapping up on this, although I could chat with you forever - can you give me timeframes on this stuff? I know it can take a little while and I don't want to get anyone's hopes up, going "I'm going to buy this, it's going to be three months and I'm going to sell it, it's going to be awesome," so give me a timeframe on a typical thing for you.

Ace: Of course there are always extremes - I will normally sell a business within two years. So the 30 year old business, I'm coming up on two years and we actually have a buyer lined up that's going to buy it in April. But then, like that tennis line, that was actually a six month deal. I kind of exploded the revenue and sold it to somebody else, did some other things in the business, made it more like a franchise, invested in a nice sign, really put some money into it and grew it at the same time and sold it within six months.

Jaime: So tell me about the due diligence process too - like from day one. So, yes, definitely on how long you hold something, but how long the whole process takes.

Ace: The process of finding a business? Okay. Let's just go through each step - the first step is actually finding the deal. You go through, you find the deal. The next step is you're going to sign the NDA with a broker or even with the business owner if you're dealing directly - I recommend, even if they don't talk about an NDA, you should let them know that you're educated and say "We should have an NDA involved." After that, you get access to the prospectus and some general information. Most of the time you're going to do a call with the seller once you've gotten that information to ask them questions and figure out what's going on. I really like to do a second call because that first call is great if you can just get to know them and spend some time talking to them. The second call is where you really dig in to due diligence and you can ask them tougher questions, you've had the nice "I'm not just a complete A-hole" talk, but now it's time to get down to business. After that, you're going to do an LOI. Already we're six weeks in. An LOI is a letter of intent and that details your offer, so the fun stuff with this is that you've got all of these things that you can control in the LOI - it's not just the offer, it's the price, the down payment, the financing terms, whether you want them to finance, whether you want them to hold equity. All of those things come into play in the LOI and you want to put together something that makes it as attractive as possible. After that you do the true due diligence. In the second due diligence call you get information but you don't really verify that information until after the LOI. Then you've got about 30-60 days to close if you decide, after your due diligence, that you do want to close. So, on average, just from looking at the deal to closing, it can be about three months.

Jaime: I appreciate that. Okay, so that's even before the hard money is written and signatures are signed and that sort of stuff. That's a lot of work. I appreciate you going in and telling us how it goes because some people would be like "Oh, I just buy it like a car or a house." That's a little bit easier, so being able to explain and go through some of this stuff, and of course you have to have lawyers and all of that other fun stuff involved as you're going through it - please don't anyone do it on their own, especially if they're just starting, I want to make that very clear! So I really appreciate that. Then you go through and figure out the other stuff. I wish that I could be on a lot longer with you but I have to wrap up, so the last question that I always ask is what is one action listeners can take this week to help move them forward towards their goal of $1 million'

Ace: Start looking at businesses. I think whether you want to buy a business or not it's great to know what's out there in your market. It's great to be able to talk to sellers and learn from them. One of the greatest opportunities in this is when you get to speak to somebody who's built a profitable business. It's an interview process but you're actually able to interact with the millionaire on the other line and ask them questions about how they built their business and they do lift the kimono and let you behind the scenes, so just that is a really valuable process for any entrepreneur.

Jaime: That has never been said before and I think that's amazing, especially for someone who is a bit newer to this and doesn't understand the whole thing. Being able to actually see a working business is hugely educational for you. Don't get me wrong - I love interviews, that's what I do, but it's hard to get the full picture unless you're looking at it. Thank you so much, Ace - where can we find out more about you?

Ace: I'm on Twitter @AceChapman and then AceChapman.com

Jaime: So everybody needs to check that out and follow him on Twitter. We'll definitely have links in the show notes for everything, too. Thank you so much for coming on the show today, Ace. I really, really appreciate it.

Ace: I enjoyed it.

Jaime: I hope you enjoyed that interview with Ace and I loved his information, especially as it might change your perspective, especially if you're a startup person really trying to get stuff off the ground. Try to think of it this way - there is so much more leverage when you can go in and see what other businesses are doing, so check that out for sure, and if you liked the interview, go to EventualMillionaire.com - we've got tons of other amazing interviews just like this, and if you want you can check out Millionaire Insiders. What that is, is we actually recorded another interview after this with Ace, where he went through step by step what he does after he  buys the business. So you can check that out at TheMillionaireInsiders.com

Announcer: Thanks for listening. You can find out more great information like this on EventualMillionaire.com.

Tags: Ace Chapman, Business Growth, buying businesses, millionaire interview, selling businesses

Categories: All, Business, Business Model, Entrepreneurship, Finances, Millionaire Interviews

Hi I’m Jaime. Each and every week I bring you the top business advice from the people who know best.

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