Can You Buy A Business With No Money Down? - Roland Frasier

one of the one of the strategies you shared at that event is that you can actually acquire businesses no money down now this sounds a little crazy at first but when you explained it it is powerful and I think everyone should should know that this is a possibility yeah you break this down like how is this possible well it's really funny because I just started thinking about well you can buy real estate with nothing down because I learned about that from Bob Allen back in the 80s yeah and it actually worked and I when I do a talk like an EO or YPO or those kinds of things I'll I'll ask I'll say who here has ever bought real estate for no money down and two or three hands will always go up and in a real estate crowd maybe half the audience right and I say well the funny thing is is the exact same things that you can use to buy but to buy real estate for no money down apply to a business and how did you guys feel the first time you did that was that like a holy crap I can't believe I can buy this for nothing done and everybody's like yeah yeah yeah it's the same feeling when you do that with a business the first time and so I say that there's I think it's seven ways seven reasons to buy a business so you buy it to get media so that you have access to an audience that you can then sell to you can buy it to get a team you can buy it to get a product or a service that either you're buying from somebody else or that they're buying from you you can get it to compress the supply chain and cleaning your buying distribution either manufacturers or creators or whatever down to actual distribution channels or you can buy it for IP for intellectual property and then you can buy a competitor as well that's a you know that's the obvious one I think but the the other six that are around that are really good good ways to expand your business directly if you could have more media with a better team and additional products and services to sell and more people to sell them to on the distribution and more people to create good products at a lower cost through supply yep and get more IP and gosh you know forbid you by your competitors to yeah you can grow a pretty daggone big business yeah so then it's well how do I do that and what am i buying and the reason I break it down into those seven categories is I don't want people to think they have to buy a company media can be a YouTube channel an Instagram account right and casebook group yeah it could be it could be a company but it could be a slice of a company that has media mm-hmm and it could even not be a company just could be somebody's side project that they view as a job but they started it and now they've built up fifty sixty thousand or two hundred thousand members right and you can buy those when you negotiate you can buy those usually shockingly inexpensively and some people you know want a ton of money but some people don't yeah so it's a numbers game just like dating you have to ask a lot of a lot of folks if they're interested in a few of them are gonna say yes now it comes down to oK you've agreed I'm gonna buy this thing and you're gonna buy it for a certain amount of money and I'd never let whether I can afford it or not enter into the equation until I get to we've agreed that they'll sell it for this number and I feel like that's a fair number yeah and it's the lowest number that I'll get then it's the law of of price and terms which which isn't the law that I know of but I decided to create it and that says that you can get any price if the terms are good enough okay but if you want so then it's okay well I always ask what do you need the money for what are you going to do with the money when you get it typically they have no plan or they have a plan that doesn't require a hundred percent of the money that they're getting and at that point you've immediately identified how much you actually have to come up with so now I know there's an amount that they need and there's a whole bunch of ways to do that I can I can say let's do that on I'm you want more than I think the business is worth if the business generates that much over some period of time then we'll agree that I'll pay you that amount that's called an earn out right on it so that's one way to do it you can say I'll just how about if you just carry it back what are you going to do with the money I don't know I'm just have it too you know retire on okay great what are you gonna be able to invest it out well right now maybe 2% 5% that's great I'll give you seven you know how about that and you just carry it back seller carry I'll go and say what are the other assets in the business that are leverageable so can I do an asset based lending deal where I say ok I can factor your purchase orders or your accounts receivable you've got this land that's worth this much that doesn't have any debt on it will leverage that and then the business can provide the money for the down payment through the assets of the business I'll go and do slips which are self liquidating payment deals okay and that's where I say okay we're gonna buy this interest in the company and you're gonna you're combining that and you're saying okay you're gonna finance that over this period of time so I'm gonna have the company that my interest now and the company will cover the payment okay over time you'll have non-competitive partner deals so you can go out and say you guys are interested in these customers to you you do you do micro blading and we do women's hair replacement mm-hmm so how about if this audience needs both of those things how about if I make the deal happen and you come in with let's say it's a million dollars that I had to come that I had to buy it for and I had to come up with 20% okay I need 200 grand yep so I go and I'm the hair replacement then I go to the micro bleeding people and I say how about for 200 grand I give you the opportunity to have access to this list right and I'll give you 20% of the company right right well now it's a to 80/20 deal but I got 80% of this company for $1,000,000 for free so I just made $800,000 of unrealized non-taxable income right until I sell it so there's and there's you know there's a ton of ways so it's just all of those creative ways of looking at that which are most of those not not like the last couple but most of those are real estate based yeah let's just you know hey what if you carry I'll give you a you know a hundred thousand dollars for this house we carry it back yeah you know we're gonna pay you when I sell you can have an option you know super creative I mean at the big takeaway I get at beginning was asking the questions asking what are you gonna do with that money crate cuz that gives you leverage points again clarity gives them clarity and just you open up the whole world yeah and then you talk to every seller so if there's four sellers you want to talk to all of them because some of them will want to hold out for more than other as well yeah but if you can if you can scoop up let's say it's four people if you could scoop up three of them at a valuation that's fifty percent less than what the one wants because the one has an unrealistic expectation you've effectively bought control of the company of seventy five percent of the company yeah for 50 percent of the ask right then the twenty five can either come on board right they can be diluted later if you're adding new things in you know you take care of them you treat them fairly yep but they're they don't have to be on board and you don't have to own even 51% of a company to have control of it depending on how widely dispersed the ownership is okay so there's lots of lots of lots of ways to do that and ownership of stock is like ownership in real estate fee-simple and real estate is called the full bundle of Rights okay that includes riparian rights like water rights mineral rights air rights land rights lease rights easement rights all that goes into this thing called fee-simple in a company you have stock but stock can be split off into all kinds of rights - yeah so stock can be sprung off split off into a life interest it can be a profit participation interest it can be a rights deal it could be a proxy deal so you could just buy the proxy right to vote the stock yeah for somebody else they still own the stock but now you've got voting control of the company I mean there's a million that's things you can do you just have to think it's it's all to me thin slicing every yeah thin slice your profit centers you thin slice the the equity chunks you'd you know use that's and then you look at every single aspect and say where can I get leverage

Channel: WealthFit

Views: 24,858

Keywords: financial freedom, financial independence, personal finance, money, finance, savings, tips, how to be rich, success strategies, how to, startup, entrepreneur, investing, think big, think rich, wealth, motivation, millionaire, how to become a millionaire, how to become wealthy, how to create wealth, roland frasier, wealthfit, get wealthfit, richard branson, digital marketer, ryan deiss, Structuring Creative Deals, Thin Slicing, Exit Strategies, leveraging events, profitability, valuation

Id: K3asCXZ5MJc

Length: 8min 33sec (513 seconds)

Published: Thu Nov 28 2019