Escaping the Drift with John Gafford - Journey Through the Business Broker World with Expert Trent Lee

Episode Date: July 9, 2025

America's top-ranked business broker, Trent Lee, joins us for an engaging discussion on the burgeoning trend of buying existing businesses rather than starting new ones. Trent, who has been recognized by the International Business Brokers Association for six consecutive years, sheds light on his inspiring journey from his formative years in Las Vegas to becoming a prominent figure in the business brokering world. He opens up about his father’s successful sale of a janitorial company, a pivotal event that ignited his passion for entrepreneurship, and shares invaluable lessons learned from those early experiences.   We venture into the often-overlooked For Sale By Owner market for businesses, a fragmented landscape compared to the real estate sector's centralized MLS system. Trent offers insights into the critical elements of having a "buy box" and a "buyer box," stressing the importance of experience and licensing in successful business acquisitions. He dispels the myth of being "industry agnostic" and illustrates the necessity of aligning personal expertise with business opportunities through a compelling example of an auto mechanic shop transaction.   Transparency, due diligence, and the art of exit planning are key components in the world of business brokering that we explore further with Trent. He discusses the significance of crafting businesses that thrive independently of their owners, a factor essential for a smooth transition when selling. With an eye on the future, we contemplate the challenges business leaders face in retirement and the parallels to coaching roles, alongside the strategic advantage of vertical integration and personal branding. Join us as we navigate the complex yet rewarding terrain of buying and selling businesses with Trent Lee’s expert guidance.   CHAPTERS    (00:00) - Buying Businesses (13:23) - Buying Businesses (22:59) - Selling Businesses (29:12) - Business Brokers Discuss Commission Percentages (39:29) - Business Ownership Reflections and Due Diligence   💬 Did you enjoy this podcast episode? Tell us all about it in the comment section below!    ☑️  If you liked this video, consider subscribing to Escaping The Drift with John Gafford  ************* 💯 About John Gafford: After appearing on NBC's "The Apprentice", John relocated to the Las Vegas Valley and founded several successful companies in the real estate space.   ➡️ The Gafford Group at Simply Vegas, top 1% of all REALTORS nationwide in terms of production. Simply Vegas, a 500 agent brokerage with billions in annual sales Clear Title, a 7-figure full-service title and escrow company.   *************   ✅ Follow John Gafford on social media:   Instagram ▶️ / thejohngafford   Facebook ▶️ / gafford2   🎧 Stream The Escaping The Drift Podcast with John Gafford Episode here: Listen On Spotify: https://open.spotify.com/show/7cWN80gtZ4m4wl3DqQoJmK?si=2d60fd72329d44a9 Listen On Apple: https://podcasts.apple.com/us/podcast/escaping-the-drift-with-john-gafford/id1582927283    *************   #escapingthedrift #trentlee #businessbroker #buyingbusinesses #existingbusinesses #startingnewbusinesses #internationalbusinessbrokersassociation #trentlee #lasvegas #janitorialcompany #entrepreneurship #familydynamics #forsalebyowner #fsbomarket #realestate #mls #buybox #buyerbox #relevantexperience #licensing #sbalender #industryagnostic #automechanicshop #transparency #duediligence #businessbrokering #legalmatters #financialmatters #licensedbusinessappraiser #technology #ai #absenteeownership #sellside #compensationstructures #brokercommissions #dualrepresentation #exitplanning #financials #activebusinessowner #retirement #coaches #verticalintegration #personalbranding #socialmediahandles

One last question before we go. Same question. I asked the last question. I ask every guest comes on. What's the one question you keep getting asked on podcasts. You wish people would just stop asking you. I, you know, I don't. And now escaping the drift, the show designed to get you from where you are to

where you want to be. I'm John Gafford and I have a knack for getting extraordinary achievers to drop their secrets to help you on a path to greatness. So stop drifting along, escape the drift, and it's time to start right now. Back again, back again. Another episode of Like It Says in the Opening Man, the podcast that gets you from where you are to where you want to be. And today in the studio, people look, there has been so much buzz.

It seems like this has come out of nowhere in the last six months or so where it's just become everything is about how to buy a business. It's about buying businesses. It's about, don't go out and try to start a business, find a business to buy. And luckily for you guys in the studio today, I have a dude who was ranked by the IBBA and that's no, he's not a fighter He's not done way it didn't weigh in a weight class for this

This is the International Business Brokers Association has ranked this dude as the number one business broker in America For six straight years that kind of makes him a defeated I think and we are lucky enough to have him in studio today because he lives here in the greatest city the world Las Vegas And we are lucky enough to have him in studio today cause he lives here in the greatest city of the world, Las Vegas, to share his knowledge with you on all things buying businesses. Welcome to the program, ladies and gentlemen,

this is Trent Lee. Trent. Glad to be here. How are you, dude? How are you? Thanks for coming over. In the rainy days that we're having in Las Vegas. Yeah, the rare day.

I love the rain, dude. I love it. Although the weird thing is I kind of go backwards cause like, you know, like you have like your, your beater car and then you have your nice car. My, I have a Bronco and no like top on it. Although the weird thing is I kind of go backwards because like, you know, like you have like your beater car and you have your nice car might have a Bronco with no like top on it. So I have to take that home to then bring a very expensive car out in the rain, which is I looked at that today. I'm like, this is probably backwards. I'm probably doing something wrong. I don't know. Good. Well, happy to be here. No, I appreciate it. So let's do, let's jump right into it. So, man, you obviously you're at the pinnacle of what you do in your business. And how did you get into being a business? Like, how did you get into it?

That's a great question. So I was interested in it early days. I grew up, as you mentioned here in Las Vegas, my dad had a company, a pretty good sized company, depending on the time of year, between 500 to 700 employees. I was the oldest boy. And I thought that was like my ticket for success. I was, I was going to take that over. He ended up, um, just as I was graduating high school, getting an offer, or really what I should say is someone came out and said, Hey, we want to buy your company. He told them, thanks, but no thanks. This is a family business has provided a fantastic lifestyle for us and declined

their offer, but just out of curiosity, kind of said, well, I'm going to buy your company, but I thanks. This is a family business, provided a fantastic lifestyle for us and declined their offer. But just out of curiosity, kind of said, what did you have in mind? What is it? Yeah. And so they sent their team down. I remember seeing them in the office for a couple of weeks, made them an offer and he said, done, I'll sell it. And so he, here's the great part about it, from a kind of father to son standpoint, and now I've got my own kids,

he was kind enough to let me and my brothers go through the whole process with him. And so we sat in with a lot of these meetings. I mean, really, what business do two high school kids have, you know, come into these meetings. I got one sitting about 60 feet that way. Yeah. It's it's enormous.

That's a good experience and education. And so we walked, we went through all of these meetings with them, the due diligence meetings, meeting with the attorneys. We went out to California for a tax planning session for when he sold the business, how he was going to minimize taxes that got my brother really interested in the legal side of things. He went to law school and followed that passion. I was interested on like the brokering side of things.

How did this deal all come together? And so obviously coming fairly young at that point, I didn't pursue it, but I started a couple of my own businesses, exited from two of them. Well, let's back up, let me ask you. So you thought this was gonna be your business?

One day, one day. You thought one day this was gonna be your deal? It was in the back of my mind. It's a hard business to come out of fairly young. It's not a young industry. You have to have a lot of experience in a lot of different. What was it?

What was the industry? My father's business? Yeah. Janitorial. So pretty much any business here, any building, any Class A building here in town, the malls, the libraries, every Howard Hughes building, pretty much any class a building they dominated. But let me ask you this. So here you are. You think you have this path, right?

And then all of a sudden carpet gets a little ripped off from underneath you. Now, luckily it happened to you at a very young age. Um, and how did that send you spinning a little bit? No, no, no. Yes, it was great. No, it didn't at all. It was great. I came from, I watched my dad start, that wasn't his only business.

I was one of them. I watched him start a number of businesses. And so after he went through that process, I left, I lived in a different country for a couple of years after high school, I served a mission for my church. I came back and my dad and I just started companies ourselves. And so I wasn't, I wasn't worried about it. It wasn't worried about it. Yeah. Yeah. Cause I would say, dude, cause one of the things with me, you know, as a young man,

my father was fairly well off and I was kind of felt I had this golden parachute and it probably stunted my, it's a stunt in my, my ability to push forward more than it should have. And I should have been more aggressive younger, but my father was an attorney. So it was like, it wasn't really, I couldn't take it. It was like us, step brothers were like, I didn't go to law school.

Oh, we're just going to take over the family business. You didn't go to med school. In this case, it gave me probably the opposite. It gave me all sorts of encouragement and confidence to go out and do it. Because I watched my dad do it a number of times and be successful. We started a company and since then, how you got into it, the quick version is we ended up selling two more of those companies that I was involved in. And I was so unimpressed with the business brokers that I worked with.

And I saw by thenimpressed with the business brokers that I worked with and I saw. By then I'd gone, counting undergraduate degree, got into Harvard, did my master's of finance, transferred to MBA program. At that point I had enough experience. I'd been, had a good background, sold two of my own companies and was like,

you know what, I can do a better job than I think these business brokers that I'm seeing out there. And that's what kind of full circle came around to what I thought I was interested in back in high school. Now was the right time to get into it. Of making that work. You know, it's interesting, your father,

so one of the lessons I learned also late in business was you build a business to be sold. Most like your dad was building a generational business. So probably wasn't structured properly off the, off the click. After he sold the first one and you guys started the next one, was it day one we are structuring this thing for the sale? You know, I didn't have the foresight to do that at the age and I don't think he did

either. I think it just happened to be, he was good at starting and ramping up businesses and that's what he knew. I don't think he necessarily went into it with a better strategy the second or third time around. How many people that you work with now do you see that don't see it that way either? Like when they say, I want to exit, it's a mess.

Yeah, pretty much everyone. Most of the sellers I'm dealing with are selling because they have to, not because they want to. Health issues come up or sometimes they just get burned out. In that case, they, yeah, they want to, but they're so burned out. Sometimes they're, they're not two or three years away from really doing proper exit planning and exiting on the, on their terms versus mom gets sick on the East Coast with cancer and they've got to move, or spouse gets a job opportunity and they've got to move, or whatever happens.

And most of these people are selling and they're just dealing with whatever the business is at the time. You see probably, I mean, because you do so many, you're averaging over a hundred a year, I guess is what we talked about. Yeah, depending on the year. Depending on the year.

And so you see such a blend of businesses. What would you say is the easiest business to exit right now, as far as a class? Like, I have a guess is what I think it would be. You know, that's, so it's interesting because there, I don't know if I would rank it as maybe the easiest business, but there are certain industries that are very hot right now.

Home services. Yes. Home services. Yeah. The online guru community love like that. They're what they call buy box. Home services is a big one, but one industry that you'd be familiar with is property management companies.

In other words, companies that have some type of stickiness to the revenue, not just one time, you know, selling a pair of tires or whatever, but with, in this case, property management companies, I don't even have to necessarily take it to the open market. I have a list of buyers who will just, they're just buying doors. They just buy it.

They're just buying doors. Though their buy it. They're just buying doors. Though their property managers want the business. Yeah, exactly. There are a bunch of industries like that that have some sort of reoccurring stickiness to the revenue component of it that are very big with private equity groups, with the family offices, or someone who's not quite that size,

but they're already in the industry and they know it. They've got the experience and they can, they're capitalized enough that they can, they can expand. What's the, what's the class of business that people always think is worth more. And then they're shocked at what it's actually about every business. Fair. Yeah. Yeah. Everyone thinks their business is worth more.

Everyone thinks. And here's, here They always think it's worth more. Yeah, everyone thinks. And here's one that is, to your point, it's a great question. Here's one that comes to mind only because literally just an hour ago I was dealing with it. It's the business that has, that's a good business. I'll give you an example here, but it's a good business that makes money, but is very equipment or inventory heavy. That becomes a problem because when you do a business valuation, we're not valuing the

business from a multiple of earnings approach. We're calculating SDE, seller's discretionary earnings, EBITDA. We're looking up the market multiple. We're not valuing that plus inventory. The inventory is wrapped into a component of the multiple of earnings. So right now I'm dealing with a tire company. They have a retail and a wholesale division. They sell tires, rims, all those types of accessories, and they've got about a million dollars of inventory. They're bloated. The guy doesn't have a really good clean system for inventory management.

Because of that, he's got too much inventory on the books. And so what happens is he wants, he, he wants about 1.3 million for the business, which is a fair multiple. He's, he's fairly profitable. He's asking for about three times earnings, which is reasonable, but he's not going to get three times earnings plus a million dollars for the inventory. The inventory doesn't exist or the multiple of earnings don't exist

if you take the inventory out. And so what ends up happening is someone like that that has either a ton of inventory or a ton of equipment. Heavy equipment is a big one. You can't have it both ways. That's essentially the same. I told him, look, in the car industry, you get this example. You either sell your car for parts at the junk yard, which is the worst valuation, or you go to the dealer or some other private party and sell

the car. And if they offer you $25,000 for whatever the car is worth, you don't go to them and say, yeah, but you know what? I'm gonna include the transmission for you. So you gotta pay me $3,000. And by the way, I'm gonna throw in the tires too. And that's an extra thousand dollars. It's the whole package or it's the parts. You can't take two valuation methods and combine them together and double dip.

That's essentially asking the buyer to pay you twice. That's what everybody wants to do. Like, well, let me ask you this. We talked earlier about the rise of the internet guru saying buying businesses, buying businesses, buying businesses, and what is there? There's biz by sell and there's all these websites online. I have a philosophy, which is it's kind of like

really good commercial real estate. Like really good commercial real estate never sees the light of day. The deals are done like, okay okay, you want to sell this? Let me make two phone calls and it's gone. Right. Is the same thing to be said with really solid based businesses? Sometimes not always, but sometimes, for example, if it's a franchise and you see it on biz buy sell and it looks like a smoking

deal, you got to ask yourself, why did, why did the, why did the neighboring franchise not pick this up? Yeah, or the franchisee just take it back as a corporate store. Yeah, or their friend or the neighbor or their kid or whoever. And so, yes, in some ways that's true, but there are plenty of really good deals on the market because the owner has no preparation for exit planning

and they don't know anything more to approach the neighboring franchise or, or the neighbor, you know, competing, competing business because they don't want to violate confidentiality. They don't want the employees to know they don't want word to get out, or they just don't know really how to handle that. And so they, they reach out to a business broker who just puts it on the market. So there, there are plenty of really good deals. Is there a FISBO market for businesses

the way that there is for houses sometimes? Not a valid one. I mean, you can look at Facebook marketplace and. For sale restaurant is where that's gonna be. We're here to find that stuff for sure. Not really. And there's really, there's no such thing as an MLS like there is for real estate.

So it's a very fragmented market. There's a bunch of biz buy sell type websites, but there's no consolidated place. Well, it's like even, you know, even with commercial, there's loop net, CoStar, but there's no centralized database for all stuff. And there's no rules to it, which sucks too. I know in commercial, the worst part about it is

there's no regulating body telling you to take stuff down when it's leased or sold. So the biggest problem, especially in Vegas, the hardest part with commercial is you make these, you make 20 calls and I'm like, Oh yeah, we sold that like six months ago. You're like, dude, take it down. But they leave it up because they're shopping for leads. Oh, interesting. Right. Does the same thing happen in business brokerage? Or really? And, and I'll tell you why, because a good listing gets an overwhelming number of inquiries.

And so it's, it's almost out of hand, unless you have technology and automation in place, which is really one of the biggest frustrations why most business brokers are so bad is because they get so many inquiries and they can't possibly keep up with it. So at least from my perspective, as soon as I have a deal that's sold,

I want it off the market because I've already collected 500 inquiries for this whatever HVAC business. I don't need more time suck taking out, phone calls about a business that's already been sold. I've moved on to the next one that I'm selling. I'm guessing with that type of volume, dude, you gotta have some institutional buyers that are like anything in this box, just send it to us.

There are some and, but it depends on the industry. Yeah, well home services. I mean, HVAC, roofing, you've got to have buyers in your pocket for that stuff. Yeah, absolutely. As he says smugly, if you're not watching the video. He's like, yeah, that's a two phone call afternoon for me and it's done.

So if you're somebody out there thinking about buying a business, right? What are some things, I'm not talking about the necessity at this point, the nuances of what you should look for, but if you're thinking about getting into that, what are some things you think they should consider about themselves before they jump into that?

So it's such a good question because it's all the rage right now like we talked about for these online gurus about what's called a buy box. And don't get me wrong, I love the buy box. I love a buyer being able to filter what their criteria, what their investment criteria is. But it's not just about the buy box, it's about the buyer box.

In other words, what I mean is, just because there's a great HVAC company for sale, if I get a buyer who has no experience running that business, they have no management experience, how are they gonna get the license to buy it to begin with? And so the buyer box is just as important because the buyer has to be able to come to me as well as an SBA lender and say, I'm the right buyer.

Forget the business being a good fit, let's just assume that's a good fit, but I'm the right buyer because I'm the right buyer, forget the business being a good fit, let's just assume that's a good fit, but I'm the right buyer because I have the right experience and I either have the license already or I have direct or what the bank calls ancillary experience. If I get, here's one of the worst things I hear as a business broker, this immediately tips me off

to a first time inexperienced buyer. Which- Oh, I'm gonna guess. Which there's- Seller financing. Yes, we can talk about that. Okay, we're gonna get there. Yeah, we can talk about that.

And don't get me wrong, there's nothing wrong with a first time buyer. Most- Everybody gotta start somewhere. Most of my deals are all first time buyers. But when someone comes to me and says, I'm industry agnostic, that's an immediate sign to me is,

you do not know really what you want to buy because you haven't finalized and thought through the buyer box. Yeah, you might have a buy box, but just because you fit, just because a business fits the buy box doesn't mean that the lender, the SBA lender is going to say, sure, I'll give you a loan, Mr. Buyer, who has no experience managing people, no experience in the industry and can't come up with a good resume as to why they can step in and manage the business and make the bank feel comfortable with the loan.

What's your process for walking people through that? Finding out what their background is. So I wanna find out what their experience is and what their passion is. So I'll give you another example. I'm closing on a deal next week. It's an auto mechanic shop. Fantastic little business makes $400,000 profit. It's a small business, but for the buyer,

it's going to be a great transaction. He's putting about $40,000 cash, going to walk into a business after debt service ratio, debt servicing, and all that. He's going to be netting $200,000. Which is more than he's probably ever made. Which is more than what he's making now. He'll have the freedom to run his own business and to grow it. That's funny. Now, he doesn't have experience as a auto mechanic, but he has a passion for it. He's tinkered around for decades with his dad and now his son, and he can

walk and work his way around a mechanic shop. And so, yes, he doesn't have specifically experience as an auto mechanic or, you know, working or owning, but he has enough experience to go to the lender and say, I can turn a wrench and I can talk shop with the guys. And that's really what I'm buying. I'm buying a business that already has the employees that are established there, but he has to know enough to walk in and have some sort of respect with the employees

for them to wanna stay. I think the better thing is I know the right questions to ask to hire qualified mechanics. Like I understand what it takes to be that. I don't need to be the tap dancer, but I know how to watch one dance. Now here's the biggest problem. Not only is there industry agnostic people,

but when they come to me and say, I'm industry agnostic and I see their area code and they're calling me from Florida and they want to buy an out of state business that they have no experience in and they don't even live here. That's just a recipe for a disaster and it's not going to probably get done. I'll give you another example. I closed on a med spa, $5 million med spa. Fantastic business. One of the rare, rare businesses that actually was absentee owner.

Employees had no idea who the business owner was. Oh, wow. Never magic. Never came in. Very, very rare. All these absentee business owners that I know internet people love to chase it. Very rare to have a real true absentee business. This is one of them. However, the lender said, this was an out of state buyer, the lender said, and by the way, this was a perfect buyer. It was a med spa and it was a

nurse practitioner that was buying it. Perfect. He was going to come in and be the license holder, do a lot of the, the, the, oversee a lot of the procedures, had the money, had the credit, had the background, had the collateral, but he didn't live here. One of the closing conditions, one of the closing conditions was that he get a house or an apartment here in Las Vegas. So the lender wanted to see that he's got real commitment. You're going to be here. He's not just going to run this thing from, uh, you know, Midwest where he lives in. Even though it was's gonna be here. He's not just gonna run this thing from Midwest where he lives in.

Even though it was able to be run that way before. Even though, yeah. And so you get some of these, now, if you're paying cash, you could do whatever you want. Yeah, sure. But from a lender standpoint, which most deals are gonna go through the SBA, they're gonna wanna protect their investment.

And one of the ways they do that is, I mean, think about it, they've got all these metrics to say, okay, all of these businesses that are run from someone out of state who never comes to live in town have a higher risk of failure. So we're going to make a contingency that they've got to come, whatever, a couple of times a month. He didn't have to move here full time, but he had to show that he had the ability to come in a

couple of times a month and, you month and put his feet on the ground with the business. Yeah. So you mentioned the SBA, which I want to talk about. How long is that process? Cause like I've never, like we boot, like all the companies we own have just been bootstrapped cash, all of them.

So luckily no debt, no debt. Long enough and hard enough by the time you get done, you wanna pull your hair out. But. Fair answer. 60 to 75 days would be fairly quick. That would be fast. That would be fast, yeah.

75 to 90 would be a safe bet. Have you ever had a deal take a serious financial turn in that time waiting for the SBA to get approved? Yes, I've had, at this point, having closed over 650 transactions, I've seen all sorts of crazy stories. I've seen sellers days away, like SBA is approved,

we're literally days away from closing, pass away. I've seen burned buildings and the business burn down when we're right in the middle of closing. I've seen all sorts of crazy transactions. Well, let's, it's funny you mentioned burning. Let's talk about this because one of the reasons, you know, we do everything here. We do, it becomes a real estate.

We handle everything at this, in my shop, but we do not do business brokerage because it's so litigious because somebody's always cooking the books and always comes back up later. So how, I want to talk about what percentage or how many of your deals have wound up with sellers and buyers suing each other over cookbooks.

Have you ever been dragged into that because the due diligence process, how do you protect yourself? Cause this is like, I'm not looking to get the business. I'm just curious if I'm right about thinking not being. Well, you're right in the sense that it requires additional licensing. Oh, sure. So that's the first step. I'm trying to think two that I can think of.

That's it, out of six, that's great. Yeah, which is not bad. Now, does that say a lot about you or am I just completely wrong with the industry? Do other people have a lot of issues? Do you think your issues are less because you're good at what you do? Yeah, I think it's a combination We have lots of disclosures where we're not doing the due diligence for the buyers and we tell them that up front and we Make them sign

Everything. In fact, we refer them to other people who do diligence and they're signing off knowing that we're not warranting, we're not guaranteeing anything, we're not doing the due diligence, that's totally up to them. So plenty of disclosures are important. A good team is important, so you can refer out legal questions, you can refer out to CPA for due diligence things. But I think it also comes down to good business brokers

managing and setting the expectations and knowing upfront, are you dealing with someone who's lack of a better word, shady, that's got like the second set of books and they're gonna try and value the business on the second set of books. Or, and in this case, I'm a licensed business appraiser, which is unique.

Most business brokers aren't licensed as a business appraiser. So I know. Most business brokers aren't licensed as a business appraiser. So I know what to look for from an SBA standpoint. I'll do expert witness, casework, SBA valuations. I'm only valuing it off of the tax returns. I don't care what they really tell me about this extra $100,000 that went unreported. Great, I tell them, you got the benefit

when you stole that from the IRS. You're not getting the benefit when you try and sell the business. Yeah, you're not getting it now. So we're valuing this off of the tax returns. And then not to get too off topic, but I have, I use a lot of technology in particular AI is why I do a lot of the transactions. I do is because so much of it's automated. I created my own chat bot that will analyze

and reconcile the seller's bank statements to their profit and loss statements, to their tax returns and start flagging potential issues. Not because I'm doing the due diligence for the buyer. In fact, I don't even tell the buyer, I do this. I wanna know. This is your piece of mind. Yeah, I wanna know between me and the seller,

are we selling a fairly legitimate business here? Now, do they always reconcile perfectly? No, of course not. But I want to make sure there's not major discrepancies that we can't have a realistic explanation for. Yeah, man. So, you know, again, it's funny you say that, Oh, by businesses, it's the Vogue with, with a lot of the gurus talk about buying them absentee, right? Is there any way the, obviously it's a high probability of failure there.

It is it, what industries is that even possible if it is to buy absentee? You know, that's a great question. I would probably say almost any industry's possible. It's not so much an industry question. It's an operating or an operator question. Most operators just don't have the background or the experience to build the systems, the processes, the procedures to build a business that's absentee. Yeah.

That, that's more of the issue. Once you get a really sharp operator that knows how to do that, and they're out there, then the next question is, once they build that, why are they gonna sell it? Yeah. I'll give you, here's another example.

We're in escrow right now for a business that does special, um, like, like, um, I'm going blank on the term, but the students who, like special need students, they do all the bus transportation. So they pick them up from home, get them to school, get them home. State funded contracts. Yep. All funded. So they, this company has, has contracts with each of these, like schools, high schools, elementary schools,

and we'll just handle the whole thing. We've got a fleet of vans. There's great, again, stickiness, reoccurring revenue. That was actually the seller built and has the experience to build a business. He lives out of state and operates this truly absentee, and it's very profitable. A million plus dollars in EBITDA. To my point, the question is, well, why would he sell it? Well, it's in escrow

right now. We're in the due diligence phase. The only reason he's selling it is not because he wants to, it's because he's going through a divorce and as part of the settlement, he's got to sell two of his businesses to pay off the portion of what he owes. And so he's letting go of two of his top businesses so that he can essentially kind of start over and rebuild. But that's a good point. There are really good businesses out there that do sell and there's,

there's reasons for it to sell. You just have to know what the reason is. You know, it's interesting you talked about, because, because the reason I was walking you down that path earlier of what's your process for helping people establish their buyer box was I was wondering if you had developed a GPT to help people do that. So you didn't have to. I've played around with it a little bit. I've, I've, I've messed around with having people take personality tests and running it through that. And I haven't really mastered it because,

and I'll tell you why, the real money in business brokering is on the sell side, not the buy side. So I'm spending most of my time developing automations and systems and processes to accelerate the sell side representation of the business rather than the buy side. When I have a good listing, the buyers will find me. How does the compensation work for brokers and agents that come?

Depends on the broker. Some charge for upfront, some sort of a commitment fee to cover their time and their advertising because it's a lot longer process than it is for selling real estate. It's gonna take us six months to a year to sell these businesses. So some people charge an upfront fee. I love the model of if I'm as good as I say I am, then I don't want any money upfront. I want it all on the backend.

And so I don't charge anything upfront. I charge a percentage on the backend. So I'll do a formal evaluation for free. We'll spend our own time in marketing developing the pitch deck. Yeah, same thing that we do. The summary. Yeah. And then I get paid on performance. So if you had to go, if you had to call it not a percent, I don't care how much you charge, but I'm just, I'm wondering, say there's, there's a total commission pot for a deal

for the buyer's broker and for the selling broker, what percentage traditionally goes to selling broker? What percentage traditionally goes to there is a 75 25 traditionally. Well, there's no standards. Whatever goes to the listing broker and then the buyer's brokers paying themselves. Most buyers don't have their own broker. They're not coming. They're coming on represented. Yes. And so the selling broker will do often what's called dual representation or the buyer has no representation at all.

So it's unique in that sense. So you're not dealing, you're not really negotiating with a lot of other agents. You're just facilitating between two parties. We're facilitating the deal. You're facilitating the deal. We're just making sure both sides are fairly treated often. Not always, but to your point, kind of what's majority league. Yeah, but that makes it so much easier most of the time.

Yeah. In fact, when I get buyer brokers who come to me who don't have the credentialing and don't have the experience, they're just in the way. They make life more, they make life harder. And so I traditionally try not to give them much of a split because I actually don't want them to be involved. I would rather, in fact, sometimes if they have a really serious buyer, sometimes I'm like, look, just whatever your split is, I'll just pay you the referral fee. Just let me handle the whole transaction so you can get out of the way. Yeah. I walked into our,

walked into our director of commercials offices a couple of months ago. He's on a Zoom and I look at it and I'm like, what are you like, he's like, I want to zoom in my clients. And I said, okay. And I look around the screen and it's a table with like 20 doctors. And I'm just like, I let's see, like, I like, what a nightmare this must be to deal with this. What's the point guys at a table voting on buying a building here.

And I was just like, Oh my God, like I don't have any of that at all. The more, the more hands you put in the pot, the more difficult it becomes for sure. What's the one thing you think people should know before, if you had to pick one thing before they either try to sell their business or before they buy one, you had to pick one thing. What is it? On the sell side, we talked about is exit planning. Best thing they can do is get their books in order and start building a business

that's not overly dependent on them because most buyers don't want to buy a job. Even though it may be a good paying job and that may be a job that might be better than their real nine to five job in, in many cases, well, most cases really, the sellers are selling a job because the business doesn't operate without them. So from the sell side, getting their books in order, cleaning up all the financials, getting all the income on the books

and starting to build the systems, the process, the procedures, letting the employees handle the business. That's the best thing the sell side can do. You know, one of my good friends, Kent Clough, they always says, if you think you own a company going on vacation for three months, don't call, don't write, don't do anything. If you come back, if the place is not better than it was before, you don't have a company, brother, you got a job. Exactly.

And think about it, how many business owners could really do that and come back with a better business? Very few. So, you know, especially, well, like you look at the business that we're in, right? Like this is such a figurehead type business. And that's always been a challenge with my partner Gavin and I is, is we are, we are this business and we're making some moves, you know, we're not selling, but we're making some moves to, to, to step back away from Duke from those things a little bit.

Yeah, there are, there are some industries that are just, I mean, to your point, you are the business in many sense, in many cases. And so you got to figure out, okay, what are you going to do? Is selling the business may not be your big, big payday, but you got to use the income that the business produces to fund other things. Oh, sure. But like you look at like our title company, our financial services company does amazingly well. And I don't have to do anything there. We have great staff. We have great management. They just, it just runs and we just own. So yeah, I wish they were all like that.

But you've got the skill set to do that. Yeah. Well, thank you. But we, I still have to show up for work. So I still feel that nagging need to show up for work every day. Like if I'm not here, people can be like, where's John? Why isn't he here today? I still have to show up for work. So I still feel that nagging need to show up for work every day. Like if I'm not here, people can be like, where's John? Why isn't he here today? That that's your personality though. And here, this is interesting because look, I'm the same way.

When I sold my second company, I thought, you know, I'm going to do this like four hour work week thing. It was awful. Like after a week, I was bored to death. I had nothing on my calendar, nothing to do. And the sense of lack of doing anything was worse than just like sitting at home taking it easy. Dude, this is why you see all like these superstar coaches in like college

football, right? And then they retire after like this glorified 50 year career. And then they're dead in two years. Cause it's something to do, but if they're still in the game, man, it keeps you young, keeps you moving. So the interesting part is sellers eventually become buyers because they think they sell, they think they're ready to sell their business and retire.

And they just need six months break. And then they're bored. They're like you and me. And they're like, I don't know what to do. And they're back. And they're back and they buy a business. Same interest, same industry or something? Often sometimes different, but on the flip side,

buyers become sellers. There's so many businesses here in town that I've sold multiple times. One, there's one. It's like a buy here, pay here car lot. Exactly. Like just, oh, we're repoing and selling to somebody else. There's one pizzeria here in town

that I've sold six times in seven years. Oh my God. Every year it turns over. At this point, I've racked up more in fees than the whole business is worth. Yeah, cause you know why? Because I think restaurants, that's the field that I think people are like, oh, it'd be fun to own a restaurant.

It's like, have you ever worked at one? No, yeah, it's not that fun. In fact, there's a bunch of banks who won't even touch restaurants unless the buyer has direct management experience in a restaurant, because it's such a tough industry. It's really hard to make money there. I spent a lot of my years in that industry

and zero industry to go back, or zero interest to go back to it. My wife, every now and again, we'll send me something like, well, how about this? And I'm like, no, that's food. Nope. Not doing it. I have no interest at all. What, if you had to go, like if you quit being a business broker today and you had to go buy a business, what kind of business would you buy? That is such a good question. You know,

I haven't thought about it. And let me give you my, I'll take a step back and give you my initial game plan when I got into this industry. I thought I was going to do it for a while, and then I would just start buying all these businesses myself. Yeah, I was gonna get to that question. And the reality is, and I don't mean this to sound arrogant,

so don't take it the wrong way, but at this point, having sold a couple of businesses, And the reality is, and I don't mean this to sound arrogant, so don't take it the wrong way, but at this point, having sold a couple of businesses, having sold at this point over $200 million in transactions, and we get a fairly good percentage of these deals, double what most real estate agents are getting, it pays well. I don't really have any interest in buying

any of these businesses because the quality of life at this point is worth so much more than buying a business that maybe it nets 200, you know, let's say there's two million dollars EBITDA per year. Well, I can just make that doing what I'm doing now. Working from home, I play tennis four times a week. I take as many vacations as I want. I have no employees. I have no overhead.

I didn't personally guarantee any type of a lease, any type of equipment. And so if I run into a business that maybe makes $3 million a year and I got to go into debt to buy it or shell out a bunch of money to buy it, the quality of life is not an extra million dollars really at this point, what does it do? It doesn't do anything. I think it's funny. I think the more you pull the curtain back

in anything that you do, like the higher up the pyramid you climb, whatever you wanna call it, the easier it becomes to A, make money and get out of the headache. Like for example, in real estate, I have flipped hundreds of properties. I just have flipped hundreds of properties. I just have flipped hundreds of

properties in my life. And now you couldn't pay me to flip a house. You just couldn't pay me to ever do it again, because I can buy notes at 70% LTV first position that are 60 day coupon at 12% with 1% discount point. I have zero risk. My money goes out. My money comes back. I don't swing a hammer. I don't look at tile. I don't do anything. It's smarter work. Yeah. And I'm making a blended average of in the 20% of my money. Why in the world do I want to go swing a hammer or wonder why my tile guy is not here today? I'm like, what are these problems? And that's not to say that buying a business is for the right person

at that state is buying a business is the next step in there in where they need to go. Yeah, but it's not necessarily but you've just found a better way within that circle to make money. There was better way that works for me. It works for you. But not everybody can do what you do. That's the difference. Right? It's not like, well, I'm not going to buy a business. I'll just become a business broker and do what he does because not everybody can do that.

Yeah. And I'm not so self-centered that I would think that what I've found is the best way everyone has to follow it. That just works for me. Sure. I think that's the key to it is finding what works for you. What is the thing that you see, like it's funny, you talked about the pizza, you've sold six times.

What's the biggest regret you get from people and they buy businesses? How biggest regret when they buy a business, they, they don't first time buyers don't realize how hard it is to actually be a business owner. Not to say that that's a regret, but sometimes they just don't know what they're signing up for. Not to say that that's a regret, but sometimes they just don't know what they're signing up for. They're used to working a nine to five and clocking out and taking, you know, here we are the day before a holiday and taking the long weekend off.

In most businesses that doesn't, it doesn't fly. Nope. And they're not, sometimes they're not quite ready for that shock of they're always on. You have to always be on. I think I always look back to when my son was probably eight years old. And I said, what do you want to do when you grow up? What do you want to do?

I want to do what you do, dad. I said, what do I do? You're the boss. And I said, okay, why do you want to be the boss? And he goes, he goes, cause nobody gets to tell you what to do the boss? And he goes, I, he goes, cause nobody gets to tell you what to do. And I said, okay. I said, do you know what the hardest thing about being the boss is? You said what? And I said, nobody tells me what to do. I've got to figure it out. Right.

And I think not enough people realize that there's, when you, when you become the top of the food chain in any situation, there's no helpline. You gotta figure it out on your own. And if you can't, you're going to fail. Here's one other regret that I sometimes think about. It's when someone, a buyer from the buy side is rushing the process and they, they don't spend the time. They're either being cheap and they don't spend the time to hire someone to help

them with due diligence. And then there's issues, financial issues that they didn't know about that they should have known about. Or I'll give you another example. I have another business that is really a good fantastic business. Buyer and seller, I'm sorry,

the buyer's a husband and wife team, or was, this is now past tense. and they went all in. In other words, they quit their jobs and they're all in in this situation of buying a business, which sounds like, oh, that's great. They're gonna make it big time, right? It's the worst thing they could have possibly done. Because now not only are they depleting

their down payment capital, but now they're starting to feel pressure to make a quick decision to buy maybe a mediocre deal and convince themselves it's a good deal because they- They need the income. Yeah, it's been five months that they haven't quite been able to find something close on it and they're feeling rushed to make a bad decision. What should due diligence on a business cost? What's the investment?

Depends on the business. So there are, I always like to classify it as kind of two camps. Let's tear it up. There's a quality of earnings, which is done for bigger businesses. That's expensive. Those are million dollar plus EBITDA businesses

where you wanna spend some good money and by good money, 20, $30,000 to do a quality of earnings. But then there's quality of earnings light or proof of cash where you can get away with spending just a few thousand dollars. If you just have a CPA reconcile what you have and not only just your seat, not only just a CPA, it needs to be a CPA that really specializes in this. Yeah. Because what ends up happening is the buyer who's got their buddy or their neighbor, their

best friend from college that's a CPA that files taxes, he's so busy and he doesn't really specialize in due diligence work. He tries to help someone out and overcharcharge them for mediocre work versus a CPA that just does due diligence and acquisition work. They're going to be better equipped and they're going to be better priced typically. Okay. So my next, so obviously you're referring these people because my next question is me, I love vertical integration. It is, I think it's, you know, it's the greatest thing ever.

We own in the process of purchasing a home, every single thing that you can do, you have anything to do with buying a home, we own it. Like we own part of a company that does that. Like we gotcha. So as somebody that buys and sells businesses, have you ever personally thought about, maybe I should vertically integrate a little bit

into consulting firms, into a M&A, maybe just law firm. Like how much business can I bring you before all of a sudden it's like, hey, maybe I get a piece of this or what can I do? If I were to ever buy something, it would be exactly down that road. It might be an accounting side practice. It might be a legal escrow service,

some type of a small law firm. Yeah. If, if I went down that road, it would be that buying that whole package from start to finish. Do you find that how many buyers do you have that come to you with that dream saying, okay, listen, our clients also use X. We want a business like this because we might work with you. Most don't because it's more of a sophisticated thought process of rather than just excited about buying in their first business.

I'm going to take that as a compliment. I'll take that as a compliment. Thank you so much. All right, dude. Well, man, that is, I mean, that's look, obviously you got it down for people. It's been good. You know, right? You know how to do it.

So if they want to find you, how do they find you? I'm on all the social media. And in fact, I post a lot, a lot of educational I'm on all the social media and in fact I post a lot a lot of educational content whatever their favorite social media. What's the handles? I don't have them all memorized I should. They should all be the same what are you doing? I think it's Trent, Trent Bizbroker, Trent Lee Bizbroker. I'll have to actually get them to you. I'm giving you a book before you walk out here today I'm going to give you Dan Fleshman's, how to build a personal brand book. And they should all be the same.

They're close. You're going on podcasts. You should be able to say, Trent Lee, the business broker number one. Biggest mistake I made. That's it. Well, dude, hey, look, if that's the biggest mistake you've made,

you're doing pretty well. Yeah, it's, it's, it's been good. So I can give you a, give you my, my cell phone number, email address, and then they can look me up on any social media. Cell phone [phone] or email address is trent at fcbb. So rankcharlieboyboy.com.

I got it. All right, one last question before we go. Same question I asked. The last question I ask every guest comes on. What's the one question you keep getting asked on podcasts you wish people would just stop asking you? You know I don't the podcasts are so great and they're so so different I don't run into one question that I think oh that's a dumb question and and this has been the same

thing this has been fantastic. I love the questions. I appreciate that. Absolutely. Well guys there it is man if you are looking to strike out on your own, hopefully some of that is gonna keep you on the straight and narrow and keep you on a better path of just thinking, hey, this is easy. Do your due diligence. Make sure this is a business you understand. Make sure it's a business you want to be involved in.

Understand the risks. But hey man, if it looks good, charge. Go get it. See you next week. What's up everybody? Thanks for joining us for another episode of Escaping the Drift. Hope you got a bunch out of it or at least as much as I did out of it. Anyway, if you want to learn more about the show, you can always go over to escapingthedrift.com. You can join our mailing list, but do me a favor. If you wouldn't mind, throw up that five star review, give us a share, do something man, we're here for you, hopefully you'll be here for us.

But anyway, in the meantime, we will see you in the next episode.