Next Level Pros - #41: Richard Parker : Founder of 13 Businesses and 12 Exits, Best Selling Author

Starting point is 00:00:00 people tend to just jump in. Like the internet is the worst, is the greatest blessing and the worst curse for people looking to buy a business. It's a blessing because you get a lot of information. There's business for sale websites, that type of thing. And it's a curse because there's lots of information and there's business for real websites. And there's a lot of garbage information and generic information of people screaming about materials and educational materials that are very misleading, ridiculously expensive. People have a tendency, they'll spend an inordinate amount of time just searching through countless business for sale listings. And they're not prepared. They're not educated.

Starting point is 00:00:34 They have no expertise. They not have any preparation. Yo, yo, yo, yo, yo. Welcome to another episode of the Founder Podcast. Today, I am joined by Mr. Richard Parker. This guy is uber accomplished in the M&A world. He has acquired 13 businesses on his own, sold 12 of them, and served as an advisor to many, many, many, many thousands of different people. He sold 100,000 copies of his book on, remind me of the name of it, it's How to Buy a Business. How to Buy a Business at a Great Price. How to Buy a Good Business at a Great Price. And anybody that's an entrepreneur wants to know the answer to that question. So I'm super excited to having Richard on the podcast.

Starting point is 00:01:25 Just so you know a little bit of his accomplishments. This guy served, like worked directly with Ray Dalio and his family. Good, really good friends with one of Ray Dalio, the late Ray Dalio's son. And we're really excited to just hear his experiences, his stories. Welcome to the show, Richard. Thank you very much. I wish I could do my introduction as exciting and as enthusiastic as your yo-yo-yo, but I will tell you that I'm crazy excited to be here. Awesome, awesome. Well, you're awesome. So I'm really excited just to

Starting point is 00:01:57 kind of hear the story. What got you going in the entrepreneurial space? How many years, at what point did you know you were an entrepreneur, that you wanted to go and acquire businesses and then later teach people how to do that? Okay, so, well, I believe I was always an entrepreneur. I probably didn't know the word at the time, but since I was a young kid growing up in Montreal, always had jobs or businesses on the go, you know, 10, 12 years old, 13 years old. And then I went to, after school, I went to work for a consumer products company in Canada. And we were in the toy business, a high-flying company, doing great, publicly traded. I was

Starting point is 00:02:36 in a position that was probably way over my head, but we were growing at the speed of light. And so we were, you know, putting people into place place or they were putting people into place to manage the growth. And I was doing well. I was still in my 20s. I was, you know, the good news was I was growing like crazy. This is, you know, I'm 62. So this is in the 1990s. I was 29 years old. I was making $72,000 a year. That's a lot of money in the 90s. That was a lot of money. It's still a reasonable income. And so that was the goods. That was a lot of money. It's still a reasonable income. And so that was the good news. The bad news is through my brilliance, I managed to invest money in the stock market and pissed away $60,000 and was completely broke. And so at that point, I said, well, I don't know how I'm going to get out of this hole,

Starting point is 00:03:20 right? So I'm either going to go put it on 17 Black in Vegas and I don't gamble, or I'm going to try to win it through the lotto and I don't buy lotto tickets. So my I realize that the only way I'm going to get there is I've got to go into my own business. So my then wife was pregnant with her first child and said, you know, I've got to get into my own company, which I did. I took on a line of consumer products in the same area that that was experienced and more important, what I believe that I was an expert in. And shortly after that, I started acquiring ancillary businesses that would complement that business.

Starting point is 00:03:53 So I was selling to retailers and then I acquired a retail service company that was a small company. I couldn't afford to buy it, but I convinced the then owner who was based in a different part of Canada to join me and that we can build, we could build something special. He came on and started buying. What is a retail service business? I'd love to like hear a little more detail on that. Okay. I apologize. So let me explain that because it's pretty simple. And most people probably aren't even aware that that type of business exists. When products are sold to retailers, Walmarts, Targets, Home Depot, what have you, but especially more so in Canada, where they have far less store-level personnel,

Starting point is 00:04:34 the challenge for manufacturers who are supplying these retailers has always been and remains to this day getting the merchandise from the back room onto the sales floor where it's supposed to be. And certain times you have ads, national ads that are breaking, the merchandise is sitting in the back room because people can't even get it onto the floor properly. Or you have a four foot section of product and 30% of the products are out of stock and the replenishment system is just not adequate to get the right merchandise to the right stores. Retail merchandising companies have a staff of people

Starting point is 00:05:13 that go into the retail stores. Some of them take merchandise physically from the back, place it on the shelves. Other ones will place advertising displays or take inventory and generate a purchase order to replenish the stores so in our case in Canada you really had a low employee count and what was happening was I was doing these great programs with retailers across Canada and then I'd go into the store and I couldn't find my stuff so like it was great that I sold it in but it doesn't mean anything until it

Starting point is 00:05:43 goes through the cash register, right? And so this retail merchandising company was a small company in the East Coast of Canada and brought them on board. I started doing it in a very, very small way where I was based, brought them on board, then rolled up a bunch of other companies in a similar industry, doing the same thing or close to that throughout the country because Canada is a big country and amalgamated and took that what was and pardon my French a shitty little business and we turned it into a four and a half million dollar company with that which was ridiculously profitable because all we were selling was labor I mean we had no cost of goods right we just had we had 200 people visiting straight through us and I think at one point we were probably doing about a service to about 5,000 stores. Wow. Wow. That's, that's awesome. And so did you, you end up selling off this business or what, what was the, uh, the exit

Starting point is 00:06:36 there? That business I actually gifted to my brother. Oh, wow. My brother was my partner. And, um, when I sold my other business, um, I sold a business, uh, to Sega of America and relocated to Florida. And, um, I gave my brother the business. He was one of the partners. That's cool. So over, over your experience, right? You've acquired 13 different businesses. Like different businesses. Tell us some of the things, really the answer to your book. How did you go in and acquire a business at a good price? Tell us a little bit more about that. Well, my strategy, when I look back at the time, I didn't think it was really smart or even a strategy, but I went, but when I look back, it was actually quite intelligent for someone who, you know, I'm not the smartest guy in the room, but what happened was my first acquisition, the first business that I, that I actually started and then acquired some shortly thereafter, it was doing pretty well. I was a young guy with the, I think it was

Starting point is 00:07:44 generating about a hundred thousand dollars a year in income, which is nice at the time, which was the mid-1990s. But, you know, it's still expensive to run a business, but it was still profitable. And as I started buying other businesses, the retail servicing business, then I bought an infant products company, an importer, and then an Asian trading company. They were all ancillary businesses. And in other words, They were all ancillary businesses. And in other words, they were all businesses that I could either tuck into what I was currently doing and had the same client base, or they were additional products that I could sell to the same client base. Because one thing that I read early on, I think it was a book by Tom Peters who wrote

Starting point is 00:08:21 Thriving on Chaos, an old book, classic book. But I believe the number at that point, they were saying that, you know, a customer, there's a 60% greater chance that an existing customer will buy from you versus going out and getting a new customer. And that really resonated with me. So I bought these, tagged on these ancillary businesses. And from an economic standpoint, is I never took money out of the businesses. I lived on the first business. So I never went crazy, even though the businesses were doing well. I didn't adjust my lifestyle upwards

Starting point is 00:08:50 because I was making more money. I kept putting money back into the business to grow the businesses. And that, if I have to pinpoint one single thing, would be that in the growth of additional businesses would be the fact that I never drained the businesses. I just used them. I kept reinvesting in the business. And then what ultimately happens, as you know, if you put a dollar back into the business instead of taking it out, if it turns into another dollar of profit, you sell it at a multiple down the road,

Starting point is 00:09:17 three, four, five times, sometimes more. So, I mean, the math is always so simple that people don't understand, you know, live on a certain amount and then plow it back in the business to grow. Right. So, yeah, really build that that that overall enterprise value by by building the business rather than just sucking it dry as a cash cow. That that's exactly right. So so what are so what are some strategies that you used in acquiring these businesses? How did you typically structure the deals? Were you paying cash up front? Was it valued as a multiple same time provide some valuable information to your listeners is to understand that I've always believed that you want to buy a good business. You don't want I've never been interested in buying distressed businesses or garbage businesses. And I understand that there's a whole sector of people that either preach that or do that. I just don't believe in that because I, you know, there's, there's a reason why it's a garbage business or a distressed business. And most inexperienced people are not

Starting point is 00:10:36 capable of turning around a distressed business because they have to put a lot more money. So with that said, from a structural standpoint, making sure number one, that the business was right for me, my best skill. I've developed five golden rules over the year that every business I buy must comply with. That's my own personal criteria. So I make sure it fits that model. I'm happy to explain that in a second, if you'd like. Yeah, I would love to hear those, love to hear the five criteria that you look at that that will definitely help the audience so so for me and understand these are my five rules right they're not yours they're my five rules and and i never will look at a business that has four it's got to have all five and these are developed

Starting point is 00:11:15 and they're specifically related to my skills and any everybody needs to develop their own five rules which tie in to their skill set because that's the most important thing when you acquire a business whatever it is that you do best has to be the single most important driving factor of any business of the revenue and profits of any business you consider purchasing so from my standpoint my five golden rules are number one it's got to be a sales and marketing driven business why because that's what i'm good at i mean i'm not good at a lot of things but i'm good at that and i have a lot more weaknesses and strength but i'm good at. I mean, I'm not good at a lot of things, but I'm good at that. And I have a lot more weaknesses and strength, but I'm good at sales and marketing. Number two, I want a business that has high margins. I don't care about the revenues because if it has high margins and I'm a good sales and marketing guy, I'll get the sales up and the profit will surely follow. The third thing that I want is I want a business where there's demand in place for the product or service.

Starting point is 00:12:04 I don't mind competition. I don't want to go out and create demand to try to make people aware of what this product is. I want demand in place because it's too damn expensive to try to create demand, no matter how much information may be available to consumers. I don't, number four is I don't want a business that competes solely on price because I don't believe that that's a sustainable model. You know, businesses where you have to go back into business every day, that's literally what you're doing for the rest of the time that you own that business. You can never build something. You're back in business every single day. You start at the start line again, as opposed to progressing towards the finish line. I also like a business as a fifth thing that has an element of

Starting point is 00:12:44 exclusivity, whether it be the product, the service, the territory, something in place that no one else has or no one else locally has, or there's a point of difference. That's a competitive advantage. It may be a moat, but there's an element of exclusivity, maybe a little better mousetrap, that type of thing. So those are my five, sales and marketing driven. It's got to have high margin demand in place. Um, they'll compete in price and, and, and an element of exclusivity. I have like a sixth and seventh with, I like recurring revenue or, or less employees, but it doesn't matter. I don't care if it has a six and seven, those five, I will never, ever, ever, ever sway from those ever. No matter. I love that. I love that. I think, I think those five rules are just like, they're the, they're the same ones that I have, right? Because it sounds like you have very, very similar, very similar skill sets from a, from a sales standpoint, you know, from being really good at that, loving the good high margin businesses and, and really, you know, understanding that like price shouldn't be the key differentiator and your other two. I mean, I love that. So with that being the case, are you typically, when you're advising acquisitions or whatnot,

Starting point is 00:13:55 are you typically liking to have the ownership stay in place, the previous ownership stay in place as a management team, completely replace them and move them out of the business? What are you typically advising in that type of scenario? There's some cases where I've kept owners in place, not many. Typically in the businesses, in the lower categories, smaller businesses, which are hard to necessarily define, but let's call them businesses that are generating a million to $10 million in profits. Some are even lower.

Starting point is 00:14:25 I mean, a ton of my clients who use the material are buying businesses for $50,000 or $100,000. But in the cases of those in the smaller end, typically, it's not a private equity type acquisition or rollover. The owner, you're replacing, you're becoming the owner-operator. I haven't in all cases, but typically, you become the owner-operator. You assume their chair. So you want them for a transitional period. But one thing that's really interesting in the smaller businesses, which typically lack a lot of sophistication, right? Whether it be books, records, processes, procedures, people, et cetera, the quicker you can learn that business and get

Starting point is 00:15:00 the owner out, the better off you are. I mean, you've got to put your stamp on it. You've got to make it your business. Don't be, you know, egotistical that you could learn this business in two weeks. You can't. I mean, you walk in the first day, you don't even know where to, you don't even know where to turn on the lights, right? But so it takes a little bit of transition time,

Starting point is 00:15:14 but the faster you can get the guts of that business in your belly and make all the decisions, you buy a business, you're the new sheriff in town. That's it. And everybody has to understand that and get the old owner out as quick as possible. I have done ones where owners have stayed, but it's only if they brought a really high level of value to the business. Right. That's the only time they stay. And most, you know, if they have second tier management, that's great.

Starting point is 00:15:38 I mean, that I have no problem with. Nice. So so do you typically buy 100%? You advise on 100% acquisitions so they. And they could just get a distribution at the end of the year. But you want to sometimes it's just not affordable for many individuals looking to acquire a business to acquire the whole thing. So you can buy 60% and then, you know, 8% a year over the next five years out of profits or what have you. I prefer to buy 100%. I certainly would never buy 50. I don't want to be a 50% owner either way, because then in a smaller business, that's a recipe for disaster. In most cases, you can't get anything done. If there's two active partners, I mean, there's the possibility that there's a standstill, like with every major decision, right? And so I try to avoid that. But wherever possible, you want to buy full controller or 100% ownership. Yes. And then as far as getting the deal done,

Starting point is 00:16:46 do you typically structure where it's an owner finance deal over time? Do you finance it through debt, 100% cash upfront? What type of direction do you prefer in that scenario? Well, unless it was an unbelievable deal, I would never pay 100% cash because I want the sellers proverbial kahunas on the line to back up and have some skin in the game so that whatever they've represented, they're going to think twice about the representations while they have a little bit of skin in the game. So unless it was a massive discount, I would never pay 100% cash. As far as structure is concerned, I love seller financing. I've never bought a business without it. 91% of our clients actually have a component of seller financing. There's a tremendous amount of positives to going that route.

Starting point is 00:17:38 However, there's also deals related to SBA financing, which could become very attractive, right? Because the leverage is attractive, right? Because the leverage is unbelievable, right? It's like a nine to one leverage. And the criteria for SBA financing has been reduced greatly recently. So that has become even more attractive. As long as you can deal with the securities or whatever they have to put into place. But you never have to pay 100% for a business, no matter what the seller tells you, even if they tell you they're not financing their financing, because that's the only way deals get to the finish line. And so a combination that my preference is a huge component

Starting point is 00:18:15 of seller financing. And but but as the drop down to that, I have an advantage with seller financing than someone who's never bought a business because I have a track record. Right. And so a seller would be more inclined to bank on an individual who has more experience operating businesses related to the financing than someone who's never done that. However, seller financing is the norm. It'll get you to the finish line. Debt is really expensive now, so it's not even an option for many people. And so seller financing is even more prominent than it used to be. And there's such magical upheaval in the market right now. It's wonderful, right? Because of interest rates, it forces, it impacts and helps the buyer,

Starting point is 00:18:57 right? I mean, buyer terms are much more favorable now because of all the uncertainty. So typical, I mean, what's the type of structure that you like with a seller financing? Is it, you know, a earn out over the next 12 months? Is it a three-year finance? Like what, what do you typically recommend for a standard deal? So the prevailing interest rates could be reduced substantially, should be at least 30 to 50% lower than what the interest rates are because the seller can charge you whatever they want i i prefer to get a longer time i'll pay a higher interest rate to get a longer term because it gives me the use of the cash so ultimately may pay a little more but i have the immediate use of the cash so the interest

Starting point is 00:19:37 rates you know we you can negotiate down pretty favorably but it never really frightens me as long as i get a longer term and i'm very much the ilk of, hey, I'll pay your price. You just take my terms, right? Because I'm going to work on the term site. And so, but as general rules, you should be able to get 30 to 50% seller financing at least. At least. This whole concept of buying businesses for no money down,

Starting point is 00:20:00 cash flowing $500,000 a year, closing the deal in 30 days, that is like smoke and crack. Okay, that just doesn't work. a year, closing the deal in 30 days. That is like smoking crack. Okay. That just doesn't work. I know it's like all over the internet. I know people are promoting that, but I tell you, I'm doing this for 30 years and I've looked at hundreds and hundreds of businesses and I've done it once. Right.

Starting point is 00:20:16 So if you want to spend the next 30 years trying to find that once, yeah, it's doable. If you want to buy a business in the next year, forget about it. Right. I love it. Love that. So, so yeah.. So I love it. I love it. So tell us a little bit more about the SBA loans.

Starting point is 00:20:32 With interest rates or whatnot, are SBA loans kind of out the window, or are they still a good option? I know you said that the leverage with these are 9 to 1. Tell us a little bit more detail about the SBA loans. So the first thing I would advise anyone, there's, you know, the granular details on everything are on SBA.gov. And I also have, if any of your listeners ever want to get in touch with me, there's some good resources that I could provide for them to give us some real granular information but then as a like from a 30,000 foot view yes you've got a nine to one leverage the amount of that the buyer has to put down which could be a combination of buyers equity or a seller note is around 10% now a seller can remain in the business with a small percentage whereas before they couldn't be you could bring in outside investment I believe and I want to

Starting point is 00:21:22 be correct but I believe it's like up to around 20% without them having to sign personally. So there's all these components that make it really attractive now, which are things that they've had to do to generate more loans and also to compensate for the higher interest rates. An SBA loan is based on prime plus about two and a quarter to 2.75 is the max. So if you look at the Wall Street Journal Prime today, I mean, the loan could be 11 and 11 and a quarter, 11 and a half percent, which is pretty big. Right. Right. You know, I'm not predicting where interest rates are going. I have, you know, I have enough trouble figuring out what I'm going to do in the next 10 minutes, but I don't know where they're going, but they probably won't go up that much. And the possibility always exists to refinance at some point. Plus the SBA loans are 10-year loans. Right. Which a lot of the times is much longer than your traditional type business loans, right? Traditional type business loans will be three, five or seven years. Yeah. Exactly. Because a seller typically wants their money early um but i've done it i

Starting point is 00:22:25 did a deal with someone where they were so hell-bent on selling their business for a million dollars right and i came in my valuation i think it was about 875 or 900 000 they were so hell-bent on selling it for a million they wouldn't budge and i couldn't figure out for the life of me it's like and i have i've developed a proprietary valuation formula that's that's like the industry gold standard now right and it's been used and it's been a stress test with thousands of businesses i use that and every other factor and i kept coming to like that 875 nine and a quarter or something like that and i could not get this person to budge and then in a nice casual conversation as we're talking because it's always good to have these casual conversations with sellers not to be negotiating all the time

Starting point is 00:23:03 because you get great information from them when their guard is down and i realized you know and something that they said he'd already always dreamed of selling his business for a million dollars absolutely just so he could boast to his buddies that he sold his business for a million dollars so he said okay no problem i'll pay you a million dollars i want a 30-year note he agreed wow it was all it was all for bra Wow. It was all for bragging rights. It was all for bragging rights. And interestingly enough, there's almost all, in every deal, there's almost always one of those either bragging rights or one issue that buyers and sellers both have.

Starting point is 00:23:37 It's like the bee in the bonus. Like they got a, you know, something buzzing around their cap that they just get neurotic about. They're not even logical. Like you can't have an articulate conversation with them it's irrational but they have this thing in their head that for for whatever it is and you can't get past it so you have to figure out how like that's the hot button and in this case that was it so um you know when you were talking about into the original question about terms and structure it varies greatly but you can um the terms is what you want to focus on right because

Starting point is 00:24:08 the price if you're buying a good business you know spending an extra couple of hundred thousand dollars over the time that you're going to own it and sell it for a multiple doesn't work out to a hill of beans right right you're getting a rock solid platform to build. It's so interesting. So I'm not sure for those that have followed me on social media, I spent the last three weeks out at Harvard as part of a owner's president's management group. It's 160 owners from throughout the world that come in. We live together. We spend time together. It's phenomenal. Um, one of my, one of my

Starting point is 00:24:45 favorite, uh, classes that they teach there is there's an old private equity guy that, uh, that teaches negotiation, right? And, and the negotiation, it's so interesting, like how much emotion goes into a negotiation outside of logic, right? Like there's to speak to your, this exact story, right? That, that somebody is so bent on getting a million bucks. They don't even care how they get the million, as long as they can brag it and it's an emotional tie or whatever. And I've, I've done a handful of acquisitions myself, and this always tends to be the case that there, there's always an emotional factor that you have to figure out what's the underlying. And then you can give on a couple of things that really don't matter to you to help

Starting point is 00:25:33 them get exactly what they want. And, you know, it was interesting. We did a mock negotiation at Harvard and my role, I had to try to protect my friend, my friend's interest. And it was nothing more than about our relationship, right? It had nothing to do with the financial outcome of the business or anything else, but I had to somehow, because like that kind of stuff is real. There's so much emotion when you're negotiating. You know, it's your, the way you explained it is spot on. And I don't think just for lack of experience that most people have a sense of the appreciation for that, because oftentimes, you know, that part overtakes the rest of the discussion related to a deal. So when you're looking at businesses, like, you know, the easiest

Starting point is 00:26:23 part is the numbers, right? The numbers are the numbers. Numbers don't lie. People lie. So once you get the numbers, you know what they are and you can determine evaluation. Excuse me. That's done and over with. Excuse me. It's all the other pieces and the emotional component to it is massive. And one of the things that I really try to impress upon people is when you're going through these discussions with the seller, as long as you've made the determination that the type of business is the right business to fit with your skill set, you like the business, you remain keenly interested in acquiring it, the conversations that you want to have with the seller are A, more casual, you want to keep their guard down. But your number one agenda is once you get to the point where, again, you like the business, you could see yourself running it. You like the seller, you trust the seller. If you, you want to impress them, right? So, because if they make the decision that you're the person to buy their business, you dictate the deal terms. They're cooked at that

Starting point is 00:27:22 point. And I've seen it time and time again with in my own situation with buyers I've represented in situations where I've represented sellers. I've had meetings where a buyer has come in. I'm representing a seller and the buyer leaves and the seller says, that's the person I want to buy my business. At that point, the seller's cooked, right? Right. They can dictate in terms because it's their legacy. They see part of themselves, you know, the perpetuation of their of their good, good work. And so have that understanding philosophically related to the negotiation that that is if you were to break it down to the 80 20 rule, 20 percent is the numbers. Right. The rest of the 80 is, you know, is the business right for me, has a good future. What is the competition like, et cetera? But understanding the dynamic and the interaction with the seller, you know, because at the end of the day, if a buyer and seller get along, they like and trust each other.

Starting point is 00:28:14 One wants to buy, one wants to sell. You can't stop them from doing a deal. But this negotiation piece, and some people get so intimidated and concerned and worried about negotiating. Like, you know, it's like they go into panic mode. And it's just a real good conversation. And having the strength. It doesn't matter. You could lose every battle, win the war.

Starting point is 00:28:35 Absolutely. Give up points. Those minor points are negligible. You know, it's amazing how often you can give into a small point to get a major concession. Oh, yeah. Oh, yeah. But don't get, you know, like, you know, don't not everything is a deal breaker. Not everything is a line in the sand. It's a give and take.

Starting point is 00:28:53 And you have to be fluid with it and be accommodating. And that's how you get to the finish line. And it's having that philosophy that also helps you run a business better. Because if not, you people, you know, if you, you turn every incident into a catastrophe. All right. Now that, that is such, that is such good, just value in, in going in negotiating, acquiring, running a business like, like that right there, what you shared. Phenomenal. Thanks. Thanks for sharing that. Let's shift gears. I want to hear a little bit more about your story working with the Dalios.

Starting point is 00:29:29 Obviously, Ray Dalio is like the godfather or superstar of private equity and investing. And a lot of people give him massive respect. So you've interacted and worked with the family. Tell us a little bit more about that. Yes. So people do give him massive respect because he's earned it and deserves it. He's I worked with the family back in 2007. I was hired as a to help raise all the sun.

Starting point is 00:30:03 Devin at that point looked to acquire a business who's based in Florida. The decision was ultimately made that he was going to go join the family office, which we were just starting. Real quick, time out. How did they get in touch with you? Was it because of your book? What made Richard Parker the guy that we want to work with our son? Or did you have a previous

Starting point is 00:30:25 relationship? Give us a little bit more of the background there. No, no, no previous relationship. I was recommended to Ray through a colleague in Florida that when they were doing their research and his son, Devin was doing the research as to who can help on the buy side, because there's very few buy side representatives and there were far less than, and I had written the book on the buy side because there's very few buy side representatives and there were far less than and i had written the book on the material and uh spoken to uh to uh ray had called me i didn't know who he was so i got a call one day and he said who he was i had no idea who the guy was this was back in 2007 my my very in-depth work with him was more much more recent than that which i'll touch upon um but he introduces himself and he said, I was referred to him and he would like to hire me to help his son learn how to buy a business because I had a lot of material

Starting point is 00:31:12 related to buying a business. And I told him at that point, I said, look, at that point, my youngest son had just been diagnosed with epilepsy. And I had told him, I said, look, I'm not taking on any new clients. My son was just diagnosed with epilepsy. I know nothing about this condition or disease. I'm going to take off the next few months to learn about it because I really need to become comfortable with an understanding of what, you know, what he's, what my boy is facing and what our family is facing. And Ray had said to me, look, he said, no, I totally understand. He said, and by the way, he said, I have some really good connections with some medical

Starting point is 00:31:42 people. If I could be of any assistance to you whatsoever, please let me know. I'm happy to make introductions for you or referrals, whatever you need. It was just such a kind gesture. And again, I have no clue who this guy is, right? And I really appreciated it. And I said, you know what? At the very least, I'll meet with your son, right?

Starting point is 00:31:58 And I met Devin and I really, really liked him. This was a really nice kid, really smart. And when I say kid, he was about 29 at the time. Really nice, really smart, really keen on acquiring a business. And so we set up a program that I started to teach him how to buy a business. And we would meet weekly. We went through my course, chapter by chapter. We did exercises, which is what Ray wanted.

Starting point is 00:32:18 You know, it's all about the learning. And then we went and visited businesses. And he was one of the quickest studies that I've ever met. I mean, he was just a brilliant guy. And as brilliant as he was, he was nice. And then the family and him and I worked together for about six months. And then they decided the family office was opening up and decided that he would go in and work with the family office. I had no idea what a family office was. And it was only probably five or six months into this relationship where something was said at one point about i think it was devon might have said something about his family whatever

Starting point is 00:32:50 and i sort of like like something hit me like like this might be like a pretty substantial family right i'm not a guy wait you're telling you're telling me it wasn't until like six months into this relationship that you you finally realized like holy crap, I'm dealing with like somebody pretty awesome. I think it might have been longer, but it was at least six months. Might have been seven or eight. Yeah. And then I sort of like, I don't know, like, I don't know if it was I Googled him or whatever. I was like, holy shit.

Starting point is 00:33:19 Okay. And the thing was, like, understand that I was dealing with Devin. And he was such a down-to-earth guy i mean i never would put one he was never a bragger i never put one like you know two and two together as they say to draw any conclusions and the other thing is like i don't care about that stuff like it doesn't even enter my mind like people are people like that's the end of it and so he decided to join the family office it It was a good decision at that point. Ray was incredibly appreciative. He paid me incredibly well. And even long after, he kept sending me gifts every month as a thank you. He was so appreciative. He was such a nice guy. But I hadn't met Ray.

Starting point is 00:33:55 I've spoken to him a couple of times. And then Devin and I stayed in touch. And he ran. He worked his way up to become the co-CEO of the family office. When he joined, there was about five people. I think now there's probably 125 or 150 people, maybe more. And then in 2017, he decided, Devin, that he wanted to leave his role as the co-CEO, and he wanted to start to acquire some businesses. He was also contemplating moving to Florida, and he told his dad that he was going to get in touch with me, which his dad was all in favor of. We I was in the midst of moving my M&A practice to another company.

Starting point is 00:34:33 And so the timing was like terrible and terrific. Ray called me on a Sunday afternoon, said, you know, Devin's interested in doing this. What is it going to take to get you on board to do this? And, um, time out, time out. Let's, let's, uh, I want to, I want to recap this thing because this is phenomenal. This is grade a education on how to network and build relationships. And I'm going to recap it here. So one, create content, create content around what you are best in class at. And, you know, Richard wrote a book and he had a great program and he did all these things. Right. And, you know, Richard had good experience and, and, and, but, but he basically positioned himself as a master or a guru in the space of buy side acquisitions. And so, and he did it through creating content. And because of that content, he was introduced into different circles, Ray Dalio being one of them. But I think this is a key. When he was introduced into these circles, he didn't treat these guys any different than he did any normal human being, right? He treated them as a friend. He helped educate them. He never put them up on

Starting point is 00:35:51 a pedestal. And because of that, he established a relationship of trust, right? Trust as a professional because he had the content. Trust as a human being because he was a genuine good guy and and didn't you know wasn't uh fan boying the the dalios and and just stayed in contact over over time until ultimately we're talking several 10 10 years later he's got ray dalio on the phone calling calling him up, asking him to do him a favor, right? Like when you got a guy like Ray Dalio asking you to come and be a part of something, that's when you know you've made it and that you've done the networking thing right. You aren't. And probably most importantly is that as you can see, Richard is just an authentic dude. There's nothing high and mighty about Richard. He's not snubbing his nose at people.

Starting point is 00:36:49 He doesn't put people into different brackets. People are people. This is grade A networking, ladies and gentlemen. If you want to develop better relationships, treat people like people. Don't treat them like superheroes. Don't treat them like just be genuine, be loving and kind. And eventually, you stay in contact. You create good relationships.

Starting point is 00:37:10 They're going to come around. And Mr. Ray Dalio might be calling you up on the phone. Well, pretty good summary. And I appreciate the compliments. That's very kind of you. So we have this nice conversation. And to dovetail on what you're saying, Ray is just, I consider him an extended family member. We've come very, to you. So we have this nice conversation and, you know, to dovetail on what you're saying, you know, Ray is just, you know, I consider him an extended family member. We've come very,

Starting point is 00:37:29 very close. He's just the regular guy. And the same way that you talked about, you know, how people get treated, he treats people the same way. He treats people respectfully. He appreciates education. He appreciates people being brutally honest with him. I think he, you know, they refer to him at Bridgewater as radical transparency, but he appreciates honesty and sincerity. And he's just a wonderful guy, great guy. And so we sat on the phone on that Sunday and says, it was one of these, like, what is it going to take to get you here? And I certainly wasn't picked by any means. You know, I thought it was an interesting opportunity. And we ended up putting a deal together pretty quickly. And I, instead of Devin relocating to Florida, we worked out of the Northeast. I commuted from Florida to New York for a few years. And Devin and I worked together.

Starting point is 00:38:16 And our goal was to learn about, we were going to acquire a lot of small businesses, but we wanted to, we had the blessing to be able to learn about a lot of different things and decide where it is that we wanted to play. And so that was, you know, that was come from the higher from higher up of Ray, very specifically saying, you know, learn about a bunch of different stuff and see where where it is that you want to direct yourself. So we had unbelievable support from the family office. We didn't interact with Ray regularly, of course, because we were stood up by the family office. They were our greatest cheerleaders. They have unbelievably talented people. They're all genuine. I mean, you meet one person nicer than the next and all bright and all caring. And we're cheering for Devin and I, of course. And we had our own offices outside in Greenwich, Connecticut,

Starting point is 00:39:03 one in the city. And we made a number of investments. And Devin and I worked together. We shared an office. Our desks were face to face. And we developed, you know, what went from originally like a transactional relationship to a real personal relationship. And we, he and I did a lot of good things in business, but we became tight like brothers. I mean, just incredibly close. And he was, you know, the combination of the kindest, smartest man I ever met. And it was just a beautiful relationship. And when we wanted to make an investment, we had to do our investment committee. We have to present it by Ray or the trustees or what have you. So we didn't get favorable treatment, notwithstanding the fact that everybody wanted to see us succeed. We had an advantage of course, because we didn't have to go out and raise money, but

Starting point is 00:39:56 we weren't given ridiculous carte blanche, but the support that we had was unbelievable. And more importantly, when I look back at that time, besides the incredible learning is the relationship that Devin and I had was, was, was just unbelievable. And more importantly, when I look back at that time, besides the incredible learning is the relationship that Devin and I had was, was, was just unbelievable. Just this, there was nothing we didn't share with each other was the most magical partnership because the, the element of trust that we had between each other, like we would take a bullet for each other, right. And there was no, and it was based on truth and trust and respect and kindness and um and after covet hit i came back to florida we he and i were working on zoom for a while and then unfortunately on december 17th 2020 devon was killed in a car accident sorry so sad so um

Starting point is 00:40:38 young guy 42 years old and um with a three-year-old daughter and an incredible guy just and and so, you know, subsequent to them, of course, you know, from the business side was immaterial and you could, I couldn't even imagine what, you know, what a family goes through losing a child and four kids. I can't even get my head around the thought of even thinking about that. And, you know, so now, you know, the conversation, your questions related to the family, family are very close. We speak regularly. We get together, you know, regularly to honour Devin and we talk frequently. They're incredible people. It's the loss that, you know, it shows you it doesn earlier question, I'm sorry to be long winded. I could never pay Devin enough honor during, if we don't have enough time to even do that.

Starting point is 00:41:49 But, you know, I never held, I was always in, I guess, in awe of Ray's accomplishments, right? Because it can't help but be in awe of his accomplishments. But I've never been in awe of him, right? Like as greater than thou person. I'm not like that with anybody. I have one person up above up above that i hold in the highest esteem and then that's the end of it and um he's just you know he's my buddy's dad right and he's just a regular guy and his his parents his mom his siblings i mean the entire family is you know ray and his wife an incredible job of raising their boys because

Starting point is 00:42:25 they're they're all humble accountable productive philanthropic kind i mean it's pretty incredible i mean just so unaffected you know and use their their their way and use their position in the world and their resources to better the world. I mean, they're an incredible family. Incredible. I mean, I love them dearly. I mean, it's just, you know, that whole event was just, I mean, Devin's still my picture on my screensaver. Him and I had a Zoom call every day. I reenact it most days where I'll have a Zoom call with him because he was an incredible,

Starting point is 00:43:00 you know, I learned as much from him. I was hired to mentor him, but he probably taught me as much as I taught him. And, you know, it's just it's just a very unfortunate set of events that, you know, what the outcome was. Thank you for sharing that. You know, death, death is such a difficult thing to deal with and you sharing that and just a beautiful way to honor Devin. I think, you know, thank you. Thank you for sharing that. Richard, man, it's been a fun one. Just hearing your story, hearing the different strategies and everything that you have and acquiring businesses. I know to shift gears and it's really tough to shift away from Devin because you just shared something very emotional and heart-wrenching. Makes my heart hurt even thinking about it or putting myself in that scenario. What are, as, as business owners that are acquiring businesses, what are

Starting point is 00:44:07 like some common pitfalls, mistakes that are made in, in the acquisition process that, that you can give to our listeners and give us some. So you're talking about people that already own a business and they're looking to acquire additional business along that in that world or or just even just even people that are in the acquisition game right like that are that are trying to go out and and and uh try their hand at uh buying a business what are what are some pitfalls that we that should be avoided well there's there's a few of them. The single biggest reason, and the stats in this industry are horrific, right? And before I jump into that, first of all, I appreciate your kind words very much about Devin. And I know there's a role related to this conversation that we want to inform people, but I really appreciate the departure and your kind words. So thank you very much again for that. And hopefully, you know, share Devin's story a little bit. I appreciate giving the floor to talk about that. Pivoting a little bit to the business buyers, there's a number of common mistakes that are made. The statistics in this industry are terrible.

Starting point is 00:45:22 And by that, I mean, 90%, and this is an industry statistic nine over 90 percent of people who begin to search to buy a business never complete a transaction and that's for a whole host of reasons and including the following people tend to just jump in like the internet is the worst is is the greatest blessing and the worst curse for people looking to buy a business a blessing because you get a lot of information there's business for sale websites that type of thing it's a curse because there's lots of information and there worst curse for people looking to buy a business. It's a blessing because you get a lot of information. There's business for sale websites, that type of thing. And it's a curse because there's lots of information and there's business for sale websites. And there's a lot of garbage information

Starting point is 00:45:52 and generic information of people screaming about materials and educational materials that are very misleading, ridiculously expensive. People have a tendency, they'll spend an inordinate amount of time just searching through countless business for sale listings. And they're not prepared. They're not educated. They have no expertise. They not have any preparation. And so they just spend their time running around like, it's like if you had a bunch of people at a starting gate at a race and the gun goes off,

Starting point is 00:46:20 everyone runs in different directions. No one even knows where to start and where to finish lines, right? And so that's like a big problem. And it's so big that that's why the statistics are so dismal. I mean, I'm thrilled to report that 82% of our clients buy a business in six months. So that's a good thing. But this lack of or jumping in without a plan is a massive problem. The second thing is you have to get in tune with the type of business that's right for you. Most people don't know, I'm gonna go look, oh, I've always been interested in buying a X. Well, nothing in your background qualifies you for running an X.

Starting point is 00:46:56 You may wanna own a restaurant because you love cooking, but you know nothing about operating a restaurant, okay? Or someone has a hobby, an avid golfer they want to buy a golf store well what the hell do you know about running a golf store right like zero okay and so and the problem is like if you try to turn a hobby into business like you you quickly learn to hate your hobby because like while you're out working in the store all your buddies are going playing golf right and um and so so the lack of knowledge and preparation and education people thinking that they just go out and find something and get help from a business broker, an attorney or accountant.

Starting point is 00:47:29 I mean, that's nonsense. Right. And therefore they get tidbits of generic information on the Internet, which are which are completely useless. And so the goal is you first have to identify what business is right for you. What is your greatest strength? Not your experience. It doesn't matter what industry you worked in. It doesn't matter if it was aerospace or healthcare or hospitality is what is it that you did in that industry that really made you special? What is your number one skill? Is it sales? Is it marketing? Is it logistics? Is it dealing with people? Is it building a team? Is it putting a plan into effect? Is it logistics? Whatever that skillset is, you have to marry with the right business. So when you can identify the type or types of businesses that are right for your skill set, that's the place to start. As opposed to looking at hundreds of businesses and trying to figure out which, if any, are right for you.

Starting point is 00:48:15 That's completely ass backwards. You've got to educate yourself and you've got to first learn what business is right for you. And the third thing is this philosophy. You're going to find the perfect business because it doesn't exist. I worked with a guy, his name was Jerry Efros. He was a tail gunner in World War II, you know, sat in the bubble in the back of the glass bubble, if you've seen those planes and shooting down the enemies, right? And he passed away a number of years ago. He was an unbelievable guy, but he used to say, you know, you know what the perfect business is? Own a toll booth. He said, because people just come through and give you

Starting point is 00:48:45 money right he said other than that there's no perfect business and that's so important because every business has warrants every business has blemishes they all have problems you could mitigate i believe you know i could i teach people how to eliminate the risk when buying a business there's always a smart element but you can mitigate for everything you know i interviewed this guy iggy domogowski who bought my course. He since bought 10 businesses, built them up for over $200 million, sold out, runs a $2 billion company now, had a beautiful call with him a couple of weeks ago. And that was one of his biggest things was you have to get past like some of the shit, right? There's some businesses to just have, they just have a little bit of a problem to them or

Starting point is 00:49:22 they're not perfect. They have pimples, they have warts. It's unavoidable. So those are the three things, again, which is you got to be prepared. You got to have the knowledge. Make sure you understand and get really in touch with what type of business marries perfect with your best skill set, because that's the business you need to buy. And forget about this perfect business. It doesn't exist. Similar to what the point you made about negotiations, that there's some things you just have to get past. Love that. Love that, man. That is great knowledge share. Great bombs right there. So, Richard, obviously, you've got courses, you've got products like where is the best place for my listeners if they're looking at potentially going out and acquiring a business, like where do we go to learn more from you and maybe follow you by your book? What's the best route? Okay. Thank you. I appreciate it. So my main website is richardparker.com. It's really

Starting point is 00:50:16 easy to remember that richardparker.com. And it's also, that was the main character in the movie, the life of pie to Bengal tiger. If you saw that beautiful movie, it was the Bengal tiger's name was Richard Parker as well. On that site, you find there's tons of free articles i only have one course i have some industry specific guides but only one course i just don't believe in people buying something then upselling them to consultation then i'm like quote mastermind group unquote i'm just that's just not my nature so my my main program, which is how to buy good business at a great price, it's under $200. The other thing that I, 550 pages covers the entire buying process, what people need to know, what to do and how to do it. And the other thing that I offer people

Starting point is 00:50:56 is the one thing, the single biggest thing that I missed when I was making my early acquisitions, I had nobody to talk to. I had no mentor. I had no expert. I couldn't bounce some ideas off people. And so when I launched this program, which was never done to turn into a business, I'm still stunned that it turned into the business that it has. I don't do this for the money. Thank God I don't need the money. I'm trying to make it very affordable, but I let anybody who buys our course, you can email me anytime. I'll answer your questions. I spend the whole day answering questions and emails. I'll get onto the phone with our clients to help them negotiate a deal or guide them or provide them information. So, you know, if you want to read a ton of great

Starting point is 00:51:33 articles, they're all free. It's on the website, richardparker.com, and you can navigate your way to the course on there. But either way, you're going to have to find some great information on there. Awesome. Awesome. Thank you so much for sharing that. A couple last questions for you. So outside of your course, outside of your book, what are a couple books that have changed your life that you can recommend to the audience? I think one of them from philosophically a life type book is a man's search for meaning, which was written by Viktor Frankl. Great book. Business book two, actually what I read, I'm a, I read constantly. So from good to great by Jim Collins, which is a terrific book. I only bought it originally when I saw it on the bookstore shelf,

Starting point is 00:52:20 because the title was similar to my course, right? I have how to buy a good business, a great price. I see the thing called from good to great it's a fantastic fantastic book a must read um the e-myth um by michael gerber is a terrific book because that really um programs you to understand how to duplicate a business and also how to duplicate yourself because so many small businesses you know the assets leave at five o'clock with the owner, right? And this teaches you, or it'll open up your eyes a little bit. And, and of course, the book by my, my, my cherished and dear friend, Ray, Principles, I think is an absolute must read for anybody, regardless whether or not they're working, not working for somebody, working for somebody, um, working for somebody or going into their own business. It's, um, a very,

Starting point is 00:53:06 very interesting view on many subjects related to work and relationships that make you a better person. I mean, that, that there's no doubt. So I, those would be the, uh, the ones I would, I would. Awesome. Thank you. Thank you for sharing those. Those are all fantastic books. I actually haven't had the chance to read the Ray one and I'm'm excited to pick up a copy of that and either listen or read to that. Last question, some maybe habits that you've had in your personal life and business that have really helped transform you over time. What are, what are some of your top habits? I'm neurotically organized. And I think that's really important. I mean, I'm, I'm, I'm an old school guy, so I still use a day timer. Um, but, um, but I'm meticulously organized. Um, and I probably, you know, and so that's, that's always been very important for me. I think from habits, one is which is more philosophical.

Starting point is 00:54:13 And I've evolved over the years because I think when I was younger, it might have been ego or insecurity, you know, probably played into this. But as time went on, understanding that surrounding yourself with more talented people, people that are bigger, better and faster than you is really the way to go. And when I was younger, I couldn't do that. And again, I allude to the fact it was probably my ego and insecurity because I was a young boss. And you learn as you get older and hopefully you evolve. And I don't look at that way. So so you know hiring good people um and surrounding themselves with that talent is good you know so like to me if if i'm the smartest guy in the room i'm in the wrong room i like to be wrong i want to be the dummy in the room um and and um i think focusing like this concept of i i'm going to blank a great blank by doing the following. Like I've tried to use that phrase to myself,

Starting point is 00:55:12 whatever it is. And that is, I'm going to build a great business by doing the following, or I'm going to have a great relationship with my wife by doing the following, I'm going to have a great relationship with my wife by doing the following or I'm going to be a great friend to so and so by doing the following. And and I think what what's happened because of that is like I don't focus on the money. Like, yeah, pardon my French, I don't give a shit about the money. I never have in anything that I've done.

Starting point is 00:55:42 I need to live. I need to eat. But I think if you focus on not being right, if you focus on getting it right or doing it right and doing right by people, the money and the gratification just happens by default. So I think that philosophically, and maybe sounds a little bit too altruistic, but it's really the paid dividends for me has really been, you know, guiding principle, you know, of conducting myself in that way. And I'm not holier than thou. I appreciate you telling, you know, St. Gabriel, I'm a down-to-earth guy. I like to think that I am, but that sort of idea,

Starting point is 00:56:15 and some of it comes with evolution. You get older, right? You just chill out a little bit. It's not so important to be right. You like, you've got to embrace being wrong because that's when you learn, right? You got to embrace rejection, right? Know how to deal with it and dust yourself off. So all those things, but a lot of them just come a little later in life. Absolutely. Man, I appreciate you sharing those. I connect very much with those principles, those habits, money not being the driver.

Starting point is 00:56:41 I'm 100% on board with everything you just shared. So Richard, thank you so much for your time today. I know it's very precious, very valuable. You've dropped incredible knowledge. Thank you so much. Until next time!

Next Level Pros - #41: Richard Parker : Founder of 13 Businesses and 12 Exits, Best Selling Author

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