"Do I Combine With My Competitors or Start Over?"

0:00Okay. >> Yes, sir. >> Yes. So, my partner and I came here with the intention of learn to to learn how to grow our business. We have 10 med spas. >> Oh, sweet. >> Yes. >> Love that space. Talk to Talk to JJ and talk to Well, Ben will probably reach out. Really interesting. Okay. >> Yes. So, we came with, you know, thinking how to grow. We had a bunch of questions about marketing and different strategies and stuff. And then after yesterday when you talked about like building your company for to sell it.

0:27>> Sure. >> I was like, "Okay, we can we can probably do that." Like that's that's something that made all You know, perfect sense. And 4 million sounds pretty good. And then better than the cash flow that we make now. Um >> How can I help? >> Exactly. The way The way that we built it was different partnerships, different states, different We like we opened one by one. And the strategy always changed as we grew. >> All right. >> And now that we figured out, now we have the winning formula. >> Yes, we have the the perfect model. My question is really, do we go back with the new part with existing partnerships that we have with like a non non-compete contracts that we have with certain partners in different states. So, do we go back and change the existing or do we leave it like a cash cow and slowly grow it and then open a new company with the intention to sell it from scratch with our winning formula, grow that, and try to sell it in like 40 months?

1:13>> you definitely merge the companies. >> Sorry? >> I think you can definitely merge the companies. So, think about it like this. Like you already have So, if you're familiar with Do you know what a private equity roll-up is? Okay. So, I'm going to do this as fast as I can. So, basically with a roll-up you have many businesses that are similar. So, let's say I'm doing a roll-up for chiropractors. So, I would go knock on doors and be like, "Hey, Mr. Chiropractor, can I buy your business?" And so, they might say, "Yes, sure." But if I get 10 chiropractors together that have John John Smo Chiropractor, Jim Crackback dot chiropractor. I have all these different chiropractors. That's not a very valuable asset yet. So, I have to get them all to convert to the same CRMs, same back-end systems. I can I can consolidate all the payrolls I get all of that. I can centralize the phone system so it goes to one person, and so I get lots of EBITDA that drops to the bottom line just by consolidating systems. And then I get them all on the same color, same logo, same whatever.

2:05And so then you make the deal where you say, "Hey, of the 10 guys, what are your partnerships like? 50/50? Or like, what's the deal?" >> Yeah, so they're different based on the situation because we kind of always improve the deal as we went. But >> it. And so yeah, once you had more proof, you could ask for I get it. So, what what I would end up doing is probably making some sort of hold co and saying, "I'm going to try and swallow all of these up. You guys are going to get way smaller slices of hold co, so you might get 5% of hold co, but we're going to sell hold co for like 200 million." And so, the thing is is the way you explain this is your individual asset is probably not that sellable. Like, let's say they own 50% of one of your med spas, right? You being able to sell this is going to be really hard, and you're probably only going to get like a 3x multiple on it because no one like buying a one-off med spa is just not super valuable. If you sell with us, we're going to get 10x.

2:54And so, your half is still worth more than your whole, sorry, half of, you know what I'm saying? The the smaller slice of this big thing is worth more than the 50% slice of this smaller thing. And so basically, hold co takes 100% ownership of the new entity of the old entity, and then they get a tiny slice of the big thing that owns everything. >> But wouldn't wouldn't like if we just sit down and think of a new name, new concept, new color, whatever, and just continue growing parallel, and then we can just keep the partnerships and make a new one from scratch with the winning formula without these partners, wouldn't it just make more sense to do it like that? If it's the same effort like to change everything

3:31>> you think it's the same effort? >> I think it's I think we created not a mess, but >> explain why private equity roll-up exists. Because it's much easier to combine 10 than start 10. >> Okay. >> And so if you have the relationships, then it's like, let's just And I'm sure you use the same back-end systems, probably, because you Right, you just have to change the [ __ ] logo. >> Not even. Like >> Right, okay. So, like you're already like 90% of the way there. This is why I'm bringing this up. So, you're 90% of the way there, and when you see how much money that you would make in being able to sell all of these 10 for your slice, you're not going to want to not include those.

4:09>> I see. >> So, I would do that. Also, if you have the better model, the the smart cookie move is let's go to other med spas that already exist. >> We've done that also. Some of them are like that. >> Right. So, you want to convert like that's the model. Like this is the private equity model is you go, you find you find the This is who we're looking for. They do between 1 and 3 million. They got a solar guy. He's kind of older. He wants to get out, whatever. And we take over with our systems, and then we consolidate. We put everything central. And so, we get more profit. We have, you know, way better systems. And that's how you can gobble up a marketplace. And then, the equity arbitrage that you have is you can buy for three and sell for 10 or sell for 12 when it's big enough. Like that is the PE play.

4:45That's how it works. >> Okay. >> So, could you start scratch? You absolutely can. I mean, obviously you guys are good at it. You'll make money either way. It's just a question of which one will make you the most money the fastest. If you already have 90% of the conversion here, I would lop everyone in. They don't have any voting power. I have all the voting. You guys don't. You have to agree to these terms up front. And then, you just I mean, you just make the deal. >> Okay. Thank you. >> And the day-to-day wouldn't change. It's just how the It's just what the what your ability to sell changes. That's it.

5:13>> Okay. And I wanted to say thanks for everything. >> No, you're welcome. Thank you. If you like this video and you're a business owner who wants to break through your current revenue ceiling, I distilled every lesson from scaling 10 businesses past 10 million and three businesses past 100 million into a completely free scaling roadmap that I've used to go from zero to one, zero to 10, and zero to 100 plus. And so, you can click here, and you can check it out. Again, absolutely free. And since you're a business owner, I appreciate you, and uh enjoy.