Wie Acquisition.com wirklich Geld verdient

0:00How has your criteria changed for businesses over the last two years? >> Um, it's just much bigger. It's just the businesses have to be a lot bigger. Um, they have to be billion-dollar opportunities now. Um, when I first started, I think honestly when I first started the goal was like $50 million opportunities and then it became like $250 million opportunities. And so it's almost like 5xed actually like every every like 18 months or so it's almost 5xed.

0:25>> So how does it work exactly? a company reaches out to you and they say, "Hey, we want >> they'll go through acquisition.com on the site and then >> and what do they do?" They submit their info that they want money or they want to sell or what is it? >> So, we have we have um we basically have three kind of places that someone can go. So, for like seed capital, SAS, you know, software type startups, we have ACQ Ventures, which is our venture arm.

0:49And so, those are typically like smaller checks that are between like $50 and a million dollars like check sizes. And so we do, you know, a lot of those deals. We do probably like a couple deals, three, four deals a month sometimes. Um, like December did four, I think we did four in January. Like we we do a decent amount of deal volume there. And those deals are much more like meet the founder, understand the idea, cool, we can we can just deploy. Um, we have uh the private equity side, which is kind of like the the big big the big boy side. Um, and those businesses, like if we're going to do a deal, they're all bespoke based on, you know, the valuation of the business, where we think the business can go, what our value ad is. Um, and typically in that side, it's like right now we're 40% SAS, 40% um, uh, B2B services, and then 20% consumer services. And we're shifting over time towards just a blend of a SAS and professional services. That just tends to be where we just do really well. And so that's on the private equity side.

1:44And then um we have the advisory division which we started in January of last year which is uh companies that are like not really portfolio ready. And so that's kind of like that you know 1 million 10 million 30 million sometimes uh dollar per year business where uh it's like they need to change a couple of things. And the reason that happened was for the three years prior to January of last year, um, we, you know, we'd look at a business, we'd do four, five, six, you know, diligence calls, get to understand the business. And a lot of times, like 90 times out of 91, we'd be like, "Not a fit for us or not fit for us right now. Maybe change these two things, move this metric up, and when you do, like, call us back." And what ended up happening is a lot of founders were like, "This was more valuable than anything I've ever had to go through, and thanks for doing it for free." And for me it was like it was actually super expensive cuz I'm doing that 90 times times however many calls lots of companies. And I was like I wonder if we could do this in a way that we could charge to do the same basically assessment of a business and say here's all the things that we would do. Here's how we change it. And so then we you know we we we wanted to see if people were interested in it. So January I was like hey if anyone wants to come out to headquarters you can meet my portfolio team. We'll kind of assess the business and be like these are the blockages to either making it more valuable or scaling it. And so it's like you'll meet with my head of marketing. and he'll be like, "Okay, change this on your web page, change this on your ads, change this on whatever. Meet my head of sales if sales is constraint. These are these are the things that we do." And um people have really, really, really liked it. So, it's been exceptional. Um and I think the reason that it works so well is that there's kind of what I was alluding to at the beginning is that there's just not a lot of help at that $1 to $100 million range. Um and I think we can provide that. And so,

3:14>> how do you make money from that? Are you taking distributions from the company or have you sold some? >> No, no. It's just we sell it as an advisory service. It's just a service for me. >> Oh, overall well no we have distributions that come from the private equity side. >> Okay. >> Um >> the venture checks obviously I'm not going to see anything for that for 10 years and then um services just normal business. >> Why don't you have a website or a place where where people could see the companies that you've invested in?

3:39>> It's a good question. It's something that I've gone really back and forth on. The main reason is like when I sold gym launch um I sold Prestige Labs which was a sister company that did supplements and sold through the distribution base and I remember in the diligence meetings uh for that it was like a huge point of contention that I had a 10,000 person Instagram following at the time and they were like are all the sales coming from your Instagram and the business is doing like 20 million a year just the just the supplement side and I was like no it's not coming they're like well this could be this could be an issue for us if like we can't have complete control of the Instagram and how do we know you're going to keep promoting it? I was like, "My Instagram is not driving like 10,000 people does not make it 20 million.

4:16Like, I promise you." And uh seeing how sensitive they were to kind of like keyman risk around, you know, an acquisition, I was like, "Okay, uh if I do deals and I grow my brand, uh I don't want people to know what the companies are because I'm going to have to go like I'm going to write a check, but then if I publicly associate with it, then I'm going to have to go with the deal later." So, like for example, school, that was purposely, you know, like a brand association plus money obviously that went into it. Um, but I know that I'm in that I'm in that for the long haul. You know what I mean? Like I'm going to be with school for many, many years. And so my keyman risk is something that I'm willing to basically deal with. Whereas if I buy a, you know, an HVAC business, I publicly associate with it. Um, a potential acquirer will want me to sign other non-competes. I'll have to have some provisions around uh, promotion and I just didn't want to do that. I have gone back and forth on it though to be really like I've gone back and forth.

5:05>> It seems to me like there would be a net benefit on that. Reminds me >> I've g back and forth. I have gone back and forth like a Shark Tank business where it's like as seen on Shark Tank is pretty big. And you could argue that the business you bring to that will drive up the valuation to a point where even without you, it's still higher than if you were never involved. >> Agreed. So then the next thing that goes is >> if I have all of these different things that I'm like pseudo promoting, then it almost feels like I'm shilling a lot of things.

5:32>> No. And so that's been that's been where I've been. >> I would just as a viewer of you, not that anyone like not that I would question your credibility, but I think that it would it would bring a lot more clarity where I actually >> I've gone back and forth on it. I mean, I've gone back and I think it would attract a lot more businesses where you could say, "Hey, when you started with acquisition.com, you were valued at this much, your revenue was this much, and now look at you." >> Here's the other thing. I think it would help you negotiate better terms saying that you're going to be on this website

5:58>> where it's even a 100 companies and I think it's important you put them all in the same place so that it's not like you're promoting this or promoting that or you you should never talk about these businesses unless in a podcast setting where you're giving an example. >> The other the other and yeah I mean I've been very I've been torn on it. I was like, you know what I mean? Like I've been very like >> uh because of all the reasons I just said, but the other one is kind of like the >> um the compliance thing that I just said, right? Like if if a company could you imag like a company does something stupid and companies do stupid things.

6:29Even if I wrote a venture check to a business and then and the company does something, I'm an owner and any any you know reporter or you know clout seeeking YouTuber would then be like Hermosi is saying doing this and it's just like >> how is it different from Y Combinator where they're very public or a lot of these like even some of these private equity funds are just like >> that's their value prop though. YC's value prop is Harvard's value prop is like the the main thing they get is that

6:55>> Yeah. But there are plenty that go through Y Combinator that just turn out to be, you know, Yeah. maybe not the best. >> Yeah. But I think it's Well, Y Combinator is kind of unique in that like I mean to be fair if if a if a Harvard grad does something bad, Harvard takes a hit. >> Um but is a law of like >> it's going to work both ways. I think I think it's going to hurt you if a business does something that reflects on you. And if you do something, it reflects on all the businesses. I think it goes both ways. I think the net benefit is like a 51 to a 49 like% down to 51%

7:25>> like I have I have gone back and forth to the Turi where I've been like >> I'm going to I'm going to make all of our stuff public. Um I think we are make I think the ACQ ventures if I'm not mistaken I think our ventures things are public. Um so it's really just the private equity side. Real quick, I'm going to show you the exact 10 stage road map from zero to 100 million plus that less than 1% of companies finish I've now done multiple times. And so I can say with a lot of confidence that these are the stages as headcount increases that you need to get through.

7:54And I broke each of these down by eight different functions of the business, what the constraint feels like, like what are the symptoms of it when you're going through it, and then what steps we actually took to graduate. And we've done this across software, physical products, uh service businesses, brickandmortar, all of this. and it works. And it's my gift to you. It's absolutely free. And so the link's in the description, but you just go acquisition.com/roadmap. Just enter your info and it'll spit it right back to you.