Transcript of Interview with Moran Pober
Dan: Welcome to another episode of Shoulders of Titans, this is Dan Lok. Today I have the privilege of bringing you another entrepreneur; a very interesting entrepreneur in the merge and acquisition, also a turnaround specialist. We also share a mutual mentor, Dan Pena, the 50-billion-dollar man. So, I think this would be a fascinating interview and it’s going to be a very interesting conversation. Moran, welcome to the show.
Moran: Hey Dan, thank you for having me. I appreciate it.
Dan: And it’s nice to connect. Maybe just for our audience, tell us a little bit about your background and how did you get into what you do today?
Moran: So, I started in business almost — more than 10 years ago now. I started a few businesses from scratch and one day I realised that I just don’t like to do the day to day stuff in a business. It’s funny, I had someone come to me and offered to buy my business, and a few things happened since. First of all, I realised that the best time to sell a business is now, no matter what, just sell it, because I had a bad experience with my business, which I can expand on.
But then I just realized that I want to do something else. I want to — and that really happened by watching TV shows like Shark Tank and The Profit, which you probably heard about, or Dragons Den in Canada. And I just realized, “Hey, I want to do that. That’s what I want to do. I want to sit; I want to invest in businesses; I want to buy businesses; I want to own businesses; and I don’t want to manage businesses.” And that’s what led me to the world of investing, of buying businesses, of acquisitions. Which led me to meet Dan Pena, our mutual mentor, and many other great mentors who I’ve since met. That’s kind of like my life, that’s my focus at the moment. I’m just out there looking to buy businesses and it’s the first time in my life that I can see myself do that literally for the rest of my life, just because I’m having so much fun from that.
Dan: Interesting. And Dan, I call him big Dan usually you know, Mr Pena actually was the first guest for the Shoulders of Titans show. And I interviewed him — probably it’s got to be more than ten years ago, and then it’s ten years later that — back then was cassette tape. I had him on cassette tape.
Moran: Yea I heard the interview. It was…
EXPERIENCES IN THE CASTLE – WORKING WITH DAN PENA
Dan: I was much, much younger and it’s interesting kind of we connect with Dan and see what he’s doing. Maybe share with us — because I know a lot of listeners, they are familiar with Mr Penn. What inspired you to go to the castle and what’s been that experience like and what are some of the things that you’ve learned?
Moran: So, I’ll tell you that I paid a small fortune to learn from different people over the last few years. But first of all, there’s no one out there who’s teaching anything living in a castle! That’s a good first impression. And I just like the fact that Dan is so raw, you can see from — like, he’s opening his mouth and you can just feel the integrity and the honesty the transparency. And that was really important to me to be honest, to get that feeling. And secondly the fact that he got a track record. He used to be CFO of a public company and he’s the first one who’s talking about really big things. For me, I heard about him pretty long time ago, and it’s the first time that I heard about things like acquisitions and buying companies and growing literally by the fact that you can grow by a year’s worth of sales literally in an afternoon, just by buying another company. And it’s really opened my eyes. And I just, I was thinking like, worst case, I’ll just have a cool experience in the castle. And it’s really opened my eyes and it changed a lot for me and I’m really grateful for him.
Dan: And when you went to the castle was it — did it meet your expectation? Was it what you expected? Was it more than what you expected? What was that like?
Moran: That’s a good question. Obviously, at the end of the day I got more than I wanted. Like, more than I expected, that’s 100%. I mean, just the fact that I got access to Dan one year later as well. So we have weekly reports and monthly calls, and Dan is there literally as your accountability partner. And Dan is talking about it — all his content is pretty much out there, but the fact that you’ve got him as your coach, as your mentor, someone who’s just telling you, “Hey just shut up” I don’t know if I can curse on this show, but someone to basically just tell you, “Hey, just shut up, go do what you know you’ve got to do and believe in yourself and understand it’s possible and just go and do it.”
I mean, he’s always talking about the fact that you’ve just got to pull the trigger and it’s so so true. I mean, so many people out there are just reading books and listening to podcasts. There’s a place for that as well, but people out there — and Dan is talking about it for so many times, I heard him saying that people are just afraid to pull the trigger. They’re seeing it as an excuse as they think that they grow by reading another book, by watching another podcast, by listening to another video. Yes, you grow, but after you watch those things or you learn those things you need to go and pull the trigger. You got to take action, otherwise you’re not going to get more money in your bank account just by reading the book. You got to implement what you read in the book.
Dan: Well said. Because I have all of Dan’s materials on my site and he gave me permission couple of years ago. All the stuff is all free, right? All the KLA stuff. And because of that, I get a lot of people either asking me, “Well, should I go to the castle?” Or after the castle I get a lot of emails of what that is like.
But what I also noticed that people, when they see someone who is — not just a track record, but such a strong role model and also very alpha. And I think a lot of people they may be attracted to that, but after the castle experience, only a small percentage take action. And it’s just like anything: 80/20. Now with you, after the castle experience, what did you start doing? Did you come back and say, “Hey, you know what? I’m going to put together my board immediately.” Or did you wait a couple of months? What did you do?
Moran: I was in a really funny situation and actually I think I was lucky. One of my businesses literally got destroyed. I’m happy to expand on that, if you want. I had a really successful app company. I had an app that became in the top 100 in more than 100 countries, it made really, really good money. Like, I was ranking in the app store next to really famous apps like kindle and all that stuff. And one day Apple came and basically said to me, “Hey, you can’t upload the new version.” Because Apple came out with their own version of the app. I used to have a few apps but my most successful one was ‘tips for iPhone’. We basically just gave some tips on how to use the iPhone and tonnes of people download that. Like, we had the free version and beta version and it made really good money. And now if you have an iPhone, Apple got their own version on tips on how to use your iPhone. And I basically was at the point where I’m like, “Okay that business is probably done. What’s next?” And that led me to the castle. After the castle I was like, “Ok, that’s my thing. I love it. That’s me full time one hundred percent.”
So, after the castle — I mean obviously, it took me some time to understand — and it’s funny, some of the things that took me a few months then, now I’m just like, that’s a joke. Things like putting the board together and finding the chairman and finding the CFO and finding your accountants and lawyers. Now I look at it ‘it like, “Come on guys, just do that! Seriously, that’s just the beginning.”
And Dan is saying that as well. Yes, getting a board is great, getting your accountants and lawyers is great, but you got to work — like, the real work is about finding the deal and making sure that you’ve got financing for those deals. So that’s where you eventually want to put most of your work. But I agree, most people — they just don’t even take the first action, which is going out there and look for their board, or look for their accountants and lawyers.
For me, I mean, it took me time, but I’m all in. I was all in and now I’m still all in. That’s all I do, that’s all I focus on. Just out there and talking — like literally I have sometimes 15 calls a day with business owners; different business owners or different financiers or banks to figure out what kind of financing we can get for those deals. So, I’m all in after the castle. That’s all I focus on, that’s all I do, that’s all I care about. I don’t look anywhere else.
STARTING A BUSINESS VERSUS ACQUISITIONS
Dan: That’s very interesting. Now, since we’re talking about acquisitions and — for a lot of my listeners, they’re entrepreneurs. Most people when they think of business, I think almost everybody’s thinking about, “Ok, I should start a business. I want to start a business.” And what’s your take? Because, I’m curious to know — because you started different companies, even like the app and successful company — from that starting versus buying, what has shifted for you over the years?
Moran: It’s funny. Even the app company, I mean, officially I didn’t really start it from scratch because I actually bought -0 before I even knew about the world of acquisitions — because I basically got out there and bought a code, an existing app from someone who just didn’t have a successful app. And I just literally turned around that app. But I didn’t even know about the world of acquisitions and buying businesses. I just took the app, I hired developers and designers and marketers, and we just took it from nowhere to where it got to be. So that definitely opened my eyes. But, I’m with you 100%. All the books out there, like 95% of the books out there —
Dan: Probably 99 percent.
Moran: I didn’t want to stretch, right? But yea, everyone is talking about starting a business; about building the next Snapchat or the next Facebook or the next WhatsApp or whatever. The next billion-dollar idea. There’s nothing wrong about that but I just — people just don’t understand the stats. They go out there and they think that, “Yea, ok, I’m going to start a business.” And everyone is going to be successful. And you do need that certainty, that mindset, but just look at the stats out there. I don’t know the exact stats, but I know that at least 90% of businesses fail in the first five or ten years of starting the business. It just frustrating because people put all of their time, all of their money — I’ll bet even more than that — I’m working with pretty big accountant and law firms and they tell me that for them — they work with tonnes of start-ups — and for them, they work on success fees with tonnes of start-ups. And if they get to a point where those start-ups pay them any fees they’re like, “Oh my god, that start up is successful.”
Dan: Pay something is considered successful.
Moran: Literally. It’s ridiculous. And I see people who are wasting so much time: all of their money, all of their savings, and sometimes their family’s savings. Don’t get me wrong; if that’s your dream and you want to do it, go and do that. But many people just don’t know there is another option, which is to go out there and buy an existing business. Many times you can buy a business that’s already existed for five or ten or sometimes — I’m talking to businesses right now that have existed for 20 or sometimes even 30 years. And those businesses are really really stable. Maybe they’re not growing as fast as Facebook or WhatsApp but they’re making really good money.
And you can many times buy those businesses with none or very little of your own money. You can make money from day one of owning that business, because it’s already profitable, it’s already making money.
It’s just frustrating, you know? I see so many people out there who are just like, “Yea, I’m going to start this,” or “I’m going to start that,” and they’re just throwing sometimes years of hard work. Again, I’m not against that. I think if that’s your dream and you have — especially if you have a very special idea, I think that’s actually, it’s something good. I mean, we need people like that in the world, you know? Who come up with creative new ideas. But many times, many people getting into business just because they want the lifestyle and they want the income. And if that’s what you’re looking for in business, I just think there are better ways, like buying businesses and growing by acquisitions.
Dan: I couldn’t agree more. Because a lot of people — sometimes they come to me and say, “Oh Dan, what advice do you have for starting a business?” I said, “Just don’t start one!” I mean, either you buy one, in my case you [inaudible 0:13:42] in one, or you invest in one. All these options out there. Like you said, 95% of them are going to be dead in five or ten years. It’s just like, if you go to the casino knowing you know what I’m going to bet my money on this hand knowing nine out of ten you’re going to lose.
Moran: Wow, exactly.
Dan: And nobody — I’m going to versus a great metaphor that I heard from Keith Cunningham, who’s also about the buy business. I went to his training, and last year–
Moran: I heard about him, he’s awesome.
Dan: The metaphor that he used, I love. Because — you guys listening can also go back to the episode I did with Keith. But Keith was saying basically about this: imagine you have to fly somewhere. Imagine you get to the airport and the people at the airport are saying, “You know what? You see all those mechanics, all those parts out there on the field? The engine and everything, the wings. Let’s put all of that together, and you put in the field and you be the pilot, and hopefully you will get to your destination. That’s starting a business. Because you’re starting from scratch. You don’t know anything about the industry, maybe you do. You don’t know the mechanics, you have no skills, you don’t know how to fly, but let’s put that shit together and hopefully get there. That’s how you die, right?
Moran: So true.
Dan: Versus if you’re buying a business. Imagine here’s a plane: It’s a working plane and you are going — almost like it’s been going there to halfway, two thirds of the way. You have a pilot, which is your existing business owner. You are the co-pilot on the side. And you are like, “You know what? Show me the ropes. Show me how you’re running the business.” And then you slowly, slowly taking over to be the main pilot and the existing owner would be the co-pilot. The chances of you getting to the destination are much higher. So, I love that metaphor. Always remember it.
Moran: I love it.
HOW TO BUY A BUSINESS WITHOUT MONEY
Dan: It’s very, very true. Now people might be hearing this, they might be like, “Hey man, what do you mean? I don’t have the money, that’s why I want to start a business, I want to provide for my family.” How can you buy a business with no money?
Moran: I’ll just say, I really loved your metaphor by the way, Keith’s metaphor. It’s awesome. I’ll just end and say I have friends who are [inaudible 0:16:04] investors and they are venture capital partners. They know in advance that they are going to invest in at least nine, ten businesses. They know in advance, like you said, that nine out of ten or so businesses are going to fail. But for them as investors its still okay, because one of those deals is going to make so much money that it’s going to cover all of those other nine. But what I’m saying is: why would you want to be that person who’s fighting on that 10th percent?
But I’m with you 100%. I really, really love the metaphor you just talked about.
But you’re talking about money. So, how do we finance those deals? I want to say it’s simple, it’s not easy, right? But it’s basically very similar to real estate. So, if your listeners are familiar with doing real estate deals, to put it simply, it’s a combination of debt and equity. But basically, you go out to businesses and as soon as we talk to a business, we talk to the owner, we tell them, “Hey, I’m potentially looking to buy your business.” We sign an NDA, a non-disclosure agreement, to make sure that he’s comfortable sharing that information. And as soon as we get all of these financials, which is like the basic information about the business: DNL, balance sheet, all that stuff, as soon as we have that, we know how much assets we got on that business that we could potentially leverage.
So basically, if we’re going to look for potentially a marketing business, they have accounts receivable, they have potentially some inventories, some cash in the bank – those are all of those assets that the business got. What we can then do is go to a bank and tell them, “Hey, bank,” or whatever financier we’re talking with, we tell the bank, “Hey bank, we got that business that we potentially look to buy. Here are all the assets that that business got, and we’re asking you how much money can you give us if we’re going to buy that business.” And all the big banks, they’ve got acquisitions departments, and they’re looking for deals, so they’ll tell you — and I can get into details if you want — but basically, we could get around 80% of receivables; we could get around 40-50% of inventory; and obviously there’s cash in the bank. If we get real estate that we buy with the deal — so many times we buy a business, and that business own a real estate, their offices and stuff like that. So if we got real estate on the balance sheet we can leverage it for at least 80% of that as well.
So, imagine we go to the bank. We tell them, “Hey, we got that business. Here are its assets, how much money we can get?” The bank will tell us how much money we can get and that’s the money we can pay the business. And then it’s a matter of negotiation, right? Of how much we need to pay for that business. I don’t know if you want me to get into too much details, but that’s — basically we usually value a business. There’s a few ways to value a business, but the simple way is just in multiples of [inaudible 0:19.14] the business pre-tax profit. So, then we just start a negotiation with the business. We know already in advance that amount we can raise from financiers or from banks. And then we go to the business and we tell them “Hey, let’s start negotiation, how much do you want for the business?”
And Dan’s talking about it a lot and explaining that the overall valuation is important, but the terms are more important.
Dan: Alright, we are back. That wasn’t a commercial break, it was actually a technical glitch. Now Moran, you were just sharing with us something exciting, you were talking about: don’t just look at the price of the business, but also look at the terms.
Moran: Yes 100%. So basically — I need to get to the groove after the break, I got into the momentum. Basically, you get the deal and you negotiate the price. You already know in advance from your banks or financiers how much money you have to invest in that deal. And that money that you know you have to invest from your banks is the money that you can pay at closing.
So basically, as soon as you close the deal, that’s the money that you can transfer for that deal. The rest of it you got to negotiate that it will be deferred or structured over a few years. And there are many terms that you can negotiate there as well. You can negotiate the [inaudible 0:20:49] and that basically means that you only pay if the business reaches some kind of a milestone. You can do it similar deals to real estate. Like do it as a seller note with interest. At the end of the day you got to know how much money you have to invest in the deal, and that’s the money you can pay at closing, and the rest of it — if you don’t have more money, you got to structure that deal over a few years. Or if you want, you could put your own money into that deal as well, and pay that as part of the closing payment. So that’s kind of like a simple or a common deal structure that you do when you look to buy a business. You basically pay something at closing and you pay the rest anywhere between one to sometimes even seven or so years.
Dan: So basically, what we’re saying — so let me just clarify a bit. So, we are leveraging the business cash flow or assets to borrow money from the bank, or perhaps if necessary sometimes we are putting our own money, or we might bring on another investor or third party lending to buy the business. So, in the acquisition world this is called a ‘leverage buy-out.’ So that our listener can follow what we’re saying. Now, we’re not saying that, “Hey, you know what? If you’ve got like zero business experience, you don’t know anything about business, and you go leverage millions of dollars and then buy a business.” No, we’re not saying do that. We’re just saying that, “Hey, you know what? For guys who have some business experience, and if you know how to run a business, and you have certain skills, this is a good way for you to kind of get into it with, kind of reducing the risk, right?”
Moran: Exactly. And like you said before, if you don’t have that experience, find someone with experience who could be your partner. And even if you have a small percentage of the deal you can buy really big businesses that way. And even if you have a partner who is going to take most of the deal from you, go and do that. Get experience that way by just being around someone who’s actually doing that. I think that’s a great way as well.
GETTING ESSENTIAL EXPERIENCE IN BUSINESS
Dan: In your case, we’re talking about putting a board together, maybe a chairman, maybe a young guy. You have less experience but that’s ok, because at least you get your first couple of deals done and then you get a deal flow. You kind of just get your foot in the door, right?
Moran: Exactly. I’ll tell you even more than that. If you don’t have the confidence to even do that, to go and build a board and all that, many people will pay you equity in deals or some kind of, you could say referral fee, just for helping them find the deal. And you don’t need to be a brain surgeon for that. You just go and talk to businesses and look for businesses who are looking to sell. And many people potentially — like, I know I’m personally happy to pay someone equity in deals if they’re finding me good deals, like, why not. And at the same time, they could watch me do everything and learn the process that way and gain certainty for their future deals.
Dan: Very smart. What about for someone listening to this and they’re saying, “Okay, so I’m looking for — where do you find these deals? Like, do I look on the internet? Do I talk to people or do I knock on doors? Like, where do you find these deals?”
Moran: So, in the end of the day, it’s very similar to a marketing process. Any business out there, whenever they have a product, they’re trying to sell the product. So they’re doing marketing campaigns and stuff like that and the same goes here. The difference is that we market ourselves as buyers. There are tons of ways, there are like 20 plus ways we’re using daily to look for different businesses. Anywhere from social media to different online campaigns, to direct marketing and letters and JVs, joint ventures, and partners. So anything you could think about that is related to marketing would work here as well. Doing funnels, all that stuff.
HOW TO FIND A DEAL
Dan: And also, I want to emphasize one thing. You might be thinking that, “Oh my god, it’s so difficult to find deals.” It’s actually the opposite, because with what’s going on with the baby boomers, a lot of them are looking to sell. So there are a lot of — especially in the states — there are a lot of motivated sellers in the marketplace. And then think for yourself. If you’ve been running a business for 20, 25, 30 years, you’re getting old, you want to exit – when was the last time someone knocks on your door and says, “Here I want to buy your business.”? This doesn’t happen very often. They’re happy to hear from you: at least some guys knocking on my door, right? Because most businesses never get sold. So, you actually have a lot of power as a buyer. Because if this doesn’t work, or the price doesn’t work, or the term doesn’t work, you can go to the next business. There’s so many of them to choose from. So as a buyer you have a huge advantage.
Moran: So, true. What you said just now it’s so true and I think to give you an example: we’re talking with — I’m negotiating a deal in the UK right now. And it’s literally what you said now, exactly what you just said. So basically, it’s an owner who’s running the business for more than 20 years. Now the situation there: the owner really cares about his employees, the brand that he’s built, it’s literally his baby, right? All his life is there and at the same time he really wants to retire. So he’s looking for someone he can trust to literally hand over the business. I’ll tell you that I still didn’t close the deal but cross fingers, there’s a good, good chance that I’m buying that business just by paying the owner the cash that’s already in the business. Which means I don’t even need to use banks, I don’t need to bring money from home, nothing.
Now I’m not saying that that’s a common deal, but the situation there is; in the UK you have what you call an entrepreneurial relief. So basically, if he’s going to sell the business to me he’s going to be able to take that money out for just 10% taxes. Versus if he’s going to take that money as dividends, he’s going to pay around 40%. So just by doing that is going to tell, hey, first of all there’s someone who’s going to take care of the employees if he’s going to buy it from me secondly, I’m going to get much more money other than just taking the money out and closing the business. And I’m going to be the hero because I’m not going to shut down the business. I’m going to have someone who’s going to take care of the business, who’s basically going to grow the business and I’ll just take my money and I could retire comfortably. And just do that.
And what you said is so true, there’s so many baby boomers out there, people who are looking to retire. And they’re just looking for a safe pair of hands to take over the business from them, and many times they care less about money and they care more about the person who is buying it.
Dan: Because usually, think about it, if they have a decent business, they have been running it 20, 25, 30 years, chances are they’ve accumulated quite a bit of money themselves, right? Like you said, they care about their employees. Are you going to fire all my people? Are you going to ruin my brand? If they feel comfortable with you — and that’s why it builds on the relationship, it’s not like a transactional thing, it’s more, hey, you know what, you approach the seller and you develop the relationship; you find out a little bit more about the business, and maybe how you can add value with your skills or with your team, and that kind of conversation — imagine just in the process, couple of months in, in that negotiation, you walk away. When are they going to see the next buyer?
Dan: And the problem is with most businesses, as big Dan talks about, when you approach them, they might say — they’re not going to run ads, or they’re not going to put a big sign in front of the business saying, “Hey this is for sale.”
Moran: Yea. Exactly.
Dan: They don’t want to rock the boat for the employees. But knowing that if you ask enough people that you will get — how many businesses do you approach before you have someone say, “Hey you know what? I’m interested in selling.” Like, what’s the percentage?
Moran: So, at the end of the day it’s really a numbers game, right? I could tell you we’re approaching hundreds of businesses a month and I’d say it could work by the — and I think Iwan Roberts talked about: it’s like real estate deals; you should expect to approach at least one hundred. Maybe make offers on ten and maybe get one deal from that. And I’m really just throwing numbers. The numbers could really change and it really depends where you’re getting your deal from.
I’ll just add and say what you just said about the owner is waiting for a buyer. I mean, sometimes when you come in as a smaller buyer, that’s actually giving you a benefit. Because I heard so many horror stories about big companies buying other companies and literally destroying them. Because when a big, big company is buying a specific business, they don’t care about the name on the door. I mean, they don’t care about who deals the business, they’re going to change the name to their name, they’re going to fire many of the employees and cut the costs. And I’ll tell you even more than that. Many times that happens during due diligence. So, before they even bought the business, they already destroyed it. Many times during due diligence they’ll back off the deal, and the business is destroyed, and the owner can’t do anything because they already opened all of the books. Many times, with baby boomers, they’re afraid because they have a list of clients, they have a list of employees, and I heard many horror stories about companies coming to businesses and basically telling them, “Hey, we’re looking to buy you.” And they’re literally stealing employees, stealing customers and then they’re telling the owner, “Hey, sorry we don’t want to do a deal.”
So, when you come in as a smaller buyer as someone who’s just like, “Hey, I’m just me,” and some other guys who are looking to buy big businesses, it’s actually many times a benefit if that’s the seller you’re talking to who, just like you said, that’s his baby, that’s something he worked for for years. So, yea that’s a really crucial point to emphasize here.
Dan: And yea, one thing I learned from Keith Cunningham, because Keith only at the same time he only buys businesses — and one big lesson I learned from him is that: think of you going in there, you’re like, think of yourself as the son or the daughter they never had.
Moran: Yea, I love it.
Dan: Yea, you go in there, you talk with them, you learn and you respect their opinion and like all these things, it’s not like a hostile takeover. That’s why the flight analogy: you’re like a co-pilot. It’s like a buyer-seller, mentor-mentee relationship, because you want the seller to kind of stay on board a bit, to kind of teach you the ropes, and they love it.
Because keep in mind, if they are selling the business, chances are because they cannot leave it to their kids. Their kids could be spoiled, or they’re not interested in the business or whatever. And now you come in, and imagine you’re the older guy: young guy comes in, you’re eager, you’re ambitious, you’re ready to learn, you want to take over, you want to make sure you do good, you want to take over the company. All these things, oh my god, thank you, right? Finally, someone shows up to solve a big problem for me.
Moran: Yea. Exactly. I’m just saying — it’s funny, just this world of buying businesses. You can learn so much about business. I think I heard it from one of my mentors, I forgot who said it, but he basically said that even if you’re not looking to buy business, just put yourself out there for even a while as someone who’s looking to buy a business. Because you’re going to learn so much about business just by going out there and putting yourself as a potential buyer. Because just think about it; there’s no one in the world that that business owner is going to tell more about his business, other than a potential buyer. I mean, even his wife is not going to know so much about the business, like you, if you’re the potential buyer. And you can learn so, so much about business. Literally you can learn more in two months about business just by talking to different business owners, than by, many times years of trying to start something from scratch. Because you’re just testing things that you don’t even know if they’re going to work or not.
CRITERION WHEN LOOKING TO MAKE A DEAL
Dan: And when you are on the hunt, looking for deals, are there criteria are you looking for, or any type of business that you like? I know Big Dan talks about telecommunication, healthcare, but what about yourself?
Moran: For me, at the end of the day it comes down to the terms of the deals. And Dan’s talking about it as well, about how motivated the seller is. Because I’m not a public company yet, hopefully I will at some point, I cannot pay premium for deals. And I’m just looking for good deals that we could pay a very accounting evaluation for that, which is usually anywhere between three to five or six times [inaudible 0.33.55] and that’s what’s most important for me at the moment.
And the fact that I know that I could have someone to manage that business, because, like I said, I don’t want to run businesses, I want to own businesses. So it’s important that we either have an existing management team in place, or that we already have someone that we think who could run the business, or that we could hire, or maybe even someone we can promote from within who could take that role. So that’s the most important.
And obviously, the fact that you could finance that deal. Because I don’t care how rich a person is, there’s only so much you could use of your own personal capital. And the richest people out there in the world, they’re growing their wealth using other people’s money. So, at the end of the day it’s a matter of if you can finance that deal. And if you can finance it, and you have a good deal and you have a good management team in place, then by all means, any deal is a good deal.
I mean, the sectors — so Dan’s talking about telecommunication and healthcare, they’re amazing — and at the end of the day you do want a sector that there’s got some growth in it. But at the end of the day, many times I’m looking at businesses that’s working for 20, 30 years and they’re just growing really slowly every year, so even that’s okay, for me personally at least.
Dan: And is there a range where you’re looking for– between what price point to what price point that, at this point you’re comfortable with?
Moran: So I’m looking for businesses doing at least about one million a year in sales. And that’s literally just from the fact that, like I said before, we want the management team in place. And usually, many times, under one million a year in sales it’s just a one man show, or the business is really dependent on the owner, and as soon as he leaves there’s no business. So usually above one million there’s already a team in place and its more about the product and the service versus the one person. I’m open to look at any deal, any size. I’m not looking at public companies but if it’s a private company I’m really open to look at any deal. And after a few conversations I’ll know if I could potentially finance that or not.
Dan: Just like you said in the beginning: you’re not looking to manage it, you want to have a management team in place where someone is going to manage the day to day, and after you buy the company probably you’ll get involved with setting a strategy, help them grow a bit and then look for the next deal, that’s kind of the plan.
Moran: Yea, exactly. And I think really it’s up to the person, right? Some people like to do the day to day, the menial stuff. Just personally, I just realized that I’m not good at management and there are people who are just much better at that than me. For me, I’m really good at the organizing people and finding who’s the right person to do what, but I’m not the person who’s good at managing the day to day.
And I just realized for myself, also for the lifestyle that I want, is that I’m just an ADD, I just like to be involved in many, many things at the same time. I think this is the first business for those kind of people. Even that I know Dan is talking a lot about focus and it’s super important, but my focus right now is in doing deals. And that’s all my focus and I’m 100% focussed on that. But at the same time, I got so much variety because I’m being involved in so many different — I’m looking at so many different businesses and deals and people. And I just feel, it just really good for someone who’s ADD, or just likes to be involved in many things at the same time.
Dan: It just doesn’t get bored right.
Moran: Exactly. I mean, you get an excuse to travel around the world looking at deals, talking to really interesting people. Just think about it; you’re talking to someone, like you said before, they own a business for sometimes 10, 20, 30 years. I mean, those people are so passionate about their business, they could talk about — I remember talking about this guy who’s doing — I don’t even know how to explain — he got this medical testing laboratory business. And I didn’t understand anything about it but that person could talk about it forever, about the kind of test he’s doing and the results he’s getting. And you’re getting passionate. You feel alive just by talking to some of those people. And I just love it, I love talking to really interesting people and just get an excuse to also travel to different places to meet those businesses.
Dan: And you mentioned you’re looking for deals in UK, you’re also looking for deals in US. So it’s not limited to just your own city. Like with internet and everything now it just could be anywhere in the world, as long as it’s like a capitalist kind of a society, right?
Moran: Exactly. Our target markets are US, UK, Canada and Australia. But I can tell you I looked at deals in Poland and I looked at a deal in Spain. I’m actually Israeli, so I’m looking at deals in Israel as well. So it really doesn’t matter. I’ll tell you even more than that: it’s funny, one of even the lawyers and accountants, even they’re doing most of their work virtually. So today with the internet it’s really amazing, just the fact that I can talk to you from — we’re both in different countries
Dan: Yes, and in totally different time zones by the way.
Moran: I know, I mean it’s not something we can take for granted and it’s really amazing nowadays.
Dan: Yea. Now what about — we’re talking about deal making and your plan. What’s your plan for the next, maybe like four, five years? Like, how many companies you want to buy, do you have a vision for yourself?
Moran: I love the question. Yes, so I have a vision of buying at least 100 companies in the next five years. I know it’s very — I’m basically taking Dan Pena for just — Massive action. Huge goals. And I’m just looking at people like Richard Branson, who’s owning more than 300 companies. I’m looking at people like Marcus Lemonis, who’s owning hundreds of companies. I’m not even close to their level, but I think having them as the type of — I guess they’re kind of, those two people are really representing my vision of the type of people I want to be eventually. So, I just said, “Hey, let’s put a goal to buy hundreds of companies and let’s see how that goes.”
Dan: And just like Big Dan said, right? Even if you’re only half way, it’s still good.
Moran: Exactly, and to be honest I realised that you do need to have those goals, but as long as you have fun on the way. I mean, I’m really enjoying my day to day right now, so I don’t really care if it’s going to be another ten good companies or another hundred. I mean, obviously, I want hundreds of companies just for the fun of it. Just to say, when someone’s going to ask you, “What you do?” Say, “Yea, I own a few businesses.” You know? But I think as long as you’re happy with the actual day to day, I mean the goal, I think will get there eventually. If it’s going to be in five years or ten or twenty or thirty years. At the end of the day I think what really matters is enjoying the day to day.
And I think the financial rewards, they’re going to come if you’re focussed enough and you’re going to work enough. But then — and I’m saying that just because, at least personally, for years I just really worked, worked, worked so hard and I just forgot to enjoy my path. And I think it’s really important to mention that as well. Yes, money, success, that’s so important, but just remember, just try to enjoy your journey as well. I think it’s really important to say as well.
THE IMPORTANCE OF LOVING YOUR WORK
Dan. Awesome. Awesome. And I have one question, I ask this question for all my guests. If you could travel back to a day of, maybe your earlier days, and have a ten-minute conservation with your former self to communicate any lessons that you’ve acquired, with the intention of saving yourself the mistakes, the headaches, what would you tell your former self?
Moran: Wow, that’s a really, really good one. I’d say learn as much as you can about enjoying today, because if you’ll do the actions that you enjoy today, you’ll be successful. So, three things I have in mind. One of them is: just enjoy today. Secondly is: just put yourself –just have a huge goal and find someone who’s already achieved that, and just do whatever you can to literally learn from that person; be that person; just dress like that person if needed.
Dan: Yes, three-piece suit.
Moran: Yea. What else? Yea, I think those are really important. Just learn to enjoy, at the same time find what you want to be and just do whatever it takes to get there.
Dan: For sure, and I think our listeners can hear your passion. You’re enjoying the process. It’s not so much — although when we’re talking about acquisitions we’re talking about making money, making a lot of money – millions of dollars. But you can see from both of us, who are both like mentees of Mr Pena, that we enjoy what we do. It’s not like oh man — if you don’t like what you do, there’s no fun, right?
Moran: That’s crucial. Man, that’s crucial, what you just said. You don’t even know how important that is. Because I used to have businesses that made so much money and I remember waking up literally [inaudible 0:43:18] I don’t care how much money I’m going to make, I don’t want to do it anymore. And it’s so important and I think it just flows so much better when you enjoy what you do. So, enjoy it and you get success as well and you don’t even care about the money, it’s just a matter of playing, having the score.
Dan: I totally agree and you think about it, if there’s a market, if you have — given that if you have business acumen, you love what you do, obviously, you will get good at what you do, then money just shows up. It’s just a by-product of just giving value right. I couldn’t agree more. Awesome. So for our listeners, if they want to get in touch with you, kind of seeing your journey, what would be the best way to find you?
Moran: I don’t really have — I’d say just email me personally if you want to get into this world of doing deals, and you want to maybe help me find deals and stuff like that. Like I said, I’m happy to give equity in deals or referral fees. So, if you want to hear more about how that works just email me personally at email@example.com.
Dan: Awesome. And we can also connect you on LinkedIn, right?
Moran: Yea LinkedIn, Facebook, all that stuff.
Dan: Yea of course. Nowadays, must Google! But I also put your LinkedIn profile as well as your email address just one more time on the page, so easy for people can find you.
Moran: Sounds good, sounds awesome, man.
Dan: Awesome, thank you so much for inspiring us with your story and your thought process. It’s nice to connect; us both mentees with Mr Pena, so it’s very nice and thank you for being on the show.
Moran: Yea thank you man, I really had a good time. Thank you very much for having me.