Acquisitions are a strong theme on ‘Business Lunch With Roland Frasier’. This episode is no different.
Why is the topic coming up again and again?
Entrepreneurs are learning that you don’t have to have a pile of money sitting in the bank to acquire a business or a business asset. And, Acquisitions win over every other business-growth strategy when it comes to building your business faster than you ever thought you could.
In today’s episode, we’re sharing a section from the first session of Roland Frasier’s Epic Challenge. He discusses the giant opportunity for Entrepreneurs in times of recession (and why Acquisitions are better than Startups).
“The word ‘crisis’ comes from a Greek word that means a ‘turning point in a disease that will either end in recovery or death.’ And for a lot of business owners, this will result in the death of their business. But we intend to help these businesses recover!” Roland Frasier
Why is now such a good time for Acquisitions?
• The market conditions causing multiples to be low (great time to buy).
“Most businesses sell for a multiple of either their profit or their revenue. And what happens is that the multiples that are used when you get into a recessionary time (like this) are lower. But historically every single time across every recession in history, (I believe there’s been 18 in the last 100 years in the United States), these multiples, they increase as the recessions pass”. Roland Frasier
• The wave of Boomers retiring.
“In the USA, 50 million baby boomers, according to the Insurance Retirement Institute, will be retiring over the next ten years. Twelve million of those own businesses. As a matter of fact, 4.5 million businesses in the United States alone, worth over $10 trillion, are going to be transitioning over the next ten years.” Roland Frasier
• The availability of cash for purchasing businesses.
“Should you decide that you actually want to get into this fun process of flipping companies (I flip companies like people flip houses, right?) There’s a lot of money that is sitting on the sidelines that’s available to buy companies that fit certain criteria”. Roland Frasier
What Returns Can You Expect?
S&P500: 8%
Real Estate 12%
Traditional Way Of Buying Businesses 44%
“Even if we were to buy companies traditionally, the old fashioned way paying cash for them, right, it’s going to average for you about a 44% annualized return on your money.” Roland Frasier
Roland’s Way Of Buying Businesses: Exponential.
Reasons To Acquire A Company (Instead of doing a Startup)
1. Less Risk (Startups have a 90% failure rate in year one).
(Listen for Roland’s explanation and Stats on why they have such a high failure rate).
2. More Financing Options (because there’s less risk)!
3. Brand recognition is often established.
4. All the contacts, systems, and employees are in place.
Top Takeaway
“Your true product is the business itself. Think about that, about selling the business, not selling the product. We want the people working in our business (that we own) to be working on selling the product or service. We want to be thinking about how to increase the value of the business and how to actually sell the business itself.” Roland Frasier.
What Is EPIC?
You may have heard about Roland’s EPIC challenge, which he moved online when the Pandemic hit. It focuses on Ethical Profits In Times of Crisis and dives into no-money out-of-pocket business acquisition strategies. If you’re interested in finding out more about this strategy, go click here.
Listen to this show on Apple Podcasts or your preferred podcast platform.
Who is Roland Frasier?
He’s referred to as ‘the smartest guy in the room’ with much respect and affection from fellow entrepreneurs. We want to share his insight and expertise with you on your own entrepreneurial journey. As the Co-founder or principal of 5 different Inc, Magazine’s fastest-growing companies (e-commerce, e-learning, SaaS + real estate), Roland is a serial entrepreneur who has built or sold over 30 businesses with adjusted sales ranging from $3 million to just under $4 billion. He’s a mentor and investor and an excellent podcaster too! Read more about Roland at his website.
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