Intro: [00:00:00] Welcome to the Stacey Salyer Show, the podcast for property management leaders ready to think bigger about growth. I'm Stacey Salyer and the only acquisition strategist in this industry who sat on all sides of the m and a table. I've been the buyer acquiring a 370 door competitor during COVID using seller financing.
I've been the seller building and exiting a seven figure business. And I've been the corporate evaluator as director of acquisitions, assessing over hundreds of companies nationally. That means I know exactly what you're thinking, what you're missing, and what actually works when it comes to buying and integrating in this space.
On this show, we dig into acquisitions as a real business tool. Not luck, not someday. You'll learn positioning, strategy, numbers, and integration from someone who's actually done it all. Let's go.
Stacey Salyer: Welcome back, my friends, to the Stacey [00:01:00] Salyer Show, where we talk about buying and selling property management companies. And today, I have a guest on our show who has a vast history in M&A, mergers and acquisitions but not in property management, but in pretty much any other business.
So, welcome to my show, Jeremy Harbour. I'd love for you to introduce yourself and talk a little bit about your background, and we'll kind of dive in from there.
Jeremy Harbour: Yeah, absolutely. Stacey, thank you so much for inviting me along. And as you say, I've bought and sold a couple of hundred companies now. I've taken nearly 100 companies public, and I'm, thinking back and there is nothing in property management. We've done, interior fit out companies.
We've done lots of stuff knocking around the property industry, but never specifically in in property management. But my background is not actually traditional M&A, so I don't come from the corporate finance or legal or, accounting sort of backgrounds. I was an entrepreneur.
I started a business when I was very young. I quit school to pursue that business, and it didn't work out. I then had a business [00:02:00] in the 1990s in telecommunications. Telecoms expanded very, very quickly, became hugely fragmented, and then went through a long consolidation phase. And it was that long consolidation phase that really taught me M&A, because I was being approached all the time by people trying to buy my business.
Now, you'll know this from meeting people who are thinking about maybe getting into acquisition entrepreneurship. It's pretty daunting at the beginning. you don't know what you're talking about. You don't know where you're gonna get the money from. You don't know how the deal structure's gonna be put together.
So I was kinda there. I was like, "Shit, I can't do this. I don't know what I'm talking about. I don't have any money." And then all these people would come and try and buy my business, and I'd realize they don't have any money. They don't know what they're talking about. I can do this.
Stacey Salyer: Right? Right? I love that. I love that. So
Jeremy Harbour: and that was the genesis really.
Stacey Salyer: Okay, cool. Yeah, so you mentioned you quit schools. W- was that high school or college that you
Jeremy Harbour: Yeah, high school. 15 I finished school. Yeah, so my birthday's June 1st, so I'm on that borderline [00:03:00] between two school years, so I could either be the youngest in the class or the oldest in the class. So, I happened to be the youngest, and so yeah, when I quit I was 15.
Stacey Salyer: Okay.
Jeremy Harbour: I, I'd already been running a business for three years, so
Stacey Salyer: Okay. Okay. You're like, you're like, "I, I'm good. I'm good. I
Jeremy Harbour: yeah. I'm a bit busy for school. can I leave now please? I was actually really blessed, and this is a parenting thing because, I mean, I'm, I'm a parent, and you, you have so much more respect for your parents when you have children, don't you?
Stacey Salyer: Hundred percent
Jeremy Harbour: they had no idea what they were talking about."
You looked at them like they were these sages that knew everything, and then you realize when you have your own kids, fuck, they just made it all up. It's,
Stacey Salyer: Yep, they did
Jeremy Harbour: So anyway, and we have Google. We, we, we they, they didn't have Google. Anyway, there was a careers guidance person at my school that sat down with my parents and said, "I've never met a 14-year-old that's ever told me what they want to do," whereas your son sat with me for two hours and, and just didn't stop talking about all of his plans and things that he was involved in, and all this kind of stuff.
And he said, "So I think you should just let him do what he wants." [00:04:00] Now interestingly, at that time I had no idea. I thought there were other reasons why they'd let me get away with not finishing. And but no, they told me this years later. So, yeah, I have a careers guidance counselor to find and thank somewhere.
Stacey Salyer: Oh, yeah. That's amazing. That's really cool. You don't hear that very often, I feel like. So tell me what, what was that first business
Jeremy Harbour: Oh, so the, the first one I, I started off just buying like cheap Chinese imported stuff like watches, jewelry these electronic beeping key rings and things like this, and I would sell them at school. And then I started selling them on, on like a little market stall at the weekend and doing all these like fairs and things like this.
And then I realized that if I bought enough of them, the price came down like a lot. So, so if you buy like a thousand, they're like, half the price of buying a hundred. And so what I would do is buy a lot of them and sell them to other market traders who I'd got to know on all of these different-- this like circuit I was doing.
And so I'd buy a thousand, sell nine hundred of them, and my hundred that I had left were basically free. [00:05:00] So my margin was was, was very high and and I could go and sell them. And yeah, I had this I obviously didn't have a driving license, so it was al-always either trying to get my grandmother or my dad or somebody to get up at six AM to take me to one of these things, abandon me there while I set up my little stall and, and sat there all day and then come get me again later, so it was it was quite dependent on adults at that point.
Stacey Salyer: That, that's awesome all around. Yeah, so from playground to the fair, fair setup. I love that. Yeah, that's really cool. Okay, so kinda fast-forwarding. I mean, you, leave high school, you have that business, you kind of move forward, and then y- it sounds like you got into telecom, and I've,
Jeremy Harbour: yeah, I screw- I screwed the first one up. We over-expanded, I ended up getting a premises and a whole bunch of, rookie mistakes. Running a business when it's just you is one thing. Running a business with staff and premises is like a whole different ballgame. And yeah, so that, that didn't work out, but it was a great learning curve.
And actually, the, biggest lesson it taught me was, the business failing wasn't the end, because [00:06:00] you kind of think "Oh, shit, I'm walking this tightrope, everyone's throwing fruits at me, it's all terrible," every- and then when it actually stops, you wake up the next day, you've got all your arms and legs, your tail's between your legs, you feel a bit kind of down, but basically you're still alive. So, you kind of think, "Well, that tightrope was only like six inches off the ground. What was I worried about?" it wasn't so bad. So it's good to do it when you're young and bouncy, it's,
Stacey Salyer: yes, 100%. I know I have kids as well and I tell them the same thing. I'm like,
Jeremy Harbour: Hurry up and fail. Yeah.
Stacey Salyer: I know, yeah. And honestly, I don't think it stops. I'm 51, and I'm
Jeremy Harbour: Yeah. Yeah. We just learn, we just learn more expensive lessons as we get older.
Stacey Salyer: Yes. Little bit, little bit, but that's okay. But yeah, that's the fun and part of the journey. So as far as... So you're in telecom. Was that the first type of business that you purchased? Or how, how
Jeremy Harbour: No, but actually it was a pho- yeah, a phone, a, a phone company was the first company I purchased. So, the, the telecoms company I started from scratch when I was probably 19 years old. And I grew it to like a million and a half in revenue. That's pounds, so it's two, [00:07:00] $2 and a bit million.
But this is 30 years ago. So, and and then I bought another one down the road. We did fixed line and mobile phones. This was a mobile phone retailer effectively that we bought. It had about 1,000 handsets across 600 customers, which was pretty much what we would sign up in a year.
And we bought it without any money up front. We didn't use lawyers. I couldn't afford a lawyer, so we literally just wrote this like letter we both signed. And and we grew by a year's worth of sales in an afternoon without spending any money. Now, everything else I'd ever done until that point to get customers had cost me money.
You either did... I mean, back then it was like fax outs and cold calling and stuff like this. But you'd nearly always have to hire people, have some kind of marketing collateral, have some kind of expense to get leads, and then suddenly we grew by a year's worth of sales in an afternoon without any capital, and it was like an epiphany that just went off, which is, doing a startup, pushing, that first three years, that pushing the water uphill kind of effort that you put [00:08:00] in, you can shortcut all of that.
And so I mean, I have this expression that you don't have to run the marathon, you can just run the last 10 yards. They still give you a medal. Which is you can just pick up somebody else's blood, sweat, and years that they've poured into something and just start from there.
Stacey Salyer: Okay, that's cool. Yeah, I call that my aha moment. Kind of similar type thing. I did an, yeah, acquisition in my market buying a property management company. It was like this aha moment of wow, I just tripled the size of my company,
Jeremy Harbour: so tell me something. How-- what was the gap between doing that first deal and doing your second one? Did it come really quickly again after that?
Stacey Salyer: S- well, kind of yes and no. So, long story short, I started my own firm in 2016, and I did that acquisition actually at the very start of COVID during 2020. So and then I ended up selling. I scaled mine. I divested a portion of it, and I scaled it, and then I sold to a large national firm at the very beginning of 2022.
And
then...
Jeremy Harbour: my next-- that was the other epiphany, which is you [00:09:00] don't make money running businesses, you make money when you sell them.
Stacey Salyer: Exactly. I know, right? And so, so then what I ended up doing was I became their director of acquisitions, and so I ran acquisitions on a national level for them and then jumped back out. Now I'm doing acquisitions again. I'm actually working on three in the property management sector.
So I, I feel like once you do one, they become very addictive kind of like tattoos. That's what I say. Once you get a tattoo, you get
Jeremy Harbour: Yeah, I've, I've managed to avoid tattoos so far. But but the,
Stacey Salyer: Well, I've got a few. I've got a few. You can't...
Jeremy Harbour: Well, yeah, we won't get into that then 'cause I won't ask you to show me.
Stacey Salyer: No, that's okay. Yeah, most of them are visible, so
Jeremy Harbour: But the no, the, the, the addictive thing is absolutely right. I mean, I have a, yeah, I have a podcast called The Deal Junkie, so it's exactly exactly that. And but no, what's really funny is, I mean, I've worked, I, I did my second deal two weeks after my first one because you're just buzzing, and you're looking everywhere.
And and I just thought that was random [00:10:00] and by accident. And then since I have a Harbor Club called The Community, and s- c-called... I have a community called The Harbor Club, and since having that community, I've seen it again and again and again, which is sometimes people take a year or a year and a half to get their first deal done, and then they do three in 10 days or something.
There's something shifts, and everything just falls into place, and it's, I'm sure your, your confidence levels go up, your competence levels go up, everything kind of aligns, and the deals start flowing
Stacey Salyer: Yeah, 100%. I know my business partner and I, we talk a lot about, at this point there's really no hold, hold for us as far as that goes. I think in, in my world, in the property management sector, I mean, in the very beginning you'd mentioned the business that you were in originally was very fragmented.
Is that correct? Was that the telecom? It was pretty fragmented. same in the property management space. So we, kind of anticipate a lot of that changing with AI and, and boomer businesses. What are you seeing out there as far as just overall [00:11:00] M&A? Are you seeing
AI and boomer
Jeremy Harbour: Yeah. I mean, look yeah. B- boomers has been a a trend for a decade now in terms of deal flow. And and it-- a- actually the problem with succession for boomers is getting worse. And I was literally having a conversation with somebody yesterday about the fact that the broker market, the business broker market, not the M&A advisory, but the kinda next tier down, the kinda generalist brokers, are actually quite predatory in that space.
And they go after these baby boomers and basically promise them these insane numbers that they'll never achieve but on the condition they give them a load of money up front. And what seems to be happening is that you tell this person they're gonna get five million, they mentally go out and spend it.
I mean, they've chosen the retirement home, the car, the-- all this stuff. And then, of course, for the next two or three years, they just get what they consider to be derisory offers from people like you and me, who give them realistic valuations and realistic deal structures that [00:12:00] balance the risk between the buyer and the seller.
And they just think that we're kind of, They, they laugh at us thinking that we're, we're the ones that are wrong. And then at the end of that three years when they haven't sold it and they get despondent, they end up just winding the business down and, not rehiring staff when they leave, and then actually closing the business down.
So they take something that was probably worth a couple of million dollars, but because they wanted five, 'cause some idiot told them it was worth five, they end up getting nothing. and they end up working three years longer than they needed to, and they end up, grinding themselves into the ground and, missing out on all that family time.
It's, But we're seeing it, a- again and again and again. So that, that baby boomer thing has definitely been a trend for a while, and the broker trend is getting worse. Bro- brokers, I mean, secondhand car salesmen and timeshare salespeople were always kind of, the, the, the bad guys.
But I think brokers are gradually winning the crown when it comes to being the, the not so loved end of the, the spectrum of salespeople. And then [00:13:00] AI is obviously a huge shift that's going through everything. But I think just like every other technology shift that we've seen, whether it be the internet or, other things, I think acquiring businesses and in- and injecting AI into them is better than trying to disrupt an industry just using AI from scratch.
And so I think, taking over property management companies and making them more efficient with AI is, is a great way. If you can buy them at two to three times their EBIT and then massively increase the profit by, bringing in efficiencies throughout the throughout the business, that's a very, very repeatable model and very scalable model.
And I mean, the other truism that, that a lot of people don't quite see Is their position in the marketplace that they're in, because I mean, we talked about fragmented markets, but every m- every market has fragmentation to an extent, and it just depends what the pyramid looks like. So some pyramids are like this and some are like this which is there's a few big companies at the top and a lot of small ones at the bottom.
And property management [00:14:00] has a, a very wide bottom. There's millions of these small operators. Every town, every city has multiple operators in it. And what's interesting is if you look at the universe of buyers for those businesses, it's the exact opposite. It's a pyramid this way. So there's like you at the bottom who can buy this, hundred thousand companies.
But at the top, there's all the private equity firms, the family offices, the public companies, the-- you know, there's this huge audience of buyers when you get big enough. And so actually the, the, the best game in town right now is moving up that scale pyramid, because if you're doing a million dollars a year, there's a million companies like you.
If you're doing five million a year, there's only, half a million companies like you. And if you're doing fifty million a year, there's only like a hundred. So if you can move up to the rarefied air where there's not so many people that look like you, but there's a lot more people that could buy you, the valuation just goes exponentially up.
And that's kind of always been a trend, but it's [00:15:00] getting exacerbated more and more, and particularly post-COVID because the buyers have got even less at the bottom and even more at the at the top. So, when I was younger, private equity would, would buy businesses for ten million.
Now it's kind of a hundred million and up. They're not even in the kind of small to medium space anymore at all. So it's yeah, the whole kind of dynamic has shifted
Stacey Salyer: Yeah. Yeah. No, it's been interesting. I know private equity is very interested in that pr- in the property management world,
Jeremy Harbour: if you're big
Stacey Salyer: re- you're right, if you're big enough. Right. 100%.
Jeremy Harbour: Yeah, and you don't want them to back your roll-up. You want to do the roll-up and sell it to them. That's the... 'Cause if they back your roll-up, you belong to them, and it's yeah, it's not so much fun. 'Cause they, 'cause they know everything,
Stacey Salyer: right. Right. Yeah. Yeah, they don't. But yes.
Jeremy Harbour: Yeah, yeah. No, no,
Stacey Salyer: Yeah, 'cause
Jeremy Harbour: Anyone who says that doesn't, yeah.
Stacey Salyer: Yeah, no, I know. Yeah. No, for sure. So, so you kind of started, I mean, your journey, you had the aha moment super early and, started acquiring quite a few businesses. Were you [00:16:00] still very much in day-to-day and acquisition in the very early time?
And I'm assuming now you're just out buying and you're
Jeremy Harbour: Great, great observation. So I, I I
Stacey Salyer: together
Jeremy Harbour: was a fan of Warren Buffett, and Warren Buffett had said "The best time to sell a good business is never." So I thought, "Right, I'm gonna buy all these businesses, I'm gonna keep them all." And what I'd overlooked is that Warren
Buffett's idea of a good business is Coca-Cola or Apple, not a fucking air conditioning company in rural England, so I
Stacey Salyer: Okay.
Jeremy Harbour: I was missing the key part of his lesson. But but nonetheless I, I empire built and I kept all of these things, and every time I bought one, I would take a, a revenue stream from it and try and hold the whole thing together.
And I remember kinda discussing this with a friend of mine, 'cause I got up to 12 companies, and I just remember saying, "Do you know the only thing worse than running one shit company? It's running 12 shit companies." It's
Stacey Salyer: Right. All the employees and
Jeremy Harbour: Oh, it was a nightmare. I went from, I was trying to put a deal together that needed two and a half grand, and [00:17:00] I couldn't find two and a half grand to do the deal, and 18 months later, my payroll was 250 grand a month.
So I'd gone-- my, my psychology had gone from, "I can't find two and a half grand" to "I need to find two and a half gra- 250 grand every month." And those months come around really quickly, and so, yeah, it's a bit of a baptism of fire as you go through that, that kind of scaling process.
But yeah, it was-- So I went through this empire-building phase. I basically then sold a company. That was that epiphany that you make money when you sell them, and I just started selling all of them. I sold some back to management, some to competitors just got, got-- cleared out the, the portfolio and started again.
But what I did this time is instead of buying them and interfering, is I'd buy them and prepare them for sale. And I was very much in the kind of flipping market. And basically, the, the delta was businesses that aren't prepared for sale, turning them into businesses that are prepared for sale.
And because I [00:18:00] had bootstrapped every business I'd ever run, I knew how to bootstrap businesses and make them more efficient than they were already without lots of management interference. So I didn't have to get in there and roll my sleeves up and do stuff. There was things that I could do on the outside that would just make them more efficient and make them work better.
I landed slap bang 'cause I sold my first company in 2006, and I kind of then, as I was exiting my portfolio, we came into the global financial crisis. So 2008, 2009, I lost one business in that. In that we had a huge exposure to AIG Insurance, and that business fell over, and that was a really big lesson that I should sell them not wait, and and try and extract cash from them, but, but market them and sell them.
And but what I then started buying was lots of distressed businesses because everybody was panicking because they couldn't quite make ends meet. But when I looked at their business, for me, it was like a, a normal Wednesday as a bootstrapped en-entrepreneur, were businesses that were having a, a very minor wobble that [00:19:00] would be very easily fixed by getting rid of a couple of people or moving premises or something like this, so I did a load of distressed deals and where I would literally buy them for a dollar tinker with them and then flip them again. And half of them would fail, so half of them, instead of them putting it into bankruptcy, I put it into bankruptcy. That was the only difference with half of them.
But the other half we'd make six or seven-figure exits on, and we did about 50 of them in, in a, two or three-year period. So we were quite prolific in terms of-- When I say we, me and a couple of people that I had on my staff. We got quite prolific. I bought a financial outsourcing company, and the CEO was an accountant, so he became kind of my partner in lots of deals and and had an operations manager with me at the time.
But yeah, we did loads of these distressed deals and then everything started being less distressed, so we started doing solvent deals, and you just realize how much happier solvent people are than distressed people . So don't have to talk them off the ledge
Stacey Salyer: for sure. Yeah, no, for sure. So kind of going back, I know I get a lot of DMs and [00:20:00] calls people always want the silver bullet of, magic pill or whatever of finding business for sale. I mean, you mentioned... So like in the property management world most of them are not listed for sale.
A lot of people don't use business broker. Do you have a magic pill that, of how to
Jeremy Harbour: Magic pill. Yeah. So, I think the first thing is you're not looking for businesses for sale, you're looking for the ones that aren't for sale. The first thing I would do is obviously... I mean, look I'm sure it's the same in property management, but let's say you identify exactly what it is you're looking for.
So I'm looking for a company doing between half a million and 5 million in revenue. It's got to be in this geographical area and it's got to do X, Y, and Z every day. Well, that, that universe of businesses is relatively easy to identify. So in some states in the US you'll actually have a public register of those companies, even through the local government, through let's say it's a childcare center.
It has to be registered for the local government, so you can get the list straight from the government. Or you can go to your library, and you can often get the [00:21:00] information for fr- free from your library, or there are databases you can buy. There are trade associations. There's a whole bunch of places where you can basically find the total universe of businesses that meet your criteria.
And so let's say there's 1,000 businesses that meet your criteria just add them all on LinkedIn find out their addresses, write them a letter, do an outreach on LinkedIn. And the outreach on LinkedIn, by the way, the best outreach that works is send nothing. No text, nothing. So do a connection request where LinkedIn wants you to put a few words in there, and it gives you, it gives you a sample.
"I'd love to connect with you," blah, blah, blah. Delete that, so it's an empty box, and send that to them, because half of the people will just accept you. As soon as you write something, they've got something to think about. So don't give them anything to think about. If there's nothing there, they'll probably just accept the connection.
If it's anything else, they'll think, "He's trying to sell me something," or, "She's trying
to sell me something." So then they don't connect with you. So, connect with them on LinkedIn, write them a letter, and if you don't mind, you can call them as well, but [00:22:00] I've never, I've never bothered calling them. But lots of people in my community will do multiple approaches there.
Also, you might be able to find their email in public domain somewhere, sometimes attached to their LinkedIn profile. So why not email them, LinkedIn them, write them a letter, and call them. And all you're trying to do initially is just have conversations with people who own businesses that you'd like to own.
Don't approach them and say you wanna buy them. Don't approach them and say you wanna do anything else. You can just say, "I'm an investor. I'm looking at the property management space. I'm-- I've been toying with the idea of possibly doing a roll-up in the, in the property management space. Love to have a chat with you about where you see the challenges and opportunities in that industry and so appeal to their ego that they're-- they have more knowledge than you and that they might be able to share some ideas with you.
Obviously they'll hear the word investor and think they've got money. People always like to meet people with money. So, you're more likely to get in the door and uh, just start having those conversations. And it's amazing if you get people talking and you build rapport with them, how [00:23:00] they'll just tell you exactly everything that they're, you know, planning to do.
What the three to five-year plan is, what they're trying to do, and yeah, let the stars align
Stacey Salyer: Perfect. I love it. That same, yeah, I talk a lot
Jeremy Harbour: Not really a magic pill, it's more of a magic essay.
Stacey Salyer: right? I know, yeah, no, I love it. No, yeah, relationship building. And I always give advice, too, get out in your community. So if you happen to reside in the community of where you're, wanting to purchase, like get out there, join service-based clubs, whatever.
Like network, right? Yeah
Jeremy Harbour: Exactly. Just like any other business, you need to market yourself to get customers. So if you start to treat the company as a product that you're trying to market and sell then yeah, anything that you would do, you know, to find customers in any other business, you need to do in this business.
And people buy from people that they like, know, and trust. So invest time in the relationship before you dive into what their financials are and what their, the, the deal structure's gonna be and all of that kind of stuff. You need to, yeah, you need to yeah, invest in the, in the [00:24:00] relationship first
Stacey Salyer: Okay. Okay. So on that note, what's been your fastest closed deal and what's been your longest
Jeremy Harbour: My fa- my fastest, I met them at 9:00 AM, and we were introduced to the staff as the new owner at 4:00 PM So literally the same day. And this, this deal was like a two-hour drive from my house. Now, I know for you Americans a two-hour drive is just I don't know, taking the kids to school or something.
In the countries I've lived in, a two-hour drive gets you to another country. So it's It's, it's a long way. So I'd driven two hours to this meeting, and so when he said, "I wanna think about it," I said, "Okay, I'll go get some lunch and I'll come back when you've thought about it." So, yeah, came back after lunch and and closed it.
Now obviously with that particular one, the pain point was, was great enough that he wanted to do something with it. It was a, a air conditioning company that had actually been doing about six million in revenue a couple of years before. Global financial crisis had kicked in.
They'd basically lost all of their new installations and were just on their maintenance income. So they'd gone from six million to one and a half. But basically, there's a six [00:25:00] million dollar company in there trying to get out. It was just going through a bad moment. they hadn't scaled down quick enough so they were still carrying too much overhead.
And so they had bunch of debt that was there, and they were terrible at prioritizing, so they were paying suppliers and people that really were not that important and not paying their staff. So the staff hadn't been paid for two months, but, their, tax bill was up to date, which is, completely the wrong way around.
so yeah, we bought it for a dollar bought it on the same day, done and finished. The longest is really hard. We closed one last year that had been in our pipeline for three years, and I was joking with somebody this morning on our-- 'cause we have a team huddle call, Zoom call every morning, because one of the deals that we're looking at had updated their Dropbox, and I said, "Is that like five years since, we, we started this one?"
It... And I think it is five years ago that we, we would've set... And when I say they've updated their Dropbox, what I mean is the virtual data room that you put [00:26:00] together as part of the purchasing, part, part of the deal where they have to fill in the, give you the, give you their stuff.
Show you, show you behind the kimono kind of thing. And so yeah, for five years they still haven't populated the virtual data room.
Stacey Salyer: That's funny
Jeremy Harbour: but I-- again, I still don't know if that's the longest, 'cause you just have-- I mean, what happens is you meet people over, years and years and years and years, and it's amazing, some of them just come back.
And I mean, my-- we, we did an event for my Harbor Club community in I think it was April this year in London at Heathrow Airport. And and a guy came along to that and I was like, "I recognize you." And he goes, "Yeah, you tried to buy my company like 25 years ago." And it was yeah, I, I tried to buy his company 25 years ago and he came along to this to this event.
And so, yeah, it's random how Yeah. If you keep doing the same thing for long enough, yeah, eventually you, you get to know kind of, yeah,
lots of people
Stacey Salyer: Yeah, yeah. So I know in my community and what I teach, I teach people basically how to build out that acquisition engine. 'Cause in, in property management, the normal way [00:27:00] to grow is what we call door by door. So you go out and find new clients. Let's say you own a rental, I sign a contract with you.
But, I mean, I'm a firm believer in acquiring, obviously because it just makes way more sense. I mean, it's way faster to grow and then be able to build something that we're selling. So do you have any tips or tricks on, Are, is that what you teach people to do, is basically grow out a CRM,
Jeremy Harbour: yeah. Do you know what? I mean, look you're absolutely right. You need an acquisition engine. I think people are-- people always focus on sales, marketing, and team, the people in the organization, and they never think about acquisition. Whereas acquisition, I mean, I always-- Within acquisition, I always talk about kind of joint ventures, mergers, and acquisitions because each of those can have an order of magnitude increase in the value of your business if you pull one off.
Pull off a big joint venture or pull off a merger or pull off an acquisition, it can have this order of magnitude impact. Now, I, I actually think as an entrepreneur, in the early [00:28:00] days, you're doing everything. So you do the sales, the marketing, the team, all of that stuff. But there comes a point where those things become jobs.
So marketing should be a marketing director, sales should be a sales director team should be an HR manager, and then what does the entrepreneur do? And actually, in lots of businesses, the entrepreneur interferes with everybody that's trying to do those jobs and holds the business back. Well, I think if the entrepreneur can then move up the entrepreneurial ladder and do mergers, joint ventures, acquisitions, and maybe exits because they can be having exit conversations, it's always good to keep that door open as well.
You're giving the entrepreneur something to do that has a order of magnitude impact, doesn't interfere with everybody that's actually trying to get on and run the business. And it's exciting, so, it's something that they can do that, that's fun, that's not staff or customers, 'cause staff or customers take all the joy out of running a business.
So
Stacey Salyer: do. They do every day, every time, every day. So how... So where do you what do you suggest for people to kind of flip their mindset around [00:29:00] that? 'Cause I think it's really normal for people to just kind of just think "Well, I own this business. I'm just gonna do my thing."
Jeremy Harbour: Yeah. Look, it's, it's the second engine on the plane. Having two engines on the plane is better than having one engine on the plane, and it's, But it is a daunting topic, and the first time you start, it's really scary. I think before we came on the recording I was saying, people peek behind the curtain, they scream and run away, and they never look behind the curtain again because the...
I often joke I know 10% about the world of mergers and acquisitions, but that's 9% more than everybody else, so I'm way ahead, but every day is a school day. There's so much more to learn, and so yeah, there's always yeah, new things that you're picking up or figuring out or working out how to do or, or whatever.
In some ways I wish I'd niched into something like, just property management companies and then perhaps I'd have less battle scars if I'd got really, really good at one thing. But I guess a true addict any opportunity is
Stacey Salyer: Yeah, yeah. Well,
Jeremy Harbour: can't say no to stuff.
Stacey Salyer: Yeah, I think the cool thing about it though is it, just [00:30:00] because, I've niched at this point doesn't mean that I'll niche forever. Because, for me the blue collar service industry is a huge... I think that's a great one
Jeremy Harbour: you have the property management and facilities management and the services that bolt in, into that. I mean, it's yeah. And, and there's that same kind of disruptive arc going through all of the operational aspects of it. But at the end of the day, the blue collar end of it can never be fully disrupted 'cause you've gotta have a, a person in a van turn up at some point and do something.
And we're a long way off robotics replacing that. So yeah, it's yeah, there, there's a nice evolution that can come there. And I think also, you have more vertically integrated revenue streams then as well, so, there's a, there's a great value proposition in there,
Stacey Salyer: Exactly. Exactly. Yep. Every property management company needs a good, plumbing company, HVAC, electrician, all that. And, operationally-wise, it's similar enough. Yeah, so I don't know. I wouldn't say it's easy, but,
Jeremy Harbour: yeah. No, [00:31:00] there was a good example we had in our community. There was a facilities management company, and they were spending a million dollars a year on scaffolding. And so, they went and bought a scaffolding company that was making a million dollars a year of profit. So they turned basically a cost center into a profit center.
And yeah, it was a g- yeah, great great vertical integration.
Stacey Salyer: Yeah. And so I... Oh,
Jeremy Harbour: the scaffolding company-- scaffolding companies are worth a lot less than facilities management companies, so they then also get to disguise all of that revenue in an FM business and increase the shareholder value.
Stacey Salyer: Yeah. No, that's fun. So as far as I know I've listened to you on some other shows. Are you, like, anti-startup, or are you just 100% no, you should only, acquire? Or what, what do, what would you suggest to maybe somebody getting into entrepreneurship?
Jeremy Harbour: Yeah. So my, my thinking on this has evolved over the years. So, felt startup was a rite of passage, something that everybody should do, because [00:32:00] when you go through a startup, it's, there's that kind of pain and suffering moment that you can't really learn. It's something you have to experience.
And then I kinda went to the, you should never start a business, you should always buy one. Whatever it is you're thinking about starting, just go ahead and buy it. And then I found myself a bit torn, 'cause you then take away the excitement that comes with doing a startup and the, kind of opportunities it creates and so, I don't think there's a right or wrong answer to it.
I would not want to do a startup again. And I think that buying a micro business might be better than doing a startup. the advice I've given for years is, "Don't buy yourself a job." But actually for the entrepreneurial experience, if you have zero, if you've only ever worked behind a desk in an office and you want some entrepreneurial experience, maybe buying a job is the way to do it.
So maybe buying that little subscale business, it's slightly better than starting one in terms of the learning curve and the, and the pain, 'cause you've got some customers and you've got some revenue [00:33:00] and you've got a website and a business card and all that kind of stuff. But you have to go and work in it.
But that's good, 'cause by working in it, you'll learn the sales, the marketing the recruitment, the management, that, that stuff which you kind of have to get... You, you have to experience to realize how illogical and crazy it is. 'Cause you can't teach somebody how illogical and crazy running a business is.
I w- I always say the day I knew the most about business was the day I started, 'cause in your brain you know everything, don't you? It's like, "Oh, this is gonna be easy. It's like I just..." Yeah.
Stacey Salyer: Of course. Of course. Yeah. Yeah. No, I think that's good advice. you know, I'm very thankful and grateful for all of my experience and definitely, starting from the ground up. But I, like you, would not wanna do that again. I mean, to me it's just easier...
Jeremy Harbour: too old for that shit, as they
Stacey Salyer: Yeah, I know. I'm like, "No, I felt that pain enough." That's okay. But you know, I, I think as we get older too, our identities kind of shift. I mean, I know when I first started mine, I've, I've talked about this, I've written about it and talked about on my show before how my original company was [00:34:00] like my fourth child and it took, took me some learning that no, it's not.
It's actually an asset. And then, you kind of build from there. And now I'm like, "No, no, I just keep wanting... I wanna buy assets and basically flip them and do all the things like, like
Jeremy Harbour: Yeah. Create those capital events. That's where all the fun comes from. Yeah
Stacey Salyer: 100%. No, that's awesome. So as far as I know you kind of mentioned like in the very beginning you didn't have any money, like people approaching you that wanted to buy you didn't have money.
You didn't have money. I didn't have any money when I bought my first business. So how do you, how do people get money? Like what do you suggest?
Jeremy Harbour: So I, I used to do a lot of presentations at business groups, and they would always say, "So how do you buy a business with no money?" And my facetious kind of quick answer was, "Well, you just start with no money."
Stacey Salyer: Right? Yes. You just do it
Jeremy Harbour: Yeah, necessity is the mother of invention. So when you d- when you
I know they say like a fool and their money are easily parted, but there's a good truism to that, which is if you had the mon- if I'd had the money, I would've just given [00:35:00] it to them because I thought buying the business was a great idea. But because I didn't have the money, I had to come up with a structure that got them what they wanted and got me what I wanted.
And then what I've realized over the years is actually it's the only way to buy those really small businesses because ultimately they're incredibly risky assets. If two staff members leave or two customers leave, the business' value deteriorates to almost zero immediately, and the person running it is kind of the star employee.
So do you wanna pay the star employee to leave and you carry the can from that moment on? And by the way, there's not a bunch of natural buyers out there, so it is a buyer's market. There is no natural buyer for that, for that business. So if they want to get a deal that gets them anywhere near their kinda magic number of what they would like to walk away with, they're gonna have to collaborate with you.
They're gonna have to work with you on the transaction so that you get the business that you want and they get the money that they want. And it's gonna have to happen over some time. And once I realized that that's all it is, it's a balancing of the [00:36:00] risk between you then it, it became a lot more comfortable for me to present it to people in that way and to discuss it with them openly in that way.
Because you have to say, "Look, I can buy a US Treasury and there's no risk. It's the risk-free return. And, and, and that pays me 5% a year," which is like a 20 times multiple equivalent. Or I can buy commercial real estate on a 10 cap, and I get all my money back o- over 10 years. If I'm gonna buy a small business that's incredibly risky and incredibly volatile, it's not gonna be anywhere near the multiple of a piece of commercial real estate.
It's gonna be, sub five times earnings, and even then, it's gonna have to be fairly heavily attached to its performance over the next few years as you transition out of the business. And so I think once you can have that kind of honest conversation with them, you can put your best deal on the table.
They will always say, "Oh, there's 50 people that will buy it for, from me. They'll write me a check tomorrow." Great. Okay. Well, let's come back in September. If you haven't sold it by September, should we do [00:37:00] my deal? And, people always think they're gonna sell it really quickly. They always think they're gonna sell it for lot, for much more.
So as long as you keep the rapport and you keep the door open and you have your best deal on the table, it's amazing how eventually they do come around. If you negotiate it like a secondhand car salesman and you burn the bridge before you walk away, they would rather bankrupt the business than sell it to you So,
Stacey Salyer: Right. Right. 100%. Do you find that you spend a lot of time kind of even educating the seller on,
Jeremy Harbour: Yeah. Huge amounts. Huge amounts.
Stacey Salyer: the process and...
Yeah,
Jeremy Harbour: yeah, yeah. I spent a good hour today educating a, a seller,
Stacey Salyer: Okay
Jeremy Harbour: exactly how it works and what he should expect and how, what the outcome is most likely to look like. And it's all, easily verifiable information. They can go and find out. The problem is if they've had a business broker in their ear telling them they're gonna get a check, all of it upfront, and it's gonna be a gazillion dollars you just have to walk them through why [00:38:00] that just doesn't make any sense.
Why on earth would somebody write you that check when these are the, these are the other things they can do with their money? The risk-weighted return on capital is a major factor. Why on earth would somebody give you that for what you're giving them? And also a lot of these businesses aren't actually prepared to sell.
They, they think they are in their mind, but they're running personal expenses through the accounts. They're... they've got terrible processes. They're still involved in all sorts of things. They're, they're buying the toilet paper. They're-- I mean, nothing works without them, it's Yeah, they're not, they're not really in a sellable position when you first meet them
Stacey Salyer: Right. And is that still like a business that you would buy? I
Jeremy Harbour: Yeah, absolutely. Yeah, no, I, e- every every red flag is a green light, if that's a m- a mixture of metaphors. But basically every time you find something wrong with a business, that's your leverage to not give them the money up front. Client concentration, amazing. Oh, 80% of your revenue comes from one client, that's awesome.
I'm not gonna have to pay you anything for this.[00:39:00]
Stacey Salyer: Right. Right. Yes. Yes. Okay, cool. Yeah. So yeah, so you're speaking my language for sure. And that, yeah, that's a lot of what I talk about as well. Like a red flag doesn't mean no, it just means that's gonna adjust the valuation as far as like what
Jeremy Harbour: And what's-- and more importantly, the structure. So I mean, we, we use this expression all the time, "You, you name the price, I'll name the structure."
Stacey Salyer: Hmm.
Jeremy Harbour: the deal is in the structure. If it's-- If you can make it self-finance, and if you can de-risk any overvaluation by linking it to future performance, then, they can name whatever price they like.
So it's almost like when somebody says, "I want a million dollar..." 'Cause everyone wants a million dollars. "I want a million dollars." We always say, "Okay, let's see how we, h-how we could get you to your million dollars." So we're not saying, "Yes, we'll give you a million dollars." We're not saying, "It's worth a million dollars."
We say, "Let's see how we get you to your million dollars." And then you start to build out, "Well, we can do this to this. We can link this to this. We can pay this later. We can do that then." And yeah, then if you have your best year ever for five year- five [00:40:00] consecutive years, yeah, you get to a million dollars.
Stacey Salyer: That's awesome. That's awesome. I love that. Yeah, that's cool. Well, this has been s- a lot of fun definitely kind of going through all these. Do you have any other parting words of wisdom or advice? I know, in the property management world, acquisition, buying selling is always kind of a sexy topic, but there just doesn't seem to be a lot of buy-in yet.
People are very scared. They're like, "I don't wanna buy other people's problems," or what if... what if, what if. And I'm like, well, what if, what if, right? So I don't know, any other parts of
Jeremy Harbour: Yeah, look, a- acquisition entrepreneurship I think is an incredibly rewarding area of entrepreneurship, and it's one that many people don't explore because It's just another thing you have to go learn. And when we first started a business, we didn't realize how hard it was gonna be, we figured it out pretty quick.
And so the thought of learning something new on top of that is, now we know what it feels like. It's like having the second child. Now, now you know what you're in for, so, although somehow the universe makes [00:41:00] you forget temporarily. But yeah, it's that it, it's that kind of, Daunting thing.
And so-- But what I would say is, look, go down a few rabbit holes of research and figure out if this is something that you want to do. Because if you do want to do it, it's polarizing. Half of you won't, and half of you will. But if you do want to do it, it's-- the juice is worth the squeeze. You'll you'll be freed.
From an ent-- from an entrepreneurial perspective, you'll be freed from staff and customers. So most entrepreneurs that I meet wanted freedom when they started their business. They wanted freedom, time freedom, and financial freedom. And then their business robbed all of their time and all of their money from them, and they're now in this kinda prison they can't take a vacation from.
And M&A frees you from that. It will help you sell your business and create a capital event, which means you earn money while you're not working. And it frees you to go and buy and sell businesses without having to get involved in the management and, and running of them. And when I say it like that, it sounds really simple.
It's actually really [00:42:00] complicated, and there's a lot more to it. But you'll really enjoy the process of learning it and experiencing it and figuring it out. And I mean, if you go to our website, we have a twenty-one-day free email course specifically for this point because people are, don't know if they want it or not don't know if they want to embark on this journey or not.
So every day, we give you an email that's multimedia. You've got videos to watch, things to read, all that kind of stuff. So every day, it takes you through some sourcing ideas, some deal structures, some things you can do with the business once you've built it. It just takes you through the whole journey from kind of nuts to soup.
And so when you finish that, you'll then go, "I could never do this," or, "Wow, I wanna do this every day." And that will be the... Yeah, that will be the, the difference. And yeah, it's just harbourclubevents.com. And I'm, I'm British, so we spell harbor correctly, which is H-A-R-B-O-U-R. We, we stick a U in there just to confuse the Americans.
So yeah, it's H-A-R-B-O-U-R, harbourclubevents.com, and at the top it just [00:43:00] says free course. Just click on free course, put your details in, and it'll start sending you these these emails. And yeah, you can find out if it's for you or not or if it's just too overwhelming. But yeah, I, I've... It's completely changed my life.
I've really enjoyed it, and it's changed the life of thousands of people that I know. So it's yeah, it's been fantastic.
Stacey Salyer: Yeah, no, that's awesome. Yeah, thank you so much, and we'll make sure to put that information in the show notes as well. Yeah, I'll go check it out myself. That sounds like a great, great way and, a great way to figure out if it is something you wanna do before you jump in and start investing time and time and money.
Although, I, I think both of us would agree that you should do it, so...
Jeremy Harbour: But we've drunk the Kool-Aid. I mean, you
Stacey Salyer: We have.
Jeremy Harbour: my, my answer to everything is buy a company. Peace in the Middle East, buy a company. Getting divorced, buy a business.
Stacey Salyer: know, right? I know. Why not? Why not? It's a... Yeah, it's a, the gift that keeps on giving, so yeah. Very cool. That's awesome. Well, thank you so much for coming on my show and spending time with me today and you dropped [00:44:00] some great information and I any of my listeners are interested in checking out your programs or your community, all your contact information will be in the show notes
Jeremy Harbour: Wonderful. Stacey, thank you so much. It's been really enjoyable and yeah, look forward to out more about your property management r-roll-up. It s-sounds really exciting, so
Stacey Salyer: Yes. Yeah. Happy to share once it's all done, so. All right. Well, we'll see you all again soon
Jeremy Harbour: Thank you
Stacey Salyer: All right, there we go
Outro: Thanks for listening to the Stacey Salyer show. Here's the deal. You can read about acquisitions anywhere, but you can't learn acquisitions from someone who's done it the way I have as a buyer, a seller, and from the corporate side evaluating hundreds of companies. That's why I need you to subscribe and share this with someone in your network who needs to hear it.
And if this episode landed, leave a five star review. It's how more PM owners find the only acquisition expertise in the space that comes from all sides of the table. And while you're at it, grab my Acquisition [00:45:00] Readiness checklist on my website at staceysalyer.com. Then when you're ready to move from Growth Thinking to Growth Building, explore the Built to Acquire program.
Don't leave it on the table. See you on the next episode.
