John Jantsch (00:00): This episode of the duct tape marketing podcast is brought to you by the MarTech podcast, hosted by my friend, Ben Shapiro brought to you by the HubSpot podcast network with episodes, you can listen to an under 30 minutes. The MarTech podcast share stories from world-class marketers who use technology to generate growth and achieve business and career success. Recent episode, one of my favorite extending the lifetime value of your customer. You know, I love to talk about that. Listen to the MarTech podcast, wherever you get your podcasts.

John Jantsch (00:45): Hello, and welcome to another episode of the duct tape marketing podcast. This is John Jantsch. My guest today is Roland Frasier. He is an investor and business mentor co-founder and or principal of five different Inc. Magazine's fastest growing companies, names like DigitalMarketer, Traffic and Conversion, scribe publishing and real estate world. I guess I could go on the list is quite extensive, but we'll just get right into the interview instead. Rolling. Thanks for joining me.

John Jantsch (01:13): And I want to talk generically about acquisitions and that's a place that you spend a lot of time in. You teach a lot of people you've done. A lot of of deals are currently, always seem to have your hand in every time I talk to you. I, you know, I learned more about how many things you have your hands in. I think most people think of acquisition or a lot of people at least think of is I'm going to go buy a company. I feel like you take a much more strategic approach of how do we build a portfolio? How do we bring, how do we buy market share? So I wonder if you could talk a little bit about the various reasons why somebody ought to be thinking about acquiring, even if they're running, you know, full time of business and couldn't imagine doing anything more. Yeah, absolutely.

Roland Frazier (01:53): I think it's a, it's a, it's a great question from that perspective too, is okay. Acquire, but why? And, and I like to look at it and say first, keep in mind that it's possible to acquire assets as well as companies. So you don't have to acquire a whole company. You can acquire assets too. And I, I like to look at it from what is it that you want to accomplish? What do you need in your business? And so let's say that you want more market share. You want more customers, okay, that's the easiest kind of acquisition to do. You simply buy a competitor and it might be a direct competitor. Somebody that's selling the exact same thing that you do to the exact same audience and the exact same location, or it might be an indirect competitor because they're selling something that people buy instead of the thing you buy or they're selling to a different audience.

Roland Frazier (02:42): But the cool thing about it is like, I don't know any way to double your business, literally overnight, other than an acquisition. So you then go out and acquire, identify the competitor. That's got the, be the business that you would like to have the customers you'd like to have and you buy it. You acquire that. And I say acquire because we don't typically buy with cash out of our own pocket. We do use cash and we do give money to the sellers at closing. But we typically do that with, with no money from our pocket, letting the businesses pay for themselves. So that's category one. What's another thing that you might want. I want more leads. Great. If you want more leads, let's say you own a flooring store and you want more flooring store leads. Then how can I get that? The question to ask is who has already gathered together?

Roland Frazier (03:33): People that would be my ideal customer and how can I maybe get access to those people? You can use ads like Facebook has gathered a lot of people, but it's very, very broad or a radio station or television station has gathered a lot of people, but that's my shotgun blast. So if instead we could say, what if there is a group of people that are passionate about remodeling and even better? What if they're passionate about remodeling floors, right? But, but certainly about remodeling, that would be a good pool of people to acquire. And somebody has already got a bunch of people that are interested in that. And maybe even in people that are interested in doing it right now, maybe there's a program or a course or something like that. Or, or it's another store that that's doing remodeling classes, but they're not selling the same thing you're selling.

Roland Frazier (04:25): They're not selling flooring. So if you could go and acquire that group or that asset, sometimes it's a Facebook group. It might be a, a physical group like meetup.com has groups around all kinds of interests. It could be a podcast about remodeling, right? If any of those things are media and the media is aggregated the attention and eyeballs of that ideal customer. So if you can acquire that media, now you have ownership of all of those leads. Another thing might be, and you can stop me if I go on too long. But another thing might be, I've always wanted to have some software that does this thing I do, or I need a sales team, but I don't know how to build a software team. And I don't know how to build a sales team. Um, how can I get that? Other people have already done that and they probably are a lot better at it than we'll ever be.

Roland Frazier (05:16): So you can simply do a thing called an Aqua hire where you're saying anybody else that's already built teams or resources that I would like to have. You can buy that, right? You can buy that company or you can buy the assets that include that team is part of the deal. If you say I'd like to have a higher order value on average, when my client or customer comes into my store, my business, I'd like to be able to sell them more stuff. Cool. And, but, but I don't have, I only like I sell lawnmowers, I don't have other things. Then you'd say, what are the other products or services that customers who buy lawnmowers are buying before they come to you while they're shopping with you and immediately after. And you might be able to say there's a whole suite of things that they would buy.

Roland Frazier (06:02): The lawn mower person might have a garden and maybe they need garden fertilizer and other stuff. And we only sell lawnmowers. And maybe they would like to have, uh, information on how to do certain things outside, landscaping yard, that kind of stuff. So then you start saying, I could acquire other products or services that people already have. And typically that's not acquiring a company. That's just going out and saying, oh, these people have a cool product. Let me acquire that. And then you add that on to what you're selling to your customer now. And you've got a higher average order value. You've increased the transaction size of your customer. Maybe you're saying, gosh, man, I'm not making enough profit right now. I need to increase my profit margin. That's a thing that we say fancily in the investment banking world. We call it vertical integration.

Roland Frazier (06:48): But in the regular world, it'd be like, okay, if I'm let's, let's stick with the lawnmower thing. I'm, I'm selling lawnmowers. Is there a possibility of acquiring one of the manufacturers of lawnmowers or I make lawn mower. I am already a manufacturer, but I want to start acquiring people that are making the components that I assemble to make these things. Or maybe you're just a, you know, maybe you have a repair shop and you say, I have, I have a team that I use to create content for my repair shops. So I can do content marketing online. And you acquire that right? It's or I have a call center that I'm using to set appointments for me or any thing that's outsourced, like any of the contractors that you have in your business that aren't currently employees are potential, um, resources that could be acquired that you're right now, only in this part of the value chain, the small part.

Roland Frazier (07:41): But if you can expand to get higher up in manufacturer or lower down in distribution, that's a fantastic place to be a lot of people that sell things either online or in physical brick and mortar have affiliates that sell for them as well. And so we frequently will acquire affiliates as a way of increasing profit margin. Or if we need to innovate, we're saying, gosh, things are getting stale. We need some new stuff here, but we're not really good product inventors will then you see this on shark tank all the time or dragons, Dan, you can go out and acquire intellectual property for people that have innovations. And so you can effectively acquire innovation. So any of those things to me, you just ask the question and you say, what do I need? I need leads. I need a team. I need some innovative products. I need more stuff to sell. I want to have a higher average order value. I want to make more profit. I want to have recurring revenue. Any of those things,

John Jantsch (08:35): Uh, buying opportunity. In other words, like spotting a company that is just terribly underperforming. I did some work recently for a gentleman that had no, no industry experience at all, bought a manufacturer of high performance drive shafts for racing, automobiles didn't know a thing about it, but he knew what he did know is that most of their orders were taken over the phone or in person, and that they had no web presence. And in about 18 months, he tripled the business by, you know, just taking them online, taking an old school industry and taking them online. So he acquired a business pretty much on the cheap in some ways that was a great product, but just didn't have the distribution. But I've got to believe that some of those are still out there.

John Jantsch (09:17): And now a word from our sponsor. Yes, this episode of the duct tape marketing podcast is brought to you by HubSpot. HubSpot is the world's leading CRM platform and has rolled out over 50 plus integrations over the past year to help businesses connect with customers like never before the latest suite of customer centric tools to help your business, show your customers a whole lot of love, including seamless payment tools, CRM powered, CMS, customer portals, and feedback, service, secure customer portals, keep ticket conversations going between customers and reps offer access to your knowledge base and can be customized to fit your brand without having to code a thing and customer feedback surveys, where you can capture unique feedback to your business, share insights with your team and grow your understanding of your customers. Learn more about, uh, how a HubSpot CRM platform can help build, maintain, and grow your customer relationships @ HubSpot.com.

Roland Frazier (10:19): There are millions of them there, there really are. And it's so fun to find because you can do like when you acquire that you're acquiring it at the price and value that the seller has built up. So the seller is getting the fair market value of the asset or the company as it exists today. And one of the challenges when people buy things, as they say, but I can add all these things and it's gonna be worth so much more so I can pay more for it. That's your money. Don't pay that. Right? Don't do that. But there are very, very, very many opportunities. And you mentioned one of the biggest, which is digitization, right? So any brick and mortar, any existing business that doesn't have an online presence that doesn't have an online store, that's not using any kind of online marketing is very, very rich with opportunity to really blow up sales in a positive way.

Roland Frazier (11:09): And, and the, the other thing is there, most people think that they have to pay for their customers. And so they're not at all taking advantage of organic marketing and typically a business that exists with a brick and mortar presence. Even if it's got an online, like an e-commerce store and it's buying ads through paid advertising sources still has a tremendous opportunity to implement content marketing and through organic and social double their existing online sales. So like wherever you look, you'll find that there are massive opportunities to add performance. Does the company have a call center? Does it have outbound sales? Does it have an inbound sales team that's actually taking the leads? Do they collect their leads? Because a lot of, especially a lot of brick and mortar stores, don't, they they've got they're at least sees me. They don't even keep track of their customers. Like they've got their customers. And I guess they could pull a report in QuickBooks or something that would list people they'd done stuff for, but they don't actively collect and market to those customers, put them in a CRM, a customer relationship manager, and email them once in a while. Right. Those opportunities are such low hanging fruit. And there's so many of that. I would never recommend buying a turnaround because there's so many store there's so many stores and businesses that just are completely underperforming under utilized under optimized that you don't ever have to get.

John Jantsch (12:35): If somebody's listening to this and thinking, oh, I hadn't really thought about that. I should acquire a competitor or I should acquire leads. The idea might make sense. I'm I'm guessing the first step is the hardest. Like how do you find them? How do you get started? You know? And I'm sure, I'm sure there's like a million answers to that because there probably is no exact way. Right. But I'm curious if you've found some ways that have been effective.

Roland Frazier (12:56): Yeah. So, so the, uh, I'll tell you what I think the worst way is, is to go to a business broker because business brokers are in the business of being lazy. No, I didn't say that business brokers are in the business of taking a business and hopefully marketing it and creating an auction environment and getting the highest price for it. So you're putting yourself in the worst position to buy at a point in time where the seller has the highest expectation of what they're going to get for their company. And so I think it's better not to do that. It's just like with real estate off-market deals are best. So how do you find those that the way that I've done it is I just brainstorm. So I start with, what's my objective, what do I want? And I think I mentioned seven of them a minute ago, if you, if you break that down.

Roland Frazier (13:42): So I'll say, okay, I want more leads, uh, or I want to, uh, uh, let's, let's do the easiest one. I want to acquire my competitor. Who are they? Cause chances are pretty good. You know, who they are. And so I would make a list of the competitors that, you know, and then I would just research and the easiest research, I think these days is Google. You can still use yellow pages if you want. And I would make a list of all of the people that fell under the keywords that are my keywords for my business. So I own a lawn Moring shop. Then I'm going to say lawnmower shops, San Diego, probably cause I'm going to look in my area first. And then I'm going to find a list of probably 20 to 300 of the people that are selling that kind of stuff.

Roland Frazier (14:24): Then I'll go through that list. I'll whittle out all the ones that are franchises or major companies like, you know, if it was, if it was home Depot, right, I'm probably not going to buy home Depot yet, but I would take that one out. And so I'm looking for basically mom and pop local businesses, and then I'm going to start by making a list of those people that were in that category and I'm going to start an outreach campaign. So then I say, okay, I've got my list. How do I find out who the owners are easiest way would be to either yourself or get a virtual assistant, to reach out and call them all and find out by asking. So who's the owner of the business, right? You can also do it online. You can go to the site. Sec states.com, S E C S T a T E S.

Roland Frazier (15:09): And that lists all of the secretaries of state for all 50 states. If you're in the UK, it's company's house, if you're in other countries, it's other places, but there's always a place where businesses have to register. And so I would go there. And then when you find the business that's listed, it will list typically the officers and directors, and depending on where you are, maybe the owners, and it will also list the addresses and sometimes the phone numbers of those people. And so then you're creating a database of all those people. Now I've got my list of businesses. I've got my list of owners or at least contacts. And then I'm going to, typically for me, I like sending letters because letters are unusual and I have a lot of businesses that are direct mail. So I've, I'm very comfortable with that. If you're a phone person, you can call them on the phone.

Roland Frazier (15:55): If you're not a phone person and you don't like letters, there's a thing called ringless voicemail. You can just load them all up and leave a message. And my initial outreach is very, very straightforward. If I'm, if I'm straight looking to buy a business, like we bought a, we bought a digital marketing agency in the Minneapolis St. Paul area for our print shop. That's located up there because we wanted to add digital services to our digital, excuse me, to our printing services. And so we got a list from info USA of all the digital marketing agencies that were like 763 of them in this Minneapolis St. Paul area. We did a, that was a list we paid for. It was like 10 cents a name. So it cost us 70 bucks, something like that. We then did a, just a print merge letter and sent a physical letter to all of them saying, Hey, I see that you're a digital marketing agency located in the Minneapolis St.

Roland Frazier (16:46): Paul area. We're in the process. We are a print shop. That's been around for the last 30 years. And we're in the process of looking to acquire digital marketing agency to add to our repertoire of services. If this is something you might be interested in, please call this number. Right. Very, very simple had about 60 some responses to that that led to about 10 actual phone conversations. And we ended up buying two of them. And one of them that we didn't buy, we'll probably end up buying in a year. Cause that's how that always works. So that's like, that was a super simple, very local effort, just witches,

John Jantsch (17:21): Which is perfect. Like you said, cause it was a print shop has, so let's talk about no money down. I've got to believe that that's a message that is going to get people's sensitive because I'm sure like most people, if you haven't acquired a business, you're thinking, oh, I've got to go write a check for a million dollars. So, so how, what are some of your approaches for acquiring businesses with no money down?

Roland Frazier (17:43): Sure. So, so first I want to, I want to make a distinction because no money down to me, no money down means that there isn't any down payment. There's no cash that exchanges hands at the closing. And I think those, there are deals like that that are out there. They're much harder to find and they're much lower quality than the deals that you'll find that are no money out of pocket. So I like to focus on it's it's an important distinction because I like to focus on, look, we're going to give the seller cash. If they want it at closing, this is not going to come out of our pocket and we're not going to use our personal credit to do it. So that that's important because, because if you come in and you say, I want you to give me your awesome business, that's making a million dollars a year.

Roland Frazier (18:24): I'm giving you $0 for that at closing, I'm going to let the business pay for itself. How does that sound? Well, I'm doing that already, right? But, but what, what is important? I think for people to, and it's it's have you ever done a, like a no money down real estate deal where you bought a house or building or something with no money out at the closing? No money out of out, literally no money down. Okay. It's for anybody that does that. It's a holy crap moment. I like the first time I bought a house and I'm, I'm at the closing table and the seller signed everything over and I'm like, I literally didn't pay anything for this. I own all of the equity. You're still on the hook for the debt. And I'm going to auction this house off in the next five days and wow, you can do this, this, this just happened, right.

Roland Frazier (19:16): It's a, it's a holy crap moment that, that you just, you, you, once you've done it, you're like, I have no idea. This was possible. And before you do it, it's easy to be very skeptical. But think about it this way is that we're looking just like when you're ideally looking for good deals with real estate, we're looking for people that want to sell their business. People that are motivated. Now they might be motivated the desire to have the money, to do something else with, or because they're going through a divorce or they've got partner problems, which lots of people do, or maybe they're just relocating or they've had a health or a death in the family. There's a lot of reasons that somebody feels pressured to sell their business. And when they do, they're a motivated seller. So we're looking ideally to find people who aren't just, I don't know.

Roland Frazier (20:02): Sure. I'll sell it. If you give me enough money, I never thought about it and don't want to, but you know, if you overpay for it, I'll sell it. That's not who we want. We want somebody that actually is motivated to sell for, you know, usually one of the reasons that I mentioned. And, um, so then what, what you do is you're looking and you're saying, ideally, those people don't need all of the money that they're asking for the business upfront in the first place. So we use a few different things like seller financing is very common, an earn out where you say, you know, Hey, if the business performs at this level for a certain period of time, then let's defer this percentage of the, of the purchase price still then. But there's lots of ways to find cash that's already in the business, whether it's factoring receivable, tapping untapped credit lines, going out to suppliers and getting supplier loans, having other people that are going to run the business for you.

Roland Frazier (20:56): Cause I, I like to work above the business where the business is my product, not the thing that the business sells. I don't like to work in it or on it. I like to work above it. So, um, that, so what I'll typically do is I'll say, okay, let's say the owner is leaving. And sometimes the owner just wants to be an employee. They're tired of the hassles and headaches of being an owner. And that's okay too. But I'm going to look at, who's going to be running the business and then I'm going to give them the opportunity to buy in. So, um, I might acquire a business, the owners leaving, but there's a manager and a bookkeeper that have been running it for the last 14 years and they're staying and they've got home equity lines and retirement plans and things like that. And so I'll give them the opportunity to say, have you guys ever thought about the possibility of owning part of this business?

Roland Frazier (21:40): And very often it's a, I didn't even know that was possible. And I say, yeah, so I'm in the process of acquiring it and I'm really interested in you guys hanging around. So how would you like to think about coming in for maybe 10% ownership for each five, got a 20% down payment and the rest is seller financed or seller financed and earn it, earn out. I got my down payment money from these two people that I'm bringing in, who now have skin in the game and are thrilled to finally have the opportunity to get an actual ownership upside because I'm going to also share with them. Hey, my, my plan is to, I typically hang onto these things about five years. Sometimes it's three, sometimes it's eight, but it averages about five years. And then I sell it to private equity after we've grown it for a lot more. And I'd love for you guys to be in on that. I'd love for you to be able to participate on that. How does that sound

John Jantsch (22:31): Pretty good, right?

Roland Frazier (22:37): Take that money you embezzled

John Jantsch (22:39): And the company. So obviously this is a topic you can talk about for a long time, but it's also a big complex topic too. You want to tell people where they, I know you do a lot of teaching on this. You have a lot of programs to help people do this. You, you, you know, you work with people that come to you and, and help them go to the next level. So maybe tell people where they can, where is it? Where's the stopping point or the starting point I should say for, for learning more from your own.

Roland Frazier (23:04): Sure. You can always message me. I'm on all the socials that forward slash Roland Frasier from LinkedIn to Facebook, to Instagram, I have a podcast called the business lunch podcast where we talk about this stuff all the time until people get sick of it. And, and I have a challenge that I do usually once a month that is at get epic epi, see challenge.com, where I basically do a five day let's identify five companies that you might want to acquire. And here's, uh, eight or 12 ways that you can go about doing it without having

John Jantsch (23:33): Well, thanks so much. It was great to saw you a few weeks ago in Austin, but it was great kitchen and up with you, a one-to-one on the, on the podcast and hopefully we'll run into each other again, very soon out there on the road.

Roland Frazier (23:43): Likewise. Thanks, John. Appreciate it.

John Jantsch (23:45): All right. That wraps up another episode of the duct tape marketing podcast. I want to thank you so much for tuning in, feel free to share this show. Feel free to give us reviews. You know, we love those things. Also, did you know that we had created training, marketing training for your team? If you've got employees, if you've got a staff member that wants to learn a marketing system, how to install that marketing system in your business, check it out. It's called the certified marketing manager program from duct tape marketing. You can find it at duct tape, marketing.com and just scroll down a little and find that tab that says training for your team.