8+ Acquisitions $100 Million in Funding & Chasing the Whale

 Summary

In this conversation, Jon Stoddard interviews Marty Fahncke, an M&A entrepreneur, discussing his journey in creating value through mergers and acquisitions. Marty shares insights on his strategies for raising capital, navigating challenges during the COVID-19 pandemic, and the transformative impact of the Epic course on his career. He emphasizes the importance of understanding business metrics and the need for effective capital allocation. The discussion also covers recent deals, lessons learned, and future plans for growth in the M&A space. In this conversation, Jon Stoddard discusses his approach to acquisitions, emphasizing the importance of strategic partnerships and the role of management in the companies he acquires. He shares insights into the home healthcare industry, highlighting the challenges and opportunities present in this sector. Jon also elaborates on his networking strategies, particularly with family offices, and how these relationships have facilitated his deal flow. He reflects on his personal growth and passion for business, noting the creative aspects of his work in mergers and acquisitions.

Takeaways

Creating value in businesses involves identifying inefficiencies.
Raising capital requires understanding the specific needs of the business.
The Epic course provided essential tools for navigating M&A.
COVID-19 presented both challenges and opportunities for businesses.
Acquisition strategies can leverage existing business relationships.
Learning from failures is crucial for future success.
Building a network of investors is key to raising capital.
Understanding business metrics is vital for making informed decisions.
Flexibility in deal structures can lead to successful acquisitions.
Continuous learning and adaptation are essential in entrepreneurship. We are open to anything up to hundreds of millions if it's the right deal.
I brought it to my friend. said, you'd be perfect for running this company.
I'm almost out there selling. How many is in your portfolio now?
I can get that to be a billion dollar business without too much effort.
We're positioning that business to be on the forefront.
Networking has been my number one source of deal flow without question.
I just watch the web traffic spike up and then the phone calls start coming in.
I got to get out of here because I see bigger potential.
I'm having so much fun right now.
This has given me so much opportunity to be creative.

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Transcript

Jon Stoddard (00:00.116)
out and you're recording. So I want to make this kind of informal, Marty, because you and I have talked before we're friends and I just want to find out how you're doing. want to talk interview the top &A entrepreneurs. So this is Marty Fonke. Welcome to the show. Thank you. Excited to be one of your inaugural guests. You are the inaugural guest. You are the inaugural guest.

Yes. I mean, I've got other people signed up, but you are the very first guest. You know what they say about pioneers, right? They're the ones that wind up with the arrows in their back. And then everybody else just follows along behind them after they blaze the trail. So yeah, like, like, hey, honey, let's go build, you know, it's 1820 or something like that. Let's go build a house out in the West in something. What do you think? It's, you know, properties free. Yeah, no, thanks. Yeah, I'm so excited.

So we met each other through Roland's Epic Course, which is the &A group. And I just kind of want to find out. I'm going to ask you some questions, just how it's going for you. So everybody on the other side gets a sense of who you are, what you do, how your success, and who your failure is on that. So let's just start with, what do you do now? I know you've got a great career. I've seen that. We've talked. And I've seen you on video.

Well, thank you. easiest way to describe it is I create money out of thin air. So whether that be through marketing strategies or whether that be through investment strategies, mergers and acquisitions, I find ways to put money into company owners' pockets. Yeah. And so you're looking at a company. What size of companies do you work with now?

The range is pretty, pretty broad, actually, between 1 million and 175 million are the deals we've done in the last, you know, or the deals we're working on completing in the last year. So it's a pretty broad range, but 175 million is the biggest one so far. And of this, of this past year, the biggest ever I've done was about 300 million. Yeah, that's amazing. Now you were came on as making money out of thin air as like a consultant or contractor with that one or was, what was that?

Jon Stoddard (02:20.652)
Yeah, so whether it's if I'm coming in approaching it from my consulting and management advisory, I can basically walk into any business and find where they are leaving money on the table, whether it's through increasing revenues, increasing profits, sometimes there's more money to be made in just efficiencies than there are in increasing revenues, because if you've got a bad system, then you're just exacerbating the problem with increasing revenues. And then from the investment side,

helping business owners find ways of raising capital that aren't always the traditional ways that they would think of. whether it's most business owners, if they need capital, they think of banks, which is debt lending, right? They think of SBA loans, which is debt. They think of private equity, they think of VC, and there are hundreds of other options out there for raising capital.

that I can help business owners find if they need funds to grow. Yeah. When you raise funds or use alternative methods to raise funds, now, what are you looking at as the best scenario or possible case? Let me give you an example. I had this conversation with a guy earlier this morning that the business needs to raise capital. And I said, well, what's it going to be used for?

Because a lot of the times I've seen people come, they raise money because it's going to solve all their problems. Right? Right. I said, no. Where I've seen the best success is if they already know what their metrics are, cost of acquiring a customer is. And if it's $100 or $1,000, then you ask, well, what if I give you $100,000? Would you still have the same profit margin adding all those customers? And what if I give you $1,000 or $1 million?

Am I gonna get the, know, turn a dollar into $5? Right. Yeah. Yeah. And that's a question that always needs to be asked because quite frankly, I would guess, well, it's probably 80-20 rule, right? 80 % of the time when you ask that question, you get an answer that's less than satisfactory, right? Like they're wanting to spend the money. They're usually trying to throw money at a problem that should just be fixed first.

Jon Stoddard (04:41.621)
And then you can put money into capitalizing on fixing that problem. So definitely I'm always asking the business owner, what is the problem you're trying to solve? And that's why it can be any number of things. It could be fixing something that's broken. could be everything's right. They just need more customers, which is a marketing and sales problem. Or it could be that they have something that definitely needs capital, whether it's equipment.

or inventory capital, et cetera, there are times when just truly cash is needed. And so going in and understanding that and helping that business owner to really look at what is the money that they need and why do they need it is absolutely great advice. So you're right on that. Well, let's go back to the Epic course. This is where we met you. And this is an Epic course.

started by Roland Fraser. It's basically an &A course, which turns into kind of a mastermind because we're networking with everybody. So what did you think of the course? It was life changing for me. So I am not a take a course kind of guy. have I have taken a sum total in my 35 year career, I've taken a sum total of four courses in my in my life, I limit myself to one per decade, apparently.

And so I'm not one of those that jumps on every guru. I'm not a big guru guy. I'm not a big course guy, et cetera. But I do a lot of business in and with China. And so I could see at the end of 2019, well before most people, what was coming to the United States with regard to the coronavirus. Already my factories were being shut down.

I was seeing all sorts of issues and I was starting to warn people like something's coming and it's gonna be a huge disruptor and you need to be ready. Well, I knew that I knew what was coming and from a personal standpoint, there were things I could do to prepare. From a business standpoint, there were some things I could do to prepare, but I didn't know exactly what to do to fully prepare for what I knew was coming. But I was ready. So we're recording this literally almost to the day one year after.

Jon Stoddard (06:54.721)
the world started shutting down. And I kind of sat there. basically, got lucky because some of my businesses that I work with were able to take advantage of, or let's use a different word, were able to capitalize on the lockdown. So one was a company that produces calming sleep music. Well, everybody had such high anxiety that that product was selling like gangbusters, I mean, record levels.

But other products and businesses I had were suffering. One of the, I do a lot of TV and radio advertising for a lot of my businesses. And so there was an opportunity that came along where all national advertising for things like movie theaters, car, you know, car sales, restaurants, et cetera, all stopped. They pulled their budgets overnight. And so almost every single TV and radio network out there went from

you know, from cranking along and one of the best robust economies we had to every budget being cut overnight. So there were huge opportunities with media I was taking advantage of, but I was watching to see what's the long-term ramifications here? How do I, I knew that businesses were gonna be shutting down and going out of business. I knew it entrepreneurs were gonna be struggling. I knew that a lot of people in my circle of influence were gonna be hurt because they were in.

know, restaurants or other types of businesses that there was no way they were going to survive an extended lockdown. And I knew it was going to be extended lockdown. There were a lot of people who were like, fell for the, you know, two weeks to flatten the curve line. I knew it wasn't going to be two weeks. I knew it was going to be months or years. So I quickly was looking for how can I help people? How can I, how can I survive this? How can my businesses survive this? And how can I help others survive this?

And it was less than 30 days later, I think it was only three weeks later that I got an email from Roland. And I was actually signed up to be in his at Trafficking Inversion to go to the VIP dinner with Arnold Schwarzenegger and Marcus Lamonis. And I think there were only 15 or 20 of us that were signed up for that. so I was kind of...

Jon Stoddard (09:16.031)
upset that that had all gotten canceled because I had a specific reason to want to meet want to meet Marcus Lamonis and on a project I was doing. So I was on one of Roland's very first emails and he said, Hey, you know, I've got this course. Would you be interested? And I'm like, yeah. So it was the five day course, the epic challenge. Yeah. And it was brand new for him. was, mean, had, he had done one live version before, but he hadn't, he hadn't done it virtually. So I was on, on that. I was

three days into that five day challenge and I knew this was it. I knew this was the way I could help people. So you were epic number one course one. Yeah. I mean, I didn't hesitate at all. just second I got the email from him. I was like, know where this is going. I could just see it. So I signed up for five days. Yeah, go ahead. You knew Roland before you were a part of digital marketer before or yes. Yeah. So I was I had

Traffic and conversion was a very important conference for me. It was one of my most profitable conferences. I had a lot of business partners that I met out there. I went out there for networking. I went out there for education, et cetera. I had met Roland. I wouldn't say I knew him, but I had met him. And then like I said, there was a VIP dinner that was scheduled that I was signed up for with Arnold and Marcus. so, and that got canceled. And so I was already kind of working with Roland and his team and Deanna and things like that.

I think that's why I got kind of the early bird sneak preview, like, we're thinking about doing this. Would you want to kind of, we're in the beta group we're called, because we, you know, all the kinks weren't worked out yet. So five days into the Epic Challenge, or three days into the five day challenge, I already knew this was, you know, absolutely a game changer for me. And I went ahead and did the eight week full, you know, full course. And,

anytime I've ever done a course, like I said, I don't do very many, but anytime I've ever done it, I always tell myself, I want to see an ROI from that in the timeframe that the program is. So, you know, I put a couple thousand dollars into it and I said, okay, and it's an eight week course. is so in eight weeks, I have to make back my $3,000. And I always do that when anything I do, I always put an ROI to. By the way, it's not 3000.

Jon Stoddard (11:31.309)
I don't know how much it is now. I'm sure it was is a lot more now. Yeah, we're I don't care how much it is. It's worth it. Yeah. Yeah, it was probably cheaper for us because it was beta but data. Yeah. I made my money back by the second week. Well, okay. So tell me about that. What did you acquire a company? Yeah. well, what kind of company was it?

So was my bookkeeping company. So the company that I already used to, that did all my bookkeeping for my other businesses. And we learned about a technique called the pipe wrench technique, which is basically, you know, you go to a company you're already working with and well, backing up. how do you, know, how do you find businesses to acquire? And the starting, the starting place is who do you already do business with? Who do you write checks to and who writes checks to you?

your whole supply chain is an opportunity for investment. So the Piper Edge technique is basically going to a business that you already do business with and saying, hey, you know, I have a new motto and that is I only do business with companies that I own part of. And so you already have several of my accounts. I'm gonna be acquiring a bunch more companies. I will bring all those companies to you as new business. Your business is gonna grow, but I want to own a part of your company.

And it was one phone call and two emails and that deal was done. my god, that's great. As I well, what are we talking about a bookkeeping service? Was it a CPA? Or it's a BPO? Yeah, but yeah. So they do all the quick books they do, you know, taxes, not gonna, they're not a CPA, they're a bookkeeping firm. So it's funny, I literally an hour before an hour before this call, I just got my, my February profit share from them. So

Yeah, so how did that work out? Now? How are you doing? Like the profit first, like Michael does? absolutely. Yeah, absolutely. So on every deal I do is different. That particular one was was structured. So I get paid, I get paid monthly, I get paid annually, and I get paid, I only get paid if the company is ever liquidated, which I don't anticipate this one, you know, really exiting anytime soon. This is a

Jon Stoddard (13:44.237)
know, it's a small business, there's four employees, it's, you know, it's one of those. be about CPAs. I have a buddy in the &A world for CPAs and six, four employees, about $600 into a million. yeah, so they're, you know, they're, a nice business, but you know, that was some of them that I do these kind of deals with, it's like, okay, you have a specific goal of exiting in two years or three years or five years, or this one's like, they have no goal of they have no intention of ever exiting. I don't care how long they live and like, or dislike doing taxes.

Yes, exactly. So yeah, so my very first deal was within within the second week. And by the time the eight weeks had had had completed, I had completed another deal. Okay, that one was, I'm gonna think about it. It's been a year. I've done a dozen deals in a year. So I got to think about which one that you've done a dozen deals. I've done a dozen deals in the last. that was my beekeeping, my beekeeping one, which I've told that story actually a couple times on some other interviews, but

Yeah, that was the CBD honey deal. yeah, yeah, I think I read, saw that on your interview with somebody else. I did tell that story. don't wanna, it's a great story though, because it so perfectly frames how this all kind of can work. But yeah, that was my second deal. So that happened on like the fourth week probably. And again, that was a very fast, that was another like two phone calls and an email kind of a deal. And so I thought, you know, it made it look easy, right?

So obviously I have other deals. I just closed one yesterday that we started, I started last July. Not all of them are that quick. They, know, obviously some of them take six, eight, nine months. And then we've got others that are, I'm nurturing and- So what's this big, the one you just closed?

So the big one is not closed. We've hit a bit of a hiccup and I'm actually not gonna get into too many details about it because of where it is. in a really weird place. Basically it was $175 million asking price for a particular company. We raised the 175 million in about six weeks. We raised the 150 million in first three weeks and it took us about three more weeks to raise the last 25 million. We had the full asking price for the seller.

Jon Stoddard (16:01.869)
we had a B for certain reasons. had a non exclusive LOI, because there were a couple of exceptions that were, that were in play. And while we were trying to get everything finalized and we were that close, somebody came in and offered $65 million more dollars more than we did. Took us out of the deal. No, it's not cash. so,

We firmly believe that deal is going to unravel and we're gonna get back in it. And that's why I'm not gonna get too far back in. Yeah, so you and I talked about this and I'd be very discreet about this too is oddly enough, I know one of the guys that owns it, the son of the guy that he went to NAU, I went to U of A, we're in the same returning, we knew each other from that. Yeah. That's very odd.

very small circles. Yeah, it's a crazy situation. are they have three more weeks to close that deal. And then then and then we're back in. I'm they're probably out trying to raise the funds. They're out trying to raise the funds. Right? Yeah. Yeah. And they're not doing it are so are you coming back with more funds to help them? Are you staying with the same offer? We're gonna lower our offer if he comes back. Okay. All right. Interesting.

So and the guy, have you still had conversations with them? Is that? We're in communication. So awesome. Awesome. So what's that? It's a great game of chess, man. Yeah, it's interesting, man. It's emotional, right? God. I, yeah, when I, that got taken out from underneath me, I, I literally was like sitting at my desk for about 20 or 30 minutes, just speechless.

Yeah. And then I shook it off and I was like, okay, there's gotta be this can't be what just happened. And so I started doing some digging and some researching and made some calls and had some conversations with some, some smart people like you who, who gave me some things to think about. And then that's when we realized we're not this deal isn't this deal isn't dead yet. There's, there's some extenuating circumstances. but yeah, that I called you within hours of that happening. think it was that afternoon. Yeah.

Jon Stoddard (18:16.397)
Yeah, and it's just like you recall, I want to bring this up. I was reading something in Ink Magazine from back in 19 or 2012. It was Tony Robbins business. And he's talking about Peter Gruber. You know Peter Gruber from Hollywood. He was at Sony and he did his stuff. He said, I've had many cataclysmic and painful failures in my life, Gruber says, emphasizing Tony Robbins.

but he helped me overcome and move through them faster and more efficiently. Like the fact that the uncertainty doesn't threaten me anymore. It doesn't threaten me. How did you get through that and say, you know, it's not dead or I'm just gonna let it go or there's just too many opportunities out there? Like I said, I literally sat there for about 20 to 30 minutes, just completely speechless. And then I got back to work and just said, you know what?

either this deal is still gonna come around and I'll make it happen, which is great, or I will learn a lot of things from the deal. So one of the things I learned is that, you if I need to scrape up $175 million in six weeks, I can do it. You've got, since then you've made those contacts to do that? absolutely. Yeah, absolutely. I've got the intent letters and everything. So.

So now I've learned where to go and how to put that kind of money together for the right deal, which is great, because that's bigger than any kind of deal I've ever done by myself. I've done bigger deals as part of a team, but by myself, I've never raised that kind of money. And to do that in 2020 was, to me, impressive. Now I know that that actually isn't that impressive because there's a ton of dry powder out there with regard to investments.

you know, it's actually a great time to be looking for cash to buy companies or investing companies. But so I chalked it up to, look, if the deal never happens, I learned some things that I would do different with the deal process to, you know, more guarantee surety of close. I've made some amazing connections. I've got tens of millions of dollars of investment capital in my back pocket for the next couple of deals that I'm working on, which I'm working on other deals.

Jon Stoddard (20:36.097)
And it's been a fun ride. Now, do I still want to close that deal? Yeah, I'd love to have that EBITDA in my pocket because it's, you know, the business is minting money. But if it never comes back, then it wasn't meant to be. And I've learned some great lessons from it, made some great contacts from it, and I'll go do another deal. Yeah, good. Good for you. I do want to ask you about that process because, you know, we go through Epic, we learn how to purchase companies with no money out of pocket or other people's money.

but there's a big gap between some of these companies as you grow larger, they're going to say, I want some down payments, some deferred down payments so you have to find that. Now, what did you do about going and finding that dry capital and say, you're talking to an investment bank or, hey, Marty, you're purchasing this company. Let me know when you come to the next deal. Here's a letter of intent for $25, $50 million. What was that process?

We started with looking for actual equity investors. we, when I say we, say I've got a particular partner who he and I have worked together for several years. We've grown a couple of companies to 30, $40 million together. And so we worked on this project together. And so the first thing we do is reach out to people that were high net worth individuals in some family offices that we knew would have equity. So we raised the first $30 million that way.

And that was fairly quick. We kind of knew who to call and we've been working this network for years. so, and then from there, was a matter of the rest of it was gonna be debt. And so it was a matter of talking to the right banks with the right mindset. And we very quickly got 55 million committed right away. then we had, actually one of our earlier phone calls was a bank that

was they were sitting on so much capital that hadn't been deployed. They were begging us to be in their ceiling was at 30 million though. So they, they committed 30 million in one phone call and literally begged us please take my money because we, know, this is a deal we can make work and we got to get money out there and please, please put us in the deal. So okay, you know, twist our arms. So we, you know, we pretty quickly had, you know, over 100 million that we just kind of kept stacking it up from there. So

Jon Stoddard (23:01.783)
Well, that's not I mean, that's a lot of dry powder. Are you upping your level about who you're going for? This is because this is funny. I read a lot of books on Berkshire Hathaway and Warren Bobbitt. You know, and he starts at Seize Candies at $26 million. And now it's like, to move the needle, I mean, need to make a $40 billion acquisition. Yeah, crazy. Yeah.

So I have different levels that I'm working at. So I have my own personal acquisitions that I'm doing and those are on the smaller scale. I have two different partnerships. One is in the healthcare space and we've got $30 million committed there. So we're looking for, and we're specifically looking for businesses in the, basically the two to three, maybe two to $4 million range in that, because that's the sweet spot where they wanna find them. We're doing a rollup on that.

And then with other partners I've got, we are open to anything up to hundreds of millions if it's the right deal. So. Yeah. And of course you leave that management in place. All of it, is it all of these companies you look at and say, hey, we leave management in place, keep doing what you're doing? No. So I had three different kind of deals that I've kind of done in the last year or tried to do in the last year. So the first, one of my first.

Closings was a company that wanted, the owner wanted to retire and leave the business. But I had an operator in mind who I've known for many years and I trusted who, you know, when I saw the business for sale, I said, you know, I brought it to my friend. said, you'd be perfect for running this company. He's like, yes, I would. So that worked out great because I, you know, we were able to do the acquisition, put somebody else in a great job, let the person who owned it retire.

everybody wins. I'm not always mandatory that the existing operator has to stay or the existing management has to stay. On most deals, I'm doing less than full acquisitions. I'm doing anywhere from 20 to 49 % acquisitions. And those ones, obviously, I'm keeping the management in place. We are looking to them to continue to run the business, run it efficiently.

Jon Stoddard (25:21.281)
we're bringing to the table a lot of resources, whether it be partnerships, business development, doing business with all the other businesses in our portfolio and our partnership portfolios, business development. I consider myself the number one salesman for most of my portfolio. I'm almost out there selling. How many is in your portfolio now? Right now, well, as of yesterday, 13. That's amazing.

Yeah. So since last year when you started Epic, you've made 13 acquisitions. No, I've made 12 acquisitions since I started Epic, I had three already before I started Epic and then I've spun off two of those and I kept one. So total is 13. So. Yeah, that's amazing. I mean, can we say you're a star student of Epic?

I know I am far from there's plenty of people doing plenty more deals and plenty of deals. I'm just enjoying life, man. Yeah, that's cool. I love to hear that. Go back to is there any deals that you did for you know, you're just like, I would love to own that company, you know, so when some people get very, very rich, he goes, I've got to own that sports club.

Yeah. Well, this big deal I'm working on. I was kind of, was working on, you know, how the types of deals as far as like management and stuff. there's, there's been mostly deals where I keep management in place. There's been two deals where I've management has left and I've replaced them with operators. And the big deal that I've been working on, I actually was going to take that over. That was, I actually want to run that company because I have, I clearly can see how that company can triple in revenue.

and I know how to get it there. I've got the vision and everything. So I was actually going to run that business for about three years. And because I think I can I can get that to be a billion dollar business without too much effort. So now obviously, I'm not going to go run a million dollar business, but I will run a $200 million business if that's for me. So those are the three, you know, kind of three models, whether it's the owner operator stays.

Jon Stoddard (27:33.835)
the owner operator leaves and I replace them with somebody I trust or whether I become the owner operator, which is gonna be a very specific deal. And if another one comes along that's almost that perfect, I'll do that one. But yeah, I'm not looking to run most of any company. And so my involvement generally tends to be as a strategic advisor and as the chief salesman. I'm always looking to grow any businesses I work with. And...

But from a strategic advisor standpoint is I'm the coach. I'm the one that's a lot of times the business owners that are currently there, even though they maintain ownership, there's a reason they sold part of their company to me, right? They're in trouble or they plateaued or they're doing good, but they wanna grow faster, whatever it is, there's some reason why they were open to an investment. So what I always do is look for opportunities where the company has

some very specific issues that I know I can solve and help that company to unclog and grow faster in scale. Yeah, so all of them or most of them are non-controlling interests. Do you have a put call agreement in place and the profit first kind of deal? Yeah, so some of them have, I usually put an option.

in there. So a buyout option down the road, which is usually tantalizingly high for the seller. And I use that as leverage on the front end. So I kind of use it as a bargaining chip to get a better deal on the front end. But yeah, most of them, and there's several that are specifically going to be growth

growth opportunities for the next three years and then they specifically want to exit and they're really designed around doing that. And so, you know, I'm gonna increase the value and my profit's gonna come from my ownership shares of that company. So. Yeah. You have any plans to take any of these companies public? So, yeah, there's a couple of them I think are right for a Reg A plus or other things.

Jon Stoddard (29:51.725)
the healthcare business that we're working on that we've got the funding for is specifically, you know, is going to be, and that's that 30 million is just the initial seed. I mean, we, we, we definitely have a goal of taking that into a, a billion dollar valuation and, know, through, through a couple of different strategies. kind of healthcare companies are we going to focus on home healthcare companies? Uh-huh. So companies that are going around, there's, there's about 15, somewhere between 12 and 15,000 home healthcare businesses in United States.

And most of them were started by some sort of medical professional, usually a nurse who, know, sick and tired and fed up with the medical system and in a hospital system. And they, want to make a difference and be more personal and hands hands on. And so they start this home healthcare business so they can go into people's homes and take care of them. All great, right. But the reality is that's a brutally tough business. And a lot of them have, you know, they're great nurses, but they aren't great business people.

And so I can't tell you how many deals I've had conversations, pitches that I've had conversations where the owner of the business, I mean, they've got 25, 30 employees and they're literally driving down the road in between patients with their entire business on the passenger seat of their car and in file folders and milk crates, trying to do paperwork in between calls and then take calls from us and beg us, please help me figure out how to do this right. so.

So we've started with, you so there's a lot of burnout in that space right now, the COVID thing has really been brutal on them. So that space is very interesting to us because there's a lot of businesses, business owners who are thinking about selling. It's a business that's critical today and will become more more critical as the peak of the baby boomer generation.

hits their critical mass with healthcare problems in 2030. So there's nine more years before the healthcare system just completely is overwhelmed. And so we're positioning that business to be on the forefront. What we wanna do is build the Nordstrom of home healthcare basically. And so- Well, anytime you have a fragment in industry, what's his name? Wayne Huizinga from Blockbuster saw that fragmentations. With other- Fragmentations opportunity. Yeah. And there in-

Jon Stoddard (32:09.407)
know, if you are interested in home health care for yourself or for your parents or whatever, and I say, what's the brand? Yeah, there isn't there is done. There's there's brands in in managed care with facilities. So a place for mom, right? So but that means you got to holler to a place. But there is no national brand for home health care. And so my partner and I are sending out to change that. that's awesome. Yeah, I like that.

I want to go back to your developing these relationships with the family offices. Now, very specifically, how did that look like? You created a pitch deck or an offer deck, or did you just, this is just kind of phone call and it's in the back pocket and say, hey, next deal I want to do. What does that look like? It's been a little bit of, so on the front end of this, it's been a couple of personal relationships. So I know

I know some people who have some fairly good sized family offices. So it's been in the early days of kind of doing this in 2020, making fun of them say, hey, I'm looking at doing this. I'm looking to do an acquisitions. If I need capital, what are you interested in doing? And then they've kind of told me. it's been in the early days of this last spring, or mid spring summer of 2020, it was a whole lot of, hey, we aren't putting any money into anything. We don't know what's going on.

very quickly by the fall it was they were calling me back going okay we've got to deploy funds and we you know we're interested in what are you doing and so the conversations definitely did not go great at the beginning because I was too early I was too you know everybody was just hunkered down and nobody was deploying capital anywhere but I stayed on them and so picked up a few picked up a few of those I guess some of them are some

people that I've worked with before. Ironically, one of them is one of my earliest acquisitions who went on to, I think that acquisition was $2 million, this is 20 years ago, like $2 million. And then he went on and built another business and it was acquired for 700 million. And so this guy knows how to build businesses and sell them.

Jon Stoddard (34:24.429)
I bought his $2 million business, but I didn't buy his $700 million business. He said, I got to get out of here because I see bigger potential in some other stuff. Exactly. Exactly. You can have my little $2 million business. But so I have some connections with people who have connections and I've just been working them. So when that great big deal came along, obviously got much more aggressive. And it was interesting because

there was no pitch deck involved. There was no nothing. was literally call those people and then nobody, nobody, no one family office or no one bank is going to put in all that money. They all want to do, you know, some sort of syndication, right? Yeah. And some of them are waiting for the first guy to, okay, I'll do it. Yeah. So we had our first, we had our first group. And so from there it was like, Hey, so and so is in and so and so is in. Are you good for, you know, 2 million or 5 million or whatever? Yeah, absolutely. And so

but it was interesting because people who normally wouldn't have probably taken our calls, base, was, it was a very, you know, back of the napkin kind of thing. Like here's the business, here's the money, here's the EBITDA and you know, this thing is just thrown off cash like nobody's business. And, okay. I mean, it was, it was crazy how, how quick that went. So yeah. Yeah. Where did you, how did you source that deal? Where did that come from?

another Epic member. awesome. So collaboration, Yeah. Networking and working with, you know, other investors and other people who are in the &A space, everybody's got something specific they're looking for. And everybody has something specific they are not interested in. And there are plenty of deals out there to go around. And so I've got myself plugged in pretty well to several

people who are bringing me deals on a pretty regular basis. I brought you two or three. So that was, you know, so that one came to me from somebody who, you know, was fairly fresh into the game. And, and so, you know, they, picked up on it they were out, they, they found it cold calling. that's awesome. Yeah. What is their split in the deal? Did they? I don't

Jon Stoddard (36:47.245)
If it goes through, right? If it goes through, yeah. So it was depending on how the deal closed. Now we were closing this one as independent sponsors. And so our independent sponsor success fee was going to be, you know, 2%. And so he would have gotten half of that, basically. So 1 % of the 175 million. So yeah, so yeah, I think everybody would take that. Yeah. Not bad for a cold call. Yeah, yeah.

I mean, 1 % doesn't sound like much when you're talking numbers like that. $175 million. It's a lot. It's a lot of money. networking has been my number one source of deal flow without question. Number two, though, has been podcasts just like this. yeah, yeah, yeah. I've had a lot of people who've reached out to me and asked me to...

to do interviews and every single interview I do, I just watch the web traffic spike up and then the phone calls start coming in. the last interview I just released about two weeks ago, within two hours of the interview dropping, I had three really interesting deals contacting me. So that's been kind of cool. Yeah. Have you watched the Jason Calconis and Chamath and...

Freberg and Sachs, Silicon Valley investors. it's awesome. mean, Chamath is just wicked smart. mean, he's wicked smart. I mean, the analysis he puts over situations just amazing. That is a great podcast if you're watching. I'll check it out. Thanks. Yeah. Yeah. So that's actually been my two primary sources of deals has been networking and word of mouth and doing interviews with really smart, cool people like you.

that's been, you know, the collaboration, have to share this story. We just partnered up with Adam Lyons. He's one of the other instructors, you know, I'm right. Yep. So we're partnering up with another business. But I was listening to one of the conference calls. And he said, we were I was helping another epic member try to do a $6 million deal. And we got stuck on something snagged, right. And the guy wanted to see proof of funds for some amount. I don't remember what it was. So Adam reached out to another guy.

Jon Stoddard (39:09.837)
who had lots of cash, took a screenshot of his bank account, sent it to him, and Adam gave him 6 % of the deal, and they closed with the LOI. I mean, it's pretty cool. Just for that, goes, for 6 % of a $6 million dollar company, you just want a screenshot? Yeah. OK. Yep. Yeah. That's awesome. Wow. Yeah.

So what's next for you? I mean, you'd like to get this company, but do you have any big deals coming in? You're going, this is really exciting. got the seal team, deal team in place. I got Grant. I got all my accountants. I got my own bookkeeping. I got funds ready to go. You're now on the precipice of something big, huh? Yeah.

I don't know what's next, because I haven't seen the next really big deal. I've got several kind of small to medium deals happening. I've got one, I've got a $22 million seller who literally won't leave me alone. She's begging me to buy her business. I'm just like, don't know. This would be one where the owner, well, she will exit. She needs to exit the business. She's burnt.

She's been in the hospital twice with stress-related illnesses. I've already met four or five of those types like health. I gotta get out. I yeah. so, is, you so it's like, okay, now, you know, if the terms are right, we'll do it, but it's right in my sweet spot. It's a business category. I've already done, I don't know, 80 to a hundred million dollars in sales in personally. So that one might be interesting. We just got to work out the right price and the right terms, but that just came about recently. And I've had...

I've had three people today call me and say, she keeps calling me. She wants you to call her and like close this deal. And I will see, wait till the price gets a little more realistic. So. so what's the multiple evaluations too high? So the issue there is that her books aren't very clean. Okay. So we don't really know the truth story. Yeah. Yeah. I'm willing to, I'm willing to take a gamble on

Jon Stoddard (41:26.765)
fuzzy books, but I'm only going to do that if the worst possible scenario is what we base the numbers on. So and she's kind of wanting to base the numbers on the best possible scenario. And I'm basically saying, let's just clean up, clean up the books. So, so we'll see, know, that's one of those that's not gonna happen overnight. Can you ask for the bank statements and just say, hey, let's we're gonna go off the bank statements, not, but that would cost you a lot of money. Then you're doing due diligence before you got a deal, you know? Yeah.

So we'll get there. I'm confident in that one. We'll get there. good. So what do you, let's do this. mean, I've probably taken up your hour and I love this. I could probably talk for another hour. Yeah. You had 10 questions and I think we're only on two, like we're only at two three. Yeah, two. So you wanted to try and do this in 15 minutes. Yeah. It's like, I was crazy. Okay. I overestimated that. All right. All right. Sorry. And I think a patch, Patch Baker said that too. And he goes, I'm not going to do 15 minutes.

conversation with you. go, yeah, it turned out really stupid to say, I want, you know, I'm gonna crossfire you with these questions you're gonna answer real fast. That didn't work out. It could have been fun. I mean, we could still try the format sometime. I was kind of practicing. think I could have nailed it. I don't know how much content or value the content would have to the listener, but it could still be done. I think it'd still be interesting to try that. I think it's so much more valuable. the way, stars, know, &A rock stars, mean, Patch is crushing it. Holy mo-

Yeah, yeah. Somebody told me I'm I join his 3pm Thursday marketing. He's done four zero. Wow. Or the acquisitions I heard. Yeah, that I believe it. It's they're just it's if they steamroll though, like once you start doing a couple then all of a they just I mean, I got I used to have to go out and find deals and now they're coming to me faster than I can even keep track of them. And so I can believe that he's he's really doing awesome.

Yeah. And let me ask you back to like personally, what has it done for your confidence or just who you are as a, like you walk in the door and doesn't matter. mean, the prettiest girl on the planet would look at you and that guy's powerful. know? I still drive a Toyota. Actually I drive two Toyotas. I have a truck and a car.

Jon Stoddard (43:50.881)
You know, what it's done for me, it's done two things.

It has made me feel good about myself knowing I'm helping others. I mean, I have saved some businesses. I have literally saved some businesses and literally saved some jobs. Not as many as I had hoped. I had these really grand visions of like doing a lot more saving. And a lot of my deals, I'm saving some jobs, but other ones, you know, they're just, they're making more efficient. I'm almost really.

I'm almost losing jobs because I'm making the business more efficient. We don't even need as many people. So I'm a little frustrated about that, but I am helping people and I know that. And that's the most important thing to me because that's really why I did this. Second is I am having a ball. I am having so much fun right now. I'm, you know, my mom called me this morning and she said, do you realize that you haven't talked to me in two weeks? And I'm like, really?

Didn't I just talk to you like two days ago? And she's like, no, it was this day and this is what happened. And you were going to dinner and I was like, wow. I'm going a million miles an hour and I'll have to slow down. But I play hard too. I take a lot of vacations and I get off the grid and fairly frequently to the point my partner's getting annoyed with me. But I'm having so much fun that

a 14 hour day of zoom calls. I'm exhausted, but I go to sleep with a smile on my face and wake up and go, Hey, let's do it again. do it again. It's second. It wasn't 6am yet. Let's go. And so that's the coolest thing I think is that is that this stuff can be so fun. And every deal is so unique. There are no two deals like that. You've got to be creative. You've got to think outside the box and

Jon Stoddard (45:54.303)
look at it from every angle and understand the needs of the cell. I this is the stuff I learned back as a salesman. I think that's, let me, let me interrupt you very good because I think that's why you're so excited because it's new every day. Yeah. I if it was the same thing every day, you just grow boring of it. You, I think it's because it's different. Yeah. Yeah. There's no question about it. I am not a person that could

be on work on an assembly line and do the same thing every day, day in and day out. God love the people that are, thank you very much. I'm a huge, huge fan of Mike Rowe and the jobs out there that I could never do, the skilled labor jobs and whatnot. But for me, I just have to be creative and I have to be innovative. And this has given me the ability to do doing mergers and acquisitions and scaling businesses has given me

so much opportunity to, yeah, just totally be creative, be an artist, but an artist with businesses. I can't draw a straight line to save my life. You know, I can't sing. I don't have any of those kinds of artistic abilities, but my artistic ability is in business and growing them and scaling them and making them more profitable. And that's my canvas and I love it every single day. that's beautiful. And I'm going to end on that because that's a beautiful note right there. So I want to appreciate your time, Marty. Let's, I hope we can do this again.

Yeah, awesome. Thanks, john. Well, for your first one, I hope that you know, I hope that I set the bar at least reasonably high so that when when when people like patch or whatever show up, they know they don't don't look back and go, man, that first one with Martin. was boring. There's a hundred views and patch gets found 4000 because like, No, no, no, no, this is this is gonna be great. I really appreciate it. So I'm gonna stop record.

Chapters

Chapters

00:00 Introduction to M&A Entrepreneurship
02:49 Creating Value in Business
06:00 The Impact of the Epic Course
08:47 Navigating Business Challenges During COVID-19
11:54 Acquisition Strategies and Techniques
15:10 Recent Deals and Lessons Learned
17:46 Raising Capital and Investment Strategies
21:05 Future Plans and Business Growth
23:55 Exploring Acquisition Strategies
28:01 The Role of Strategic Advisors
30:20 Opportunities in Home Healthcare
33:07 Building Relationships with Family Offices
37:43 Networking and Deal Flow
40:03 Future Prospects and Challenges
43:50 Personal Growth and Business Passion