Raised $200 Million - How to Raise Capital for Acquisitions with Natu Myers

Summary

In this conversation, Jon Stoddard interviews Natu Myers about the intricacies of raising capital for business acquisitions. Natu shares insights on how to attract accredited investors, navigate SEC regulations, and effectively prepare documentation for potential investors. The discussion covers various strategies for marketing to investors, the importance of due diligence, and the challenges of managing investor expectations. Natu emphasizes the need for a solid business plan and the significance of compliance in the fundraising process, providing valuable advice for aspiring entrepreneurs looking to acquire businesses without substantial upfront capital.

Takeaways

Raising capital without money down is possible through equity.
Understanding SEC regulations is crucial for compliance.
Private placements can be an effective way to raise funds.
Accredited investors are key to successful fundraising efforts.
A solid business plan is essential for attracting investors.
Marketing to investors should be done compliantly.
Due diligence is critical in evaluating investment opportunities.
The drop-off rate in investor interest can be significant.
Building a network of investors takes time and effort.
Debt lenders require strict adherence to credit criteria.

 Watch the Interview:

Transcript:

Jon Stoddard (00:00.098)
Welcome to the top &A entrepreneurs today. My guest is Natu Myers, Natu is from Raises. Natu has raised over $200 million. And if you're trying to buy a business and you don't have any money down, he's gonna show us how to raise that down payment with equity from investors. Absolutely. Listen, it's really nice to be here and thank you for inviting me. All right. So.

Natu, how do we do this? I've got a lot of people coming to me and they just say, well, I'm looking at a $1.5 million business and I'm going to raise capital, leverage it through the SBA or traditional loan, but they still ask him for $200,000, $300,000 down, which I don't have. How do I do that? I know if I borrow it, that's got to be paid back from some other cashflow source.

So the other only way I could do it is raise equity from investors. And that's why I want to ask you, how do we do that? Exactly. Like what is that? How does that work? Like it's a serious game because you have these rules that tell you how to deal with raising money from raising equity from investors. So equity, know, ownership and it's a security, you you're secured by the actual assets that you're purchasing a part of.

and you're getting part of the, either the shares or the units or whatever into that deal. So how do you actually do it? So, in the United States, during the Great Depression, just from backstory real quick, is basically, you had people that were scamming investors and scamming everyday people. And so there was a new government agency, the Securities and Exchange Commission, which emerged to just help the common folks just not get deceived by a lot of scams in the business.

So, how do we deal with this and how do we actually work with them? So basically there are public equities and then there are private equities. Public equities, this is like Apple stock, your grandmother and grandparent, like anyone can buy Apple stock. But then you have private equity. So private equity or equity that is not listed on a public exchange. So that's called something that is exempt. It doesn't have to exempt just means not having to do something.

Jon Stoddard (02:23.04)
exempt from doing all that work and listing. And so how do you sell your equity and get around having to listen to public exchange and pay hundreds of thousands of dollars to do that? Well, you have to do a private placement. So you have to sell the equity to folks who are able to actually accept that equity. And the rules of the SEC say that you can only accept that equity from credit investors. And there's a big list of exemptions. But one of the exemptions, which prevents you from having to register and sell your deal publicly and go public,

is really using an exemption. And the most common exemption, one of them is the credit investor exemptions and using the different rules like regulation D rules, regulation A rules and all these different rules and all this. So what's a credit investor? How do you qualify and who should it be talking to and say, are you a credit investor or not a credit investor? Yeah, so in the credit investor is somebody, it depends on the rules in the country, but basically somebody that has over $200,000 like willing to invest.

or it may be around $1 million in assets. And in terms of the details, I don't want to misquote because I think the rules may change on the location, but basically somebody that has enough money that they're able to lose that money without them having to actually need that money so that they have reduced the risk. Basically rich people, long story short, who if they lose money on your deal, they don't lose their shirt. So long story short,

If you didn't get anything from what said, you just have to sell that equity. so the way to sell it, the easiest way to sell it in the United States of America is just to, there are two ways that we see people do it. Some people ignore everything that we say and recommend. And then they just like have like an LLC set up and then they just find like a business partner and just like join them as a business partner and bring a certain amount of money. Yeah, you can do that, but you run the risk.

of the person when they personally, if something goes wrong, they come back and sue you, then they can complain to the SEC because the SEC is they're very like, they don't really complain. They don't really like, they're not really that proactive. They're usually really reactive and they go against a whistle blowing. So if you just like, you you can do that. You can say, Hey, I have this down payments on this deal. I want to acquire it. And I want somebody to join me as a business partner with the other 300,000. They just take like other shares in the LLC.

Jon Stoddard (04:41.902)
and I pay them back based on the cashflow of the business and then I just have a business contract. That's what some people do and it increases the intimacy of the deal. And then they go out and then they start telling people on random Facebook groups, hey, you know, coming my deal and this happens all the time. And can do that. Facebook and LinkedIn. Yeah. Yeah. I mean, Hey, go have fun. It's your, it's your business, but then we don't recommend it. What we recommend is for people to, if they want to do it, if for some reason you can't get seller carry,

You can't get a good enough loan. Then you do a private placements, get a 506 regulation D, 506 C document put together to upset investors, and then make sure that in whatever States that this is happening in, that you call your local States securities regulator to make sure that you don't have to notify your state as well. Because for example, in Florida, the last time I checked, disclaimer, not legal advice. In Florida, the last time I checked, you can just, you don't even have to notify them.

So just make sure if you state that you do or you don't have to notify them or you pay a hundred bucks or whatever, you have to pay for the registrations to do that. And then you sell units, you sell either units or shares as a private placement. And then you notify the SEC after the investors invest, last time I checked for the 506C regulation deed. And then like, I think it's like 30 something days, please check. This is not legal advice. And then you do that. And then you're able to legally accept investors and you're able to actually advertise.

So then all the rich people, so when that happens and then you the SEC, then what happens is that you can actually have a high level of status and then you're not like some random person on Facebook. Then you're dealing with people who actually take the deal seriously. So let me go back on this. So if I have a plan to start an acquisition company, but I don't have the capital to go acquire the company myself, so I need to raise the 300, $500,000. Let's say it's just $500,000 for the rest of the conversation.

I don't have anything to sell yet, but an idea, right? So I still need to do a 506 C reg D and only targeted towards accredited investors. It's still an idea because I'm just going to raise a capitalist. How do I go do that? I'm going to go to an attorney and look for a 506 C, get that written and approved and pay for that.

Jon Stoddard (07:07.533)
Right? Yeah. So I mean, really you need the subscription agreements and then the, mean, there are different ones you can do. The easiest one is like the 506C and then do it. So do a subscription agreements and do a private placement memorandum. So find a service or a person or whatever to help you get it done. You know, like there's a way to do it with law firms. There's a way to do it with consultants. But the point is you have to get it done. law firms or consultants or what have you. And then

Yeah, then network with investors and so on. Another way to do it, can do the 506B, but the problem of that is that you can't really advertise. But if you can't advertise, you maybe, don't have to do a private placement memorandum, which can save you some costs. So you want to look at your own situation. I can tell you right now, I know somebody paying like one to $2,000 a month on Facebook ads, and he's getting tons of limited partnership, people invest in his deals, about like $200,000 per month.

So the 506C can really like, you can get some capital in, you can advertise as long as you vet that the investors are legitimate. When you say advertise, I'm limited to what I can say on that advertisement on Facebook and search funder and LinkedIn, right? Thank you, you are. Because you're not allowed to say the terms of the deal to people who aren't accredited. So you can let the public know that you're working on something like this and again, not legal advice on the show. But you just not, you can't say the terms of the offering.

So don't say you're offering this percentage and this and all that. Don't talk about the terms of the offering. Just say for those who would like to learn more for accredited investors, you have to make sure that they self-identify as an investor or you work with a third party tool. Some people can actually check the people's bank accounts to make sure that they're actually accredited, their services that exist there for that. You usually don't need to go that far, but just make sure that the person self-identifies as accredited investors. So if you get audited one day, then...

you have reasonable amounts of evidence to prove that you did your best. So what is the threshold for that? Do I need to verify that they're an investor? I'm familiar with those websites called verifyinvestor.com. Or if they go through my private placement memorandum and they check mark the box and say, I'm an accredited investor, is that good enough? So it depends on what's being said in the private placement.

Jon Stoddard (09:31.981)
depending on the rules, have to sometimes, you have to do a questionnaire, depending on the, whether it's 506C or 506B. So then based on whether you have to go take them through the KYC, the questionnaire for them to make sure that they're actually credit. It's like, okay, how much like, do you and your spouse earn the X amounts of money? Do you and your this, all those questions. So then as they answer those questions when he signed and that's good. But then more importantly than that, there's actually like a phase,

there's actually like, you you actually say in terms of the deals at a high level, you kind of in say that publicly, eh? Even with the private succeed, you just have to, you have to make sure that even if you select, for example, you have 10 different deals and you want to show that to people, you have to make sure at least they have like a check box at least. You don't have to go into all the details, just that they have at least a little check box. Then you have the terms, but then when they actually sign the subscription agreement and they're ready to invest, you know, then yeah, you want to make sure that you follow the proper, whether you have to KYC them.

KYC means know your customer or know your clients, whatever one makes sense, or you don't have to KYC them. And again, check with your lawyer, but then that's pretty much what we do. Back to that advertising, you can't offer an IRR for an equity investment, right? I I see this in CrowdStreet, which is debt lending for apartments, real estate, and they'll say projected IRR 6 to 8%, something like that, but you can't do that.

with equity, right? No, yeah, yeah, you can't like it's just like, I mean, you're breaching securities law and then it and really at the end of the day, by can and can't really the problem of securities law is like a lot of it is they call it it's principles based they call it so it's not really black and white. It's really great. So a lot of it is this risk mitigation, right? Because we know a lot of people when even in real estate world or an &A or whatever a lot of people you know, it's

Wild Wild West sometimes on LinkedIn and on Facebook groups. But people are able to do that, but then the risk is higher. So the quick answer is, people can go out and do the things they have to see that says don't do, but then you run the risk of getting fired if the wrong person reports to you or if you deal with a litigious person or you make somebody angry, which is normal in this type of work. absolutely. There's always going to be a disgruntled investor because it didn't turn out right for them. Right? Yeah.

Jon Stoddard (11:54.187)
Yeah, an investor is just like a customer, is just that they have bigger checks and they'll do more damage if they're angry, that's all. So I've got this idea to acquire a company. I want to raise $500,000. So the first step is I go write this, I get this private placement memorandum written. I'm ready to go. I'm legally ready to go. So now I want to go find investors. And I start with my inner circle first, which is friends, family, and fools. And I'm tapped out of that.

then I could start going outside it because it's a 506 C reg D, which is crowdfunding for credit investors. I could go to Facebook and social media channels, right? Yes. Yeah. In a certain way. Yeah. Because I mean, the whole thing is just sales and marketing at the end of the day, right? Yeah. Depending on what exemption you're using and what regulation you may, even the friends and families and quote unquote fools, people want to make sure that they fit in their rights.

because for the 506C last time I checked, they all have to be accredited. you know, so it depends on like, you know, what are the details? But basically, yeah, you know, you, you, it's a simple fun. Like, I mean, my, one of my associates in Palm Springs, yeah, he's running the Facebook ads, he's keeping everything vague and high level. And then he's saying, if you're this, yeah. And then he just really hooks story offer. It's like you hook something interesting that strikes a nerve story quickly. And then they offer or call the action, call to action.

simple copywriting and then they click in and then they certify that they're accredited. It's kind of like when you see an ad is certified at, I'm interested. Here's my email and name. And then, you then you try to book calls with them and then get them nurtured, bring to them the information. And how do I do that? If I run some ads and people actually call said, hey, I want to get involved in this investment. I'm going to take the call directly and answer the questions or I send the private placement memorandum.

They review it. I call them back and ask them if they're invested or are there other kinds of platforms that will, you know, like take the money, put it in escrow until I'm ready to acquire the company because I got to, if I don't acquire the company, I got to return it. Right. Yeah. Yeah. Well, I mean, and there are different ways and different ways of doing it because the way that you're doing it, it does assume that the company hasn't been acquired yet.

Jon Stoddard (14:19.021)
which it can be a harder sell. I was just talking to a fellow who just joined raises upcoming and I was just, he was confused whether fund or, or one, one that deal at a time or whether I should get the deal first or whatever, but it depends. And sometimes if you have like a really good LOI and you have a seller that will just sit down and wait, then who knows? Maybe you can actually get that investor in that sit down and wait period. Or maybe your capital raise effort is an ongoing effort, but yeah, long story short.

I think that's, as you said, yeah, people should get like an ongoing, have an ongoing capital raising process, you know, and then they should just get the people in. And then when the deal is like under LOI, you have that three month window, LOI means letter of intent to those who are new to this. It's basically you telling the seller of the company you want to buy that, I want to buy you. Yeah, then you can, you know, shoot the people the right opportunities. And then you have that refresh database ready to go. Yeah, so I've got this,

Kind of just curious about where I'm spending money. I'm spending money on the PPM. I got that set up. And then I, I, w let's say if I go to my first circle, which is my friends, family and fools, I don't have any of them. Then I start spending money on Facebook ads or doing some postings. Maybe I got some celebrity status in my social media. in for instance, like Grant Cardone, I saw an interview with him. used Cardone capital.

He raises a lot with 506 C's and reggades and he's got 75 million followers. So he just asked for money and people send it to him. Yeah. Yeah. Where if I've started from zero or I got a digital marketing firm or I got 20,000 followers, where does it help that I get that leverage? No, I understand the question. Okay. I think like it helps to start organically because sometimes one misconception that I had, cause I mean, I mean, cause

I run raises.com, is, I mean, we're offering like a, you know, a product in the membership service sort of setup. then, you know, initially I used to think that it was all about like, all about just paying for ads and things like that. We did a lot of ads, but one thing is really people have to organically start, I think, to see if there's something that is validated organically. So sometimes what people can do, if you're able to do this in a compliance and legal way, you know, just, you know, talk to, always be talking to investors, obviously not.

Jon Stoddard (16:39.777)
breaking any laws, but just talk to investors and learn how to talk to them and then do it organically at first. And then once you have like a message that strikes a nerve, then you're able to put ads in that. So then just to reduce the risk, it's good if people just do things organically. So then specific ways include, I hate to say it, but meeting in person, like meet people in person and talk to them at all these investor events. then the main way that we get people to do it at just our company and others is

We get appointment setters to work with targeted lists of people that are actively looking. It's number one. then to book appointments with them. Yeah. Yeah. There's some people that are actively looking. They're either a small check, like small checking credit investors, or they're actually private equity firms that are actually like looking. I mean, I can recommend some right now. I mean, there's one called like Bond Capital, although they're pretty big and they do like 10, 40 million. pretty large. There are some that are actively looking and then they will actually tell you yes or no.

So find the ones that actually look at it and just put 10 minute calls with them, five minute calls, 15 minute calls. And then once you find like a pattern, then you can pump ads on that. And then another way too is just to build that list over time on social, learn copyright and build your list and your brand and so on. Build your investor website, your acquisition websites, have your acquisition criteria on your websites, build a list of companies that are looking to sell to you. And then the way I got started in investment banking was

blockchain companies looking for funding and then had a ton of people looking for funding. And then when I went to a middleman or investors, I'm like, hey, I have like thousands of companies that are looking to funding. You want to have a 10 minute chat? And then that's how it starts. And then, the demand usually can start on the sell side if you're able to get a lot of traction on the two-sided marketplace, right? And then from there, you're able to strike a nerve. And then once you strike a nerve, then put that on your ad and then generate leads and then go from there.

So what are they looking for investors? Well, two parts of this question, how big when you talking about a little check writer, big check writer, what are we looking at if I'm only raising 500,000 for a down payment and what are they looking for as far as documentation aside from the private placement? Do they want a video? Do they want a pitch deck? Do you want a business plan? What is, what does that look like? Yeah, exactly. So then there are a lot of questionnaires that we recommend people go through, but

Jon Stoddard (19:05.613)
Basically, I mean, there are three things that are really critical, right? So number one, let's just get the scams and all that stuff out of the way. So then when it comes to due diligence, all the principles involved, just to make sure that you have, do your court case lookups, do some good court case lookups on your principles to see if there are bankrupt in the past. You can go to a website called unicourt.com. And there's another website called pacer.gov, I think, or pacer.com or pacer.gov. Pacer is like a few cents per lookup.

It takes some time to get the thing to and then just look them up. Make sure that you do some quick sponsor background check to see if they're in. The one that you want to make sure that they weren't, were not in was being a defendant in a criminal court case or anything to do with securities fraud. Also look them up at just a quick Google. So that's number one. And besides that, yeah, so then the securities documents, so then the PPM and then the private placement memorandum and then the subscription agreement and on the financial side.

you know, good five years history, five year operating history, know, statement of cash flows, you know, all the financial statements as well. And then also the three to five year projection, you know, just as a base to have that. And then, you know, after that, I guess number three would be organizational basics, you know, so that concludes the marketing materials, some more marketing and organization. The marketing material, you know, the org charts, organizational charts, so who's the CEO, who's this, who's that, you know, and then to have the

One pager, the pitch deck in that. And then the last component would be any ancillary or extra information like who are the customers, where is some of the tax paperwork, tax returns and so on. Any disputes, environmental leases that the company has, any, more of operational stuff. And that can go to like a fifth area. So that's pretty much it, a lot of stuff. But the thing is that they're giving it to you. You're not the one making it.

they're giving it to you because you're the one buying their company. then whatever, because you're the investor who's you're buying their company. So you should position yourself as the investor. whatever, so ideally, whatever you're asking the seller to give you, it should be really congruent to what investors would give you. And then if you don't know, the best thing in addition to what I said, you can just ask what investors wants or lenders would want. Will I as a seeking capital raising funds, do I need to give them a kind of pitch like

Jon Stoddard (21:26.867)
know, startup founders do to VCs, like go through a pitch deck on Zoom or face to face. For the equity side, yeah, like because the lenders, I mean, everyone has their own process, quick answer, but in the debt side, which we're not talking about, they have their own process, same with the equity folks. So it depends on how big check they are. If they're like a small, small guy who's investing like 20,000 or something, you know, then it could be more of a sales process that you control, right?

And then you're really the one who is controlling the sales process. You have more like status and it's a bigger, it's an easier sell. But then if it's like a larger transaction and are doing hundreds of thousands or millions, you know, then they probably have their own processes that you have to follow. And then you may have to jump through those hoops. But in general, for everybody in general, usually the process starts as a quick qualification call to see if the person is in the scope of what you can do. And then after that quick call,

The goal is to make sure that either you give them the NDA or they see the deal. And then after they see the deal, then there's a back and forth questions and multiple calls to see if they're interested or yes or no. So that's usually how it is for anybody. Yeah. What's the kind of expectations I should set of how many people I need to talk to before I start seeing an investment? To be able to raise 500,000 people, how many people do I need to talk to? How many noses am I going to get? And just

you know, when do I, you know, minimize my frustration? Yeah. I think the drop off rate is probably like what it could be. it could be anywhere between 20 and 3 % at every phase. Right. So, I mean, you know, number two, two things, right? There's the, audience and then the qualification. So basically, you know, you talk to, you get the calls generated and then you reach out to people, you know, you're going to have like anywhere between, you know, three, it could be three to 20%.

that are interested in having that initial call. So that's what we say when the qualification is decent. You made sure that you did your research beforehand. You're not just blasting it out. And after the three to 20%, then you're talking to, then we're saying one in 10 of those people would be the ones who are interested in actually moving to the next step and then seeing the information and the NDA and all that. And then after that, you're gonna have one in 10 of those people that are interested in actually signing the LOI or signing the documents in that they'll invest. And then after that, then you have like,

Jon Stoddard (23:50.931)
another drop off, have like probably one in five people that actually would put the money in because they can sign everything and sometimes they don't put the money in. You know, so we're talking about the one in 10 times one in 10 times four, right, whatever one in 4000 probably depending on depending on your skill and how much you qualify to people. Well, so what's better? Here, let me set some context for this. I saw an interview where Alex from Ozzy talked to Grant Cardone, and Grant said, I don't like to take

money from big check writers anymore. And Alex asked him why. And he said, because they're meaner. I like to do in reggae and 506 C's. So what if I'm out there trying to raise $500,000 and the guy, the other investor on the other side says, yeah, I'll write you a check. I like your thesis. I like your idea where you're going and who you are. And I'll give you a check for $500,000. But I'm only trying to buy a $1.5 million company.

And that's already 33%. So of the company. what do you, do you have any recommendations on that? Should I take the money or should I look for smaller check recorders? Well, I mean, I think it depends on the, so for Grant Cardone, and I watched that really good video, Grant Cardone had a lot of status Delta, we call it, right? So he was looked up to as almost like, I hate to say it, almost like a God to certain people. And then he's huge. And then because he has that status Delta,

makes more sense from the duty reg A's, you know, and the reg C's, C F's. When it comes to the, somebody should do, I think it depends on how certain that they are. want to raise the money because if you raise less, more, less money from smaller checks, the certainty increases, right? The probability increases usually, but then the amount raised and like can actually, you know, be less because like if you're, if you have like less than money that you want to raise,

the probability of this goes way higher that you actually be able to raise anything. But then if you want to actually just get a large check investor to do everything, the problem is that you're risking the probability of anything happening. So if you really need any money to actually just go on a deal, then I address record and you have some form of like either prestige or you're able to convince like a mass audience, then just go the small routes. But then if you're in a position that you want the big check investors, because you don't want to deal with the complexity,

Jon Stoddard (26:16.717)
mean, look, Grant Cardone, amazing guy, but then he's dealing with lawsuits and he's the complexity of managing all of them and setting all their expectations because a lot of them can sue because the big guys, usually, they have a lot of capital that they're willing to lose. Then you can take the big guy instead. Yeah. The bigger you get with 75 million followers, the more naysayers and lawsuits come your direction. It's just natural. Like 1 % of people are, you know, probably have a problem with everything. So, all right. So where does

This is the point where you get to plug raises.com. Where do you help in this process? If one of my listeners says, yeah, I'd love to buy a company. mean, I've got a good credit score. I could probably raise the money, but I don't have a $500,000 now payment. Where do you get involved? Yeah, good question. So then, I mean, it's funny, like some people that get involved with this, just doing even a debt deal, funny. But basically the whole part. So number one is for...

The point is number one is just making sure that we make sure that we just get everything prepared in terms of the process to do the outreach to the originators and the direct sellers, the process of underwriting the deal to make sure that the deal is not, it makes sense and is going somewhere. And then what to ask the seller, the process of actually getting lenders to lend a debt portion as well. But then ultimately we're also able to, so then we have some people here- Let me stop you right there. Are you talking about SBA lenders or traditional lenders that are not SBA?

These are non-bank lenders. For some reason, everybody knows about the SBA and they complain about how long they are, even though their rates are pretty okay. The last thing is if somebody wants to set up exactly that down payments and have an equity deal for that, or they want to create an &A fund, a blind pool &A fund. Either those two things, then we just do the whole draft paperwork and then we introduce them to an attorney to give the check mark on that.

And then we get them the, you know, a team of salespeople to, you know, introduce capital to their deal based on a contact base or just outbound could just be basic LinkedIn. Yeah. So you get the outbound and you get these appointments set up or you have kind of have a nice list of possible accredited investors. You get these appointments and who's making that presentation? Is that the founder that's trying to buy the company or the blind &A fund?

Jon Stoddard (28:40.097)
Yeah, most of most time is the founder because we place them with the the people who are raising money. And but then we have a few people funny enough, we have a few people, was one fellow, he's raising 100 million dollars to buy gas stations. He's just too busy. He seems to be too busy. So we place him with a full time salesperson. So the quick answer is most people, they just have to do it themselves because of where they are. But then there's some people that they've earned the rights to delegate. And then we just place them with a salesperson underneath their company and they just plug in and then

away they go. Yeah. How long do you think that process will take? Yeah. So sometimes ideally it can take anywhere from two months to nine months, depending on the deal. Sometimes it's really slow. So that's why we recommend people to just have an ongoing investor load up period before you funnel them all to one deal. But yeah, it's not a quick process. It's much slower than that. Unless like

you know, unless there is something like amazing about the deal that is just earth shattering, because the person would have to make sure that the deal fits in the mandates of the investor. yeah, could take anywhere from two, two to nine. Nine months. mean, nobody's going to, you know, if I see a nice deal on biz buy sell and nobody's going to, you know, the seller's not going to wait around nine months for me to raise that down payment because he's just going to move along.

Should I just raise a blind &A fund for bigger acquisitions? Well, most people, most people, they struggle of getting the credibility to get the investors to actually send people money that they trust that they would invest in whatever they want. So the way that we recommend if somebody is doing that, then do it the Dan Pina way of building like an amazing team and quote unquote board. know, Dan Pina, of you folks know the fellow, the

You know, the Scottish, you know, drill sergeant that if you've been in the military, I don't really like people yelling at me anymore. Yeah. It seems like Dave Goggins of MNA basically. at the end of the day, like, so it's hard if you don't have a good team because the people that we're working with, they're actually setting up blind pools. They've raised hundreds of millions before. That's the only way that they're able to get people to trust them to do that. Otherwise that they're just doing one off. So I think what people should do.

Jon Stoddard (31:00.691)
should always be marketing compliantly to investors in the way that is obviously compliant and it's tricky, but then there's a way to do it. And then just load up your database of investors, load up your database of deals. And then when the time strikes, then you funnel them all. And that being said, sometimes the SBA can take long too. I mean, instead of just waiting for the SBAs, it's to just load up the equity side as well. And I think, and ultimately, to be honest, it's best if you can just do it like,

It's best really if you can just get like a seller carry and get some debts, then you honestly avoid all this and then in the future come back to an &E fund. That's what we tell some people too, because the point is not for people to shoehorn different products for regulation D if you don't need it. The goal is to get the deal done. So what if somebody says, he's not in a great financial position. He's not a W-2 or an investment bank. So he just didn't have the money, but it's

Somebody, he found a company that has a motivated seller and it's a great company. It's been around 30 years. It's really profitable. It's thrown off 500,000 SBE every month. But what if raising equity for that down payment doesn't make sense? What about raising debt through traditional non SBA? What does that look like? Yeah. So then that one just looks like just focusing on the financials as always.

But it's much, it can be really quick. The only difference overall is that the debt lenders, they're very checkboxy, we say. So then they, whenever they say something, you don't do something that they don't say. There's no flexibility. There's no, like there are very few opinions and it's really credit driven. You know, it's really credit driven. And so the point is you want to make sure you have good credit, you repair your credit if it's not repaired.

And then you want to make sure you do some good cashflow analysis to make sure that the debt coverage ratios of the deal and then the valuation of the deal, you have multiple opinions on this and you just focus on the quality of the deal because the problem with getting too much debt, the other problem is that look at the market that we're in. Now the interest rates are higher. The thing is like the amount of margin that the deal needs to survive, it gets less because the interest rates are higher. So it can kill the life of the deal.

Jon Stoddard (33:24.191)
And when the market gets competitive in the sector, have to think like, yeah, I bought a deal, but then we just had a call of somebody, they bought a deal, but then now it's it's negative EBITDA and such because the market got more competitive. They're new buyers. The manager is getting out of the company. And then you actually have to run a business for it to be profitable, right? you know, just be careful when it comes to just be conservative. And maybe sometimes if it doesn't make sense, just pre-qualified the deals until they can actually handle.

you have a good valuation and debt coverage ratio before you take on, and they're seller carry before you take on too much debt. So that's why I recommend instead don't be in a scarcity mindset, right? Yeah. As long as you have many deals that you can talk to, you don't have to suffer with a bad deal that wouldn't be profitable. Then what's the point of you owning a a cash eating assets, right? What's the point, right? Unless you're a bigger company that's already doing roll ups or talk ends. Yeah.

Well, this is great. Not to last question. You still squatting 600 pounds? Yeah, I mean, I am. I'm just, I'm working on my depth. So, you know, but I'm there, you know, that's why I do it either whenever, you know, maybe investors take long to reply or something. Then, yeah, I just put the frustration in the weights. Fantastic. So, Hey, look, everybody, if you want to get in touch with not to go to raises.com, just go through his nice little funnel there.

Yeah, that's it. And hey, it's been an amazing pleasure. love what you're doing. And I seriously do. And I'll be watching every single one of these. I'm a big fan of this. All right. Thanks, Natu. Thank you. Cheers. Thanks for watching this video. Make sure you're a subscriber by clicking on this button right here down below. And if you want to watch more Serial Acquire interviews, click on this button right here. If you're ready to buy your first business,

Get my course at dealflowsystem.net right here. Take care. Cheers, John.