Raleigh Williams Spills 9 Exit Secrets That Made Him $26 Million!
Summary
In this conversation, Raleigh Williams shares his journey from being a mergers and acquisitions lawyer to becoming a successful entrepreneur. He discusses the challenges he faced while transitioning from law to business, including familial resistance and financial struggles. Raleigh elaborates on his strategy of acquiring businesses, particularly in the entertainment sector, and the importance of partnerships in achieving growth. He emphasizes the need for a calculated approach to acquisitions and the lessons learned from his entrepreneurial journey. In this conversation, Jon Stoddard discusses his journey in the entertainment industry, focusing on the profitability of various ventures, the strategic decision to sell his business, and the challenges faced during the sale process. He reflects on personal connections with family and introduces his new venture, Deal Maven, a marketplace for partial acquisitions. The discussion delves into the nuances of business valuations, the importance of public-facing buyer profiles, and the educational aspects of facilitating deals in the marketplace.
Takeaways
Raleigh transitioned from law to entrepreneurship after nine months.
He acquired the IP for an escape room business to start his venture.
Facing familial resistance was a significant challenge for Raleigh.
The startup phase took longer and was more expensive than anticipated.
Raleigh learned the importance of partnerships in business.
He emphasized a calculated approach to acquisitions.
Raleigh's journey involved navigating financial struggles and risks.
The importance of market demand in business success was highlighted.
Raleigh's experience shows the value of patience in entrepreneurship.
He believes in structuring deals to minimize risk. Profitability varies significantly based on location and demographics.
The decision to sell a business often involves strategic timing and personal readiness.
Navigating the sale process can be complex, requiring segmentation of business assets.
Reconnecting with family can be a significant emotional aspect of business success.
Deal Maven aims to facilitate partial acquisitions in a transparent marketplace.
Public-facing buyer profiles can enhance deal flow and transparency.
Partial acquisitions can bridge valuation gaps between buyers and sellers.
Advising sellers is crucial to align expectations and facilitate successful transactions.
Market education is essential for the growth of new business models.
Cash-flowing assets are more attractive for partial acquisitions than pre-revenue deals.
Watch the Interview:
Transcript:
Jon Stoddard (00:00.118)
Welcome to the top &A entrepreneurs today. I have Raleigh Williams. Raleigh has been involved in nine exits and six acquisitions. Welcome to the show Raleigh. Thanks, John. Appreciate you having me. So let's kind of rewind a little bit and tell me how you started. know I'm looking on your LinkedIn and you were an attorney for a while. So what, how was that like? You obviously didn't want to do that anymore. I lasted for nine months.
as a mergers and acquisitions lawyer, so working on, you know, billion dollar plus deals and, know, I was working out of a Manhattan office and then I ultimately moved to Dallas office doing mergers and acquisitions, capital markets. I come from a family of lawyers. That was kind of the, the trade of the family. And, right when I got there, I knew that I hated it. And so I started looking for.
the fastest way out possible. And I didn't have a route to entrepreneurship like most have where, you they have a sales background or they're very artistic or passion driven. I was never selling rocks to my next door neighbors. I was always really great at school. I thought I was going to be a lawyer for the rest of my life. And I just couldn't stand, I couldn't stand that life. I couldn't stand doing those deals. And so I wanted to find a way to
I started to look for acquisitions to actually leave my law firm job. did you get the idea? A lot of people go, gosh, I should just work on a startup. Where did you get the idea of acquisitions? Well, I was doing acquisitions on daily basis as an &A lawyer. And so I saw these private equity firms, and I saw these massive corporations that were growing their business through acquisitions. so that's kind of, I thought.
I thought that there was a way that I could do that to leave, entrepreneurship through acquisition, some of those things that are a little bit more popular now than they were seven or eight years ago, those weren't very popular. And also everything that I was doing that was more passion driven, things that I was interested in, they weren't working, they weren't taking off, trying to start side hustles. And so I started to look for...
Jon Stoddard (02:22.861)
acquisitions to do. I found this article on Market Watch that, you know, talks about the unbelievably lucrative business of escape rooms. And so I started to contact escape room businesses to see if I could acquire them. And every, every escape room business that wanted to be sold wasn't purchasable, you know, it's just a bad business. And then everyone that had a good business didn't want to sell. And so I wasn't sure the best way to
kind of bridged the gap. And one night I was watching this show on CNBC from Matthew McConaughey's brother who, you know, had a show. Yeah, I know that show. That's a pretty cool show. Investors Club from Rooster McConaughey. Yeah. And I was like, how is it that these guys are crushing it? And like, they seem so unsophisticated. They're so different than the private equity guys that I was working with.
know, so I started to look at Rooster. What did Rooster do to get rich? And he was in a piping business, an oil and gas piping business. And he bought in 2004, he bought a patent for a piping business. He bought it for 400 grand. And then in two years later, he sold it for 120 million bucks. And so that was kind of the first time that I thought instead of buying the entire business that I want to buy in an escape room business, what if I just buy
the piece that's holding me back the most, which is how do I build an escape room business? I ultimately acquired the IP to an escape room business that was in Europe. I bought that IP, put my own branding on it, started what ultimately became Alcatraz Escape Games to get started. And then over time we grew through acquisitions. started acquiring trampoline parks, acts starting businesses, new locations. And over the course of five years, we ultimately sold those businesses for
26 million bucks in aggregate. so that's kind of. That's amazing. I want to go back to you where you're trying, you're leaving the being an, a lawyer and y'all your family's lawyer. Did you have any resistance or friction from them in these conversations? Like massive, massive friction. Everyone, you know, I went to a very expensive school, university of Chicago is not a cheap law school. and they paid for that.
Jon Stoddard (04:43.041)
My parents and my dad paid for that. their investment is saying, you're just going to throw my investment away. Yeah. Yeah. And I had a young daughter that was a year old. the idea to leave one of the, I was practicing at Skadden Arps and Vincent and Elkin. Skadden is the biggest mergers and acquisitions law firm in the world. The most prestigious firm that you can go to, to do mergers and acquisitions. And so to leave that to,
do something as silly as an escape room business, they felt like it was a massive mistake. Like that I was throwing my entire life away to do something that I just needed to be more patient and stick it out and practice law like my dad had done. Suck it up, Raleigh. Yeah, so I didn't speak to my parents for a year after I quit practicing law. was like you've ruined your life.
and you're on your own. We're not going to be a part of these bad decisions, which I think was ultimately good because it allowed me to... That was kind of the first time I'd been very good at school. I've been very good at taking tests. And so I was on that kind of well-paved, well-trodden path toward partnership at a law firm, leading a life of quiet desperation.
while making good money in the process. so taking a pause from that kind of allowed me to fail and, you know, kind of, it was the first time that I was really on my own and kind of left to figure it out for myself, which I think is a good, a good experience looking, looking back on it. wouldn't trade it. Yeah. So you saw a lot of the financials, balance sheet, cashflow statements, income statements, but
What did how did that measure up when you first told you were responsible for them now? Sure. Yeah. We I massively undershot how expensive it would be. You know, it's just like anything. I mean, it was it was an acquisition that bridged a big gap that we had, but there was still a startup aspect to the business. You know, I wasn't coming in to stable cash flow. I bought I bought the IP I needed. Yeah. And then I then I applied it in the way that I needed it to.
Jon Stoddard (07:05.613)
And so it was, you know, I thought from quitting the law, I was making 200 grand as a first year associate at a law firm. And so I thought maybe I would need two or three months to kind of get the business up and running and it would cost 200 grand. Two or three months, huh? Yeah. Yeah. And it ultimately cost, you know, it ultimately cost.
double what we initially thought and it takes three times as long as you initially think. And, you know, we didn't pay ourselves for eight months, not two months. And so I ended up moving in with my in-laws into their basement with my, you know, young daughter. And so there was a short time that was very stressful and it definitely felt like I had made a hasty decision to quit.
the comfort of a big law job and that, you know, I was going to need to go back to school and get an MBA in addition to a law degree, or do you like the worst thing that could happen? You're talking to your wife is, I go back to being an attorney, right? Yeah, that was your fallback. Yeah, that was I mean, most law law is different in the sense that like if you quit a big law firm, like the one that I was at and you go and do something entrepreneurial,
Like they don't look favorably on that because law firms are in the business of practicing law. And for me to show that early on that I had an inclination for something other than practicing law would have been a massive red flag for any. You probably do it again with the next idea. Yeah. So like, so my worst case scenario was that I was just going to, you know, either go back to school again and get an MBA in addition to a law degree or go and do
a different type of job, investment banking or consulting. I knew that when I quit the law that my career as kind of a big law lawyer was essentially done. so it was, I'm sure other people in entrepreneurial journeys take bigger risks, but for me, it definitely felt existential from a career standpoint. It was like, this is the bet, I'm putting it all on the line. But I was so
Jon Stoddard (09:25.685)
I was so absolutely miserable in my job. It was the first time that I'd ever experienced panic attacks. I didn't do well in the structure that a law firm requires its associates to have and being told what to do. I was pretty miserable even though I was making good money from the outside. say law firms are like...
you know, everyone from the outside wants in and everyone on the inside wants out. know, I've never heard that before, but that's cool. Everyone who's not a lawyer, you know, I always hear people's story like, I wanted to be a lawyer. I took the LSAT. I thought I was going to do it. I decided not to. But, you know, most of my really good friends that all went to Ivy League schools, you know, they have some sense of wanting more in addition to what they do professionally because it's you can
you know, doing $50 billion deals look sexy when you read about it in the Wall Street Journal. But in terms of actually doing it day in and day out, you know, there's not much fulfillment there. So you were, you were in it, you burned the boats, you're working a business, it takes more and it took more twice what you thought it would and longer than you thought it would. When did you start seeing it turn around?
Let me more context to that because everybody that does any marketing for their business, whether it's coaching or products, is always testing a hypothesis. Like, will people respond to this offer? When did it start turning around and you getting people involved? It was late in the first year, that first year of building product out.
Within the end of the first year, that's when we started looking at making a new acquisition that the escape room thing was going to work and what would be a complimentary product or business to match with the escape room thing to make it bigger than just a single location business that can pump out four or 500 grand a year in profit. And so within that first year, we started looking at
Jon Stoddard (11:41.527)
trampoline park options, either merge or acquire or do, I mean, we were looking at a lot of things, arcade businesses, trampoline parks, axe throwing, everything that was kind of in that family entertainment segment that fit the space requirements that we had. So I think once we were able to move out of my in-laws house, which was like eight months, eight months in, that's when we knew that
you know, there was stable demand there. I had picked, I had picked a startup that, you know, escape rooms were already happening. You know, it's not like I came up with like, why don't we lock people in a room, see if they like doing it for 60 minutes. You know, was, there's demand for this is happening in other places in the country. It's, you know, there's a location that could make sense for this. I now have the assets that I need in order to build it. And you know, there's not like, there,
I eliminated the execution risk that could exist in terms of like, do I build this stupid thing by buying that IP from that European company? And so it was just a matter of, it just took a lot longer. It takes time to get word of mouth out there. when you're, I don't come from a marketing background or kind of getting the word out background. so we ultimately, just...
Solving the constraints one step at a time. It took about eight or nine months for us to get to the point where we're like this we can at least we can at least subsist. We can at least stay alive on what this business will generate, whether it turns us into multimillionaires or not. That's still TBD. Well, who's the we? Did you have partners in this? We started with three partners. was it was me. I had a buddy that was working at KPMG, which is a big accounting firm. And then my brother, who
was working at Goldman Sachs. And so all of us kind of banded together. And at the start of it, you know, over time, I ultimately bought one of my partners out and my brother and I were kind of the two that were the, you know, basically co-managing co-partners on what ultimately became Williams Entertainment Group. Yeah. So the mindset you had was always to roll up to get a more profits, more
Jon Stoddard (14:00.289)
hire multiple and sell out because I mean, you say KPMG, you say Morgan Stanley, that's like a gold standard of investment banking. Yeah. Yeah. I mean, we, we, we all had different, we all had different objectives at the beginning. And I think now as I move forward into new businesses, you know, I pay attention to what my partners ultimately want and where they're at in their life more than I did at that time. At that time, it was kind of like,
Are we all willing to take this risk together? Let's jump in the boat and like, see if we can figure it out. You know, there wasn't much thought of like, are we complimentary as partners or any of that stuff? And, and so I always wanted to do something, you know, I wanted to make a hundred million bucks. That's what I wanted to do. My KPMG buddy wanted to, you know, make a couple hundred grand a year and golf as much as possible.
And my brother also was kind of of the mindset of like, want to do something big. I don't care if it's escape rooms, it's trampoline parks, if it's a software, but I don't care what it is. I just want it to be big. And so ultimately my brother and I kind of had a similar vision in terms of how big we wanted to take it and how hard we were willing to work at it. he's still my really good buddy to this day, one of my best friends, you my KPMG partner. He decided that he didn't want to.
He didn't want to take the next step of kind of scaling the business out. you know, we were at that time, we weren't adamant that it needed to be a roll up play. You know, we were just, what are the best opportunities out there? Does it make more sense to, you know, acquire a new concept or to build it from scratch? And so like, you know, I wasn't, I wasn't hell bent on it needing to be an acquisition or it needing to be a roll up. Those were just, those were just.
the avenues that kind presented themselves over time that made them, you know, they all those things. Yeah. But you guys had the imperative to both of you said, I want to grow big. You shed off somebody that said, I don't want to grow big, which was probably could have been an anchor future. But I wonder if there is, you know, people that start off small, they and they they grow big by accident, but they don't foresee or have visions of growing big versus
Jon Stoddard (16:15.563)
how many that grow big where, you you two co-founders started, it was like, we just want big hairy ass goals. One's a hundred million and another's just big because I work at Morgan Stanley and they talk about big numbers. Yeah. Yeah. I think, I, the, the, cause I, I, the people, the only kind of the, the skillset of the people that I've seen that have grown big despite kind of by accident, I think,
That specific entrepreneur type is someone that is massively in love with the product that they're building and they're massively patient about how much money they make. Like I have a really good buddy that has 30 plus restaurant locations. And so he's built a massively big restaurant business and a segment where most people fail on the first one that they try. so...
But he was adamant about the quality of the product and what that restaurant business looked like. And him taking it location by location has been more mission driven around the idea of he wants more locations to have access to the food that he thinks is the best in the world. And he almost kind of like pulls the reins on the growth of that business. That wasn't my experience. My brother and I, from a product standpoint,
cared zero about escape rooms or trampoline parks. It's not like we're acrobat. We've got to have the best experience possible. once we got into it, we wanted to make sure that our product was competitive and that customers had a good experience. it was the best opportunity that we found at the time. And we decided that there was a gap in the market. The market was going to fill eventually.
and we want it to be the first people to fill that gap to do it. Yeah. I wonder what the debt promoter scores for escape room are. It's like you get a low score if you get out in five minutes or a low score if most people don't get out or. Yeah.
Jon Stoddard (18:28.781)
higher net score if you have like one minute last on the 60 minute timeline. the escape room game is you're trying to get them to kind of like be working on the last thing within the last two minutes of it and like, you know, get out right as time goes out. That's like, that's the whole experience that you're trying to cultivate. Yeah. So tell me about so these acquisitions you did. I mean, how was the process? Were you just very familiar with them at?
with your at Skaden, know, knew how to do an acquisition, knew how to do evaluation, knew how to do the due diligence. You and your brother, was it easy for you guys or was it? I think, you know, I think it's easy to look from the outside and say, well, there was a skill set there that I don't have. And so that's why it was easy for them to do it. And, know, I can't.
I can't replicate that experience. of my mentors that I have while was practicing law said, you should only do deals that if you're right, you get rich and if you're wrong, you don't go broke. And it's a very simple equation on the one hand, if you're right about it, it needs to be something that moves the needle for you. And if you're wrong about it, it needs to be something that doesn't wipe you out completely. so for us, was never, we didn't...
We weren't actively pursuing them from a biz dev standpoint or, you know, trying to really force it like you would at an investment bank or a law firm. Just opportunities came. We had developed a reputation in our community. We were always very collaborative with our competitors. And so a lot of times when competitors were facing hard times or, you know, on the brink of going out of business, were some of the first people that they
reached out to, to figure out if there was a deal to be had. And, you know, we were always very hesitant to take on a lot of debt. We took on debt for real estate transactions that we ended up doing, but we, you know, for us, we tried to make it very easy to do deals with us. And we wanted people to bring us ideas of when they were open and willing to collaborate and do deals. so,
Jon Stoddard (20:53.173)
And we always just tried to get to a structure that made sense that we felt comfortable with. So we were comfortable to pull the trigger on something. so, you know, it came in a lot of ways, either it was a trampoline park business that was going out of business that had a bunch of equipment and
know, inventory and those types of things that they were trying to figure out what to do with. Just distressed assets value the asset sale. Yeah, or it was, or it was businesses that weren't in our part of the country that were willing to license us their intellectual property so we could kind of de-risk, de-risk the thing that we were trying to do. That's what happened in the axe throwing business. And so for us, it was every single deal that we did felt
the deal that we did felt safer than building it from scratch. So it felt like it was a quicker, safer way to continue to go about being in the business that we were already in. And they just made sense. think people, you know, because I talked to people about deals to deal-made and all these things. And I think people can hear a marketing message that, you know, people are talking about about doing deals and all those things. And they put themselves on a tight timeline. Like, I want to do...
three deals by the end of this year and they started putting pressure on themselves to pull the trigger on deals. And I found that deals are much like, I think it's a lot like somebody who's dating. It's like, I'm going to get married in the next three months. You know, they start putting all this pressure on themselves to make it happen. And I think the best marriages, like the best deals are ones that like, when it comes across your desk, it doesn't feel like pressure. It feels like something that you don't want to miss out on.
It feels like something that like, how could this possibly go wrong? And it's good to get educated and make sure that you have fewer and fewer blind spots as time goes on. But I think if on every single one of our deals from a principal standpoint, if we were right about the deal, we would get rich, but we were never risking the kingdom for a pot of gold. was never this idea of let's bet the company on this potential acquisition and let's hope to hell that it works out. It was always, you know,
Jon Stoddard (23:06.349)
very low debt, we could tolerate the risk and what we were doing. And we structured the things where the sellers were happy with, the sellers always had some skin in the game in terms of the going forward transaction on bigger deals on like liquidation stuff, it doesn't matter. And we were never risking a big part of our balance sheet to continue to stay in the game that we were already playing. Yeah, did you use debt?
to pay for any of those? You said you didn't use it most of the time. On real estate deals, we would. We did it on real estate deals. So there were a couple pieces of real estate that we were already in and the landlord was considering selling the businesses. So we used SBA debt on real estate deals. And every time, we weren't taking conventional debt. Every time that you go into a new location and you sign a personal guarantee on a lease, it's kind of like,
off balance sheet debt where you're guaranteeing rent payments, even though you didn't take a loan from a lender. So that's some form of debt. It's a suitcase full of IOUs. Yeah. So we would do those types of things and we would try to get it as close to non recourse, know, where our own personal assets weren't involved. So we took on debt, it was always debt that relative to our cash position and like our cash flow position, excluding COVID,
always felt like a very tolerable risk. It was never like, let's triple the business overnight and if this thing doesn't work out, then we're out of business tomorrow. Yeah. Did you guys, you and your brother worked, are you good friends and you work together real well? Yeah, we're better brothers than we are business partners, particularly on something that like we're too similar, I think of where we kind of came to after being in business for five years together.
We're both very big drivers. And I think the thing that we found that ultimately made the best partnership was when anytime that we tried to share resources, like share employees, and it kind of like being working on the same thing, it was just too many chefs in the kitchen. And so we worked best because we ultimately had four concepts that were kind of under our umbrella, trampoline parks, escape rooms, ax throwing, and then a concept that we acquired slash created called labyrinth. And so we worked best when we divided and conquered.
Jon Stoddard (25:32.479)
individually, separately with our own separate teams. Then we did, you know, we were kind of more co CEOs than we were, you know, in a conventional org chart. Yeah, did he leave the Morgan Stanley? Was he working full time for you guys? Yeah, he was. I mean, he so he was a Goldman Sachs Goldman Sachs. Yes, sir. You're good. But yeah, he quit. Yeah, yeah, we were all we were all working on it full time. I mean, at pre sale, we were doing
You know, close to $6 million of EBITDA a year between, you know, little under 500,000 square feet of retail space between all those parks. Some of it we own, of it we leased. And so it was a, it became a full-time operation for. So 6 million EBITDA and all those units, business units, like the escape room, ax throwing, trampoline, and labyrinth. How did they look in?
profitability, like this one works better than this one, this is a laggard, what? Yeah, it was all very location specific. Escape rooms kind of tend to perform well and in locations that there's a lot of older kids and corporations looking to do corporate events, that type of thing. Trampoline parks hit a younger demographic.
You know, our whole idea as we began to expand out concepts was an idea around trying to concepts that took a big square footage versus concepts that had a really high performance revenue per square foot within a park. And so our parks were 50 to 60,000 square feet per park with some exceptions. And so the trampoline park business, you know,
tend to drive 50 to 60 % of what the revenue and the profitability was. And then those other smaller concepts took on a much smaller footprint, but generated high revenue for Squidfoot. Yeah. And so where did this idea to sell the company come in?
Jon Stoddard (27:51.543)
Did somebody come to you knocking on your door? Did you actively say, hey, let's sell, I'm tired of it, or let's sell? I was the driver. I was the driver of exiting and it kind of happened pre, we started to exit pre-COVID and we started to get into conversations with- Would you call that lucky? I'm not lucky, I'm good, man. You know what I mean? No, I-
through the process of scaling the business, when we got to our seventh location, my brother and I had kind of decided that to get to the next level, it was either going to require us to go nationwide or it was going to require us to franchise. so neither one of us really wanted to be in the franchising business. I had talked to enough people that were in the franchising business to know that like, your first 30 units aren't very profitable. So you gotta get to,
30 plus franchise units before you really start making anything. And I had kind of felt like I had gotten on this escape draft off of the law that turned into a bigger thing that I'd ever anticipated it to be. But I was so far off from what I wanted to do on a daily basis in terms of operating these businesses and dealing with the employees that you have to deal with when you're managing a retail type business. I decided that
I didn't want to get to the next stage of growth. And I wanted to get out of the business before the profit and loss statement started to demonstrate that I was as checked out of the business as I was. so I kind of felt like the writing was on the wall. And I your brother agree with that? Yeah, yeah. I he he was coming up back then he was coming up on 40. You know, he's 37 38 years old at the time. And I think
he had gotten to the point where he was like, I don't want to be in the kid party business when I'm 40 years old. And that was like a breaking point for him. And so I started going through, I met with some investment bankers, I met with some business brokers, I met with a lot of the competitors that were in the industry, both in the trampoline park and the escape room business. And the reason why it took nine exits was because as I started to kind of figure out the best way to get this thing structured to sell it,
Jon Stoddard (30:11.955)
I realized that we had overgrown, we had a trampoline park business, wanted to buy the trampoline parks, but not the escape rooms and all these other pieces. And then the escape room people wanted to be in the escape room business, but they didn't want to be in all of these pieces. we had, what we had originally started to build thinking that we were kind of becoming this conglomerate type business that we could, you know, have all these other different concepts under one roof.
we found that we had kind of overgrown our acquirer pool, that there was no real one acquirer that was like a perfect match. And so we started to kind of segment down and disintegrate the business a little bit. And so we ended up selling off the majority of the business low, either by location or by concept to just to fit the buyers that we needed to fit in order to make those.
sales happen on a case by case basis. Yeah, that makes sense. Yeah. You weren't going to get the multiple from a larger buyer because he didn't want half. I didn't want the actual business. I didn't want the trampoline. He didn't want to be in, you know, their private equity back and they didn't want to be in the real estate business. Like we were in the real estate business in some of the locations. And so I went through, I talked to bankers, broker. I basically decided that the only way to do it that could make sense for me
was and the way to get highest and best value on all this stuff was to just go asset by asset. Some of them, you know, the escape room business, we sold a portion of it to a haunted house buyer. He bought two locations. We kept the franchising and the branding rights. We just went deal by deal. Me basically going deal by deal and like, is this asset going to make sense as a location, as a park? Were they on three of them or, you know, and so it ended up being the type of deal that
really most entrepreneurs would have had a difficult time doing, which is why, from a content perspective, I think people see that though. They're not seeing that. goes, man, I got to break this up to sell it. Yeah. Yeah. And that became the only thing that made sense for me to get the numbers that I wanted to get and not take a massive discount. it just, took time, but we were happy to take the time to make it happen in a way that, you know,
Jon Stoddard (32:31.915)
made us the most money. Yeah. And I have to ask you about who made the first reconnection to your dad and your parents and how did that go? That's a great question. I think as the business started to be successful, probably about a year in, it just kind of, I don't recall the first kind of reconnection as much as I do
you know, whatever had happened between us was kind of water under the bridge and like it all kind of worked out. And for a couple years, my dad was kind of running an analysis of like, if you had stated the law, how much would you have made by now versus like how much have you pulled out of these businesses, you know, but now it's like the equation so far, I've made so much more money than, than I.
I mean, I was sorry, I met some I was thinking about going to investment banking a long time ago. And I asked a couple of guys at a party, how many hours you work and go 110. I go, no, no, no. It's a massive grind. Yeah. So that he's like, I'm proud of you. You proved me wrong. Or was he gracious about everything? Never stipulate to that. He would say, you know, that I'm
not cut out to practice law and that, you know, but that's okay. You know, I guess I did okay. He had never, he would never say that he was wrong about it under, under no circumstance, you know? Yeah, that's all right. So that's great. Six actual acquisitions, nine exits. And now you're onto something new called field maven, right? I know you did a lot of other things in there, managing partner, fierce, athletic, sure.
But you are Chief Executive Officer, Deal Maven. What is Deal Maven? Yeah, so Deal Maven is a marketplace of software where people can do, where buyers and sellers can do partial acquisitions. And part of that was the story, again, that kind of the context for partial acquisitions was that was the way that I got out of the business that I was in was by I had this big thing and I ultimately sold it off piece by piece, piecemeal.
Jon Stoddard (34:57.421)
And most of the deals that I did from the acquisition side, I wasn't buying a full operating business, valued off of stellar discretionary earnings or whatever. was buying pieces of businesses that relieved constraints in the business that I was already in. so after I sold Williams Entertainment Group, I said, I'm never going to...
start a business from scratch again. I'm only going to acquire from now on. I was looking for full acquisitions to do. the things that were frustrating for me was that I had enough capital to do any transaction that I wanted to do, but I still felt like I had to be the one out there sourcing and hunting. The deals weren't really coming to me in the way that I wanted them to. And secondarily, I felt like
as a seller, there were multiple times that I would have sold part of my business in a different way, or I would have sold part of my business had that transaction been available to me in terms of the way to get that done. so Deal Maven is a marketplace that allows buyers and sellers to connect and to figure out ways to get deals done that make the most sense for
the entrepreneur and then make the most sense for the buyer. those can be licensing deals. Those can be, you know, a full acquisition, if it makes sense, a partial acquisition, buying part of the equity, buying part of the assets, whatever makes sense for the entrepreneurs that are willing to trade under those circumstances and buyers that are willing to trade under those circumstances. And so that's what, that's what Deal Maven is. So did you start that or did you buy Deal Maven off of, you know, was already starting, it was already going a little bit. I started it from a
from a blank slate, unfortunately. I looked for months and months to acquire, know, I'm an investor in a business called Apocto, which is kind of like a due diligence platform for acquisitions. And so part of what we were going to do was I was going to invest and then he was gonna give me a portion of the code that he had already had built and we were gonna use that to kind of build Deal Maven. Ended up not working out from a...
Jon Stoddard (37:15.691)
where I wanted to take the business. so Deal Maven is clean slate, start from start. I've made some acquisitions within Deal Maven, mostly traffic acquisitions just to get leads and generate. Yeah, you bought that Facebook group from Chris Lopez. I think I made a bid on it. I lost it. did you? Were we competitors on that? I don't even know, John. I'm sorry, man. I made him an offer and he said, I'm looking for all the cash. And that's not what I wanted to do.
I did a partial acquisition on that. Actually, I bought half of the group instead of buying all of the group. bought an admin seat. so like, you know, I've done, I've done some, acquisitions, you know, I, you probably wouldn't even call them acquisitions. I've done some deals for deal maven, that have made sense mostly to try to generate leads. but, from a marketplace standpoint, we started and I looked,
So you guys, so you're a marketplace, you need buyers and sellers and you're starting from complete zero. Yeah. The first thing you do is what is it? You're reaching out to say, list on my site or let's get a Facebook group and start listing. mean, how many, how many listings you have now and how long did that take? Right now we have about 120. No, sorry. About, about 200. Some of those are broker led deals that
They're listing on Deal Maven in addition to other marketplaces like MicroAcquire, BizBuySell, or Flippa. And then we have somewhere around the order of 10 to 15 entrepreneurs who only want a partial acquisition, Deal. And there's not a great place to do that outside of Deal Maven. And then we have about five listings that we're repping ourselves from an advisory standpoint.
for on the sell side. And that's taken, you we launched in August and we haven't been full promotion. You know, we're definitely in the product market fit stages of figuring out what is it that buyers really want? What is it that sellers really want? And what are the things that we need to do to make those, make the changes? So what was the evidence or data points that you say, well,
Jon Stoddard (39:36.981)
instead of being a broker, a marketplace site, let's do partial acquisitions. I mean, what led to that? So when I started Deal Maven, the big feature that I wanted in Deal Maven was I wanted the buyers, I wanted the buyer side of the marketplace to be public facing. I didn't want anonymous buyers. And that was for two reasons. One, when I was selling my businesses, if you sell on BizBizell or if you sell on any of their other markets,
places, you get an inbound inquiry, but that's about it. You don't have any real context on does this person have money? Do they have the capital to do these deals? Do they take a no money down course? they're a high school kid that's trying to get something figured out and they really can't do this deal. So it was a frustration from a seller side that I had experienced selling my own business. And then the second piece was me as a buyer myself, me as an acquirer, I had
You know, I had built websites out that kind of looked like a private equity website of like, you know, these are the criteria of the deals that I'm looking for reach out, but those sites, if you're not getting traffic to those sites, it doesn't, it doesn't create any inbound deal flow in any way, or There's no business. It's not, you can, you you can't, there's no other, I wanted, I wanted to have a flip of profile or a micro acquire process. I'm looking for this. And then when a seller.
has something like that, say, hey, Raleigh's got the capital, he's done these deals, why don't I just reach out to Raleigh instead of me having to be the hunter all of the time? And you know, I- So was this kind of your frustration, deals weren't coming to you, this is your solution to your frustration? Yeah, so that's how I wanted the buyer side of the marketplace to be public so that way buyers could get inbound deals and sellers could vet who those buyers were and have all the information that they needed. And so,
As I started to talk with people, as I started to kind of like promote that and talk to just friends and kind of get feedback, I would talk about the public buyer side, which people were like, it sounds interesting, whatever I could see why that would be important. And then when I would talk about, we also make it so that you can do whatever transaction style you want, whether it's an asset deal, a partial acquisition, a licensing deal. That was always the piece that when I would talk to people, the partial acquisition thing was just the hook that like,
Jon Stoddard (42:02.145)
people found to be super interesting. And when I talked to brokers, it was always the thing that they get a lot, not a lot, but they get enough of, enough sellers that want a more exotic deal style that brokers don't want to touch. Brokers want clean apps. They want their commission. I get you on the table, I'm out of the table. Right. And so the partial acquisition thing, it just seemed to be the thing that everyone understood.
and kind of like saw their own use case for, and was also a way to be non-competitive with brokers. You I'm trying to build something that helps people get more deals done. And so I'm not trying to build. And so it seemed like there was inventory and, you know, use cases that the market hadn't figured out a way to solve yet. so that's kind of, that's kind of how that evolution happened.
Let me ask you about these partial acquisitions. Do you coach or advise some of these sellers? Because let me give you an example. It's a million dollar SaaS business and they're tapped out. They don't know how to get it to $5 million. And a sophisticated buyer comes in, I'll take this, this, and this deal, which basically takes over the company. How do you prevent that? There's two parts to the question. And then.
Like why is somebody doing a partial acquisition? Are they fully aware that I'm still in the startup phase or I'm in a phase where if I put a dollar in, I get $5 out. I just need more dollars in. Yeah. So the first question, I originally built it to just be a marketplace, let sellers do what they want and let buyers do what they want. quickly found
that most people are not like me where I wanted to do every piece of every transaction and be in the details. Most sellers, what I found thus far on DealMaven, most sellers just, they want the transaction to happen with the least amount of involvement from them as possible. Not the most amount of involvement from them as possible. And so I found that there was a gap. I was creating a problem that I wasn't solving very well. And so the educational piece kind of needed to happen.
Jon Stoddard (44:24.213)
On the seller side, it's not that hard to be an advisor for them, right? And so we have an advisory piece now that we've built out with lawyers and bankers that we can advise them through the transaction and take a cut of the deal like a typical broker would. And then on the buyer side, I found that a lot of the deals weren't happening just because buyers didn't see some of the possibilities of deals that could happen just because they didn't know how to do it and how to structure it. And so...
on deals that we advise for. know, most of the time it's sellers that are wanting to take chips off of the table and they've run into a roadblock in the business that they're not sure how to solve. And so usually what they want is they want somebody to come in, give them, you know, give them some form of cash comp at the front end of the deal, followed by, you know, they want, excuse me, and they want a strategic partner.
they want a strategic partner more than they want an investor, right? It's somebody with, usually, know, marketing, marketing or operations, those are kind of the two big ones that we've seen thus far, where they want somebody to come in and bring a cash slug and then also relieve some of the marketing issues that they have. And so this new person comes in and isn't just a passive investor, like you would do in an angel deal, but they're also actively engaged in the business. You know, they're buying, they're buying an active, they're buying an active piece of the business and they're,
they're solving something with the skill set that they have. Yeah, it's just not money, it's the person. It's not just capital. If it's capital, then it looks like a full acquisition. And that's fine too. And then the other use case that happens is a seller thinks the business is worth more than it really is. And there's a gap in terms of what a buyer can reasonably pay for it and what the seller thinks that it's worth. And so partial acquisition,
allows you to bridge that gap because a buyer can get in at a reduced valuation today, probably closer to what the asset is actually worth today. And then the seller stays in the deal. And as that value rises, the seller can get taken out on a secondary, you know, downstream transaction. so that's. Yeah, I know I asked about this. Somebody else had this. said, well, wait, what valuation right now, if you try to sell 100%, it's a, and it's a SaaS app. Let's just say it's 4X.
Jon Stoddard (46:51.233)
right? But the they said, well, if he's only selling 40 % of the business, he could buy in at a six X. Like, well, how do you do that? How do you justify that? Yeah. And, you know, the people that we advise and the people that, you know, we go from a informational content coaching perspective, whatever, like, I, I found in deals, it's
that pigs get fat and hogs get slaughtered. And if you have a mindset of being confiscatory or taking or just being overly greedy or overly reaching on either side of the deal, that's just when deals don't happen and deals don't get done. And so with the people that we take an advisory role for on the sell side, it's a waste of everyone's time if either side of the transaction is being greedy and unreasonable. And partial acquisitions,
can bridge a gap in expectations and kind of how people see the future because it's let's get a deal done today with everything that we know right now. If you're right about the future, you as the seller are right about the future and this turns out wildly successful. Great. You get a second bite of the apple and you make more than you otherwise would have selling all of it. If the future is less rosy than you are proposing it to be, then you make less than you would have otherwise done. at least we're getting a deal done with what we know right now and let's work towards some, you know,
everybody making more money in the future. Is this following kind of like if you go to a crunch base and you look at the big companies like a big accounting firm, you'll see them take a minority investment in a company to see if it works out. If it does, then they make the full acquisition. The biggest, the biggest companies, the most sophisticated companies in the world, private equity, like most private equity deals aren't 100 % cash at the closing table, take your money and go home. They're usually
some form of either solid financing or earn outs or sellers rolling back their equity into the deal. It's not massively complicated to do. It's just a little bit more work to do from a paperwork side. it so drastically reduces the risk for the buyer in a deal that if you have a seller that's willing to trade under those terms, like
Jon Stoddard (49:10.541)
you can you do safer deals and you can do more deals over time because you're doing safer deals every step of the way. It's so much safer of a deal than taking a massive SBA loan out personally. Also, 90 % of the value of the business because you have you have so much leverage in that asset that any any unforeseen event like you you're behind the eight ball so quickly. so partial acquisitions tend to have less leverage in them because they're not
Underwritable from an SBA standpoint. so, you know, I don't think it's like, you know, I don't think that I'm reinventing the deal world really. It's mostly bringing kind of the middle market down to, you know, the smaller deal sizes. And so, you know, that takes
It's taken more market educate, you know, take people out to get comfortable with it and understand it. And everyone wants to know how do I continue to operate this? Who's in charge? How do we deal with issues? All those things and all those things are massively solvable and easily solvable and an operating agreement. you a securities broker now to facilitate partial sales or? No, we have a guy on our team that has those, but it's not a broker dealer because
We're selling active. We're not. We're not selling securities. We're selling active. We're, you know, we're building new partnerships and, know, if you come in and buy 40 % of DealMaven, I'm only selling it to you because you're going to help me with the marketing of it. And so by definition, it's not a security. So they don't have to be an accredited investor either. No, no. And, and, because it's, it's not a security because it's not passive, right? I'm not selling, I'm not saying
here's this new business that you can make 12 % return on your money. And you know, it's mailbox money. It's not, it's not bad. It's you're, you're investing in buying into assets that you're bringing strategic value to, which is part of the reason why understanding who the buyer is on deal may then is, is important because. absolutely. And it's, makes a world of difference. If you get a, you know, no name VC or you get a, you know,
Jon Stoddard (51:31.165)
VC that's minted, you know, billion dollar companies. Yeah. Yeah. Yeah. Yeah. These tend to be these tend to be assets that are not later stage, but you know, they're a couple of years old. These aren't pre revenue deals. You know, these aren't these aren't like the micro acquire not making money. you know, are deals that are making money that you know, the new owner wants chips off of the table.
Because typically in these deals, the owner is taking cash out. You're not just investing into an asset. And so these are later more mature businesses than what you'd see on, I guess, Flippa kind of runs the gamut and maybe MicroAcquire is not too, I'm not sure. But these are cash flowing assets. Well, we're already up on the hour. And so I want to say thank you. Raleigh Williams.
He's done nine exits, six acquisitions and a big $26 million in that exit. So that's fantastic. And he's got Deal Maven, partial exit. So Raleigh, thank you so much for spending time with me. Thanks for having me, man. I appreciate it. All right. Let me still.
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 acquirer 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.
