Roman Beylin Launches GAME CHANGING M&A Due Diligence Marketplace
Summary
In this conversation, Jon Stoddard interviews Roman Beylin, founder of DueDilio, a marketplace for M&A due diligence. They discuss the importance of due diligence in the acquisition process, the challenges faced by entrepreneurs, and the evolution of Duedilio from a personal pain point to a thriving platform. Roman shares insights on the marketplace dynamics, the types of due diligence services available, and the typical costs and timeframes involved. The conversation also touches on the significance of building relationships within the marketplace and the target client demographics for Duedilio. In this conversation, Jon Stoddard discusses the complexities of acquiring businesses, emphasizing the importance of thorough due diligence and financial analysis. He highlights the challenges faced by acquirers, particularly in understanding the sustainability of business growth post-COVID. The discussion also covers the nuances of international deals, the demand for due diligence services, and the evolving landscape of business acquisitions, particularly in offline sectors. Stoddard shares insights on the marketplace for due diligence services, the importance of educating buyers, and the strategies for growing his platform, DueDilio.
Takeaways
Due diligence is crucial to avoid bad deals.
Duedilio was born from a personal pain point.
The marketplace for due diligence is growing rapidly.
Clients can find pre-vetted service providers easily.
Financial due diligence is the most requested service.
The process typically takes about three days.
Costs vary widely based on the complexity of the deal.
Building relationships is key for repeat business.
Independent sponsors and searchers are primary clients.
The sweet spot for transactions is between $1-25 million. Acquirers often struggle with financial analysis post-COVID.
Sustainability of business growth is crucial for acquisitions.
International deals require specific expertise and language skills.
Due diligence is essential for making informed acquisition decisions.
Most demand for due diligence comes from offline businesses.
Educating buyers on due diligence is a key service.
The marketplace for due diligence is evolving rapidly.
Partnerships with major marketplaces are vital for growth.
Time efficiency is critical in the due diligence process.
A free matchmaking service can attract more clients.
Watch the Interview
Transcript
Jon Stoddard (00:03.374)
Well, welcome to the top &A entrepreneurs where every week we talk to active entrepreneurs about their process, where and how they source their deals, the industries they work in, how they analyze deals, valuations, due diligence, and the ecosystem they work in. We also talk about their successes, failures, and their backstory. Why they do it, how they do it, how they got started, their adventure, the mentors, they aspire them, the challenges they faced, and what they cross that threshold.
You know, and what keeps them motivated to go into the process. Today, my guest is Roman Bailam. He's the founder of Doodilio, and that's spelled D-U-E-D-I-L-I-O.com. It's an &A due diligence marketplace. And as well, he's the publisher of the Business Inquirer newsletter. It's a pretty cool newsletter. He analyzes small kind of companies for sale.
and gives his thoughts on those based on a due diligence background. Roman began his career in investment management, moved to investment banking. In 2013, he caught the bug, entrepreneurial bug and co-founded one of the first alternative data consulting firms, counting some of the most well-known hedge funds as clients. And he actually sold that business and since then has been active in the entrepreneurial acquisition space as full-time on due diligence and the business inquirer.
And so, as well as some other projects. So I want to welcome Roman. How are you doing today? Thanks, John. I appreciate it. I really appreciate you having me on. know due diligence is not the sexiest topic out there. I disagree because this is a case where there's one phrase, no deal is better off than a bad deal. Right. Yeah. And that's the whole premise of this.
Deal. So tell me how you started Doodilio. Yeah. So, you know, it's not one thing. It was really a combination of a couple of things. So first, it started off with just a personal pain point that I had. I bought a small service business a couple of years ago, a small acquisition. And I was looking for an attorney to help me draft an asset purchase agreement.
Jon Stoddard (02:27.645)
and also someone to help me review the financials just with a fresh set of eyes. I have a bit of a financial background. I can crunch the numbers, but it's always good to have someone else just to kind of view it with a fresh perspective. So, you know, I spent so much time interviewing people, finding the right provider. It was a small acquisition. So, you know, I couldn't go to, you know, a larger, I'd say even midsize firm.
to do this, it just didn't make sense. So it took me probably a month to find someone to help me analyze the deal. So that was kind of a personal pain point there. Second, of, I guess, fast forward, I started the business inquirer about, I think 12 months ago, a year, maybe a little bit longer.
And as you mentioned, it's a newsletter where I highlight interesting acquisition opportunities, kind of give a bite-sized commentary on each one. know, readers are generally searchers, independent sponsors, some private equity guys. And as the readership subscriber count grew, you know, I started getting pinged by subscribers just asking, hey, this deal looks interesting, but.
Can you help me find someone that can help me do due diligence on it? And as time progressed, I got enough of these pings from people where kind of the light bulb went off. And I thought that today there's a marketplace for anything. Whatever you want to get done, there's a marketplace for it. And why isn't there a marketplace for due diligence? It's a very fast growing.
space, more and more deals are getting done. What about the due diligence aspect of it? So yes, there are platforms like Fiverr, Upwork, Catalan, but they don't... Top total too? Yeah. Yeah, top total as well. Yep. But they don't specifically focus on &A due diligence. Yeah. So, you know, I thought, why not give this a try? So...
Jon Stoddard (04:47.945)
I launched Adelio about seven months ago. And yeah, that's kind of the founding story. It's kind of a combination of personal pain point as well as a little bit of crowdsourcing. Yeah, solve your own problems first. then go, like, is anybody else having these problems? yes, they are. Absolutely. Yeah. So let's go back to that story. Did you buy that little small business or pass? did, yes. Yeah. What was that?
It's like a resume building service, career service business. interesting. And that's that still going? It's not. I sold it. OK. OK, cool. And it a quick turnaround. So where did you find this person to do due diligence? I mean, did it make sense on this small? It's a smaller business under one million or what? Yeah, you know, I found it through my network.
I asked around, interviewed a lot of people, and one person was kind of the right fit, had experience with, so from a, talking from a legal perspective, had experience with these types of smaller acquisitions and priced right. And then on the financial front, also through the network, I found someone to help me review the numbers.
And how, how was it going now? Seven months later, by the way, I'm to go back to the marketplaces. I love marketplaces because I started a marketplace called TurboSquid was we're buying sold 3d assets. And once you get, the founder of LinkedIn loves marketplaces cause LinkedIn is a marketplace. So if you, if you get the established in the marketplace, it's incredibly difficult to displace it with some other competitor number two. I mean, you look at Airbnb.
you know, Amazon or eBay, something like that. So I love this. That's kind of why I had you on to talk about this. So how is it going? How, you know, your traffic, your, your, your sales, your number of, you know, inventory, which is both sides buying and selling going. Yeah. So, yeah. So I launched about, seven months ago at launch. had about 30, I think 30, maybe 25 vendors on the platform.
Jon Stoddard (07:13.965)
doing the due diligence. Right now we have over 160 pre-vetted due diligence service providers. And that's including independent professionals, boutique firms and mid-size firms. Yeah. Let me interrupt you, Elena. So if I can give you a scenario where it's a sub-million dollar business,
And it's an internet business. You know, let's say Amazon or a service based business or reoccurring revenue type deal. And then I'm going to go here. I said, look, I don't know anybody that do diligence. I kept going to my attorney and they're not experts at it. So I do what? I'm to go on the site and then what happens? Exactly. So you go on the website and you fill out a short form.
It shouldn't take you more than two to five minutes to fill out. And it basically asks, what are you doing? Is it an acquisition? Is it an investment? How big? At what stage are you? Are you are pre-LOI, submitted LOI, post-LOI? When are you looking to hire someone? Is it ASAP? Is it in three weeks? Is it in two months?
And then we ask about what exactly you're looking to do. We have over 20 types of due diligence listed on our website, on the form. So depending on the type of business you're buying, you can see this list of available due diligence services and pick out what exactly you need. Whether it's
a quality of earnings. So that would be more on the financial side. Or if you're buying an Amazon business or let's say Shopify store, e-commerce store, then maybe you want to analyze their digital marketing spend and see, you know, what's their ROI and is there any room for improvement? The numbers make sense. So it's really depends on what type of business you're buying.
Jon Stoddard (09:34.645)
of course, how much you want to spend on the diligence because you can, you know, there's unlimited. So what are we talking about in ranges? What does that look like and how fast? Two questions in one there. Yeah. So, so it takes about two days for us to present you with proposals for your project. And then then it takes a day to hire someone. So it's the whole process. It takes kind of three days to go from
submitting the form to hiring someone. That's kind of the standard scenario. Of course, if you have questions and things like that, it could take longer. Pricing varies widely. And that's, you know, I think that's the biggest value that we bring is that if you're buying a $200,000 transaction of a Shopify store, you need someone to, you you want to spend maybe one, $2,000 on their diligence.
maybe do some financial due diligence, basic digital marketing due diligence, we can source someone for that price range. If you're on the other step, on the other hand, if you're, if you're independent sponsor and doing let's say healthcare roll up and it's a 25, $20 million deal, then we can help you source due diligence providers that may be a little bit more of a name brand where
know, quality of earnings maybe will cost between 25 and $50,000. And let me go back to the small one because do when I fill out the form and I said, hey, I need this quality of earnings report. Do I already have an NDA with this due diligence specialist? Because they're going to start seeing all the financials from this person. Or is my NDA that I have with a seller
cover the due diligence specialist. So you're going to sign an NDA once you hire the due diligence, wherever you want to work with. That's going to be NDA, correct? Yeah. does that NDA specialist kind of act on behalf? He starts saying, OK, buyer, I need you to start asking for the three years of income statements, a cash flow statement, and a balance sheet.
Jon Stoddard (12:00.749)
And I need you to ask for like Stripe accounts and bank statements or IRS documents. And then the buyer goes back and asks for him for that or what? Or that's all we're supposed to So it can work kind of one of two ways. Either the due diligence service provider can work with the buyer and the buyer can communicate with the seller. That's one way. The other way is the due diligence service provider can just directly communicate with the seller.
and present them with a list of documents that they would like to see. That really depends on how the client wants to structure it. Yeah. What do you see normally? You know, somebody that's buying a $200,000 business, that a newer, you know, buyer and not aware of the process of what they should be asking for? Or are they just
you know, at some point goes, no, hey, I want you to talk to my due diligence specialist. And then they start asking all this stuff. And typically what I've seen is in the smaller transactions, the due diligence service provider will provide a kind of be a guide for the, for the, for the client, for the buyer and help them, ask for the right documents, ask the right questions. Then once they get the documents, analyze them.
go over the results, just help them really understand the operations of the business financially, whatever it may be. Yeah. I know you're just a matchmaker on that side. So what is the analysis and opinion offer? mean, it's pretty easy to say, hey, it's like, OK, you're not making money. There's no net income. There's no EBITDA. It's negative.
you know, this is not a one X EBITDA or a five X EBITDA, it's something else. Yeah. Yeah. I mean, you know, the goal here is not really to provide a go or no go decision. That's not the goal of the due diligence service provider. The goal here is to make sure that the buyer goes into the transaction with their eyes open, understands what the business really is. Does the
Jon Stoddard (14:25.335)
Do the numbers match what the seller has presented? And just help them go through that process and really understand the business. it's really not a yes, you should buy the business or no, because that's up to the buyer. That's not up to the due diligence provider. But what kind of information does it reveal?
like footnotes or cash flow or these guys got a lot of debt or something like that. What kind of analysis does that look like? So probably the most requested type of analysis is financial due diligence and just looking at normalized earnings. Are there any one-off items? Are the add back?
appropriate that the seller has added. How do the numbers look on a normalized basis? That's probably the most requested type of due diligence. Now, I'll be honest, I'm not personally a due diligence provider. I can't go into the, I'm not a CPA to go into the specifics, but just based on what I've seen,
You know, since launch, we've done about 90 due diligence projects or facilitated 90 due diligence projects, I should say. And that's really the most requested type of... The financial, right, sure. The financial, that seems to be the biggest kind of black box for... So, yeah, let's talk about that 90.
What does that look like as far as time to start? They request the due diligence and they complete the due diligence and the buyer gets back to the seller and can make his own determination or decide on the value of the company. How long has that taken? What's the cost of that? I guess like the high end, low end and medium. Yeah. So let's take
Jon Stoddard (16:42.241)
let's take financial due diligence, for example, because I think that's the most requested and it's probably the requested. I believe that tells the story. That's all that's all Warren Buffett looks at. Hey, send me your financials. He looks at over the weekend and then comes back with an offer. Right, right, right. Yeah. So so I'd say there's kind of three levels of financial due diligence. Kind of the easiest is just verify the financial.
which is just take the P &L, take the tax returns and make sure everything matches up. That's simple. Something like that typically could take a day or two. So let me ask you about that. So they're gonna ask for like bank statements. They'll ask for bank statements. Bank statements and they're gonna match the income statement with the bank statements and say, hey, this was actual sale.
you know, whether it's a cash kind or a cruel accounting and, you know, this bank statement match that sale or, or it's consolidated in that, years worth of sales. Yeah. It's going to be more high level. but, but, but yes, I don't think it's not going to drill down into specific, you know, specific, daily sales or monthly, but it'll be more of the high level. And, know, something like this can cost anywhere from
$500 to $1,500. It's relatively cheap. It's someone that has a financial background can do this relatively quick. They know what to look for. And again, it's a very high level analysis. If we move kind of one step up, it's probably gonna be something like proof of cash. And again,
you normalized earnings. That's gonna be a little bit deeper. It's probably gonna require a little bit more information. Might take one or two weeks to do. Costs anywhere from 2,500 to maybe $5,000. Right, review like three years of financials. And then once we go kind of one step further, that's the quality of
Jon Stoddard (19:03.585)
Right? That's the kind of all encompassing deep dive to make sure all the numbers line up. What's the normalized earnings of the business? Again, looking at one, two, three years and something like that can cost anywhere from that. That's wide range because then you're getting into kind of the boutique and midsize firms. What size are you talking about in revenue where you think you should go? Where's the match?
You know, just one is, you know, checking the income statement with the bank statements. You know, that's good for a $500,000 business, et cetera. What is that? Where's the matchmaking look like? They're lined up together. That's a good question. I think that, so a full quality of earnings typically is required by lenders or investors. So it's something that,
that's a required piece of analysis and it costs more. If you don't need a full quality of earnings, I would say you're probably good with kind of that second step of just, you know, an ad hoc, sorry, normalized earnings analysis that an independent professional can do or maybe a boutique.
know, boutique firm. So yeah, I don't know, does that answer kind of the- Yeah, I mean, you just really said it because if somebody is going to go out and buy business and they're going to get a loan or bring in investors, they're going to have to go to Quality of Earth. Everything else is like, you know, it's kind of eyeball, spitball and go. Yeah. And, you know, ultimately due diligence is insurance, right? When I was, you know, 18, I didn't have life insurance. I'm now close to 40. I have life insurance.
and I'm spending money on it. So, you know, that's kind of how I look at it. You can spend as much as you want on the diligence. And it's not for me to say, you should do this or you should do that. But- There's no perfect deal though. There's no perfect deal, right. There's no perfect deal. It's always how much risk are you willing to take versus how much are you willing to pay to have some level of comfort.
Jon Stoddard (21:28.685)
with the rest that you're taking, right? And if you're buying, you know, $500,000 transaction, $200,000 transaction, $100,000 transaction, are you gonna spend $50,000 on the diligence? Yeah, I don't know. Yeah, that doesn't make sense. But again, that's really a personal choice. You know, what we try to do is just explain all the options, educate our clients on the different costs.
and helps them make the decision. But it's really not up to us or even the due diligence service provider to say, hey, this is. Right, right. They're not, I mean, unless they develop a relationship with them. Right. great. Curious about that. And Fiverr does that too. And they love you to use the same guy, but they don't, you know.
once you start finding out who that person is, they don't want you to go around and go outside it. How do you prevent that where they develop a relationship and then they just take a due deal out of the picture? So no, so we actually encourage that relationship. think our goal is to connect the client with the due diligence service provider and for them to actually have that relationship. Because I think that leads to the optimal outcome and that's a good working.
That's a good working situation. We don't get in the middle. We help them answer any questions. We help guide the client on what's available. We present them with proposals from our network of what due diligence is available, how much it's going to cost. And then once they choose a proposal, we make an email introduction between the client and the due diligence service provider. That's it.
We're there to answer any questions. We collect feedback, of course, along the way. But we're not standing in the middle. Yeah. What about the second sale happens? And I'm asking from a marketplace founder, how do we get these guys to make sure we get a piece of the toll gate on the second sale? Because that's when our marketplace grows, is the second sale. We spent all our money acquiring the first guy.
Jon Stoddard (23:53.729)
that first customer in the marketplace, we want them to keep coming back and coming back. Right. That's a great question. in terms of, so there's nothing to prevent the, the client from going to the same provider and not going to the Delio on a second acquisition. Yeah. In my mind, that's okay. And that's what I want. We have a contract with everyone.
on our network, all the service providers on the network. And it's trust-based that just says, listen, if we bring you a client and you help them and they come back to you in 18 months, we think we deserve a referral fee from that as well. Is there, I don't think Fiverr, Upwork or Catalan or Graphite have
invented any way to prevent slippage. think that's part of the... circumvention. I think that's just part of the business model that you have to accept. Right now, we are very much a high touch manual service where we don't have a back end. It's us doing the matching, us talking to the client.
It's not just a, you know, just a, just a technology solution in the future. It will be in the future. We're going to provide tools for both the client and for the service provider that we hope is going to keep them on the Dodilio platform. Yeah. I guess that remains to be seen. You're only seven months old, so you don't know what happens at 18 months, right? I have no idea. have no idea. Right. Right. What are you finding? Are you seeing serial entrepreneurs coming back?
And or, you know, an entrepreneur acquisition entrepreneur, he's got to have, you know, 100 conversations, 60, you know, he's got to have that upside down funnel where it's a lot of outreaches, 60 conversations, maybe 10 offers out there or five offers. Are they doing due diligence on every one of those? Or are they just selecting one or two to say, I'm not on that?
Jon Stoddard (26:18.382)
Usually from what I've seen so far, that we come in after an LOI has been signed and once they're kind of closer to closing the transaction. So they know that this is the business that they wanna acquire and the seller has agreed that they're the right buyer and that's when we come in. That's typically what we see. A lot of times...
will get a request from a client. This typically happens with a searcher, search for Trump. They'll come in, they'll submit a request, we'll connect them with the right due diligence provider, and then the deal for some reason is gonna fall through. They'll come back three months later, resubmit another request for another business, and we'll help match them with the right provider for that business. And then,
hopefully the deal will close and they'll turn into kind of a commercial engagement. Yeah. So on the search funder, that's like kind of ideal client because most of these guys are funded by some kind of private equity fund like Avery Partners or something. And then they require due diligence to go to the next step, right? Yeah. I mean, think everyone is realistically, everyone's
Well, an independent sponsor is like, hey, man, I buy my own businesses for a million bucks. I'm going to go on my own. No. So probably searchers and independent sponsors are our biggest client base. So we definitely see a lot of independent sponsors come to us. And we help them find a diligent solution. Yeah.
What kind of range in the business? I mean, you do see these numbers on the dashboard say what kind of range of size of the business are you seeing the most of? Yeah, that's a good question. I would say the majority of the businesses are between one and five million transaction value. Yeah. Probably I'd say 80%, maybe 90 % of what we see.
Jon Stoddard (28:31.886)
But then there are the tail end. So we've definitely seen businesses that are smaller. So maybe 250, 500,000. And then we've gotten requests for $90 million deals, $50 million deals as well. But I really think that our sweet spot and where we add the most value is really in the one to $25 million
transaction range. And I apologize if there's, if you're hearing drilling upstairs, they're doing some construction. It's good timing. So. Yeah, that's all right. I'm talking like a number of episodes and you're in my dog park in the background because somebody came to the door. Yeah. That's cool. Are these people that are, one to five, it is really, or one to 25 is the transition of assets from
the baby boomers to something else, to a new generation of buyers. That's the biggest probably slice of the pie, right? That's the biggest. But we also have clients that are SMBs, so small businesses, buying other businesses. really? It's not a big subset. I'd say probably 80 % of our clients are the kind of what I'd call searcher. Then there's, you know,
I don't know, maybe 5, 10 % of independent sponsors. And then there's SMBs, small family offices, kind of things like that. What are you trying to attack right now? I mean, small family offices would be a good source or reoccurring type. Is that a big private equity or do they, private equity already have their due diligence people set up and for what? Yeah, yeah.
You know, I think that our value is really, you're a small office, if you're three person private equity shop, three person family office, and you don't have the internal resources to help with the diligence, you don't wanna spend the time going out, sourcing, pricing, and hiring the right to diligence solution. I think that's really where we come in.
Jon Stoddard (30:57.646)
I don't think that we're the right solution for, you know, a 50 person investment shop. They probably already have someone in They probably have a CPA for a forensic accountant. At the same time, so I mentioned that we have 160 due diligence service providers, but we also have partnerships and relationships with expert networks. So that gives us access to over 250,000 subject matter experts.
Now a lot of that. What do you mean by subject matter experts? So these are people that have deep subject matter expertise in a particular industry, sector, technology, business type. So that's more of when you think of like a GLG, Zentro, Deep Bench, GuidePoint, those types of solutions. Yeah. lot of people don't think of that.
not as due diligence necessarily, but we do have some more on the private equity side. We do have some of those clients that come to us that ask for help in sourcing the right subject matter expert. And we help them with that. So we really take, we're able to take kind of that load off of their plate and help them source the right solutions.
Yeah, I have to tell you that I'm in a couple masterminds and one of the biggest challenges I see with acquiring, I'm not minimizing the acquirers capabilities. mean, sometimes it's just not their superpower, but you know, they'll put their financial numbers in there and I go, well, look, man, it's something to happen in 2019 or 2020 with COVID and they're not able their efficiency to turn cash into cashflow.
is just not there anymore. They can't do it. But that takes a financial analysis that somebody needs to dive into. The efficiency dropped. And if you bought this business, it's going to cost you a lot more to acquire a customer and turn those assets into sales. Yeah, or vice versa. There's a lot of businesses that gained a lot of revenue due to
Jon Stoddard (33:26.766)
So yeah, it works both ways and you really need someone with subject matter expertise to go in and see how sustainable is this run rate? How sustainable is this growth? Yeah. Right. Right. Now, but you don't see any of the data afterwards that the, let's say the forensic accountant or the CPA or whoever it is, hey, here's my analysis of the financials. You don't see that, right?
So for an individual deal, no, I typically don't see that. But as part of the vetting process, so everyone that wants to be part of the platform, we do have a vetting process. I do ask for samples of past work. I do ask to, if possible, talk to some past clients. A lot of times that's not possible. So I'm not gonna sit here and say that for every person on the platform, we've talked to their,
previous clients. But yes, I do ask for past work and I'm able to see how they present the results, what type of work they've done in the past. Yeah. But for an individual deal, no, I don't, I'm not part of that deliverable. Right. So if a guy, a guy, girl, and whoever comes to the site says, hey, I need due diligence, looking at a $500,000 Shopify store,
I sign up, I present all the data. How long would it take to get that analysis back?
analysis or how long does it take to hire someone? To hire somebody, you you get that you hire somebody and they start their work and then I get that analysis because money loves momentum and yeah. You know, honestly, there's a lot of factors that go into it. First, I guess, yeah, honestly, I guess so we're at the end of the year.
Jon Stoddard (35:33.4)
Good luck right now trying to find someone to do a quality of earnings for you before the end of the year. We can do it, but it's tough. So I think that that factors into it. Second, how quickly can you get the right information from the seller? I think that's actually the biggest factor here because a lot of times maybe the seller doesn't...
doesn't have the data handy. Maybe they don't even know how to get it. my god. This is a subject that is so frustrating because, you've got a great business. And they give you the pie in the sky numbers and say, hey, we're going to be doing this. And then you start asking for the financials. Can you send me an income statement? And they'll send you a screenshot or maybe partial financials. No cash flow statement, no balance sheet. I go, OK.
I need to get three years. mean, you've been in business for five years. I need to see three. And it's, do you have an accountant or do you have anybody using Intuit or FreshBooks or anybody? Cause that's five minutes to create. Yeah. A lot of times people run multiple, I can tell you, I do this, right? So in addition to the Delio, I have a couple of other projects and the other projects I group under one legal entity, one umbrella.
Right. I ever wanted to sell that one other project, it would be pretty hard for me to separate the financials. So I'm guilty of this as well. I think a lot of people do. Pro-mingling your accounts right now. Exactly. Yeah. Right. Yeah. What about international deals? I I have just within the last three weeks, as you know, I do this podcast and I'm
got a big presence on LinkedIn and Search Fundr. And I have, last five days, I've had somebody from a Slavic country, Latin America, and India offer businesses for sale, off market deals. I mean, what's your take on that? I get somebody to do that in your group? So I'll tell you, we had one request come in for someone who was buying a cybersecurity company in
Jon Stoddard (37:54.83)
Germany needed a cybersecurity expert who also spoke fluent German I can tell you It took a very long time for me to find I did find someone but it took I think it took a month Yeah, actually ended up hiring someone else. Okay? If you have these types of specific someone, you know a financial analyst who also speaks Croatian
harder to do. Well, you know what? I gotta tell you something. Here's the thing. If you buy any EU company at a certain level, they are required to publish all of their financials, all of it. Like any United Kingdom, most EU companies require, I think it's $2 million a remittance. Not sure, but it's on a public domain site. Yeah. Yeah. But you know, I can tell you, we have in terms of
service providers, we have providers in the US, we have providers in the Philippines, we have providers in China, we have providers in India, we have providers in UK, France, Russia, I'm probably missing a couple of countries. So there is a high probability that we'll be able to find someone. And even if we don't have someone in our network,
At this point, we have a pretty good understanding of how to source the right solutions. So even if you come to us with a request that we just don't have someone in our network that can fit the requirements, we'll go out and we'll source a couple of options for you. So that's another thing that we're really good at. And I think just another kind of service that saves people time and time is money.
Time is money. So I'm going to go back to this. So because I like the speed on this thing. So if I go to your site, I fill out the forms, I find and I hire somebody and how long it takes to do that diligence. Let's say it's just the first level because it's only a $500,000 revenue company and maybe $100,000 in even. How long do you think I get that information back and
Jon Stoddard (40:19.714)
How do I grade that? I'm the buyer. How do I myself grade that information, say that was valuable because it told me whether I should buy the business or what multiple I should be offering for the business.
So again, I think that if you're looking for a go no go decision, I'm not sure that's the right way to think about it. I think it's if you've gained a better understanding of the business, if you have some things that you can go back to the seller and maybe negotiate a better price or a better terms, I think that's valuable. you're doing let's say,
digital marketing due diligence and you see that there's some very easy levers that you can pull after you acquire the business. I think that's valuable. If you're doing a background investigation on the company and all of a sudden you find that there's well, there's five lawsuits in different counties. Who does that? Is that in one of the three most bought packages like the lawsuit?
Is that in a different package? It's not the most requested thing. I think for a $500,000 transaction, do you want to do that background check? Something like that costs anywhere from $500 to $2,000. Does it make sense to spend? I don't know. If you're buying a $25 million business or
$10 million business. Maybe you'd want to do that. Yeah. The reason I asked that is I bought an e-commerce business and I go, look, I made that big mistake and there was a lot of complaints because the seller was not refunding in the time period that he stated on the website and then they would go to this one site. I can't remember it. It's lost popularity. was just complaints.com or something like that. I didn't see that when I bought it.
Jon Stoddard (42:34.85)
I just didn't, I missed it, which I should have done. Yeah, yeah. You know, the other, the other aspect of this is, you know, there's also sell side to diligence. So let's say you're, you're one of these people that's retiring, right? You're trans, you want to transition the business to someone else. You might actually want to do some, you know, the diligence on the potential buyer. If you have five people who are interested in the business,
you want to make sure your employees are taken care of, you might actually want to do a background check or background investigation on the buyer to make sure that there's nothing there that kind of raises a red flag. There are Nazis on Facebook or they got a criminal record or whatever it may be, right? Whatever it may be. Terrorist watch list. Yeah. Yeah. Yeah. So, you know, we've been talking about this.
mainly from the buy side perspective and that's 90, that's majority of what we see. But there is the other side of this that we also offer more sell side to do. What are you seeing as when we started the marketplace, ours, which was TurboSquid, they started developing the KPIs and the drivers of the business and it goes like, hey man, these are the levers. What are the levers and KPIs for your business, for Dudilio?
That's a good question. mean, is it, you know, ideally how we got to grow? And this is what the guy in LinkedIn said, says when the buyers are starting to buy from sellers and sellers are starting for buyers, there was kind of organic growth in there. Yeah, I look at a couple of things. You know, the simplest metrics, of course, how many requests are being submitted, right? That's the top of the file. That's that's number one.
Number two, how many of those requests are converting into an actual customer forms, sellers on the platform, right? So that conversion ratio. Third, what's the gross market value of those contracts? What's the average value? So I think those are kind of the things that I'm thinking about right now. Give me another, ask me the same question in a year and maybe I'll...
Jon Stoddard (44:59.98)
go back and say, no, I was a complete moron. And actually these are not the things that matter. It'll be something else. Yeah, yeah. We didn't know that. I mean, we started our TurboSquid right after eBay. it was the second, like we thought it was an eBay. We actually were going to buy the keyword 3D Bay. But we got a little notice from an attorney, said, no, that's not a good idea. Yeah. So.
What is the goal, long-term goal? mean, do you have a revenue number or a transaction number or a buy side, inventory side number on this? No, my goal is to be the one-stop destination for business buyers and private investors to source due diligence providers. That's kind of the overall goal. So
Right now, we just started inking partnerships with all the major marketplaces. So we are the due diligence provider on PrifSource, on BizNexus, on Interrexio, and a couple of more that I'll be announcing probably in the next couple of weeks. And I think that's the goal right now to form these relationships to
be able to help as many business buyers as we can and really learn about the market. What are the services that we can offer? Right now, are kind of purely on the marketplace, does the matching. But maybe clients would prefer to see more of a productized solution. So maybe clients don't really
care who does the work as long as they know what the output is and they know that it comes from one of the higher ranked providers on the platform. So I don't know that yet. I think we're still learning about the market and figuring out how we can add the most value. Yeah, let me ask you about that. if
Jon Stoddard (47:15.278)
a buyer comes in, they get due diligence on their $500,000 company and they like the work that the provider give. Do they give scores and stuff? Because what happens is you saw this on Craig, not Craig's this, but Jenny, you know that service provider, you start getting scores and that person gets gravity and they get busier and busier and busier and they can raise their prices. And then the next guy comes up, he goes, well, he's too busy, he can't get to me.
to meet for three or four weeks, et cetera. Yeah, yeah. So just recently we started kind of formally collecting reviews. We've always done it just over email, just kind of a post project call. But recently I've started doing it in a more formal fashion with a form, feedback, ratings, things like that.
Yeah. Are you a developer or do you outsource that? You just have the design and say, hey, this is what we need to do. mean, you're not afraid of loss for examples on marketplaces on what works for most marketplaces, right? Yeah, no. I mean, I can build a four. That part's pretty easy. But in terms of next step for the DILIO of building out the marketplace, it's definitely going to be outsourced. Yeah. I can build a WordPress website.
That's about it. Not a big technical background. Yeah. Is there an industry that you're seeing more of? There's more internet business. There's Microquire out there that just does SaaS businesses or in a better Shopify type stuff. Do you also do, let's say, offline manufacturing businesses? Yeah. So we see it all. But it's actually interesting.
vast majority of what we see are actually offline businesses. manufacturing, restaurants, healthcare providers, all types of healthcare providers, retail. What do you mean like healthcare providers? Like medical offices we've seen, we've gotten a couple of requests. MSOs? Yeah, dental offices, adult.
Jon Stoddard (49:33.614)
What's it called? Like home care? Home healthcare, yeah. So we've seen a couple of those, which is actually, know, when I first launched to Delio, I really thought that most of the requests would come from A, people buying online businesses. So tech enabled businesses. And number two, I thought most of the demand would really come like sub
sub a million, sub 2 million transaction value. And what I've seen is actually completely the opposite. Most of the demand is from one to 5 million, one to 10 million transaction value, and it's mostly for offline businesses. that's interesting. Your thesis, your original thesis.
Why do you think that is? Do you think these internet guys are more savvy and said, hey, I don't need to do the digits or do they already have, you know, somebody that does it for them? I think it's a couple of things. Number one, I think, yes, I think if you're buying a Shopify store for any sizable amount, you probably already have experience in e-commerce. Yeah, that's number one.
Number two is I think it's just a function of the communities that I'm active in. So I'm active in SearchFundr. I'm active in a couple of these other entrepreneurship through acquisition type of communities. And those folks generally go after offline businesses, plumbing, landscaping, healthcare, manufacturing. So- Yeah, that's true.
That is true. I mean, I'm in a veteran community and all they're doing is buying offline businesses. Right. So I think that's actually the biggest reason is just most of the clients we've seen are searchers and these are the type of businesses they're buying. So that's where we see demand. Now with the partnerships that we're starting to ink with the online business marketplaces,
Jon Stoddard (51:50.69)
theory is I think we're gonna start to see more of these due diligence requests for online businesses like SaaS and e-commerce. that- your bets. You don't know yet. Yeah, place your bets. I don't know. I don't know. Yeah. Well, that's cool. mean, where do you think this is could-
I mean, I do have a five year work backwards. mean, I just read this great book called, start at the end by Dave Levinsky is like you, you start at the end, you design your goals and you move backwards. and then, you know, make it small little accomplishments. And I saw this great interview with a couple of podcasters called my first million and they were interviewing Rob Durbeck, Durbeck did the, the skateboard guy and ridiculousness and
Man, that guy, I would have never thought he was as sharp, wicked smart as he is. Yeah. Well, anybody that built a hundred million dollar fortune skateboarding. Yeah. Yeah. Yeah. Yeah. This may be a little bit off topic, but I think any celebrity who is out there, who you see, know, the Kardashians, for example, or Paris Hilton, I think a lot of people think they're maybe not the sharpest tool in the shed.
I think completely opposite. I think it takes a lot of smarts to kind of sustain that celebrity to build those businesses. And I think with Rob, it's the same thing, right? He started off as just a skateboarder and on the surface, you think, okay, just a guy riding the half pipe. But I think it's...
It's incredibly smart. You have to be incredibly smart too. Yeah, it's a pretty funny interview. I know this is off the top and he goes, but he these tricks and he gets to the day before the tricks are right because he said, this is the stupidest thing I'm ever going to do. Yeah. So these partnerships, where do you need, what do you think you need to grow?
Jon Stoddard (54:04.686)
I think you want to be a $5 million business in transaction. You're taking the toll back and forth. You got great organic growth. What do you think you need to get there? I need, I think, awareness. I think a lot of people just don't know about DueDilio. Something like this exists. So I think that's probably number one, because I think there's a lot of great
great tailwinds there to make the DueDilio successful. You see, you know, it's kind of, discussed earlier, transaction volumes are at all time highs. More people are retiring. There's more, more deals, more deal flow, more transactions. So I think these are all things that are very conducive to a marketplace like the DueDilio. So I think it's just getting the word out.
and obviously bringing in clients and building these partnerships where my hope is that when someone's searching for a business on a marketplace, we'll be right there where they can click a button and get, of solve their due diligence needs for the business. At least that's my feast.
That's what I'm hoping will drive a lot of the demand. Yeah. I got to ask, I didn't ask this. When do they pay for it? Do they pay for it when they just start the process or they pay for it when they find the person that they want to hire? Yeah. So we're completely free. So the DILIO is free to use right now. know. Well, okay. This is model is going to be in 10 years, but right now we're completely free to use for clients.
we get paid by the service provider. The service provider, because you basically found them a lead, which they would have had to spend to get anyway. Exactly, exactly. And I'd say, I'll add that we get paid only when the service provider gets paid. So it's not a pay to play type of model that some marketplaces have, where they charge you 500 bucks a month to be on the platform plus 3 % of...
Jon Stoddard (56:26.846)
whatever you make. No, we are purely if the service provider makes money, we make money, all incentives are aligned. I love that. I mean, it's a free matchmaking service for now, right? So yeah, so I think it's a very attractive value proposition. I think it's really just spreading the word that this exists.
and gaining some recognition in the marketplace. Yeah. Do you help buyers get smarter faster by saying, this is what you're going to ask your service provider?
Yeah, so I think- Or is that just a great idea you should offer at the point? No, that's part of it. So we do have a lot of free content and templates on our blog that kind of talk about some of this. But I think the biggest service that we can provide is to educate the business buyer on what type of due diligence is available to them and what makes sense, what maybe doesn't make sense.
how much they can expect to spend on something. So I think that's another kind of piece of the puzzle there. It's just educating the business buyer, whether they're buying a manufacturing business, a restaurant, landscaping, an e-commerce store, what should they be looking for? Yeah. So has the why question already been answered when they come to you? Yeah, I think so. I think that...
Yeah, I think it's hard to say that someone buying a business doesn't know that they need due diligence or that they need an attorney to, you know, I'll also say that, you know, I use the diligence in a very kind of wide scope. Hiring an attorney to draft an asset purchase agreements, most people don't consider that part of the diligence, but you know, but I do in our platform so we can help people with that.
Jon Stoddard (58:42.798)
Yeah, just trying to think what else is maybe, know, kind of being connected to a subject matter expert. That's another area that maybe a lot of people don't consider part of the diligence, but we do. And then also we have as part of our platform, not just service providers who do the due diligence, but we also have what I would call deal sharp.
These are folks that can help you finance a deal, can help you analyze. Hey, can you hold on one second? This is a great conversation. But first, I need to pause one second. Yeah.
So Roman, me, I'm really interested in this, Sherbert. Tell me more about the service part. Yeah. So we have part of the platform, part of the network, past searchers that have kind of gone through the process and now do consulting for other acquirers that help them kind of navigate this world, help them.
find the deals, how to talk to brokers, how to do outreach to a potential target, how to structure a deal, how to negotiate a deal. So things that again, probably don't fall in the diligence sphere, but are very helpful for someone who's maybe doing this the first time or looking for help just general. I love this. I mean, because
I am part of a mastermind of the Epic Group, is acquiring businesses, and Roland Fraser, and Adam Lyons, and Patch Baker, and Marty Funke, and Mark McCrae, some guys I interviewed. And they are masterful on the phone. mean, it's like, I got a guy on the phone that's done 100 deals. He is masterful when talking about negotiate.
Jon Stoddard (01:00:49.582)
He's not negotiating, he's developing a rapport and finding out what the seller needs. And then he'll customize his conversation about what the customer needs. it's, you know, most people will first get in, hey, well, send me your three years of financial as well. Then they start pissing on each other's counts and the deal's over. Having a Sherpa like that with experience is awesome idea. Yeah. Yeah. Yeah. So we, you know, we have a...
I don't know exact count, but we definitely have. How many do you have in there? more than a dozen. I'm sure more than a dozen. Yeah. Hopefully this call people here in this they'll, they'll sign up and more. hopefully. And it is still, it's a free service to be introduced, but when they sign up, it's a part of the deal. Exactly. Exactly. It's free service. Yeah. We're happy to answer any questions. Of course.
We provide proposals from the service providers so they can see what's the potential deliverable, learn about each provider, what's the estimated fee range, and then we answer any questions again, and then we make an introduction to one or two or three providers that the client things may work for them. Because a lot of this is also, you do need to ultimately get on the phone.
with a due diligence service provider and make sure you have a good rapport. It's not just finding someone that can do the work. I think you also need to have a good working relationship and kind of a good conversation. Yeah. Be like somebody doing business with. Yeah, exactly. Roman, I have taken you over the hour, Mark, and I really appreciate the time because you talked about some subjects that I just didn't know that you were offering.
But hey, we've got Roman Beylin. He's the founder of DueDilio and &A Due Diligence Marketplace. He can be found at DueDilio, D-U-E-D-I-L-I-O.com. So Roman, thank you so much for your time. If you're also available on LinkedIn and Search Funders, but go to DoDilio.com. you. Great to be here. Appreciate it.
