Sebastian Amieva's Secret to Helping Students Make 45 Acquisitions!

 Summary

In this conversation, Jon Stoddard interviews Sebastian Amiba, an M&A expert, who shares insights on mergers and acquisitions, particularly in Latin America. They discuss the importance of due diligence, the structure of holding companies, and the challenges of acquiring distressed companies. Sebastian emphasizes the need for a strategic approach to M&A, the significance of negotiation skills, and the value of being a qualified buyer. He also shares personal experiences and success stories from his clients, highlighting the journey of becoming a global deal maker. In this conversation, Jon Stoddard discusses various aspects of mergers and acquisitions (M&A), focusing on equity sharing, the importance of asset-heavy deals, and the necessity of having a knowledgeable team. He emphasizes the significance of setting clear exit strategies and the need for coachability among potential buyers. Stoddard also shares effective questioning techniques for engaging with sellers and highlights the importance of proper valuation and readiness for sale. Ethical considerations in investment choices and navigating international deals with expertise are also discussed.

Takeaways

M&A is a modern way to evaluate businesses.
Setting up a holding company in a first-world economy can facilitate funding.
Due diligence is crucial and should be conducted by top-tier firms.
Asset-heavy deals are easier to verify than asset-light deals.
Starting with smaller acquisitions can build confidence for larger deals.
Becoming a qualified buyer is essential to access more opportunities.
Negotiation skills are vital for successful deal-making.
Building a relationship with clients increases the chances of success.
The journey of M&A can be lonely without proper guidance.
Success in M&A requires a strategic approach and preparation. 5% equity is a fair share for involvement.
Asset-heavy deals provide better leverage.
Qualified buyers can seize opportunities quickly.
Industry experience is crucial for successful acquisitions.
A clear exit strategy is essential before buying.
Coachability is more important than financial backing.
Effective questioning reveals seller motivations.
Emotional detachment from deals is necessary for success.
Ethical considerations guide investment choices.
World-class firms are vital for international transactions.

 

 Watch the Interview

 

Transcript

Jon Stoddard (00:03.084)
Welcome to the top &A entrepreneurs. This episode is brought to you by DueDilio, D-U-E-D-I-L-I-O. It's a &A due diligence marketplace for service providers. It's for online, offline businesses. It's free to use, search, find, due diligence service provider. You only pay when you engage with the right person. It is a modern way to evaluate businesses, especially to establish assets, liabilities, and evaluate the commercial potential.

No deal, better than a bad deal. Today, my guest is Sebastian Amiba. He's an investor, mentor, &A expert, global citizen. I mean, he travels the world. If you follow his Facebook, he's in a new spot every day and a Harvard Law grad. Sebastian has spent 12 years personally implementing &A strategies, investing into startups and traveling around the world. Welcome to the show, Sebastian.

Thank you very much, John. Yeah, I'm very excited about this interview. Thank you very much for inviting me. Yes, let's have fun. Let's talk about the &A, which I guess is the topic that everybody is enjoying. I love it. So where are you answering or doing the interview from today? Because that looks like a hotel room or something. Correct. Yes. So right now I'm in Montevideo, Uruguay. It's a little country beside Argentina, Uruguay. So I'm in Montevideo, which is the capital. It's a small country, four million people.

So I came here, I'm coming every year I came here for spend some holidays. They have a nice beach here. So it's called Punta del Este. So I recommend to anybody to spend some time in South America and Uruguay. It's one of the safest countries in Latin America. honestly, it's really beautiful. So do you do any deals in Uruguay or Latin America? And I'm probably sure you do. But the reason I ask this is I got a guy reached out to me, LinkedIn. He's got a nice little

I don't know, almost a $2 million business, very profitable. And he wants to sell. Yes, in terms of buying deals in Latin America, which I exploring more and more every year, I'm getting a lot of requests from business sellers that they want to exit. The only issue here is the funding, right? So the banks won't give you anything to do a LBO transaction, right? A leverage buyout. So I discovered that you can do the holding subsidiary strategy.

Jon Stoddard (02:26.454)
which I did in Brazil, right? I bought the biggest LED factory in Brazil in Sao Pablo. It was 700 plus employees, 22 million euros in assets. What we did in that case with Latin American market is setting up the holding company in a first war economy. It can be in Canada, US, UK or Australia, right? So setting up the holding company in a first war economy like UK, like I did, it's allow me to access.

to finding solutions, right? To a lot of lending facilities. So we set up the holding company there. Then the Brazilian company became a subsidiary one. And then we were able to raise funds from the UK and bring down to the Brazil for restructure the company. So that way I was able to buy this 700 plus employees company, right? The biggest LED factory in Brazil. So, and then I started to explore more and it's plenty of deals in Mexico, Brazil, big, big economies, right? In the world, right?

Mexico, 200 million people, Brazil, the same 200 million people, big economy. So I think it's plenty of deals, but the sellers, don't know how to exit, right? Because sometimes it's difficult for Latin America to have 20 million, 30 million to purchase a business. So you can structure this whole strategy, know, so holding subsidiary. So I recommend to people to get into Latin American markets to try because you expand, you you can become a global deal maker, not just

doing deals in the US doing the SBA, which most of our audience... And Ransom does deals globally too. So it's not just like, United States, UK. yeah. I love Richard Ransom. He's also very global, right? So I realized if you're a global filmmaker, you have more opportunities, right? You are open to...

you know, different opportunities. But the best way to do it is setting up the holding in a first world economy where you have access long does that take and how much does that cost? Because I did get to that point where I found somebody that was a citizen of Peru, now lives in Miami, and said, there's the process is it could take six months to a year because you got to move all your there and then to move the assets under the holding company. Yeah, correct. So in terms of the time frame and how long it takes.

Jon Stoddard (04:39.534)
It normally takes three, four months, five months maximum. It depends on the law firm that you have, the tax planner, the CPA that you're working with. Sometimes it's not your fault. You can do everything fast, and then the lawyer is slow response. The CPA is also very slow. So normally you need to transfer all the shares from the subsidiary, from the Latin American company, say, to the holding company in the UK.

So it takes some times, two, three weeks to set up everything, but you need to do a preliminary work, which is putting all the numbers in order, getting all the balance sheets audited, the profit and loss, and also the tax return. The last two tax return, the last two profit and loss, and the last two balance sheet. Once you have a data room built, then you can start doing this holding subsidiary and transferring all the shares to Latin America, to UK, for example, or US can be any first world economy.

The only thing is, for example, in the case of Brazil, we transfer 99 % of the shares. Because if you transfer 100 % of the full package, then you need to pay more tax. It's more taxable. So if you transfer only 99 % to UK and you leave 1 % in Brazil, it's not considered as a sale. It's not a sale. So we have some more. Interesting loophole, I guess. Yeah, correct. This is the only trick. So you don't need to.

to transfer 100 % because it's gonna be considered as a sale and you need to pay tax, a lot of taxes. So it's better to leave 1 % in a country that is becoming subsidiary. So you can do this. And also if you have the holding in UK or US, the investors are likely to invest, right? Because they are investing through a UK legal entity or US legal entity. That way you're offering safety to the investor to put the fund through.

that holding company, then you bring down the funds to Brazil, you pay to the seller, Or you in shape capital for growth. And another thing very important to do this model, which I'm very keen to do it, you every week we analyze in Latin American deal is the assets, the asset must be done by a top 10 accounting firm like Deloitte, KMBAG, know, Video.

Jon Stoddard (06:57.087)
Ernest and John, all the big firms, because if you do the evaluation, the appraisals with a regular firm, then in the UK, nobody knows that kind of firm. And they maybe think it's not real, right? It's not real numbers. So it's better to do it with KPMG, Deloitte, or any of these kind of firms. pays that? The company pays that, or that comes out of the acquirer's box? Yeah. No, no, no. The company targets pay, right? The company targets. Sometimes you can pay the whole process.

on success fee basis. So after you take over the company, you pay to the Lloyd or KPMG. These films are of course very expensive. So it's better to be very straightforward with them from day one. And then you just do all the legal accounting, do a deletion, you do all the transitions of becoming a holding subsidiary. Actually, I copied from this film. I copied from the Lloyd, this holding subsidiary. But the thing is they do with plus 100 million deals.

And I doing with 5 million, 20 million companies. So they do with the bigger deals because they are very expensive. So their fee are more expensive to do it. But we can do it for 50,000 to 75,000. It can cost to set up the whole link with the bank account, with all the legal, all the due edition. You're going to spend 50k, 75k, but you can buy a $20 million company doing this methodology. And then after you do this setup, then you know.

need to do a fundraising campaign, right? Bringing investors on board for investing in this international or multinational company now is becoming. And then, yeah, the fundraising side also is important because you need to pay something to the seller. Is it 10 % down, 5 % down or something, Yeah, yeah, The other part of it is the LBO. yeah. So this one, I really like it because I am a...

Global deal maker, I like to travel to do on-site to do a deletion with my team, with the CPA, with the lawyer, with the technical person also is important to do a deletion. And then yeah, it fits my acquisition methodology, right? So going out there and I tried Mexico. Mexico is a lot of hotel for sale, right? And they, it's like 100 million hotels, 50 million hotels all over Cancun and Tulum, all these places, but they don't know how to exit.

Jon Stoddard (09:19.211)
I started planning to do some takeovers out there with some partners and setting up the holding in Miami because Miami is very relevant for Latin American markets. Miami, Florida is the bridge between Latin America and Miami. Latin America is 21 countries, right? And then you set up the holding in Miami, everybody gets comfortable and then you can do this kind of transaction between Latin America and the US. So. Yeah, let me ask you a question because I ask,

my buddy from Peru about this. said that, so if I was to give you, I already sent him the income statement, two to three years in the balance sheet and the cashflow statement, how much credibility, how much do you trust that? And he goes, none. It's like, okay, what's the next thing you do? I mean, now what's the kind of next due diligence do you do? I mean, what is it on a Latin American country? Yes, so the due diligence must be done.

course, but the top, top tier of freedom, like the Lloyd KB and KB and G. And also it depends the industry that you're doing, right? Sometimes mining industry can be a bit suspicious. know, some industries doesn't fit this criteria because it's difficult to, you know, to do deletion on site. So it's better to do with asset heavy deals, not asset light deals. Asset deals, asset heavy deals. Yeah. So something that you can verify easily, like a property, like a mcQueenery, like equipment. So

Asset heavy deals only, that works. Like the factory I bought, it was a LED factory with 2 million euros equipment, you know, with a lot of stock, with a lot of properties, so easy to leverage. But if it's only services... Off-ware, it's like, he just like backed away, goes like, John, it's the IPs and the people, so we don't have any way to verify that. All right, a bunch of computers and a software, this is very difficult to leverage. But I say always but because one client from London...

Rebecca, she bought a five million pounds cybersecurity company. But the thing is there is no asset, but the asset was the contracts. They have a contract with the government, with the army, right? So they have 10 years contract and it's very easy to leverage this kind of contract, right? Because it's cash coming in all the time. It's like you put that contract down with the, was it the Royal Marines or Army?

Jon Stoddard (11:36.545)
Correct, that is the big credibility. yeah, this kind of contract also can be used as an asset. The same with digital marketing, with software companies. If you have a big brand like a client, then this kind of contract, the receivables can be used as a collateral to bring funds. You can use revenue lender, cashflow lenders, or invoice lenders. The alternative finance. It's all right, gonna run that deal by you. I mean, it's kind of little bit smaller, but.

take a look at it because they've got some great clients. Microsoft's a client, Santander's a client. There's some big by profile customers. Okay, okay. If you have any deal we can discuss. Normally people when they want to get started into the &A space as a deal maker, I recommend to do one single acquisition between 500K to 5 million. Because some people want to do more complex acquisition like IPO, SPACs.

or rollups, which take more time because you need to convince five people to roll up with you to Marsha and then to do an IPO. But it's better to prove the system, right? To have everything in place, close a deal, and then you have kind of a credibility, you will feel more confidence, and then you can do bigger deals. Doesn't matter if it's small, big in the beginning, you need just to close one deal to prove that you can do it. Then you can do global or you can do bigger deals.

So I recommend to people to become, if they want to start into the space, if they want to buy, became a business buyer, I recommend to become a qualified buyer, Because I I'm seeing all the time people who is starting on this space and they don't have an acquisition criteria set up. They don't have an acquisition strategy, you know, properly set up. Also they don't know how to build a data room. They don't have a proof of funds, you know.

they don't know how to prepare for the negotiation. So for me, it's very important to become a qualified buyer so you don't get blacklisted into the broker network. As soon as the broker realizes you are not a serious buyer, they are all interconnected. So if you are- I don't have any time wasted on you, telling you. Yeah, yeah, yeah. You're going to be a time waster. They're going to blacklist you and then you can access more deals, at least through brokers. You can find off-market deals, of course, using different lead generations that we use in-

Jon Stoddard (13:56.653)
in our &A deal making program. yeah, so brokers are important out there. 20 % of the deal are sold by a broker. Let me rewind a little bit. mean, I'm going to go back to the Harvard law grad. So you got a law grad from Harvard and like, I didn't want to do this. I started doing it and I hated it. This one is like a business program.

not a degree, right? So I went two years in a row to study negotiation because I realized it's a negotiation. It's a cold program on negotiation, right? I met a lot of CEOs and very important people. They go every year to study this kind of program because negotiation for &A is very important, right? So I have a very nice negotiation preparation checklist. I will send you for free if you want. I got that from Harvard. So.

I realized that being a dealmaker also is very important to have negotiation skills. This reason I was investigating and doing my research were to study negotiation, right, in a professional way. So I went to Boston, know, two years in a row to study this topic. I met the professor, Deepal Mahotra, know, Francesca Zeno. So I met the, I made very good friends with her and then, yeah, I bought her book and I did the training and it was amazing. I think...

I recommend to any deal maker to go there to Boston. They do it three times per year, this program, right? So you can enroll to any of them. And then you're gonna meet amazing people, right? Global CEOs, they fly over to Boston to do this kind of training. Yeah, and the professors are amazing, right? So how far professor they have a good- They still teach a course, Never Split the Difference guy. Yeah, yeah, yeah. So this, no, this guy is-

This never split the difference. There is a nice book right from this guy. He's from LA, right? So he's a great negotiator. I love this book, yeah. So it's one of my favorite. So how did you get started in your first acquisition and just say, am I going to acquire a company? Yeah. Yeah. So I bought the first company when I was 24. 24? Yeah. When my &A lawyer, My &A lawyer bought it for me, kind of.

Jon Stoddard (16:16.717)
So I was working in a law firm back in Argentina in Buenos Aires. And then they were telling me that they're buying distressed companies, no money down. And in the beginning, I thought, this is like a scam. How you can buy a business, no money down, a distressed company. That can be not possible. And then I started to watch them, how they close deals on the negotiation table with the sellers. Distressed companies, mainly, they were buying. But I don't recommend to anybody to hire a distressed company because

I personally bought it and then it's very stressful to restructure a company. It's very stressful and very stressful to deal with the creators, with the banks. Everybody's calling you to, hey, can you pay me? Can you pay me my invoice? Can you give me money? So it's very stressful. So this was almost 200 employees, tracking company, transportation company in in in Argentina. was a pretty big deal. was very excited. Next day I got the Mercedes-Benz from the CEO.

I wanted to do everything at once. I wanted to be the CEO. I wanted to be the sales manager. I wanted to do branding, marketing, being the deal maker all at once. So after six months, five months, the company bankrupt. So I got up with that. That's your first lesson. know, Bert Schuyler Wathaway went bankrupt too. So I'm not ashamed to say that because yeah, it was a nice experience. I felt very excited about the &A war and buying deals, my money down. But this what this Trace company was

crazy transportation company. And then you feel a bit sad when the company go bankrupt and you know, all the jobs and people lose their job. you know, so it was, it was very difficult time. I don't recommend it either unless you love doing it. I mean, you're starting from a whole, I bought a distress company, was an e-commerce company. And after three, four months, people that didn't get their refunds that the guy didn't tell me were putting it onto that.

site where it's it's like, it's not high deck, but it's like the worst STO in the world. All your, Hey, this guy didn't pay my fee. Like, wait a minute. I didn't negotiate that. it's, it's, this was my first lesson. So don't buy any distressed company. know some people out there is saying buy your distress company for $1 consideration.

Jon Stoddard (18:38.485)
But this is very bad advice for somebody who is starting like me when I was 24 years old, because you need to be an expert at restructuring companies. You need to know how to drive sales, how to increase the profitability of the company, how to have an exit strategy, who can be the potential buyer after I purchase the business, how can I grow by &A. You need to be more knowledgeable about this topic to start doing this stress company. But of course, you want to feel very tempted if somebody tell you, I'm going to give you my

my $10 million company for $1 consideration, but you have $10 million asset and 11 million debt. So that company worth is minus one, right? So you paying your dollar that you paying is more than what is worth. And then you want to have a lot of issues with dealing with the creditors. I know a guy that's pretty good at it now, but because he's got a platform company and he just looks at it and goes, you know, I could just, you know, yeah.

plug it into my platform company and it makes sense, but not now. Then I realized, okay, I was in Argentina, I was making a lot of million of pesos. So the currency is very weak right now. So I would say, what if I do the same, but with a solid currency like British pounds, for example. So then I decided to move to the UK when I was 20, 29. So I decided to move there.

I got my Italian passport. have the two nationalities. So with that, I was entitled to live in the UK. I set up my company there. I bought a football club in Spain, the LED factory in Brazil. So I started doing deals in euros in another currencies. And it was very exciting journey, right? So I rented my office in the Gerkin in London. I was getting a bit popular. Everybody want to sell to me because of course, if you have a nice office, if you have a couple of deals in your pipeline, if you cross

some deals then people will start to reach out, this guy, he's buying businesses. So I was in the newspaper in Spain, also Spanish is my first language. So when I bought the football club in Spain, I became a bit popular. Of course, no Barcelona, no big brand, but it was a third division football club. And then I was, yeah, I got in the interview with a television radio and then I started getting famous and a lot of Spanish business owners start reaching me out to sell their companies and then.

Jon Stoddard (21:01.857)
I started analyzing these there, but of course, Spain is not the same of UK, right? You sell, the LBO strategies are harder. So you always need to set up the holding in the UK, right? Always playing safe from a first world economy, right? And then you can absorb companies from third world countries or second world countries, right? So like Latin America, for example. So, but right now I recommend people, know, after I moved to the UK, so to continue with the story, I...

I've been living there five years and a half in London. And then I decided that the London is, you know, the weather, the weather, British weather is not what I wanted. I decided to really, I decided to do three months, three months in Georgia, the country Georgia. I know, I don't know if you know that country, maybe Si. Not Georgia, United States, but Georgia and UK. I lived in

Turkey for a year. My dad was stationed there and I lived in Germany for three years. Nice. So we moved, I moved with my wife to Georgia. You know, we bought our house there and we're some business from there. And then we spent the summertime only three months there, three months in Europe, three months in Latin America and three months in the U.S. So I'm doing, following the sun, you know, and enjoying a better weather. And I realized all these deal making lifestyle, I can do it from the computer. So yeah, it's very helpful to.

Yeah. So how many deals have you been involved in acquiring? Yeah, 45. 35? 45, 45 with my 45 deals, that's amazing. With my clients, myself four only. Myself, that's myself four, but with my client 45, approximately between 20 and 30 % of my clients, they close the deals. When they hire me to help them to become a qualified buyer, helping them to close their first deal.

These kind of clients, you know, we have about 20 between 20 and 30 % successful rates. So it's pretty decent with on my side. And then I have clients who they hire me to, to, help them to grow by &A, right? So these companies making at least a million sales per year. They want to grow by &A, do a couple of single acquisitions. And then we do an SPAC or IPO, you know, in Sweden, maybe. I have to tell you that.

Jon Stoddard (23:23.821)
Many of the people that reach out to me are first time &A and it's their first acquisition that's toughest. What do you look for in a client to help them get over that first one? Yeah, so first of all, it's not all about the money. Of course, I charge money to work with myself, but also I get equity because I believe I'm going to get involved with and I'm going to make sure my clients buy the right deal. I know the wrong ones.

So I get the 5 % equity normally between 5 and 10 % equity on the first deal that I close with my client. And also I charge a fee for 12 month, so service. But what I'm looking for is somebody who can commit four hours at least per week, who have a business experience, who have a good credit score, who also want to get involved with in an industry that they know, right, mainly. And also,

somebody willing to learn new things, right? More curious person, because a lot of people reach out to me with all the answers and they came to me with a deal on the table. Most of the people came to me, 50%, say, Sebastian, I got this $30 million deal. I want you to help me to close. I want to enroll your program and all this kind of approach. And I can tell these kind of people, are not gonna close it because when I start asking three or four questions, like, do you have proof of funds?

Do you have two investors line up? Because lenders will give you up to 90 % of their skin price. That is not the problem, right? We have lenders network. I have very good lenders that provide me up to 90%. But the lenders normally will ask you, OK, are you willing to put a personal guarantee? Normally they will say no. Are you willing to put some skin in the game, 100k, 200k? Well, I don't have it. So you will need at least one or two investors line up to put 200k, 300k, 100k as a skin in the game.

The lenders can give you the money. And then you need to have a strategy. Why are you buying this business? What do you want to do? How do you want to the sale? How are you going to pay the debt repayment plan? How are you going to pay the lenders? How are you going to share the dividends with the investor? So you need to have a big idea before you do the deal hunting. This reason I have seven steps until you buy your deal. So deal hunting is the last part. Deal hunting, you cannot start hunting for deals.

Jon Stoddard (25:46.143)
until you are ready, you are prepared for the opportunity. This reason for me is very important to become a qualified buyer. So I prepare people to become a qualified buyer. I provide to them a $5 million commitment letter from my trusted lender. So if I give you a commitment letter of $5 million, you can pass the question when somebody asks you, can you show me proof of funds? You have something. Instead of you showing your bank statement, I can provide you with a commitment letter from a lender who had the license and everything in US, UK.

So I help people to became a qualified buyer. This is mainly my Do you think that's what you spend the most time on is like prepping these? I don't want to spend much time on this. I just did a promotion on December on 61 people applying, right? I try to keep it boutique 50 people per year only because I get to know them personally. Sometimes we meet personally.

Because at end of the day, they are going to be my partners. I'm going to get 5 % equity. They're going to get 95%. So it's more hand-on guidance. I don't provide any online training, any info products, any challenge. I don't do any of these marketing tactics. What I do is more hand-on guidance. I take 50 people and I fully spend time with them. We have weekly calls, one-on-one. I provide you with the commitment letter, with all the documents that you need to become a qualified buyer.

And then together we analyze the deal and we fly over to do the site viewing. We do different things like acting as a real partner because I realized that way the probability to you to close a deal is higher. A lot of people reach out to me and they say, I bought this online course, X course. And then they are a bit disappointed because they don't know how to start, how to purchase the seller, how to build an investor network, how to develop the lender's network.

how to show credibility in front of the seller or the broker or the investment banker or the family office or the property equity firm. So the information is great. You can watch a YouTube video, you can buy an online course, but then you're gonna feel lonely because being a deal maker is a lonely journey, If you don't know where to start. So I realized I want to focus on providing hand-on guidance during 12 months because I don't sell magic, right?

Jon Stoddard (28:04.991)
I think it's very important to have a timeframe of 12 months. Some people can close a deal in three months if they're very hardworking. Some people can do in five months, six months, seven months, nine months. It depends, right? So I believe in long-term relationships, this reason I want to do it in a 12 month program, like the service I'm providing. Who's your best student? mean, how many deals have they done? You always see somebody break out.

Yes, I have one from Canada, Damian. Damian is from Canada. He bought a commercial lending company for 3.5 million. And now he's doing e-commerce acquisition. He's buying the second acquisition. So I get very excited when one of my clients is making good money per year. And they buy the second acquisition, right? And we still keep the relationship. We started together three years ago. I flew to Canada, to Vancouver to meet him. We spent one week together developing a

acquisition strategy, meeting a few private equity investors in Vancouver. then, yeah, it's nice when you build a relationship with people. I'm a people person, I'm very reachable, so I like to spend time with them. And I think this kind of methodology that I'm applying to teach people, if you want to call it, or to partner with people about how to buy their first or second company is working.

Yes, working very well. very happy with this. That 5%, is that just equity or you're getting a profit first or dividends or something? I guess sometimes I get the equity, 5 % equity. I became a shareholder, silent one, know, silent shareholder. I just get my portion of the dividends every quarter or every six months. So I get some equity in different companies. So that way it allow me.

I know a guy that does that and he'll ask for 5 % of the gross profits at the top cash flow out. Say, hey, it's kind of a Shark Tank guy where he goes, hey, you're going to pay me back until my original vessel is back and then I still own 1 % or something. Yeah. Yeah. It's a good idea also. Maybe I will consider it. Yeah. I was thinking which is the best way and the fair way to work with people. I want to be fair. want to...

Jon Stoddard (30:24.865)
you know, provide a good value, right? Because I'm here for the long run, right? If you do something like very abusive, if you want to take 50%, I know people out there that they take 50 % of the company just to teach you how to buy companies or stuff. That is too aggressive. I recommend to do it very, know, 5 % for me is enough, And then, but if I have 5 % of 50 people, then it's gonna be a good portfolio of companies for myself, right? You know what I mean?

So you can get a small piece of the cake and you can help people to become first time business owners. And also this year I'm taking a bigger clients, right? With plus 10 million revenue. So we trying to plan two or three acquisitions and then do an IPO in Sweden, right? For example, which is the fastest and there's a very good stock of chains out there. And then it's not too expensive. So.

Yes, I'm planning to do bigger, bigger deals this year. I'm very excited. I think the &A last year was big, know, so many transactions. And this year, you know, after all this pandemic, COVID, a lot of companies, they are recovering, you know, and then now you can tell which company is good, which company survived all this pandemic, and then you can pick, you know, the best deals. I always recommend to buy asset heavy deals, just because it's easier to leverage.

because you have the equipment, the real estate and the machinery to use it as collateral. Of course, you can try asset like deals like a digital marketing companies, but if you want to close a deal in three months, six months or as fast as possible, I recommend to do it with asset heavy deals and mainly manufacturing, healthcare, warehousing, tracking companies, something that you can use as a collateral. And also for me, deal flow is not a big deal.

Some people think building your increasing your deal flow, increasing your pipeline is very important. For me, it's not important. And some people even is paying 3000 per month, 4000 to deal finders, to deal sources, find their fees, right? To some companies, I know this industry very well, right? I don't recommend to do that because deals are out there. Opportunities are out there all the time. But if you are not qualified buyer, there is my point. If you are not qualified buyer, then you wanna start...

Jon Stoddard (32:45.941)
watching opportunities pass by like a buses. And then you cannot do anything. You're going to spend two, three years to close a deal maybe if you're lucky, if you find a highly motivated seller. But if you know what you're doing, if you have a proper acquisition criteria, if you have a exit strategy, if you know what you're doing, if you have proof of funds, if you have somebody who can take you there, it's easier. It's easier to close a deal.

Yeah. How do you judge somebody that says, I want to buy this manufacturing plant. They make X widgets. And how do you say, well, you're a doctor. You came from some other medical field. You don't know anything about B2C products. Yeah, when they have zero industry knowledge, what I recommend is to

hire or to put on the board somebody with 10 plus years of experience in the industry that you're targeting. If you don't have somebody on your board. For me, when I was 24 years old, I didn't have any board, just me and the lawyer who was my boss. So don't believe that you need to build a solid board to buy a deal. I think anybody can do it if they have all the pieces in place.

But if you're a doctor and you want to buy a tracking deal, for example, you need somebody who understands at least the industry five years experience. So maybe you can hire an external consultant and pay a success fee after the completion, or you can give equity, small equity after also the completion. Different ways you can pay equity or consulting fee.

So you can bring somebody else. This is like the Warren Buffett, Charlie. They don't know anything about C's candy. mean, they like eating it, but they don't know anything about manufacturing and building it. yeah. They surround the right people. With the right people. As Richard runs to say, with the right people, everything is possible. Yeah. I've got Andrew Wilkinson from Tiny Capital on my list in my rotation. And he's just like, hey, my number one job is to hire and fire CEOs.

Jon Stoddard (34:50.561)
Yeah, because you can find somebody also in the UK is called a non-executive directors, right? You have an association with people who is retired already, but they would like to participate on deals still and get pay a quarterly fee or an annual fee for general meetings, right? So you can hire people who've been managing plus 1000 employees, right? And put them on your board and doing a very, you know, very nice, you know, building your nice pitch deck with you, right? For a very cheap price.

non-executive director, the same in the US and in Australia or Canada. You can bring on board these kind of people who is retired already and they will like to get into this space, &A, or they believe in you or they really know the industry that you're They're like, keep busy, know? Another thing, John, I recommend is that expert five plus years of experience in the industry that you're targeting and also you can buy a market research, market report about the industry, right?

for $100 on statista.com, for example, any of these providers to have a better understanding of the industry that you are entering, right? So if you are in the negotiation table and if you know the top 10 players in the tracking industry, how much is this industry performing? And you know the main numbers and the main players, then you will sound more knowledgeable. And that is gonna give you more credibility to negotiate. It's like, okay, he's a doctor, but he really understand the markets.

He really know the top 10 players. understand the main numbers of this, or the trucking industry. He got somebody with five plus years of experience. So it must make sense that position strategy, right? And also the criteria that you set him, right? So. Yeah. So what, do you have any students that are doing multiple roll-ups? I know you said that a guy that a lending company then, and then start buying e-commerce. Do they have kind of an exit plan like three to five years or?

Yes, some of them. sometimes we, our system, the system that I'm applying, the &A strategy that I have is buying a business, delegate the management and get dividends. It's very simple. So you don't, you're not buying a job like most of the dealmaker are doing. They buy a job, they want to be the CEO, they want to be all at once. So when you delegate the management with somebody who's been running businesses in the same size, you can

Jon Stoddard (37:16.757)
They can develop also a growth plan for you, right? The CEO can develop a growth plan. And then you just, you just always working with developing the network with family office, private equity firm to have an exit plan, to be acquired by them or to buy one or two single acquisitions or sign a check-in acquisition to then do an IPO or doing a, you know, a bigger exit. So yeah, exit plan, you know, we, I help them to set up the exit plan. But the most important thing is

before you buy a business, you must have the strategy. Some people just buy a deal. Most of the people, buy a deal and then they don't know how And they're happy, They bought their lifestyle business and they're happy. I know, know. it's a different story. Each people is a different story. So I really enjoy the diversity of this &A world, right? Because you have so many industries, so many personalities, and also so many cities to explore.

So what do you see in the most of, mean, I like that the personality that comes to you, like 50 people come to you and he goes like, Hey, they're all motivated, but you know, I've got to, you know, this is like the big question is like how to pick the superstars. Cause you need the superstar in the acquisition you needed in operations and you needed delivery and like picking that person that's going to be, well, I, if I'm going to put any time or money behind this guy, I know he's going to do it.

For me, it's very important that being humble and coachable, right? For me, it doesn't matter the money that you have. Some people came with me with 200K. I say, Sebastian, I got the skin in the game. I got 200K. I know what they want. I want to buy, for example, logistic companies in Florida. Let's do it. They work together. Find me a deal. Let's close it together. But then these kind of people, they know all the answers. I decline them, even if they want to pay me, you know, because...

They're going to waste my time and they don't want to listen. They came with me with deals and money, but then they don't know the process, the entire process of &A. You need to understand what you're doing, then setting up a proper acquisition criteria and then take action. Not the opposite around, taking action and then thinking about a strategy and then thinking what to do. So it's not the money. There's a lot of people with money, with 100K, half a million sitting in savings, but I don't take in them.

Jon Stoddard (39:40.203)
you know, on board if they are not coachable. So for me, it's important being coachable. Yeah, is there a story behind that where you started working with somebody, the guy was not humble and not coachable and it just blew up? Yeah, we've been coaching for a while, know, four years and a half. And I met different personalities, right? So I can tell how they work. The conversation I can tell if they are going to be coachable or not, if they are good listener, because

on negotiation and also in the &A space, you need to listen, know, why you selling? You should ask and then listen, why you selling the company? You know, how did you start this company and you need to be good at listening. And the people who don't listen, I don't try, I try to don't take them on board, right? Because it's a very- How do you know they're not listening? How do you, are you on the call when they're asking questions? Yeah, when I interviewed them, I realized they are not-

they're not the right fit. And I say, listen, it's fine. You can try buying an online course and do it yourself. You don't need me. I should say that very politely, in the most polite way, because I don't feel comfortable with somebody that I want to explain, you need to do this. And the week after they came with me with three deals, they found on visitforsaid.com, any of those websites. And I said, listen, you are not ready for this. You need to prepare yourself.

two months preparation, 45 days preparation, knowing the main terms, the main question to ask to the seller, to the broker, getting proof of funds. You need to have a lot of things in place, setting up the foundations, then go out and do the deal hunting. So if they came to me with deals from day one and they are a bit or something, they say, I've been closing deals my whole life, I know how to close it. 45. Yeah, 45. Now I became the...

They money advisor of microadquire.com. I know I saw that. know, I know Andrew, I'm going to get him the Yeah, get him on the board. So I get him on the, on the interview. then, yeah, we are 110 million company now, know, valuation. So valuation. Yeah, it's great. I am advising a lot of startups owners there. I have like almost seven clients, you know, they, they reach out to me, they want to sell the company. They listed on microadquire. So I,

Jon Stoddard (42:06.389)
also advising people to how to exit their company, right? So most important. I actually know another guy is doing exactly what you're doing. Yeah. Okay. You know, yes, it's a lot of people teaching this. I got into the &A coaching space as people started reaching out to me in my office in London, right? I didn't want to also English is not my first language and I didn't want to be like a public figure, right? But then I realized how can I do this?

and getting equity, right? It's not all about the money, also the equity, like a deal maker, because I am a deal maker. I want to get involved with, I want to get equity. I want to help people to also achieve their first or second acquisition, but I want to get equity, right? So I found this way very fair for everybody. It's a win-win situation. So yeah. Yeah, your English is fine. I guess like after like two or three minutes, I mean, I don't have any problem understanding. Yeah, no, it's fine. Yeah. It doesn't matter. It's no excuses.

English, no excuse. No money, no excuse. People just put excuses for everything. You just need to take action. And I don't mind competing with anybody and you just need to get out there, exposure in yourself. More in the beginning, if nobody knows you, need to keep exposure in yourself, getting out there, getting in different interviews, in podcasts, getting... The sellers must get to know you because if you want to buy deals, doing the in-bone marketing strategy that...

Like they contacting you, you need to keep posting and promoting and putting content out there, attracting the right business seller, right? The motivated one. Yeah. I got to ask you a question about, asking questions of the seller. mean, what kind of questions do you ask and like, what are you listening for to make sure he's, you know, actually does want to sell versus, you know, just, you know, I just testing.

Yeah, so the first question is a very, very nice one. So you say, what are you planning to do after you we close a deal together? I am very straightforward. I want to close a deal. what are your plans after we close a deal together? After you exit, what is your plan? So if they don't have a plan, they know this is- If they don't have a plan, they're just wasting your time. They're wasting your time.

Jon Stoddard (44:28.877)
The second question or the first one is the understanding that why? Why they're selling? Because they put excuses and maybe, know, everybody wants to retire, right? But this is the easiest answer. But yeah, so there's always a number of questions like, and I got to tell you, when I saw my business, you know, I wanted to sell my business. A lot of people didn't ask me like why I wanted to sell it. And then the truth was, one of the big truths was,

Well, a competitor came in owned by United Healthcare and they owned the company that I was competing against with and I couldn't compete them on like to acquire leads anymore. So yeah, that's one way I want reason why I get out. All right. Yeah. So understanding that why is very relevant. So asking always why they're selling and just listening, right? I'm meeting the key people inside the company when you do a site visit and trying to listen what they think about. Sometimes it's a confidential thing. can't.

they cannot introduce you as the buyer because they get panic. know, all the employees get panic about losing their job. Yeah, so that's a good sign because if they're introducing your employees, they've already told them theirself. They have to because those people panic. If they tell it's a confidential thing, nobody must know, maybe they are not fully ready for an exit. Right. And then what else? Yeah, so some indicators that they are time wasted.

Some business owners, they just want to know how much their business worth, right? Just they want to know. And they want to make you waste time. You do the side visit, you make them for a lunch, for dinner, you spend some time on do a deletion, on advice or nothing. And they say, well, we are not, I'm not ready. want to stay on board. Or they decline your letter of intent or they ask you for more money. Then you realize they are not really motivated. So I recommend when you start doing deals, don't get emotionally attached with any deal.

This reason you need to have in your pipeline, five, 10 deals and send five, 10 letter of intent and wait until it's signed back. So I don't get emotionally attached with any deal because as my own experience, you then you losing. If you get emotionally attached to it deals, it's like a with person. need to be, know, wait. Hey, she's going to call me back. She's going to kind of, I'm going to keep calling until she calls me back. Yeah.

Jon Stoddard (46:47.767)
So these two questions, you need to realize what they're gonna do with their money after you purchase the business and understanding their why. So if they don't have a plan, what they're gonna do next is because some people don't have a plan because they're well, I'm gonna get these 10 million and then I'm gonna travel around the world. I wanna buy an island, I wanna do this. This can be, at least they must have an answer. Yeah. How much do you spend on valuation? The reason I ask is like,

asset heavy business, it's going to have a set type of valuation type of business, right? Yeah, the business that we are analyzing must have the appraisal done, must have the audited balance sheet and profit and loss, must be everything, the tax return also, everything. They must build a data room before they sell. The problem is most of the brokers, they behind commission. They don't know how to sell a company. They just, they want a commission only. So they don't know how to prepare a proper data room.

with the marketing materials, with the tax return, with the balance sheet, with all the profit and loss. If the business is not ready for an exit, then you need to understand that you will spend more time. But if everything is properly done in a virtual data room, then you can do it quicker, If it's the appraisal done from real estate, everything is done, then it's going to be quicker. So I try to check out the memorandum information, checking out that everything is properly done, and then I spend more time. But if it's...

If it's a mess, like most of the deals, they are not organized, then I try to decline. I want a deal where they are fully ready for an exit and they're selling for a four times multiple EBITDA maximum. Because my lenders, they don't like expensive deals and also the investors, they don't like expensive deals, investing in something that is over budget. Just curious, what is the interest rate for an international company?

For loans, mean for... Yeah, so it's between 6 % and 11%, the most expensive one, right? It depends on the lending facility that you're applying. We're using the alternative finance market, like asset-based lenders, cashflow lenders, revenue lenders, invoice lenders. So these kind of lenders, they have from 6 % to 11 % maximum. So on the average, seven, let's say seven. So you have a 7 % interest rate. The lenders are working with, right?

Jon Stoddard (49:07.347)
Is there any industries you avoid like oil and gas or mining? You did mention mining earlier. Yeah, so the ones that I avoid personally are the CBD marijuana related. You CBD like oil and marijuana? yeah, yeah. And I was like, you can't move that money around the United States. Yeah, all of these drugs and weapons and casinos I don't personally do because for ethical reasons. So I don't want to get involved with like a...

in any of these deals just for personal reason. It's not profitable. Maybe some people are making a lot of money on this, but I don't want to profit on this kind of industry because my personal values. For example, I'm not taking guns or weapons factories or casinos or gambling stuff. I don't do this. yeah, I'm not saying it's not good deals. You can find very good opportunities out there, but it depends.

Yeah, it's your choice. like a student comes to you one of your 15 and say, I want to work on this casino. go, you I'm going to find somebody else or? Yeah, I pass. I pass you to another &A advisor that I know. No problem, Yeah. You know, and then I don't put that on my track record. If I help it in some way, I don't put that on my track record. I don't want to be recognized. I'm the guy who make money selling casinos or weapons just for my credibility, right?

Yeah, no, I mean, it's up to you. don't gamble either on that case. I think the risk is way too high. Some industries that I try to don't do is, you know, for example, software as a service, test as a service, you all what is... don't do those software as a service? I do advisory how you can sell this company, right? I do the, you know, the sell side advisory on these companies or micro acquire, right? But then...

For a buyer, prospective, if it's not a sign-as-shed acquisition, if you don't got the money to pay 10 times multiple, 15 times a beta, so then it's difficult for a buyer and for people that we know that they are doing LBO strategies with IT companies, because you don't have much to use as a leverage. You don't have enough collaterals, enough assets.

Jon Stoddard (51:25.259)
except they have a solid contract with big brands. Yeah, you got to have a consistent earnings, like three to five plus years on that. then you're like, whoa, whoa, how do I get my money back? Another thing is very important is I don't know taking companies who are new. New companies, no. If you want to buy a two years company, it's not enough track record for the lenders, for the investors. So most of the IT companies, e-commerce companies, they are two years old.

Yes, normally 25 years old guys who want to make their first million selling their e-commerce. I understand that is fine, but then you don't have enough financials to do a cash flow projections. The lenders don't feel comfortable sometimes. Now you have a lot of e-commerce lending facilities. It's becoming more popular because of course, most of the companies became an e-commerce, so they must do. It's crazy numbers with Thrasio and those guys.

But before, one year ago, it was a good idea to buy e-commerce up to half a million dollars because you have PayPal loans. You PayPal loans? You can apply for a PayPal loan through PayPal up to half a million and you can use the PayPal from the company target, right? Account and then you can apply for funding solution and pay that way so you don't use the money.

You can leverage with PayPal, but now they changed the regulation. think they lower down to 100K or less, too small. kind of deals are you working on right now? Tracking, yes. Tracking, tracking, tracking a road construction company in India. We have a $42 million road construction company. They buy a start from Washington DC. So we're setting up the company. Let me ask you about that. So having the right people in the place,

Have you done business in India before? no, This reason we need to have a top tier firms like Deloitte, working with these big firms that they can do. From India? Yeah, from India. Because they are global firm, they have branches everywhere. So I working with Deloitte, OK, P &G only, and sometimes with BTO. So we have these kind of companies and we force them, we force the seller to work with them. If not, we are not interested.

Jon Stoddard (53:48.909)
We cannot get the evaluation from a regular field. It doesn't matter what country it was. If you didn't have any knowledge of the country or somebody peed on the ground. I need to go to India, maybe in March. So I'm going with my team, my lawyers. So we're going there to do the site visit and reviewing everything, meet the key person. We've been chatting on Zoom all the time. But of course, it's better to meet personally to do that everything is for real.

And then we started paperwork. So this kind of deals, global deals, Africa, India, Middle East, all these countries, is better when you have these kind of fields behind. So they are recognized in the UK or US for the investor side and also for the lenders. The lenders are not gonna lend you, if you have a $1 million property in India and the valuation on the price is not done by Deloitte.

then maybe that house worth 100K only, right? You need somebody who maybe, I'm not saying always is some cheating people, but you need to working with world-class films on these international deals, right? Yeah. And what do you do with Deloitte? You have your contact in the UK and say, hey, do you have somebody in India? Yeah, correct. Yeah. So you can call the head &A of Deloitte, for example, and say, hey, can you connect me with your partner in India? And do you know the &A?

head office &A, know, the head of &A. So they contact you with their partner and then you start chatting and then they say, well, yes, if they want to become a client, they need to pay X amount of money, you know, or we can do a success fee deal because we know you're Sebastian. Sometimes they don't charge me upfront because they know my methodology of the LBO. So sometimes we can avoid any contingency fees or upfront fees.

which is good. Yeah, I was just curious, how do you, you Deloitte's going to say, I, know, I got to pay my people. Well, so when, here's the bill, doing 30 days. Yeah, they have, you know, they charge you by hour, right? $300, $700, you depend on the professional tax planner, wealth planner, wealth management, expert, you have different professionals, know, the legal, the legal, technical one, the accounting one. So they will charge you by hour. So

Jon Stoddard (56:07.647)
If they know you like they do with me, sometimes I pay a fee. After we close a deal successfully, we pay whatever invoice they start invoicing, know, in milestones, know, after we close a deal. not before. So if a deal takes 12 months, they're willing to wait that long on the invoice? No, no, no, no. The thing is, you must hook up, you must hook up.

Again, the data room organized, right? If it's a mess deal, I don't take it because I know I'm gonna make waste their time. It's gonna be bad for my reputation if I send a bad deal to Deloitte, for example. Must be Yeah, don't send me bad stuff. Yeah, no bad stuff. Something that is ready to audit and can take you a couple of weeks, a couple of months to organize everything and then start applying for funding solution, right? Yeah.

Did you take your attorneys with you on each deal to deal? Like the guy in India, he's got his own attorneys or do you bring yours to cross? Yeah, so we have a bilingual attorneys, right? So we can each time if he's in Brazil, we have somebody who will speak Portuguese, you know, for understanding what the lawyer is telling me. If he's in India, somebody who speaks the language, right? And also English. So I fully understand what.

what is going on, right? Of course in India, everything is in English. So it's not the problem, right? But we always bring a lawyer because the lawyers from both sides must be connected. legal team from US for example, with the legal team in India must be interconnected, right? And sharing the same folder and everybody must be in the same page, right? So avoid any misunderstanding. yes.

With like an hour has already gone by. I need to go. need to go. Yeah. Thank you so much, Manelie. So everybody, is Sebastian Amiva, investor, mentor, &A. Top &A entrepreneur. I want to thank you so much for your time. Thank you very much, John. Yeah. Let's publish this. I'm very excited. Thank you very much. And let's keep in touch. If you have any doubt about the &A process, or if you have any personal questions, just send me a direct message. Thank you so much. You're welcome. I really appreciate that. OK. Cheers. Bye. Bye.