- Hey everyone, it's Neil Patel here
for another Q and A Thursday video.
I'm here with Adam LoDolce from Viewership.
- Hello everyone.
- And this weeks' question is...
- I am fascinated to get Neil's thoughts on this,
but this one is from Jason AK Mitchell,
and he'd love to hear our takes
on buying businesses using leverage,
LBO to buy a business,
and also using things such as earn outs.
Basically, he's very interested
in acquiring businesses,
especially internationally.
- LBO stands for leverage buyout
and what Jason's trying to do is
he's trying to buy out a business
using debt, special financing
where he doesn't have to pull
all the money out of his pocket
and even make it where he's buying that business
and using a lot of the profits to
pay back the people
who used to own that business.
And yeah, that's really possible.
You don't need bank financing
or anything to do this.
I have a friend in Seattle who does this
all day long.
And I've also done this.
The strategy that you use is you go
to the business, you figure out, alright,
how much cash are you willing to put up front?
It's very rare that anyone's willing to
walk away from their business unless they're
looking to retire.
And be like, sure you can have it all, just
pay me out for three years.
- Right.
- That's very rare.
If you can get that deal, good for you.
If you hit up enough people, maybe
you'll get that.
The easiest way is typically hitting up a
business, asking what are they doing, what
do they want, assuming you come to terms.
Be like cool, we'll give you X amount of
dollars up front.
The rest we'll give you over three years.
And you can even throw in some sweeteners
in there, in which you're saying
look, if you stay on board and you help growth,
you help us hit this milestone or this other
milestone, we'll give you X more dollars.
And what you would do is you would just be
taking the profits from the business and
using it to pay em out.
So that way, you yourself don't have to
come up with all this cash from your pocket.
And that's how most people structure these deals.
At least these big private equity companies.
A lot of them are doing it with debt finance,
so they're putting a portion down.
And because the business is profitable, the
bank finances the rest.
But I'm guessing a lot of you guys who are
watching won't be able to get those deals
'cause they're hard.
So what I would do is just try to put a
little bit down, and negotiate with
the buyer in which you pay em out over
a period of time, and it would be a bit more
money probably, 'cause they usually won't
accept it if it's the same amount.
You would have to give maybe a bit more money,
but you can do it from the company profits.
And a lot of people accept it, 'cause they're
burned out, they're tired of the business,
they just don't wanna do it anymore.
- Right.
Now how do you find these?
I mean, you kinda skipped over that first part
which is like, oh you just hit em up and
you go from there.
How would you go about finding that
if this is the type of...
- So you look at what sector you
want the business in.
- Right.
- You do a shitload of Google searches.
You do your research using tools like the
A Trust or SEMRush's or the Ubersuggest.
- Yeah.
- Pop in euros, you find the ones that you're
somewhat interested in.
- Right.
- You just start emailing em, and you're saying
like hey, looking to see if you guys have any
businesses, or if you're interested in selling...
- Right.
- Like, the space, and you just try to email
50, 100 people in that industry, and you'll get
some people responding saying no, you'll get
a lot of people who ignore you, and some people
will say yeah sure, and let's discuss it.
- Neil, I'm trying to buy neilpatel.com.
What are we thinking?
What kind of LBO do we need?
- Sure.
I'll sell it to you for a billion dollars.
- A billion dollars.
- I'll sell it for a lot less than that.
- Let's crowd source, everybody.
Leave a comment below if you want
in on this deal, and then we'll crowd source it
together, but I own 100%, alright?
Sorry, that's just how.
Is that a good deal?
- Not for them.
- Awesome.
- The other thing that you could do is that if
you're a bit lazy, there's usually a
premium for this, but you can just hit up
website brokers.
There's a lot of website brokers.
Just Google website brokers.
You'll find some, and then you can
just go buy a site.
Or if you're looking for smaller sites, you can
go to like Flippa, Empire Flippers, and just
hit up the sites and try to negotiate a deal.
- Smart.
Okay.
- So that's it.
- Great.
- Thank you for watching this.
Oh, and one thing I forgot to mention, this is
the same process whether you're buying a
site in the U.S. or internationally.
It doesn't really matter, it's the same process.
- Right.
That makes sense.
- Thank you for watching this week's
Q and A Thursday video.
If you have a question that you want answered
on next week, leave a comment.
Either way, I'll answer it.
And if you need anything else, you can always
hit us up personally or hit me up personally.
- Yep.
- Thank you for watching.
Comment, like, share.
- Anything.
And by the way, we're open to new topics.
Like, this time around, we're trying
to get anything.
So whatever you guys can come up with,
you ladies out there, whatever it is,
leave that comment.
There's nothing too weird.
Trust me.
- Yeah, 'cause we used to only answer
marketing related questions, and we started
getting more and more questions that were
not marketing related.
Even some people were like hey, why aren't
you answering my question.
So we're trying to do a better job of
answering everyone's questions, whether it's
marketing related or not marketing related.
And as I mentioned, either way, I'll leave a
comment answering your question.