From Failure to Fortune: How To Acquire a Business with Serial Entrepreneur Adrian Knight

Ever wondered how a serial entrepreneur turns the tide from multiple flops to a flourishing multi-million dollar empire? Acquisition entrepreneur Adrian Knight joins us to unravel his roadmap to success, transforming from the heartache of twelve failed startups to triumph in the children's education sector. We get to the heart of Adrian's tenacity and the mindset shift that propelled him to recognize his strengths in improving existing businesses instead of starting anew. His candid tales will not only inspire you but also offer a fresh perspective on the resilience needed to conquer the unpredictable waves of entrepreneurship.

Dive into the realm of no-money-down business acquisitions as Adrian elucidates the nuances behind these creative deals. By sharing his playbook, he reveals that purchasing power doesn't always spring from deep pockets but from a deep understanding of deal structuring. This episode peels back the layers of how to spot growth opportunities, trim the fat, and optimize business performance to unlock true value. If you're seeking a masterclass on turning potential into profit, Adrian's strategic insights are nothing short of a treasure map.

In the final stretch of our journey, Adrian guides us through the delicate art of sourcing and securing business acquisitions. He likens the process to navigating the stages of a romantic relationship, from the first blush of interest to the commitment of purchase. We dissect the importance of understanding seller motivations, cultivating trust, and the critical first steps post-acquisition. Adrian's wisdom extends beyond the boardroom, providing a playbook for managing risks and connecting with seasoned professionals to safeguard your venture into the world of business ownership. Follow Adrian's journey further and tap into his daily nuggets of wisdom by connecting with him on Instagram at Adrian J Knight, and for a deeper engagement, visit his website.

How can the guests contact?  website, email, social?

www.adrianknight.co.uk
https://www.instagram.com/adrianjknight/

GETIDA Amazon Owes You Money!   Get $400 in FREE reimbursements done for you, follow the link below.

Helium10   50% OFF first month OR 10% OFF LIFETIME subscription = PROMO CODE “FTM”

SoStocked

Start Your 30-Day Free Trial

Your 1st Month Is Free For Any Plan You Choose!

If You receive value from this content please SUPPORT The Podcast

Paypal → CLICK HERE
▬▬▬▬▬▬▬▬▬▬▬▬▬▬▬▬▬▬▬▬▬▬▬▬▬
🗣️ TALK TO US ON SOCIAL MEDIA 👇

Instagram ► https://www.instagram.com/firingtheman/

Facebook ► https://www.facebook.com/FiringTheMan

Website ► https://firingtheman.com/
▬▬▬▬▬▬▬▬▬▬▬▬▬▬▬▬▬▬▬▬▬▬▬▬▬
💥LISTEN TO THE PODCAST 👇

On Apple Podcasts ►https

The Digital Revolution Podcast
Welcome to The Digital Revolution Podcast, where marketing experts share their expertise.

Listen on: Apple Podcasts   Spotify

Transcript

Speaker 1: 0:41

Welcome everyone to the Firing the man podcast, a show for anyone who wants to be their own boss. If you sit in a cubicle every day and know you are capable of more, then join us. This show will help you build a business and grow your passive income streams in just a few short hours per day. And now your host serial entrepreneurs David Schomer and Ken Wilson.

Speaker 2: 1:06

Welcome everyone to the Firing the man podcast. Today we have the pleasure to interview Adrian Knight. Adrian is an accomplished acquisition entrepreneur, adventurer and endurance athlete. Adrian buys and sells businesses for a living and has used his acquisition skills to build a multi-million dollar children's education group from the ground up in less than three years. Today, adrian leaves the running of his children's education group to others, while he spends his time working on his own personal growth and mindset, which he undoubtedly recognizes as the secret sauce to his business and endurance success to date. Very excited to have Adrian on the show. Welcome, adrian. Thank you so much. I'm equally as excited to be here, absolutely so, to start things off, can you please share with our listeners a little bit about your background and your path to becoming an acquisition entrepreneur?

Speaker 3: 1:56

So those who aren't quite aware what an acquisition entrepreneur is. It's buying, building value and selling businesses. In a nutshell, it's those three areas. But prior to getting into this, I was a startup entrepreneur, and a very bad one. That that, if I must say, I had 12 failed startups that I went through over a period of. It was around 12 years, so one a year and I was stood up and hitting myself like hit my head against the wall and realized I needed to try something different, which is how I got onto the path of buying businesses and, yeah, I made my first acquisition within three months of heading down that path and having it back Awesome.

Speaker 4: 2:44

And so I want to dive into that a little bit. You said 12 startups in 12 years, and so can you. That tells me two things. One you don't give up. And two, you know how to pivot it in tries. So can you share with the audience some of the lessons that you learned along the way that ultimately led you to success?

Speaker 3: 3:02

Absolutely so. One of the big things in hindsight that I can see that contributed to those spaniers was I wasn't playing too much strings. So I would sort of brand myself as, like, quite entrepreneurial, have a vision. I can get people brought into that vision. I can give quite a bit of gusto to you know, rah, rah everyone up and to get things moving. But that only takes you so far, and for me, the same hurdle I kept coming across was as things started to become far more operational, there was many more moving parts and that needed orchestrating and systems and processes, and that was where I was falling short and which is eventually what led to these failures. But what's been so interesting for me personally, as I've gone into the world of buying, building value and selling businesses, is that that skill set, as say that that entrepreneurial skill set, has serving really well in in this world of buying a set of businesses. Because when you go into a business and establish business, all of the logistics are all of the moving parts already in place, but there's normally a couple of problems, and so those problems need to be dealt with, and to do that you have to instigate change. So you need a bit of vision. You need a bit of rah rah. You need to rally the right people to the right places, and that has worked really well for me and is probably the main thing I look for when buying businesses now. I look for those opportunities that are going to align really nicely to my skill set.

Speaker 4: 4:36

One other follow up question and I'll throw it up to David because I know he's got some questions. You had mentioned you're an endurance athlete. Are you a runner or cyclist, or what do you do for endurance?

Speaker 3: 4:46

All the above. So I started off with running. That then moved into triathlons and the words were way up through triathlons and then I've done a nine man. Then, not wanting to like continue doing the same things, I started to look for other type of endurance activity. So I've been very fortunate to visit the arctic circle Last year. I've ran across Northern England last year as well, six weeks. Today I fly to Panama for coast to coast adventure, two week adventure where we're going five days completely unsupported through the jungle, and so, yeah, just all of the above. Really, I found myself doing activities I would never sort of think I would do, but absolutely loving it.

Speaker 4: 5:33

Yeah, that's fascinating Because in my mind you know you had said the I had had 12 startups that failed. I just I like to. I would like to call them like lessons learned, because each one you probably learned something and then took it to the next one. And so what kept you motivated or where kept you going after for to do that 12 times? Is it just your mindset? Can you explain that a little bit?

Speaker 3: 5:52

Yeah, I. Fundamentally it was knowing that I didn't want to work for the man, finally enough. And I always knew. When I was growing up I never knew what I wanted to be, but I could never see myself working in the stereo that is sort of typical like nine to five. And I never, never saw myself doing that and I always felt that I had a place in business. And so with each of these startups, I was learning stuff as accumulated lessons. I was learning the importance of business models and how our business functions. I just wasn't able to like bring it to life in my own way. But when you know, I start out and then to be failed, it was so destroying. Every, every single time and every single time I had a conversation with myself saying what are you going to do now? And you know my family were very worried. Friends can understand what I was doing. Why don't you just get a job? You know you're more than like, you're more than capable as a person. But in my heart I just knew that wasn't me. I knew that wasn't the path that I needed to take and the mindset I always had. At that time, I mean, my dad genuinely thought I was losing the plot. But I was like this is just building the foundation, like every setback was building that character, every setback was building a foundation and I knew that all of those experiences would someday like have a meaning to it. And you know, some of those experiences have had a meaning as I've gone into this different world and there's still many experiences which I'm sure will have a meaning in at some at some point sort of have a down the line Very nice, Very nice.

Speaker 2: 7:30

That's a really good attitude and I think to our listeners, if you have launched a product and it hasn't worked out or you know things did not go as planned, you are just getting started on building that resume of skills and and every very successful entrepreneur that I know has a long list we call them failures, but they're really not. They're just experiences that you go through, that you learn some great lessons and I am grateful for some of my early business failures. I have a handful of them that I've like. I've learned from those and it's great. So you have mentioned something in your answer when we were starting out about problems like when you go in and buy a business. There are problems that need fixed and I'm going to make an analogy here. I got involved in investing in residential real estate and I'm always looking for a deal, and one problem that I like is vinyl siding that's moldy because it's it's. It looks horrible, but you power wash it in one day it looks brand new. So I like that problem. That's a problem I go out and try to find. Problems I don't like are leaky foundation, because it's super expensive to fix and it's it just is kind of a nightmare, and so, when you're looking at acquisitions, what type of problems do you like to find and what are some deal killers?

Speaker 3: 9:16

This is such an amazing question and I love the connection with property because it is like the two worlds are very, very similar. The only difference is when you buy a business, you don't have bricks and water or moldy. You know mold Well, you may do. When I first started down this path, I was looking for opportunities where I could add value. So typical opportunities would be oh, they're not doing any marketing, so that's an opportunity in itself. I won acquisition that was generating around two million per year in revenue and it wasn't doing any marketing. And my mindset was if it's doing two million in revenue and it's not doing any marketing, what could we do with marketing? And there's definitely a place for that. But I've also matured slightly in my in my mindset, in the sense that if a business owner has been running their business and building their business for 20 years and they haven't quite nailed the marketing, you can still be quite comfortable and confident that they've probably tried a lot of different stuff and nothing's taken off. So it's not always as simple. Unless you're a marketing genius or marketing where you know you've got a very strong background in this, it's not always as simple as we just put some marketing on. So those type of opportunities where you can add stuff, so like add marketing, add sales, and that was where I started. But I don't look for those now. Now I'm looking for things I can take away, so it's more deductive. So I'm looking at businesses and I'm like what can I take away from this to make the business perform better? And sometimes it could simply be there's role, people in the role scene, which is very common in small businesses. I'm yet to meet a small business that doesn't have some form of family member, friend and some connection to the business owner. It is, and very often they're the people who really shouldn't be in the business. I mean the same with finances as well. Like a lot of small business owners run a lot of their lifestyle through the business and you take the small business owner out and all of a sudden, all of those lifestyle costs go as well. So I'm looking for things where I can take away, because the value added tends to be far more like, far greater in many cases, but also a lot simpler to execute. Going back to the building value, like every business house potential and every seller will tell you that their business has so much potential. But as entrepreneurs, we know better than anyone. You know it's bringing that potential to life. That's the hard bit, and so, yeah, I tend to look for deductive problems now, rather than stuff where I have to, like, really put in a lot of resource and work hard to build.

Speaker 4: 11:51

Very nice, very nice. This next question here is it's kind of interesting and I know the audience is going to be excited to hear the answer to this. So how do you buy a business with no money, adrian?

Speaker 3: 12:02

That's the money question. I want to start by defining a no money down deal, because the common thought that a lot of people have myself included when I first started with this is that you're paying a dollar or a pound for the business, but it's not technically accurate. Like, you may pay a dollar or a pound or a euro for the business and I've bought businesses like that before but also you can do a no money down deal where you're paying hundreds of thousands for the business, maybe even more than that, and I've done many bays as well. You know, no money down deal fundamentally means that you're not putting any of your own money in on day one. Like you're looking to structure things in a way so that the business can technically self finance itself. And when you can get quite creative with those structures, it does become very exciting. But how do you agree about it? Well, it ultimately comes down to your relationship with the sellers and understanding at a very deep level why are they looking to sell? Why are they looking to sell to you? Why are they speaking to you? Now? You see, very often and this is particularly the case with retirement sales it's not about the money Like the money, of course is important, but a lot of these good businesses, like the owners of those of those companies, they've already put their children through the body patron of education, they've already paid the mortgage off, they've already got a lot of the stuff that they need from a material aspect. But normally there's something else just as important, if not more important, going on in their life. So they could have had a sudden health scare and they could have been a sudden passing of a friend or a family member. There could be a number of other reasons and they're quite sort of varied really. To give you an example, the last acquisition I've done, the owners were in their early fifties but they had a friend who passed away and they just realised that they were far too young to retire, but they'd spent 20 years in this particular sector and that if they wanted to do something else, now was the time to make a change, a career change, because they still had a 10-year runway to do something new and that was their driving motivation. So if you wanted to get these no-money-down structures, you ultimately have to understand what's driving it from their side, and when you truly get it and they know that you get it you're then in a position to start proposing a structure that is genuinely going to work for them and is genuinely going to work for you. And you know when you've got it? Because they are just as excited, if not more excited than you are, about the deal. And it's kind of amazing when it happens, because it's like a marriage all-mode, so it's like they're coming together perfectly possible to do these and there's so many businesses out there to buy.

Speaker 2: 14:51

Yeah, it's quite sounding really I love that you use the analogy of marriage, because I think that when you're talking about partnerships or purchasing a business, there's the dating, there's the engagement and then there's the marriage when it's signed. And so if we were to talk about your process of sourcing deals, I kind of would view it as a funnel. Right at the top of the funnel, your speed dating, you're seeing what you like, what you don't like, and then there's a middle part of the funnel where you see who's my long-term relationship with, and so can you walk us through that funnel? That would get you to a marriage with somebody open to a seller finance deal or a no-money-down deal.

Speaker 3: 15:30

Yeah, I love the analogy again. So deal sourcing is one of the main pain points in this. There's two main pain points, which is deal sourcing and valuation, because the center of a business their valuation is often very different to the buyers and there's many different reasons for that. But, yes, you start with sourcing. So, from a dating perspective, you've got your best shirt on and you're heading out into the market and you're starting to approach people and you're starting to let them know that, hey, I'm looking for opportunities. I'm trying to say this in my way, but I'm open to opportunities. Do you want to have a chat? Shall, we get a drink? So you start like that when you very first start in this field. There's a lot of that, there's a lot of like your approach in people and that's just kind of how it is. I guess, as you start to get a bit more known and people know that you're looking for opportunities, you tend to find them coming to you. So and it does change quite quickly but first of all it's going out and letting people know that you're looking for these type of opportunities, and I often say that you probably have your first deal already within your phone book. It will probably be in your network, either a direct contact or a contact of a contact. So I go like a second degree connection on LinkedIn, for example. And that's an important component, because the next thing, the next stage of the process, is trust and building a relationship with these people. They're not going to sell you their business if they don't like you and they're especially not going to sell you their business on a no money dealt structure if they don't trust you. That is why the first deal comes from somewhere within your network. But at this stage, like you're going out for dinners, you're going out to the cinema you're building that trust. You're starting to share openly on both sides about where are they at, where are you at, what are you looking for? Is this aligned? Is this not aligned? That stage can take a while. It can take Well. I mean, I've got conversations that I started four years ago that I still keep in on, but also I've had a lot of conversations and deals I've done where it's happened in the matter of three or four months. You move through that stage, so you're starting to get to know the motivations. This is the point where you're starting to identify the business, or maybe even businesses that you really like and you see a vision for it and you like the owner, so you like where it can go and you see how you can add value. And that's the stage where you start to get down on one knee and start to talk about what you want this future to look like and sort of go into that. And then you sign the paperwork. Like you get married and you sign the wedding papers and it's a great day and it's very similar. Again you then go into your honeymoon period. So the first, like some 90 days of owning a business that you've acquired particularly on the no money doubt structure really is like a honeymoon, like you're just running from here to really got these guleless smiles and so excited. And then not in all cases, but in some cases the reality starts to dawn and you realise, oh, I've got to put some work into this and I've got to make changes myself and I've got to do things in order to ensure that this works. It really is a block of marriage.

Speaker 2: 18:51

I really like that. And one thing I want to point out to our listeners is at no point is all about communication, like there's no tactics or tricks or I'm going to pull what it is communication and understanding what the other person wants, and man, that if that's not finding a life partner, I don't know what is. I got one more question. I'm going to kick it over to Ken. When you're in the speed dating, do you find better success rate with broker deals or off market deals?

Speaker 3: 19:17

Off market every time. So in the UK in particular, brokers are not looked very favourably upon very much one of those people. There's a couple of very, very large brokerage companies here and they are public companies and when you read their annual reports you can see that 90% of their revenue is coming from charging the centres of marketing fee to list their business for sale. They actually sell very few businesses. They tend to be a major block up and the main reason I touched on it earlier but it tends to come down to valuation. You see, brokers will, particularly if they're sort of competing for the same seller they want to work with, they will tend to fling around valuations that I mean. I've seen valuations which are based on numbers, which you go and look on the other company's house numbers and they're completely different. As a numbers like is, it could be quite cowboy. So broker based deals tends to add quite a few more barriers and they're very, very hard to to overcome and it's so this heartening and heart breaking in many ways, because I like I really feel for the sellers like this is their exit. This is something that been put in 20, 25, 30 years into and at the very last sort of 100 yards of it, like they are locking the service out. I feel they should. And off market deals is Well, I'll define it their deals which they're not like listed for sale on, like a national website or anything like that. Because they're not the, you tend to be able to Build a relationship much, much more sort of fluidly I guess it's the word so you can build relationships with them. But it's not to say that the sellers aren't supported, so it's not to show in them.

Speaker 4: 21:01

They still have fashion advisors around them, but because it's not listed on the market, you're able to just be a lot more open in communications and how you're gonna go about making this, making this happen for baby Adrian you mentioned earlier you know, getting into the business and putting in some work, and so this next question is kind of in that in that face is what are some steps that an entrepreneur can take if they do decide to Buy a turnaround business, and can you explain what a turnaround business is?

Speaker 3: 21:26

Yeah, absolutely so. Every business, regardless of its of its size, will have some level of distress to it. Like there's no such things, a business without any problems, like there will be some form of problem. Now, some of the businesses will have quite good problems, but the problem is nonetheless and some businesses will have quite bad problems and those businesses with bad problems tend to be More distress. So they're hiding distress from distress to hiding distress. Those businesses need more than like a lick of paint on the house. They need a real, like a real turnaround. So that's where turnarounds tend to come, to come into play, and I've done a few turnarounds. They are hard work, there's no question about that, but if you do it right, the value that you get as the new owner could be quite significant with any business, regardless of Whether it's a turnaround or not. My first steps of going in so we've signed the paperwork, I've already laid out part of due diligence for the bottom of the of information. So I can't know where I need to focus, but the generic steps I take is first to take control of finances and to get some proper financial Reporting in place. It is scary how many businesses I've looked at, how many business owners I've spoken to where they've got you know millions running through their books at them or in just Excel, or they don't have reports and they can't actually tell you how much money the business made in profit last month. Like is really quite terrifying. So the first thing to do is get those balls rolling, so we get control of finances but we, more importantly, start to get an accurate picture of what's going on. I tend to put that to a team of people, normally outsourced, like some outsourced Bookkeepers or finance, who can start working on that. The next step, and the one I always do myself. He is the team of people in the business and so pretty much always they are pretty terrified Because the world they've known, like with the owner, that only is now the picture. And this new guy's in they don't know him, they don't know what you know, what he's planning or anything, and he can be pretty scary. The big difference between, say, investing in property versus investing in the business Is that again, we'll touch on it earlier. With a property you do have bricks and water, but when you are buying a business, you are essentially buying contracts you know like intangible things, such a customer databases, and there's no guarantee that they're gonna be there, but you also getting people with the business. Now We've got a small business with ten people, which actually is quite a sizable small business. If you've got ten people there and two of those people leave, that's twenty percent of your workforce and so it could have quite a big impact and it actually represents quite a big risk. Here. What I do to counteract that finances to be insorted are literally weak. One from sort of halfway through week one, I'm standing a lot of time with the team. I'm talking a lot about the vision, talking about where we want to go with this or what we want to do, and then I start to Schedule one to ones with everyone and I sit down with them. I basically just listen, like I want to hear everything. I have to say you want to hear about everything. They like everything. They don't like Any problems or you know potential problems they may have with this change of ownership. And then, with all of that out the way, and once I feel that they feel that they've been really understood Sorry, but the mouthful there lay it out and say look, this is the vision, this is where we're going, this is what's expected. Do you want to be a part of this. It helps to identify quite quickly people who are gonna be team players, people who are not gonna be team players and people who are potentially gonna sit on the fence and pick out one of each way, as with the finances and the people under wraps, that's probably the biggest, the biggest sort of risks you have, I guess, and the biggest areas you want to focus on.

Speaker 2: 25:10

So I, sticking with our marriage analogy, I Pleasure a lot like in-laws, they should get married, they're gonna be a part of your life. Of course, silly, you can't, you can't fire it in law. But talking about, like, post acquisition, have you found like, do you prefer to go in and take a hundred percent stake, you know, replace the owner at 90 days, or do you like to take a majority stake or minority stake and keep that owner in place? What have you found works a little bit better?

Speaker 3: 25:36

So I've taken a hundred percent stake in everything that I've acquired today and I've done a lot of deals like in, like into the double digits in terms of the acquisitions. I've done every single one and I wouldn't change this. I've Taken with a great of the owner, of course, like they stepped out immediately every single one of those as well. I've put a contract in place with the owner, like a consulting based Contracts, so that if any of their services are required, then they they already know at time of signing. This is their day rate, this is what they're gonna be. A lot. This is the type of things that they may be called upon. There's no guarantee that they will, but I always put that into place because you can't ignore the fact that if they've been building this business for 20 years, like regardless of how good the handover is, there's gonna be so much knowledge that they're just not going to be able to handover and You're not even gonna think about asking it. It's only when it comes. A problem comes up six months down the line and you could spend a week figuring it out, or you could jump on the phone with the previous owner. You could tell me in five minutes oh yeah, this is the backstory. You want to do this, but I always tried to have the owner step away immediately, primarily because of the, the team of employees who are staying there. If the owner is still in the picture, then they will like. It's human nature, they will naturally gravitate to them and it does make they does may like the the handover of the transition Harder and I've certainly seen that with some peers of mine who did in that situation. With regards to like the percentage, so have always taken a hundred percent. We're at a scale now where that's less important to me. I think every entrepreneur goes through various sort of milestones and one of those milestones is where you realize you don't need to R100% of the pie. In fact, it could actually be far smarter and less riskier to have a smaller piece of that pie, regardless of whether it's Majority or not. But your chances of all that actually materializing into something significant is so much greater that that I would definitely and have with like conversations to have a recently being a little flexible on. But in terms of the area of stepping aside, I'm quite I've lost so many scenarios with us worked well I'm loving this conversation.

Speaker 2: 27:49

By the way, the proposal like when you get down on one knee and I'll play this out. I'm a 60 year old business owner, I want to sell it to you for a million dollars and my kids don't want to be a part of it and I wanted to be in good hands. Like what does that look like? How do you highlight benefits? That makes it seem appealing to them? It's all in the lead up.

Speaker 3: 28:09

So you're not just going down on one knee out of the blue. You all are dropping hints and all the way of, oh, she like that ring and oh, I bet that's not the case for honey balloon. And should we go like never listen, like wedding dresses, etc. You're, you're. It is very much a like, a natural process. So like, for example, you could in a conversation where they say you know what, we are planning to go on holiday in six months time and I really want to have this business solved before then. And I've just wanted a way saying, look, we could make that happen, but in order for that to happen, we're going to have to have something like this and that's what it's going to need to look like. And so you just build them that up so that when you do start to formalize what that deal looks like, it's not coming as some big surprise. If anything, they're pretending to be surprised because they already know what ring they're going to get and where they're going to honeymoon and he's going to make their dress. So I just the other side of that, because I in the earlier days I didn't do that I would build loads of like, rapport and connection with the owner. We'd go for everything and then I'd put down this or suggest there's no money deal structure, and they would be completely insulted by the fact that I put down this, this deal. There was no lead up to it. It was a thing from their perspective. They felt a little baiting switch, which is not you know, you're not doing that intentionally. Yeah, it's all in the lead up.

Speaker 4: 29:33

Yeah, I like that analogy that resonates. So, adrienne, now this is for the listeners that are. Maybe they've heard about acquisition, entrepreneurship, or they've heard about buying businesses. So there's always risk with buying a business. With anything you do in life, there's a risk right, a risk tolerance, and so this is kind of a two part question. One can you share some of the verticals or spaces that your acquisitions have been in, and then can you share some of the risks that are associated with that? So the listeners can kind of tie those together. With whatever business maybe maybe they're interested in purchasing a business what risks to the be aware of?

Speaker 3: 30:05

Absolutely so some of the verticals I've acquired in the franchise sector and even today I own two national franchise networks in the UK and they actually got franchises abroad by the primary base in the UK Consultancy, construction and childcare, which is where I've built our children's education group In terms of the risks so there are a few different areas here and I've really don't want anyone to be misled here. It all be very clear. There are risks and is why you need to like, if you're thinking of doing something like this or you'd like to settle doing something like this, you need to get educated at the beginning at least, like you need to understand where to look for these risks of all, possibly how to protect yourself from them. So you've got financial risks. So you've got wrongly valuing businesses, not doing proper financial due diligence or not fully understanding the numbers we started common for entrepreneurs, because we're not. Many of us are not financial countings or come from a financial background, and that's okay. You can still make this work, but you need to cover yourself there. You've got the people risks of the HR. So you've got the risks of people leaving the business. You've got the risks that are inherent with being an employer. So my last acquisition, I had one of the employees stealing a substantial amount of money from the company and he had been for a long time, but the previous owner never done anything. You've got many other people related sort of risks in the construction. We had health and safety risks related to people who are quite frank and we're just being reckless. And then you've got the legal risks as well. So if you don't cover your back from a legal perspective, then it does leave the door open for potential. Come back there and all of these risks. They all actually funnel back to the no money down structure and why. It's not just about trying to not put in any of your own money, like I've come to believe now from experiences and I've had some real train wrecks here. That's some success, but also some train wrecks as well I've come to realise that that no money down structure is so important in so many ways because you structure the deal so that if any of these problems, all these, will last come up, then you are protected and you've got mechanisms within the deal so that you're not paying for them and just to give you a very quick example here is it's so important? My last acquisition it was a no money down deal structure and the actual valuation that we agreed was several hundred thousand pounds. But I knew there were problems in their business and the red flags really went up when we were asking questions due due diligence and the owners couldn't give us the answers not that they didn't want to, but they physically couldn't. They had arranged their information and so I still want to do the deal. So I went into that deal knowing that there are problems, but I didn't know exactly where they were, and in the first three months of ownership we had a hundred thousand pounds worth of problems come up, like a hundred thousand pounds worth of bills that needed paying to put these problems to best to beds. But the deal was structured in such a way so that I wasn't paying for that. That was actually coming off of the seller's deferred consideration, and so these little things like this or they seem little, but they can actually have quite a quite a big impact when you go into this and you start to talk yeah, fairly significant numbers yeah, no, that's, that's um.

Speaker 4: 33:28

Yeah, thanks for the detailed response and one follow-up on that. I guess if, um, if you buy a business and someone is stealing money from the business, I guess it's kind of a bonus for the, for the buyer, because it's not that money is not in due diligence, where it's not there, so you basically uncovered bonus. I mean it's nothing a bad thing.

Speaker 3: 33:46

But if that was the advocate here, there'd be a good thing, right yes, I'll put some numbers to this to highlight your point because it is easily great. Point um, so that particular employee of certain words and names, his annual salary was 40 000 a year, a couple of benefits he had on top of that with um, some of the calculations I did about what was actually going. It actually works out that he was taking over a, taking home just over six figures the year from the business and various guises, but his official salary was 40 000. So it was a kick out. It was a really awful experience to go through. But, to your point, that was 60 years coming back into the business and that's.

Speaker 4: 34:26

That's a prime example of deductive value of a date or deductive sort of problem, that that you can uh to work with yeah, yeah that you came in and you did your your hard work and you uncovered that, and then that added value to the business. How bad it was, but it still added value to the business.

Speaker 2: 34:42

So as you were going through the risks, you had said you'd need to educate yourself and we were to put together a acquisition entrepreneur boot camp. Obviously, step number one is to check out Adrian Knight's. I know a lot about this stuff but in terms of like reading lists or podcasts, if somebody was was wanting to make an acquisition in the next six months and wanted to educate themselves and try to hedge the risks as many risks as possible, what would be on that reading list or content or or whatever?

Speaker 3: 35:10

yes, a really good question. The first thing I want to say here and this is slightly like contradicting myself you, you don't learn to buy a business through education, but application. That's how you learn to do this. Like it's through the application where the real learnings come. But that doesn't mean you go in and start with no education. You still need a foundation. A lot of the like, the different training providers out there across the US, across the UK, etc. A lot of that tends to be like more of a knowledge dump enough and like enough you go type thing and you kind of want balance between the two. Like you want the knowledge but you really want someone along your side who's helping to guide you. And I was very fortunate in my early days where I just built connections with the, with the right people who assisted me with those earlier deals. So that's just something to keep in mind there. In terms of reading lists, it's very hard to say I'm probably not going to be very useful here or add much or add much value, because there's a lot out there about how to buy a business. A lot of it is of varying sort of like quality. What I'd really say is you need to look into. You need to look into, like who's actually writing this and what they've done. What I read, and what I continue to read, is I like to read the about the entrepreneurs who've used this skill set to build quite sizable businesses or to do quite big things. And in the UK we have a program called Dragon's Den which has a lot of and US equivalent actually is Shark Tank, and so reading the stories of those investors, you tend to see the acquisitions and the selling of businesses is quite a common theme in their background and they a lot of them actually made their money from selling companies, but they built their companies through quite a size by acquiring like. It's really interesting when you start to look for this stuff, so I would definitely recommend checking out, checking out that type of material, yeah, and sort of going from there.

Speaker 4: 37:02

Awesome. I'm so glad you gave that answer because I have a huge fan of Shark Tank. I've seen every single episode on all seasons and I didn't know dragons then existed, and so now that is going to go on my list of things that hopefully I can get access to that here in the US. So last question for me, Adrian. This question is for Adrian the visionary what does acquisition, entrepreneurship look like in the next one to three years? What are you? Is it going to stay the same? Is it going to get better, Worst? What do you think?

Speaker 3: 37:27

I genuinely believe that 2020s are going to be the golden years for small business acquisitions, like I truly believe that and the reason why and this may or may not be sort of new news but there is whole generation, like the baby boomer generation, that is retiring and, for the first time in history, the generation after them there is actually smaller than the baby boomer generation. So already there's more baby boomers and more businesses for sale than there are buyers. And then sorry, just to clarify, there, a lot of the small businesses good small businesses are owned by baby boomers, so you've got immediately out of the gate, more supply and there is demand and that's going to continue over this decade. The next thing as well, is from a buying perspective. There are a number of people who, I think, have started to switch on to like the significant opportunities here and the significant growth that can be experienced like and at speed as well. I mean, I built my children's education group to a multi-million revenue in 24 months like it is fast when you get this skill set. But also there's a lot of people out there who are slightly diluting the market. I think they are from a buying perspective. There's a lot of people out there who again have made, done a training course for a weekend. Two years down the line they still haven't bought a business, but they're diluting messages to sellers. So from a buying perspective, a buyer's perspective, if you are going out with the right intention and especially if you already have a business, like I think, the opportunities are vast because if you've already got a business and that scenario, well, you're a proven operator, you've proven business owner and by buying another, then there's a very natural story that the sellers of these businesses are going to see that. But yeah, I want to be a part of that. So I think there's a huge amount of opportunity over this decade. I think there's a huge amount of supply and I think that would unlock the people who are trying to handle this. They're not making it work, which in turn makes the people who know how to make this work like there's even more sort of opportunity. You've got less competition.

Speaker 2: 39:40

I think why don't we get into the fire round? I'm afraid that I could stay on this podcast for five minutes One of your speckle of Adrian's time. So yeah, let's get into the fire round.

Speaker 4: 39:51

Alright. So, adrian, all the guests we have on the show, we run them through the ringer and what's called fire round. Are you ready? Let's do it. What is your favorite book? Seven Habits, safari, fetish People Nice, I like that one. What are your hobbies?

Speaker 3: 40:03

Go out and do stupid stuff with sports in even really hot, really cold places Awesome something challenging, right?

Speaker 4: 40:11

Yeah, what is one thing that you do not miss about working for the man? Being told what to do Excellent. Last one what do you think sets apart successful entrepreneurs from those who give up, fail or never get started Assistance Excellent answer.

Speaker 2: 40:25

Absolutely. Adrian, want to thank you for being a guest on the Firing the man podcast. If people are interested in getting in touch with you or following your content, what would be the best way?

Speaker 3: 40:34

Yep, so I'm very active on social media, particularly Instagram. I post on there several times a day and my handle is Adrian J Knight with a K, and you can also go to my website, which is Adrian Knightcom.

Speaker 2: 40:48

Awesome, and we're going to post links to both of those in the show notes. Adrian, thank you so much for your time today and looking forward to staying in touch.

Speaker 3: 40:55

Likewise, thank, you so much for having me. I've, yeah, thought I'd enjoyed this and the analogies as well. Thank you.