Jeremy Harbour
Hi, my name is Jeremy Harbour. I run an experiential training course called The Harbour Club, where we teach people how to buy and sell companies. Specifically we focus on how to buy distressed or motivated sellers so that you can buy the company without using any upfront capital and without borrowing money from banks or investors in order to complete the deal.
Jeremy Harbour
Now, a lot of a people are worried that when they buy one of these businesses, the current owner or current directors could just leave and take all of the customers and all of the staff with them and you end up owning something with very little value. So I’m going to give you a little tip on how you can stop that from happening in a really effective way, but before that I just want to tell you what you’re going to learn if you come on the full Harbour Club weekend. Basically we’re going to teach you how to source distressed and motivated sellers so that you can approach them to put these deals forward. We’re going to teach you how to hold the meeting so that you can actually get the deal across. We’re going to teach you all the different strategies for doing no money down deals, and we’re going to give you all the documents and contracts that you need in order to complete these transactions.
Jeremy Harbour
We’re then going to show you some really clever financial engineering tricks. These financial engineering tricks can take away debt when the company owes lots of money, they can improve the profit, and they can massively improve the cash flow. We’ve bought businesses before that haven’t paid their payroll for months and within a few weeks of buying them, we’ve managed to get them back on to an even keel with all the payroll cold top in cash in the bank every day. So these really are quite transformational things that we can do with these businesses. And then most importantly we’re going to teach you how to sell it, how to get the most value out of it in the shortest possible space of time. So anyway, I hope to see you on the Harbour Club one day, but let me tell you a little bit about our tactic for stopping the directors or previous owners from running off with all your customers and staff.
Jeremy Harbour
Now, as you may know, many contracts that you sign with key employees can have something called a non-competition clause, or a non-compete clause. Basically this says that if they set up in a similar business in a similar radius, that you could have some sort of claim against them. Now, what happens in reality is that there’s all sorts of things like the European Court of Human Rights and various other things that mean that it’s very hard to prosecute people under these clauses. In fact, what you’ll have to do is probably pay 50 or 60,000 in lawyers’ fees just to get to the point where you can decide whether or not you have a case. So that can be a real pain when you’re trying to fix a business that hasn’t got any money anyway.
Jeremy Harbour
So we came up with a really simple solution to doing this. So instead of having a non-compete clause where you’re trying to stop them from going into competition, we actually have a compete clause. So we put a clause into the contract that says they’re welcome to go into competition with us, they’re welcome to employ our staff, and they’re welcome to target our customers, and within the compete clause we have a penalty for doing so. So if they would like to employ any of our staff it’s 20,000 per employee. If they would like to supply any of our customers, it’s a simple 50% charge on the invoice that they raise. What this does is it gives them a contractually tied in position that means if they do then go and set up on their own, you can simply send them an invoice.
Jeremy Harbour
Now, chasing up an invoice is bread and butter for a lawyer. You don’t have to prove that there was any wrongdoing. You’ve got a contract from them that is signed, and you’ve got an invoice for what they signed to say that they were buying effectively, which is the staff and the customers, which means if they do run away, they can do it. Now, if they’re at all hesitant about signing a compete clause, then you have to question their motives because it must mean their intention is to go off and start up on their own. So I hope you found that useful. The compete clause can be a real winner, especially in the small to medium size business sector and I hope to see you on The Harbour Club one day, thank you.
Jeremy Harbour
Hi, my name is Jeremy Harbour. I’m going to talk today about growing your business by acquisition. I had an epiphany a few years ago when effectively I grew my business by years’ worth of sales in an afternoon, and it didn’t cost me any money, and I didn’t have to take any risks with sales and marketing type techniques. But before I get into that, if we go back to the start, growing up I was always quite entrepreneurial. In fact, I started a business when I was 14 years old, and I left school when I was 15 to go and pursue that business. In fact, it went spectacularly bust when I was 19, which is a great lesson in humility. I think everyone needs a good kick in the nuts when they’re a bit young and cocky. So it was a really useful experience and actually it’s really helped me in later life to be able to empathize with businesses that are in trouble, because I know exactly what it feels like to be in their shoes.
Jeremy Harbour
So basically I was running businesses like this. I was always a firm believer that if you wanted to be successful, you had to start a business and you had to work really hard, and I did sacrifice everything. I put in the blood, the sweat, and the years into growing my businesses at the expense of almost everything else in my life, and it was great, fun. It’s a rite of passage. I think everyone should start a business and have that experience, but one of the things I realized, I was growing a telecoms company at the time and we’d grown very quickly organically. So I think in our first year we did a few hundred thousand. The next year we doubled that, the year after that we doubled it again, and an interesting thing happened. We obviously appeared on the radar of quite a few of our competitors.
Jeremy Harbour
Now, our competitors were looking at buying us out because obviously they could add our revenue to their business, but they didn’t have to take all of our costs. So they could get rid of our office and our staff and everything else and just add the profitable revenue, which meant that they would get a much, much bigger upside from buying our business than they would, than we would get from our own business.
Jeremy Harbour
So I basically spent every week having meetings with these various different telecoms company bosses who were trying to pitch me, and that’s the only way to describe it really, pitch me on why I should sell to them and how I should do a deal, and the reason it was a pitch was because there wasn’t going to be any money upfront. All of these deal structures were quite creative. They were all targeting things that I needed and wanted and that would help fulfill other needs, but ultimately all the jam was tomorrow. So there wasn’t going to be anything upfront. Now, fortunately I had quite a few of these meetings.
Jeremy Harbour
I think too many people are negative on the phone when people ring up and don’t have meetings, but I think I always took the view that it’s part of my business education to meet as many people as possible and talk about what it is they’re looking to do. And sure enough, after a while what happened was instead of me having two or three opportunities to choose from, I ended up with sort of 15 opportunities and then it made me start to think about everything a little bit differently, and the thought process I had was pretty much well, at the time I didn’t have any money at all, so maybe I could buy a business. Maybe I could use the same type of strategy they were doing in order to grow my telecoms company.
Jeremy Harbour
So I decided to just go out there and start talking about wanting to find a business. Now, a really interesting thing happens when you go out and start telling people what you want, lots of little sign posts pop up that weren’t there before. In fact, all the same conversations you used to have suddenly with this new pair of spectacles on, there’s new opportunities, and it didn’t take long before I started to get opportunities to talk to other telecoms companies about the possibility of buying them. I got a few slaps around the face from not being able to come up with any cash, but sooner or later I found a 13 year old telecoms company that was based in the UK. It had some great customers, Nintendo was one of its customers, and I was able to structure a deal with him because he had particular motivations that I was able to satisfy.
Jeremy Harbour
I was able to structure a deal with him where I bought the business for no cash upfront whatsoever, and also I didn’t have any borrowing. I didn’t borrow money from the bank, I didn’t borrow money from the guy that was selling me the business, I didn’t have to take on investor’s capital to complete this deal, and like I say, I effectively grew the business by a year’s worth of revenue in an afternoon, and I had an epiphany. I don’t need to start a business and work really hard. I don’t need to put all the blood, sweat, and years in that I’ve been putting in before. I can just do, I don’t have to run the marathon. I can just do the last 10 yards and I still get the trophy, and that was a really important epiphany for me, and it suddenly made me realize that maybe I’ve been doing it wrong all these years. Well not wrong, but just not the right way.
Jeremy Harbour
And the funny thing was, now when I started looking back at all the books and all the things that I’d read before, with this new idea that you can just run the last 10 yards of the marathon and still get the trophy, I realized that everybody that I thought was telling me to start a business and work really hard, that they’d all made their money doing deals. In fact, all of the dragons on Dragons’ Den bought or sold businesses is the way that they accelerated their success and their wealth. So it was almost like, well it was a complete paradigm shift. I completely changed the way that I looked at business, and it was around about this time, I basically having had that epiphany, I went on a little bit of a rampage, and I ended up buying lots and lots of businesses, and in the space of 18 months I had built up a sort of mini empire of businesses turning over about 13 and a half million pounds a year on a sort of monthly run rate. We had about a 135 staff, all based around the [inaudible 00:09:34] area in the UK, and yeah.
Jeremy Harbour
I became extremely busy doing all of that. I bought a seminar company, it was one of the businesses I bought and this seminar company taught people various business skills and business techniques, and out of the back of that I kind of thought well, how would I teach people what I do? And it was actually at one of their seminars I started to write a little script down of how I would do a training course. One of the first things I realized is actually to learn how to buy a business you really need to buy a business, you know? Because it’s an experiential thing.
Jeremy Harbour
So I titled this course The Harbour Club and I wrote down all the things that would make it interesting for the participant. So how would they source deals and how would they effectively continuously source deals, because they’re not where you think they are. They’re not with accountants, or insolvency practitioners, or people like that. How would they get to have a meeting with these people, because if you ask the average entrepreneur how is business, generally it’s their best month ever, isn’t it? So you need to be able to have an honest conversation with the entrepreneur about how things are going and what it is.
Jeremy Harbour
Then they needed to understand the no money down deal structures that you can use because there’s lots of different ones. In fact, on The Harbour Club course we have six core no money down strategies. There’s actually kind of seven or eight altogether, but there are six core no money down strategies that we work through which shows things like how I was able to buy an air conditioning company for a pound where we met them at nine o’clock in the morning and at 5:00 PM the same day we’re being introduced to the staff as the new owner and then go on and sell that later for six figures. How we bought a furniture manufacturer for a pound 100% and again, were able to turn that around and sell that one in a very short space of time, and a whole load of other stuff. So a call center business, we bought a gym and a spa. It was a health club, 15,000 square foot health club that cost 3.2 million to fit out just a few years before that we were able to buy lock, stock, and barrel, and actually the way the deal was structured, we ended up 25,000 pounds in front after the deal was completed.
Jeremy Harbour
So there are some really, really interesting techniques that we’ve stuck in there, and everything is backed up with real case studies, and not only do we use the real case studies with the real company names, but we also give you the documents that we used when we completed those deals. So all of the contracts, and spreadsheets, and questionnaires and things like that that we’ve had to do.
Jeremy Harbour
Now, people often ask how would you buy a business with no money? And my facetious answer is you need to start with no money and try and buy a business, a bit like I did with that first telecoms company, because necessity is the mother of invention. So I’ve bundled all of that into this course called The Harbour Club to give people the complete package on how to do things, and The Harbour club’s been running very successfully since 2009. The references and things that people give us for it are always incredibly flattering and very, very positive, but actually quite a few people just want to come along to learn how to grow their business by acquisition. So they’re not so interested in all the turnaround techniques and the insolvency tactics, and the exit side of it. Really in the beginning what they’re looking to do is what I did in the first place, which is to grow the company by a year’s worth of revenue in an afternoon.
Jeremy Harbour
Now, in order to grow by acquisition, actually one of the most important things is how you find motivated sellers, because these people aren’t always in distress, but they are motivated. So you need a consistent tactic that will get you those people. Now, they’re not with insolvency practitioners, they’re not with accountants, they’re not with business brokers. So where do you find businesses that actually aren’t really for sale that you can then put these deals together with? The next thing is then how you have the meeting with them so that you can have a proper conversation about getting a deal done, and then we go into the sort of legal protection. How you protect yourself from not getting yourself into trouble. You wouldn’t like to buy a company that’s potentially insolvent and then it destroy your business that you have already. Now, it’s very simple not to get into trouble like that, but as long as you know how.
Jeremy Harbour
Then the next thing is the deal structuring. So how do you actually put a deal together where you’re not borrowing money and you’re not paying anything upfront for the business? So we go through all the systems you need to do that, and then how do you reduce all your upfront costs in doing the deal. So we show you how you do it without any legal fees, without any accounting fees, without any cost of due diligence. We have a really smart system for taking all the due diligence cost out of doing the deal. We tell you exactly how I bought businesses, how I found them, how we got the deal done, the whole thing. Then if you feel that you want to take everything a step further, you can come on one of my Harbour Club courses where we’d fill in all the gaps in terms of how you do the financial engineering, the seven steps to fixing a company’s cash flow. For example, we bought an air conditioning company that hadn’t paid its payroll for two months. It was 10,000 pounds overdrawn. We were able to fix that within about six weeks so that all the payroll was caught up, and it constantly had cash in the bank.
Jeremy Harbour
We bought another business that was 85,000 pounds overdrawn, payroll was due in a week, and the overdraft was personally guaranteed by the owners. So the deal we did there was if we can get you off the personal guarantee and we can pay the payroll, could we have the company? To which they said yes, and then we used a really clever tactic which meant we didn’t have to put any money in ourselves, but we managed to get the overdraft back to zero, get the bank guarantee canceled, and we were also able to get the payroll met on time and ended up with the company, which we were later able to sell for six figures. So that’s one of the case studies that we use in the course.
Jeremy Harbour
So if you’d like to find out more, have a look at it, see how that works, and then maybe I’ll see you on a Harbour Club one day in the future. Thank you for listening.
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