Jeremy Harbour
Hi, my name is Jeremy Harbour. I buy and sell companies, and I specialize in distressed acquisition. This is typically businesses that we can buy without using any capital up front, and without borrowing money or getting ourselves into horrible amounts of debt. I also teach a course called The Harbour Club, where I help people to do the same thing. I teach people how to source these deals, how to hold meetings, how to prepare the company for exit. We have a great section on financial engineering which can fix most companies cashflow and profit.
Jeremy Harbour
But one of the problems that quite a few people come up with, because many people come on The Harbour Club because they want to sell their own business. One of the things they’re worried about is getting stuck in the business when they sell it, because quite often people want to buy it with a manager or a very experienced person to take the business forwards for them. How do you not get sold with your own business? Get sold into slavery when you do your deal?
Jeremy Harbour
Well, you need to have a good succession plan. You need to be able to take on somebody who’s going to take that CEO role when you sell it. I’ve always had a lot of problem with the succession planning. One of the problems is that people that have done the job that you want them to do before, don’t necessarily want to do it again. The guy that took a business from 2 million to 10 million in revenue, doesn’t want to take another business from 2 million to 10 million in revenue. They want to move on in their career and do something different. They don’t want to live in Groundhog Day for the rest of their career.
Jeremy Harbour
You’re really looking to try and find this young, hungry, ambitious person that can run a business like yours. The best way to find a young, hungry, ambitious person that can run a business like yours is someone that’s already running a business like yours. The easiest way to succession plan is to merge with another company that has a good CEO in it. Now, people often say that mergers are a merger of egos. Everybody’s fighting for who’s going to run it. Well, if your goal is to effectively remove yourself from the operational day-to-day involvement in the business and effectively become a shareholder, then effectively you can lose the battle and win the war.
Jeremy Harbour
You can capitulate and let the other person get the CEO job, and you can come and sit on a beach here with me in Majorca, drink mojitos, and get your report sent to you every Friday with how the company is doing, which sounds a lot more fun than working for a living, doesn’t it? The best way to do succession planning, rather than looking at CVs, which are all perfect, is go and find another company that looks like yours, merge the two together, get the CEO on board, and then sell the whole thing together with its new CEO. I hope you found that interesting, and I look forward to seeing you on our Harbour Club soon.
Jeremy Harbour
Hi, my name’s 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 a year’s worth of sales in an afternoon, and it didn’t cost me any money and I didn’t have to take any risks with the sales and marketing 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.
Jeremy Harbour
In fact, it went spectacularly bust when I was 19, which was a great lesson in humility. I think everyone needs a good kick in the nuts when they’re a bit young and cocky. It was a really useful experience, and actually, it’s really helped me in later life, to be able to empathize with the businesses that are in trouble, because I know exactly what it feels like to be in their shoes. Basically, I was running businesses like this. I was always a firm believer that if you want it to be successful, you had to start a business and you had to work really hard. I did sacrifice everything. I put it in the blood, the sweat, and the years into growing my businesses at the expense of almost everything else in my life.
Jeremy Harbour
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. 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. 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. 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 we would get from our own business. I basically spent every week having meetings with these various different telecoms company bosses who were trying to pitch me, 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.
Jeremy Harbour
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. I think too many people are negative on the 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.
Jeremy Harbour
Sure enough, after a while, what happened was instead of me having two or three opportunities to choose from, I ended up with 15 opportunities, and then it made me start to think about everything a little bit differently. 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. 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.
Jeremy Harbour
In fact, all the same conversations you used to have, suddenly with this new pair of spectacles on, there’s new opportunities. 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 his customers. 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 up-front whatsoever. 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 investors’ capital to complete this deal. 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 don’t have to run the marathon. I can just do the last 10 yards, and I still get the trophy. That was a really important epiphany for me.
Jeremy Harbour
It suddenly made me realize that maybe I’d been doing it wrong all these years. Well, not wrong, but just not the right way. 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, they’d all made their money doing deals. In fact, all of the dragons on Dragons’ Den bought or sold businesses as the way that they accelerated their success and their wealth. It was almost like … Well, it was a complete paradigm shift. I completely changed the way that I looked at business.
Jeremy Harbour
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. In the space of 18 months, I had built up a mini empire of businesses turning over about 13 and a half million pounds a year on a monthly run rate. We had about 135 staff, all based around the [inaudible 00:08:20] area in the UK. Yeah, I became extremely busy doing all of that. I bought a seminar company. It was one of the businesses I bought. This seminar company taught people various business skills and business techniques. Out of the back of that, I thought, “Well, how would I teach people what I do?”
Jeremy Harbour
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. Because it’s an experiential thing. I titled this course The Harbour Club, and I wrote down all the things that would make it interesting for the participant. How would they source deals? 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, January is their best month ever, isn’t it?
Jeremy Harbour
You need to be able to have an honest conversation with the entrepreneur about how things are going and what it is. They then 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 seven or eight all together. But there’s 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 9:00 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.
Jeremy Harbour
How we bought a furniture manufacturer for a pound 100%, and again, we’re able to turn that round and sell that on in a very short space of time, and a whole load of other stuff. A call center business, we bought a gym and spa. It was a health club, 15,000 square foot health club that costs 3.2 million to fit out just a few years before, that we were able to buy Lock, Stock and Barrel. Actually, the way the deal was structured, we ended up £25,000 in front after the deal was completed. There’s really, really interesting techniques that we’ve stuck in there, and everything is backed up with real case studies. 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. All of the contracts and spreadsheets and questionnaires and things like that, that we’ve had to do … I had to do.
Jeremy Harbour
Now people often ask, how would you buy a business with no money? 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. I bundled all of that into this course called The Harbour Club, to give people the complete package on how to do things. 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. They’re not so interested in all the turnaround techniques and the insolvency tactics and the exit side of it.
Jeremy Harbour
Really in the beginning, what they’re looking to do is what I did in the first place, which is to grow that company by a year’s worth of revenue in an afternoon. 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. 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. Where do you find businesses that actually aren’t really for sale that you can then put these deals together with?
Jeremy Harbour
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. Then we go into the 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 the business that you have already. Now, it’s very simple not to get into trouble like that, but as long as you know how. Then the next thing is the deal structuring. How do you actually put a deal together, where you’re not borrowing money and you’re not paying anything up-front for the business? We go through all the systems you need to do that.
Jeremy Harbour
Then how do you reduce all your up-front costs in doing the deal? 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 costs 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 cashflow.
Jeremy Harbour
For example, we bought an air conditioning company that hadn’t paid his payroll for two months. It was £10,000 overdrawn. We were able to fix that within about six weeks. All the payroll was caught up and it constantly had cash in the bank. We bought another business that was £85,000 overdrawn, and payroll was due in a week and the overdraft was personally guaranteed by the owners. The deal we did there was if we could get you off the personal guarantee and we can pay the payroll, could we have the company? To which they said yes.
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. That’s one of the case studies that we use in the course. If you’d like to find out more, have a look at it, see how that works, and then maybe I’ll see you in a Harbour Club one day in the future. Thank you for listening.
Enjoyed this video? Grab Your free PDF report about how to buy and sell companies for a living without having to use any capital or debt. Go now to HarbourClubEvents.com/report.
