So Vendor means the Creditor. And the collateral is the prommissary

…but Codie Sanchez says I’ll get rich

Thanks David. It's easy to assume that sales are profit and to therefore get into problems that could easily be avoided.

How recent was your last company purchase? I see on your LinkedIn in youve been mostly a podcast host for the last 15 years, do you actively participate in buying business in today's market? Lastly, how many small business owners have you met this year? Just want to gauge how active you are in a rapidly changing market.

If it’s on bizbuysell that’s the first red flag

We are bringing our CRM and ERP software to America in January 2025. We will provide it for free in our target sector. We have procurement software that beats all market prices on ASW, eBay, and billion-dollar sector suppliers. The future isn't in monthly fee software. Some European packages are really good. Another supplier Ohoo has payments and EPOS to name sales features.

Thanks David. Really amazing stuff

Another very insightful video David really love your content

Thanks again David! I love your videos. I missed this one though because the thumbnail was so different from what I'm used from you. Some stock photo guy seemed more like the millions of video suggestions i get from channels im not subscribed to.

I really appreciate your videos - always bringing in the reality of buying and owning a business. Regarding low SDE, what about online businesses that can be run remotely and asynchronosly? Am I delusional to believe that one can keep their W2 job, run a business part time and buid it to replace a salary?

If you don't want to manage people then don't start a business. Instead make money through truly passive investments. Stocks, precious metals...etc

Hi Sir, I'm Heron Mia,do you recognize me? I follow your channel for a long time, I see that you upload your video content every week, but more people don't see it since it doesn't reach more people.Reaching more and more people is made possible by SEO optimization.your content lack of SEO,,I’m a KZbin SEO specialist with five years experienced.

Thanks You A lot...a lot of information

If the seller is also the landlord- can this pose any potential problems?

Thanks David. Good warnings, it's interesting how someone not directly involved in a deal can cause problems for no good reason.

Had a landlord who told us “we don’t care, we won’t work with you, it’s more profitable to have an empty commercial retail space.” Landlords are parasites

HELOC is a good move but it’s adjustable and interest only

I smell very bad business idea for company to sell bad things and go to bankruptcy faster 😅

Thanks again for having me on the show!

Example of someone who is telling people what to do but hasn’t actually done it and shouldn’t be advising

Why didn't you charge a monthly listing fee if your biggest problem was months going by without the sellers willing to lower their asking price to the market price?

Really good insights! Business owners will justify and defend why the business is not making money.

Hello, Sir. I have three years of experience as a KZbin SEO specialist. As I watched your channel for a long time, I saw that even if your content is of a good quality, your videos don't get as many views, engagements, shares, comments, or likes since they don't have video SEO. I would like to speak with you about SEO, please.

Thanks David. I have bought the first two books, very informative and easy to understand. The glossary is a really good idea.

David, as always, you bring your experience in brokering business acquisitions to highlight the realities of SME acquisitions! Your commitment to sharing your insights is most valuable, particularly to me as I have been looking for about a year now. Many are marketed just as you described in the example. Keep up the good work.

Hello Sir, How are you?

Hi David, Thank you for your videos, you are so clear and easy to understand! I have another question related to the value of my business...how do you account for the real estate value if you own the building? Do you add that value to the business value of the 3 year base net income x 4 multiplier?

As we head toward our 70's this is EXACTLY what we want to do! We bought owner carry on some stressful terms, but we want to make it much longer term for the next buyer, since we have a great rate...one that a buyer will not be able to get. Really want someone who loves the bead business!

I've been trying to figure how much business I can actually buy. I will have $500K to invest in the next 12 months. If I follow your rule or thumb of 50% of SDE I'd be able to get a business with 1 million $ SDE? That seems a little too good to be true?

Look forward to the new module!

Sir,,I'm sending you my linkedin connection please accept my linkeding connection there we talk details about "'Ýoutube SEO'' Please

Thanks David. Good point about the cap ex, so easy to overlook.

Sir,,I'm a youtube SEO specialist with 3 years experience.I follow your channel for a long time

Can you help explain if capex is classified as an addback item and is depreciated, will the depreciation count twice as add-back? Once in ebitda and again in adjusted ebitda? Not sure if this makes sense. I think my system will add back items considered as addback iwhje calculating adjusted ebitda

Perfect, what I just needed 👌

Just found your channel last week. I cant stop watching your content, I love it all.

Again: DB is the smartest guy in the room.

Thank you!

very good - most people should watch this a few times

First 🎉🎉

It may be true. However why are there business acquisitions? Why are there Leverage Buyouts if these things do not exist?

How about there are more businesses sold than buyers. Most sellers will not be able to sale their businesses. Why are you all worried about that? Do investors run their own businesses?

What many people fail to take into account is that if you take so much cash out of the business it might lose its ability to trade. Be very careful when following this strategy. If the business is seasonal or cyclical like one that closes for a December holiday, you might need those funds to carry your overheads during that period. So if you take out that money you have to replace it with something. Meaning you have to either put in your own cash or borrow money. Which puts you at risk anyway. Then you could just as well have borrowed the money to buy the company in the first place. Also, removing so much cash will have a negative effect on your balance sheet due to reduced current assets, which will negatively affect your ability to borrow against that balance sheet. And you're saddling the business with 300 worth of debt, making that balance sheet look even worse. If there is a downturn and it cannot pay the 300 on time, the owner will come back and want the business. Tax will be paid in the end. It's inevitable. With this method you're paying the owner the earnings which he would have had to pay in tax. And you're assuming the responsibility for the tax burden. Just understand that balance sheet engineering is what it is, its just manipulating figures, in order to convince the bank to lend you the money. That is a moot point because you've reduced the financial attractiveness of the business. Especially if the cash was not in the bank but in fixed investments that you liquidated in order to pay out the 225k. There are other better ways.... Also, balance sheet engineering is more effective if you sell a business. But once again, the reduced NAV would probably deter buyers from paying top dollar for the business. If you pull it off and you sell at a very high price, buyer's remorse might set in very quickly and you will not be able to peacefully ride off into the sunset with your millions. If your objective is to buy a business risk free, this is probably the least elegant option. Anyway, once the owner has received the 225k and an acknowledgment of debt that you owe him 300, what exactly do you have left? A company that has lost its driver, leaving it without any vision, passion, institutional knowledge, insider industry knowledge, experience, client relationships and IP. And a company with a lot of debt responsibility hanging over it for a number of years. So looking at the pre-purchase balance sheet and cash flow, and using it to judge the post-purchase ability to repay that debt, is utter stupidity of the highest order. I would venture to say that once you've lost the owner you've lost the entire business, unless there is a very very strong management team in place. But managers do just that, they manage the existing business, but a business requires leadership. Management is not leadership. So unless you are an inspiring leader that can adapt to that industry very, very quickly, you have problems. Therefore, if you want to use any kind of debt, one should rather stick to an industry that you know well so that you can take over the leadership from the owner.

Never love your business ...love what it can reward you.

Always enjoy your content. Serious and informative. Thx😊

Excellent content. While most small business owners rely on the sale of their business as a retirement gateway, I think most owners fail to take advantage of retirement saving plans such as Roth IRA etc. As a small business owner, I met several retirement age owners, who have not saved into one of these retirement vehicles such as Roth IRA's and rely entirely on the sale of the business as a retirement plan. In one extreme case, I met a small business owner who has told me that he has >$ 1 million dollar worth of hand made Persian rugs in his inventory that he was trying to unload at liquidation price as that is all the money he has to retire. He attempted to sale his business several years ago and failed. Consistent and diligent investment into some of index funds or Roth IRA etc. is a great way to de-risk retirement anxiety. Appreciate your content as always. Very informative.

excellent stuff! In my experience, most owners are not thinking this way at all!

Thanks David. What you say seems like common sense but it doesn't seem to be common knowledge. More people should be made aware of this situation before it happens to them.