Christian Rodwell and Kevin Whelan speak with Jeremy Harbour, an expert in small business acquisitions. They explore methods for acquiring businesses without initial cash investment, focusing on generating capital events and balancing recurring income with capital growth. Jeremy highlights the importance of empathy in dealing with business owners and the benefits of the Harbour Club community for networking and learning from other dealmakers.
This week, Christian Rodwell and Kevin Whelan are joined by Jeremy Harbour, an investor and global leader in small business mergers and acquisitions.
In the episode, they discuss the strategy of buying businesses without using cash upfront, highlighting the importance of creating capital events and the benefits of a blend of recurring income and capital growth.
Jeremy shares his experience and insights into the world of business acquisitions and emphasises the need for empathy and rapport-building with business owners for success.
He also discusses the Harbour Club community and the value of learning from and collaborating with other dealmakers.
Resources Mentioned In This Episode:
Next Steps On Your Wealth Building Journey:
>> Join the WealthBuilders Facebook Community
>> Become a member of WealthBuilders
If you have been enjoying listening to WealthTalk - Please Leave Us A Review!
Christian Rodwell (00:02.018)
purpose of Wealth Talk is to educate, inform and hopefully entertain you on the subject of building your wealth. Wealth Builders recommends you should always take independent financial, tax or legal advice before making any decisions around your finances. Today's episode is brought to you by Wealth Builders Membership, a proven step -by -step process that helps you achieve financial security within two to three years. find out more, head to wealthbuilders .co .uk forward slash membership.
Welcome to this week's episode of Wealth Talk. My name is Christian Rodwell, the Memchip Director for Wealth Builders, joined today by our founder, Mr. Kevin Whelan. Hi, Kevin. Hi, Chris. Good to be with you again. So today we are focusing on the business pillar, pillar five of our seven pillars of wealth. And we've got Mr. Jeremy Harbour as our guest and he's going to be talking to us about how you can buy businesses without using cash upfront. Businesses with no money down, Chris. Surely that's a lesson we all want to learn. Yeah. Well, we hear that.
In property, don't we? We know there's many different property strategies. today, Jomi is going to be talking about not necessarily starting a business, which perhaps is what people think about with the business pillar, but the opportunity of getting into businesses where you can add some value and then you can negotiate terms of sale. And yeah, well, we're here for Jomi, how he goes about that himself. Are we going to talk about the pros and cons of doing building capital events from businesses
property and so on, or we do that in the debrief, or you want to start on that and get right into it. I think, you know, Jeremy's got some really good experience over 20 years and well, we know he will be mentioning capital events and wealth builders. We focus a lot on recurring income, but of course you've got capital and you've got recurring income. And I think a blend of both is important when you're building wealth. Well, unquestionably the case, even if you were to go into the general
conversations just about building retirement income. Any decent IFA is going to have a chat with you about what your income needs are, but also what your capital needs are. Moving house, buying cars, holidays, all those things. So in our life, we need to be planning for cashflow, spendable money, capital, so that we can not just reinvest, but also we can help build our net worth so that
Christian Rodwell (02:30.21)
balance sheet is on the rise and also our cash flow statement is on the rise. So both are important, but of course we give much greater importance as people begin their wealth journey into capturing income coming from assets to get to income security. And I know Jeremy has an interesting piece of language to explain that, which is our language, but just in a fancier way.
Absolutely. So keep your ears open for that one. yeah, let's head on over now to our conversation today with Mr. Jeremy
Hey, I'm joined today by Jeremy Harbour, investor, business consultant, global leader in the field of small business mergers and acquisitions. Jeremy, you've bought and sold over 100 companies and advised on over 200 acquisitions. Welcome to Wealth Talk today. Hi, thank you for having me. Tell me first, what's motivating you? Why do you do this? I was a startup entrepreneur. started loads of businesses when I was a kid. I had a business in the 1990s that was in telecoms. Telecoms expanded hugely when there was deregulation plus
miniaturization of mobile phones, that industry became acquisitive and I suddenly got turned onto the idea of growth through acquisition or growth by doing deals. And once you do your first one, there's no turning back. It's like you've opened, pulled the curtain back on a whole new world that you never knew existed. So yeah, it was an absolute game changer.
So it's been a good 20 plus years or so, I imagine that you've been in this mergers and acquisitions. In that time, you've written three books as well, most recently, Go Do Deals, The Entrepreneur's Guide to Buying and Selling Businesses. And you've moved around the world. So currently in Dubai, what took you there? Yeah, it's COVID refugee, basically. So we were very happily settled down. I have a wife and two kids. We were very happily settled down in Singapore. We lived there for 12 years.
Christian Rodwell (04:28.718)
Singapore permanent residence, which is one level before citizenship. In fact, we would qualify for citizenship in the country and they just got a little bit uppity over the flu and made the city pretty much unlivable. So we traveled during COVID year during 2020. was lucky enough to have my own aeroplane. So we were free to go anywhere we wanted. When you land in your own plane, you're a high value business traveler, which was one of the allowed to travel categories, which is basically
Rich people were allowed to travel. Everybody else had to stay at home, obviously, which is incredibly unfair. But that's why your listeners need to become the rich people that can do what they like. And yeah, we literally just COVID dodged. So we just flew around different countries as they opened up throughout 2020. And we ended up November 2020 in Dubai. The rest of the world was kind of closing down in that second wave that was happening at the time. And so we bought a house, put the kids in school, bought a couple of cars. And then it became very hard to leave after that. So it was quite impulsive.
But after living in Singapore, everything in Dubai is 90 % cheaper. So buying a house is more like finding some change down the back of the sofa instead of a life -changing decision that you have to make with your wife. So it was very much a different kind of approach here. As you're aware, Jeremy, at Wealth Builders, we teach a holistic process to our members, all centered around seven pillars of wealth. Now, pillar five is business. Why do you like the business asset so much?
Well, so businesses for me are a great way of creating an income stream, but actually, more importantly, it's a way of creating a capital event. in my kind of Harbor Club community, we talk about wealth a lot. And one of the definitions I use is what I call escape velocity investing. Now escape velocity is a rocket science term, you the amount of energy required to escape the Earth's gravitational pull and get into space. The gravitational pull I'm describing is your expenses.
your house, your travels, your cars, all of these things that you have to spend every month and those fixed costs that build up over time as you get older, the things that were luxuries become essentials. This creates the gravitational pull on your wealth. so what we try and do is create an income stream that pays for all of that. And so that your investing can then be exponential. So instead of choosing to invest 10 or 15 % of your income, you can invest 100 % of your income.
Christian Rodwell (06:54.562)
because all of your expenses are covered by your invested income. And the easiest way to get there is to create capital events. And a capital event is where you get a big chunk of money in one go that you can deploy into income generating assets. Now, typically that's real estate or business. Typically the capital event is going to come from selling a property or selling a business. Now to do real estate flipping, you have to have some capital in the first place. You have to be able to put a deposit down or buy
a piece of real estate to then flip it and create that kind of capital event. Whereas I kind of found out that in business, you can enter into a business transaction with no money down a lot more easily than you can in a real estate transaction, but still create a capital event at the other end. And often what you'll find is whilst you can take an income out of a business, it's a volatile income stream. It's an operationally generated income stream.
And so we try and turn those income streams into capital as quickly as we can, and then deploy that capital into kind of truly passive investments rather than investments that might sound passive, but turn out to be quite active. Yeah, no, that makes sense. Are there any examples, perhaps even one of your early deals where, you know, the kind of light bulb moment for you when you realized that you'd done this and you could easily replicate this? Yeah, absolutely. And what's really interesting is we see this again and again and again in
in my community and I thought this was just luck from my perspective. But what happened is I kind of got onto the idea that I'd like to buy a business and of course I knew nothing about it and I was very young and I looked very young as well. always looked younger than I was, which I guess now is a benefit, then was a handicap. It took me about 18 months, I think, of knocking on doors and speaking to people before I got a deal done.
And that was a game changer because I didn't risk any capital and we grew by a year's worth of sales in an afternoon. So it had a really kind of quick and immediate impact on my business. And two weeks later, I bought another one. It was kind of like the cork had popped and now there was no stopping kind of thing. And what's really funny is when I look at the Harbor Club community, exactly the same thing happens. I was speaking to somebody yesterday who's in Australia. They did their first deal about two weeks ago and they've just closed their second
Christian Rodwell (09:11.15)
There was a cat, chap called Jamie I was talking to who took 18 months to do his first deal and did three in 10 days. I think one of the things that holds you back, what's that old adage, if you think you can or if you think you can't, you're right. And as you go into these situations, I reckon there's just an element of you that thinks you can't and that comes across the table to the other guy and for whatever reason you can't. And then, you know, once you've done one, that bit disappears from your brain. You now know it's possible and that opens up.
unleashes you basically on the world to become a deal junkie. Now, do you believe anyone can learn this, Yeah, within reason. mean, look, one of the key things here is you have to be able to build rapport with a business owner. And part of process of building rapport is empathy. And some people just can't create an empathetic relationship with another human being. And by the way, this is not about being outgoing or introvert or anything like that. Actually, introverts often make better dealmakers because they tend to shut
up and listen to people. That's quite a healthy, helpful quality. But some people are just anti -people and really, really struggle to build relationships in any context. And I would also say, whatever business you're going to buy first, you don't have to understand that business, but it's quite helpful to have a little bit of an understanding of the industry that you're going into. It will help with that rapport and it will help with that credibility. And so if you have zero experience, you've done nothing in the world of business.
it's going to be quite hard to build that trust that you're the safe pair of hands they should give their business to. Now, we've seen ex -military people do this. We've seen people who've had long corporate careers do this very effectively because they have transposable skills that they can bring to the party. So it's not about different experience. It's about no experience. I think if you've got no life experience, it's going to be very, very hard to convince somebody they should hand their baby over to you.
So you've referred to the Harbour Club a couple of times there, Jeremy. So you set up in 2009, it's now a global community for people who want to learn about mergers and acquisitions and based on your experiences and obviously now the community who are following in your footsteps of buying, selling and fixing businesses essentially. Absolutely, it's a community and look, I learn as much from them as they learn from me. I mean, we have these deal fest.
Christian Rodwell (11:30.062)
events where we all get together and share case studies and these are hugely valuable. I learned so much from those. Plus, mean, in the intro, you mentioned the 100 companies I bought and sold and the 200 advised deals. I mean, since 2016, we've also been taking companies public and we've taken over 100 companies public. And I would never have taken a company public, I think, if it wasn't for the community and the ideas and the inspiration that comes from working within that community and leading.
community. So no, it's been hugely valuable. We're an anti -seminar and we're not just there to sell people training. There's no upsells. We don't have these gold, platinum, diamond things that people can sign up to. It's just a straightforward membership with lots of events and lots of learning kind of built into it. There's nothing else like it because there's not really anywhere that you can learn how to deal with owner -managed businesses. If you do an MBA, it will teach you how the largest brewer in the world bought the second largest brewer.
in the world. you go to lawyers and accountants, they just want to sell you legal services and accounting services. If you go to brokers, they'll just say you have to use a broker. So there's not really any unbiased information out there as to how you can get these deals done sensibly. I definitely want to hear more about it. And I know you've kind got eight steps, wealth being the final step. So we'll find out kind of what leads up to that. one of the things that we hear very often, Jeremy, I'd like to ask you
When it comes to people building wealth, things that hold them back, things that stop them taking that first step. Firstly, well, I haven't got any money to get started. So we're going to address that one. The other one is time. Now you've just talked about all of the things that you're involved in taking over a hundred companies public. Someone might say, well, you know, how do you hit the time? How do you manage your time, Running businesses is incredibly time consuming. And that's why I don't run businesses. That's why I buy them and sell them. When you buy them and sell them, you're a
and shareholding is a passive activity. So the goal for me is to be the passive investor rather than the active operator. And this was a huge learning curve because when I was running my telecoms company, I believed I could do everything better than everybody else. You would be slow to delegate. You would buy companies and then tell people what to
Christian Rodwell (13:44.396)
you would buy companies and immediately implement a hundred things that you wanted to change. And what I realized after several years of doing it is although I was really, really busy, I wasn't really adding any extra value. I overvalued my own impact on these businesses. And when I didn't do all of that stuff, they did just fine. And that was a big dawning realization. was a really good ego check in terms of how much value you can bring. And actually, you know, I have
a pretty narrow band of expertise, I'm really good at getting the deals done. And if I just focus on that, that's my highest value activity. And that activity is actually kind of feast or famine. So I have a young family, but we travel a lot. We travel every month somewhere. And it's normally once with the kids and then once, know, mommy and daddy time somewhere. And so every month we're going away somewhere. The summer we take pretty much the whole summer off. We'll leave on the 29th of June and come back in September.
So we make the most of the time outside. But you can also guarantee that a deal will close while I'm up in the mountains in Italy or something like that in the summer. And that's fine because it will be a few hours of my time dedicated to that particular thing, perhaps a couple of Zoom calls and some frantic calls from lawyers. But then it's done. It's feast or famine. You're either super busy or you don't have that much.
to do. So I much prefer that way of working. think many people do startups because they're looking for freedom. They want financial freedom and they want time freedom. And then they do a startup and it takes away all of their money and all of their time and they can't even take a vacation or a holiday from the business. And I see that a lot. In fact, quite often the businesses that we're buying, the average age of a company that we buy, by the way, is about 23 years old. So these are well -established businesses.
But I see businesses that we're buying where they've not taken a holiday since they started it. So you've got somebody that's been in a business for two decades without having a proper holiday. And sometimes that's one of the motivational factors to doing the deal is I want to go on holiday. I just want to go and spend time with the kids or go and do something, which is alien to me because since I started, since I sold my telecoms company, which is in 2006, and I've just bought and sold companies, I've spent every day that I can
Christian Rodwell (16:05.832)
my kids and I'm able to spend a lot of time at home and work from home most of the time. so, yeah, it gives you a massive lifestyle enhancement. Yeah. And we talk a lot about recurring income, Jeremy, but people commonly refer to that passive income and I know that's a term you're not so in favor of. Well, it's just been bastardized and hijacked by every charlatan on the planet, hasn't it, for selling their dreams and schemes. So, you you see these
you trading bots that automatically spit out money or you see these, you know, FX programs that automatically spit out money or you see these, you know, real estate projects that are supposed to be passive. And, you know, in my experience, you know, a lot of these things aren't passive at all. They're actually quite active. mean, you know, for example, I sold all of our real estate that we don't live in and went into REITs instead because, you know, we were spending every summer
screwing door handles back on and getting boilers fixed in apartments in different places. And you just look at yourself doing this and you think, shit, I'm doing $10 an hour jobs when I could be doing $1 ,000 an hour jobs or even better doing nothing. And whilst it was really exciting at the time, it's a rite of passage, I think, but it's something that you have to grow out of.
I very much now look at physical real estate as a business, as an investment. So if you want a physical real estate business, that's fine, have one, but recognize it's a business. It has customers, it has challenges that you have to deal with on a regular basis. Whereas a REIT is a passive investment. And I'm sure your listeners are aware it's a real estate investment trust, but effectively it's publicly listed, managed portfolio of real estate. And the other thing I like is it enables
very quick and easy geographic distribution. So I can invest in Sydney, Singapore, New York, London, Paris with $1 ,000 in each or $10 ,000 in each or whatever you want. And then I can also go into sectors that I perhaps couldn't as a private investor, like I can be a shareholder in a hospital or I can be a shareholder in a hotel or in industrial units or storage facilities or any number of these.
Christian Rodwell (18:24.686)
classes of real estate that generate pretty good yields, have pretty good capital appreciation. And with a REIT, you have it professionally managed and have this income stream, which actually in the current environment, the income stream from a REIT is probably slightly better than direct investment because leverage now has got expensive and rental margins have got squeezed. you might go to get 3 % on a flat in London, you probably get 7 or 8 % on a London residential REIT.
Let's come back to how someone might learn to buy and sell businesses for a living. And in particular, someone who's listening now thinking, how do you buy a business without using any cash upfront? So how do you go about this? When I started this, I believe there were only three ways to grow my business. And that was sales, marketing, and the team that had working for me. And I then had loads of people coming to try and buy my business from
The reason I didn't think about buying a company was exactly that. I didn't have any money and the banks wouldn't lend me any money. Then I had all these people coming to try and buy my business and I realized they also didn't have any money and they also didn't have banks that would lend them money. What they had was a really compelling story and a solution to challenges that I was facing in my business. And so I basically figured, well, I could be on the other side of this table. I can use that same pitch and go and approach people myself.
And over the years, it's kind of perfected and perfected, but there's basically a couple of really simple ones that I could explain for your audience now, which would be relatively easy for them to grasp. And the first one is leveraging the business owner instead of the business. So you may have heard of a leverage buyout. Well, a leverage buyout is where you borrow money from the bank to go and buy a business. And it's a terrible idea.
Lots of people, when they think of no money down deals, think of leverage buyouts because it's similar to what happens in real estate. You put some money in yourself, you get some money from the bank and bingo, you own a house that you can now rent out. Well, the problem with business is there's a million moving parts and effectively business is more like a highly volatile asset. So imagine a business is less like a property and more like a crypto meme coin. Now on that basis, would you mortgage your house and stick all of the money into a crypto meme?
Christian Rodwell (20:42.03)
I'm sure somebody in your audience would say yes, but the right answer is no, shouldn't borrow money with a fixed return and invest it in volatile assets. It's a really dumb idea. Well, small business is a volatile asset. If you lose two key staff members or two key customers, that business can disappear overnight and you still owe all of the money that you borrowed for buying it. And so because of that, you have to look at something called the risk -weighted return on capital.
And the risk rate way to return on capital is how much you can sensibly pay for something that's risky. And the best way to look at this is you look at the two -year treasury, which is the US debt, the US treasury, and that's your risk -free rate because the US treasury can never fail. They just print more money and it will always meet its obligations. So it's called the risk -free return. So the risk -free return on a two -year treasury at the time of recording is about 4 .8%.
So if you look at how much cash you can take out of a business on an annual basis and multiply that by 20, that would be valuing it at the same basis as the risk -free return. Now what's interesting is when you speak to most business owners, that's pretty much exactly what they're doing. They might have a profit of 100 grand, they can take 50 a year out in cash, and they're asking for a million quid for it, which is exactly 20 times and is exactly the same as the risk -free rate. Anyone that gave them that money,
is a psychopath. They should buy the two -year treasury and just go to sleep at night instead of buying this crappy little business. So the first thing is to understand what it is that you're trying to buy it. And then explain to the business owner that in order for them to get anywhere near the kind of return that they're looking for for their business, they're going to have to shoulder some of the risk with you. And they're effectively going to have to be the bank. In other words, you're going to have to defer.
a large chunk, if not all, of the money that they're going to receive over a period of time and work with them collaboratively to extract that value from the business. Otherwise, there are simply better investments out there that would take the capital that they're asking you to give them. Now, for a newbie, that's quite a hard conversation. a more seasoned deal maker, they can pull that deal off. So we have a strategy that we call Wibo.
Christian Rodwell (22:55.406)
which is perfect for a newbie, perfect for somebody that's perhaps in a job at the moment or just starting out in the area of M &A. And that is instead of going to them and saying, I'm going to buy your 20 year old company on a hundred percent deferred basis over the next five years, which like I say, is a harder sell to get people past. You simply go in and take a minority stake in the business in exchange for creating a load of value and making the business more
So we have a report that we run the company through and it shows the current valuation and all the areas of improvement that could be done to make it more sellable and more valuable. We then go in and execute some of those plans, which often can double or even triple the profits of the company, improve the balance sheet of the company, but also give it things like a data room and a process manual and things like that that the next buyer is going to need if they're going to buy
But at this point, you're a 20 % shareholder and you've created a load of value for them. And by the way, you can get paid for this. We sometimes call it consulting for equity. So you do a consulting project with them that you're being paid every month and you get an equity kicker for the success that you create. So you normally pick one of the measurements that you know you're going to hit out of the park and use that as the trigger for the equity component. And then maybe six months later, when you've done all of that stuff, you're now a 20 % shareholder. They're an 80 % shareholder.
You then put in an offer to buy the remaining 80%, but on a deferred basis paid over time. Now, at that point, they're a lot more receptive to that 100 % deferred pitch because you've delivered on something you said you were going to do. You've enhanced the value slightly so that the value that they're now going to receive is better than it was when you first met them. You've done all your due diligence because you've been in the business for six months and been paid while you've done stuff.
and you've basically warmed up the relationship to the point where you're the safest pair of hands. In fact, what works quite nicely is once you finish that work is to actually put it for sale. So advertise it on businessesforsale .com or bizbuysale .com, one of those venues, and deal with some of the inbound inquiries. And what they'll quickly realize is that most people are chances and looking to pick the business up for nothing. And at that point, they'll say, okay, well, you're a safe pair of hands and you're going
Christian Rodwell (25:09.006)
buy out on this basis, I'd rather give it to you than give it to them. Because there aren't a big queue of people running around with checkbooks to buy these micro businesses. Anything below $5 million in revenue is almost unsellable. yeah, there's a huge amount of opportunity to pick businesses up in that fashion. Yeah, because statistically, just picking up on that point, not that many businesses sell, right? About 8%, they reckon. Yeah, 8 % go up for sale actually sell. So when you're a seller, it's important
be head and shoulders above the competition to be sold. But when you go and see these businesses, they're not head and shoulders above the competition. They've still got personal expenses running through the accounts. They haven't documented how they run their business, so it's almost impossible to transition to a new owner. They haven't got a data room where you can find out all the information that you'd need to find out. All they've got is a big shiny price tag that says they want a million quid for it, and almost no justification as to why on earth you would do
One of the things we do is we do publish tons of free content. So if anybody follows me or the Harbor Club, we give you tons and tons of free information on how to do this stuff because we're not just trying to sell people membership. We're trying to get more entrepreneurs to be deal makers and to make more money from doing deals because I think it's the next rung on the entrepreneurial ladder. So this is stuff you can get for free. You don't have to join anything or pay anything to understand this stuff. We publish tons of content around this.
Yeah, just remind people where the best place to go and find that is. Yeah, I think probably start by following me on Instagram or X, so jeremy .harbour. And yeah, we post links to all sorts of different videos and stuff on there. So yeah, you'll find lots of information. Just before we wrap things up, Jeremy, and I've really enjoyed speaking with you today. We talked at the beginning about diversification. There are multiple asset classes. We're talking about business today, but
Are you diversifying now some of those business profits into other asset classes? if so, why? Yeah, so this is kind of the point I alluded to at the beginning. I think holding businesses as an asset class is actually not a great idea. think business can change on a dime. So Google could do it for free or Amazon could come into your space or AI could replace what you do or somebody important could die or a customer could go bankrupt. There are so many things that can dramatically change.
Christian Rodwell (27:33.102)
landscape in your business, that my goal is always to de -risk, create a capital event and go and deploy that capital. In much the same way I spoke about the risk -free return being the kind of competition on an acquisition, it's kind of the same on an exit. If you can take half a million to a million off the table, you can probably get 100, 200 grand a year of income from that, which is more than you'd probably be able to take out of the business. And you'd be able to do
on a passive basis rather than having an active basis. What kind of example there would you be referring to? Well, so mean, my favorite equity strategy is fixed coupon notes. So fixed coupon notes when markets are a little bit volatile, it's very easy to get 20 to 30 % returns. Now, I know that most retail customers aren't allowed to buy these much safer, much better structured products. They have to buy stupid high risk stuff that their financial advisors are allowed to sell
We also have private credit type investments that generate 15 to 20 % a year. We have our own one called IPIN, which is a regulated fund out of Singapore that pays 15%. One of the things I always recommend in the Harbour Club community is you need to get yourself into the private wealth banking space as quickly as possible. And I mean the offshore private banking space, so not like Coots or something like that. You need to be with, you
Julius Baer Switzerland or Singapore or UBS or JP Morgan or one of these guys because there you get, know, Lombard lending at less than a percent per year above base. My rate's about 0 .7 % at the moment. And you also get access to the institutional version of all of the funds. So things like Pimco and Schroders and all of those funds, which don't really make sense for retail investors because the cost is too high.
They have an institutional version where the cost is really, low, which is what they sell to the Harvard Alumni Fund and the Norwegian Sovereign Wealth Fund. Well, as a private banking client, you can get those, which pay a much, much higher return because they don't have the drag of the expenses that the retail version has. You can also buy direct bonds. So through a private bank, I can buy an Apple bond or a Microsoft bond and hold it until maturity. As a retail client, you have to buy a bond fund, which is volatile according to interest rates. And so you have a potential for
Christian Rodwell (29:54.362)
loss, whereas if you're wealthy and you buy a direct bond, your capital is protected because you receive all of the capital back at the expiration of the bond. So the first thing to break out of the rat race, if you like, is to get onto the private banking ladder, because once you're on the private banking ladder, it just opens up a sea of opportunities. And that Lombard lending one is huge because against your portfolio at any time, if you have a big capital expense, like you want to buy a new house or you want to buy a
You can simply just take the money straight out of the bank within an hour at 0 .7 % per year. I gave an example. We were traveling for four months over the summer a few years ago, and we bought a Maserati Levante because all the taxis in this country were terrible. We bought a Maserati Levante when we arrived and we sold it when we left. And the cost of that car for that whole period of time, brand new or six months old, was $180.
And also another one, bought a yacht. I've several yachts. got a different one at the moment, but the one I had at the time I was living in, or I had a house in Mallorca in Spain and I had a yacht there. And basically I was just pissing around on websites offering people half what they were asking for their yachts. And one of them went and said, yes, didn't they? And I think it was advertised for like 550 and I got it for 220 or something like this. And so you have to buy it. You can't say no.
I used a Lombard loan for it and my cost of capital was two grand a year. So I had a half a million dollar yacht for two grand a year. Those kinds of things. mean, it's why Jeff Bezos never pays any tax and why he has a half a billion dollar yacht and didn't pay tax on that half a billion dollars because he simply Lombards against his Amazon stock and then slowly deleverages by selling some of the stock to pay down the loans. Same with Elon Musk, same with lots of people. The rules of the rich, hey?
Yeah, join them. Yeah, if you can't beat them, join them. You're only a few capital events away. And like I say, the easiest way I can see to creating those capital events is buy a business for no money down and sell it for six to seven figures and rinse and repeat. Yeah. No, it's been really fascinating speaking with you today, Jeremy. I can see you at home. You've got your family there with you. So final question, is there a legacy that you wish to be remembered for? God, I haven't thought
Christian Rodwell (32:17.67)
far in advance. Like I say, I'm a bit of a deal junkie. When people ask me what my favorite deal is, it's always the next one. I'm in my living room at the moment because there are builders upstairs refurbishing our whole top floor and my home office is up there. I'm relegated to the living area at the moment. Thanks very much for taking the time to speak to us today. I'll let you get back to that Dubai sunshine. Lovely. Fantastic. enjoy the UK sunshine.
Christian Rodwell (32:45.848)
So clear to see Jeremy is a very entrepreneurial kind of guy there. Kevin from a young age, he got hooked on buying businesses and no turning back for him, that's for sure. Well, it's great when you know yourself and Jeremy clearly does. He's got an investor's DNA, a dealmaker's DNA and he loves the thrill of the deal and that's so obvious and I think it's great if you like that, but it's great to understand the principles even if you're
If you're not fundamentally about chasing lots of deals, but you just want to do enough to give you the income that you want, then you can achieve the same result, but without the same obvious drive that he has. So plenty of lessons for us to dive into. Before we do that, let's head on over to our latest review on Trustpilot this week. And thanks go to Vicky for taking time to write the following. And she says, I've loved dealing with the Wealthbuilders team.
and in recent years have gained a lot of benefits from the Academy program. The important thing for me is that the key people in wealth builders have an ethical approach to creating financial security. I was initially wary having seen upselling galore in the past by other organizations. It became clear to me that's not how Kevin and Christian operate. There's a lot of great content, support and connections available here. A special thanks to Helen and John, my coach. Overall, highly recommended.
That's nice to see that many of our team are getting a mention and thankful as we are to our team, but just as thankful to our members and to those people who take a moment or two to let people know their experiences. And I think we're always pleased when the same words come time and time and time again, don't they, really, Chris? They do indeed, yeah.
Let's talk about business now. I pulled out a few stats from online, Kevin, just to give some context around how big is the market? How many opportunities are there out there to be buying businesses? At the start of 2023, there were 5 .6 million small businesses in the UK. Surprisingly, more than half, 56 % of those are sole proprietors. Less than 5 % of companies have been around for 20 years or
Christian Rodwell (35:02.478)
And 80 % of businesses brought to a sale don't sell, although you might argue perhaps more than that. Well, you've given me death by statistics, Chris. was beginning to fall asleep there. We need some statistics to back things up. Of course we do. And 5 million or thereabouts is the number that I would normally raise when talking about the number of businesses in the UK. And I think Jeremy calls them owner -managed businesses and they don't necessarily have to be limited companies because the business of business
the tax structure can be different. But the staggering fact for me, and I've repeated this before, Chris, on other podcasts, that from the national statistics of businesses that are sold, where there's a capital gains tax bill, because all businesses that sell using what was called entrepreneurs' relief get a capital gains dispensation up to one million pounds. Now, not that many businesses are sold for a million pounds, less than 1%.
of staggeringly less than 1%. It's only 5 ,000 businesses a year. That's 0 .1%, which means generally spot on. The vast majority of owner managed businesses are not sold. And they're not sold because either they can't be sold. There's a mismatch in understanding between the buying price and the selling price. It's not like a house or a car or a bit of jewelry you can put a value on. Most people put their life's work into a business
often want more money than actually somebody's willing to pay for. And in truth, an acquirer is looking for future profit and predictable future profit, which is where we've spoken in the past about the importance of recurring income, but most businesses do not have recurring income. And many business owners actually leave it too late. And when they come to think about selling, we know the average age of a business that sold
through normal channels is 57. So let's say most people are older when they don't sell. And then the business is either going to be dropped or it's going to be scrapped if you remember that from previous episodes. You can do a great service for continuing employment, continuing service delivery, know, serving the community of people who want a product or a service by finding and identifying that cohort of
Christian Rodwell (37:28.28)
business owners who want something for the business, but they definitely don't want it to scrap. If it's a school, they value the fact the school's providing service. Normally it's a service, it's a continuation of service or a continuation of employment or a continuation of a culture that respects and appreciates somebody in the chain. And I think if you can recognize that, understand
appreciate that deeply, then you can find a win -win solution to help a business owner gain some value rather than no value. And you can gain value too. And you don't necessarily have to add an incredible amount of value. It's always good if you can, if you've got some skill. But if you can acquire a business where the acquisition just means really taking over the delivery, and if you can work out how to do that through understanding some
skills that are required for a business to operate, because you're not looking for another job, are you? So you're looking for a business that can run. And we've got lots of skills. We teach people about what are the key principles of a business that works without you. And if you can find that, recurring income being number one, number two, being outstanding in a niche, and number three, the business being capable of being systemized. So if you can create
some core principles and look for businesses that match those principles, then you can find business owners. They're not difficult to locate. I mean, they advertise for goodness sake. So, you somewhere, you know, they're findable. And if you can do a good job of finding and you don't need the funding in the same way as you do when you're buying property, for example, where you need deposits or you need refurbishment costs and so on, I think it's a very clever
to be able to find a good and ethical solution, not to take advantage of business owners to help all parts of that triangle. The suppliers and those who are benefiting from it, suppliers, let's say, employees and customers being one end, the business owners themselves who want to get some value and those people who are buying the businesses. And if you look at the baby boomers who are increasingly
Christian Rodwell (39:51.586)
millions of them coming to retire every year, it's easy to identify the boomers and try and help them secure their retirement by giving them something from the income or the future income of the business. Because every business that's ever sold is built on some kind of multiple of the future income, because that's where the money comes from. But why would you buy a business if there wasn't predictable future income? Well, you wouldn't buy it. So it's the same principle, future income wants predictable.
can be paid to the owner of the business or the current owner of the business, or some of it can be paid in installments. So just like getting an annuity from your pension, there are just different ways where you can secure an outcome, you can secure a transaction without having to physically pay for it with a single lump sum that you would have to find. So very clever, very intelligent. Obviously, the more experience you get at
And at the beginning, can sound daunting, but Jeremy teaches this. And for those people who are interested in that, I would gravitate towards his website, which is obviously available. others do this same thing too, but Jeremy was certainly able to demonstrate the value that he brings, not just for himself, but the people who join the Harvard club. Absolutely. And with all our fantastic guests, we love to work.
collaboratively with them and Jeremy is someone that for our members, there'll be additional benefits inside of our wealth hub. And we haven't talked too much, but we've recently launched the wealth hub, Kevin. think we should probably do an episode very, very soon to let everybody know exactly what that's all about. Well, yeah, it's just Kev's big black book, isn't it? It's no longer a little black book. I'm getting it now online. Yeah, it's getting posted online so that our members can physically see who those people are that we resonate with the most and
least to the best of our knowledge do a great job. And of course, it's the feedback of our members that will continue to validate that. yeah, definitely looking forward to sharing the podcast on that specifically, Chris. Good. So thank you, Kevin, for your thoughts. And thank you once again to Jeremy for sharing some of the insights into how you can buy businesses for no money down or certainly very little cash upfront. I hope you enjoyed today's episode. If you think somebody
Christian Rodwell (42:19.31)
might like to take a listen, please hit your share button right now on your podcasting app. We're now at 250 plus episodes, so there's plenty of back catalog for people to go back and enjoy. We often speak to people every day, Kevin, and they say they've just discovered Wealth Talk and they're going back to episode one and they're binging all the way from the beginning. We love to hear that and we really, really hope you've enjoyed all the episodes so far and we'll hopefully get another 250 in us, Kevin.
I'm not sure about that, but I was talking to somebody today who said she downloaded a copy of the seven pillars of wealth and listened to it at the same time. You know, it's almost all along. Yeah. Everybody likes to consume information and in different ways, whether you're out to read, listen, whether you engage with your ears, you know, whatever senses that most resonate with you and your learning style, we do our best to make that available to you. So however you, you like to consume our content.
please do that. It helps you get to know us and us get to know you. If you're one of those people who give us feedback, what would you like to see more of? What would you like to see less of? Can you post a review to let other people know that we're hitting the sweet spot when it comes to good content and good sharing? So we're sharing, why don't you? All right. Thanks for listening. Take care. Kevin will catch up same time, same place next week. We will indeed. And until then, my friend, see ya.
Christian Rodwell (43:47.288)
We hope you enjoy today's episode. Don't forget that we are constantly updating our resources inside the WealthBuilders membership site to help you create, build and protect your wealth. Head over to wealthbuilders .co .uk slash membership right now for free access. That's wealthbuilders .co .uk slash membership.