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All right, So we’re getting everyone joining the room. Hi, everyone. It’s just Nancy Meyers here from races to come. Nice to see everybody. It looks like there’s a lot of action today. So, yeah, usually this call is really the purpose of this call is just to go through everyone’s situation and then help them get to the next step. For example, let’s see, somebody is working on finishing their financial projections just to go through that and finish it. And we’ll try to allow probably like ten, ten, 15 minutes for each person just so we can get it along. And then and then if there’s extra time needed, we can always do a one on one or at the end of the call we can stick around at end of the call to spend a lot of time on one person. So, okay, so let’s see. The first person that we had in the queue was Henry. And Hey, Henry, how’s it going there?

[00:01:06] It’s going well Now to thank you for having me first in the queue. I think I need all the help that I can get.

[00:01:13] Yeah, no worries. That’s why we’re here. I have matter. Matter is a registered chartered financial analyst. So when it comes to the numbers, he’s the numbers person. And then. And then I’m just the person to just move it to the next step here. So.

[00:01:26] Awesome.

[00:01:29] All righty. So last I checked, I got. Yeah, I just got your form filled in. So basically we had somebody reply back with just the the folders on Google Drive, and then it just came in and they said, okay, here’s like a draft, like just empty draft template, pitch deck, and then incorporation documents like corporations, private placement, random and in limited partnership, private placement of random. So basically the point is really just to we’ll just figure out like the answers to some of those questions, fill in the gaps and then then and then work on getting the introductions and then talking to investors, basically. So that’s basically it.

[00:02:11] Okay. Yeah. Because again, like other like I’ve represented here before, this is my this is my first time. It’s something I’ve always wanted to do. I’ve always wanted to grow by acquisition. But of course, the tough question is how how do you deal with the bank? How do you deal with money lenders? Right. And it takes it takes a lot to get banks to be willing to lend to you, unless, of course, you’re working through SBA, which means maybe you do one deal once every ten years. Yeah. Yeah. And and again, that that led me to searching and I’m really glad that I, I got to meet raises dot com. I’m learning a lot already just by following the the WhatsApp group. Yeah but for me of course what what immediate is this acquisition that I have right in front of me I have the opportunity to acquire another company that is really a home health company and I’ve been running at Home Health Corporation since 2013 and we’ve been looking to grow and we’ll find the opportunity to acquire actually another home health company. We are located in Pearland, Texas, and serve the Houston area. These guys are located in El Paso, so they serve a different market.

[00:03:33] Um, there are multiples that were better than ours because, of course, the Houston market is saturated. They’ll pass. The market, on the other hand, is not. Currently, these guys are making about 3.7 in in gross revenue and EBITDA of around $700,000. Yeah, there is so much opportunity for growth. Even at that, they don’t offer a service called hospice, which we know that we can offer very easily to the existing client and quite literally double that EBITDA. So of course, the question now is how do we raise the funds we need to make that acquisition? We’ve thought about working with the SBA, which means that we get to, of course, raise at least $350,000 in cash, which we will inject as a as a as our own money down. So my my idea is one of two things. Number one, either to work with investors to raise all of it, which which we mean both the junior and senior debt and or to work with the SBA to cover the senior debt and then raise equity to cover the 350 K that we need to come up with how to structure that. Well, that’s why I’m here.

[00:05:02] Look beautiful and feel free to net. So for some reason we just had a big influx influx of a few people here. So then some of them are like, I mean, some of them are M&A advisors. So feel free to just offline or even on a call connect with Henry. But yeah, no, totally. And yeah, just to circle back, I think like the. Uh oh. And by the way, were you able to get the deal information to us? I don’t know how far down your the deal. A pipeline you are in terms of getting some of the deal info.

[00:05:33] Okay. So I have all that lined up so and I’ll be uploading them tomorrow morning. I don’t think it would be today, but I have all that I’ve got that all the information. So by tomorrow morning they’ll all be in my in my room.

[00:05:48] Beautiful. Oh yeah. So when we get that then, then we eat that away because all those, those draft documents we sent, we will just pop. We’ll use the deal information to populate the pitch tag, private placement memorandum and all that stuff, so that at least you have something to argue. But, but basically I said this to you, I think offline. But basically, yeah, we want to just make sure that. So this is let’s say this is the buying price of 1 million. And then and then this this part is the the equity down payments. And then this part is the SBA loan. Yeah. We would just like to see if we can work with you, to work with you to proceed with the SBA to see what the terms would be and then assist you in that down payments, or if we get other lenders asides from SBA, even though SBA is good, they’re slow. So if we’re able to get others, then we’ll assist you in finding that that portion. And then same thing, try to find equity portion. It’s a lot of work, but it sounds simple, but it’s a lot of work to get it. But then that’s that’s really the way and then or ideally and then the last thing is ideally if you were to like down the road, hopefully there’s another deal that comes in. They don’t even need any equity down payments. Maybe there’s some seller carry, then we’ll just assist you with some of our lenders, like some of the folks that are working on Steve’s deal. Another fellow working on cybersecurity deal. We use some of his lenders and then and then put it in this one. But that’s pretty much the plan again in a nutshell, and then we’ll just help you with all the admin stuff in between. So that’s pretty much it.

[00:07:24] Yeah. Awesome. Thank you about that. And then of course, like I mentioned, I’ve got a couple other deals down the line, but of course I want to get this one done first. I’ve got a couple of sellers who are looking to sell to me and and exit the market. It’s getting a little tougher to do to take to to, to to run home care companies because of the fact that it’s really labor intensive, it’s tedious, but we are building a software that automate the process to where we don’t need to have 12,000 different people doing that, different things. And we can just have automated processes just running in the background. And so for us, that’s the confidence to go in and buy up all those who are exiting because we get the automated process, make it easy to work and still be profitable. But of course, first things first, this first deal, and then we’ll look at the other.

[00:08:19] I like it. I think it’s important because you have these interest rates that are going to eat up some of that profit. So anything you can do to jack up that, you know, that profit margin for the next five months or five years rather, or three years. And I think it’s a smart idea. And if you can be as aggressive as possible on the you know, on lowering some of the even the even lowering the expense on the existing company, you’ve got two things to that matter. I think you’re just on mute there.

[00:08:49] Yeah. I mean, it’s it’s pretty straightforward for this deal. Like, as you mentioned, Henry, like you have some equity that you’re going to put in. So I think all you need to do is just raise some debt and you’ll be able to find as the deal. And, and yeah, I mean, it’s pretty straightforward. Like the price is I maybe missed that one. So 1 million is the price for that or just an Example.

[00:09:12] No, that was an example. The price is actually yeah that as an example the third price is actually 3.77.

[00:09:21] Okay. On a so you said 700,000 a debt. Right.

[00:09:26] Yeah, well, yes. $700,000 EBITDA. That’s correct.

[00:09:29] Okay. Yeah, that seems like a reasonable valuation. Maybe a little on the higher side, but but definitely, you know more about that side on a specific end of the business. But yeah, I think like pretty straightforward deal on this end. From my perspective.

[00:09:46] Well.

[00:09:48] Oh, good. And so, hey, it’s going to be a pleasure. Going to be fun to work on with you, to take it to the next step. And then. And then let’s see. I think unless there are any. Any other questions. I mean, anything else? You want to take a deep dive in before we go to the next person?

[00:10:07] Honestly, not at this time, at least until I have all my data populated in the room. And then I can start building on that project a little bit more. But at this point.

[00:10:18] Alright beautiful the only thing I recommend to you is like even though the SBA, like if you could find a way to like proceed with the SBA while at the same time courts, other lenders, I think that that will be they’ll put you in the best position because then you just anything to not be to overdependence on any one person because we’ve seen people suffer from that before. But as long as you avoid just over dependent on one person, then we think at least you’ll have some you know, you’ll be more resilient. So.

[00:10:48] Yeah, absolutely. And and for that, that is the plan would continue to pursue the SBA and pursue other options that we have. There are other investors that I know personally that I started talking to as well, but I’ve been careful how I disclose every portion of the deal I want to make sure that I have all the details. What I would raise is dot com and then when I really put the deal before them, it’s professionally done. Yeah, obviously I’ve put out teasers and got an interest, but I really don’t want to go there and maybe by the time I’m done they’re not, they’re no longer interested because I haven’t done it right.

[00:11:27] Yeah. It’s the only, it’s a first impression. And then even even if in six months or two months or whatever, maybe you gain like a lot of you gain a lot of intel or something, you become even a different person than the people just remember you from the first message. So it’s kind of hard to outgrow that initial.

[00:11:45] Yes.

[00:11:46] Yeah. So just outgrow that initial impression. No good stuff. It’s going to be fun.

[00:11:54] Thank you. Yeah.

[00:11:57] All right, so who else is here? Um. And just stop the annotation. Yeah. If anyone has any question, feel free to just either raise your hand or pick. But I’ll just go and order from the last person, the people that join us.

[00:12:16] Let’s see.

[00:12:17] So after.

[00:12:18] Henry.

[00:12:20] It looks like it was Richard afterwards. And then.

[00:12:23] Gerald. Well, good evening. Thank you very much for hosting and you’re doing great work and the is great. And I don’t really have anything new to ask about or mention other than you can see I have a different background now. Yeah. And I’m setting up my, my office for a podcasting. Okay. And I just got invited to another podcast. So three podcasts in the next eight days. Just just funny one from. Well, I don’t even. They’re from different groups here and there but nonetheless on. So all the good stuff that you’re helping me learn here and and stuff that’s helping people gain interest in wanting to interview me.

[00:13:20] That’s good.

[00:13:21] Somebody with which podcast is. If you don’t mind sharing.

[00:13:27] Well, let’s see. Tomorrow. Noonish is. Hold on. Let me look at my calendar on. Okay, so tomorrow noonish is is. Michael Black, Anvil Capital. Can. And then Wednesday night is. Is Daniel Pettitte. And that’s going to be live. I don’t know where. And then next Tuesday, it’s going to be. That’s not on the calendar. Oh, because it’s the 20th. Tuesday. The 20th. Um. Bourke Investment Group, Sam. Hmm. Nice.

[00:14:26] Nice. So you’re going to use these to kind of warm up the the audience for the. Is this for the fund or for this indications? Both nice. Yeah. No, I think I think it’s a good move because yeah, I mean, it kind of you can kind of have them because what you can do, you can have them on the intro. If there’s a place for you to be introduced on the podcast, they can introduce you as somebody who has done X amounts of accomplishments and then it just pre frames you as like the the person that is like worthy of like the investors. And so that’s why I know a lot of people do and, and even for me like when I was on John Stoddard I mean he just introduced like oh yeah they’ve raised over $200 million and so that just pre qualify as all the it just cuts through all the, the people, the doubters and all that stuff. And then and then everyone they listen because you’re like, okay, yeah, this guy is like this guy kind of endorsed him by proxy, you know, So like if you really fine tune that introduction, the deals that you’ve raised and the returns that you got on that podcast, if there’s a place to do that.

[00:15:30] Then you know, then it just you break through that beginner kind of status for sure. So it’s good.

[00:15:37] Oh, good pointer. I mean, this latest one, Daniel Pettit, I’ve known him for probably six or nine months and we’ve chatted a few times and I told them, you know, we settled on a property in July, 77 doors and we’re close to settling on a 96 store property this week or next week. And he knows the the trials and tribulations I’ve had and is amazed I didn’t give up. So. So that’s kind of the tact of that podcast Wednesday night. So yeah, I’ll be able to talk about all the mistakes we’ve made and all the things we’ve learned and sort of get some credibility of we know what we’re doing. We have, what, 160 doors or so, not a lot, but a lot more than nothing. So.

[00:16:31] That’s good. And then also another thing to last recommendation is sometimes, because I know you have your whole set up to take in the investors and in the automations. Something that you can also try playing with is to after you ask them to fulfill in your subscription agreement, you can send them that that past interview you did just to make sure that they they they go through that information because by the time that they talk to you, then they’ll say, Oh yeah, I saw your interview with this person. So then you’re already, you know, you’re kind of like the already pre framed that, Yeah, this person is serious. I mean that’s what I’m just doing, What I start telling you what I do because for me is like, there was this interview we had with Abdiel, one of the other members, and then he was talking about his $75 Million Regulation eight. And then the first video that people see when they go to Rage dot com, it’s like, okay, it’s like, what is this racist dot com thing? And then they say, Oh yeah, they interviewed this person with the 70 regulation A and then they’re showing him how to do his regulation A och So then this guy is not this is not just some random scam watch scam random website. So then the things like that just helps people kind of, you know, know what what’s going on and everything as you just put the investors into your website when they go through there.

[00:17:45] Good point. Thank you. Appreciate it.

[00:17:49] No worries. All right. So unless any any more questions, I think Gerald was next.

[00:17:57] Um. Hello.

[00:18:01] Let me get my video on so people can see me also. There we go.

[00:18:07] Yeah, no.

[00:18:08] Worries. So. So let me just kind of recap where I’m at, which is basically ground zero, but kind of where my thought is. And then if you can give me a quick start down the path, that would be helpful to start. So I have a business acquisition I’m looking at. I need to raise 400,000. It’s a online life insurance brokerage. They started like the end of last year. It’s barely a year that they’re in business and they did all the work to figure out their ideal customer and how they’re approaching and processes and. And then now she’s looking to find someone to hand that over to. So me and a friend of mine who have collectively about 60 years experience in insurance is looking to take this over, but it’s the first step in others. So I like to bring in after we do this acquisition, I want to move on to bring in some other types of financial related products to kind of build out, you know, build out a larger company. So that’s kind of what my goal is. The first question I would have is do I treat this as a as creating a fund to do all my acquisitions or do I take it one at a time? Do I just get this one under the belt with without even knowing what my next one is going to be? So so it’s a kind of mindset of how am I approaching this? Is it step by step? Or do I talk about the larger plan? And this is only phase one of that larger plan.

[00:20:19] But I don’t want to start raising money for an acquisition I haven’t identified yet. So getting to step two is, you know, six months down the road, not weeks down the road and that and then and then kind of just figuring out what this first acquisition is. I like to find some some investors who are interested in this month so that, you know, so that I can go to the seller and say, okay. Here’s the plan for me raising the funds and and taking over the organization from you. So. So I’d like to get the interest as I’m building out all the paperwork. So. That’s generally where I’m at right now. So any and all advice would be helpful.

[00:21:18] Yeah, absolutely. Definitely. I definitely really strongly recommend one because. Yeah, definitely one because I mean, it’s really because like, well one because of the time line because I remember from the earlier call we had before, you’re on the other side and I’m going to get you on mute as well because Eddie’s actually a M&A advisor as well. You know, actually use them as an example because sometimes that one that first one deal is much, much easier sell than the multiple at the same time. That’s number one. Number two is because of the time, the time in which by which you need to get moving on. This is quick so sometimes you can get the quicker feedback on that one deal as a generality. Number three, it’s it’s simpler and then it’s the reason why it’s an easier sell is usually because of the past track record. So I mean, there are some folks here that like there’s like a fellow called Dre and he’s doing what’s it called here? I always called fix and flip. So then only because he’s doing fix and flip and he’s doing multiple deals and they need to go off the market quick. He’s he’s, he’s doing that. And then.

[00:22:26] He’s doing a blind pull fund. So he’s raising money to acquire multiple things. And then there are other folks here that are doing reeds and stuff because they’ve done they’ve run on Wall Street. They did a lot of one off deals and then it kind of became an easier. So but then so somebody is usually either they need it, they need to have money to put money into deals that go off market quick or they need to have the experience and you had one one off deals way better. And so I think you just say something as well.

[00:22:53] Okay.

[00:22:55] So, Richard, do you have something to add?

[00:22:58] Well, I had somebody last week tell me, as far as a fund goes, kind of like a single purpose fund and very narrow, very specific until. You have quite a reputation and then people will say, well, whatever he touches turns to gold, so we’ll throw money at them. So in other words, know I have a very tightly narrowly defined value add multifamily. 18% yield or higher on the underwriting in these three states. Boom, boom, boom. Nice little box. And that was the advice I was given, is don’t set up a hedge fund with six different things. Set up one fund with one. That’s just. What do you think there? Me, too. And Matty?

[00:23:57] Yeah, no, I agree with that. It’s just like being narrow is most likely better, especially when you’re starting off. But I would definitely add the long term plan in your in your proposal that look like you’re starting with this, but you have a long term plan of how you’re going to add value. And this is just the first step. So mentioning that is good. But raising money just for one is a good idea at this point.

[00:24:26] So so what I’m hearing is I’m raising for one and kind of focused on that. But I can indicate that there is a larger that this is one step in a larger vision, but that’s down the road. That’s not part of this initial deal. So so yeah, because I am starting out, this would be my first acquisition. So I’m brand spanking new. But I want to get to the point where Richard indicated or people just want to throw money at me. So, so so that’s the status I aspire to. So, so let me get that first one done under my belt and then then move on to the next.

[00:25:13] So at that time you will have like something to solve for like six months of work or whatever time it takes. So you will have something like how you were able to manage the current business that you acquired and then you will have more to build on and be able to raise money for for your next investment.

[00:25:32] Sure. And then although this company is now pre revenue, they have a little bit of revenue because they are doing a lot of AB testing to get there to get their operations focused. Then when I take it over, I’ll be taking it from this AB test stage and growing it so, so and then in insurance, the revenue lag, there’s a revenue lag. You know, you don’t even though you write a policy today, you get that in monthly installments over the year. So, so it takes a while to get the cash flow positive and then I’m estimating that’s going to take me at least three months to do so. Six months down the road, I’ll have a better track record. Got all this experience in the industry. I got this company profitable and cash profitable in three months where I have positive cash flow. Then that makes me a better candidate for the next acquisition.

[00:26:41] Exactly. Hi, Derek. And and when you mentioned that, like the 400 K amounts, are you also factoring in the working capital in that or is it the purchase price of that?

[00:26:55] No, that’s the purchase price. I think we have the cash necessary for the working capital. And then that was part of my problem. And really why I thought raises that would be helpful in finding independent investors is I didn’t want to blow all my cash in the acquisition. I wanted some I wanted the working capital. So so I didn’t want to force through an acquisition that in three months we we run out of cash and run out of the ability to generate more revenue. I mean, then and basically we’re belly up. So, so I have cash for working capital. I just need to raise funds to help with the acquisition in.

[00:27:45] That makes sense.

[00:27:47] Got it.

[00:27:49] All right, Jared.

[00:27:51] All right. So then my next step is to get into the data room and start filling out all this information.

[00:27:58] Yeah, exactly. And in the thing of the information not to be true because sometimes, like a lot of sponsors that come to us, they have like a syndication in mind and then they’re like, okay, I know what all the numbers are, blah, blah, blah, blah, blah. And then they insert it. But honestly, all we have to do is same thing with what we did with Henry. We just have to create you a Google, just a Google Drive document that says, okay, here are the here’s a here’s a pitch deck, basically the pitch deck, the financial forma projections. And then the and I know you have I remember you’re you’re into finance, but then we just have our own version we like doing and then the the subscription agreements so that you’re able to take in investors matter actually since we’re here matter. I actually have a question for you. So, I mean, for Henry’s acquisition, we did an incorporation and then also a a an a limited partnership kind of draft because sometimes like the things that sometimes these M&A deals, some investors like being intimate. I guess what is your what is your opinion? I just touched both. But what is your opinion is it’s do a lot of these acquisitions would be better for me incorporation or what better is it better to be limited partnership.

[00:29:14] Do you think? I think incorporation is the best way to go for that because it’s just yeah, I mean, incorporation, in my opinion, is better for sure.

[00:29:24] Got it.

[00:29:25] And which gives us more options. Right?

[00:29:28] Yeah, yeah, yeah.

[00:29:31] Yeah.

[00:29:32] Yeah, yeah. Because that’s what I was thinking also is, you know, an LLC or LLP kind of keeps you limited and, and you can grow, but it’s slower. But with corporation, I mean, you can turn around on a dime and start and start bringing in more investors without reorganizing.

[00:29:52] Exactly.

[00:29:53] Yeah. Yeah. And then I’m currently sit in, in California, which may not be the best state to incorporate in should I look at in Nevada or Delaware or stay in California.

[00:30:09] I think that the thing is that. Sometimes like I look at what’s what the investors. Eddie’s had his hand up for a while. But. But sometimes I look at what the investors say mainly, and we had somebody called Paulo Joy where he’s out of California and because he’s right in Silicon Valley, we just kept it in California because it just makes sense like he’s in Silicon Valley, so like there’s so many angel investors there. But like, unless like you’re in close proximity and we wanted to really test it out, you actually in your local market first and then try California, you know, to see what it what it would be. But I think unless there’s like a big tax incentive, then I will just usually keep it in the same state if like so basically if somebody has a lot of investors in their own local states and then the acquisition, the buying company, the buying company is in the company that you’re buying is in California as well?

[00:31:01] No, it’s in New York.

[00:31:03] Oh, it’s in New York. Yeah. Then I really wouldn’t be as yeah, then I wouldn’t really be as loyal. And I will just say whatever is most tax efficient and then relocate it as needed. Because, you know, Paula Joy’s dealer was in California as well, and then he was in California, and then he was in Silicon Valley. So he kept it there. Unless there’s like a strong tax incentive, then we just say, keep it in your state.

[00:31:25] Okay. Well, there’s the other issue is I need to get an insurance license for the company. So so I have to pick a state that that that has good basically insurance regulations. The insurance industry is regulated by state. So you pick one state to be your domicile and then they call all the other states foreign states. So. And unfortunately, New York and California are probably the worst regulatory environments, though. Though my friend who’s going to join in on this deal and I used to be based in Illinois and Illinois is an easy insurance regulation state. So, so so I’ve got to consider tax and insurance regulations to pick the right state. So it seems like I need to answer that question up front here as part of the pitch deck. And don’t leave that open.

[00:32:37] Yeah. And where we’re most of the customers, who are the people who are using the insurance, where are they located? Most of them currently there.

[00:32:47] The firm is licensed in basically the northeast and a little bit in the mid-Atlantic. So so that’s where their license and where and where their clients are coming from. Since we have this close connection with Illinois, we want to get in Illinois next because that’s another large population. So, so so basically it’s going to be East Coast, Midwest. And then once we get the operations rolling there, then we’ll then we’ll probably get California in the mix.

[00:33:24] Got it. Without being somebody that has anything to do with insurance except just having a few applications for corporate insurance. I mean, you already have data that shows that their customers in north northeast. I think you said north northeast, right?

[00:33:38] Yeah.

[00:33:38] So, I mean, that’s you may be able that may make sense to look there because you already have customers that are people are paying cash and in Illinois is good, but then it’s more of a plan and then we don’t know the people have to pay cash for it, you know. So those are just my thoughts.

[00:33:55] And yeah, like New Hampshire, Vermont might be to regulatory states. In the New England, that would be better. It’s either that or go down to the Cayman Islands where where I can do a yearly trip to the Caymans. But, you know, that’s probably the longer dream, not the shorter one.

[00:34:17] Yeah. Yeah, right. And you know something else? Could you not also have JVs with non foreign states anyway and just say, hey, I have foreign states just signed to sign an agreement with a broker in a different states, although your fees may be less, but you can probably do that to kind of spread your way around the US. No. Or does it work? Not that work that way.

[00:34:40] No. You set up in one state then. Then you get like a license in every other state. But but you have to pick one state to be regulated by. So if I like saying Illinois, if if I set set the company up there and that’s my all my domicile state, then the Department of Insurance in Illinois regulates me. Now, I can sell in any other state that I can get a license in, but if there’s a dispute, it goes to Illinois. So.

[00:35:15] Oh, I see.

[00:35:16] So that’s basically it’s like picking picking the state of jurisdiction when you put that in a contract that all disputes will be settled in X state. That’s what we’re doing. But on on an insurance regulatory is you pick a state that you’re going to be domiciled and that’s where everything works. And then if I and then and then if I go in and out of business or have to take. Or start getting complaints. It goes to that state. And then they’re the ones that, you know, take care of me. But, you know, but in essence, it’s what you’re saying. It’s a joint venture with other states. It’s just I’m putting it in regulatory terms. You’re putting it in business terms.

[00:36:07] Got it. Got it. To tell you this for next steps. Last thing, too, is. Yeah, to answer your question, yeah, just to fill in that little data room. But if there’s a question, if you email supports, we will just create a. The marketing and then the paperwork to get you going and then start some introductions to get the process going. But I think something too, is if you are able to I don’t know if you’re able to do financing for some of those contracts that you have for insurance, because you’re saying that the problem is that the monthly you have this monthly type of revenue that comes from this yearly insurance, but it will be nice if you’re able to do some financing because then you will look better on the performance, right. For those people that are using that insurance, I don’t know if that’s something that.

[00:36:52] Possible to do.

[00:36:53] Probably not. I mean, we’re talking about insurance contracts. I mean, the range of premiums for the customers they already have is on the low end is 500 probably averages around $2,000. Their biggest contract is 8000. So so on a on that small basis, premium financing doesn’t make sense. But if I want to. But as I expand up in like doing I would like to get into the insurance for small to medium businesses, you know, that type where the premiums are higher than a premium finance operation makes more sense.

[00:37:47] Got it for a while.

[00:37:51] So just just to know that it’s not under observation. The two questions I have for Gary and Gerard. Sorry. Sure. What is the motivation for buying this business? How long has it been in existence?

[00:38:10] It’s been in existence for less than a year. So they only had you know, they were only generating revenue for about three months in the summer into the early fall. So so they’re around for less than a year. And and basically I wanted to ask to you know, I’ve been in consulting for the last ten years and and I wanted to get out of that dog eat dog world and start building an organization where I could have a steady flow of income. So so kind of relying on my insurance background is is what I started looking at. And then I found this organization. And what I like about it is even though we’re implementing an AI system to help match people with insurance companies, it’s it’s led by an insurance person, not a technology person. So we’re we’re business first and then we’re building the technology around the customer as opposing to build the you know, the field of dreams approach is you build the technology and then you find the customers where we’re building the technology to meet the customer demand. So, you know, so that’s why I kind of like this organization, think that I can something I can work with very well and then and then use it as a platform to build out more products, different customer bases. So so.

[00:39:51] That’s yeah. So based on what you just based on what you’ve said, which is your objective is to have some sort of steady cash flow, steady income in my opinion, I would, I would suggest you buy an existing insurance company with a track record. Then you can do add on with a technology company like this, because in that way you already have that insurance company cash flow sustaining the business because what you’re trying to buy right now, that’s not enough. Based on what you said, there’s not enough cash flow coming from that. You have to pull money out of the pocket probably to get this going for about maybe a year. Even if you get investors money when it comes to technology and you’re always having to put money into. And all the time trying to optimize the process, try to make it more efficient and all that. I would it would have been in my in my world, based on what I know, it would have been best if you have something that is already existing, is cash flowing, then can add to it. So even they are not giving you the kind of return you want yet, but you are not in the red, right? Your business is cash flowing, you are building your clientele. Your planter will be happy when you have I is more efficient or if you have just I and you just you sit iterating, iterating for about a year, you’re probably going to lose some customers in the process. And I think I don’t understand why the seller wants to sell. It’s less than a year old why it is trying to sell and is trying to sell for about half a million dollars. Right.

[00:41:46] Right? Yeah. Basically.

[00:41:49] How much have they put into it? How they come to that valuation of something that’s less than a year old.

[00:41:55] So the three months they were working in operations, they they generated $20,000 in revenue. That’s not cash flow that’s written well, what in insurance we call a written basis, that’s what’s accrued. And then it takes them a year to to collect all that. But on expenses of less than 10,000. So and then and then they made some things to to kind of bring some of those costs down. So. So basically in on an accrual basis, this company can be generating profits in probably month two. So so I hear what you’re saying. The problem. Well, the problem you have to overcome is that is that you collect that premium over a year or so. So my and my projection is I projected we can collect about 30 to 40% or closer to 40% of the premium in the first year. So then that pushes 60% of that revenue, that cash flow into the second year, but with no expenses. So so after you kind of get over that first year, then you’re always kind of have, you know, you’re getting paid off with cash you’re not putting expenses to because you already bought that last year. Okay. So, so the initial return might only be like less than 10%, but without having to grow it much more in the second year, continue as is that 10% jumps to 30% because of that, because of that 60% cash you’re going to collect in the future.

[00:44:06] So. So. So thank you for the feedback. I think that gives me the opportunity to better explain how this works. So I think I think there’s I still think there’s opportunity here. I just need to because I’m going to be dealing with people who don’t understand insurance to the same level I do. I got to explain it to them in business terms how this works. And we kind of have to wait. We’ll be building the first six months getting cash in the future or later. So, you know, so you kind of have to kind of wait it out and just make sure that that that top line revenue number that we write every month, we get it to 20,000, which we can probably do in two months. But then it has to be steadily increasing for the next eight months in order to get that big payoff in the second year. So, so so I’ll I’ll explain that in the financial model a little bit better, but. Okay. Thank you. I appreciate that input. That really helped me kind of bring my thoughts together.

[00:45:29] Well, good. Yeah. Henry. Henry, you seem to have had your hand in prison.

[00:45:37] Yeah. It’s actually bizarre because my exact lines of thought was what I did just addressed. And that’s why I put my hand down, because, I mean, alarm bells are ringing less than a year. Why are you looking to sell? Is it cash flowing? He wants to cash flow. It’s about income now, so why not buy a cash flow in company? But. But once I set out here in Daryl’s explanation that I didn’t put my hand down, but. But my lines of thought.

[00:46:08] Exactly right. Right. And the person who’s stealing is going to retain 10% of the company. So she’s going to stick with it. But I think she’s really looking for someone who can take over the leadership and grow it in that. And, you know, I hate to be ageist here, but, you know, I have over 30 years experience in insurance, ten years in consulting. I could grow this company. She’s probably less than ten years in the work world. So so me and then then the friend of mine who I’m going to bring in to help build partnerships, him and I together have over 60 years experience. So so I think it’s that experience gap she’s looking at and she has two or three other projects she’s also developing. So so she’s similar to the like the tech guys that want to build something really quick and then sell it because they don’t know how to run it. I shy away from those deals because they’re usually handing you a dog with fleas. But this is an insurance person. And she built it solid. She just needs someone to take over to it. You know, they actually build out the team and get the partnerships in place and do all that work.

[00:47:45] So that makes.

[00:47:47] Thank you for your input. Henry, I appreciate it.

[00:47:52] Oh, good. Good. Happy if went on to college and just the yes man. Like there’s some criticism and and poking into things. So that’s really how everyone gets better. So it’s good. All righty. So but yeah, the next steps is really if you either just ping us that supported raised dot com or there’s this finished data room button. Yeah. Then we’ll just we’ll spit out the, the, the documents and then we’ll let the, we’ll let the investors like also tell you what they think after we finish everything and then we start going to them and get everything going so.

[00:48:27] Oh, that’ll be a beautiful thing. So I’m jumping on that next. So I’m going to finish the data room tonight. Get support on tomorrow so that I can get this ball rolling so well.

[00:48:40] Excellent. Sounds like a plan.

[00:48:42] Okay.

[00:48:44] Good. All right. I think. Ernest. Yeah. Ernest, you were next in line here. How’s it going there?

[00:48:53] Still around.

[00:48:56] Yeah. Can you hear me?

[00:48:58] It’s a cancer. How is it going?

[00:49:00] I really came to listen so I can catch up on all the experts, but I just. Only one question I had. It’s probably a stupid question, but when you’re looking at a company, right. Just two of the different ways to buy. Either do the assets and sell your own company or just buy the company as it is and maybe probably do like a DBA since the company is already established. Is it better to leave the company in existing name when I take on the 10% partners?

[00:49:34] It’s actually not a bad question, something I’ve actually been wondering about for a while. If I’m being honest with you, I’ve seen both In matter of matter, you just actually acquired a company just a while ago. So. So I guess, Matt, do you have any insight on this? Like, what are you using an existing? So if you can ask the question again, first of all, and just matter your thoughts.

[00:49:55] Ask the reader, reiterate the question is, is it better if I’m just starting out? Um. Just like Gerald. Just to have to keep the company as it is because it has a track record. And then I’m able to use the company to do things. Or should I, like, just do my own company? Because last time I talked to you is that when we and we raise funds, the if I’m not doing the 10% save, I can do 90%. And the 10% is going to be a separate organization. Should I keep the the company that we’re buying an existing company rather than just buy the assets and start a new company?

[00:50:37] Oh, okay. Matter. Before you jump, I get the question. Yeah. So then the matter before you jump in is. Yeah, let me just so then. Yeah, because I was talking about the down so then that down payments. So yeah, that one’s talking about putting me in an org for that down payment part. So let me get this. Some people do that, but we just had some thoughts on this call but basically like so then a lot of real estate guys for your real estate deals, what a lot of people do for the down payment part, they would they would do a limited partnership to raise money for that down payments. If it’s a real estate deal, that’s one thing we see a lot of people do because the real estate investors are just number one. Real estate investor is used to seeing that, you know, and then it also limits the liability that they have into it. So, you know, some people, they do it like they call this a single purpose fund or a syndication or what have you for that down payments. So are you talking about like if you’re doing if you want to buy like an apartment or like a gas station or something, or are you just talking like any type of business in general?

[00:51:44] Well, no, I know the real estate is different, though, because that’s going to be unlike a realty trust. And I’m talking about the business. Business?

[00:51:54] Got it. Yeah. Yeah, I think. I think it may be the target company, but that matter. What are your thoughts?

[00:51:59] I can. I can be in here. So I would like rather than answering your question straight forward, I would say like there are certain things that you need to look at. So the things that we looked at when we were acquiring this company was mainly like, How so? First of all, how you’re able to raise the capital. So we were going for a debt and, and we were not able to get like a lot of debt. So we decided to go with the share purchase due to multiple reasons. But the major reason was that we were able to keep some of the liabilities on the books. So that was a bigger biggest factor. So just like just the current liabilities, the credit cards and things like that, So we were able to maintain that. So that is one reason. The second reason was there were some tax advantages that we had by, by purchasing the shares because the company had lost in the previous year. So we were able we will be able to take advantage of those tax things in the future. So that’s the second point. And third is like there were leases, there were multiple things like that lease employ contracts. So if you are buying the assets, you would have to do the lease again.

[00:53:12] You would have to hire the employees again and then you would have to do multiple things like that. So it would have like purchasing the assets would have been a tedious process. Now, on the other hand, the benefit of purchasing the assets is you don’t like you don’t really have to worry about any existing liability or any thing that might come from the historical thing. So like, we have that risk right now that we purchased the share. So if anything comes up from the past, it might actually hurt us. So that is one major reason why you would do an asset purchase and not really a share purchase, and that that is the most important thing, why people do asset purchases. And but for us, like that wasn’t a big issue because we knew the seller for a long time and we knew that the company only existed for two years so we could take that legal risk of it. But, but so these were like various factors and obviously there are other factors too, and that depends on the case to case. But these were the factors that we looked at before deciding what should we do?

[00:54:24] Yeah, a good one. Yeah.

[00:54:27] Are you buying the entire company or are you just buying an interest in the company?

[00:54:35] Oh, me?

[00:54:37] Yeah.

[00:54:38] No, no. I don’t want the whole thing. Not. Not just the interest.

[00:54:45] Maybe if you want the whole thing. I don’t think you need to. You could have it. Cause I don’t know. You could have an owning company, right? That owns whatever you’re buying right now. But when it comes to you raising money for that particular target, you need the stock because of that target, especially when you’re doing a share purchase acquisition, just like what I just talked about. That’s easier for you and it’s even easier for well, it depends on the company. It depends on the country anyway. And you could have long term what they call it, different tax something. I can’t remember the time right now. So it depends on the country. I think the SharePoint is much better. It’s cleaner asset. Yeah, it’s seemed to be cleaner, but I think it’s more problematic because you have to be thinking of you have to do the valuation of those assets. You want to know how much is what you know. That’s a lot of expense coming along. But if you’re just doing a share purchase, you know, how much what are you buying based on the revenue multiple, whether you’re buying based on the EBITDA multiple, whether you’re buying based on the EBIT multiple, whatever number you guys agree on buying. And in some cases you could buy, you know, net of any form of liabilities, right? You’re not buying the liability, you’re buying the shares of the company or you’re buying on the basis of like a net asset. Right. You’re not taking over any liability that comes with it.

[00:56:24] Oh, yeah. The due diligence will tell you that. Okay.

[00:56:27] Yeah, well, the due diligence will tell you, but stuff about what you agree to. It’s not just what it says, what the problems are divide, liability and assets and about what you are agreed to that it is how you want to buy this company, in some cases by a company where there’s no working capital included. When you buy your buy on basis of 2 million that you guys agreed on, there’s not going to be any adjustment for working capital. In some cases, you have to adjust for working capital. In some cases you buy the liabilities together. In some cases you don’t buy the liabilities is net of any form of liability. That’s what you’re buying. If they have any liability, they have to give you the warranty and all that to make sure that, okay, even though you buy net of liabilities. All right. If anything comes up. And that’s why in some cases, you find people don’t pay the entire consideration. So probably going to have some kind of maybe an out or don’t pay the entire you have deferred consideration maybe for about six months or for some period of time just in case something comes up, especially when you’re buying a company that may have some things that are not apparent to everybody to see because of the industry. So that’s why you have some deferred consideration. So maybe in six months, that’s when you get the entire the balance of your consideration. If anything, if nothing serious occurs within six months, then you get the balance. So I’m buying the company from you. I only give you 1.5. I’ll pay you the balance in six months. Provided. We didn’t find anything, you know. Like the liability that we are to pay for within that period of time. So it all depends on how it is structured. So you have to be very careful how you structure it so that you are well positioned to to not put yourself in a situation where you are buying liabilities, you are buying net of liabilities, and you realize in six months later or 12 months later that you have 200,000 liability that you have to pay for.

[00:58:43] Okay, So. So it’s it’s a small business and they’ve been around for like, say, 20 or 30 years and now they have credit lines. Now, how do they. Move the credit line saying they have business credit card. How do they move it over to. If I was going to if the owner is going to leave. And see if they have like $80,000 in credit line. But this establishing the old owners name. But now I come on and now I want to move it over.

[00:59:13] Like they say, part of when you’re doing this kind of acquisition, they are going to inform everybody they have relationships with, right? That there’s a new owner, they’re going to change information. Then the bank probably going to vet you because I don’t know how it works in the US that do you have the capacity apart from the business, they’re providing a line of credit. Some will look at your your personal credit score as well. So we just based just on the business. So if the business has been performing well in the last five years or whatever, and the line of credit is based on what the business has been generating, then that would not be an issue because they are just looking at the business, not necessarily the individual that is running the business because the business that they are lending to. You know, of course, they’re going to look at your track record as to can you deliver as well or that. But essentially it’s going to be they’re going to be looking at the business, all their clients, all all their creditors or their debtors. They are to inform them that they are selling this business to you. So you are the person that will be interacting with going forward. Okay. Does that make sense?

[01:00:40] Yeah. I hope I was that easy. I work with business credit builders, and, like, I don’t want to have to start with if it’s already built up when I come in all of a sudden and it’s cut in half or something like that, because they go by me, or I’d rather go by their business. So I haven’t talked to the banks about that. And some banks go by when you acquired it, not when it was set up. I’m trying to bypass that. So certain lenders I want to go by, say the business for 30 years and I come in, I don’t want to be handicapped because I’m coming in. You know, I wonder all that established record, you know, So I can.

[01:01:18] Use that as part of what you’re buying by the goodwill that you’re buying so it becomes yours.

[01:01:25] And if it’s an established business with a with a consistent cash flow and revenue, it’s likely that the business will have relationships with the bank and not really the owners. So you probably will be able to take quite a bit of liabilities just to stay on the books and it will just roll over when you when the ownership changes.

[01:01:47] Okay.

[01:01:47] All right. That’s good.

[01:01:50] Yeah, but it’s it’s really interesting to what Adam was talking about being able to buy the, the the shares, but, you know, leaving their liabilities on the table for me, I find that that that would be very useful for the purchase for the acquisition that I’m looking at as well. So I really love to spend some time with ADR offline to, to explore that because some of my major concerns would be, okay, so what happens with all of the liabilities potential that they’ve done, I mean, all of the billions have done in the past. They’ve collected money from people and done and done jobs for them. So, so so what happens six months right into that acquisition, someone shows up and I suddenly owe $200,000 to somebody for something that was done two years prior. So how do I how do I really do, you know, purchase the shares of the company and and still and still be able to leave those liabilities potentially, so that if they come up, the previous owners get to deal with them. That’s something I really want to X plus some more. Yeah. I think that’s part of what you get with that is I think you’re going to get what do you call it, representation warrant. But even at that, that’s not forever. So there’s a timeline for representation you warrants that’s going to cover you for maybe for 12 months. It might be for less than that. It could be for two years depending on the industry.

[01:03:18] Yeah. And they would need to disclose the liabilities that are currently on the business. So you like whatever is on the books. It’s their obligation. Like whatever liabilities the business is, their obligation to convey to you before you purchase. And the price would be based on considering all the assets that the company has and all the liabilities. So it has to be from the net effect. So even if you’re saying that $200,000 of liabilities, if it comes, if it is there in the books and you decide to keep it on the books, so the price would most certainly be reflective of that. So there would be a negative. Basically, you will be paying for the net asset value and not really just for the assets and you just take on the liability. So the price needs to be decided like that.

[01:04:08] Can we take can we take that off the price? Purchase price.

[01:04:13] Yeah. I mean, so that’s the discussion you will have, right? So the valuation of the business if you’re purchasing the shares. So it will come like factoring in all the assets and all the liabilities. So you can definitely negotiate from your end. Okay. Like that. These are the liabilities and these are way too much liabilities that I don’t really want to. So you can obviously negotiate with that. But but that’s comes in the overall negotiation of the valuation and not just specifically based on a certain liability.

[01:04:46] Okay. Yeah. Okay. So to add to what Marty just talked about now, I think when we are trying to buy a business, let’s not forget it’s not just about valuation, right? You have to do your due diligence and it’s when are going to identify all these things that we’re talking about, whether they have those liabilities. And in the process, you get to know their banks. You’re going to ask them. But when you’re doing the due diligence, so many questions are going to come up because you start seeing certain things. You don’t understand it, you’re going to write it down. Then you start asking questions. You know, that’s when you identify all the likely problems or liabilities that they might have and how you’re going to deal with that, which is why when you always when you’re making an offer or putting an LOI, there has to be room for adjustment based on due diligence findings. Because if you just put in an LOI, you’re buying this without making that provision. And the mistakes that some people make is that they want to buy something. Just put an LOI 2 million buying at 2 million without making that provision for an adjustment. Then they start doing their due diligence. They identify certain things. I said, you’re dealing with somebody that’s, you know, I don’t know what you use. In some cases, very difficult for you to go back on what you signed on your LOI. When you translate into your offer, you offer to purchase is very difficult. This is what we agreed on. So because of that, we’re going to change it. Of course, if it’s something that is material, you might have to walk away from the deal. But if if you spend so much money on the deal and this way you go through maybe 50 K or you might just have to just bite the bullet and go. But if you made that provision for it in your alloy, definitely you’re going to adjust for it when you want to close. Okay. Based on this findings, you’re going to deduct that 50 K directly from the final purchase price.

[01:06:57] Oh, it’s not no, it’s not binding as LOI is not binding. Like if you find something, you put that provision in there, you know, the price is subject to change.

[01:07:06] Subject to change on what? On what basis? That’s why due diligence is always important. Yeah, I’m speaking from experience. I mean, I’ve done this a while and I know that at times you are locked in with that price. If you don’t make that room, it’s about what is documented. Some lie, some part of it is not binding. So part of the alloy is binding. You know, honestly. So this makes me want to send My Lai out for everyone to freely read through and give me feedback. I’m glad that I haven’t locked it in with the potential seller. I think I still have till the end of this week to potentially deliver that letter of intent. But now I think I want all the mines in here to review and give me feedback before I before I send it off. If you’d be so kind as to do that. No, everybody here can always give you an input that nature will give you. Maybe we give you. So we have done this before, so. Awesome. Yeah. Awesome. Thank you.

[01:08:16] No worries. It’s a good idea. There’s something. When I was at another firm, I was registered, like, over a year ago, at another two years ago, at another firm. And the one that they were scared about when it came to acquisitions, they called them. I’m just looking it up here. Remote contingent liabilities, because sometimes they don’t need to put their liabilities on on the on the books. If they say if they say it’s not probable of it happening, but it’s subjective. It’s like if it’s if it’s like 50% chance of it happening, it’s like, how do you even know the chance of it happening? Then they don’t need to put the liabilities on the books. So that’s just like another thing, because we used to do due diligence on some real estate deals and sometimes there’ll be these liabilities and if we put it on the on the Excel. So it’s like, you know, it’s like, what the heck, right? So it was really frustrating. And then all of a sudden the deal was nothing because of that, those liabilities. So I think, yeah, if you were able to put some sort of language in there about those like and really dig into like potential liabilities that they didn’t include in their financials and that’s, that’s huge.

[01:09:19] So yeah, Yeah. And then specifically with home health care. So you get to build insurance companies for taking care of people, right? And then and then and then you get you get audited sometimes three or four years back. And then they’re just audited. Right. And you never know when the audit will happen. So for us, if we if we do these purchases and we do these acquisitions and any one of them get audited backward, then what happened? And I’ve I’ve been thinking about that and thinking about how to build in protections for it. Again, this this session I think I may maybe the single entity that will benefit from this session, to be honest, because I really it’s really, really insightful.

[01:10:03] Yeah, I think everyone here probably learned something like and I mean, the audits are funny because they’re expensive, but then they’re actually useful too. So yeah, it’s not just paying money to somebody. It’s actually pretty useful to to see like what are the internal controls in that company.

[01:10:19] It’s good.

[01:10:21] All right. And, Joe, I see that you’re here. Were there any other questions or thoughts that you had since, or are you just listening quietly?

[01:10:33] What do you.

[01:10:33] Know, Joe?

[01:10:36] You may not be here, but that’s okay.

[01:10:39] Well, at the beginning of the session, he says it really didn’t have anything to to share, that he would just be listening.

[01:10:48] Oh, yeah.

[01:10:49] Yeah. If I read that correctly at the beginning of the session.

[01:10:52] Yeah. He said this in the chat.

[01:10:55] Yeah.

[01:10:56] Okay. But other than that, I mean, hey, anyone have any final either questions or things that you want to discuss? Anyone? And if not, that’s that’s cool. We can wrap it up now if you like.

[01:11:15] Okay.

[01:11:15] Any questions?

[01:11:17] All right. So so listen, everyone, this has been a good one. What we’ll do, we’ll just send a recording, upload the recording and transcript as usual. We have the next one Wednesday at 11 a.m. Eastern Time. If anyone ever has any questions, feel free to just ping supported raises dot com matter and some other financial analysts can help you. I can help personally still help you in and we’ll get everyone moving to their next step on their next goal step wherever they’re at in the process. So this has been a really fun one. See you, everybody.

[01:11:50] Thank you. Thank you, everyone.

[01:11:53] Thank you.

 

 

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