Here’s a glimpse of what you’ll learn:
- What has caused the new wave of investors that are acquiring FBA private label businesses?
- Mark Daoust talks about the different sizes of private label brands that his company, Quiet Light, works with
- The strategies Mark uses to help business owners prepare for a sale
- The advantages of working with brokers versus selling directly to FBA aggregators
- What sellers should expect when working with Quiet Light to sell their businesses
- The criteria Mark looks for when evaluating a brand to work with
- Common issues Mark advises brand owners on before for a sale
- How to decide on the best time to sell
- What differentiates Quiet Light from other brokerages in the market?
- Mark shares his most surprising takeaways from working with online entrepreneurs
In this episode…
According to Mark Daoust, there are a number of factors that have fueled the increased interest in private label businesses on Amazon—from press coverage of companies like 101 Commerce and Thrasio, to the current COVID-19 pandemic. While brokerages such as Mark’s company, Quiet Light, have been helping FBA brand owners sell their businesses for some time, these recent events have skyrocketed them into the limelight.
So, what should private label sellers expect when working with a brokerage to sell their businesses? For starters, the broker will want to know the ins and outs of the business, including the defensibility of its revenue, the type of market it’s in, and how prepared it is for a transition. As Mark says, he looks for details about each unique seller and brand in order to determine when it will be most valuable for them to sell their business.
Mark Daoust, the Founder, President, and CEO of Quiet Light, joins James Thomson in this episode of the Buy Box Experts podcast to explain what private label brand owners can expect from working with a brokerage to sell their businesses. Mark talks about the advantages of working with a broker versus selling directly to an aggregator, why some sellers decide to postpone selling their brands, and what differentiates his brokerage from other players in the market. Stay tuned.
Resources Mentioned in this episode
- Buy Box Experts
- Controlling Your Brand in The Age of Amazon: The Brand Executive’s Playbook For Winning Online by James Thomson and Whitney Gibson
- James Thomson on LinkedIn
- Quiet Light
- Mark Daoust
- Mark Daoust on LinkedIn
- Quiet Light Podcast
- “Why List Price Multiples Don’t Matter as Much as You Think” on the Quiet Light Podcast
- James Thomson’s previous interview with Mark Daoust
- Prosper Show
- Walker Deibel
- Brad Wayland
- Jason Yelowitz
- Amanda Raab
- 101 Commerce
- Disruptive Advertising
Sponsor for this episode…
Buy Box Experts applies decades of e-commerce experience to successfully manage their clients’ marketplace accounts. The Buy Box account managers specialize in combining an understanding of their clients’ business fundamentals and their in-depth expertise in the Amazon Marketplace.
The team works with marketplace technicians using a system of processes, proprietary software, and extensive channel experience to ensure your Amazon presence captures the opportunity in the marketplace–not only producing greater revenue and profits but also reducing or eliminating your business’ workload.
Buy Box Experts prides itself on being one of the few agencies with an SMB (small to medium-sized business) division and an Enterprise division. Buy Box does not commingle clients among divisions as each has unique needs and requirements for proper account management.
Learn more about Buy Box Experts at BuyBoxExperts.com.
Podcast Episode Transcripts:
Disclaimer: Transcripts were generated automatically and may contain inaccuracies and errors.
Welcome to the Buy Box Experts Podcast. We bring to light the unique opportunities brands face in today’s e-commerce world.
James Thomson 0:18
Hi, this is James Thomson from the Buy Box Experts Podcast. Today’s episode is part of a special series of interviews that we’ve done to dive deeper into the recent phenomenon of private equity companies and FBA aggregators investing in private label brands that are leveraging the Amazon sales channel. As part of this series, we interview a wide range of investors, brokers, consultants, and entrepreneurs that have recently sold their private label brands. We peel back the layers on what’s happening in this new investment space, and look at how private label brands are finding financial success through the building and eventual sale of their online businesses. For three weeks from mid February through early March, we will release a new episode every weekday on this topic. Sit back and enjoy today’s episode.
Hi, I’m James Thomson, one of the hosts of the Buy Box Experts Podcast. I’m a partner with Buy Box Experts and the former business head of the selling on Amazon team at Amazon, as well as the first account manager for the Fulfillment by Amazon program. I’m the co-author of a couple of books on Amazon including the recent book, Controlling Your Brand in the Age of Amazon. Today’s episode is brought to you by Buy Box Experts. Buy Box Experts takes ambitious brands and makes them unbeatable. When you hire Buy Box Experts, you receive the strategy optimization and marketing performance to succeed on Amazon. Buy Box Experts provides executive level advisory services with expert performance management and execution of your Amazon channel strategy. Go to buyboxexperts.com to learn more.
Before I introduce our guest today, I’d like to send a big shout out to the team at Disruptive Advertising. For off Amazon advertising, Disruptive Advertising offers the highest level of service in the digital marketing industry, focusing on driving traffic, converting traffic and enterprise analytics. Disruptive helps their clients increase their bottom line month after month. Check out disruptiveadvertising.com to learn more. Our guest today is Mark Daoust, the founder and CEO of Quiet Light Brokerage. Founded in 2007, this brokerage helps entrepreneurs in the online and internet business sectors to sell their websites for maximum value. Mark’s team has worked with hundreds of brands that sell on Amazon. Mark joined us on our podcast back in early 2020. Then COVID happened and then a major push by new investors and money rushing into the market to buy Amazon private label brands. Mark has a front row seat to what’s happening with all these new developments. So I’m very pleased to have Mark back to talk today about what’s going on. With all this excitement around brands investing. Mark, welcome. And thank you for joining us today on the Buy Box Experts Podcast.
Mark Daoust 2:58
Thanks for having me on. It’s good to talk to you again, James.
James Thomson 3:01
So Mark, let me start by asking you about this new wave of investors that are surfacing to acquire these FBA private label businesses or FBA private label businesses or high commodities, but they’ve been around for a long time. And yet the interest is fairly new in this last year. What do you think’s been happening that’s generated all this recent interest? Frankly,
Mark Daoust 3:22
I think some of the press that some of the companies have received really added a lot of fuel to the fire. Now look, the conditions have been right for this for a while and and we know just with any product, or any industry that needs adoption, if you take a look at an adoption curve, there’s usually kind of this underlying current at the beginning. And then you start to see that graph of adoption and hockey stick up right. So this isn’t unusual for us to have this happen. We’ve really had a perfect blend of events happening here we had we had some press going on. So we have these aggregators out there. These guys that are conglomerating these brands, they already existed. Some of them did a good job of creating some press on a basic thesis. I’m thinking of like 101 Commerce back when they were out there saying we’re going to require 101 $1 million Amazon companies, right? That was their thesis, it was really catchy. So caught some eyes. COVID is another element here that was just another recipe or little ingredient in this recipe. And so this combination of press, Thrassio receiving a billion dollar valuation and getting splashed all over the news, Perch raising an ungodly amount of money with their raise that legitimize what had the attention of a lot of investors to begin with, and then throwing COVID on top of that, where we see this seismic shift, and let’s make no mistake about it. We’re at the beginning of the shift that we’re seeing. We’ve all seen it in the stock market. The Nasdaq was up some ridiculous amount this past year. It was like 46% for the year which is insane when you consider the dip in this shift is just continuing and it’s focusing on this Amazon FBA space. So we’re talking to a lot of firms that are new, they just raised funds, or they are in the process of raising funds. And so that’s, that’s what I’m attributing most of the increased attention to,
James Thomson 5:15
just what do you think’s going to happen? As the number of these aggregators continues to grow over the next couple of years? I would think, you know, that’s good for a business like yours, as companies that are looking to sell are all running around looking for brokers who can provide opportunities to access some of these acquisitions?
Mark Daoust 5:33
Well, you know, funny you mentioned that we were actually talking about that internally, here at Quiet Light today, because some people are coming to us, some people are going direct to the aggregators, and trying to get the best deal possible, which I get, you know, there’s some arguments there as to whether or not that’s a good thing for people to do. Obviously, I would argue, maybe not, but I’m biased. But what do i think is going to happen? Look, I think, you know, if we just pull and we take a look at the raised funds that are out there, and there is a huge sum of money that is sitting, waiting to be deployed to acquire Amazon FBA businesses, there will be a wealth transfer that occurs here. Now the problem that the aggregators have his deal flow. And look, this has been a problem for as long as I’ve owned Quiet Light Brokerage going on 15 years now. And that is how do we get more deal flow? And all the buyers want to know, how do I get more deal flow? Now you throw it into an aggregator that has a large fund that is based on the idea they’re going to do volume acquisitions? Yes, that becomes a problem. So what’s gonna happen? I mean, this is supply and demand. at its finest, we will see some price pressure moving up, it’ll be interesting to see how that plays out, in actuality, because the investment thesis does require that, you know, certain amounts are paid for earnings. But with a lot of the new entrants in the game trying to break in and get those first deals done, I do think we’ll see some price pressure take effect.
James Thomson 6:55
I’ve talked to a number of these aggregators, and it’s curious to see the natural tearing across those companies in terms of the size of the targets they’re going after. As a broker, I imagine you’re seeing some of that as well, where there are only so many companies of different sizes available. What do you think about the world of private label sellers? When it comes to big medium, small brands? I feel like mama bear, Papa Bear and little baby bear, what do you think about these different private label brands?
Mark Daoust 7:27
What was the strategy that I realized? Sure, sure. Yeah, sure. So I mean, we think about it in terms of enterprise value, typically, right, and we can, you know, have a discussion on that, if it makes sense to do so. But we’re looking at, you know, sub $1 million would be one category, and we put them in a big pool, our target client tends to be a little bit larger, we’re not working with brands that are valued at 100,000, for example, or even 250,000 would be about the lowest that we work with. So sub million dollars, and then I see the one to five, five to 10 and 10. Plus, and then there’ll be another tier probably above that, but we don’t work a lot above that, you know, with our largest deal being 25 million. I think we feel very comfortable, maybe up to 30 35 million for enterprise value. But in terms of the strategy, you know, pretty, pretty even numbers that are, you know, one 510 and above, as far as what does that equate to revenue wise, you know, that that begs the question of valuations, I’ll just say, break up the revenues into similar territories. And you can probably start to get a sense with maybe adding another strategy on top of 20 million for revenue.
James Thomson 8:38
When I look at some of these very large brands, guys that are doing 50 million plus in annual sales, they’re getting a 30% gross margin, and they’re able to get, whether it’s a four or five, six, multiple, you know that that starts to become a very, very large acquisition number. And quite frankly, one where your FBA aggregator may not have the funds to support buying a company that’s going to cost them 80 to $100 million. How do you see some of these much, much bigger brands potentially existing and being able to enjoy some of this new excitement that’s happening with these investors?
Mark Daoust 9:13
Well, frankly, I don’t think that’s a difficult question. Private Equity, I mean, private equity is they’re interested in this space. The problem with private equity is that for a lot of these PE firms are doing a $10 million deal doesn’t move the needle, if it’s not enough to really attract their attention, they would have that as a dip a toe in the water, maybe a bolt on if they have something that that makes sense to do. But for you know, there’s a group of private equity that won’t touch the space just because it’s not big enough. And so I think you are looking more at the private equity sort of exit which, look, there’s an argument to be made that these aggregators are a form or derivative of private equity, right? It’s just the same sort of concept to play. So I think for those 50 million plus revenue companies, there’s a lot of money attractiveness towards this online space. I’m not, I’m not saying anything groundbreaking right now. But that attractiveness is attracting the attention of, of institutional money. Financial Times recently had an article on this space on the aggregators, Amazon FBA being acquired. I mean, this just shows the increasing awareness in serious markets and in the serious institutional money, looking at the space differently, and not seeing it as risky of an asset. Maybe as it was looked looked upon in the past. And look, we’ve run into this on my own, I had a deal that I was completing last year for about $15 million, where I won’t say who the buyer was, but the buyer was a traditional institutional buyer, right? Definitely falls in that category. And the deal ended up being turned down because of platform risk, which is what we were hearing previously. Yep. But that’s that’s decreasingly become a concern, as we’re seeing people move more to this online world.
James Thomson 10:58
So let’s go back to your point about deal flow. There are literally 1000s of these private label brands out there. And one of the things that continues to surprise me a little bit is how many of these owners don’t realize they’re sitting on an asset, that under certain conditions being right, someone’s actually going to pay them a decent amount of money? And how do you get as a broker? How do you start to proactively go and find companies and tell them the story that you are listening to? You’re sitting on something that somebody may want to buy? It’s opposed to just waiting for people to come to you and say, hey, I’ve decided I want to sell what can you get me for this business? Yeah, that’s
Mark Daoust 11:40
a great question, and one that we’re trying to unlock as well. There’s a bit of a problem with the brokerage industry in general, I’m going to rag on our industry for a moment, all right, and say, well, there’s a lot of ambulance chasers. Right. I, as the owner, Quiet Light Brokerage have received email solicitations from my competitors asking if my firm is for sale, because they have an interested buyer. Right. So they said, Hey, is there is Quiet Light Brokerage for sale, because we have a buyer that’s expressed interest, and then I reached out to them, you know, hey, and so I know them personally. got this email. Oh, don’t worry about that. That’s just our prospecting email. Yeah, right. Right. So we’ve developed a bit of a reputation as an ambulance chasing industry. And we’ve made the conscious decision for a long time to not engage in that practice, because I felt it was disingenuous to say we have a buyer interested in your business, when the truth of the matter is that the nuanced truth is, yeah, we probably have a buyer interested in your business. But I don’t have a buyer that specifically reached out to me and said, contact this person. Sure. Sure. Just the nuanced truth. So the question of deal flow. In the past, we have worked purely on an educational basis, go out there we, you know, Prosper Show, go give Prosper Show or sponsor Prosper Show, talk to people and try and educate them on the fact that they are sitting on something valuable, and teach them teach them what makes it valuable, what makes it not valuable? And how can you maximize that value. And that’s been our thesis for a long, long time. And we’re gonna continue with that, you know, double down doing everything we can to get as much education out there. We are starting some outreach, though. This year, we’re gonna play around with it for about six months, maybe nine months, and see what we can do. But we’re gonna try and do it differently. We’re not promising people that we have a buyer waiting in the wings, they just want this the same sort of educational approach to this issue of deal flow. Look, this, again, everybody’s dealing with this problem. The aggregators have the advantage of saying, I’m the buyer, and I want to buy your business potentially. And so that that’s more of an immediate, sort of sort of outreach, the problem. The problem for the sellers, is, I truly think that these aggregators, by doing this, are generating a lot of what we call here at Quiet Light ‘the ignorance discount’, right? Sellers who aren’t prepared and are literally leaving hundreds of 1000s or millions of dollars on the table, because they don’t know how to prepare their financials properly. They don’t know what a good deal is, you know, even if they go out and ask, like, what should I be getting? Hey, they offered me 2.8. And you know, and somebody says, Oh, you should get a 3.2. My business partner, Joe Valley, we just did a whole podcast on the problem with multiples. We think multiples are this somehow objective measure that we can say, Oh, look, a company is offering 3.8. Company B is offering 3.2 3.2? On what? Right? And how do you calculate that and what to include in that $15 million deal that I just mentioned I did last year, depending on how you count the numbers that could have been a $9 million deal. That could have been a $12 million deal. That could have been a $14 million deal. When you throw everything in? It’s 15 million. And that sounds a lot more impressive, doesn’t it? Yeah. So anyways, that’s my little red.
James Thomson 14:49
So it’s, in talking to some of the aggregators, they’re starting to get very proactive in developing software and figuring out which brands look interesting. Proactively reaching out to these companies who may or may not be thinking about potentially selling, you’re now competing with their proactive marketing efforts to try and try to insert yourself where you would be a trusted advisor helping with the deal. Where do you see aggregators potentially not having the same kind of advantage that you would have in terms of being able to approach a brand directly?
Mark Daoust 15:24
That’s a really good question. And I’m not sure if I have a full grasp on the answer there. Well, the one thing I would say, though, is that the buyer seller relationship, initially is somewhat adversarial. Because the buyer wants the best deal, the seller wants the best deal. Now, traditionally, the broker install relationship can also be adversarial to a certain extent, because everyone has an angle. We’ve tried to build our reputation on something opposite of that to say, look, we, yeah, we have an angle, we’re going to be very transparent about it. And then we’re going to try and put it aside and just do what’s best for you, the client, I would say, it’s a bit more muted to our relationship with the seller as far as being adversarial, because at the end of the day, we have to be cooperative. And so we’re going to benefit along with our clients by getting them the best deal possible. So that that would be potentially our advantage. And really, it’s incumbent on us. And this is what our outreach, right, because you’re right, we are going to be competing directly against the aggregators. Yes. So where’s our advantage going to come in, our advantage is going to come in by really being more useful, more informative, more unbiased, and more transparent than anyone else out there? And hopefully, hopefully, that wins at the end of the day. I mean, at the end of the day, yeah, I want people to sell the real Quiet Light. Okay, that’s how I make my money. So of course, you always buy, that’s obviously what I want. Yep. Before you’re the altruistic side of me, I want to see good deals done. And I hate to hear of somebody, you know, taking $700,000 from the business when they could have taken a million. And this happens a lot. Right? So I don’t want to hear that. Because I’m an entrepreneur, myself, I’ve sold businesses. And if I knew that I left 300 grand on the table, simply from an accounting error, or, you know, something that I didn’t know you could do or should do, or something I should ask for. Yeah, that isn’t something that I don’t want to see.
James Thomson 17:13
So let’s, let’s take this through. I’m a private label seller. I’m thinking, maybe I want to sell my business, I contact your firm, take me through, what does that communication journey look like? Whether I actually end up selling or not? The moment I engage with a broker, what should I expect as a seller to be talking about? What should I be expecting that I’m going to have to go back and do his homework? Take me through that journey? Because quite frankly, I right now, as we’re having this conversation, I think of so many of these companies that don’t realize that maybe they can sell and get a life altering amount of money if they sell their business, knowing what what awaits you in terms of what that journey is going to look like, that’s really important. So take me through the journey when it comes to that first contact with a potential brand.
Mark Daoust 18:02
Great question. And I’ll speak for Quiet Light. What to expect, please? Yes, yes, yes. And really, that it starts with that initial phone call, which is really kind of a mutual feeling out process, we want to learn about your business and how you’ve run it. Because every business is very unique. And at the end of the day, when when you want to sell, you do have to conform to some extent, into what the marketplace or these buyers are expecting if you want to get the best price possible. conformity is in Haynes, certain metrics is what you’re looking at. Keep in mind, these aggregators, they’re trying to do a lot of deals. So they’re looking at hundreds and hundreds of deals per month. And so if you don’t conform, you get tossed pretty quickly. Right. All right. So that first call is a discovery process on our side, you know, How close do you conform to the current market? And how far do you deviate from it? Secondly, it’s an education process on our part, we want to give you that first phone call. And my hope is that you get a sense for what the value of your business is right now, you know, a rough estimate, because you can’t give a specific valuation just a single phone call, but a rough idea, but more importantly, one of the big things to work on, like, do you have major issues with the transferability of your business? So you have major risks, you know, vendor risk with your business, you know, are your trends bad? Do you know what your books are not set up correctly? So it’s an education process where we can try and teach you what’s going to make your business really valuable, like, what are people going to be excited about what’s going to push that valuation up, and maybe some of the elements that might be dragging it down for you as well, especially that low hanging fruit? So when you walk away from that call, my hope is that, you know, I know my business is worth about 15 million to 20 million. I know that I need to do these things with my books, you know, in order to get an order. And I know that this industry, this niche, is really good, but I need to demonstrate X, Y or Z, right. That’s what I really hope that people get from that first call from us now, the entire customer journey, what does that look like, you know, if somebody is looking to sell their business and wants to go through that process, again, it starts from that same starting point, we have to have a sense of where you are generally. But then we get a lot more detailed. And we dig in, we ask a lot of questions of our clients, we look at a lot of reports. Because we don’t want surprises, you know, surprises are what kill these transactions at the end of the day.
James Thomson 20:25
So at what point do you start to become interested in a company that contacted you, meaning there’s enough credibility in the numbers in the story that you can do something with this prospective client?
Mark Daoust 20:39
Well, it starts with the goals of the client, right? I want to know what their goals are. Why are they thinking about exiting? That’s important, because I don’t want I don’t want to back out, you know, I want you to be committed. And the fact is, you get one chance to sell your business, you might think it is a great day, a great decision right away, but you might be going through the process and start having second thoughts. And that’s fine, legitimate, like it’s your business, you hang on to it, if you want to keep it but I want you to go through that process before everybody starts spending their time. So I start to get interested, if I know, look, this person is ready to sell and it’s in their best interest to sell, you know, it is their decision. But I want them to be convinced of that. Secondly, I’m looking for defensibility of that revenue, I want to be a business that can sustain in the long term, not something that is going to, you know, be here tomorrow. Third, I don’t want to deal with businesses that have specific talents wrapped up in the owners, I think about when it comes to Amazon. And look, I know your clients don’t necessarily fit this profile. But you know that the flippers, right, those guys that are bargain, bargain hunting and throwing up on Amazon, or they really know how to get good deals and are really practicing arbitrage. But that’s a skill set. And I’ve seen a few examples of that being done at scale, which are impressive. And they’re usually backed by software that’s defensible most art. So I want defensibility of revenue. And there’s a lot of things that factor into that intellectual property protection, uniqueness of the idea, size of the market. And the type of market, right? Is it a fad market? So a lot of things go into that. preparedness of the financials and preparedness of the business for a transition. Is it something else that we look at pretty heavily? Do you have clean books that are kept on an accrual basis? Can I trust these numbers is pretty easy to tell if you can trust numbers, and then that transition issue as well, right? If you’re the one running around doing everything, that’s a problem, obviously, but also the staff that you have, or the different setups that you have within the business. So what starts to pique my interest, again, it starts with the seller, I want to know or the owner, the business owner, are they ready to sell. And that’s why that initial phone call is really this discovery process. And I want our potential future clients to have a really good awareness of what they’re sitting on. And oftentimes what they’re sitting on is something that’s going to be really valuable in the future, you know, might be valuable now, but hey, maybe in two years, it’s going to be really valuable. They should know that.
James Thomson 23:05
And so what do you typically find yourself coaching new brands that you’re first talking to? What are the kinds of issues that over and over you’re having to say you need to go off and do this, this and this specifically, before you’re actually ready to have a responsible conversation with their prospective buyer.
Mark Daoust 23:22
financials, unfortunately, get put in the crosshairs a lot. And I know it’s not the sexiest of topics to bring up. But the number of people that are not on accrual basis for one or on some sort of full accrual basis. Right. So accrual basis just simply means we’re recognizing revenue and expenses when they’re incurred and this most impacts your business in your cost of goods sold line. So an easy way to tell if you’re on cash or accrual basis, take a look at gross profit margin. If it goes one month 30% the next month 90% the next month 110% next month, 2% year on cash basis. Yeah, full account for accrual basis is if your gross margins look like January looks like 70% 80% 75% yada yada yada then you get to December and all of a sudden you have a negative 10% gross margin profit margin. That’s full accrual accounting that’s for tax purposes only gives me no insight into the business. Okay, so that’s number one. Bad financials. Yes, see the number one area the other areas
James Thomson 24:21
before we move on? Yeah, I have bad financials, you send somebody off you say Go get yourself this type of an accountant to go through your numbers and rework them. That’s a three to six months process.
Mark Daoust 24:32
Hopefully not that long, but sometimes it can take that long. I’d say a good accountant that you’re paying a decent lot of money to will get it done in one to two months. Depending on how much support you can get my recommendation so I’ve changed on this game since I think you and I last talked. You know I’ve often said hire a good bookkeeper. I’ve modified this a little bit. If you’re doing over a million dollars in revenue with your business, hire a fractional CFO, it’s just bang the dollar for dollar. You’ll get the money’s worth for that sort of investment and they will make sure that you’re doing your books properly. This is nothing against regular bookkeepers. I love them for my other business, I still have a regular bookkeeper. But they are. That’s a sub million dollar a year business in terms of revenue. So yeah,
James Thomson 25:18
your financials are in trouble, you need to go rework them, hire someone, a fractional CFO to get that under control. Take me through other common issues that you have to send these buyers to go off and look at upgrading.
Mark Daoust 25:34
Yeah, Amazon account health issues. Could be something I mean, we were dealing with a client recently that received a number of not just automated warnings, but manually triggered warnings and their account, and that they had to submit like a written plan to Amazon. That’s something where time is going to heal the wounds there, right, we don’t want to try and sell right after I receive this manual warning, that’s a problem. So we want to get that worked out or there are other health concerns, you know, high return rate or a product defect, what sometimes happens, get those things worked out before trying to sell, try to get a better history on that account. To show, you know, this count is healthy transition issues would be the other area that we look at is a big time problem, where people just aren’t ready to transition, maybe they have staff that they want to keep with them, or they don’t have proper slps in place. And then the last thing would honestly just be trajectory might be I haven’t even thought about this before. But I think this might be one of the biggest reasons that we turn people away and not turn people away. We advise them, and then they make the decision on their own. Right? They come to us for business. It’s growing at a rapid rate. Yep. And you know, the discussion naturally goes to here’s what you’re worth today. And here’s what you can be worth in the future. Yes, if you want to do, right, this is your call to your business and the decision is often Oh, well, let me hang on to it. Let me hang on for another six months. And then as we’ll get to that point of selling, and that happens quite a bit as well.
James Thomson 27:05
So Talk Talk me through this process of either is a trajectory of my business, I can keep growing over the next six to 12 months. How do you advise brands on when it’s a good time for you to sell versus wait around another six to 12 months and keep growing? Obviously, the individual entrepreneur has to decide for himself or herself, how much more effort they’re prepared to put into this. And there is a point where you get enough, you’ve got enough and you’re ready to exit. But no one never likes to leave so much on the table that the next guy that buys the company is going to go Oh, wow, thank you very much. I can double the business in three months.
Mark Daoust 27:45
Yeah, I mean, it’s far more, right. It’s all about fear of missing out. And that’s why I’ve said for years, the best time to sell your businesses never if you really enjoyed running your business. I mean, it is profitable. Don’t sell for financial reasons would be my answer. Or if you are going to sell for financial reasons, pick a number that is what your exit point is. And then be happy with that or move with that. And it doesn’t mean it needs to stay that way. I’ve been talking to a guy for years, a friend of mine, now we’ve become friends. Now initially, he thought he wanted to exit for 30 million. And then as business grew, and he’s like, man, I think we could get like 70 to 80 million. Yeah, yeah, no, I think it could too. And then we in this business continue to grow. Now he’s looking at it, you know, a few 100 million dollars, and that’s fine. I think it’s great. I’m super happy for him. He’s always had a number in his head where once it gets to that point, he’s gonna have that gut check, do I want to sell? That’s totally fine. But I think that the question of when is the right point to exit your business, and it’s super personal. And I would encourage people to not look at it in terms of a money calculation, because you will always have the potential to make more for your business, you’ll always have the potential to be able to exit for more. Look at it more from a life balance situation. What are your goals with this money? What are your goals from an exit? What do you enjoy doing? And from one entrepreneur to another, as I’m sure many of your listeners are entrepreneurs, take into account the fact that as entrepreneurs, we love the startup, and maybe that’s part of what you need to look at. Or maybe you want to transition. There’s so many different things to look at, besides just the money portion that you need to have that calculation in mind, right? Do you want to continue running the business for a while, then do it? I don’t think that we can sit here and say you should exit x dollar amount. It really is a burnout thing starting to settle in. And that’s real. Yeah, start making those plans and try and get ahead of that burnout don’t sell once you’re burned out. That’s a bad time to sell. So you have to get ahead of that. But that’s a nonspecific answer, James, I’m sorry, but it’s such a personal decision. It’s hard to answer.
James Thomson 29:51
The fact that it’s non specific, you know, leads us to this whole issue of every deal is different. Every person looking to sell a business has slightly different motivations, slightly different timeframes, and so on. It’s a very interesting issue because quite frankly, companies are saying, I don’t want to miss out on this gold rush, I want to sell my business and make my millions. Okay, but at what point is the right time for you to do that, if you run a well run business that’s got lots of growth opportunities, you’re doing the right things. And there’s inevitably going to be somebody interested in buying your business in a year, two years, five years from now, if you’re doing the right things with a business today.
Mark Daoust 30:35
So, you know, it’s so easy. If we think about it in terms of stock investing, for anyone that does stock investing, I think buying in is easy, I think knowing what to sell, but that’s really hard. It’s the same calculus that we have to deal with with any of these things. And that’s why I think the benefit of selling a business and knowing the right time is it can be something other than a financial decision, it can be a personal decision, it can be a quality of life decision. And I think making it within that sort of paradigm is much easier to do. And probably a better thing to do, anyway, is to look at it more in that quality of life sort of framework. So that’s my personal opinion. This is, by the way, for people that don’t know me. I’ve built businesses, I’ve sold businesses, right. So I’ve been through this process more than once. I’ve bought businesses, and I’ve sold businesses. And I get how difficult it can be. I’ve owned Quiet Light for 15 years, for a reason. Right? I’m not done with it. I’m happy with my first businesses sold after two. Because I was done with it. I was ready to move on. Yeah. And so it is a personal decision.
James Thomson 31:37
Let’s talk about Quiet Light Brokerage. What do you see as differentiating your firm from the many other brokers out there? And there are a lot of brokers and new ones coming on board every day? What is what makes you different in your eyes? What makes you different in the eyes of your clients?
Mark Daoust 31:55
Yeah, I mean, it comes down to the team. It always comes down to the team, at least in my book, the people that we have working with Quiet Light Brokerage, I think are some of the most experienced entrepreneurs in the world. You know, you just have to look like a Walker Deibel, bestselling author, buy them built as a best seller for over a year now sold over 30,000 copies as of this recording right now, which is a ton of books. He also has experience as a movie producer. He recently was nominated for an Emmy. And oh, yeah, he bought eight companies in the seven figure range before he came on board with Quiet Light. You take a look at Brad Wayland, who had the second largest custom t-shirt printing business in the country. He’s bought over 28 content businesses. He’s an extremely effective investor Jason Yelowitz, who’s done private equity raises on his own once had a company that was valued upwards of $30 million dollars. You know, he’s been with me, as long as anybody down the list, Amanda Raab, featured in Time magazine for her work with pure pearls and Helen documentaries on. So the expertise of the people. So what makes us different, first and foremost, the expertise of the people. Second of all, the commitment that we try to bring to the table of, again, doing the right thing by a client. I know this is such a cliched sort of thing to say like everyone wants to do the right thing by their client. But there’s a reason that I like working with successful entrepreneurs. Because they do this mainly out of the love for what they’re doing. Right, which means we’d like to do good deals, we love to work with entrepreneurs. And we’d love to tell people what they could be doing with their businesses as well so that they make the right decisions. And that permeates down to hopefully giving advice and feedback, which truly does work in the best interest of our clients, where we see the difference from our clients, both on the buy side and the sell side is in the trust. And I know again, trust is something everybody can say and I have a rule of somebody says Trust me, I generally don’t. So I’ll point to the fact that, you know, when we survey our clients have something like nine out of 10 of our buyers want to buy from Quiet Light over any other brokerage firm in the industry, because they trust the transparency of the data that we have. Our net promoter score is in the 70s for our company, which is extraordinarily high. And it comes down to trust and being transparent with our process. And that’s what we really live and die on is our reputation. And that’s what we hope to do. We’re not going to be the largest deal broker, we’re not gonna be the largest volume brokerage firm out there. We never will be because our model doesn’t allow us to scale like that. But we don’t want to be either. We want to pick great businesses to work with, bring great businesses to the market. And we’ve been able to do it. I mean, last year, we set a new record for closings. We just got the numbers if we did $115 million in closing something our clients, the year before we were at 70 million was 65 70 million. So it’s playing out in real time as to being effective. And that’s the answer I could go on. I won’t because I don’t want to bore your audience.
James Thomson 34:48
I want to finish our discussion today with a broad observation. I’d gone to business school, I worked at Amazon and yet when I left Amazon The opportunity to work with so many entrepreneurs who are definitely not cut from the same cloth wall have these different kinds of ideas of how to build a business and how to find customers. There are so many different types of models out there that people use, quite frankly, some of them leave me scratching my head, some of them leave me amazed. When you look at your journey, working with entrepreneurs, representing them, helping them, supporting them. What are some of the aspects of this, this type of interaction that has most surprised you?
Mark Daoust 35:35
Well, that’s a big question. As far as the clients that I’ve worked with, and the
James Thomson 35:40
opportunity to work with entrepreneurs who have some good ideas over here, they may not necessarily have good ideas over here. But you know, all in all, you have to be programmed in a certain way to say I believe enough in myself that I’m gonna build a business myself, and I’m going to get people to believe in me when I offer them product or services, it’s, it’s a little bit more risk seeking than then many people would ever want to take on.
Mark Daoust 36:06
Yeah, absolutely. You know, I gotta tell you, James, it just kind of sprung into my head, I’ve often wanted to reach out to entrepreneurs and see if we could get everybody to share their worst domain ideas. Because I know we all have this big trash bucket of domains that we own for business ideas that at one point, we’re like, this is gold, and then you look back at like, why do I? Anyways? You’re right, it does take a special breed. And I think is, frankly, one of the more rewarding things of working with Quiet Light Brokerage is the fact that we get to work with some super interesting people, some super intelligent people. But I think the biggest surprises I’ve taken away are completely self deprecating, but completely real. To learn how much I am not the smartest person in the room. I have constantly worked with people that are so intelligent and have such a diverse range of skill sets. I’m going to give you an example. logistic, I owned an e-commerce business for a little bit that was on heavy gun safes, you know, for hunters and stuff like that these were big, big things. And when I was trying to set up the shipping, and this was using Magento. So this was before Amazon was really taken and taken hold on. I had to figure out how many stairs we need to take this down. Where was this? You know, where we are located far away from a major city center? It was Did you want us to unpack this thing? Oh, my goodness, it was a nightmare. I couldn’t stand it. It was just this logistical nightmare that I hated. It’s not my strength. It rewind two years ago, I talked to one client, he sold just kind of a commodity item where at one point, you know, during his businesses, and he would sell a million pieces of this commodity item every single day. I mean, it was just a massive volume. And he talked to me about how he switched from a 6000 square foot warehouse, he moved from a 6000 square foot warehouse to a 20,000 square foot square foot warehouse. Now, that was the most fun he had ever had in his time as an entrepreneur. And I could just think that, that sounds awful. Like, wow, I’d rather have a root canal. There are these different skill sets out there. And when you see an entrepreneur latch on to what their skill set is, it is really fun to watch what they can do with that, you know, Brad on our team, he knows content. So well. He’s just a smart guy in general. But he knows content so well and was very successful in acquiring content businesses. So being able to see his angle on these things is so refreshing. So I think that, you know, the biggest surprise is often the perspectives that I get from people and seeing how varied they are, but also how for the most part, they’re rooted in some really solid, justifiable positions. And just the vision that you see from entrepreneurs. It’s different. It’s different. They have a different vision, the successful ones I should say.
James Thomson 38:57
Mark, I want to thank you for joining us today on the Buy Box Experts Podcast. For those of you interested in learning more about Mark’s brokerage firm, please visit quietlightbrokerage.com Join us again next time on the Buy Box Experts Podcast.
Thanks for listening to the Buy Box Experts Podcast, be sure to click subscribe, check us out on the web, and we’ll see you next time.