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Successful Life Podcast
The Successful Life Podcast, hosted by Corey Berrier, is a globally recognized show that ranks in the top 2% of podcasts worldwide. It offers expert insights tailored for contractors, focusing on business strategies, sales skills development, and the integration of artificial intelligence (AI) in the industry.
Successful Life Podcast
Decoding Profitability in HVAC, Plumbing, Electrical, and Roofing: An Enlightening Conversation with Industry Expert Brian Cohen
Are you ready to decode the profitability of HVAC, plumbing, electrical, and roofing companies? Join us in a galvanizing conversation with industry expert, Brian Cohen, who brings his wisdom and insights to the table. Brian not only unmasks the business aspects of these industries but also reveals how they've remained attractive even during the daunting times of pandemic.
We discuss, with Brian Cohen, the intricacies of buying and selling these companies, unraveling the art of finding the right buyer and boosting the sale price. Throughout our conversation, we emphasize the importance of readiness to seize an offer when it comes and the pivotal role that well-organized financials play in this process. We also explore how forming private equity partnerships may unearth growth opportunities that were previously unreachable. Brian insists on the importance of communication, making level-headed decisions, and keeping an eye on performance metrics to ensure business growth.
Our dialogue further ventures into the realm of geographic expansion strategies, weighing the pros and cons of incorporating different trades and utilizing customer data. We also talk about the significance of trust, honesty, and the right team dynamics in achieving success. Brian shares his perspective on various investment strategies and considerations for business growth, including the concept of 'failing fast' in marketing and advertising. As we wrap up, we highlight the importance of gathering all the necessary information for informed decision-making, with Brian sharing his expertise in helping business owners, big or small, secure a plan for the future. Join us in this enlightening conversation with Brian Cohen!
Direct phone number 954-226-3409
https://www.audible.com/pd/9-Simple-Steps-to-Sell-More-ht-Audiobook/B0D4SJYD4Q?source_code=ASSORAP0511160006&share_location=library_overflow
https://www.amazon.com/Simple-Steps-Sell-More-Stereotypes-ebook/dp/B0BRNSFYG6/ref=sr_1_1?crid=1OSB7HX6FQMHS&keywords=corey+berrier&qid=1674232549&sprefix=%2Caps%2C93&sr=8-1
https://www.linkedin.com/in/coreysalescoach/
Welcome to the Successful Life Podcast. I'm your host, corey Barrier, and I'm here by man Brian Cohen, brian. So, brian, your expertise are in essentially buying and selling, not buying, helping sell HVAC, plumbing, electrical roofing companies, mechanical companies, right? So tell us a little bit about yourself, brian, and then let's dive into the conversation we were having just a moment ago.
Brian Cohen:Sure. So you know, listen, long story short, this space is absolutely incredible. It's recession proof, it's been this way forever and again I say this with all due respect you know when private equity is looking at businesses, you could flip restaurant chains right. You could do commercial real estate in New York. Hvac isn't that exciting, but the reality is it produces year in and year out and obviously and we've talked about this and everybody knows this already when you take a look over the last couple of years, listen, pandemic hit. All the multiples went nuts. Private equity dove into this space. They needed to find places to park their money and deals were happening nonstop. So bottom line is we've been doing this for almost 20 years.
Brian Cohen:The guy who owns our business, fred Silverstein, is one of my best friends. I've known him since I moved to Florida in the mid-80s. I came on with Fred at the end of 2016, beginning of 2017. Right as Freddy was closing, at that particular point in time, the largest transaction in the space One of the largest I don't want to, you know, I don't want to give you black and white and that was Dave Gogger's transaction with Horizon, followed up shortly thereafter by Ken Goodrich's deal with Gettle. So Freddy was the broker. He's also listen. I hate to use the term broker because I think it cheapens us, right, just like I don't like to say our space is not sexy.
Brian Cohen:Freddy's a CPA, right, he was the top of his class coming out of University of Arizona. Was it cumulus to loud? I don't even know what the term is. He was like that type of top dog worked with Blue Dot, cut his teeth with buddies, with Jamie D, domenico and Kenny Haines, you know, and Dave, and these are some of the OGs right With Blue Dot and they were moving businesses back and forth, went out on his own because he developed a fantastic ability to be able to value these businesses and because he was a CPA and understood the numbers and understood EBIT and how the all the numbers worked together. His reputation just grew. So he was doing a lot of things by himself, with a small team. He and I had to sit down and said let's go ahead and grow this. So, as myself, him, you know, another person or two kind of helping out. You know, one thing led to another three to four or five deals a year became seven, eight, nine to 12, became 15, became almost 20. And then we move into the COVID years and all of a sudden we did, you know, 40 plus of both of those years and we'll probably do another 30 plus this year. So it's been an incredible run and not going.
Brian Cohen:We've also worked our asses off and we have produced, like my laundry list of clients that have chosen us to handle their transaction. Is the who's, who's in our space, right White Hepworth, ishmael Ray, isaac Yark, the Gare guys God, I mean I'm just trying to spit ball on a couple I mean you know in Arizona Lou Habica and Kevin Howard, with Howard, air and Travis and Tyler Ringey, the Ringey Brothers we handled hers and orangutan, and you know there's so many that we have done and we know all these people. So when you dive in, you know it's one thing to broker a deal. It sounds easy. You realize these relationships are happened over a course of years. Right, we may have been speaking to these guys for a couple of years. They get their financials over to us. We're working with them. Could be six months, could be a year, could be two years. You listen, joe Strip mattered down just outside of Dallas, texas. He was a client for like two years. Right, we were working with him to get his numbers where they needed to be.
Brian Cohen:So, corey, what always freaks me out is that people like, well, I'm not ready. Nobody's ever ready to make a deal happen. Nothing ever happens on your time schedule. But if a buyer came to you and said I'm going to overpay for your business right now, here's the number. Everybody has a number. You know. Lou Habica said it best. He said my business is everything's for sale besides my wife and kids. Somebody wants to commit and give you the number. But if you are not prepared to take the offer, shame on you. So for people not calling us and working with us over a period of time listen, some people are helping out or working for a longer period of time. We have done so many deals. I have the best in class at what your financial should look like, where you should be pay, how much you should be paying, what your cogs should be, what your profit percent. I have it all. For somebody not to call me to work through that so we could help you over the course of six months or a year.
Brian Cohen:To tighten up on all your numbers is ridiculous. Pretend, for example, everybody talks about growth and again, I'll shut up after this. But take a $10 million business, two different $10 million businesses. One of them is running at maybe a 8% EBITDA margin, that's 800 grand. Let's pretend he's getting 10X, that's $8 million. The other guy is running at north of 15%, that's 1.5. Take the same 10X you get 15 million. What's the difference between the two? One is ridiculously efficient and probably called us. The other one got called and thought that 8 million was a good number for his $10 million revenue business. So you know, as we were talking from before, I hear these multiples these guys are getting and it's not true. They're representing themselves, they're screwing themselves in their deal and the way they're able to negotiate it. But you know, there's just some people that want to suffer, like how can?
Corey Berrier:I say it. Well, it's ego. Right, it's ego. It's like I know more than you know, because it's my business. I'm sure you hear that, or a version of that, all the time.
Brian Cohen:Yes, yes, and it's. I got to be patient. It's hard to listen to. Not everybody wants to have the conversation. I can't want to make more money for your business than you want to make for yourself. That's really what it boils down to is, when we engage with a client, we are all in, like I have a team, we don't stop.
Brian Cohen:I want to hear your story. I want to know about your people. I want to know about your trials and tribulations. How did you get to here? What do the numbers look like? Okay, great, we do a deep dive on your numbers. Here's where it's at today. Tell me where you think things are going to be in six months. The timing on this may be a year out. Like, let's work through this and look at this every month until we go ahead and pull the trigger. You know, I know everything that's going on. My company knows, my team knows everything that's going on. So when I hear people who are and again they are experts in HVAC, experts in plumbing, experts in mechanical contracting, I absolutely love that they are not experts in getting deals done with private equity. It is a different game. You know you're asking a football player to be an ice hockey player, it doesn't translate Right. Yeah, 100%. So.
Corey Berrier:I'm curious.
Brian Cohen:Except for Bojack, I think they do it in commercial. So I'm curious All right.
Corey Berrier:So when you go in and you are talking to an individual maybe he's on the fence right you explain the numbers he's like well, what happened to my people? What happens to the people that you know? I've had this person here for 20 years, ex-person for 10 years. How do you handle that conversation?
Brian Cohen:Great question. So two different perspectives. One one there's two different ways these transactions are handled. One, the owner gets his check and within 90 to 180 days they are out altogether. The other, which is the lesser percentage of how deals get done, okay, okay.
Brian Cohen:The more common scenario is, Corey, is that you're selling your business. You're partnering with private equity for growth. You're taking your risk out of play. Right, you're getting paid. They want to partner with you to continue to run the business, you to have a partner to help you out. You're still there. If you're still there, you love that person. Where are they going?
Brian Cohen:As a matter of fact, most of your people should, and again, it's hard to wrap your head around this, but you just have to see it from a different paradigm. You just have to shift how you're seeing it. If I do a deal with private equity, I have literally protected all of my people, because now my dad is a big fat checkbook and if we go into an economic downturn, I don't have to ride this out on my checkbook, which might be a problem. I have to start firing people. I got a private equity guy. I got a partner. Right, my costs are going to be down. We're going to become ridiculously efficient and get somebody helping me out with my numbers. They're dropping my equipment costs, right? All these different things should be able to keep people around for a lot longer, right, and gobble up market shares. Other people ship or sinking mine shouldn't or not sink at the same speed.
Brian Cohen:So the point is the guy's been around for 20 years, he's going to be there. Where's he going? There's a better opportunity now for the guy that's been around for 20 years and, by the way, some of these owners, they put stock together for these guys. They're tenured people. They get some stock, they got some skin in the game. So when the company, when that portfolio, goes to sell three years down the road, they're going to get a payday. Some owners understand that this business is built on the back of some of these people that have been around for 15 or 20 years and there's ways to negotiate to get those people taken care of. On the flip side, maybe you've got a guy that's been there for 20 years who stinks 20 years who stinks and he freaks out because all of a sudden he realizes he's going to be held accountable. He needs to be a little bit more professional. Maybe that's somebody you should have fired a long time ago, and this is going to get him uncomfortable enough to have to make a move, and that's okay At the end of the day, sometimes it's business.
Brian Cohen:I know that everybody loves their people and they've worked with them for a very long time and I'm totally for that. Your real, true apostles are the ones, man, if you couldn't afford to write them a check for a couple of pay periods because some things were going bad, they would show up every day and still give you 110%. When you look at your staff, how many of those people do you have? They're that committed to you. Because you're that committed to them, right, yeah, right, enough of those people You're kicking ass regardless and you're going to want to take care of those people because you understand what they truly mean to your business.
Brian Cohen:But there's not many scenarios. Let me rephrase that. The problem is there's these rumors Private equity comes in and a month later everybody's out in the clean house. Are there those situations? 100%. Do you know how many of those deals that I've done, that I've represented those clients in, that have sold Zero. Do you know why? Because my clients get multiple offers Two, three, four, five, six, seven, eight offers. They have had conversations with all of these buyers who are understanding what the chemistry fit looks like for their business. So they're dealing with a corporate raider like God. What was that movie where he raided the blue dot or blue, whatever greed? What was that greed with God? Who the hell was the actor? I?
Corey Berrier:don't know if I saw it.
Brian Cohen:Sure, go, look at any of them, I'll get you over the information with Charlie Sheen. Wall Street, oh, wall Street, yeah, yeah, yeah, yeah, you know, are you dealing with a corporate raider type? Because you can feel that, right, they don't really bring a lot to the table, they just want to take your ear but it was somebody else's and see if we can make something happen. And hey, we don't care, cut costs, cut expenses. You should be able to figure that out during these conversations. There's that chemistry fit. Where you're working with a potential buyer that understands what your needs are, you tell them you need some of these things in order to help grow, and they're going to be able to put that together for you. So this is the chemistry fit. And, by the way, there is no right or wrong answer. What do you think works best for you and your family? Ultimately, your people trust you that you're going to make the best decision for them too. So anybody that's freaking out post transaction means they don't trust you enough to begin with. And here's the funny Sometimes these employees don't even know the deal happened because the buyer doesn't come in and say, hey, I'm partners for 30, 60, 90 days. They've already gone through a couple of pay cycles.
Brian Cohen:If I'm an employee and my owner partner with private equity and I think that I'm a next level player, I should be smart enough to recognize there must be next level opportunities here. Now. Where was somebody bigger so, where I may have been had a ceiling before because I wanted to be a manager or wanted to go to this next level? Because that position doesn't exist. Of course, if you sold your business in your part of portfolio with 10 other owners and some other owner in that portfolio says I need a Brian Cohen type person on my team and I'm working for you, you should be smart enough to recognize hey, this is a portfolio and we're all going to win in this portfolio together.
Brian Cohen:Hey, interview Brian Cohen for the position. He's so good I don't have another place for him here at my place. He has maxed out. He can't do it anymore. He's that amazing. I don't have anything else for him to do. He needs the next level opportunity to be challenged Right Days within the portfolio. Who benefits there? You benefit, you've done the right thing. Your employee benefits right Because you gave him another level opportunity. Those things exist and they happen all the time. You just have to be able to see the forest in the trees.
Corey Berrier:And what an industry to be able to say that Like. If you know anything about this industry, you know that what you just say is 100% true, because people do want to help each other in this industry. Also, you said something important I'm sure that you do run up against. I'm going to use the service manager because he's usually the biggest pain in my ass. He's usually the guy that is. You know he's tight with the owner. The owner thinks he's doing a great job. I trust this guy, I put him in place, but the reality is he's ruining the team.
Corey Berrier:I'll give you a great example. I won't say the name of the company. It's not this company but I'm working with a company in. This guy Got called Smoke and Weed. Right, this is not that big of a deal in this industry. And this is not me saying that it's okay to go out and do drugs on the job. That's not what I'm saying. But guess what? People are going to do shit on their off time and if you drug test your whole team, most likely you're going to have some problems. Right, You're not going to have a team. So you know you got to use common sense. This manager decided he was going to. You know, the owner was out of town and he said he went to a couple of his guys and said, hey, we're going to drug test you. I mean the guy called me and was like dude, like you realize, half the team is going to be gone and I'm like, of course I realized that. So that service manager sometimes is the chokehold in the business a lot of times in my opinion.
Brian Cohen:Yeah, I called the pinch point right Again and I saw it. So years ago I was sitting with an owner who we did a transaction for and he had not been in his business for six months. Right, and the business was skyrocketing. He realized he was the pinch point. So look at your organization and you look at why growth is or isn't happening. You find these pinch points right, these bottlenecks, and sometimes that person has to be removed to open up the airway right For stuff to float back and forth. What does that look like? And how do you determine that? Can you walk away from your business? And the business continues to handle the plan that you and management put together and execute? And if it can, is that for one week, a month, six months? What's that look like? And again, you have certain owners. It's egocentric. They can't leave the business. They need to feel important.
Brian Cohen:Listen, years ago, as a business owner, one of the best things over ever was that my phone rang all the time. I was so important. My phone rang all the time when I got involved in this space. One of the things I was most impressed with is we would sit in these management meetings, which would be four hours and we'd be there with the owners. Their phones would not ring. Those are the guys that have their shit together, right, that's right, in a place that can handle it and don't need to call the owner for everything. Now, I'm not saying that's not how it is in the beginning, but there's a trust that moves back and forth. I know that my service manager camera manager, phone room manager, warehouse manager, whatever that looks like understands what needs to happen every day for us to be successful and they execute on it. And when it doesn't happen and they need help, they come to me and let's come up with a solution together. Yeah, I get it and listen.
Brian Cohen:At the end of the day, it's communication. Is the owner also communicating the goals effectively? Is the team understanding the goals effectively? Are they able to execute on those goals effectively? What's the stretch goal? What's the daily goal like? Are you looking at? Hey, here's the daily goal, here's the weekly goal, here's the month of goal. You know what the metrics are, that if you're attaining certain things, the month is gonna be another banner month, a month that at least beats out what the month looked like a year ago, cause that's really what you should compare yourself to, by the way, this September right to last September, not this September to August two different months and two different seasons. But did you do better this year, this month, over the one from before, right.
Brian Cohen:And then you are what, at the end of the month, are you sitting down and saying, hey, what attributed to the growth, what attributed to all these things? Great, let's lock in. And you're always trying to get better. It's almost like a football team. You know, you're sitting, you're playing film, everybody has their marching orders, the head coaches delegating out to all the assistant coaches and they're sitting in all their various team meetings to make sure everybody's doing what they have to do. That's right. In this it's.
Brian Cohen:Yeah, the HXX is different. You got a lot of different personalities that are coming in and listen. Some people are there and they're apostles for the business and some people just want their checks on Friday, and you have a lot of different personalities and egos that you have to manage right. And what buttons have to get pushed to just challenge these guys? Enough that they want to go kick ass, right? You're doing like here, for example. Or you're doing what you're doing because you're challenged enough by it, right? If it was easy, you probably wouldn't do it, but you're challenged enough by it, right?
Brian Cohen:I can't believe this client's not working with me. They're working with somebody else. This drives me nuts. What do I have to do to keep getting better? I'm the same way Like when I hear about a bad deal, or oh my God, or you know. I'm like, wow, I got to work harder. Like I need to help more people, these people hurting themselves.
Brian Cohen:My feeling is, if you are not hiring me to help you to sell your business, you're doing yourself a disservice. You're hurting yourself. You should at least give me a call and have a conversation about it. I agree, I keep that good. Right, that's my belief, and you should feel that way, and every owner of every business should feel the same exact way.
Brian Cohen:We are that good? Are people are that good? Are services that good? Will your people feel that way too? When they walk into a home, are their chest puffed out? Hey, I'm with blah blah blah HVAC, because you know there's certain guys out there that charge these exorbitant numbers and they're gonna tell you their people feel that way when they walk in the door and that's why they win a lot of deals. Right, that's right. Confidence, yes, yes, confidence knowing that what you can say now is gonna get backed up by your team, is gonna be able to deliver. My team at SFNP is unbelievable. I can say a lot of things and I can go out on a lot of limbs and my guys back it up right Cause I know we're that good and we've done it from before Time and time again. So, and it's my little, I just, I just plug myself, but I'm done.
Corey Berrier:So tell me which, all right. So out of HVAC, plumbing, roofing, out of all the industries that you deal with, what right now is like if you had to bet on one of them, which one are you seeing the most deals in? Cause I know HVAC blew up and maybe it still is. I'm sure it's still doing really well. But I'm curious out of all of those, are you seeing a mover on in one of them or the?
Brian Cohen:other. Well, you're starting to see, people you're starting to see. So let's pretend I'm a private equity company, right, and I bought an HVAC business. You know, take an area, just come up with every area. You want a geography. I bought an HVAC company there, I have a plumbing company there, or multiple ones in a geography. We don't own the territory, but we're pretty dominant in this area.
Brian Cohen:Well, what else are you gonna do? You know, the only thing you could do is grow geographically, okay, well, where else are you going to go? And remember, you kind of have to. We don't have to, but it seems to make some sense to be contiguous. Listen, there's guys that have. There's PE groups that have companies all over the country, and that's just how they're gonna do it, and that's fine. They're gonna work with their biggest suppliers and get their biggest, greatest deals, and that's great. Then there's other ones that wanna be more geographically centric. So if I'm playing the geographically centric game, or even at the end of the day, there's gonna be some geographic centers, you're gonna wanna be a geographic center in some ways.
Brian Cohen:So if I got a big player or I've got a big portfolio in a particular geography and we're handling all those trades. And now we've added some electric in right. What else am I doing to get a fence around this customer? So we go buy a roofing car. Why? Because between all of my businesses that we have here, I've got a 50,000, you know a person on maintenance plans. That's the easiest people to go ahead and market to. Hey, by the way, you trust me to install your you know X number of expensive unit in your home and when you have to blow up with your plumbing, we handle that. By the way, we're not doing roofing right.
Corey Berrier:All right. So is that from a portfolio standpoint? Because I'm curious, like geography. I mean, okay, let's just say you've got an HVAC company, you got a plumbing company, you got a roofing company and you bring on an electrical company, are you able to cause this makes complete sense that you would be able to share that customer data right?
Brian Cohen:It's all yours. It's all yours. You've got a fence around your customer already, right? I'm an HVAC guy with a. So again, what happens is this like, let's walk through it so you see the progression. I'm an HVAC business. I have 5,000 maintenance contracts, right, naturally, I have 5,000 people I can go ahead and market to. So Brian's HVAC now becomes Brian's HVAC and plumbing, and I market to my first 5,000 people. Hey, by the way, folks, we're also offering plumbing. So every time I have an HVAC guy that's in the house, I get to start talking about plumbing. Right, I got to build the market to it.
Brian Cohen:Now here's what gets interesting. By the way, I'm not telling anybody on your podcast to go ahead and add the other trade in. As a matter of fact, I sat at the Rhino event multiple years in a row. I have listened to the best in the game say the same thing every year. You don't add one train, a trade, until you have the other one down, like you used to be so solid, top of the chart numbers with everything. Because they are two different animals. One has seasonality, one has oh my God, we needed to be there five minutes ago Like it doesn't. They're two different, you know, not the same spectrum as now, but anyhow, plumbing is more on demand, right, hvac, you can kind of start to flow out some seasonality and I'm oversimplifying, so please don't beat me up while you're listening to this but two different animals, two different types of people, right, and then within plumbing there's multiple different subsets of the different things that you can do.
Brian Cohen:But my point is is that if you got really good and efficient with one, you could bring a small team with the other one, start marketing to your people, build it up right. Okay, and now I have enough on both sides. I got to it looks like there's enough opportunities to bring in a couple of electricians and keep them busy full time and there's enough opportunity to do some other things. Well, if you take a look at it and you had a small roofing company that had the game together, that all the licensing, they knew how to go ahead and do a roof, you know. Okay. Here's another pretty big ticket item that we can add some revenue.
Brian Cohen:Now, roofing companies on their own, they don't get the same multiple, they just don't Interesting Residential HVAC business, right, and again, the multiples are changing. But let's take a $10 million revenue guy, you know, 7x on the low end, maybe 8.5, 9 on the high end. We'll call it a spread of 7 and 9. A $10 million revenue guy is not going to get the same multiple Because there's nothing. You're not going to get that customer's house again. It's a one and done. It almost becomes like new construction and new construction residential HVAC unless you're a monster just doesn't get, gets paid. Half, you know half, of what the high ends. It's a much smaller multiple.
Corey Berrier:What if they're where you are in Florida, when the roofs get blown off constantly? I don't know if exactly where you are, but in Florida it would. I would imagine you'd have a better chance of getting a higher multiple on a roofing company than you would say in North Carolina, where we don't have a lot of storm, but what you're talking about now is an aberration, right.
Brian Cohen:So I get a hurricane unfortunately that comes in which we had on the West Coast of Florida, and they're still fixing roofs from over a year ago. Well, when that deal's done, you got to look for your next hurricane. So now you become a storm chaser, and there's storm chaser businesses too, and they do fantastic, right. Here's the problem. Hey, there was hail in Colorado. All these homes got ruined. Get the guys on the streets, start knocking on doors. Let's make it happen. It's a big play and you can do very well with it, but you're going to be moving all over the place.
Brian Cohen:Private equity likes consistency, right, so they don't like all of this stuff. When that number's moving all over there better be some answers on why that's happening. And remember when private equity makes a decision once the buyer put a deal together for you. Listen, man. They have they got investment committees, they've got boards. They have a history of being successful with deals, as aggressive as they want to get. They're also very conservative. They're dealing with somebody else's money. If a deal doesn't go good, somebody's going to have to explain it to somebody why it didn't happen.
Corey Berrier:And they're not into business for deals not going good.
Brian Cohen:Correct, that's right. So when you look at the next fund fund five, six, seven, eight, nine, 10, often it's based upon what they had already done in prior funds. Hey, this fund closed out. Here's what the returns look like for investors. Here's how quickly we got it back to them.
Corey Berrier:What's interesting? I've been a part of several startup incubators, which is a whole different conversation. Oh yeah, and the VCs in that space. Ironically, if they get two out of 10, they are. That's what they bank on Usually one out of 10, they're going to be. They're still going to be happy because it's going to make them so much money. But I was really shocked at that, those numbers. I was really shocked. They invest in 10 companies in hope for two.
Brian Cohen:So what? So you say, on the one or two that they won, on what is their multiple on their money? 20, 40, 50X. It's huge, Right. So you could afford to lose on eight. When you're going to hit on two, they're going to be next level off the charts. That's right. And I've heard that stuff too. And again, if you're not risk averse and your checkbook's big enough, you go do some of these things, but venture capital doesn't enter in our space. There's a reason for that. They want to hit grand slams.
Corey Berrier:Every time yeah.
Brian Cohen:Move guys around the base and get base hits. They don't like to play small bowl? Well, the H-plus space you got to play small bowl Right. One year leans on top of the other. You got to bring a new install team in. Do-do-do. Let's get a little bit more efficient. It's a process, you know, and some of these P groups get very aggressive. They got in and they work for the last couple of years 2021, 2022.
Brian Cohen:As these businesses became essential services and as their numbers went up and to the right, this place got very sexy and a lot of buyers came in. You know I tell this story and I think you'll appreciate this. When I started off with Fred 16, 17,. We had a buyer's list. It was a dry erase board. It was three feet by two feet. There were 15 people in there. Like, literally, if you didn't like, if one of these buyers did not like the deal, we'd have to call your guy the biggest competitor down the street, see if he wanted to buy it. You could not create the leverage to get the multiple. So multiples back then were like three to five, x right.
Brian Cohen:Wow, as the Sun Capital deal with Dave Geiger transpired and as Ken Goodrich's deal with Baum came to light and I remember sitting there. There was a Thanksgiving week, thanksgiving of July 4th weekend one of those summers where I locked in with the computer and just started looking through all of these different groups that may potentially be buyers and we started calling them and introducing them to deals. I'm not saying we made the space, but I know we were part of it. Right, there's a lot of people. But I started making phone calls and saying, hey, do you guys want to see these deals? And they wanted to take a look at them. All of a sudden, you've got new buyers that are in space. So fast forward.
Brian Cohen:Right, you can't always see when the seed is going to bear fruit, but the tree is going to bear fruit. And now you hit in 2021, 2022, 2023, multiples are going up. People are looking for space to buy. These people I've been talking to for years all of a sudden calling me, saying, hey, what do you got? So now I'm taking a deal to market and I'm getting 70 of these guys signing nondisclosure agreements to see a deal, to see a potential transaction.
Brian Cohen:It's a lot. That's a lot. It's a lot. So you knew you were going to get your number for this guy because you knew you were going to be able to create a bidding war. By the way, it's not too far off from that, it's just not the way it was then. So one of the biggest mistakes I see, corey, is this is I talked to an owner. Yeah, we're just going to wait for the market to come back. Come back, there were nine things seven, eight, nine things that all lined up to have the craziest two years in this space ever. That's the role of the dice you're willing to risk on. If you had dice in your hand and you need to roll three rolls in a row, I need a double, one, double sixes and some other doubles. That's what you need to happen to be able to get those multiples, because that's basically what happened. Right, that type of gambler If you are, god bless you.
Corey Berrier:Here's the dice. There's a lot of them, I guarantee there's a lot of them.
Brian Cohen:It will happen eventually, but I don't think it's happening next year. I don't think it's happening the following year. I don't know what pandemic is happening next year. If we're going to be essential services, we're going to go through this with 0% interest rates, where people don't know if they're ever leaving their homes and everybody's working from home. Now the work from home thing is I don't say it's over, it's shifting the other way. Business is saying get your ass back in the office. Right, yeah, that's right. So it's changed.
Corey Berrier:Yeah, no, I totally agree with you. And if these guys are stuck on, I got to hold out for the next pandemic, so to speak. Look, it's probably not going to happen.
Brian Cohen:No Three, it's copyright. The only time you get hurt in a scenario is this you don't do a deal and the marketplace goes down from here, which, by the way, it's already gone down from last year to this year. Yeah, you go into an election year. If the wrong political party looks like they're going to win again, it's not going to go up. You're going to form more years of the shit we just went through and my feeling is you're going to get a lot of these owners that rolled and they're going to realize I don't want to go through this for another four years. And now you're going to get a lot of guys that go to market and nobody thinks it's going to happen to multiple. When this many people go to market and the buyers now have a feeding frenzy, I don't think multiples stay the same. I think they shift down. That's right. So multiples are still there, maybe just off the high. You get your call me, we get your deal done.
Brian Cohen:Now what's the worst thing that happens If the market goes down? Thank God, you got paid. You got a private equity partner with a big checkbook behind you to go ahead and ride you through the storm Right, if the marketplace goes up. You got paid Big deal, so did your stock, because you're going to have stock in the portfolio anyhow. You hedged your stock. By the way, if you do a deal and the marketplace goes down, isn't more money made when the market goes down? Right In recession, russians is close to Ken Goodridge.
Brian Cohen:I've said this before some of the greatest things when the marketplace going up and everybody's kicking ass, everybody's a genius. You want to know the real genus is our goal. You can see who's kicked ass. When the marketplace goes down, so that's right. What will happen? And you got paid and the marketplace goes down and everything around you is on sale real estate, commercial property, you name it. You got this big checkbook to go ahead and really pick some stuff up. Here you're going to be when it turns back up. I feel about this man. So it always surprises me when people talk about wanting to wait. There's never really a wrong time to do this deal. It's only going to be wrong if things go down.
Corey Berrier:And now you're selling out of fear For sure today is the best day that you can do it. It ain't going to be tomorrow.
Brian Cohen:And what I say is this when you call me, you're not calling me because you're saying, hey, brian, I want to sell my business. You're calling because you're interested in exploring what this looks like. You have to know what your business is worth and, by the way, we do these free evaluations all the time You're in the training space you walk into two different types of businesses. You've got a guy who's doing $5 million in revenue. You've got a guy who's doing $20 million in revenue. The decisions they're making are two different decisions in a lot of situations. Do you know? Sometimes the $20 million guy doesn't realize he's worth $20 million and the $5 million guy thinks he's worth $15 million. Now, that doesn't shock me. So the $5 million there's different decisions. You get this $3 to $5 million in revenue. That's where these guys are most profitable, because the owner doesn't really have to have a general manager in. When you start locking in your GM and some of these other fixed costs that have to happen month in and month out because you need it for an order to grow, yes, your profitability drops off. It's just how it's going to work. You've got some overhead there that you don't have at the $5 million mark.
Brian Cohen:So make a decision you want to stay at $5 million and be the most profitable ever, but you're going to be potentially an owner-centric business. You're going to have to be there working a lot, or you're going to build a business that you know. Are you going to work in the business or on the business? That's right. Right Can't do both. You can't right. Make a decision on which direction you want to go. And, by the way, there's nothing wrong with hiring the wrong person. Right. Hire slowly, fire quickly. Get the right. That's right what they can wind up doing for you. What's the growth look like? Are they hitting the goals? Like put it together, put a game plan together. Don't just hand somebody the keys and say you know, go ahead and figure it out.
Corey Berrier:Right, you have to take responsibility Ultimately. If you're the owner, you're still responsible for whatever happens. And yeah, you're right, people make bad decisions on hiring all the time. And it's not the end of the world. But you got to quit. You got to correct that as fast as possible. Don't be one of these guys that I've seen who just let this individual bleed them dry because, well, I just don't. You know, he's got a family. Well, I don't want to fire him. Well, you're the one taking the hit, dude, you're the one that's suffering, and your employees are suffering, your family pays for it, your checkbook that's right.
Brian Cohen:Right, so there's that term right, and I'm sure you've talked about it. Fail forward fast. There's nothing wrong with making a mistake. How do you think marketing is done? Big picture, how do you think marketing and advertising gets done? You think they create, they sit there for a million years and put the ad together I'm not talking about Nike, by the way, right, and this ad goes up, you know, with a call to action, and it just works all the time. A B test, then the winner of the winner of that it goes into a new A B test and a new A B test. They're failing all the time. That's right and that's how they succeed.
Brian Cohen:So, if you can go into it, that mindset is say fuck this up, excuse me, we're going to screw this up, right, but that's how we're going to learn. Okay, it is what it is. How you know, how do your, your salespeople, you know, how do your techs. All these people learn is through experience. Well, how do they get there? They listen to people, they screwed some stuff up. They don't make the mistake again. That's right.
Brian Cohen:I mean, I'm sure you, yeah, I, I, obviously you and I from two different perspectives. Because I rip my hair out, it's just easier to shave my head. It's not the hair on anymore. You still got your, so you're doing your thing. But, yeah, I drive you nuts, right. When somebody hires you. They got to have the ability to sit back and say, all right, I'm bringing you in for a reason. It's time for me to take a step back, because I'm not where I want to be, and sometimes being that honest and ruthless with yourself is incredibly, incredibly difficult. Service Titan. This last week, one of these speakers talked about you know being wrong and it's okay to be wrong and accept I'm not perfect, right. And then I read another thing that was put up. Who was that?
Corey Berrier:by the way, cause this is going to be ironic if you say who I think it is.
Brian Cohen:I forgot who did it because, listen, there was a million speakers going on Again. It was another interesting one that I saw yeah, part of, and then I saw a post I don't know if it was Cassie and Leslie who do the the women's podcast together and I think in one of the things on Facebook it said you can be right or you can be happy.
Corey Berrier:Like yeah, how many times do you have to ask yourself for that in a marriage? All the time.
Brian Cohen:Right Like same difference If war, right, right, am I going to? How long do I continue to pound on the square peg to get into the round hole? Right, cause your way doesn't have to happen? Okay, this doesn't work, let's figure out a different way. That's right. And with you, they're going to help you do these things too. Right? That's right, and I understand what you go through, along with everybody else.
Corey Berrier:Well, and you know, and don't hire somebody because you need to fill the spot, like it's okay if that spot stays empty until you find the right person, cause, believe me, you're going to pay the price by just shoving somebody in there temporarily, and they don't wind up being temporary, they wind up staying there for way too long, and it's so damaging, right?
Brian Cohen:Or again, just be honest with yourself. Listen, guys, this is, you know, to your, this is not going to be the best hire. I need right to fill this hole. This is what I have to do for now. I understand it may not be longterm. I got six months to work with this guy to figure out what the next, you know, whatever it looks like Like.
Brian Cohen:Again, you got to be honest with yourself. You got to be honest with your team. It's not always great. You don't always have to be right. It's okay with being wrong and, by the way, you have to trust. You got to trust yourself that you can make the right decisions Right. Somebody needs I need a trainer in. I'm not where I need to be, but that's not a sign of weakness, that's a sign of strength.
Brian Cohen:I think part of the problem that we've seen over the last number of years is is that men or business owners? Because there's women in our space too. So I don't want to say the door, you have to be right all the time. That's bullshit. That's absolute bullshit. If you're right all the time, you're not taking enough risks, right, right, you're not. It's easy. If you're right all the time, don't make any decisions, you're right all the time. The one you're gonna make, you're 100% gonna be right. How many of the opportunities did you miss because of that?
Brian Cohen:Right, it's okay to sit with your team and say, hey, man, man, man, man man made a mistake here. I think they'd appreciate the vulnerability more. Right, 100%. Look at your people that you've ever worked with Some of your best leaders. They were the first ones to admit when they were wrong and had a plan to change the direction they go. Okay, this is not going in the direction we need to go in. Hey guys, I made a mistake here. I screwed up. Whatever you, however, you wanna present it. Boom, this didn't work. Okay, let's shift and move, that's okay.
Corey Berrier:Yeah, Dude, I look, I can tell you right now. I agree with that 100%. The more transparent that you can be with your team, the more honest you can be, the more vulnerable that you can be. You are gonna get there by, and this is why Because everybody has the same shit that you have. Everybody has issues in their life. Everybody makes mistakes, but the guy that can admit when he can make when he makes a mistake is unlike most people, because most people won't admit it.
Brian Cohen:Well, some of the characteristics. Yeah, you're absolutely right that I see, with these really good teams and again I'm in these meetings when there's a general manager who can't wait to pound his chest, talk about the growth that the team brought in that year, or that, hey, we were 15 million last year and we had 19 this year, or we went from five to seven million Like the pride they take. If you can find those type of people that are committed to growing the business and everybody winning, and what could I do to help everybody win today, I think you're on another level. No, not to say that I have selfish people that don't wanna make their shit happen. For them it doesn't happen too. But you got the right mix of those type of people and wow. But you said something important.
Corey Berrier:You said if we did right and you can tell, you can tell by people's language If they are the leader or, I'm sorry, if they are the person, that has to take all the credit, because it's really clear, because it's I or my, but it's not the team and you sit in with these owners, right, and you see the two different types, and I can only imagine when you're with an eicentric owner, right, everything has to run through them how difficult it's got.
Brian Cohen:You almost have to break them, yeah, and I can imagine this. It goes on the time that you're there saying, if you want this to happen, right, you gotta give up the control. And ultimately, what does that mean? You have to trust your employees. You have to trust your people that they're gonna make the right decision and do the right thing. So then the next question is, if we really wanna go deeper for a moment, do you trust yourself?
Corey Berrier:Boom, I was literally thinking the exact thing. You're absolutely Cause. You think about this when you make an assumption about whatever that's you. That's you thinking because you would make that bad decision. If I assume you're doing XYZ against me or not for me, that's because I wouldn't be doing that. Does that make sense? Hopefully I said that right, yeah 100% Right.
Brian Cohen:Right Cause I know I make the same dumb decision. Yeah, right.
Corey Berrier:Absolutely. And he does come down to trust him yourself. Dude, you're spot on. This has been dude. This was such a good conversation. I don't know that I've gone quite this direction with anybody before, but this is what people need to hear.
Brian Cohen:I appreciate that. I understand business owners. Go talk to anybody we've done a deal with and say hey, if you're hung out and talk to Brian Cohen, what's he about? I give a shit, I want my guys to do. Well, I know the problems they have in their business, right? Who you realize they don't have a lot of people to talk to. You know what I'm saying? How many owners have somebody patting on the back saying, holy shit, you're kicking ass? When I take a look at a business, I could tell if that owner is kicking ass. The compliment is legit, right? Yeah, I see the numbers. It doesn't matter what size you are. I know what goes on in the business. I know who's running something good and who's not. You know that's right. So we see it. So it's a. You know, when you're at the top there's not a lot of people patting on the back. I see it differently, yeah.
Corey Berrier:Yeah, 100%, yeah, 100%. This has been such a fantastic conversation. Look, if somebody wants to reach out to you, where can they find you? Could you give us any information?
Brian Cohen:Yeah, brian Cohen, the easiest way is to ask myself one number, literally text me. Everyone has my number 954-226-3409, 954-226-3409. Shoot me a text, say hey, I heard you, with Corey, want to have a conversation, and I'm pretty receptive and then I'll get back to you pretty quickly. We'll schedule some time to have a conversation about what's going on. Again, not every conversation I have is somebody I'm saying hey, sell, sell Doesn't work like that. It works better for these owners make their decision they feel it's the right time for them. But if they don't have the information to make the decision they think it's the right time for them, then it's never going to be the right time. You know what I mean.
Corey Berrier:Right, and unless they ask questions from somebody like you, they're not going to have all the information Period, right? So you know, if somebody's listening to this and they think, well, I don't know if I'm, you know, I don't even know if this is worth me giving this guy a call or shooting this guy a text, you know we're only doing $2 million and I'm just asking. I don't know. Yeah, call you, doesn't matter, ok?
Brian Cohen:I like it. Listen what's the worst case scenario the $2 million guy's not going to get the number that he wants. At least to get an idea what his business is, I have information to give to folks that are smaller and how they should be handling the books and being gap compliant. I have a thing called the two to five year plan and that $2 million guy today is five plus million dollars in a couple of years. Right, and they appreciate the fact that I had the same conversation with him that I did with a client that's $100 million.
Corey Berrier:And now they got a relationship in two years, when it is time to sell Right, and I'm here as a resource for any questions.
Brian Cohen:You know I'm Switzerland, right? When somebody's having a conversation, ask me anything, I'm going to tell you what's up, right, yeah.
Corey Berrier:Absolutely Brian. I appreciate you, my friend.
Brian Cohen:You got it. I appreciate you as well. Thank you very much for pushing to get us on a call together, Dude. This is great I really enjoyed it.
