Rob Parker
speaker
1,301 appearances
75 recordings
5 series
first heard Nov 2024
last heard 29 Aug
Rob Parker’s voice in public audio — every appearance, attributed to the second.
Trend
recordings per month · last 12 monthsRecordings per month over the last 12 months — 74 in all, peaking in Aug 2026 with 42.
Appearances
Well, especially if you're going to roll. You want to have the right fit, the right partner, the partner that shares your vision, that sees the world the way you see the world, that wants to grow the business the way you want to grow the business, that will treat your people, your customers, your suppliers with the kind of respect that you have.
So taking time in the process to get to know these groups, see what their vision for growth looks like, and make sure that fits with yours is very important if you're going to have a good partnership. I agree.
Yeah. So a quality of earnings is an accounting analysis or review of a company's financial statements. So it's not an audit. It's not that detailed. It's not necessarily the same as an audit, but it's a review of the numbers and an assembly of the numbers in a format that a buyer would actually be underwriting.
So number one, it's a scrub to make sure the numbers are accurate and they're being reported the right way. Number two, it's making sure they're compiled in a way that the buyer can actually underwrite. So for example, a lot of private business owners might have some personal expenses that they put through their business.
Well, those personal expenses will go away when they're no longer the majority owner. So something like that can be added back. There may have been a one-time item that occurred a year before, two years before, that's not going to recur again. That's an expense that can be added back.
So they look for those sorts of adjustments to get the most accurate representation of the actual earnings that they're looking to buy.
Yeah. It's important to have audited financial statements when you have leveraging in the business. So a bank is going to want the statements to be audited for a couple of reasons. One, because it's an assessment or a judgment that the numbers have been accurately prepared and compiled and the CPA firm, the auditor, is rendering an opinion.
So they're signing their own name that these numbers are represented accurately. So that's important for a bank and important in a leveraged environment, which is what you'll have most likely when when you sell your business. And, you know, one thing I just, a point I want to make about this, we're spending a lot of time talking about financial metrics and financial statements.
And that's important because that is the output and it's the metric that a buyer needs
it's like the scoreboard and it's what a buyer needs to look at to assess what they're willing to pay for a business but just a reminder to everybody all financials are is the output from everything else that goes into the business operating the company efficiently driving leads converting those leads what's your average ticket once you've made that conversion all those things that make a business great
That's the part that really matters. The numbers are just the output of all those things. So the numbers are important, and it is the metric that a buyer will use, but you have to tell the story behind the numbers. That's really what matters is the story behind the numbers, not just the numbers themselves.
Just different nomenclature. So the SIM is Confidential Information Memorandum. And there was a time in our world when those documents were driven out of Microsoft Word. And they were like books, literally like a book. Very wordy, very lengthy, a Word document. And we called them a memorandum. The industry made a conversion some years ago to PowerPoint. A picture is worth a thousand words.
So these presentations today are far more analytical, more graphs and charts and those kinds of things that, again, support a story, less wordy. And as it converted to PowerPoint and that kind of a style, It went from memorandum to presentation. So SIM to SIP. So Ken's not wrong. We sold Gettle for Ken, had the fortune to work with him and with Baum Capital.
When we sold Gettle, we may have called it a SIM back in those days, and it would be a SIP today.
Yeah, I mean, there are software applications out there that can help companies in very weather-dependent sectors like lawn care or roofing look at where the weather patterns are going to be and help you decide how you're going to sequence your jobs that day based on weather. So these tools are very sophisticated in terms of running the business.
The other thing they've done is these really great ERP systems that are dedicated to the home services industry allow companies that have traditionally been very localized, very local, advertised on the radio and in the yellow pages, support the local little league.
It allows these kinds of businesses, when you have a good ERP system that's tracking good data and keeping good metrics, then you can scale beyond just your own local market
And that's how, that's really been, as Eric said, it has really been revolutionary in terms of letting private equity come in and say, okay, I can take a business with great sort of local economics and I can scale it and I can manage that business now because of these great ERP systems.
Yeah, so, well, leverage can be a very powerful tool, both in a good way and in a negative way, possibly, too. And if you use a simple example, so let's say your company's bought for $100. Those $100 all go into your pocket, every one of them. Well, let's say the PE firm that bought your business for $100 provided $50 in equity, $50 in debt.
Let's say you want to take $10 of your $100, so you've got $90 in your pocket. You take $10 and put it into the deal. You don't own 10%. You own 20%. You're 10 of 50. There's only $50 of equity. So that's the power of leverage. You put $90 in your pocket and you still own 20% of the company. So leverage can be a very powerful device that these firms will use.
Showing 1201–1220 of 1,301 · page 61 of 66
← Previous
Next →