Show notes
A little behind the scenes on the thought process of what we did and why.
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---Transcript---
What's up everybody. This is Russell Brunson. Welcome back to the marketing secrets podcast. So today I'm excited because we officially just purchased our first company, which is crazy. And so I will talk to you about that today, what I learned and some things that might help you along your journey as well.
All right. So I can't tell you all the details yet because we're still... I don't know, we'll officially announce it to the world, what it is, why and all that kind of stuff later. But we finished signing all the paperwork today, which is crazy because two days ago I had to sign 96 signatures and there was like another like 20, and then there was a couple more. So it's like over a hundred and something signatures I had to sign to officially get this company. And it's exciting. It's our first ever acquisition.
Now I bought a lot of things in the past. Right. I bought traffic secrets. We bought mastermind.com, I bought bootstrap, salesfunnels.com. Like we bought really expensive domains, but not like full, active acting businesses. Right? This is the first time where it's a business that we purchased that has huge cashflows and all sorts of crazy stuff.
And I wanted to share with you guys just because hopefully it gives you guys just a different way to look at business. It's definitely given me a different way to look at business, which is one of the reasons why we did this. And a lot of you guys know my philosophies and principles on business, right? That's what we talk about all the time, that's what my books are about. This is what my podcast is about and there're different ways to grow a business, one way is that the more traditional where you get an idea, you get a bunch of investors, you raise money and then you go and you create something cool. I hate that way, as you know.
So we are the bootstrapped way, which is like create something amazing and then create fronted offers that self liquidate to bring customers in. And that's the bootstrap model we've been doing that, I love. But there're other ways to grow a business as well. And this one I wanted to talk about, because this has been something really, really interesting to us, and I'm not going to share all the stats, the numbers and all that kind of stuff. Partially because I don't know if I'm legally allowed to partially because I don't know the numbers I wasn't involved with all of the day-to-day because I'm no longer the CEO, Dave did all the work. I've just had to sign a million times. So I wanted to give you like some structural concepts to think through that were really, really cool for me.
So part of my understanding of this dates back to about a decade ago, I was actually at a mastermind meeting in Mexico and sitting next to this dude and he is different kind of business person than me, right? Like I'm like startup guy, start a business, grow it, scale it, launch it all that kind of stuff where he was like, he told me, he's like, I'm not an entrepreneur, you're an entrepreneur, you start stuff, it's amazing. I'm in mergers and acquisitions. And I think he had bought like 60 or 70 businesses and bought and sold and made a ton of money. And so I was trying to understand them. I'm like, so you never started a business? He's like, no, you guys do that, that's way too hard. He's like, what I do instead, is I find entrepreneurs like you, and he's like, what you have to understand...
And I'm probably going to mess up these numbers but this is just illustration purposes. Right?
He said if you look at your businesses, right, he's like at a certain level, let's say you're at like $3 million. He's like, you're only going to sell for like a three X multiple. Right. So maybe you'll get 9 million for it. He's like, but at $10 million you'll sell for a five X or 10 X, multiple or whatever it is. Right? I don't know. But like this was what he was explaining to me, okay.
He's like, so right now, let’s say your company's making $3 million, like best case you're going to get three X and it's probably closer to three X net. But anyway regardless, he said, so what I do is like I find three or four companies that are each doing $3 million a year. And they're each valued at three X, let's say. He's like, and I buy all four of them or all three of them. Let's say it's four companies at 3 million each bundled together. He said, now because the revenue of this new company is now $12 million. He's like, I can sell that. So I bought it for three X, but I can sell now for six X, for 10 X or whatever it is. It's like, that's all I do.
I just find a market. I want to be in, I find three companies that are selling it three X. I buy all three of them. I bundle them together and now they're worth five X or six X or whatever it is. And I flip them and he's like that's my business. He's like, so I have these entrepreneurs like you guys who are geniuses, who will start launch these businesses. And I just come in as the acquisition guy acquire three or four of you bundle you together and then your value goes up because of how much more you're worth. And that was his business. And I was like, oh my gosh, this is crazy.
And so it's been interesting over the last 12 months, with click funnels I try to understand, what are our evaluations, how do things work? What are we actually worth? In my head we're worth like 10 billion, but we're probably not in real life. And so it's interesting because... The evaluation game is annoying me because there're tons of ways. Like some companies evaluate off top line, some are just off EBITDA, somewhere are off whatever. But let's just say for example, let's just say click funnels is worth 10 X, our EBITDA. Right?
And I don't even know what that is. Let's say it's $50 million. So that means 50 million times 10 would be worth half a billion. Right? And so by us acquiring this company, let's say that company has, I don't know, $20 million EBITDA. Right?
I'm messing these numbers in my head, but regardless, let's say we spend, I don't know, 20, 30, 40, $50 million in this company, we buy it. Right? And we plug it in. But then the EBITDA, let's say the EBITDA they had is worth $20 million. Right? We plug that into our thing it increases our EBITDA $20 million times of 10 X valuation is 200 million. So maybe we spend, you know, whatever 40, $50 million buying this thing. But the value instantly adds for our company is a hundred million or 200 million or whatever it is. Right? So instantly just by bundling the two companies together, our value goes up way more than what we actually spend for it.
So that's like the first thing that's really, really interesting that I had never considered until we started doing this deal. Right? It's like, oh my gosh, even if like we never make our money back the value of our company dramatically goes up because we're adding all their revenues and their profits to our bottom line, which is like fascinating. And then from there we also get the customer flow and the lead flow and the cash flow and like all the other things that come with building a company or buying a company as well. And it's just, the synergy is really, really interesting.
And so anyway, that was again, our first acquisition, and now we're finishing the process. We literally finished it today, which was crazy. It got me excited to start thinking like, okay, what other deals like this are there where we can buy company for X amount dollars. We plug it into our, our beast, our machine and it instantly, whatever X is the value of our company, but then also get lead flow, customer flow, cash flow, all other things as well kind of come in.
And it's really interesting and fascinating. So anyway, just a different way to look at business that I wanted to kind of share with you guys because I've already had a lot of people, like, why are you buying a business? Why would you do that? All the things that kind of come with that. And I want to share that because it's just a different perspective I hadn't thought a lot about prior to 10 years ago when I met my merger and acquisition guy. And so I would look at that for you guys' own businesses as well.
Like think about is there a business that in your market that you could acquire that you could bundle together. All of a sudden now you get more customers, you get more traffic, but also you're adding to your cashflow, right? Like you buy the company, doubles your cashflow and now it increases the value of your company because now you're in a different bracket of what businesses are selling for and trading for, that number. And then it kind of goes from there.
So anyway, it's an interesting game. It's a different game than I'm used to playing. I'm much more comfortable in the whole, like let's build a company and grow it and scale it through paid ads and organically without taking on any VC money. That's the world I understand. And this new one of like mergers and acquisitions is fascinating to me because it's going to get us to our goals way faster.
My goal we've talked about a lot. My goal is a billion dollar evaluation. My goal is take over the world, change the world, all these different things. Right? And it's just getting us there faster. Hopefully. I mean, honestly, I'm like 30 minutes into owning this new company and I have no idea. Maybe it'll actually turn out really bad. Maybe things fall apart. I don't know we're going to find out, but I'm hopeful. I'm excited. I think it's going to be a really cool opportunity. And so as we move forward, I will share with you guys in the podcast here, behind the scenes of what we're doing. When I'm able to, I'll talk more about the companies and how they're synergistic and how we're using their lead flow and how we're using their funnels that we're acquiring and how we're using us in the backend and how we're... Just all the other fun things.
Honestly, in my head, a lot of it's, not vague. Like I know a vision of where I'm going with things, but we're going to be actually executing on it and I'll be sharing the vision with my team and with everybody over the next little bit. And it's exciting. So anyway, it's a fun time to be alive. So many fun things happening. I hope this episode just gets you thinking a little bit differently. Who could you acquire? And if not acquiring, there's also like licensing, there's three or four deals right now where we're going to existing companies that have really good content or software things. And instead of acquiring them full out, because maybe they don't have the customers or maybe they don't have the lead flow or maybe whatever, there's a million reasons why instead we're just doing licensing deals where we're licensing the technology and plugging it in and then we can start selling it or licensing their intellectual property, licensing things like there's a lot more fun ways to grow businesses than just the traditional stuff.
So, anyway, I'm curious if you guys are interested, would you want to know more information about us buying companies, would you like more information about licensing? Like what would be the things that you guys would want me to go deeper on? I'd love to hear it, let me know. The best way to do that is actually take a snapshot of this podcast episode, post it on Instagram or Facebook and tag me in it and then post in the comments. Like what else you'd like to know? Like what would be other things that you'd love to hear more about?
So anyway, I hope that helps. I'm going to go bounce and have some lunch and celebrate the acquisition of our new company. I'm so excited. I just wanted to celebrate that with you guys right now and help you understand a little bit reasons why. And like I said, over the next few months, now that you have context I can share more the insights, details, and other cool stuff as well. So that's it, thanks so much, and we'll talk to you all again soon. Bye everybody.
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