EP14: Buyer Negotiations, Team Structure, and Balancing Life and Business with Nate Ginsburg

In this episode, Michael talks to Nate Ginsburg about his experiences selling and buying businesses, yoga and staying healthy as an entrepreneur, and what Nate looks for when investing in or buying a company.

GUEST BIO:
Nate Ginsburg is a successful entrepreneur, investor and a passionate yogi. After successfully building seven-figure businesses on two different continents, he now teaches people at SellerPlex how to use the best online techniques and marketing methods to build a successful business, make money online and save themselves a lot of time and effort.

QUICK LINKS
Nate Ginsburg’s Website
SellerPlex

SKIP TO THE GOOD PARTS:

SHOW TRANSCRIPT:

Nate Ginsburg 0:35 Hi Michael, thanks for having me.

Michael Bereslavsky 0:37 This is the first time we are doing a podcast in person. So thanks for joining today.

Nate Ginsburg 0:43 Glad it worked out with both of us here in Chiang Mai, Thailand.

Michael Bereslavsky 0:47 Yeah, I know your first business was a big ecommerce site. So tell us a bit about that. How did you get started? How did you sell it?

Nate Ginsburg 0:58 Yeah, so my story. I first got into ecommerce selling on Amazon, this was in 2014 I think. The end of 2014. That was the first business that I had that really got some – more than a little bit of – traction. I remember like the second half of the first year that I was selling and sales like doubled consecutively every month, like up to the holidays and when we finished like over $100,000 a month in sales, and I was really excited about this. So the business was going really well. I mean, it was growing…our revenue numbers were good, but…as many of your listeners probably know, ecommerce businesses are quite expensive. Expensive to run and, you know, business was ramping up and our sales were growing, but most of us went back into the business and you know, like my personal bank account wasn’t really growing the way that I thought I wanted it to be And it was around this time that I was just kind of, you know, in touch with a good friend of mine, Travis who had, I guess recently around that time was selling his software business, and he was looking to get involved in some other businesses and I was open to help and you know, also looking to put some cash in my pocket and so it worked out that, that I found an investor selling him a little bit less than half of my business. And so, you know, my first experience, you know, buying and selling or partnering or investing was being invested in and, you know, fast forward and how many years we had the opportunity and sold that business, which was an overall a good outcome. And yeah, then, you know, after that it kind of got me thinking about all these different existential questions. You know, what do I want to do what am I good at? And I had had this experience from personally an overall very positive experience you know working with…you know taking on investors/partners…so like I’ve got some more cash a little bit more story and kind of credibility to you know, like I’ll see if I can explore some opportunities like that. Fast forward…I’ve had a couple of those deals we’ll talk more about that as well as well as you know, kept my team that was supporting my business, helping others to achieve their business.

Michael Bereslavsky 3:50 That’s pretty cool. So let’s dial it back a little bit to that first deal with Travis. So he bought a little less than half of the business. How did you structure the transaction? How did you first decide the value of the business? What was like a structure, what would he do? Would he be

Nate Ginsburg 4:13 So, good questions. Admitedly, some of these things we thought about at the time. Other things have, Travis and I both learned as we both go on to do you know, subsequent deals after that. This was my first and Travis, you know, early in his he’s done a lot of deals now. Looking back like we did some stuff right…we learned some things. But yeah, at the core of our investment partnership was really a, you know, mutual, you know, trust and…friendship, and really like understanding that we both wanted this to work out. So, you know, this deal would not have happened if it wasn’t for our personal relationship. So a lot of the things were pretty…you know, we were kind of just figuring it out as we went. You know, I had fortunately on my team, I had a woman – who is still with me now – who handles our finances…and so we had a decent idea of what our numbers looked like, you know, as the first place for a valuation.
Michael Bereslavsky 5:36 So, how did you decide the value first? Was it basiced on a multiple of your sales? Your profits?

Nate Ginsburg 5:41 Yeah, I mean, if I remember, right, it was roughly at like a 2x and also at this time, I mean, you know, Travis was the one who was really leading this, you know, negotiation, or conversation. I think basically, like I showed him what our numbers were and something I think he just kinda made an offer. And, you know, I didn’t really know I don’t have much of a comparison. I mean, I, you know, knew that it wasn’t trying that, you know…he wasn’t trying to rip me off, you know, he wasn’t trying to like, you know…my belief at the time, that remains that like he was looking for something, you know, more or less fair. So yeah, I think it was at something like roughly 2x, you know, plus some money from the value of inventory. So some of the things that we did well from that one, kind of looking back was again like the foundation of, you know, mutual trust and respect. And that like, I wasn’t trying to, like, you know, hide something in the business that he was going to get screwed over and he wasn’t trying to pull something on me and that like, you know, we were and remain friends and so we both wanted it to work out. Something that we didn’t account for that, I mean, I’ve since learned although, made the mistake again in the next deal that I did, was really was not accounting for a salary for the owner, or the person that was running it, in this case me. Which, you know, the person who’s running the business should be getting a salary. That’s like, I mean, also, like, you know, I think also for tax…based off of tax reasons as well, the person that’s running the business, you know, should get our fair market salary and, you know, when we went through it we there wasn’t a salary that was for me as a person that remained to run it, I mean the value to the business without taking into consideration a salary…and, you know, later, fast forward the business was going well, and like I ended up getting a salary. But yeah that, you know, one lesson that should have been included in the original discussion that you know, now I mean, now I know that like that, that’s important.

Michael Bereslavsky 8:08 Yeah, I think it’s always like that. I remember my first deals, I just agreed on price thats it and we went forward but then later realized there were so many things we should have discussed and put in writing. It’s important that happens from one deal to the next you learn what are all these details that you have to pay attention to that you have to really have some clarity. But as long as there is the foundation of trust, that’s a great thing. Trust is really important for making deals.

Nate Ginsburg 8:40 Yeah and I can say, you know, so after that deal being invested in and then after, selling my business I’ve now invested in and bought in four other businesses three of them in a kind of similar dynamic where I was, you know, partnering with someone that I knew personally and, you know, with those like, all of those deals, like you know, we’ve definitely learned some things and things are, you know, generally structured better, there have been lessons and things that we’ve improved on. But all of that is still at its core is this foundation of, you know, trust and also like, just like, I know, Travis wanted with me and what I want with other businesses, like, genuinely I want us both to win, I want to get a good outcome, but not at the expense of, you know, I mean, also when you’re investing in versus buying, you know, your partners, it’s not like us versus them or me versus you, in order for it to be, you know, long term like it has to be working out for us both and if it’s not I think that needs to be addressed because that could derail the whole business.

Michael Bereslavsky 9:56 So let’s go back to when Travis invested. Would he be involved? Would he help do some things or…

Nate Ginsburg 10:05 This was something that we could have and should probably had more discussion and clarity around at the time and, you know, it was a little bit ambiguous and, you know, we were just kind of talking, you know, this kind of happened over the course of you know, I don’t know a handful of weeks or a month or something. We both living in Vietnam and you know, we’d kind of just like discuss things every couple of days and you know, discussed this and I come back with this and that…so, we never really like that deal was done overwhelmingly on a handshake. I think there was like a loose kind of term agreement, but it was, you know, do you agree? Like OK, heres my bank info. Alright, awesome.

Michael Bereslavsky 10:59 That’s perfect.

Nate Ginsburg 11:00 It’s worked out. But some of those like your questions specifically around Travis’s involvement…it wasn’t really…I realized after the fact that there was a little bit of…we weren’t exactly on the same page and, you know, I realized that I was…there were certain things that I kinda thought getting someone involved as a partner like this is going to be like someone where, you know, I was thinking about this business and excited about it every day and we’re chatting back and forth and…and I mean through combination of things. Like just going you know, just kind of who Travis is as a person, what his tendencies are…and I also just realized this was my big thing, this was like, a thing for him and again, it wasn’t really explicitly discussed…I retained majority ownership and, you know, decision making. So it was still my business…the decisions were still you know up to me…we didn’t really get clear or discuss you what Travis’s role looked like.

Michael Bereslavsky 12:25 That’s very common with first deals. We see that every time. So, I hear those stories every single time that people go buy a business or get a partner and then they just figure things out and then they realize that there are so many different things that they should have discussed…if you could change just one thing would it be just getting some clarity?

Nate Ginsburg 12:50 Well, I can say I mean it all worked out fine in you know our instance and I you know, fairly quickly you know, just accepted or came to accept what the situation was, which was also fine. It wasn’t like he was like, you know, see ya, it was just there was some, I guess, you know, I thought maybe he was going to be a little more involved, he thought a little less and it ended up just kind of working itself out. That’s something that now and in you know in subsequent deals it’s been much like now I’m much more clear about what my role is and what it isn’t and so, you know, I have learned to, you know, explicitly address these things and be like “this is what I’m willing to do for me personally” with deals that, again, I got invested in or partnered with we’ll do you know, calls every, you know, every week or two, you know, I want to be involved with high level strategy, quarterly planning. You know, always trying to, like make useful introductions and biz-dev and connections and partnerships and, you know, that’s all stuff that I am not just willing but I want to contribute in those ways…also I’ve been able to leverage some of my team to to also add value. So some things we’ll do is help with, like hiring roles, some SOP process type stuff that I know my team, you know, has these capabilities as well as finance services, or some other back office, foundational things that I know that I’ve got the team can do and so like, those are things that I am willing to help with and you know, in deals since then, I’ve learned to be really explicit about them and like listing out and I mean…most of these deals that I’ve done are…I mean it starts with a term sheet and listing out those things like okay, this is what I’m bringing and this is what I’m expecting and, you know, for them as well. So yeah, I have learned to address the things more as opposed to just trying to figure it out as we go.

Michael Bereslavsky 15:12 Yeah, that’s a really good point. So this is something we do as well. There are some deals we do have where the seller or owner stays on and some where we partner and continue going and we always make sure that we have a lot of clarity about obligations about responsibilities. So we will generally look at all the different pieces of the deal, of the puzzle managing, growing, marketing. We will typically decide from our perspective, how much time, how much effort are we spending. For different departments in the company, or for example, myself or some other managers.

Nate Ginsburg 18:50 Yeah, I mean, I think aligning incentives and incentives in general are really challenging. I mean, they’re really challenging to get totally right and, you know, that’s sort of like the, you know, I guess all the deals that I’ve been a part of in terms of partnerships, like, at the core, it was this foundation of, you know, trust, you know, people that were, you know, friends personally. We’ve changed different deal terms after the fact that, you know, we, of course, both agree on. But, you know, ones that even as, as an investor, like there was one that we didn’t, actually two of them, well, different situations, but we didn’t include, you know, there wasn’t enough salary included, like you’re talking about before. You know, the business was going well. So it’s like, okay, you know, sure. You should have a salary of like…that was actually worse for my, you know, ROI, you know, just looking at a cash basis, but like, also probably in the best interest of the business long term as a whole and so, you know, continuing to have conversation. We had an agreement, but also revisiting it if necessary. Because yeah, getting the correction incentives is really hard.

Michael Bereslavsky 20:27 Yeah, they’re hard. There has to be structure. You cannot always discuss everything, you can not have everything like…cover every single scenario but there has to be a structure that makes sure that the incentives are aligned with what’s best for business.

Nate Ginsburg 21:22 It was, I mean sometime in the next year, yeah, a year and a half. So it’s relatively quickly and after that was definitely a year of trying to figure out, you know what I want to do. It was kind of to two things. So one of them I thought that I wanted to get involved also as an investor. But then also I ended up through the deal I kept my team and started providing services with my team that I thought that was, you know, an asset that I had that knew how to run my business and I’m the kind of person that…I error on the side of delegating and I mean I love hiring I love team building and so I had built a great team that was taking care of, you know, many of those aspects of my business that I didn’t want to do personally. Maybe other people would also want you know, benefit from the services and so it kind of has gone down you know, two to paths one of them that as and, you know, looking to in the future continue to grow my, you know, the businesses that I’ll partner in in that portfolio, as well as now with my team, offering services to help other people have a smooth exit you know, sell their business easy faster and really optimize so that they can have you know, acheive similar outcomes that I was able to acheive also.

Michael Bereslavsky 23:09 So how did you sell a business first of all? Was it like a million dollars or somewhere in that range?

Nate Ginsburg 23:15 Yes.

Michael Bereslavsky 23:16 Did you decide to use a broker?

Nate Ginsburg 23:17 So our sale was, I’d say, not traditional, although I don’t know if anything is traditional. But basically it was the same buyer that had bought some businesses from Travis. We were basically I was in Vietnam and you know, was on the phone catching up with Travis and he just sort of mentioned that, you know, this guy might be interested in buying the business and, you know, one of the things and, you know, long story short, you know, three days later, I was on a plane to – the buyers was a big Chinese company. Three days later, on a plane to China, you know, meeting with this guy to, you know, make a deal. So, you know it all I mean it happened you know very quickly and again really fortunate that I had the team and infrastructure in place, especially when it came to the finances, that when I was you know, all of a sudden had these, you know, acquisition, you know, conversations and opportunities. Like I had a lot of the, you know, necessary information, just like, you know, accurate PnLs and books and, you know, keeping good records of our invoices and this and that. To be able to then, you know, when I had this opportunity, be able to, you know, give the buyer what, what he needed. So that’s one thing I really, you know, credit and you know, one of the first time is you know, realizing the importance of like…some of these pieces like this was my first real business like I didn’t, you know, I didn’t go to, I don’t an MBA, I was like, you know, really learning as I went, and thankfully had some great people on my team that got us on top of things that you know, we needed to be on top of that then when we had the opportunity allowed us to, you know, take advantage and, and yeah, you know, fast forward there was…I mean, the whole thing is probably like, I mean relatively short, maybe like less than a two month process. It all proceeded relatively smoothly.

Michael Bereslavsky 25:40 Nice, so that’s a pretty good deal. So you don’t have to to pay a broker. You were able to save like 15% and you had Travis help with the deal.

Nate Ginsburg 25:53 The buyer…we kind of like…kind of a 10% discount, we kind of factored in what would have been a broker fee and I mean this was also like…this was I mean a couple of years ago, and the buyer was really the one who was leading the conversation. That business, they bought a bunch of businesses. So, you know, I was basically there just trying not to screw it up. I almost did screw it up. But, ended up, you know, it ended up moving forward. But yeah, I was, I mean, I didn’t really know what I was doing. I wasn’t pretending to know what I was doing. I was there like, if the offer seemed reasonable, you know, that worked for me. It wasn’t about like, maximizing every single dollar. Well, I mean, you know, looking back also, I mean, it’s very well, you know, there probably was money left on the table, because we didn’t…you know, we weren’t planning for this. We weren’t, you know, now, I’ve learned there’s a variety of things you can do to like, you know, optimize your business value and your net income and to get a higher thing, but yeah, again, ours was, I mean, I guess the flip side of that is it happened very quickly. So I was willing to, you know, accept what they…I mean and it was, you know, I still think it was a fair deal. So, so yeah, the broker, the buyer did kind of get a discount of what their broker fees would have been, you know, I got a quick deal. All being said, it went pretty smoothly.

Michael Bereslavsky 27:38 That makes sense, they made it comfortable, the led the process, and they are experienced, so you didn’t have to go and do calls with ten other buyers and wait for a year. So they, it was a quick process that way. It makes sense that got a small discount.

Nate Ginsburg 27:59 Yeah, totally, and stuff that I’ve, you know, have learned now from, I mean, looking at say Warren Buffet and Berkshire Hathaway as the, you know, really high level examples, you know, realizing that when you’re making deals like the stuff that I’ve learned it’s like it’s really a deal between two people. It’s a person to person thing. There are a lot of different ways to factor in certain opinions or norms of how things are done. But at the end of the day, like it’s, you know, me and you like do we have an agreement, are we happy, and I think that’s what, you know, that’s at the core of what moves the deal forward. If you’re able to be comfortable with the buyer or seller, you know, you’re able to, as a buyer, if you’re able to, you know, make yourself comfortable, know that you know that you’re not trying to screw them over, and that you’re able to close quickly you know, you can definitely get discounts compared to, you know what other you know other valuations might be and I think that’s the trade off. It’s like you can offer speed and ease which there’s value to and in exchange you can pick some things up at lower than one some other people value them.

Michael Bereslavsky 29:27 Yeah, that’s pretty much what we do. This is our strategy as well. Like any private equity firm out there, they have capital, they have cash so they can go and do it quickly and that’s the advantage of just being able to come up to the seller and say “we know what we are doing, we have cash, we’ll do the deal quickly, but we can…we want to get slightly better price.

Nate Ginsburg 29:53 Yeah, and also, as I know, you’re well aware there are motivated sellers and sometimes people need the money for whatever reason, or they just want to get out of business and, like, it’s one thing that I think…I think a lot of people, when they think about doing deals or buying and selling a business, it’s like, you just kind of assume that the seller always wants the highest price possible and one thing that I’ve learned is that that’s really not always the case. I mean, price is obviously a factor. But there’s so many different situations that…and other things that people value when you doing a deal like selling a business, that yeah price is obviously an important one, but it’s not the only one and you can provide other things that they care about, for example, like we talked about speed, ease, you know, that you’re going to be a good steward of the business that they built and in my case when it comes to partnerships knowing that like I’m here to help and going to add value and like whatever the valuation that we agree on that I get involved with, like we’re only doing this because we both see how this is gonna, you know, accelerate from here. So of course price important but it’s not the only factor.

Michael Bereslavsky 31:21 Yeah, absolutely. We have quite a few cases where our offer was not the highest but the seller came back to us and told us that they are going to go with us because they know that we will be able to move quickly and efficiently. These days, so many buyers at every price level that are just not very professional they will send you some data or they follow up immediately and then they disappear and then they take like half a year to do their due diligence. That happens of the time, some of them expect to get a load and then they don’t get the load approved and suddenly you realize that you just wasted five months discussing it.

Nate Ginsburg 32:02 …and potentially, in those five months, you think it’s gonna sell. So you take your foot off the gas a little bit, and now the business has gone down. This is one of the things that you know, you mentioned it, I mean, you know, brokers are…there are some really good ones. But it’s tricky, you know, there’s a very real thing called, you know, deal fatigue, where something like this happens and all of a sudden, you know, the, the original agreed upon amount was x and then for whatever reasons, intentional or not, you know, things drag on and all the sudden this last six months later, and, you know, as a seller, you’re kind of worn out and so you’re willing to accept, you know, your willing to, and do accept a lower offer and, I mean, again, there’s a lot of factors that can contribute to this, but, but yeah, I think that’s like one of the reasons why, as a seller, you want to be as on top of your business you know from, you know, before you engage with your broker so that things don’t stretch on and things don’t, you know, you can minimize deal fatigue by being prepared before you list with the broker so you know that there’s not going to be all these messes that you need to get sorted and this and that and you can come with something that has a better chance of being sold quickly as opposed to dragging on and other you know, problems coming up and you know, eventually leading to a lower sale.

Michael Bereslavsky 33:33 Yeah, makes sense. So jump around a little bit. I know that you do a lot of yoga. How long have you been doing yoga and what’s the how have you managed to get such a big following on Instagram for your yoga pictures.

Nate Ginsburg 33:49 Well, thank you. Yes, it’s all it’s all relative. Yeah, I guess I started doing yoga in Vietnam maybe some five or six years ago. I’m also the kind of person, like I’m quite, I mean, I’m quite disciplined in certain areas of my life when it comes to my health, certainly one of them. So yeah, like, yoga was something that I…I mean I always enjoyed, being active and you know, liked exercising and yoga was something when I started that like was really hard. I’m, you know, naturally not the most flexible kind of person. So yeah, it was hard for me I remember, you know, doing some of these first classes and it was really challenging. I was struggling but like, I loved it. You know, yoga has been something that, you know, fast forward, yeah, five or so years and I just, you know, consistency and you just you keep going and you keep going and you start improving and yeah it’s one of like, one of the like most amazing and beautiful lessons from yoga that is, you know, so applicable to so many things in life. It’s just like, there’s no, there’s no end goal. There’s no making it, there’s no finish line. It’s just something that you, you know, you keep on working and you keep improving, there’s always something new, you know, that you want to work on and you want to improve. I’d say now, five years into it, like I’ve certainly improved a lot. There are certainly still a lot of areas that I’m still working on. Just like, you know, life or business. You know, speaking from having, you know, sold a business and, you know, I used to have some, you know, net worth goals or income targets and as I’m sure you have and many people like, you know, you move forward, you make progress. You acheive some goals but there’s still other goals and yeah, kind of like continuing to work, continuing to improve, you know, keep showing up and doing the work with the goal of just making progress. So yeah, yoga’s been a great. Yeah, has becom a pretty big part of my life and…

Michael Bereslavsky 36:13 How often do you train now?

Nate Ginsburg 36:16 So health is a pretty, pretty big part of my life. I mean, in Chiang Mai especially, you know, I’ve been doing yoga, probably five days a week.

Michael Bereslavsky 36:28 Like for an hour?

Nate Ginsburg 36:30 Well in Chiang Mai it’s a lot actually, because a lot of the studios here, and one of the reasons why I like Chiang Mai is the level of yoga, I mean, from my experience doing yoga literally all over the world, like in Asia, on average, the quality or the, you know, the average random participant is higher in my experience and like America or the case of Europe. Yeah, not only are is the quality of other people hi but the classes are long so in Chiang Mai it’ll be like an hour and a half you know this morning was an hour and a half class yesterday was closer to two hours and so they go long whereas in America it would be like 60 minutes but but yeah so it’s I mean it’s a lot of yoga also like biking has been something I’ve gotten really into that really helps me clear my mind and you know sort through ideas and yeah really been enjoying like, have gotten into cardio a lot the last year. Yeah, all these things I think like, you know, contribute and it allows me you know, you got to have that foundation of health at least for me, like in order for me to be effective at any work. I need to be on top of my health and you know, feel good and think good, and also, exercise for me, a lot of times really helps me clear my thoughts like I’ll have a busy day at work and then I’ll shut the laptop and you know, go for a bike ride and a lot of these things that I was kind of struggling with or you know, trying to figure out, like, I’ll kind of like put on music or put on a podcast, I’ll forget about it and then you know, 30 minutes into the ride all of a sudden like, everything comes together and the ideas connected and life, yeah, just able to kind of get better clarity from, you know, taking a step back.

Michael Bereslavsky 38:28 And I think it’s really important to just pay attention to your health because it’s such an important area of your life. I see so many entrepreneurs that build successful businesses and they just neglect health and then they realize it and they have to spend all their time and their money on it.

Nate Ginsburg 38:46 That’s something that like I’m really honestly very curious about because, you know, we’re I mean, we’re hanging out here in Thailand, a lot of the entrepreneurs and you know their communities overall, I think, I mean, generally pretty healthy. I’ve been spending more time in America the last few years, which has been interesting and kind of getting exposed to like different kinds of entrepreneurs, like you were saying that like, you know, don’t really have balance in their life and, you know, neglect their health and neglect, you know, other things and, yeah, it’s, it’s interesting, because I think in, in our communities abroad, you know, balance is, like, more part of people’s lives. But also recognize that like, it’s not common or normal.

Michael Bereslavsky 39:40 Yeah, it’s more common in those entrepreneurs that travel that live abroad.

Nate Ginsburg 39:46 Yeah, I think it’s probably like a lot of the, I mean, if you’re an entrepreneur and an expat or living abroad or traveling like you’re…as unconventional as entrepreneurship is in general, even more unconventional Being that you’re, you know, traveling or you know, living abroad and so, so yeah, I think some of the even like, you know, common, like entrepreneurship tropes around, you know, working all the time and not having balanced like a lot of the communities abroad. Yeah, you know, have balance.

Michael Bereslavsky 40:22 Yeah, yoga is tough. I know, my first few lessons it was such a humbling experience. I’m in pretty good shape overall. So I exercise like three, five times a week and I had a few classes. I was like five or ten minutes and I was just completely sweating and just tired and I had to rest a little bit. Everyone is just warming up.

Nate Ginsburg 40:44 Yeah, I think I mean, you used the right word: humbling. Yeah, that’s definitely been you know, my experience even as I’ve you know, improved and I you know, it’s yeah, very humbling. When I think that, you know, whenever I think I’m like, you know, good or getting on top of stuff and then there’ll be some, you know, tiny Thai woman who’s like, you know, 10 years older than me half my size and is like rocking handstands better than I can do but it’s just like, all right, well, I guess I’m not that great. Which is, you know, whenever I catch myself thinking that I am great, it’s like, something’s around the corner. So yeah. I think a good lesson to just be humble in general and yeah yoga is certainly, one of the things that is a good teacher of that.

Michael Bereslavsky 41:40 Have you…how has yoga helped you with life in general. Have you had any friends pick up yoga from you?

Nate Ginsburg 41:49 A ton of people, I’ve brought a ton of people with me over the years. Yeah, I mean, I guess like, you know, yoga…I guess like the biggest lesson from that has been, kind of what we were talking about earlier, just like, you know, the journey is the destination there is no you know, end point, there is no making it and, you know, just like a yoga like, yeah, make progress improve on different things, but they’re still like, whenever I, you know, achieve something that opens all three new things of, you know, that I understand now how I want to improve and, and yeah, like, you know, same with with business and life it’s like there is no destination, there’s no you know, end it’s just like, you know, showing up and continuing to improve and you always you know, you want to make progress, but in you know, achieve certain things, but, but yeah, it’s more about you know, the journey is the destination and you want to keep making progress and keep improving. But you know, there is no like finish line and so yeah, that’s probably been one of the biggest lessons from yoga that’s, you know, just applicable to so many things in life.

Michael Bereslavsky 43:10 That’s a great approach to life. So let’s jump around a little bit and go back to business and so after you sold that first business you probably took some time to relax and travel and then gone back and decided to go and buy some businesses. So tell us about like the first deal and the second day, how did that go?

Nate Ginsburg 43:31 Yeah, so after I sold the business was in the spring of 2017 and I, you know, that summer there was a lot, you know, I intentionally kind of took a step back and was trying to think and what do I want to do and I was traveling a lot in Europe attending different events and it was after one event I attended in Lithuania that really gave me the confidence to like pursue something as an investor and I remember after that is when I really kinda dove in, it was it after that, then I was like “alright, I don’t know what or how but I want to get involved, I want to buy a business”. That was really kind of what started what has become radical diving in where ok great, you want to buy a business, you know, what kind of business? you know, where you’re going to find it? you know, what are you looking for? The first things that I started to do and I think like a lot of people that want to buy a business is you look at brokers so first

Michael Bereslavsky 44:45 Whats available.

Nate Ginsburg 44:46 Yeah, see what’s available, look at a lot of prospectuses, you know, like, starting to build my network of, you know, business brokers and just learning about what tools are available and just kinda starting to keep my eyes open and looking and one thing that so, you know, did that for a couple months and, you know, one thing that I realized was that I was looking for, like a better than market value deal and that deals that you find overwhelmingly that are, you know, packaged for sale are going to be, you know, market price and you know, that can be fine, but I realized, you know what, what I was looking for was I wanted like I didn’t have enough money to get…I was looking for outsized returns, and in order to get that I was looking for better than average deals. So, then was like ok great, well if I’m not going to get that with a broker where am I going to get a deal? How am I going to find a deal? That’s what kind of started me on this what has also become a journey of you know putting myself out there more and sharing my story and thinking okay if I wanted to you know if I was going to find an opportunity like I had to be the one that you know found that it wasn’t going to come nicely packaged like I had to go out there and figure it out. So you know that kinda then started, you know, trying to like yeah share more on my story go on more podcasts and kind of see what’s…what I thought was gonna happen actually, was that I would go on podcasts start talking about that I was looking for deals to buy and like, all the sudden my inbox would be flooded with, you know, all these great deals. That is not exactly that’s actually not at all what happened. One thing I’ve learned is that every time someone’s told me that they have a great opportunity for me, it’s not a great opportunity. Most people when you say “Oh yeah, I’m an investor, I’m trying to buy or invest” are like “Yeah I’ve got a great deal”.

Michael Bereslavsky 47:02 Yeah, that is how you know it’s not a great deal.

Nate Ginsburg 47:06 Yeah, exactly. So so that’s one thing. I mean, you know, I maybe got a very few, if any, kind of random people that reached out to me where I thought, like, all of a sudden I’m getting…because I always knew it was a numbers game. I don’t know what the stats are these days but it’s like you look at a 100 businesses and you buy one of them or something so I’m like “alright, I’ve got get 30 deals a week that are coming through to find one” is what I thought and that in reality, you know, wasn’t really getting many people if any, you know, random people reaching out. But what I what I did learn and did realize is that where, where there was more of an impact of me putting myself out there sharing my story was more like within the network that I already had and people that I already knew. There was some quote that I heard sort of recently that was saying like, your, you know, your first or Next, you know, million dollar opportunity, like you already you’ve already met that person and in my case, that’s what became true. The first deal I ended up doing was with someone else who I knew this guy Brent who had done some freelance work or consulting for my previous ecommerce business. So, you know, we knew each other a little bit from the community. I hired him as a consultant, so I knew you know, sort of how, you know, about this work and the quality of his work. Yeah, just sort of like I don’t remember how it even you know, how the conversation really you know, started but like at some point kind of you know we must have been chatting about something it was just like “oh well like you’ve got a business that like I’m familiar with, I know the space, I know you, you’ve done good work” like oh like maybe this is an opportunity and yeah so I think you know floated the idea and long story short he was also interested and yeah fast forward, that became the first deal that I you know that I invested and partnered with, did some stuff well other stuff you know learned about, other stuff was a learning experience, yeah that was the first one, that was almost two years ago and over all going really well. The business, I think, in terms of revenue from when I got involved has like trippled or even quadrupled, it’s on an up swing. I think that was really a great first deal and you know partnership for I mean, it’s working out well for everyone. But yeah for me, like I was saying I love hiring, I love delegating, I’ve always been pretty good and comfortable, like building out organizational structures and with my businesses like, you know, understanding my role as a business owner and generally you know elevating from self employed or freelancer, whatever and that’s really where Brent was, is he was basically a freelancer at that time had like, maybe, you know, a VA or two that he was working with, but he was doing the majority of the work. That was stuff that I knew I had good experience with and was confident I could help him to, you know, transition and transform into like an actual business and him to elevate as a business owner. Fast forward two years and like now, I think the teams like 12 people or something, there’s, you know, there’s a GM, there’s account managers and, you know, Brent is like his role in the business as you know, he’s almost entirely uncogged from, you know, he’ll jump in as needed, you know, from time to time in terms of like, doing the actual work, but overwhelmingly his role is now you know, being a leader and he does a bunch of speaking and high level strategy and yeah, the businesses has been going really well. And, yeah…

Michael Bereslavsky 51:31 So the revenue quadrupled but before that he was just alone, maybe had a few people and now there is 12 people, so is it still profitable is the profit still good?

Nate Ginsburg 51:42 Really good question, and yeah, that was one of the things that I’ve learned from that. I mean, so the short answer is yes, profit has also grown. Probably.

Michael Bereslavsky 51:53 Doubled?

Nate Ginsburg 51:53 Yeah. Ish. But yeah, it actually like, there was a pretty long ramp up period because, like, you know, I got involved, you know…so we first partnered up, and, you know, whatever revenue or profit was, and then, you know, again one of the things that I thought I could help with was like getting Brent removed from the actual fulfillment, getting Brent removed from the fulfillment meant other people are doing fulfillment, which comes with additional costs. So the first year of business actually, after I was involved, the first year, you know, the structure of the business really transformed and Brent’s role, really transformed. Revenue had grown, but profit was pretty much stagnant and this was because the business was growing, but expenses were growing and so it really wasn’t until the second year that the business…the kind of growth started to…one, the growth started to pick up as well as you know, we already like had invested in getting some of that infrastructure in place the first year. So then when it was growing, the profit was growing.

Michael Bereslavsky 53:17 Yeah, so that’s usually a process that happens once you start scaling a business, it might take some time, the profits go down you have to hire people, you have to design systems, and you have to wait a little bit until it gets to the point where the profits pick up…So what’s next for that business, are you planning to sell it at some point or just keep growing it more?

Nate Ginsburg 53:43 No plans to sell although that business now versus a couple years ago like…it could be sold. You know, there’s a team, there’s people that fulfill the work, it’s not, you know, Brent plays a really important role but like, whereas before he was doing all the work, you know, now, his role is different but no but I mean honestly my, currently my the approach to businesses and all the businesses that I’m involved with now the goal is, you know, like, long term stable, profitable and at least for now.

Michael Bereslavsky 54:23 Cash flow.

Nate Ginsburg 54:23 Yeah, cash flow like this business I mean we’ve done like it’s, you know, transformed and grown so much over the last two years and now it’s at a place where, you know, I mean, it’s a pretty exciting spot. It’s growing, there’s, you know, I think the hardest part is like, you know, getting a business to say, a million dollars to get to a million dollar business. That first you know, getting from zero to a million, I think is much harder than going from 1 to 2 million and you know, that business you know, we’re approaching that million dollar mark and so, like, now it becomes a, it becomes a platform and like, all these other, you know, we’re finding more and more different opportunities, you know, to continue the business as it is, but, you know, potentially can spin off other types of businesses or other other offerings and it’s like, you’ve got this, you know, pretty, you know, stable and growing base of, you know, clients and we do our work and we’re happy with this, but, but yeah, what I’m, what I’m personally most excited about is I think that, I mean, I think that it can, you know, keep growing and this really is just getting started and like, it’s also, I mean, I’m long on the business and it’s, you know, it’s a service business so it’s not, you know, it’s less like, high growth. It’s more slow, steady, but right, but it’s like, you know, I’m confident you know where we are now we’re at a pretty good spot. In three months from now, I think we’ll be in a better spot, you know, three months from then I think it’ll, you know, it’s on a pretty good trajectory and so I mean, for now the plan is, you know, keep growing it, see what opportunities it can lead to and who knows down the road, I mean, not going to rule out selling but but for now it’s you know, continue to grow it and you know, it’s profitable and

Michael Bereslavsky 56:26 Sounds like it worked out well, but I assume that you had to work a lot on it. It seems like can build the team, you’ve organized teams, you’ve organized processes. Do you spend a lot of time every week on it now?

Nate Ginsburg 56:39 Good question and I see how it can sound like that. The business has transformed. My role has and remains pretty…what I’m finding is like my, you know, ideal and my sweet spot…we get calls…it ends being probably, you know, two times a month, three times a month. Yeah, we had a call yesterday, you know, we message, I don’t know, most days or something but alot of it is just like sharing, you know, like little stuff, this or that and also I gotta of say that like, I genuinely enjoy my role like. I enjoy the calls, I like thinking of ideas, I like making connections, and yeah, actually some of the work that was done to transition the business in that kind of first step from like Brent as a, you know, as a freelancer to Brent as a business owner, there was actually someone on my team that also was good with…experienced with hiring and that I was kind of able to…Brent and I were able to work with but I was able to provide for that business. So…which enabled you know, that the main thing there was hiring that business’s now GM and so like I was able to help and contribute me with that from someone on my team. But that wasn’t, like I wasn’t the one that was personally going in and, you know, restructuring and you know, doing all the hiring and stuff. But so…so yeah, my workload, I’ve been pretty consistent with it and I think you know, moving forward I kind of settled into a pretty good rythm.

Michael Bereslavsky 58:24 Nice. So when you look at new deals like that what is your criteria? Generally how how much of the business would you buy? Would you look at buying half of the business or a third and what is the criteria that you do that?

Nate Ginsburg 58:38 Yeah so, the businesses that I’m looking at have done two other deals that are more of less similar to that one deal that was different, by far the worst. I’ve learned. I’ve done two other ones that are more or less similar, is a service business. It’s profitable. Part of where I think I can add value is getting the infrastructure and team — on how to build this or where to take this. So now, what I’ve learned and how I’ve built the structure deals moving forward, as an investor, is buying into a portion of cash flow. So let’s just say that the business is doing $10K a month profit, so for me, that’s what I’m buying into. So business can be doing a million dollars in revenue or it can be doing $150K — revenue but as an investor I’m looking for a return on the cash. I’m buying into that cash flow. The bigger the business, the more sale the cash flow. For instance, if it was only a million dollar business and only had ten percent profit there might be some other problems or issues. Which I mean, it’s a fake example, but probably gives opportunities to optimize. So I’m looking at it now, with the most recent deal I did over the summer, was looking at the…buying into the value off of the profit. So took out then a salary for the owner, operating expenses — plus the salary for the owner. In terms of financial exchange was around the profit that was left over.

Michael Bereslavsky 1:01:02 So you put the amount of the profit that’s left after the expenses and you’ve already discussed this with the seller as well?

Nate Ginsburg 1:01:12 Yeah, exactly, which I think is a much better way of doing it, than not taking it into consideration. The deals that I’m getting involved with…I have a role that I am playing and I have value that I am adding. These are deals that are not just looking to raise money. I believe and they believe that I can contribute to help the business. Then financially, you’d buy into a portion of the profit. That’s something else that I’ve learned, even when you do that, when another person gets involved…there’s like, often, a dip in profit or it’s stagnant in profit for a time as you’re recreating the infrustrator of…I mean, I’m cool with that — more money sooner is better, but this is a long term thing. So I’m willing to reinvest for future outcomes. So yeah, buying into a portion of that. I want to come in a minority owner, I’ve got my own business that I am responsible for, so as an investor/partner, they’re majority…and whether that means fifty-one or…if they own fifty-one or seventy-five, I’m going to be minority…But for me it’s less about — I don’t think about it as, what percentage is mine? As much as — I’m looking at the investment in cash flows. Let’s say a business has, on the high end, a million dollars profit, and I don’t have the cash available to get forty percent of that, but maybe I can still add value, maybe I can still add $100K out of pocket. I have this much money that I’m trying to put into something. And it can go into something smaller and get a higher percentage…it can go into something bigger and I can get a smaller percentage. But the return on the cash should be similar. I’m not necessarily trying to get as big a piece as possible. It really depends on the business, and where the business is at, where I can help? I guess in absolute truth though, it still needs to be interesting to me. I mean, if it’s five percent of a hundred million dollar business, that’s fine. It’s more an absolute, like I want to see a clear path to them cash flowing, you know, $5K plus a month.

Michael Bereslavsky 1:04:56 Ok, so, when you give that cash flow, how soon do you expect to get that money back?

Nate Ginsburg 1:05:07 So a few things that I look at with that, one of them is…so a few things that I look for, is you know, cash flow, so I want this to be able to cash flow me as soon as possible minimum $5K a month. I also want to minimize my cash out of pocket. So most of the deals that I’ve done will involve a portion of a burn out, or seller financing or something, so I’m cool waiting longer to get my cash flow if that means less cash out of pocket. If I was to give more cash out of pocket, I would want to see that return sooner. If it’s a good business, I rather…I’m happy to defer that cash flow, if it’s a good business, and that means I have less cash out of pocket — I’m fine deferring my cash flow from that. If there’s a longer earn out…that’s fine with me, if that means I’m minimizing the cash out of pocket.
Michael Bereslavsky 1:06:44 That makes sense. In terms of sellers and different partners…how do you make sure that the people you are doing the deals with are going to keep working on it?

Nate Ginsburg 1:07:13 I mean the ones…the point that I’ve come in, that seems to be working is like, they want to take their business to the next level. They want to keep it going more — keep pushing things further. I believe and they agree, that I can help get it to whatever the next level is, which probably includes them transitioning more from self-employed, and doing a lot of the work themselves, to getting the team infrustator in place so they can elevate to be a business owner. That is something that I’m really confident in my ability to assist there. The perfect deal for me would be a really profitable…maybe like, six figure, highly profitable…service business, where the owner is currently doing most of the work and they want to transition to building out their team. So move from self-employed, to business owner and want help doing that. They’ve found a good opportunity already, I mean, business is running, they have happy clients…they see opportunity to grow but are limited by their own time or skill set or team. That’s perfect, because again, I’m super confident in my ability to come in and help them get the right people in place that will allow them to take advantage of all the opportunity and get them to elevate more to that overall…

Michael Bereslavsky 1:09:26 Yes, we’ll we’ve learned over the years that making deals is important. How to frame work what you are doing or what you are looking at. And of course, it’s important to be doing your due diligence to make sure you have a good relationship with your seller. With our framework, we are looking at numbers, opportunities, then we look at the strategies, so everything that we do…we look at what is going to be our strategy going forwards. So sometimes it could be resale. Other times it could be expanding, adding more people…so it sounds like you have a similar framework as ours — and that framework is looking at people that have single person or one person with a few employees in their businesses, and we help them grow and transition…So the moving forward will you get a cash flow or a long term plan?

Nate Ginsburg 1:10:40 In terms of target business to get involved with now, yes. That probably fits the criteria…that’s the criteria that I’m looking for. I mean, in terms of the future division, I’m currently looking to invest in and get cash flow from these, and income. But that’s also been growing in a much better place now than it was two years ago, when that was originally the investment made was investing and build a cash flow. I’m down for more cash flow. Generally speaking. But at a certain point, the strategy very much can shift. I’ve learned a lot, continuing to learn a lot. With this business of inventing, or selling or buying, I’m kind of OK to be slow and like, continue to get experience, building my track record. Also, stuff that I’ve learned, I can also talk about a couple positive track records and case studies. But necessarily, those things take time. I can talk about the deal I did two years later, and it’s in a great place, but at the time it could have been the best deal ever, when we made it. But you just don’t know how like time is necessarily a factor, and so now I’m continuing to build that track record as time goes on, as businesses continue to grow, as I continue to learn…this is a space that I want to continue to be involved with — I think there are a lot of different, exciting directions that things can expand into. But I’m not in a rush. I’m still learning, I’m still getting the experience. I am open too, and looking forward to the next deal when that one kind of surfaces…One deal, one day at a time.

Michael Bereslavsky 1:13:05 That’s great Nate, I love the approach of…just taking it one step at a time. So many of our listeners are looking to try their first business or second business. Some of them are probably considering a similar approach…so what would be your recommendation to someone who wants to start?

Nate Ginsburg 1:13:43 Yeah, well, my advice for them would actually be advice you gave me. Earlier this year when I was looking to do another deal. We were on a Facebook community talking about, oh looking for this and that, and what you told me and what I’d like to tell them, is first you need your network. Like what I’ve said before…whatever opportunity you are looking for…you’ve probably already met that person. Thinking first of your circle…the next, you never know unless you ask. All of these deals that I’ve gotten involved with…they didn’t come to me like, oh do you want to be an investor? I mean, people have come to me and asked that, but those have not been the deals that I’ve wanted to be a part of. So thinking about what type of business you might be interested in…it’s as much as a reward investing in the person, who thinking about who, individually might be a good fit…and you gotta ask, you know, bringing it up, see if they might be interested? Then start a conversation from there. There’s a lot of other stuff to consider and if you’re considering someone like this, then chat. But I’d say, that’s probably where to start. “

Michael Bereslavsky 1:14:16 So the main advice and advantages is just asking your community. The second part is you’ve done quite a few deals and you’re able to learn from them. How can our listeners avoid some mistakes or what is the one thing that they can do to guide them from there?

Nate Ginsburg 1:15:53 So a few things, the first is due diligence around their finances. The first step in any acquisition is that you’ve got to look at the numbers, and not just look at the numbers, but you want to make sure that the numbers are verified and correct. In a lot of the deals that I’ve done, thankfully I’ve got a really great finance team, so we’ve had to come in and build their PnL for them…I mean, a lot of businesses don’t have that — so that would be the first thing. I’m targeting a return on my investment, and like, necessarily — you need to know the numbers in order to know what you’re getting yourself into. The would be the first part. I mean, I’m trying to do deals based on the numbers. There’s a million and one ways that you can approach things. Me personally, I want to do them based on the numbers. That’s the first part, make sure the numbers and there and verifying them. I think taking into account the salary of the person who is going to be running it is one lesson. There’s this one Warren Buffet quote, if you have a punch card with ten slots that represent the ten deals you can do in your life, it’s a quality not quantity thing. For me, there was a deal that got pretty far into the process, and there were points where I thought it was going to move forward and it ended up not. I’m really glad that it didn’t. I mean, he’s a great guy and maybe it could have worked out, but wait for the right pitch. It’s kind of like the balance of moving things forward but waiting for that right opportunity. I mean, I’ve been fortunate. So far, three out of the four deals that I’ve been a part of are going well, I’ve learned a lot from the one. Everything considered, the fourth one is doing OK, I mean, it hasn’t gone to zero. I didn’t follow some of my own criteria or advice if it looked like a really good opportunity at the time and we had to jump on it quickly and we did. It has been a really rewarding experience. It hasn’t gone bankrupt yet and hopefully it won’t. Getting on top of the numbers, knowing what you’re looking for and waiting for the right opportunity. This isn’t something that you want to rush into. I mean…you’re going to be business partners with this person, so your relationship is just getting started once you make the agreement. So is this a person that you want to be in business with now — next year, the following year? The deal that I ended up not moving forward, this was the beginning of summer…we were close. We had a term sheet that we both verbally agreed on, and it was like, alright, let’s sign this and do it. But around these days, I just had a weird feeling in my stomach — it was giving me anxiety. I mean, it should not…if you feel that way now…I’m not trying to gamble on some of that. This is a big financial commitment and opportunity as well. But if you have some doubts or second thoughts don’t rush into it — wait for the right pitch, and I am so glad that I did. Fast forward a couple of months later, the next deal that did end up moving forward with, I mean, it was structured better, opportunity — it was such a better fit in every way. So if I had moved forward with the one that I was iffy with, I don’t know what direction it would have gone. I don’t know if I would have been able to manage up the deal that I did go with, which is so far a much better fit for me. So all things considered, wait for the right pitch.

Michael Bereslavsky 1:20:53 So you have to know the numbers well, and pay attention to the gut feeling.

Nate Ginsburg 1:21:08 Yeah, being aware of or in tune with your intuition.

Michael Bereslavsky 1:21:12 So what are some services or products that your company offers that our listeners might be interested in?

Nate Ginsburg 1:21:22 So as I’ve gotten more experience with buying and selling — what I’ve learned is important to me to look at in deals. So now with the Sellerplex be on the sell side, help businesses prepare for and maximize for their exit. The core pieces are going to be getting on top of numbers so that when you want to sell you are on top of these things and you don’t have to go back and redo two years of books in order to finally list and get a lower price than you thought you were going to get. On the sell side and on the buy side, similar types of due diligence services. My team is really good at cleaning up messes and we are fine with messes because we understand how important it is to get these things cleared up, in order to make clear financially founded decision. So on the buy side, can help people that are looking at deals, doing due diligence on the numbers. As well as just kind of chatting. I mean, I love talking about this stuff, I’ve got some experience myself and that can be useful.

Michael Bereslavsky 1:22:35 So how can people contact you or find you?

Nate Ginsburg 1:22:58 My company is Sellerplex.com and you can email me at [email protected] – if you want to see a combination of business and yoga pictures on my instagram that’s @nateginsburg. Generally, I love this stage, I think it’s so interesting, so if you’re involved and doing similar stuff and want to connect, you’re welcome too. I’m always looking for new opportunities and find more win wins that we can pursue. So yeah, say hi!
Michael Bereslavsky 1:23:35 Thank you for sharing your story today and good luck with your future deals.

Nate Ginsburg 1:23:40 Thanks for having me, it was fun chatting.

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