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welcome to the top M A entrepreneurs today my guest is Colin Keeley Colin Keeley has acquired two companies working on his third he's got a company called Vern which by SAS buy and build he's also has a little course called ndpe which helps uh buy small businesses and he's also got a podcast called Indie acquisition and so welcome to the show Colin how are you thanks for having me doing great yeah so let's go back kind of where this started you you know what was your call to Adventure to start acquiring companies uh yeah so background did a bunch of startups uh most of them failed some small successes so software marketing agency TV and movie recommendation company signing I had a sharing economy startup that raised the money and flamed out um through that process met a venture capitalist who like me didn't like my business at all but liked me well enough to bring me on so ended up in venture capital and we were leading series a deals and also we were startup studio so once to twice a year we'd spin up new companies and that process of like finding product Market fit is just really really hard and I was a student of like how other people were trying to do it so there's a lot of other startup Studios out there stumbled on Andrew Wilkinson uh and Tiny out in Victoria and he was just buying product Market fit so he buys businesses that were working put in best practices and grow them I was like that sounds amazing I would prefer to do that um so did it uh did our first acquisition a couple years ago and just been Off to the Races since then yeah what was that first acquisition what kind of company uh blink sale the B2B payments 60 like the second Ruby on Rails app ever bling sale blink sale yeah blinksale.com and that's B2B yeah like invoicing for Freelancers and small teams oh very cool uh how big was it when you bought it uh I don't know if I could say exact numbers I think that's in the APA but it's like uh it was a six-figure deal six figure deal and what's it how long have you owned it um we just finished off paying off the seller side financing so 18 months 18 months so that's the next question how did you buy it did you have a fund your own money some investors money or 100 seller financing kind of deal uh I'm a big fan of starting small and making small mistakes so we've never done it before so uh it was just our money um me and my partner so I'm like the the marketing and the business and side of it Finance as well my partner's the the tech and product so it was our own money and seller side financing yeah how much kind of seller finance it kind of a range was it majority or uh lower lower I'd love to be completely public about like all our deals I I think we aren't allowed to okay but it was a significant amount of seller financing to say there are some there are some what what so why did they sell what was the motivation behind them it's actually the owner was super cool Brandon and Patrick uh Brandon just came out public he's building a electric boat startup like electric speed boats um so we raise money for that and this was a smaller thing just like I the typical deal we buy is like a technical founder that has other projects been working on this for like five to seven years and then it's ready for the next adventure was he paying any attention to it or was it kind of a distraction at that point uh software is kind of nice because you can mostly neglect it and it just kind of keeps going so they're just using it as a cash cow basically just taking money out of the business yeah so it was profitable yeah yeah most so we do two different things like we do bootstrap companies and then like Venture orphans and the bootstrap companies are almost all you know profitable by necessity and where did you find that uh this is a micro choir so micro acquired very nice yeah I just did an interview with Andrew so yeah they're great uh you know really helping out the market yeah was the valuation you thought Fair what he was offering because this is something I talked to Andrew about is when they first uh list on their Founders like you know they think it's worth 50x right uh and Andrew said that was one of the biggest challenges is getting yeah the right price yes that's definitely a problem for us like especially if you're doing cold outbound just like trying to talk to Founders everyone thinks their baby is worth like 10 to 20 times ARR and so you're kind of you know reality smacking him in the face and they don't always love that I basically given up trying to convince them like what the market price is like you can hand over the data and like this is what things are transacting at um but you can't convince people to change their minds yeah he calls it like a look it's hard to have a conversation with somebody when say their baby's ugly right it's not ugly it's a it's a beautiful baby it just isn't worth what they think it is yeah yeah well so how long did that uh conversation last where you guys came to a reasonable price on the business uh so the first deal this guy done Acquisitions before uh and sold companies before so he kind of out the gate had a fairly reasonable expectations and we definitely weren't the highest offer I would say we just vibed the best we had similar startups that had flamed out in the past and then I have a lot of as you kind of alluded to like public writing and public podcasts out there and he consumed a lot of it before meeting me so I think he was a little smitten like at the start which helped us win the deal yeah I have to tell you you came on my radar when you wrote that article about Mark Leonard at constellation software and the serial acquire I I it's great analysis on that by the way I saw that on searchfunder.com oh cool yeah thank you I've done that yeah operating manuals uh I received well yeah and then your second one what kind of company was that that was a SAS Company software uh data backups yeah we're not I said I would love to do everything and build in public but we're not uh announcing the name of that one yeah that's okay that's a more sensitive one yeah and uh where did you find that that one um like an intermediary reached out to us and was like this was the end of last year the founder wanted to sell for December 31st he thought there were going to be some tax changes um so we pushed and closed it within like that was like 14 days it was incredibly fast it was that an intermediary like a investment banker or kind of just a broker this is a broker in the space yeah and there and he sounded like he had motivated to sell before a you know missing out date uh did you get a good price on that a reasonable cash flow price yeah yeah that yeah oh I mean we only do I guess reasonable deals at least I like to think so yeah yeah we're not in the market of overpaying yeah what uh uh what kind of deal stack was that was that you know your money again or SBA or seller financing or mix uh the buff SBA is really tough to pull off for these software deals um so I've talked with all SBA Bankers they're great if I ever wanted to buy a physical business like I would entertain it for sure but uh in this space it's really hard uh we have a debt partner in uh based in Spain like a number of family offices um if you want to reach out you're happy to make an intro but that so we did that deal with our own money the step partner and seller side financing yeah uh that is correct I will talk to you after that about that so a lot of these deals are coming to you because you've created this social capital and they're attracted to you so where did you uh see that hey you know what I need to have a podcast to get out there to show somebody you subtracted to me I also need a course I want to talk to people about this course that you did why did you build the course how to buy a business uh I I found this to be a very opaque industry so I went to business school I went to University of Chicago um I was like very barely uh aware that this was a thing that you could buy a software company or buy companies I thought it was just like Fox making those businesses in like Idaho I didn't know you could buy soccer ones uh so this was all like trial and error and figuring it out ourselves and then back when I was a VC I talked with like all the college Alternatives and I was like I thought this was an interesting opportunity to be like you know so many people go to business school to like learn how to do business it's like well you could actually use that money and go buy a business and I'm a big you know believer in actually doing things and learning that way um so that was kind of my initial thought there and now I'm going to do a live version of the course like a cohort version such as uh well like you're talking about like kajabi or something or or what do you mean a live version uh it'll be based on Maven maven's like the new software company um from the guy who started udemy spannon did this and so it's just a cohort based course platform yeah I by the way he's talking about you to me I almost bought a courses from a guy from you to me that had software courses he sold a million of them software and it was just a cash flow King I mean it was sold a million courses doing 2 million a year with about 95 profit I was trying to buy it how'd it go it was in the UK and it was difficult to get any financing because they didn't want to move money over to the UK yeah yeah European deals can be tough yeah so what is the uh the focus of the course is it just on software companies there's a lot of courses out there you guys like Cody Sanchez Carl Allen Roland Fraser a whole bunch of people out there teaching and but they each have their own specific Niche yours is sass I would say it's more focused on internet companies but there seems to be a lot of overlap that people really just want to be their own bosses and like have freedom yeah so and like the basic things you're doing of like looking for a business to buy is very similar whether it's a physical business or an internet company so I would say it's internet focused but not exclusive yeah and you go through the entire process of uh finding the deals to reaching out to having a conversation to making an offer to to raising the capital to do it also or you know that's kind of a sometimes if you don't have the money you're going to go raise Capital to go acquire a software company do you also teach how to do that uh yeah it's not as Finance heavy as it certainly could be I think I'm mostly focusing on the sourcing phase which is like the hardest thing for people to actually you know put the time in to call Brokers to do the cold outbound to like owners um so it's mostly focused on that and then on the back end yeah I'll talk through financing the reality in this space is like great deals is kind of the limiting point it's not as much Capital like if you could get a great deal under Loi I think you could find the capital out there yeah I think so too um well these companies that you've acquired in the third one you're working on tell me how is this gone you buy and build have view it has it grown since you purchased them and you focused on the energy versus this guy that was you know off to build electric boats yeah so I would say our idea was like a company that's already growing I think momentum is really strong and so something that's already growing is likely to continue um but yeah everything we bought is up since we did it I would say it's not that hard like we're not Geniuses over here we're just doing like the basics um so I could go through like what our basic Playbook was yeah yeah please do yeah uh yeah so the goal is like stability so you take it over um often the founders are Technical and want to walk away and sometimes there's employees but more often than not there's not so we have to put a remote team in place so like our database company we put a team in Albania in place so product manager developer um they have developers kind of all around the world then we push on sales and marketing so we have a big checklist we go through Robert F Smith and Vista has this 100 Point checklist we have something similar um so it's things like moving their crappy WordPress marketing site over to webflow making it beautiful um making sure nothing's blocking SEO Pages load really quick and then we push on different channels so in a previous history I ran like large software marketing campaigns so push on Facebook ads Google ads you know see what works uh offer amazing customer support So immediately put someone dedicated to it really want Word of Mouth growth um and then a product makeover so my partner is very technical he's a very good product manager um and so that's the goal of you know making things look pretty but also improving the conversion rate reducing churn and then adding premium features so things that you know more enterprising customers would be willing to pay more for yeah are you designed to stay in a specific range of like micro kind of Acquisitions or do you have designs on going larger yeah every deal we're doing seems to be getting bigger for sure um so we'll entertain like 200k on the low end ARR to 5 million error and the reality is like a 500K deal and a 5 million dollar deal are about the same amount of work so we would love to do you know just bigger deals yeah there's also more systems in place and they're generally better businesses at that point uh are you kind of like Andrew Wilkinson and Mark Leonard buy and hold forever uh we have been to date I would say if you made a outrageous offer one of our companies we'd certainly entertain it so we're not like married to the idea but yeah I love the holding company model um certainly the students of all those guys yeah what do you like about uh I went back and listened to a lot of podcasts that Andrew did on uh my first million I've read some stuff on him and uh amazing guy I actually reached out to me I'm on my podcast he hasn't said yes yeah but I'd love to uh he's busy guy but he's active on Twitter uh what do you like about his style that to buying businesses and holding businesses because the the the the hardest part I I don't know but your article or somebody's article is the shared operational excellence program and identifying what those are to each business because they're in different niches uh so there's a lot there um Robert of Smith has the famous quote that all software tastes like chicken so the end customers can be different they could be dentists or like bowling alley owners but like the core things you're doing as the software owner is like improving the software improving usability to doing very similar marketing channels so you have different end customers different niches but like what you're doing day-to-day is pretty similar what the companies are doing yeah yeah no why do I like Andrew uh aside from his amazing track record with Wii Commerce the Shopify stuff and then the what I don't know what is it 28 32 Acquisitions at tiny Capital yeah oh yeah he's got a bunch uh I must be approaching like 40 only on companies now um but I think there's I think starting companies is really fun it's really sexy uh it's a lot of work and it's very um I think there's a lot of Randomness to it I think buying established businesses with like existing cash flow isn't as sexy and I think there's a boringness discount but I think it's a wildly underrated way to build wealth I just think it's very effective and like everyone that's done it uh SBA is a quote that I think like 98 of SBA 7A loans like never defaults never did somebody survive yeah um it's just finding somebody in the SBA that does software yeah yeah Fair yeah yeah what about Mark Leonard man I I love reading his annual reports because he's got a home spun like Warren Buffett stuff and the the transparency he gives and uh the responsibilities he is he gives to his business units like they're allowed to make Acquisitions without him knowing it yeah yeah we've been beaten out by uh consolation a number of times recently so definitely uh it's like losing a basketball game with Michael Jordan so I mean it's cool of course we lost the mic though with all the money but yeah yeah why so why'd I do like any of these operating manuals so I came across Andrew first Andrew said Mark Leonard was one of his idols I was like well I got to learn all about that guy and so he's probably the best uh one in the space and one of The Originals so he's done 500 of these Acquisitions at this point yeah um and then my other ones yeah Robert F Smith he's probably the biggest software buyout fund uh Andrew you know models himself is like the nice guy in the space and Joe Lamont and esw are like the dark force or the dark Vader in the space so they're the most Cutthroat so there's interesting learnings from him um Mike Spicer is the best startup studio so that's kind of how like my thinking goes I hop from one to the next and just kind of take away what I can yeah well have you tried to get Mark Leonard on a podcast that would be great wouldn't it that would be awesome yeah he's not on a lot and he doesn't like doing press I think he was misconstrued 20 some years ago so he doesn't do that kind of thing I'd love to just have a conversation with him but like every time I write one of these operating manuals people that work for these teams or the actual person reaches out so that's been cool I'm sure I've noticed a couple people left their business units and started their own acquisition team yeah oh yeah tons of people leave constellation and start like mini constellations yeah are you currently working on a fund to help you acquire companies yeah I mean that's what we've encountered is like people really like Brent and Colin but there's a limitation to that and turns out a limitation is like millions of dollars uh so we just need more money um yeah I think we win all the deals if we were competitive but we just haven't been competitive on some it's because you know bringing cash to the party kind of you know bringing cash to the party it is the game that's the game we're in yeah yeah what's uh uh where do you want to go with this I mean do you want to be a tiny Capital where you own 40 companies and I I did see an interview with Andrew Wilkinson said you know my my sole job is to hire and fire CEOs yeah I think as you get bigger and bigger you know hiring quality operators becomes limitation um we're not to that point yet I would say but yeah I just keep executing um build more attract more of a track record and you know get bigger and bigger is their plan you know whether you stay do really small deals like constellation or eventually you grow up and do bigger and bigger things I guess is a bit of a question um but that's a question for a later time yeah so what do you get out of offering that course I mean I've seen some successful students they've bought the course they acquired company does it help you with teal flow oh yeah yeah I think reality with courses is like uh a lot of people do it they like it they enjoy it they get closer to you um and then people send you deals and whether they like I'm not that concerned about launching like a million competitors I don't think that's reality um it's a lot of people I don't see that as a problem you wouldn't be interviewing with me if if you had a problem with that yeah yeah um I I think it's fun I always kind of intended to go back to like one of my alma matters and teach when I was like old and retired it's like hey it turns out I can do that right now and got 40 million in your bank and go you know what you don't students you don't have to be here yeah yeah so I you know I don't think I'll ever do that I think the scale of Internet is just great and it's like it's been fun and also like putting a course together is probably like the best way to distill your learnings like you know you think you know it try to teach it and then you really you know figure out and then you get better at it because you're consciously talk thinking about it right yeah I would say the same thing about writing you know posting to Twitter area posting to my blog any of that stuff it's just like you know making my thinking more concrete yeah do you are you active on all the social media channels either just to use one or is it Twitter SMB uh you know LinkedIn search funder uh yeah just Twitter is like my main one and then I started cross posting to LinkedIn um because they're starved for Content it's just a bunch of you know crap like employee stuff over there yeah it's like two percent actually post out of the you know 800 million people on there yeah so I cross post and you know that basically doubles your reach or sometimes things will kind of not do anything on Twitter and blow up on LinkedIn so that's been kind of nice uh but no I haven't done Tick Tock or anything I'm not much of a dancer yeah what about yeah I don't use Tick Tock but I watch uh Miss Excel make millions of dollars from Tick Tock yeah yeah we should probably all be on there at some point but I don't know I don't know how Business course like singing going hey you know that doesn't seem to translate for me no um we'll see okay I gotta go back something you wrote on your website that one of your startups was stretchy pants now what what was that is that Jack Black stretchy kind of pants ah this was just scratching my own itch and like this is what I said earlier like finding bad businesses and sticking my hand in electrical sockets and uh yeah uh I'm kind of an odd body site I'm pretty tall I'm six seven um and so this is seven yeah can you still dunk oh yeah yeah exactly um uh yeah I play basketball you're like you're the tallest guy that I've interviewed I'm 6'4 yeah it doesn't come across uh I'm a podcast or on Twitter but so that was scratching my own ish just like building the pants I kind of wished I had um but yeah I didn't like apparel didn't like the space that people were always lying to me when you're like producing stuff uh but yeah don't like economy e-commerce yeah well you do startups anymore uh yeah I think it's very likely we'll spin up I kind of like shared agencies kind of like the Amazon model where if your companies all need something you do it just for internal companies and then you spin it out and start taking external clients um so I think we'll do some version of that but definitely not our main focus going forward yeah let me ask you about uh mentorship where you get advice masterminds uh you know I talked to Michael Gurley he said yeah he still uses Vista a local Vista what who do you go to or inspired by it could be books could be anything yeah uh I mean I would have this kind of weird approach to mentors where it's like I I just consume everything that they've done and really study them and write up these operating manuals so that's like my basic way of learning and then from there I talk with either them or they're people that work for them and kind of understand their playbook more and then besides that it's more so Twitter um just meeting people doing like-minded stuff that's been great I should probably go to more conferences uh I haven't done that yeah yeah is that a covet thing I don't go to conferences yeah no I just didn't I wasn't in this space before kovid and then kovid killed everything like all the conferences and now they're just coming back so I should probably pick like a few a year and go meet up with people in person oh man they should pay you to be there or Neil Patel says he doesn't charge anymore to conferences because he gets better deals not charging huh yeah that's one way to do it yeah I love watching him so I gotta ask like guys what kind of books do you like to read is it the uh biographies of people or the how-to books or or concepts uh you know I I like the uh like the last book I read no it wasn't the last book but eight unconventional CEOs and they talk about the top uh I love business biographies I hate self-help books like I won't read any of them um but what if I read I read a lot of sci-fi a favorite book if you're looking for a recommendation is uh American Kingpin so the story Ross Albright and starting uh the Silk Road is basically like Amazon for drugs I think that is like it's very well written so it's very entertaining it's a great story and then it's like all your traditional entrepreneurship with shopping issues but on a much more exciting scale because it's dealing with like you know selling drugs and guns and an online Marketplace yeah behind the stuff I think uh I think I've seen that something on Netflix uh but it was the most mated man in America who who started that business yeah he's in prison for life prison prison uh what was it uh revenge yeah um but yeah otherwise it's like you know cable Cowboy would be another one kind of in that vein so John Malone is another one of these uh he's actually in The Outsiders is a chapter yeah he's rolling up cable companies um in the 80s it's very similar that was like software companies of the day so taking away learnings from him so if somebody was coming behind you and said hey what's the first thing they should do he's like hey uh Colin I I'd like to buy a company start by your course join Twitter follow you connect with you on LinkedIn and just follow like Mark Leonard Robert F Smith Vista and uh Andrew Wilkinson uh all those are great ideas if you want to buy that course great um but really just make moves I mean everyone says they want to buy a company but like be serious about it and you know do it as a job reach out to business owners and like start talking to them and I think that's really the only way you know what a good business looks like is like just doing it doing the work getting in the conversations so you'll reach out to brokers in your space set a goal maybe do five in a week or something like that try to talk cold email business owners and email five and get on the call what do you do for off-market Acquisitions um finding deals that are off Market uh it's nothing groundbreaking we have a number of people in the Philippines that work full-time for us and they'll build out email lists and I'll say like you know go after this vertical and go find all the emails and then I'll write basically group campaigns um so it's just lead generation it's like B2B lead generation yeah um put a bunch of campaigns and start conversations if you're trying to advise people for like the first deal I wouldn't waste time with that but it's like a huge time suck I think most people find their first deal in a Marketplace yeah yeah it's that's also getting your your toes wet too quickly because it's a motivated seller you know they want to sell it you're skipping the whole process of going once you get a deal like that it's a lot easier to get off Market deals because you got cash flow you understand a little bit more about the process yeah I would say most people screw up they just never get in the game like they're they always want to buy a company and it's like well next year I'll do it five years will do it 10 years I do it and just never do it um so my recommendation would be you know make moves get in the game you cannot lead a horse to water unless they're really really really really thirsty yeah yeah I think it's about 97 that start out looking for a business don't buy a business yeah yeah it's unfortunate for sure yeah well Colin uh thank you so much for being on this show I really appreciate getting an uh overview of your business model absolutely yeah thanks for having me it's great to meet you yeah thanks Colin see ya all right but thanks for watching this video make sure you're a subscriber by clicking on this button right here down below and if you want to watch more serial acquire interviews click on this button right here if you're ready to buy your first business get my course at dealflowsystem.net right here take care cheers John