Business acquisitions are primarily seen as a way for aspiring entrepreneurs to purchase their own companies without having to start from scratch. However, did you know that a lot of established business owners will also acquire other additional companies to further expand their existing product lines and resources? In this episode, Gene Marks and Joey Korenman, the Founder of School of Motion and Co-Founder of Rolo, discuss the benefits of business acquisitions and how to negotiate the terms of your next acquisition deal so that you can take your small business to the next level.

Podcast Key Highlights

  • What Are the Benefits of Acquiring a Micro Business?

    • When your business reaches a certain size, everything you do becomes expensive, so buying a business that already has a product or service to sell will save you a lot of money in the long run.
    • In addition to expanding your merchandise line, acquiring another business will also provide you with the workforce and resources that you’ll need to continue producing your new products.
  • What Were the Terms of Joey’s First Acquisition Deal?

    • Rather than using his own capital to pay a large sum upfront, Joey decided to pay the previous owner out of the proceeds he earned from selling his new products.
    • Part of the acquisition price was essentially putting the owner on a small salary for about a year and a half in return for helping him create new products that he then sold.
    • If it became clear that Joey would never be able to reach the down payment price from proceeds alone, then he and the previous owner would split the difference.
  • What Were the Advantages of Joey’s Deal Terms?

    • By using the product proceeds to finance the down payment, Joey saved himself the trouble of either risking his own money or having to raise additional capital to purchase this new business.
    • Keeping on the original owner as a consultant enabled Joey to capitalize on his predecessor’s firsthand experiences, existing network, and brand equity.
    • Lastly, the closing stipulation basically absolved Joey of any financial risk in the event that this venture did not produce the necessary profits.
  • What Do I Need to Know About Involving Legal Professionals in My Business Acquisition Deals?

    • You may end up being the one to push the deal through since most attorneys tend to be more risk averse.
    • Remember that attorneys specialize in law not business, so their advice is more focused on protecting you and your assets rather than growing your small business.
    • Since your incentives are not necessarily aligned, you really need to look out and advocate for your own interests.
  • Do I Need to Involve an Accountant When Purchasing a Business?

    • As the person who is buying a business, you don’t necessarily need to consult an accountant.
    • The individual selling their business is the one who should consult an accountant because there will be capital gains once they sell their assets.
  • What Do I Need to Consider Before Agreeing to Another Business’s Purchase Price?

    • Most sellers will be flexible about negotiating their business purchase price as well as the payment terms since oftentimes the buyer will be doing them a favor by taking the business off their hands.
    • While the stated purchase price might not always be an accurate reflection of the business’s net worth, it’s still alright to overpay if you think you’ll be able to recoup the initial loss.
  • What Lessons Did Joey Learn From His Second Business Acquisition Deal?

    • Business acquisitions can be used as a means of eliminating a competitor.
    • If any assets are missing or incomplete, don’t be afraid to negotiate for a lower price.
    • Sometimes it’s more valuable to give away the acquired products in exchange for email addresses and use them as lead magnets.
    • It’s not a bad idea to purchase a business if it has valuable intangible assets.
  • What’s the Best Advice That Joey Can Give Small Business Owners About Approaching Acquisition Deals?

    • Acquisition deals work best when you can set up a win-win situation for both parties.
    • Try to educate yourself about the way deals actually work in the real world.



The views and opinions expressed on this podcast are for informational purposes only, and solely those of the podcast participants, contributors, and guests, and do not constitute an endorsement by or necessarily represent the views of The Hartford or its affiliates.

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Gene: Hey everybody, it’s Gene Marks, and welcome back to another episode of The Hartford Small Biz Ahead podcast, part two of our discussion with Joey Korenman. He’s the Founder of School of Motion and Co-Founder of Rolo. Joey, first of all, thanks for coming back.

Joey: Oh, thanks for having me, Gene. It was fun last time, so let’s see if round two is just as fun.

Gene: Keep it going, right?

Joey: Let’s go.

Gene: Again, for those of you guys that did not watch the first episode, and shame on you, you should go back and watch it. Joey gave us a whole big background of his companies, both School of Motion and Rolo, talked a little bit and offered some advice for people that might want to set up online videos for whatever purposes, and what he’s learned, some tips, some thoughts on that. Then, also discussed a little bit about Rolo, which is really… Joey, the best way I can describe Rolo is just it’s a recruitment service for all of your students that have come through your school to try and connect them with opportunity.

Joey: Yeah, synergy.

Gene: Yeah, it’s that synergy thing, which is great. Two great things. School of Motion has been around for over 10 years, correct?

Joey: Yeah, it has.

Gene: Okay, so let’s talk a little bit about the business though, and about buying businesses because you bought, you said a few businesses over the years. What acquisitions have you made? I know they were not giant acquisitions here, but they were acquisitions. Tell us a little bit about the businesses that you’ve purchased over the past few years.

Joey: Yeah, sure. These are mid-five-figure acquisitions, these aren’t huge businesses.

Gene: Five.

Joey: Yeah, the two businesses that we acquired, one was called Holdframe and one was called Mograph Mentor, and both of these were training products that were aimed at the exact same audience as us, motion designers. The reason that we bought them is kind of interesting. I have a good friend who… I don’t consider myself a business person. Everything I’ve learned about business, I’ve learned through doing it in a service of actually running a business. But I have a friend who has an MBA and went to business school and really understands the ins and outs and can read a P&L and stuff like that. Anyway, so he put this bug in my ear. He had me read this book called “Buy, Then Build.” The idea in the book, if you read it, it’s really interesting. It’s something that never occurred to me, and I’m sure a lot of creative people, this just isn’t the type of thing you think about is that I want my business to grow, and my business really relies on having products to sell, content to promote those products, and things we can give away for free as lead magnets.

When you get to a certain size, everything you do becomes expensive. For us to put together a new product, like a new course, it takes a lot of time, it takes a lot of money. It takes a lot more time and more money than it did when it was just me, because now everything kind of slows down when you have a team, there’s pros and cons obviously. One of the strategies to get around that is you can look around and there’s a lot of businesses out there, little micro businesses where you have a solo creator making amazing, incredible stuff and they have no idea how to market it or they just don’t have time and so they don’t have an audience. They have this amazing thing and no one to sell it to. What you can do if you have an audience, which we have, we have amazing distribution channels, is you can buy their product and sell it to your audience.

Now, that part’s pretty intuitive. The part that wasn’t intuitive to me because I’m thinking to myself, “Well, that seems risky. This guy’s asking for 50 grand for this thing that in the whole lifetime of the product has made 50 grand over the three years it’s existed, so that doesn’t seem like a good deal for me.” But then you can look at it and you can do the math and you say, “Okay, well if I just take the product and I just sell it to my audience, because I’m good at marketing, how much do I think I’ll make?” It was more than 50 grand, so how about this? How about I say, “Yeah, I’ll give you the 50 grand, but I’m only paying you out of the proceeds from selling your product. If I don’t get to 50 grand, then we’re going to split the difference.” You can get so creative with terms when you’re acquiring a business where you can basically completely de-risk yourself and acquire the thing for zero. There was $0 out of pocket for that deal.

Then for another deal, I think we put down maybe…

Gene: I got to stop you. Wait.

Joey: Oh, go ahead. Yeah, dig in.

Gene: Great. You’re absolutely right about how you can structure a deal like this. First question I have for you on that though is that were you buying just the product or did you buy the guy’s company?

Joey: It was an asset sale technically, but we acquired everything.

Gene: You acquired everything.

Joey: The idea was we acquired the brand and what we actually did, because that brand had some brand equity, the owner was pretty well known in the industry, and so what we did was we folded it in underneath the School of Motion brand. If you go to School of Motion’s website right now, you’ll see a button at the top that says workshops, and when you go there, you’ll see all of these beautiful products. What we did was we acquired not just the products that were being sold, but we also, part of the deal, part of the acquisition price was basically putting the owner on salary, like a small salary for about a year and a half spread out, and he helped us create new products that we then sold. That was kind of how we financed it.

Gene: Which was going to be my next question.

Gene: You’re talking about like, “Well, you’re going to spend 50,000,” and that’s still all they’ve had over… But you didn’t just buy the product, you bought him for a year and a half, didn’t you?

Joey: Yep.

Gene: That’s why a lot of acquisitions happen. More acquisitions than most people realize happen because it’s not necessarily about the product itself or the buildings or the assets, but you’re bringing people on board, and people are obviously enormous value, if not the biggest asset of most companies. It’s also why… It’s similar to the structure of your deal. When there’s a typical acquisition, most acquisitions of a business, and if you’re watching this or listening to this and you want to sell your business, you have to expect that the buyer is probably going to want you to stick around. You wanted this guy to stick around for a year and a half because you needed his brand and you needed his expertise, you needed his goodwill.

Joey: His network, yep.

Gene: Yeah, and it’s the same thing with you, Joey. If you ever were to sell your business, if I were to buy School of Motion from you, there’s no way I would buy your business without you being part of the package for at least a couple of years.

Joey: I’m aware, yeah.

Gene: Maybe you’ll get a consulting fee with it and whatever, but there’s just no way, because it’s particularly in a small business.

Joey: We actually just went through this, Gene. We had an offer on the table and it didn’t work out. We’d gotten to the part where we’d started to negotiate things like that and then it just kind of fell apart. But I knew that I was going to come along for the ride for at least, I’d say at least two years. I have a friend who just… He sold his business a couple of years ago, exact same size as School of Motion, and he’s locked up I think for like five years. Yeah, it’s pretty common.

Gene: Yeah, you get locked up that way. It’s a standard thing. It should be known, again, by whether you’re buying a business or whether you’re selling your business, it’s super standard. The other thing is the structure of your deal was the perfect… It’s almost unrealistically perfect. I’m not saying it’s not. I’m just saying that’s what everybody dreams of like, “I want to buy this company. I’m taking a risk. I don’t know if this company’s going to work out, so I’m not going to pay anything for it unless we make profits.” That’s what every business wants, every acquirer wants to do, is to minimize their risk, and you pulled that off. You were able to…

Joey: It’s pretty common. It’s pretty common, Gene. Actually, the friend who taught me how to do this, I just went in partnering on a deal with him where he did the exact same thing to acquire a pretty well-known marketing brand that owns a conference, they own an online sort of academy, and they own a software product, and I think he acquired them for, I think it’s about $900,000, $0 down. All of the money for the deal comes out of, he runs a marketing agency and owns other businesses, and so he can basically immediately probably double the sales that this thing was doing and pay for the deal out of that. He’s an amazing deal maker so he also has all these clauses in there where if it doesn’t work out, we’re basically going to give the company back to you, but we didn’t lose any money.

Joey: What I found is if you’re just honest with the seller, when someone’s ready to sell their company they’re usually pretty motivated, and there’s a reason behind it. If you can just help connect the dots for them to let them know you’re going to get what you want, it may not happen on the timescale you were hoping, you may not just get this big check, it may take years, but as long as you’re cool with that, I bet we can make this work.

Gene: I think that it can be common to do if the owner is coming on board. If I’m going to sell my business to you and you’re like, “Hey, Gene, I’m not going to pay you unless we have profits from this business over the next two years,” that’s an incentive for me to say, “Well, I’ll tell you what, I’m going to keep working this business, you’re going to pay me some type of fee to do that, but I need to make sure that I am taking care of my interests so I do get paid out.” Most of these kinds of transactions you leave off with that when that person just comes on board. I mean, to me, I think somebody would be crazy to just sell their business on the promise of future profits if they don’t have some control over those future profits. I mean, I would never recommend a client doing that. But then in the structure that you’re just talking about, the deal that you had, that makes perfect sense because the guy came and continued to work so he could look after that, which is great.

Gene: The way you structured it is great as well because a lot of times people, they have to get banks involved or they need financing or they got to get other partners. You didn’t have to do any of that, right? Because you’re like, “Hey, man, if this doesn’t make any money, there’s nothing to pay you.”

Joey: Yeah, there’s no outside financing.

Gene: It’s a brilliant deal. I mean, it was a great idea. Before you even get to the second deal, just curious about that, how long did it take to put that deal together and who did you involve in it? You just said you’re not the business guy, you’re the creative guy, so did you have attorneys involved? Was it your friend that did the whole thing for you or an accountant? Tell me about what experts you got involved to even put together this deal, because I don’t care if it’s 50,000 or $5 million, it’s still money, so you have to have people involved.

Joey: Yeah, exactly. My friend coached me through the process. He would role play with me and explained to me, “Okay, here’s how you negotiate and this and that,” so that was invaluable, and I was very, very lucky to have him. There’s a lawyer that we’ve been working with for almost since the beginning who I met through a Mastermind group, and we’ve been good friends and he’s a really good business lawyer based out of Denver. He did all the paperwork for it and made sure that everything worked out. I’ll say that my experience even with him, and we’re buddies, so I’m very blunt with him, he’s very blunt with me, we have a great relationship.

Gene: Good.

Joey: I still find that lawyers tend to be much more risk averse than business owners, and so I still found the counter party would ask for something that to me was like, “Okay, if I was in his shoes, I’d ask for that too. That’s reasonable. We can put some parameters around that.” He’d say, “Just say no to that.” I’d be like, “Yeah, but I know this guy. I know that… That’s not important to me, it’s important to him, so let’s just give it to him.” You do have to kind of push deals through, even little ones like we did. I find there’s always some friction there.

Gene: Yeah, it’s funny that you say that as well about attorneys. I remember my dad telling me the same thing, which is really true, attorneys are… The transaction is between you and the other business owner, it’s not… Maybe it’s only in the movies or maybe it’s very, very high corporate levels where they outsource these negotiations to attorneys going back and forth. It’s usually mano a mano, you’re with somebody, you’re going back and forth. Again, you do the right thing. This guy’s making an ask of you and you’re like, “Hey, fair enough. If I was in his shoes, I’d be doing the same thing. That’s reasonable.” Nobody’s trying to outgun each other here, they’re trying to come up with a reasonable deal, and this guy was going to keep working for you for the next couple… So at least the last thing you wanted to do was annoy him or anger him because you took advantage.

Gene: The proper use of an attorney is really… After the deal is done for them to sort of write it up, it doesn’t mean you can’t go back to your attorney and say, “Do you have any thoughts on this?” But let’s just not forget that attorneys are specialized in the law, that doesn’t necessarily mean they specialize in business, so they kind of know what’s best.

Joey: I mean, I’d recommend if someone’s never done a deal like this, it can’t hurt to spend an hour with your attorney and just say, “What are the three things that you want to warn me about? Warn me right now, and I’ll make sure not to do those things.” But attorneys, I mean, my attorney always tries to do what’s best for School of Motion or Rolo or whatever business I’m talking to him about. But at the end of the day, your attorney’s incentives are not exactly aligned with yours, they’re working for the billable hour. Even though I don’t think most lawyers are trying to screw your client or anything like that, but it’s just human nature. If your incentives are not totally aligned, you always need to make sure that you’re looking out for your best interest. The lawyer’s looking out for theirs, your counter party’s looking out for theirs.

Gene: Yep. That makes complete sense. Did you involve an accountant at all?

Joey: I’m trying to remember if we did for that one.

Gene: Because you probably didn’t… I don’t think you would need to, and I’ll tell you the reason why. You’re buying the business. Now, I realize there’s an accounting entry, I’m speaking as a CPA here, and I’m only saying this for those of you guys that are watching or listening that are involved in a transaction like this, buying a business doesn’t… Not that you don’t completely not need an accountant, but it’s the seller who needs the accountant. Because when you’re selling assets, and just bear in mind on this in the future, Joe, if you sell your business, there’s capital gains involved, because you’re making the profit on this sale. That’s when you definitely need to have a good tax accountant involved to make sure it’s structured in a way that minimizes your liability, maybe your assets get put into a trust, maybe you can break out the type of sale so it’s not as much capital gains. It’s the seller I think that has more of a need, which doesn’t surprise me that it doesn’t come right to your head whether or not you involved an accountant.

Joey: Yeah, so I’m trying to remember, I think on that first deal… I mean, I’m sure they were involved in the sense of we notified them this is happening, especially because part of the deal was we’re paying for the deal out of the profits from the sale of these products, so now we just had to have separate categories to track those things separately. We had to agree on what profit meant for those products because, I mean, that’s a lot trickier than most people would imagine, I’m sure as you know. Yeah, but I mean, you’re exactly right. Going through the exercise of dealing with maybe us getting acquired, I started learning about basis and things like this that I still can’t quite wrap my head around.

Joey: I think that the way that we did both of the deals where we acquired the company, because we paid the owner out over time… Well, at least with the first deal, the owner came on and was on salary, and so I’m not even sure that it was a capital gain situation there. I think it was almost like, “Look, you’re getting the money one way or another. We’re going to call it a salary, but we all know that this was actually an acquisition, we acquired you.”

Gene: I can tell you that it’s not even your concern. You know what I mean? It’s really like however him and his accountant structured that. I mean, you’re just writing a check.

Joey: Exactly, yeah.

Gene: Whatever it is. But then their concern really is to how that’s going to be treated from a tax basis. Before we get onto the second deal, how’d you come up with the purchase price?

Joey: He had come up with the purchase price, and we negotiated back and forth a little bit and lowered it a little bit. In the end, it was basically he felt like, “Okay, look.” The truth of the matter was he was burnt out trying to run this thing by himself and he, like a lot, and there are so many businesses like this out there so if anyone’s listening to this and they think, “Oh, this sounds cool,” just go look a little bit and you’ll be shocked, they’re everywhere. Businesses where you have someone who has a great idea and it turns out they can actually execute pretty well, and they’re kind of like this solopreneur making this awesome thing, and what they underestimate is the cost of success. Oh my God, it worked. Now I have customer support, now I have people saying, “When’s the next thing coming out?” I still have to continue marketing the original thing, but now I have to make a new thing. How do I do that? I didn’t make enough to hire a team, so what do I do?

Joey: Really, the person’s floundering and the business slows down and it just kind of stops. That was the situation with this business. Basically, I just looked at it and I said, “Okay, well, what you’re asking is way too high. This number is also too high.” I kind of tried to anchor it with him saying, “Even this 50,000 number is too high. Your business is not worth that. However, if I take your product with my team and my expertise and we market it, we transform it, and we build new products, but you’re going to manage that and you’re going to be the creative director on that, and I’m going to pay you exactly what you want over 18 months based on the sales of this.” He looked at it and he’s like, and he already had a full-time job that he was doing, so this was going to be extra money to him, a decent amount.

Gene: He’s like, “Yeah, that sounds fun, and then I don’t have to run this thing anymore, but it gets to keep living. That’s awesome. That’s a great deal for me.” He said yes. Even though I technically overpaid, if a private equity firm came in and valued his company, they wouldn’t have said it was worth $50,000, but to us it was, and it made its money back.

Gene: Overpaid is… Because people say that all the time. I was just listening to an interview, it was actually a story, and it was an ethical story because it was in the news where this couple sold an African mask to a pawn shop for $300, and then the pawn shop turned around and got it appraised and it was worth $3 million.

Joey: Oh, wow.

Gene: The pawn shop sold it for that. Then the couple came back and sued the pawn shop because they were like, “Oh, you cheated us out of it.” Meanwhile, the pawn shop bought this mask. You know what I mean? It’s an ethical thing. Was the pawn shop wrong for…? Did they take advantage? It’s the same thing in your case. I mean, you’re going to come up with a valuation that you think is reasonable for you, that makes sense to you, and I think you’re kind of understating or you’re playing down your knowledge a little bit because you’re like, “I’m not a business guy,” but it sounds like there was some spreadsheets involved here, right?

Joey: There was a few, yes.

Gene: I mean, you had to have been like, “Yeah, we’re going to buy this and we’re going to take on this guy, so there’s going to be these costs involved, or we’re going to spend some money on marketing, I’m sure, whatever for this product.” But then you were extrapolating out over the next five years what you expected it to bring in. I’m sure you were like, “Okay, this is a return on…” You’re always judging that return on investments against taking that $50,000 and sticking it in a bank account for 4% interest. By the way, when you did this, it probably was…

Joey: It was not 4% when we did this.

Gene: All of that makes sense. One of the things I also wanted to comment on you, and I don’t know if you’re still in the business of doing this, but you just said that there’s a lot of business owners out there that are in that situation. There’s a lot. People come to me all the time about starting up businesses, and I’m always like, “Don’t start a business, man. Buy a business, because there’s a lot of…” Are you looking for more? Are you constantly on the lookout for more deals like this?

Joey: I mean, my eyes are always open for it. I’m not actively looking to acquire anything right now, but if I did, I think I would look for more things like the second acquisition, which worked a little differently and there was some different reasoning behind it too, so we can get into that if you want to.

Gene: Let’s talk about it. Let’s talk about it. Tell us a little bit about that second acquisition.

Joey: The second acquisition was called Mograph Mentor, and it was an online school just like School of Motion, been around about the same amount of time. They actually started a little bit before us, and they had a different business model. Our model’s built on technology where we can do these cohort-based hybrid, they feel like they’re live, but they’re not classes, and that’s really scalable. They were doing actual live classes, so you’d have a Zoom call once a week, and they were pretty expensive and they were very hard to scale, and that business model wasn’t working so well for them. What they ended up doing was then just getting into traditional, let’s just make these short instant access classes, you buy them and you get them, and they have a teachable site.

Gene: Let me stop you for a second. How big an organization was this? This doesn’t sound like just it was one guy, it sounds like this was a company.

Joey: Yeah, so he did have a small team. Over the years, I think there had been full-time employees, but by the time we got to him, he was totally burnt out from running the business, and so it was just him and he had some contractors, some video editors and stuff like that. He had a similar deal with his instructors where he was paying them a royalty if they made a class and he sold it for them. When we were looking at that deal, there was a couple of considerations. One was they were a competitor, and I saw it as an opportunity to take a competitor off the board, maybe that’s a little ruthless of me, but I was like…

Gene: It happens all the time.

Joey: Yeah, we can acquire them. They were not doing well financially, I was not making money. I mean, basically the year we bought them, I think they were almost break even. I mean, it was really not doing very well. That’s pretty common too, because if you have a business that lasts a long time, but you can never get it in a velocity to hire a team to help you do it so it’s not all you, you’re going to burn out, period, full stop.

Gene: Did you know this guy beforehand? Had you had a relationship with him?

Joey: Yeah, I mean, we had a very good relationship, actually. That’s one of the cool things about our industry is that everyone, even people who are competing for customers, we’re all very friendly with each other. This guy’s a very, very nice guy. In fact, for a while randomly, he and his wife moved to Sarasota, which is where I live, and we hung out a few times. He’s an entrepreneur, so I just really get along with him. But he…

Gene: Was he reluctant in any way to share his numbers? I mean, you are competing with him. And same for you. You just mentioned that you were involved in a potential deal to sell your company. Can you give some comments, both from his aspect and yours about, it’s got to be full disclosure, right? You got to share… Were you comfortable sharing numbers?

Joey: Absolutely. Yeah. Well, I mean, you have to be. The way I looked at it, and I can tell you from my perspective when this much larger company was looking to acquire us, when it was like, “Hey, okay, we’re under NDA. We need to see your books. Send us everything.” I’m like, “Okay.” I mean, if you’re going to buy the company, you’re going to find out where the dead bodies are, and there are dead bodies. I mean, every company has dead bodies, right?

Gene: Yes, of course. Of course.

Joey: Oh wow, what happened to that quarter? Oh my God, right? What’s that line of credit there? Why do you have that? Yeah, I mean, it doesn’t bother me too much to share that stuff if there’s confidentiality involved.

Gene: It’s the right attitude. It’s exactly the right attitude.

Joey: But when we acquired this other company, we signed an NDA, we had an LOI and all that, and then he sent over his books. This deal was… I’ll tell you what, our lawyers saved our ass on this deal. This is where lawyers came in really handy. We actually used a different set of lawyers on this deal because we had started working with just a general sort of law firm in Sarasota that understood Florida law because that’s where we’re incorporated, and they were advising us on this, and they structured this deal a little differently. This deal, there was the sticker price that he wanted for his business, which of course was more than it was worth, but we structured a deal where we’re going to pay out over, I think it was also 18 months, and it was going to be tied to certain things.

Joey: One of the things was we need all of the original project files, video files, assets and everything for every single product you have, and we need all of your contracts that you have with… I mean, just basic stuff you would ask for. I mean, he didn’t have some of it. The stuff he gave us, we started going through and we’re like, “Oh, this is incomplete. This is incomplete.” Our deal was structured so that we still got to acquire those things, but we didn’t have to pay for them. In the end the deal he said yes to, I think we ended up paying a third in the end.

Gene: No kidding.

Joey: We actually, I think, ended up paying less for that business than for the first business.

Gene: Oh my gosh, that’s unbelievable.

Joey: It ended up being…

Gene: And amicably? I mean, this guy, there wasn’t any grudges or he wasn’t angry because, I mean, I think a third of what he was originally asking for sounds like a big discount.

Joey: In honesty, I think he was probably just happy to have this off of his books and not have to stress about it anymore. Yeah, I think it was really stressing him out, having this business that… It had done fairly well for a while, and we were always kind of neck-and-neck in the early years. Then I started hiring and School of Motion just grew and he just kind always stayed right around here.

Gene: I see.

Joey: That’s really, really stressful. I felt for him, and he’s a really nice guy. I think in the end he’s probably happy to get something for his troubles. But what we ended up doing with this, which this is a trick I learned from another friend of mine who has used this trick before, is most people would look at what this guy was selling and say, “Oh, those are products I can sell to my customers.” That’s initially what I thought we would do. In the end, it turned out to be more valuable to take those products and give them away for free in exchange for email addresses, to use them as lead magnets.

Gene: Okay. Wow.

Joey: I have a buddy, he has a business… He built this SaaS business, it’s aimed at designers that work on websites and stuff. He’s like, “How am I going to find leads to sell this to?” What he did was he went out and he found… There’s a bunch of websites where people will, I don’t even understand why, out of the goodness of their heart, they’ll build these libraries of free icons or free fonts or free design elements or textures, and they don’t monetize it. He comes in and he’s like, “You have a thing here that’s worth $0. How about I give you 25 grand right now? I’ll write you a check.” Now you’ve been a business that’s been acquired, you’ve got a five figure check in your hand. All I ask is you help run it for the next six months and then we’ll transition. What do you say?” He gets yeses pretty easily in that case.

Gene: Yeah, and he does it for the data?

Joey: Yeah, he does it for the leads, basically.

Gene: I mean, listen, what you’re really saying is you’re buying a customer list from this guy, it wasn’t… I mean, in the end.

Joey: That’s a way of looking at it, yeah.

Gene: Which, again, is not an uncommon thing to do. Different people value intangible assets in different ways, so sometimes people will buy a business for one piece of equipment because they know they can turn that around and generate revenues often, like we talked earlier, people will buy a business for employees because they know they’re going to provide that value, and then people buy business for intangible assets. It could be a logo, let alone a customer list. That’s what you did, I guess, right? You took this person’s customer list and whatever data that they had, obviously customers and prospects because they’re out talking to the same people you are, and then you leverage that to market other products and services to them. Is that a fair statement?

Joey: Well, it’s even better than that. Yes, we did that, but also we took… As an example, we took one of their classes that they were selling for $100 or something like that. We took it and we said, “Free class, just sign up for a free account,” which means you give us your email address, we can market to you.

Gene: Wow.

Joey: You get a free class, like an intro level motion design class.

Gene: That’s great.

Joey: That thing generates 20,000 leads. Now for us, what is a lead worth? It’s a lot higher than what it was worth for him to have a lead.

Gene: Yeah, you’ve got other things to sell.

Joey: For us to make that class, if we were like, “You know what? Let’s start from scratch and make that class.” It would cost more than we paid for the whole business to do that.

Gene: Right. I gotcha.

Joey: You can buy assets that are products and turn them into lead magnets or just marketing elements.

Gene: Great advice. Joey, just a couple of minutes that we have left. You bought these two small companies and you have successfully converted them into return on investment, which is great. Give me some thoughts. I mean, when you go to buy another company someday, and I’m sure you’ll stumble onto something, what will you make sure that you do or don’t do in the two minutes that we have left?

Joey: Yeah, I mean, I think if we do another deal like this, and I’m sure in the future we will, it seems to work best when you can kind of set up a win-win situation. For both of these cases… I’d say I’m much more interested in the creative deal structure of like, “Okay, I’m buying this business to take a few of these assets and turn them into free gifts to generate leads. Then, based on the sales of that, I can pay back…”

Joey: I guess the advice I would give is just try to educate yourself about the way deals actually work in the real world. I had the same idea I think everyone did, which is if I want to buy a business, it’s going to cost at least a million dollars and the business owner’s definitely not going to say yes to anything lower than that, and I’m going to have to have a million dollar check to give them. That’s not how any deal works almost. I mean, it’s pretty rare, I think especially now, to have an all-cash deal like that. I mean that book Buy, Then Build, I think the author’s name is Deibel Walker, I could be wrong, but it’s an amazing book. It really opened my eyes to how you can structure things, how you can do this with no money, literally no money. You don’t even have to go to a bank. You can structure it so that it will pay for itself or it won’t, but if it doesn’t, no big deal, but it’ll pay for itself out of the business.

Gene: Great advice. Just a couple of takeaways on my side as well is you’re absolutely right, you can structure that plus, I mean, listen, buying a company nowadays and getting bank financing when prime rate is 8.5% as we’re speaking and business rates are higher, sometimes it blows the deal out of the water, so you have to be more creative as to how you want to do your deals. Sellers, if they want to get out of the business, they’ll provide their own form of financing and they’ll take less of a payout or they’ll work longer or whatever because they’ve got an interest in exiting too, so you have to be creative. Joey, that’s great stuff. It’s great… Do you have something else to add? I’m sorry.

Joey: Yeah, I was going to say just… It’s really short. Yeah, so my buddy who taught me all this stuff, I’m pretty sure he’s the one who said this to me. He said, “Your number, my terms, my number, your terms.” That’s kind of a shorthand for what we’re talking about here, and so just live by that. If they want that number, there’s a way to make that number work. There always is.

Gene: Yeah, that’s great. That’s great advice. It is great advice. Joey Korenman is the founder of the School of Motion and the Co-founder of Rolo. We have been talking about buying companies or even if you’re somebody that wants to sell your company or assets within your company, some advice here for you as well. Joey, thank you very much. Great speaking with you. Thanks for spending the time on both of these episodes. It’s awesome speaking with you, and I hope we can do it again sometime in the future.

Joey: Yeah, it was fun. Thanks again, Gene.

Gene: Thank you.

Gene: Everybody, you have been watching and listening to The Hartford Small Biz Ahead podcast. My name is Gene Marks. If you want some advice or tips or help in running your business, please visit us at or Until we meet again. We’ll see you soon. Take care.

Gene: Thanks so much for joining us on this week’s episode of The Hartford Small Biz Ahead podcast. If you like what you hear, please give us a shout-out on your favorite podcast platform. Your ratings, reviews, and your comments really help us formulate our topics and help us grow this podcast, so thank you so much. It’s been great spending time with you. We’ll see you again soon.

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