I know this is an older video, but I wanted to say it was awesome. I read Buy Then Build and paid the $5k for the Acquisition Labs series. You'd be doing a disservice by not using names. While I learned a decent amount from that team, I definitely felt the opportunity was painted in a rosy way. You are much more candid about the risks and trade-offs with your approach. Thank you.
@DavidCBarnett
Жыл бұрын
Thanks Alex. I thought about it, but then realized that I've seen this error in so many places that I thought it would be better to just teach people how to think about it.
@AlexGolimbievsky
Жыл бұрын
@@DavidCBarnett I understand. Appreciate your knowledge and approach, my friend.
@edp1120
Жыл бұрын
that acquisition labs series is now going for $8500
@JosephAlbuquerque
3 жыл бұрын
Thanks, David, Great Content! You are definitely providing valuable information for anyone looking to start or acquire a small business.
@DavidCBarnett
3 жыл бұрын
Glad it was helpful Joe.
@paulntalo1425
Жыл бұрын
Thank you for sharing. 🎉
@DavidCBarnett
Жыл бұрын
Thanks for watching!
@abdelrahmansalah4388
3 жыл бұрын
You are a legend
@DavidCBarnett
3 жыл бұрын
ha ha. Thanks.
@filmaker256
3 жыл бұрын
They also refer to this as..."creative book keeping"
@DavidCBarnett
3 жыл бұрын
Yes, I've seen that too.
@LightyearMG
3 жыл бұрын
If the book was that misleading, then you need to call it out. What's the title?? I'm not sure I agree with your initial math. First of all, you're assuming the total investment of $941k is made up front and looking at the $116k compared to that - it's not. Rather the loan is paid over time, so you need to take the amount of the down payment and interest paid annually compared with that $116k. So based on this, your FIRST YEAR ROE is $116k / $213,915 = 54%. Also, it is more realistic to take into consideration the $100k salary you're paying yourself and look at it as part of your return, so $216k / $213,915 = 100.2% return in the first year. Yes, you are working hours for it but it should still be taken into consideration. I agree with your comments about taxes and capital expenditures and till appreciate the video, though! The numbers are still less than the book would indicate.
@avotero
3 жыл бұрын
Salary added to ROI? No Problem if u work on that biz 2hrs/week… but if u putting in 60hrs plus, you BOUGHT yourself a JOB. Still great buying if u were unemployed as u created yourself a 100k job with say… no college education…. Now … u had some success in life to save that 94K downpayment… and u were laid off from a 250k yearly job so now u work full time and get paid less… cheaper to uodate your resume :-)))) Anyhow… i own a Restaurant… can you please share with me the SBA contact/loan officer that approved that loan??? Just because your math says SBA will give u 900k is more like sn exercise for college biz degree than reality. This looks more like the SBA will want more downpayment since u have no track record in business nor in the specific biz and will come back with a valuation of 500K. But I will take that SBA loan institution lender number now if you have it.
@RomilCPatel
3 жыл бұрын
@@avotero The sba gives 90% of the cost of the deal for acquiring a business as long as there is both cashflow and collateral. Yes they will look for experience, but in that situation I’d recommend you find a financial partner who has experience or a team of individuals who you can hire who have the experience you don’t.
@DavidCBarnett
3 жыл бұрын
Working full time for free just to say I had a higher ROI seems a lot like self-deception to me. Business owners need to look at the hard facts because too many of them are disconnected from the reality of the performance of their business.
@tigreytigrey8537
Жыл бұрын
@DavidCBarnett while I agree, it's best to analyze the numbers davids way from an INVESTORS standpoint (so as to avoid willfully deluding ones expectations). I also think that there is alot more to be said beyond the monetary value of SDE. Assuming the business is profitable and consistently growing, the owner could very well amplify the satisfaction and over all quality of his life purchasing a business with 12% vs investing in the stock market (thats even Assuming the timing entering the market is correct along with market conditions etc. You could very well buy Into the market at the wrong time at which point time horizons play a very important roll in this formula. NUANCE CHECK). A Stock market investment hardly has any positive effect on one's sense of well-being (unless of course your investment shoots straight up. Then it's dopamine city). Another benifit of owning a business is that You also have alot that you can RETAIN if let's say you owe child support or some similar legal circumstance. You can start to play with numbers. Maybe pay yourself less or more as a w2 employee of your own company 🤷♂️. These are all factors that one ALSO has to take into consideration when determining if that "12%" is more than just "12%". Context and personal circumstance changes David's formula. As a business owner myself with a cash based accounting structure, no debt to service and sky high profit margins I love going to work for the 70k I pay myself as my company sky rockets. Even if my growth rate was 1/4 of what it is now Id STILL love waking up in the morning to my assistants having my bfast table and backpack set up giving me updates as I eat. I honestly feel like a damn king. Plus I love that I can pay my employees really well and help them solve any problems that they may have in their personal lives. I also love the feeling of being able to take care of everyone who takes care of me everyday. (I just paid for one of my employees dogs that needed a $2500 hind leg amputation she couldnt afford. She sent me a video of her dog after the surgery running and hopping for joy. It was the BEST FEELING IN THE WORLD) I have a dream life and I'm BARELY going to hit the 600k mark in my business bank account. I thought you had to be a millionaire to live this life style. That's absolutely NOT TRUE. I know you can't measure and put a value on FEELINGS. Feelings DO NOT pay the bills. HOWEVER it doesn't change the fact that good feelings/increased quality of life and a less than stellar deal are not mutually exclusive. You can absolutely have an OKAY deal with a really POSITIVE change in the quality of one's life by buying into a mediocre return of 12%. However like David said it's always best to set the bar extra high when purchasing a business for the "unforeseens" as my dad likes to call it.
@topndropfuturestrading
Жыл бұрын
I just got the financials on a car wash Im looking to buy. I’m not sure how to value the biz. Should I take the financials to my credit union and ask for help? Not sure. Thank you! David
@DavidCBarnett
Жыл бұрын
I can help. email info@alpatlantic.com and we'll send you some information.
@thejedibunny4802
3 жыл бұрын
Excellent video. Thanks
@DavidCBarnett
3 жыл бұрын
Thanks Jedi
@raficfaraj2987
2 жыл бұрын
I have never bought a business but I am seeing a lot of people acquiring businesses without any knowledge of how to read financial statements. This guy just said ROI was based on his down payment. I know it's a long shot if you don't see this but can you make a video on liability with SBA loans. I have been hesitant to get one because of an unlimited personal guarantee and I am looking for Seller finance where I can negotiate that. Do you know as well any type of way to negotiate this? It's crazy to think that they can come after all of your personal holding for a business acquisition.
@DavidCBarnett
2 жыл бұрын
There are videos that address all of these things on my channel. Check out this livestream with Lisa Forrest: kzitem.info/news/bejne/2ZyKlqKanZqreHo
@techgod3670
2 жыл бұрын
Hi, David can u make a review like this for Codie Sanchez Buying a small business program
@DavidCBarnett
2 жыл бұрын
Never heard of him, is there info publicly available? Where can I go?
@rachelmyers490
2 жыл бұрын
This is one of her videos. I would be interested in a review like this as well. kzitem.info/news/bejne/xaOwy4p-m6CBmZw
@RomilCPatel
3 жыл бұрын
What’s the difference between IRR and ROE? Also what’s this book?
@filmaker256
3 жыл бұрын
Return on equity is a measure of return of each accounting period , where irr measures the Annual return over the life of investment
@zanlukamunih6642
3 жыл бұрын
Yeah but is the... why isnt the SBA debt not concidered as leverage for the 94k... is ut then actually a bigger return than the 12%... or am I looking at this from a wrong perspective... as KKR for example... uses leverage (debt) to enhance investor retutns. Isn't this similar?
@zanlukamunih6642
3 жыл бұрын
Oh so sorry totally forgot about paying the bank lol... first time coming over "SDE"... great video
@DavidCBarnett
3 жыл бұрын
It's exactly the same. When KKR uses leverage to enhance investor returns they're using a loan to increase ROE. The amount invested doesn't change. ROI doesn't change with leverage.
@DavidCBarnett
3 жыл бұрын
Yes, they left out the cost as well to make it look better than it is.
@lapp15
3 жыл бұрын
What’s the book?
@rjewing5758
3 жыл бұрын
Buy Then Build
@DavidCBarnett
3 жыл бұрын
It's not important because I've seen this mistake in more than one book and I see it all the time in CIMs prepared by brokers. I want to teach people how to look at the numbers so they can spot this themselves.
@gavnonadoroge3092
Жыл бұрын
tesla has interesting roi
@DavidCBarnett
Жыл бұрын
I believe they make money because of selling carbon credits unless they've become more profitable selling cars lately.
@seanlee2278
6 ай бұрын
Great video that introduces many basic concepts from business schools in just less than 20 minutes! Makes me wonder why I paid such a high tuition for my business degree. You can learn so much from his channel.
@DavidCBarnett
6 ай бұрын
Thanks man, that's a wonderful compliment.
@shaun1258
12 сағат бұрын
This is so important! Thanks for addressing
@rickfromjersey8098
10 ай бұрын
Amazing video, thank you
@DavidCBarnett
10 ай бұрын
Thanks
@ReadingDave
3 жыл бұрын
In manufacturing, we called those machines which have been fully depreciated, but still working tired iron and we have allot of it. Some of the older machines have companies dedicated to rejuvinating them though which can make the equipment a better investment than replacing with something new.
@DavidCBarnett
3 жыл бұрын
Yes, I've seen cranes and other equipment which is used sparingly be 40+ years old in some businesses.
@livingingreenvillenc6904
2 жыл бұрын
This is the program I have been looking for. Will this work for HVAC/Plumbing companies?
@DavidCBarnett
2 жыл бұрын
Absolutely Willie.
@rogerduncan1904
3 жыл бұрын
Would the equity build from retiring debt not be included in the ROI calc?
@DavidCBarnett
3 жыл бұрын
Assuming the performance of the business stays the same, as time goes by the debt would decline and the equity would increase. This would cause your ROE to decline over the years. Does that answer your question, or did I misunderstand?
@kanwalsingh4154
3 жыл бұрын
Thanks David for sharing. this information is so valuable !
@DavidCBarnett
3 жыл бұрын
Glad it was helpful!
@craig5768
2 жыл бұрын
Hi David thanks for the info… do you have a template available for use similar to what you display on the video?
@DavidCBarnett
2 жыл бұрын
No, I just build them as I need them. If you're looking for help on your Excel game, check out www.BizPlanSchool.com Cheers.
@Bari_Khan_CEng_CMarEng
Жыл бұрын
Super guidance, much appreciated. You are a God send!
@DavidCBarnett
Жыл бұрын
Glad it helped!
@oldbluegmc50
3 жыл бұрын
Why do you have so many websites? Why not just a single platform with all of your products and services on one page?
@DavidCBarnett
3 жыл бұрын
It's all at www.DavidCBarnett.com look under the course or books tabs. I like to have easily said URLs so that I can speak them easily when I'm a guest on a podcast or something.
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