About the Host
Ryan is an entrepreneur, podcast host of the show Life After Business and the co-owner of Solidity Financial. Having personally experienced the hazards of selling a business, he joined up with his friend Brandon Wood to educate others on the process. Through their business (Solidity Financial), they provide a platform for entrepreneurs called Growth and Exit Planning that helps in exit planning, value building and financial management.
About the Guest
Troy graduated with a Mechanical Engineering Degree in the 1980s and worked in several manufacturing industries. He worked in the Aerospace and Automotive industry building NASA Space Shuttle and large commercial & military jet systems and then went on to work in the elite production engineering department in a car assembly plant helping launch new car model introductions.
While pursuing his Master's Degree in Operations and Business Management, he decided to leave Corporate America and start his own company over twenty-four years ago. That original start-up company was merged with his current company in 2001 after they purchased Dane Manufacturing. They purchased two other 'Add-on' companies to join with Dane in 2007 and 2009.
In 2013, they started another division inside Dane that manufactures our own products for the residential green energy markets making Geothermal Heat Pumps called Q Energy Systems. This product is sold through distributors and is starting to gain traction in the US markets.
In 2018, they expanded Dane from $13M to $20M and successfully acquired Dantherm Cooling in Spartanburg, S.C. All three entities in 2018 had sales of over $30M.
If you listen, you will learn:
- Troy’s career “working for the man.”
- His shift to the “get in the black or you’re going back” mindset.
- How Troy approached the deal with Dane Manufacturing.
- Why it is hard to say no and why you need too.
- How Dane Manufacturing grew 3 times in 3 years!
- What is organic growth?
- How Troy used organic growth to find great team members.
- The 5 things you need to look at when hiring a top-notch salesperson.
- Why advisors aren’t interested in completing a deal.
- The 3 steps to a successful M&A deal meeting.
- Why attitude and belief are essential.
- Don’t worry about the money.
- The benefits of using an SBA and other advice for finding the right bank for your deal.
- The baby boomer problem and how to combat it.
- The deal that didn’t happen for Troy and why it didn’t work.
- Troy’s book recommendations.
- Troy’s final 2 pieces of advice for the audience.
Troy Berg: Well, we sat down and we set kind of the, the the course to say, I want a three x the company. Again, Mike, I want to go from 10 million to 30 he's like, great, I love it. How are we going to do it? I said, through some organic growth, we're going to land some more big accounts, grow our customer base, get deeper with some of the current customers and through some inorganic we're going to, we're going to acquire one and or two companies.
Announcer: Welcome to Life After Business. The podcast where your host Ryan Tansom brings you all the information you need to exit your company and explore what life can be like on the other side.
Ryan Tansom: Hey everybody and welcome back to the Life After Business podcast. This is episode 133 and today's episode is a really fun one because I have a guest on named Troy Berg who is the owner of Dane Manufacturing. And I came across a three part article series and axial.net which is an online deal marketplace where buyers and sellers of companies come on board to make transactions, to do financing, to find deals, to buy and acquire or to sell the company. So pretty interesting website if you haven't seen it, check it out. But uh, Troy's story was super interesting because he three x'd his company in three years, so he went from $10 million to $30 million. So on the show today, Troy describes how he actually three x'd his company in three years up to 30 million bucks through a combination of organic sales and M&A activity.
Ryan Tansom: So he has a huge chunk of the episode where he's talking about what great salespeople are like, how you should hire them, how he compensated them, and how that really led to a lot of very, very healthy growth. But then also he describes a lot of the learning lessons that he had through eight acquisitions that he did to get him to the $30 million. All-in-all, this as a super fun episode to do with Troy because you've got a huge personality. He's got lots of stories to share. So whether you're looking to buy a company in the near future and you want to scale up through organic sales are through m and a in order to hit your targets and then eventually sell, or if you're a potential seller in the near future, it's got a lot of great stories too, about things that you should be thinking of because Troy's got the buyer's mindset. And then you know that you'll be sitting across the table from someone like himself at some point. So great episode, tons of great golden nuggets from Troy. So without further ado, here's Troy Berg.
Announcer: This episode of Life After Business is sponsored by GEXP Collaborative. Their proven process gives you clarity on all of your exit options and how those options impact your financial success, timing and future happiness. Sell your company on your timeframe to the buyer of your choice at the price you want.
Ryan Tansom: Troy, how are you doing today?
New Speaker: I'm great, Ryan. Thanks for having me.
Ryan Tansom: I'm pumped for this. Uh, this episode because you and I talked last week and I'm, it's a bummer we didn't get a lot of that on the record because I think a lot of the, a lot of the listeners and a lot of owners would have enjoyed that. So we're going to try and recreate some of the, the, uh, the rallying back-and-forth that we had. And as I kind of tee it up, but I came across your three part series and axial about your growth strategy and the crazy things that you've gone through. And so I'm, I'm excited to hear kind of the inner workings of that. But, so for the listeners who haven't had the pleasure of reading that article, which we'll link to, let's take it back, Troy, and like how you kind of alluding to it before we got on the show, but how did you become an entrepreneur and what, what uh, what got you the bug?
Troy Berg: Yeah. Um, so I think probably like many of your listeners, you know, the desire to do it better than where they were working. If you know, some of the big corporations, they just suck the soul right out of the inner human being. Right. You know, and so, you know, when you say, I'm just tired of being in a cubicle, I'm kind of in a number in a big corporation or I, I'm tired of working so hard to have at the end of the day, my, my work, you know, my effort distilled down to mostly nothing from, uh, from the management team above me, the boss, the owner, the whatever, right? So you just go, look man, the human spirit wants to create, wants to develop, wants to grow, wants to build things. I'm a builder. Many men are builders, many women are builders. But you know, you want to build something and you go into someone's business, whether you worked for Ford Motor Company or Hewlett Packard or he worked for Dane Manufacturing, you want to build something and you want your life to, you know, your, your work or the culmination of your years' worth of work.
Troy Berg: And then as you there for several years to be a part of that, you know, growth and building up something. Most everybody, it's the human condition, right? You want to grow, you want to make an impact. So I had been in a couple of big companies and that just, just was not fitting with my soul very well. And the last company I was in, you know, I was making a contribution, a significant contribution because one person can make a huge contribution and uh, you know, the owner would change his president's like you and I would buy a new pair of Allen Edmonds shoes and every year, and he, and another pair I should say every year, and he would change presidents every year. So I've been promoted four times, was running a big part of his factory, making them a lot of money. And uh, you know, the president came in one day and all of a sudden I was out of a job.
Troy Berg: So I said, that's it. I'm not going back to work for the man and you can't make me. So had a little kind of a little, a little saying, you know, that I had in front, inside of my front office or my little tiny office, my 10 by 12 and said, you know, get black or you're going back, you know, and that meant like you better get your, your little startup company profitable or you're going back to work for the man, right? So black or you're going back. Not that they worked for the man is prison, but you know, everybody on your podcasts. No, you know, uh, I think they kind of, it would probably, do you want to be in your own? Do you want to be in your own ship? You want to be captain of your own ship and sailing, you know, plot in the course and then deciding, you know, who you're going to bring with you on the ship and set sail.
Troy Berg: Right. And um, and so yeah, that was for me kind of the beginning of it in 1990, jeepers, 96, so 22, 23 years ago now. So it started a little company grew that from nothing to just over half a million. And then a, the y2k recession came along. You know, some of your listeners remember that when their dad talked about it, some of them lived through it, and then you know, my business was going to make it but it wasn't going to be the same size on the other side of that recession. So I said time to grow you got to get, you know, so then you get the next thing which is, you know, get big or go home. Right. So I had to get bigger and many, many companies, if you start to study it and really take a look at it and try to understand, you know, our government loves statistics and they love to track, you know the census, census.gov side and irs.gov site have tons of metrics out there.
Troy Berg: You look at it, the evening news will always confuse us. There's 28 million small businesses in America are 29 million or 32 million. I always kind of liked to define small businesses is you got FICA, you got one or more employees you're paying FICA taxes for, then you're an employer. There are about 5 million employers in America of the employers. And I'm not picking on anybody that's working on their house. That's that, that makes more money than me. Really, I'm not, I'm simply talking about from my perspective, I've always been an employer. And so if I'm an employer, and there's about 5 million employers, you know, very few make very few break a million, you know, there's a couple of million of the 5 million that stable, a million or below and, and, and lots of those owners have nice lifestyles. That's great. For me, I always wanted to be a bigger company. And always kind of had a background in manufacturing.
Troy Berg: So then many companies never break two, and they don't break five and they don't break 10 and I'll get into that in a minute. But, so I wanted to get over a million. So I went out to look for a company to buy and I found the company I'm talking to you at today, Dane Manufacturing, we started to pursue the acquisition of Dane and it took about 18 months and a whole lot of time of mine, and I got it, about 85% complete with no advisers [unclear] keep your lawyers and your accountants the hell out of the room and just talk to the other seller and try to get far down the road, uh, without bringing in the attorneys, unless you have a really good attorney. Most attorneys killed deals, right? So I got really close, brought my attorneys and my accountants in and we commit, kind of consummated the deal with the owner of Dane manufacturing. Bought it. It was 1.2 million. That was 2001 right after 9/11. The bank almost didn't do the deal because of nine 11 but we got it done. My mom was our investor. That's how I got the first deal done. She came with the working capital or the, the, the down payment. Excuse me. As we, then the next year we broke 2 million. The year after that we broke three and we were on our, we were on our way. And then, um, so I three x'd the company for first time from one up to three. And then, uh, I said, well we can, we can, we can break five and we can break 10. You know, we, I got the capacity to grow and change and keep getting better. What most of your listeners may or may not know is, uh, I am the problem. You know.
Ryan Tansom: Self-aware, I love it.
Troy Berg: In my own company, I am the biggest problem cause I have the veto pen. I'm the oldest sole owner. Now I can say no to anything, right? Saying yes is saying yes, it's easy. Saying no is hard. Sometimes knowing what not to do is the hardest thing. Right? So, so you gotta be careful with your, with your, with your yeses. And so I, I said, um, we got to grow. And so we grew up to five, 6 million got stuck a little bit there for a couple of years. And then we, then we finally, I brought in some more salespeople that help me, you know, split up the big accounts I had landed and then we grew up to 10 million. And then pretty soon we got the 12. So three x, you know, three times the growth, the second time from three up to 12. And, uh, there are three up to nine to 10 I guess would be a better way to say it.
Troy Berg: So I said, okay, we're doing good, you know, one to three, three to nine, 10 we actually had grown to 12. And then I said, man, this is hard. I'm doing a lot of things at a high-end level here and I need, I need some more help. So I brought in a president, good friend of mine, uh, and he had an accounting background and he, you know, so he came in and joined the fight and we... that's Mike, who, who talks in that axial.net article as well. And Mike said, well, what do we owe? So in June of right act, right, right before, excuse me, right before Memorial Day of 2015 I hired Mike. So in June of that year, it was, you know, right after the 4th of July we got back from our holiday and we said, what are we going to do? So this is the first 30 days Mike's been working for me.
Troy Berg: And we sat down and we set kind of the, the the course to say, I want a three x the company again, Mike, I want to go from 10 million to 30 he's like, great, I love it. How are we going to do it? Through some organic growth, we're going to land some more big accounts, grow our customer base, get deeper with some of the current customers and through some inorganic we're going to, we're going to acquire one and or two companies. Cool. So we set the path and then every Thursday, like was chronicled in that, in that article, we started to then meet offsite for a couple hours, you know, so we could stay focused, not get distracted and be, you know, very direct in what you're trying to accomplish. So we had to work through quite a few things. We had to sell a company inside the business. We had to reorganize the factory to be able to take on more work. So reinvest all that money that when we sold that nine core divisions. And so it was about three quarters of a million dollars we netted from that sale and we just poured it all right back in the business. And then we reorganized the factory and started to grow from 10 up to about 13-14 and then about a year from the goal, I'm like, how are we going to get there? We're, we're, we're really [unclear] 13-14, 30 is looking like a stretch. And I had told all my friends, all my Vistige buddies, I'll every, everybody that they're a big, big Beehag, you know, an Fba, like all of it. And they were like, oh, you're nuts. You're never going to do it. So I just, anybody that says I can't do something, I cut them.
Troy Berg: I immediately put them on radio silence and cut [Ryan interjects: challenge accepted.] Except that and I, they, uh, I grabbed my phone and I block color from that on, you know, and then once I accomplish the goal out and block the caller and then post it on Facebook and tag it, tag them and say, hey, how'd you like me now? So, uh, so we ended up, so we ended up, uh, you know, kind of having a, you know, a little bit of a two step process to the final finish line to our 30 million, $32 million goal. So we, um, landed a big client, I landed a big client with my team and then I put my team to work on it on the whale. I harpooned the big whale and that was about a $5 million growth in '18. We landed them in the summer of '17. And then we finally finished the transaction of buying Danthem Cooling. We've been working on it for about four or five months. It went away. We put a letter of intent out there. They took a letter of intent from a different bitter who came in over the top of us that went away. Then in deal terminology, the deal, you know when an a no-shop clause for 90 days with that, that potential buyer on their LOI. So we lost the ability to talk about it with the seller, which was fine. They had, they wanted too much money for it. It was too high a price. So I let them go to get an education and they did and their numbers were heading the wrong way anyway, because the president wasn't running it very well that they had in there. They then in deal terminology, the deal boomeranged back to me. The president called me back and said, are you still interested in the company?
Troy Berg: I said, that depends on the price. If you got, if your seller still, you know, thinks it's worth 6 million, then I'm not interested. Don't waste my time. No, no, no. How about asset value? I said asset value is good. We can talk there. Is, are your assets still around 3 million? Yep. Okay. That's about the number. I thought it was worth last time I offered four, but I thought it was really worth, you know, three one, three, two. So he came to visit me and Madison, we went and had Sushi. Um, he doesn't drink. So we had Osha Green tea and a whole bunch of Sushi and you went away. We agreed on a couple of timelines and a couple of key things. And then I visited the company again, they're in Spartanburg, South Carolina. So that began the process. We then finished that acquisition in June of 2018. So last year, uh, you know, you know, eight, nine months ago I guess, and bought the company and uh, that took us from our, our, our eighteen million, nineteen million up to 32 at the time. So.
Ryan Tansom: And then you unblocked everybody?
Troy Berg: I unblocked a few family members, if you know that I mean.
Ryan Tansom: That you couldn't even resurrect those relationships at all.
Troy Berg: So they get to find out about it from mom.
Ryan Tansom: Well in what I'm so excited Troy is like, you know, you, you said you'd done eight acquisitions throughout this period and that's, you know, that's ridiculous growth that I think a lot of people want anyways. And so I think we'll, you know how we can go with this, with this storytelling, you know, you have so many war stories and I even now we're rallying around a lot of, a lot of the different points, how kind of broken the whole M&A industry is and how you'll learn that through unfortunate situations. And I don't even know what, what thread we want to pull first. I mean honestly like what out of that whole girl strategy, first of all maybe and the organic growth and then we can kind of tie into the M&A. Cause I think, you know, organic growth is always difficult for every entrepreneur. I mean how many times in your business groups have you seen people just waste so much money trying to find the silver bullet of a salesperson? So what are some of the things that you did to actually organically grow the business?
Troy Berg: Yeah, that's a great question. Ryan. I'm really glad you asked it because I, I would like to tell every entrepreneur this story because most don't know the numbers. You are one of them. I am certainly one of them. Um, and, and, and we identified self identified on that first call together, the first couple of calls together immediately as, as not only a-type personalities but guys that aren't afraid of the phone and that can get quick rapport and consult. And so for a very busy guy, you got into my world quickly, gained rapport and I agreed to be on your podcast cause I enjoyed talking to you. You're a very smart guy. Salesmen... Here's the math for all you entrepreneurs. Write this down, put a block around, get a blank white sheet piece of paper. Write this down and tape it to your wall and look at it for about 10 days in a row cause you're not gonna believe me until, until you look at it 10 times, 10 days in a row. And then you'd be like, damn, Troy's right. I've hired a lot of duds. Here's the math. 4% of the salespeople in America sell 92% of all goods and services, 4% the top 96 percentile, the top 4% sellers sell 92% so according to the IRS, there's about 25 million people that identify themselves in sales. That's everything from like, you know the, the camera, the Canon Fax, copier scanner guy who can't get a, you know, a sale anymore because everything's going paperless. They would sell you a car, right? And you know all about that business, right? Your Dad's business. And so now of course I have, you know, 20 printers in my company and I've got another 10 down south and you're
Ryan Tansom: Trying to figure out how to get rid of them.
Troy Berg: I still like on paper, but certainly it's going down. And my point really there is there of the 25 million salespeople, men and women in America, that cell 24 confirmed million confuse the market and 1 million actually move the needle. So when you're an entrepreneur and you're one of those 96 percentile guys or gals and you want to figure out how to find an... Not an a personality and a top a seller, let me tell you how you find them. You have to recruit them away from a very successful job they already have and convince them that they need to come work for you and you put no cap on their commission. You know, cap on their salary and if they make twice as much money as you, you cheer them on the whole time because they will make you a lot of money if they're making twice as much money as you.
Troy Berg: The business is making all kinds of money and you can decide whether to pull it out or to leave it in analytic role. So don't put a cap on your top salespeople. Many people do. It's a huge mistake. Second, second thing before you hire them, there's a test out there you can give them folks. It's called objective management group OMG. Look them up. It's a couple of guys that came out of IBM. Ibm was known for their sales management and sales training for 50 years, a hundred years with what made Ibm Corp Ibm Corp, big blue. You live in Minnesota, they're in Rochester. They still make big, you know, super computers and mainframes that run our banking systems and all kinds of secure defense contracting and stuff like that. Those mini-frames and mainframes and you know, even their big one today, I forget what it's called, what Newton I guess or whatever.
Ryan Tansom: Watson.
Troy Berg: Watson. Thank you, Watson. That was the name of the founder of Ibm Watson. I should remember that. So Watson, you know, we'll to what a trillion calculations in the second or something. The point I want to make is OMG was two guys that came out to IBM that said there's gotta be an easier way. They created a test. This test is administered online. You give it to any candidate and then it will tell you whether this, that dog will hunt or not. And you can save yourself all kinds of agony when they are not a 96% seller. Don't hire them. Go keep looking and don't just slam a warm body in there. The last thing I can tell you is on selling is you have to set the pace. If you're the entrepreneur and your business, you never get to quit selling. You know that Ryan. [Ryan interject: I do.] You are the main salesman for your, your dad's business. I'm the main, still the main salesman for my businesses. You have to suit up every, not everyday anymore for me, but you still got to put on the armor. Used to got to go, go out there and do battle. You've got to grab the Harpoon. Every once in a while I'll get on the front of the bow and and Harpoon that big whale.
Ryan Tansom: There is no silver bullet, right? I mean like, like I said, you know like in the Vistage groups or the CEO round tables or whatever the year in which if you, if the listener's not you need to be, but how many times like, Oh yeah, I'm paying 10 grand a month for telemarketers. They said no appointments or I had this person there, they've been on my salary, they're making a hundred grand and there's everybody's sucking off the tit and no one's actually doing anything. It's just like you got to go do it yourself. You have to take responsibility for it.
Troy Berg: Yeah. There's probably one more thing I would say if you want to, I'm sorry about that. I should turn that off. One more thing I would say about selling people and so I've always offered a reasonable base, you know, somewhere in that 65 to $85,000 range, nobody gets a bigger base selling for me. And then I let them go make $100,000 in commissions. Okay. So I highly incent them to sell and I only pay them two ways: I only pay them on gross margin and I only pay them once we get paid. And so take note entrepreneurs, not everybody pays their bill. And so if you're always paying your salesmen and commission or a salesperson, a commission, I mean no slam on the women listening on the line. I'm all about women power. I've got two girls at home, then my daughters I love very much and I want, I'm the product of a single mom. So I don't mean to be...
Ryan Tansom: Honestly, like on that note, I bet you that million people that are kick ass salespeople, the ones that are women, I bet you they outperform the men, too.
Troy Berg: I bet 650,000 of them are women and they outperformed the men two to one.
Ryan Tansom: I bet you you're right.
Troy Berg: Women are the superior sex, as we know. So for sure. So the, the thing that I want, the other thing I want, I only pay on gross margin and I only pay after the company has paid. And that's an important fact because you want that salesperson to uphold margin. You just don't want him to go out and sell, you know, a hundred brand new, you know, printer scanner copiers at basic would cost because now you're just trading dollars. You want, it sounds like you're talking to mark.
Troy Berg: So, so what does, what the OMG test does is it's called a sales profile with the sales profile. Does does is it looks at five areas of weakness. Okay. So you know, you can go to their website and get these things. I'm, I'm just going to spot them off off the top of memory. I'll give him the test over a hundred people and only four have passed, you're talking to one of them. The other two sell for me up here at Dane. And I have one that sells for me down in Danthem. And I've given that test over the last 12 to 14 years to 100 people. I joke, I do not joke about numbers like this. I've given the test to a hundred people. Four have passed right by it. I regret not hiring the fifth guy cause he passed it higher than most of my other guys.
Troy Berg: And now he's selling for a friend of mine's business doing really well. It wasn't the right fit at the time for us. That's my only regret. Not, not, not, not seeing past that and just bring in gym in here. He, Jim, Jim did. So five out of a hundred of faster, pretty close to the numbers I told you. Um, it looks at five weaknesses. Number one is their, you know, ability to handle rejection. You've got to take a lot of no's before you get to a yes. Ryan, I don't know how many people you call before I said Yes to do your podcast, but he probably had 20 that day and I was your 21st.
Ryan Tansom: When I started the copier business, it was 400 phone calls, 15 appointments, three proposals and one sale every single week.
Troy Berg: Man, that's some math, that is grinding there, man. Smiling down as we call that. Right? Holy smokes. We're totally, so yeah, your weld geared for the, uh, the, no, the, the second area of weakness you'll tend to see in a salesperson that doesn't perform is, you know, they're uncomfortable talking about money, you know, in, in a copier sales, uh, corporate account. Ryan, you could walk in and take a quarter million dollar order or $1 million order for multisite locations for Medtronic and you had to be comfortable talking, you know, four, five and six figure numbers, sometimes even seven figure numbers. Right? That contract I negotiated last summer was a seven figure contract across three years and it's the biggest sale I've ever had. But I was completely comfortable in it cause I knew my math and I had been working on six and seven figure deals for a long, long time. So you got to be comfortable. It's called money tolerance. You have to have a high money tolerance.
Troy Berg: Number three, you can't think like a prospect or a potential customer, give them the chance of shop around. If you think like, I want to go shop at every store at the mall before I buy a pair of jeans or I buy, you know, a Valentine's gift for my sweetheart, you're not a good salesperson. You know, you need to be decisive. Get in there and make a decision buy the, buy the uh, you know, whatever pair of jeans you want to buy and then get out. That's how I shop. So if you think it's okay for the prospect to look around and think to take a long time to make a decision, that's a weakness. Number four, you have to uphold margin. When you give a quote, you know there's gotta be 20, 25, 30, 35, 40 points in there for your, your company and you're getting a percentage of that. If you're the sales person, the more margin you that you bring your company, the more you should be compensated as a salesperson. Remember that entrepreneurs pay your sales people, the more they bring the company, the more you they should get. Make it proportional, make it go up as a percentage, right? So number five then is the fifth area of weakness is got to think about it now, oh this is an old term, but for the non, you know, silver haired folks on the line, it was, you know, it's like in your mind I'm having a conversation with myself trying to remember the fifth thing I'm going to tell you. We talk to ourselves at about 900 words a minute and then I talked to you at about 150 to 200 so that doesn't mean I'm crazy. That's your mind. Talking to yourself. Trying to remember, you know, pulling its memory banks to think of my next sentence.
Troy Berg: Okay. You're not crazy. You don't hear voices in your head. It's called self-control. I don't control the self talk in my head. The term they use in the Kerlin is, it's a broken record collection. If I walk into my appointment at Medtronic to sell them on a thousand copier bid and I'm nervous because I really want this sale and I haven't hit my numbers for the month and my commission's down and I got to make my rent check or my mortgage, you know, go out and my wife or my girlfriend or my husband's on me or I really want that new car or that new outfit and I really, you know, or my credit card bill's due tomorrow and I'm thinking about all that stuff and I'm nervous because I want, I really want this sale. Don't think for a minute that, that, that smart woman on the other side of the table isn't picking up all your nonverbal cues. You give it off. She's going, ah, okay. Crazy boy. Get the hell out of here. I ain't buying nothing from you today. And so you've got to control your self-talk, you got to control what's going on in your head. You need to have a very clean, you know, mind walking into these sales calls and it, and you need to do it when you get on the phone too. So
Ryan Tansom: We usually call that Troy has called it, uh, MSU, which is making shit up so seriously. Like as you get, we had 20 sales reps and he'd be like, okay, so if I don't get this deal, if I don't get this deal, I don't hit my quota. If they don't have my quota that I don't hit my bonus, but I don't have my bonus and I can't get the car. If I don't get the car, then I can't drive my kids today, you know, and then all of a sudden you're broken. You're on the streets all within like 30 seconds.
Troy Berg: That's good. Right?
Ryan Tansom: No, it's, it's huge man. Cause like I actually got multiple clients that we're working with too right now that like, you know, the, the repeatable sales division is always the hardest thing. And they think these people don't exist or they give them house and home and equity for no reason. And it's just, it's a, it's a huge pain point and a lot of companies,
Troy Berg: Sales. So find yourself, find yourself an a, you know, a top a salesperson. She's out there, she's probably frustrated selling for you. Look Packard or you know, IBM and she wants to work for a smaller, more nimble company. She doesn't want to take a 50% you know, backwards haircut and salary. She doesn't mind taking a little bit of a risk, but you know, show her, show her how she's going to make you know, her six figure salary, 150 or 200 grand working for you, even though you're not taking that right now cause you've got to start up company or you've got a brand new company that you know, you're only taking $100,000 salary or a $70,000 salary and it's okay if she thinks 200 cause now she's going to take your company from 1 million to 3 million or and, and don't, and, and believe me, there'll be plenty of cake for everybody at that number. And so you'll be able to give yourself pay raise if she hits her goals and goes and lands that big whale. So a types sale, you know, top meaning like the best salespeople pay for themselves as do all a players in your company.
Ryan Tansom: Yup. So, uh, shifting gears a little bit, training like on that, on the m and a that you went about. You know, maybe let's just kind of like, I don't know if we can recreate that conversation we're having, but like, you know, you were telling them, you know, you never talking about how kind of broken the whole thing is. So like, you know, before we kind of go into any like specifics or maybe if you want to, like what is some of the big takeaways that you had with your own all the acquisitions, whether it's the advisor's deal structure, you know, you know, inconsistent value valuations that are on what, like what's your overall take on your experience that you've had?
Troy Berg: Yeah, great questions. You know, when I was younger, 36, so go back 20 some years, you know, I guess I'm 54 now. So 18 years ago I was like, man, you know, how come transactions and deals and stuff are so gnarly and how come, you know, there's so much stuff I just don't know. Right? So I bought this silly little book at the bookstore, Barnes and noble, right? Go in there and I find this how to buy or sell a business. Right? And it's just like this paperback book written by a business broker that was out of Minneapolis that had been, you know, selling for like 40 years, helping people buy and sell companies. And there was just some key things in that book that really helped me understand kind of the facts, the facts. And that's how I got to be like 80% 80 to 85% done with my deal at Dane before I had, before I brought in my accountants and lawyers.
Troy Berg: No, I didn't realize that. I didn't, I wasn't done, you know, so I had things I had to get done yet as far as like raising my money and get my working capital in place and getting the bank behind the deal. So maybe I wasn't 85% done. Maybe I was only 50% that I'm looking back on it. But my point really is 80% of businesses never sell at 80% of the deals just never close because big egos are sitting in the room. And so your job is you're trying to do a transaction and believe me, I've, I've bought a companies and bought eight companies and sold one. And so is your job is to, you know, check your ego at the damn door and be a little bit humble if you're trying to get a deal done or you're just going to be like all the other friends at the club or at the bar or wherever they're, they're bragging or talking, you know, you're just, yeah, I started that guy.
Troy Berg: He wanted too damn much money for his business, you know, and I'm like, well, what did he want for it and why do you say it was too much? You know, that's usually this bravado and ego talking because he couldn't submit their ego at the door and they didn't get the deal done. So they fall into that 80% of deals that never happened. Lots of people want too much money for their business. That's not a, that's not a surprise. You know that Ryan, the job of the entrepreneur that wants to get a deal done is number one not to overpay, but number two to understand the psychology that seller, right? There's always lots of room and lots of lots of ways to be creative on a, on a deal structure to get a deal done if both parties are truly interested in completing a transaction.
Troy Berg: So oftentimes we don't know. We don't know. And if you're dealing with an entrepreneur that started the company on the other side or took it over from his dad and grew it up big and wants to sell it, now it's his one transaction or her one transaction for the family. They aren't an expert at it either. They've been listening to their damn banker and they're damn lawyer and they're Damn CPA way the hell too much. Cause those jackasses don't know how to get a deal done either. Right?
Ryan Tansom: First of all, they, they lose, they lose a client, too.
Troy Berg: And they lose a client if they don't really want you to get the deal done. Think about it for a minute, guys and Gals, that the minute that entrepreneur that's, you know, going to sell to you, sells to you, you, you being the younger entrepreneur probably in the room, they're going to lose a client because you've got your own advisors or unit or you live in Saint Paul and that, that business in Minneapolis or you live in Saint Paul and the business you're buying is in Milwaukee or Chicago or whatever and you're going to pick it up and move it to Saint Paul or Minneapolis. And so and so, you know, they, they're not incented to have you get the deal done. So there's, yeah, there's all kinds of things swirling around in that room. Be a student of the deal, understand the psychology of the human, understand there's an emotional connection to the business for them. Don't come in guns blazing, you know, calling, calling their baby ugly column, the column them stupid thinking that you can run it better than them and you can grow it quicker than them because you need the deal to close. So, number one, check your ego at the door and have some humility at the table. Number two, you know, listen, they'll tell you what they want if you listen and take notes and don't let any advisers in the damn room, uh, the people I just talked about, the bankers, lawyer and a CPA to say, I just want to take you to lunch.
Troy Berg: I just want to meet with you. You know, get them outside the company, tried to get some rapport with them and try to spend an hour and a two hour and a half to two hours with them and find out what they've done with the business and how they've done it. You know? Lastly, the third thing I'd say is they're not just going to sell it to you or give it to you for, you know, to anybody, they might have their whole life invested in the business like your dad did in your business, Ryan, and you want to sell it. Knowing that your hand enough, your, your, you know, your, your hand that you're thinking your, your kid and your dropping your daughter off at college where you're dropping your kid off in kindergarten, whatever you're at in your life cycle and you wanted to make sure that that teacher on the other side, that that entrepreneur on the other side, is going to take good care of your company.
Troy Berg: Or you're, you're in a transaction where, you know, it's a big corporation, they're buying your company, you know, and it's, it's a bag of money is different. No different kinds of transactions. But for the, your audience is mostly like me. They're trying to buy a company, not destroy the value, either bolt it on to their current company or have a dual location. Know they're, they're an insurance company in Minneapolis and they want to expand in the Saint Paul or they want to expand into Auclair, Wisconsin or whatever, right? They want to expand geographically and they want to expand the customer base. Maybe it's a virtual business, maybe they don't even need that physical plant or a physical location and they just want to, you know, they want to expand by buying customers and having more people. Maybe it's a, maybe it's people they need, right? They're buying the business to have more salespeople or to just do a talent acquisition.
Troy Berg: There's lots of reasons to do acquisitions, but understanding kind of that, that person on the other side of the table, you know, that they want to see you treat their employees decently, right? They want to see you be a decent human being. So remember that when you're dealing with something a little bit older and don't think for a minute that there's not opportunity there, just kinda guard that you know what your intentions are to do with the business. When they start asking you what are your intentions to do with the business that well, I'd want to know what you, what you'd do next, Mr. Owner, cause you know you've been here a lot longer than me. I don't know the business as well as you do. What would you do next if you were me, if I was you and I had your energy and I, you know, I'd go expand in the Saint Paul because there's lots of opportunity over there or whatever. Listen to them, write down notes. Be sincere because odds are they probably have some good ideas in those nuggets, right? So, so the last part I'd say on getting a transaction done is
Troy Berg: don't think for a minute, oh my God, I don't have the money. I'm never going to get this deal done. Cause that's the self talk stuff in your head. You know that I talked to, you know, you and I talked about this, right? Uh, Shawn Achor wrote the happiness advantage. Darren Hardy, my CEO coach, interviewed him on the senior to that, the day before I talked to you. And 25% of success is geared around intelligence and what you do with it, right? Skill and intelligence. 75% of success is your belief in yourself, your attitude, and your associations, right? Obviously your listeners are associating with you a winner. So they're trying to get better. They're listening to me a winner. So there are associations are already taking care of themselves. It's attitude and belief in themselves. So when you go into a transaction, just for all your listeners, I never had the money for any of my eight transactions, never had the money when I started to buy the company.
Ryan Tansom: Okay, so you got to have to expand on that. For the listeners, where did it come from?
Troy Berg: Never had the money. I had faith in myself, belief in myself and belief that I could convince somebody to give me the money. So it is, it is, it is. You know, you can't go on with zero. But like when, I'll give you the numbers on Dane. When I bought Danemanufacturing, it was $300,000 I needed, okay? And I had 50, so I was clearly, this is 2001 dollars okay. So it's not that much different than today's dollars and right. I was a quarter million shy of goals in my deal and I worked for 16-15 to get the deal done. And I could tell the banks getting a bit nervous. I can tell that the uh, the seller's getting a bit nervous, my CPA is getting a bit nervous. The law firm starts asking like, where's the capital coming from? I got it handled. Don't you worry about it?
Ryan Tansom: Yes.
Troy Berg: So I had an investor and the investor was yes, yes, yes, yes, yes. Until two weeks before closing. And until he was a no. And folks, I want to tell you, partnerships don't work. So I'm not talking about having a partner. I'm talking about having a silent investor that was a different kind of partnership. They have no control. They simply have an investment. They're hard to find. They usually come in form of mom or dad or uncle Mike and a, so my mom stepped up huge and help me close the deal. She remortgaged your house in North Minneapolis and you know, I closed my deal and got the first deal done. Now I went on to pay my mom very handsomely for that investment. She, we figured it out. She earned about 16% interest compounded over 15 years. So I. Yeah, I made a, you know, 12 times 15 is 180 payments. And uh, I kept changing the amount a little bit more each. Not every year, but you know, it started out as 2,500 then I went to 3,000 so she could buy a new car. They know what the 3,500 and then it went to 4,000 and so by the time we got done with the money stream, it was almost $600,000 to my mom cause I love my mom and she got her quarter of a million dollars in principal back and. Yeah. And my mom's a great lady. She's still around and we're still very tight and so don't worry so much about the money. The money will be there. If you have a huge belief in yourself, capital will always find a good home. And so there's so much capital sloshing around right now in the market. You and I talked about this last time. I'm looking for a place to go. A safe investment. One of the fastest returns on a, on an owner on an investor's money is still in the SMB. The small to medium sized businesses. You know there's, there's four and a half million of them in America and US entrepreneurs. We work really, really hard to make sure that that business is black. So we don't have to go back to work for the man and we'll, we'll, you know, we'll stay up all weekend making payroll on Friday, spending all weekend trying to figure out how to make payroll happen. Cause cause we didn't the have money.
Ryan Tansom: Because you gotta, because there is no other choice.
Troy Berg: Check's got to clear on Monday or you're not going to have employees on Tuesday.
Ryan Tansom: Oh you can, you can always do manual checks. I've done that before. You know, it gives you a little bit of flow into a little bit more float. So I actually to follow that, that whole train of thought. Uh, Troy, what other than you know, that that swooping in and your mom, what about the other transactions? Was it, you know, you didn't, it was at banks that were the problem. What were some of the other ways that the financing?
Troy Berg: That's a great point. You know, so, so you and I talked a lot. You know, I grew up in Wisconsin and I lived in Minneapolis, Bloomington for a long time, so I love you don't have that, you know, Packer-Viking rivalry thing. Uh, you know, I got lots of friends that are vikings fans and, and, uh, Minnesota wild fans. And I got, you know, lots of friends that are packer fans and Blackhawk fans, you know, and so I just see, I just see lots of shades of gray there. I love them. All right. And, uh, I always love to come to the twin cities and I'm going skiing tomorrow with a bunch of my buddies from Bloomington, Jefferson. Right. So, you know, at the end of the day, what I want to share with your listeners is that, you know, don't think because one bank says no to you, that that means no, that just means that that bank doesn't want more of the investment that you're bringing it.
Troy Berg: Right. The risk that you're bringing it. So let's say in my world it's manufacturing companies and I need, you know, I've got real estate, I've got big machinery and I've got inventory and ar. Not every bank wants, you know, to, to finance your, your manufacturing building or in your case your inventory or in someone else's case, their, you know, their software development. But there are banks out there that do. And so your job as the entrepreneur is to not be offended by one, no. From a bank to keep going through all the no's until you find a maybe or a yes. And so bankers are notorious for being conservative because they want, they, they, they really have one, got their money back as green stuff called money and they kind of expect you to pay it back. So when that tide, as bankers sitting across from you know, or doesn't believe in your dream or doesn't believe in your vision for the business that you want to do this acquisition, that's his issue, you and the, you need to believe in yourself and you just need to keep shopping for banks.
Troy Berg: Okay. So that's always my encouragement. Entrepreneurs. The other part about the, the working cap or the, um, you know, the, the money will be there once you find a deal, oftentimes you can get the seller to finance the deal. You know, this Ryan, you know, don't go into the deal looking for the seller to hold paper as they call it, deal terms, right? To hold paper on 50% of the business go into the deal. Genuinely working hard to, you know, find the capital, bring your own capital, leverage everything you've got, leverage everything your family's got to get your deal done. You know, and then knowing full well you better make it work cause your mom and dad want to be paid back. And so does uncle Mike and Thanksgiving. It's awful tough if you don't pay back uncle Mike or mom, right? Yeah. So you'll work your butt off until you do that.
Troy Berg: Um, and, and then, and then there and then they're going to come back, you know, four, five years later going, oh honey, I need you to do it. I had faith knew the whole time. No for a fact. There was times where it was dark for him. They weren't sure you were going to make, but if they loved you, they hung in there with you. So the thing I want to share with your listeners really is, is that in the Midwest, specifically Minnesota and specifically Wisconsin, the bankers are the most tight-ass you'll ever find in the country, so get out of Minneapolis and get out of Madison, Wisconsin and get to more, you know, friendlier places. Iowa, believe it or not, it's got a lot of bankers that are a lot less conservative because they already have a bunch of conservative stuff called farmland they've financed and they want to do something with, you know, financing something else. Listen to them. That's a diversification because they're not an Iowa with some, a piece of dirt, you know, for a pig farmer or a dairy farmer. Same way in Wisconsin, you know, you get out of Wisconsin and go to Illinois. Chicago land, that guy's, that guy's got all kinds of real estate loans in downtown Chicago. He's got a concentration that, you know, MD financial or fifth third bank or some other big bank and he's looking for smaller loans in the SMB market, the, you know, uh, to do a deal and it's a sharp entrepreneur out of Minneapolis or out of North Dakota, you know, he'll do the deal, you know, they're looking to deploy capital in states and areas other than their own. And I will tell you that Minnesota and Wisconsin, they have some of the most tight ass bankers I've seen. We talked about that, Ryan, right?
Ryan Tansom: Well, it's interesting. One of my clients actually just had a, they just got a new bank from a North Dakota and they just did some amazing shit for him, which just pretty cool.
Troy Berg: North Dakota has got some great bank and going on right now. I've heard the same thing from a bunch of people. There's all kinds of money over in North Dakota from the, you know, the people that are sitting on hundreds of millions of dollars from the natural gas and oil that's flowing out from underneath their farmland now. And they start their own bank and now they want to put that money to work and get, you know, 5-6% return on it. Cause they aren't, they, they got more than you know, what to do with. And so North Dakota banks are being very aggressive right now. And if you're, you know, if, if you're in Minnesota bulldog or you're a, you're a Minnesota goal for, you know, I get, I get the hockey rivalry with the, you know, the fighting Sioux or whatever they call themselves these days. They had to change your name. But you know, I get the rivalry, I get the rivalry between Wisconsin and Minnesota teams. I get it. Don't come here for banking. It's worse than Minnesota. Over to North Dakota. Over to Iowa. We did our last deal with an Iowa Bank that came forward was 5 million bucks in a great package. And it's been a great relationship, you know, um, I'm also shopping in Chicago land. I also would shop, I would shop in others, other bigger banking cities, you know, banking, metropolitan areas, right? So Minneapolis has got a lot of big banks, but man, are they conservative sometimes.
Ryan Tansom: Wha'ts interesting, Troy is that, you know, whether the listeners are planning on buying or selling. Like you and I were kind of talking about this cause I think, I mean literally it's the same numbers that I was, I rattle off all the time. I was just actually on a podcast earlier this morning and you know, the 27 million companies, the 5 million, and most of these are our boomers, right? So the big challenge that is out there right now is that, you know, next generation doesn't have the capital, right? So like, it's almost like the, if there's a listener right now that wants to sell, they should actually help find the financing for the potential buyers, too. Right? Because, you know, there's so many willing buyers and sellers out there, but the financial mechanisms to actually help with that transaction are totally effed up right now. It doesn't actually facilitate that. So I think it's great for both sides.
Troy Berg: Yeah. And, and you know, and then the other thing I would tell your listeners, even though the processes sometimes long, if you get the right bank, uh, they can make it happen. Rather they can shorten the process to be, you know, 60 to 90 days. Don't discount the SBA. The SBA has got some decent packages. They charge a lot for their fees. And that's always been the gripe that everybody, you know, that doesn't SBA deal complains about. But here's what I always save to, to those guys and gals. Yeah. Well, I'm, I'm probably going to see about a 30% rate of return on my investment in our company down in Spartanburg, South Carolina. Do I care that I paid 7% interest versus five and a half? The going rate one and a half points on a, on a 30% rate of return. I guess I'm only gonna make 20 and a half points on a rate of return on that small, medium size business.
Troy Berg: I think the return can be as high as 50 on the return on asset investment on the Iro Ai. So it becomes mice nuts sometimes when you, when you look at that. So, so keep that in mind, you know, well Geez, they're going to charge me $37,000 in fees to get the deal done. Yeah, and without them you ain't getting the deal done. And at the end of the day, earn yourself out of those fees by just going and being more profitable and for in the first year because you might be, we'll make that up in one or two months worth of profitable sales and then you go, good thing I own this company now and I guess I don't mind so much that I had to pay 37,500 in SBA fees because without the SBA I wasn't closing the gap. I want to explain the SBA just for those who misunderstand it... The SBA steps in and fills the gap in the risk pool for the bank. So if I don't make it and I don't pay back the money, the SBA pays the bank back and then they take it out of my hide for the rest of my life by garnishing my wages when I go back to work for the man. So the SBA stands in the risk gap between the entrepreneur and the bank. And so the bank loves the SBA deals because they have no risk. And so oftentimes it's okay to bring them in. You got to pay a fee because the SBA is, is just like the, um, I think it's the IRS. There's only two branches of the government that's self fund, right? The IRS and the SBA. IRS needs money is I think the SBA and one other one Smithsonian, they self-fund.
Troy Berg: So Sba actually self-funds itself. In other words, they need no money from Congress to continue to run because all the money they collect on the fees for the loans that they write and underwrite pays for the salaries of all of the workers at the SBA, small business administration and the federal government. They're one of the only organizations in the federal government that self-funds. It's okay, that's good. And pay the fee, be happy to own the company and go make the money and pay it back in one or two years. It's a small consolation to get access to the capital to own the company. So how about that? Help the buyer know that and there's nothing wrong with it. I've done two, I've done three SBA deals of the eight that I've done. My last one was an SBA deal cause we, you know, we went from 10 to 30 million and... from 20 to 30 I should say.
Troy Berg: And we needed that risk pool to, you know, to get the bank to get comfortable with it. Not because the parent company wasn't strong because the target we were buying was so bad. Okay. Sometimes the reason to bring in the SBA is, there's lots of reasons to bring them in. The other part is help the seller understand because you're young and you're an entrepreneur, and he's a boomer and he needs to sell his business, that it's okay that you bring in the spa. He may not like him, but he may not understand it either. There they stand in the middle between the bank and the and the, and the risk and they buy, they suck up all that risk. And so it's, it doesn't mean that the borrower is any, is a bad person because they can't get a traditional bank to say yes. Does that make sense?
Ryan Tansom: Totally. And like it, no, I think it's something that everybody needs to know. Whether your sellers or buyers, and I think he, just to our points, right, is that there's gonna be a very, I mean, just if you think about math and like if you got someone that's in her thirties or forties or even in their 50s if there've been working for the man, you can only accumulate so much safe. Right? I mean it unless you get an inheritance or a windfall somewhere. But that's usually businesses. So it's not usual that someone's got sitting on a bunch of capital that can just purchase a business. Yeah. So you're going to have to have a financier here and there and I think you know for that you don't, for the buyers I, I was, uh, on this podcast are where like I'm encouraging anybody that are in their 30s and forties start, start getting prepped and start looking for these companies. It because the boomers that are listening too, they need people to step up to by these companies. So it's like, and if the SBA is gonna, you know, go in and suck up to that risk, it's like, hey, why not? I mean, and the seller gets most of their cash up front.
Troy Berg: I want to speak to both sides of it here for you. I couldn't say you said it so beautifully. I would simply add to that, that that we are in unprecedented times because these boomers held onto the business too long. Last cycle, they should have sold in 2008 and they wanted to make another year's record profits in 2009 and we know what happened. The car went off the cliff and then they had to slog back in there and work their butt off for the next 10 years to get to the top of the cycle. By the way, we're close to the top of the cycle and they need to transfer that thing now or they're never going to be able to enjoy their golden years. They're in their late, mid, mid sixties to mid seventies and they need, and their kid doesn't want to buy it. They have to sell that business, you know, and if they don't, they're going to die and then they're widow's going to have to sell that business and she doesn't know what she's doing salad and or vice versa that he doesn't know what he's doing when you sell it it cause she, she built it and grew it up.
Troy Berg: It was her dad's business and she took it over. Right. So again, no sexist comments coming from me. The point I want to make is that those businesses have to transfer. You got to let those entrepreneurs, those younger entrepreneurs have control of it. And in order for that to happen, there has to be, you know, we're an unprecedented times. There's 3 million businesses, businesses that got to transfer in the next eight to 10 years. [Ryan interjects: It's crazy.] Crazy, unprecedented times. And so it's a great time to be not, and there's all kinds of capital looking for a place to go, you know. And so, again, our government has a lot of it through the SBA. The banks have a lot to lend through private individuals at the same time, you know, it's, it really comes down to getting the deal done, belief in yourself, getting a deal done and sticking in there and, and just say, enough, I should be the owner of this business, not because I'm better than you and I'm just because I'm ready to take the baton from you, Mr. Owner, Mrs owner. And I'd like to help, you know, take care of the business and take it to the next level or just maintain it. You know, you don't have to tell all that you're going to do with it cause they're not necessarily interested in here in that because... be humble.
Ryan Tansom: So as far as like your, your experience with [inaudible] kind of two things. One is advisors. Yeah. You wrote these deals and then also deal structures. Any, any comments or thoughts on like, you know, you and I were kind of talking about how, you know, I think I might, I don't want to, I don't want to prime you too much, but I think they're like those stats that you had about salespeople, they got to have something similar about actually advisors that are worth a shit and versus, you know, people that actually understand how this whole game works.
Troy Berg: Yeah. So you know, there's, there's, there's so much terminology I call it, you know, country club talk. I don't, I don't belong to a country club, but I have plenty of friends who do. I always say, I don't have to belong to the country club cause I got lots of friends that. Yeah, I can go with it, go with them and ride on their membership. I don't have a lot of time for pretension so I prefer to just kind of do things and then talk about it after it's done versus bragging on it, you know, at the club or whatever. So, um, what I would... I guess a few things I would like to share with your listeners is that there's so much language around deals and deal structure for those of us that have done a lot of deals, there becomes a, you know, a way of talking about it and sometimes you don't understand those terms and they're not necessarily in a, on a Google, you know, look up.
Troy Berg: Right. And so sometimes you need to get yourself around the entrepreneur that's done a few deals or the podcast that you're putting through Ryan, I'm sure that there's a bunch of terminology your listeners can get from a, just talk and listen and talking to them, listening to the people you interview like me. What I want to say is the advisors and getting deals done and in a lot of that stuff, you know, a lot of times they're full of shit. They're just guys and gals that want to want to associate with the winners and they'll waste a lot of time and, or some of your money, they'll take some of your money and they don't actually really do a lot of transactions. So one of the reasons I joined axial.net was because that was a serious, a serious community online that, you know, it costs a lot of money just to join where there's a bunch of serious cats there.
Troy Berg: That're trying to get deals done and or finance deals and, or sell a company, right? And so in that community was very serious players. At the same time, there's other people that are hanging on to that community that are pretty serious but just can't afford to be in that inner circle yet. Okay. So that's a great spot. There's a lot of great resources online too. You know, my CEO coach, Darren Hardy, you know at, you know he's got a lot of people that subscribe to his stuff. He's got a thing he does every day is called Darren Daily. It's just really good positive stuff and put it into your brain. You got to watch the inputs to your brain, okay? Because if you're going to keep a positive mental attitude, a belief in yourself and some of that, you are not finding it on Fox news channel.
Troy Berg: You're not finding it on MSNBC squawk box in the morning. Turn that crap off. Quit watching TV. You want to get a deal done? Quit watching TV. You know, 92% of the crap they're selling you, all that fear of they're pumping out at you on that idiot box never happens. Okay? The other 9% or 8% that's left over the other 7% doesn't happen the way you think it's going on. The only 1% actually happens. So if it's, you know, it's just fearmongering, I hate it. It's sensationalization of if somebody else got shot in downtown Minneapolis today. Yep, they did. Does that mean I shouldn't go to downtown Minneapolis to have lunch with my potential banker? Nope. You better, if you want to get a deal done. You know?
Ryan Tansom: Yeah. Somebody, how about the advisors that you like? You know, which no, I think you're spot on. It was a lot of it. How about like, you know, so many, you know, kind of what I see as like so many people did. They just turn to the first person that they trust, which they are not in the business of doing deals. Right. So whether it's... and sellers, more so than you know, cause buyers, they can, you know, they can kind of fumble their way through stuff because there's not as much risk on the table other than, you know, loss of losing a deal. But you know, these sellers turned to like the first advisor, CPA, banker, attorney, and they're not in this business. And then there's all this jargon that gets thrown on that the, did people think it and I just don't know what you've experienced over at all the eight deals you've done.
Troy Berg: Yeah. They're, they're, you know, of the eight deals I've done, there's a hundred I haven't done. Right? Cause know because of the jargon and the stuff you're talking about, the, the jackasses in the business that are walking around acting like they know what they're talking about. Convincing the seller to... I'll tell you about one deal. I didn't get done. I, I wouldn't say I regret it, it's just, it just didn't happen. It was a good deal. And I would have been great for that business. So it was one of my CEO peer, one of my CEO peers in Vistage and he was the other Alpha male in the room. I was the young Alpha Alpha male in the room. And he and I always had the best advice for the other 14 people, you know, that we're sitting around in the, in, in our business group. Right. So we'd always give the hard, hard advice to the business owners in the Vistage group. Uh, and I'll leave his company's name off and his, you know I'll just call him Jim. Okay. So Jim was going to sell me his business after, you know, having a very successful run with it. It had really nice, he would uh, Jim was going to give me the startup, the basically the work, the uh, the downpayment and I, it was uh, it was a no money down deal on a $12 million and I'm sorry it was a in sales, whether it's about a 15 to $16 million company, 2004-2005 numbers. So it's about 15 to 16 nine or company. It had three divisions. It was an old line company, but I could have, I could have grown that thing a lot.
Troy Berg: And it was been around for 135 years. It was in a small, rural town, not too far from where I live. And Jim liked me a lot and thought it was a pretty sharp guy. His CFO, however, was going to become one of my new partners. So the money that he, Jim was leaving in, he was leaving 2 million bucks in the deal and another and he was going to hold the real estate and he wanted 12 million for it. So I, I spent about $40,000 in legal and CPA with my good deal lawyer and my good deal CPA writing it up and we were really close to getting a deal done. At the last minute, his CFO convinced them not to sell it to me because the CFO didn't like the fact that I was only giving him two and a half percent equity. If for the 500,000 that Jim was leaving in for him, not 5%. He thought I should give him 5% and I should, I should have four partners in the business that had 5% equity stake.
Troy Berg: And the problem with that is now all of a sudden those four guys, you got to have 81% or 82% Wisconsin state law to have majority. Now those guys get preferential treatment because that I don't have a majority position. So it created all kinds of legal challenges for me. So instead of just giving them each four, I said, you know, you get two and a half cause we're going to grow this thing and that's going to still be worth 1 million bucks to you and you didn't put the half million in. Jim Did. So you should be happy with that. You know you're going to all walk away millionaires and you've just been the CFO here for four years, you know, so be happy Jim's leaving and half million in for Ya. And he cleared the deal. The story I tell you there is, there's always influencers around the sellers and sometimes they're inside the company, sometimes they're their country club buddies, sometimes they're their banker and there's, they're outside the business. And so you'll see the influencers, they're hanging around the king and they're always, you know, chirping in his year or courier the queen's ear and they're, like the gestures and the, you know, the old medieval times and the court in the court, right? So you're coming before the king or the queen and you're trying to bow down and, and get favor with them to have them sell you their business. And here's their jester in their ear. They like you or they don't like you. They got their own motivations. Right?
Ryan Tansom: Well, and I was gonna say, try to inject, interject for a sec. The, the sellers need to be aware because that, whether it's the advisors that could lose a big client or people like the CFO... every, every, if you don't do the due diligence, that line everybody's motives up together, the seller has to be aware of what lens everybody's looking at this through. Because everybody's got different motives no matter how good of people they are.
Troy Berg: Yeah, absolutely. And don't, don't think for a minute that, not that everybody at the table doesn't have a motive. Everyone's got an ulterior motive, including the salar and Cpas at the table. Right. So what I would, what I would suggest to your listeners that are serious about getting a deal done. You know, there's, there are some decent books out there, you know, not president Trump's the art of the deal, you know, but there are some decent books out there that speak to, you know, small to medium size business transactions. You know, you've got to look for them and you know, they talk about, you know, the opportunity for these large businesses to transact. A couple of books that I'd recommend for your entrepreneurs is, you know, Darren Hardy compound effect and Darren Hardy's, the entrepreneur's rollercoaster. Er is probably one of my favorite all time books. And I, you know, I work with there and I listen to all of his podcasts all the time. He's in my ear all the time. It's, it's my positive stuff. I feed my brain and I go to his seminars and I invest in myself. The last thing I'd share is, is invest in yourself. Darren taught me that a long time ago. You need to be investing about 10% of your salary every year in yourself. So if you're making 60 grand, you find six grand and you don't buy the new car you invest it in yourself. That's in your clothes, your seminars, your you're learning and whatnot. You find 10% and invest it back in yourself. And so I started doing that about five, six years ago when I heard it from there. And Jim Rowan thought Barron that there has been doing that for a long, long time. Darren is quite successful and I would say it's helped me immensely.
Ryan Tansom: I love it. I love it. One small story as we're wrapping up here, I uh, going back to your sales and everything that you just, and what you just said just totally brought me back. I watched Harvey Mackay speed right when I had started selling on the streets after college and broke as a joke. I'm driving a shitty Honda and I go to his seminar and of course there's, you know, this is before literally before the Internet. And then I'm like, I'm broken. Like it's $150 for his damn DVDs or whatever it was. And so I, my bottom and I was traveling around the mobile university and then, and then all of a sudden there's this one CD that, you know, cause I had put all six in my CD exchanger and then there's one that is, I love myself, I love myself, I love myself. And you do that right as you're walking into this building. Just total head gains, man. It's like you versus the six inches between your ears.
Troy Berg: It's absolutely control that self talk and your sales call Darren's entrepreneurial roller coaster, the entrepreneur roller coaster. It's a bit of a tongue tire is a great book and it really talks to the challenges we face as entrepreneurs and you know, continuing to feed yourself all that positive reinforcement for your mind because the world's a tough place. It will beat you down, you know? And then he's got his there in daily thing that he does every day, which is just awesome. Right? He's got a nice community of people similar to what you're trying to do, Ryan, to create this community of entrepreneurs. I don't, I think you guys complement each other. I don't think you compete. Uh, what you do is very different than what baron does, eh, but, but they're very complementary in the, in the trying to impact people for, you know, for better. Right. So as you, as you find these young entrepreneurs or, or older, you know, they don't, they don't, they know they've got to be young, young at heart is really what I say. You know, as the 70 year old has to sell the business to the 50 year old, many, many successful entrepreneurs don't become entrepreneurs till mid forties to early fifties sometimes, right? You don't have to be 25 to be an entrepreneur. You can be 45 listening to this. I started my first company at 30, but that was because I was, you know, uh, let go. I got let go from my last company so I wasn't going back to work for the man. And so, but that's not everyone's story. In the black or you're going back was the actual saying I had in the black or you're going back, you know, and so then, then you just, that feeds on itself every day. Right? And so just be careful what you put in your mind.
Ryan Tansom: So if there's one thing you want to highlight that we talked about or do you want to, you know, something that we didn't touch on what, and leave the listeners, what would it be?
Troy Berg: You know, I appreciate you, I appreciate what you're trying to do. I appreciate your mission. Um, I think sometimes in, in, you know, in life you, you, you have to remember, you know, so my mantra is from Darren Hardy, right? Grow, grow, impact and excellence, growth, impact and excellence are my kind of three core values that I live my life by it, right? I want to grow as a human. I want to help other people around me grow. I want the companies I work with to grow. I want my customers to grow so I can grow with them. Impact, you know, you want to impact people in a positive way. Every job you provide as an entrepreneur, I don't care if you're, you provide your first job and you're now an employer, you know, be proud of that fact. Okay? Because you created a job, you create a job, you create two jobs.
Troy Berg: Each one of those jobs impacts for people. Four people are impacted by every job. So think about that. You create one job. You just, you just impacted four people. You get to, you get to run a company of 10 people don't think you're small. You are. You're impacting 40 people's lives. Okay. I remember that for multiplier. It's a big number and people go, well, you know what? I'm single. I live at home and I remind my single engineer that she is impacting for people. If she loses her job, like, your boyfriend's going to be impacted. You'd be living in his house. Your, your mom and dad are going to be impacted and because you're going to be asking them for money and who else? Your sister. Yeah, you're right. I guess I would impact four people. Yeah. Every job impacts four people or more. That's the average. Okay. The last thing is, is excellence. No matter what you do, if you're working for the man and you're trying to become an entrepreneur, you owe that person who gave you that job a solid day's wage you. You take into heart what Andrew Carnegie said, which is you can, I can always judge the success of where a man or a woman is going to be, not by what they do during the working hours, from eight to five or seven to five in the day, it's what they do from five to 10 at night when they're not under the employ of another man or another woman. So don't waste your time. You only got one big spin around this world one time. Don't waste time. Time is a precious commodity, only have a little bit of it, right? So what you do from five to 10 at night on a Wednesday night, maybe you're, maybe you're out, you know, in Dart League, maybe you're, you know, shooting pool.
Troy Berg: Maybe you're going bowling, maybe you're drinking beer with your buddies watching Thursday night football. That's okay. Once in a while they'll make that your habit. They'll make that what you do every Thursday night, because if you want to get ahead in life, you have to take advantage of those hours. Especially if you want to be your own entrepreneur. I used to work crazy hours so that I could sit here and talk to you today, do what others aren't going to do today so you can be like nobody else tomorrow. Kind of Dave Ramsey. Right. And so those are my thoughts to share with your listeners.
Ryan Tansom: What is a the best way to get in touch with you? Uh, you, they, they can reach me.
Troy Berg: Uh, if they have questions they want to reach me, they can find me on linkedin. They can find me. Just Google, Troy Berg, Troy F Berg. You'll see all kinds of articles, different things I've done over the years. But Troy for, you know, I'm at Dane Manufacturing's one company I own, I own two other companies, but I don't like to be known as the owner and like to be known as kind of head coach. Right. But find me on Linkedin, just Google my name and there'll be 10 hits on page one. Troy F Berg. I live in Madison, Wisconsin. I'd love to hear from your listeners. I almost always take a call from a budding entrepreneur and uh, you know, that's part of giving back, right? I had people help me when I was trying to figure life out and so if I can help your listeners in any way, just have them reach out to me directly, I'd be happy to, happy to talk to them and schedule some time to, you know, get their head straight about something.
Ryan Tansom: Troy, Thanks so much for coming on the show. I had a blast.
Troy Berg: Thanks for having me. I appreciate it. All the best.
Ryan Tansom: I hope you enjoyed the episode with Troy. I had a blast chatting with him. Uh, I think we could have gone down the sales rabbit hole for quite a long time. But I think if there's a couple of big takeaways that I have here is that you have to have confidence in yourself. You have to have confidence in your vision and then you have to do the research and the diligence in order to go find the right people that can help you accomplish your goal. I went through a lot of the same situations with the banking situation that Troy was talking about, because you hear no all the time. So you think it's you, but the reality is, you know, you have to validate whether your strategy and whether or whether your ideas are correct or not. But if you have pretty good confidence and you've done your homework, go find the people that can help you accomplish those goals.
Ryan Tansom: So don't do anything stupid, but making sure you have the right people that are creative, super intelligent and that are helping you accomplish your goal. And then I think the other couple of big takeaways are if you put your mind to it. So Troy had his behaved, but if you say, I want to be this dollar amount and you're doing the intentional things to go get there, I think you can get to your valuation that you want. So that way you can exit to the right person for the right reasons. So I think really, really taking into consideration of do you have the right salespeople, the right sales process? Because that's a huge thing for any potential buyer that you have a repeatable sales process with very, very good people. But then also if there's a way to accelerate that growth through acquisition, it's also a great way to do it cause you can purchase additional EBITDA that potentially could increase your multiple when you sell. So think about tying all this stuff together.
Ryan Tansom: And really honestly, the takeaway from Troy is that believe in yourself, be happy, have a positive attitude and you can really engineer your way into the outcome that you want. So if you have any additional questions, go onto GEXP Collaborative's website. We have a bunch of guides and how to value your business, all the different types of exit options. And if you liked this, share the episode. Go on to iTunes and please give me a rating. Really love to get more guests on this show. It would be a huge help. I know it's a big pain in the butt, but I appreciate everybody that's the true loyalists listening here. So with that being said, I will see you next week.