John Bly on Growth Thru Acquisition

How do you think about acquisitions? Do you think of them as a strategic growth strategy for small to medium sized businesses? If you don’t, you should. At least according to today’s guest on the EO Podcast, John Bly. Since 2004, John has acquired more than 15 companies—including Anytime Fitness—and have grown their principal business from two employees to 80. Tune-in to this episode of the podcast to hear John talk to Dave about the art of acquisition, the realities of being a busy parent, and why every seasoned needs a high-quality assistant.

Time Stamped Show Notes:

01:51 – John says he has made Accounting as entrepreneurial as possible 02:40 – John wrote the book Cracking the Code: An Entrepreneur’s Guide to Growing Your Business thru Mergers and Acquisitions for Pennies on the Dollar 03:09 – There are a few ways to grow a business – grassroots, massive funding, and acquisition 03:56 – John started his core accounting business in 2004 and has branched out to the fitness world, he and his wife have acquired 17 companies in 13 years 04:19 – John says the passion he had in acquiring companies has changed over the years 05:03 – They now have over 80 people in the company starting from 2 when it first started 06:05 – Anytime Fitness is one of the franchises John and his wife acquires 07:18 – John sends a direct mail campaign to competitors to see if they are interested in selling their franchise 07:42 – John usually does the research himself but in one case they sought the help from India to build a database 08:45 – Having the database helps them build targeted lists much faster—size, specific industry, etc. 10:02 – On this particular project, John met the folks in India through his connections at Entrepreneurs Organization 13:57 – Aside from wanting to grow, companies engage in acquisition because they want to grow their bottom line—to make the business more profitable by securing a high-margin product/expertise 16:14 – John says when people get to the $6 to $10 million mark, they grow faster organically because they can afford to hire talent in the different areas, and can afford to acquire 17:08 – John thinks people are doing acquisitions because they either want to tap into their unique ability but can’t afford yet, or are looking to enter a new market or new niche 18:26: The value of a company depends if they are for sale or not – in case they are not selling and you are cold-calling them 19:37 – John says there is no sense in doing a full valuation 20:01 – Dave says, in selling a business, he was advised to have an investment banker, accountant, or attorney 20:34 – John says you should definitely have someone like that on your team to help you 20:48 – Investment banks don’t chase deals that are less than $10 or $15 million in transaction value 21:32 – In doing a stock transaction, you are giving up some of your company’s equity to someone else—you are essentially bringing them on as a business partner, so make sure you are aligned for the future 22:10 – Dave says he went through a handful of partners and all partnerships, and they’ve all gone really well for him 23:34 – John says only 4% of all businesses started in the US get to a $1 million dollars in revenue, but over 90% of all businesses acquired are still in business 5 years later 24:33 – In 2004 and 2005, John did 4 transactions in 11 months, all were relatively small and the bank financed 100% of all 4 deals 25:09 – The acquisitions were 100% of the revenue and now they are doing more than $10 million in revenue 26:31 – The first things John recommends in seeking an acquisition is lunch with the owner to see if their personalities align—if they don’t he walks away 27:26 – Some people think they can fall in love with the numbers first and then make the culture fit but it does not work 29:33 – The biggest mistake is thinking the owner of an acquired company is worth keeping 30:00 – If someone has been an entrepreneur for less than 3 years, they might make a good employee but if they have been an entrepreneur for more than 5 years, they won’t make a good employee 32:05 – Dave got contracted for a year and he only made it for 9 months, he thinks he might have got in the way of the new company leadership 32:54 – In discussions, John makes the owner or founder aware they will not be around for more than 3 months, and their role will be helping the buyer with the transition 33:32 – John has a friend who sold his company to a bigger conglomerate and he was gone on day 1 38:17 – The top source for referrals for business valuation work is other CPA firms 38:50 – John is finishing his first year of a 3-year term on the Global Board of EO, he is the liaison to the Asia Pacific this year, on the forum committee, the chapter development committee, and is the incoming liaison to Canada 39:30 – John also used to work in Vistage, but now he doesn’t—the peerness wasn’t there 40:54 – John is a master of leveraging his time and energy 41:11 – He has an assistant and other team members executing his tasks and he prioritizes the things that are important to him – his family, EO and business and if does not fit into those categories it will be hard for him to say YES to it 42:39 – John’s assistant helps him with tasks outside of Accounting like planning vacations, things related to EO, and general research 43:14 – John’s wife joked with him about having an assistant, but she understood it when he started having more time for their children 44:09 – John has had a lot of success in finding and hiring people from liberal arts colleges 45:18 – Connect with John at [email protected] 45:53 – John thinks there is a lot of discussion to be had in selling a business and using it as a growth strategy 46:28 – Dave closes the episode and encourages you to visit his website

 3 Key Points:

A good assistant is worth their weight in gold. If you don’t have one, find one, and if you have one, hold on to them for dear life. Growth through acquisition is a very real business strategy and one that it always worth at least some of your time and energy. Numbers alone don’t justify an acquisition—you need to make sure you fit with the existing culture of the company. If it’s not a good fit, walk away.

 Resources Mentioned:

Entrepreneur's Organization – The EO Network LBA Haynes Strand – John’s core company Cracking the Code: An Entrepreneur’s Guide to Growing Your Business thru Mergers and Acquisitions for Pennies on the Dollar – John’s book