Joshua Carnes takes a measured and analytical approach to Mergers and Acquisitions, armed with data and research that helps business owners reach the right audience of potential buyers.
As President of Lion Business Brokers, Joshua brings clients an impressive background in marketing and consulting, with extensive training from the hands of a former CMO of Oracle. Years of high-level strategic marketing experience helped prepare Joshua to lead Lion Business Brokers and its successful team of Mergers and Acquisition Advisers.
Outside of the office, Joshua’s life centers on his three sons. He is actively involved with the local youth sports leagues and volunteer coaches his sons’ football and soccer teams. Joshua has been recognized by the U.S. House of Representatives for his work with at-risk youth.
Joshua is a member of the International Business Broker Association, M&A Source a Certified Business Broker by the North American Alliance of Business Brokers, and is recognized as an Industry Expert by Business Brokerage Press Inc. & Business Reference Guide.
Connect with Joshua on LinkedIn.
This transcript is machine transcribed by Sonix.
Intro: [00:00:07] Broadcasting live from the Business RadioX studios in Atlanta, Georgia. It’s time for Buy a Business Near Me. Brought to you by the Business Radio X Ambassador Program, helping business brokers sell more local businesses. Now here’s your host.
Stone Payton: [00:00:32] Welcome to another exciting and informative edition of Buy a Business Near Me. Stone Payton here with you this morning. You guys are in for such a treat today. Please join me in welcoming to the broadcast with Lion Business Brokers Mr. Josh Carnes. Good morning, sir.
Joshua Carnes: [00:00:51] Good morning, Stone. Thank you for having me.
Stone Payton: [00:00:53] Hey, it’s a delight to have you on the on the show, man. And I got a thousand questions. We won’t get to them all. But before we even really dive in very, very far, maybe if we could just get a little bit of an overview picture. Mission, purpose. What are what are you and your team really out there trying to do for folks?
Joshua Carnes: [00:01:15] Yeah. So the team at Lime Business Brokers, our goal is to strategically and confidentially help people sell their businesses. That’s probably the easiest way that I can put it. And you know, we’ve really created a team atmosphere where we try to strive to provide a higher level of service than most brokers out there. And we do that with some strategic marketing and consulting and and really just try to put client services back into the business brokering world.
Stone Payton: [00:01:44] So I get the sense you’ve answered that question before that was incredibly articulate and eloquent and so in the interest of clarity and so that we’re all operating kind of on the on the same definition, how would you define what a business broker really is and maybe even chat a little bit about, you know, when, when and why do I even need one?
Joshua Carnes: [00:02:09] Yeah. So business brokering is a lot like hiring a real estate agent to help sell your business, only completely different. And so that’s essentially what we do is we represent people looking to exit their business or to sell their business. And probably one of the hardest things about selling a business versus selling real estate is the confidentiality aspect of it, right? You know, when you’re going to sell a house, you put a sign up in the yard, everyone gets to drive by. You put on the Mlss. Everybody knows it’s that house for sale. In the business world, it’s not like that. You have to keep it confidential. So there’s no signs on the windows. No one ever knows it’s for sale. Generally, employees and everything like that don’t know if we’ve done our job well. Employees won’t even find out that the business is for sale until they’re meeting the new owner. Right. And so if your our services are really there for anyone looking to exit or sell. So at any point, if you’re considering that, whether it be now 12 months, 18, five, five years, whatever the timeline is, it’s really good to have a strategic partner on your side that knows how to navigate the exit world. And so. If in the near future and by near future, I mean in the next five years you’re considering exiting. That’s the time to start a conversation with the business broker.
Stone Payton: [00:03:37] Okay, well, that already surprises me a little bit, so that’s much further out than I would have anticipated. There just must be a lot of moving parts and a lot of ducks to get in a row, I guess, huh?
Joshua Carnes: [00:03:48] Well, there is so a lot of times people say, hey, I want to exit, but I don’t want to exit until I can walk away with X amount of money. Right. And so for us, we always believe the process starts with the number. And that number is what do you want to walk away with? And so sometimes it might take five years to get to that number. Right? Or sometimes you might be at that number right now, depending on the market. So if you if your business made money during COVID, right. We’re kind of coming out in this post COVID economy. If your business made money during during COVID, it’s probably gathering a 1 to 2% premium on what it would have gathered a couple of years ago. And so we might have been on a five year track, but all of a sudden you killed it during COVID. And so now we’re on a next year track, right? And so that’s why we say as soon as you’re considering it, engage with the professional, start getting either a business valuation or a broker opinion of value and find out where you’re at. And then you can make the strategic decisions necessary to get where you need to go. Right. And so for some businesses, that’s five years. Some businesses, they’re already on point and they’re ready to go.
Stone Payton: [00:05:01] So how do you I guess the right term is value price your business. And the reason I’m asking, I own 40% of a pretty successful organization, Lee. Lee and I will want to exit at some point. And and I know people I’ve been around them my whole life. Right. I so I know that Lee and I might fall into the trap of feeling like it’s worth a lot more than it really is. There’s got to be some science, some rigor, some discipline to this whole pricing or valuing of a business. Yeah.
Joshua Carnes: [00:05:35] Yeah. So and what’s interesting is so I would say valuing a business is a lot of science math and it’s a pretty straightforward formula. Right. But pricing a business is a little bit more art form and technique and knowing where the market is and things like that. Right? So they’re almost two different components. So but generally speaking, what you’re going to look at is cash flow and owner brings in and then we like to do is a little bit more strategic insight and saying, all right, what’s happening in this specific industry? But every industry kind of has a value range of, let’s just say 3 to 5 times cash flow, right? That’s a very generic. Some industries go for seven, eight, some industries go for one, two. But you can kind of throw a rule of thumb up there of 3 to 5 times cash flow, depending on how well you did. And then to to relate it back to the real estate aspect. Right. Some things are prettier than others. You know, some things have upgrades. Some things have long term contracts. Some things have other things. The prettier your business, the higher end of that multiple that you’re going to get, the dirtier your business, for lack of a better term, you know, the worse your books are, the more spotty your finances, things like that, the lower multiple you’re going to get, right? So it really is a range. It’s hard to put a hard number on it, especially when you’re on that pricing side. Excuse me.
Stone Payton: [00:07:05] Yeah.
Joshua Carnes: [00:07:06] When you’re on that pricing side, it’s hard to put a number out. We go for a range. When you’re doing a value for a bank loan or something like that, it’s completely different and more mathematical in nature.
Stone Payton: [00:07:16] So what’s the back story, man? How did you get into to this kind of work?
Joshua Carnes: [00:07:22] So for me personally, it’s actually a I find it to be a fairly funny story. I exited out of my own marketing consulting firm and did fairly well with that. I took some time off and I had a personal mentor coach in my life and I was going to go all in on a real estate business. And I was I was looking at what I was going to do, licensing, all of that. And I was going to become a real estate broker. And my my friend, who had been in my life for a long time, spoke into it, sat down and said, So you mean to tell me, Mr. Business owner, very successful person is going to go drive around a car with with a family and kids in the back of your car? That’s what you’re going to go do with the rest of your life. And I said, Oh, that’s a valid point. And he and he introduced me to someone who was already a business broker. And it was the introduction was, have you thought about doing something like that but for business? And that’s the story. As soon as I met with the guy and looked into the industry, I fell in love with it. And I’ve worked for a couple of companies and that line has come up on its own line is going on year seven and it has been an absolute blast and a joy going into helping business owners exit and get premium value for their business.
Stone Payton: [00:08:47] Well, I can tell that you enjoy it. It must be incredibly rewarding work, man. What are you. What do you enjoy the most about it?
Joshua Carnes: [00:08:59] So for me, it’s the nothing is ever the same. Right. And I love the challenge that our industry brings, the confidential nature of finding out who is going to be the next strategic buyer, who are we going to sell this business for? And it’s it’s pretty funny. It doesn’t matter if you have two manufacturing companies that are manufacturing the exact same product. The way that those deals get structured and done and how they get done is just going to be completely different. So for me, I enjoy the challenge of it and the fact that no deal is like the last deal I’ve been. I’m going on year ten here personally and especially with the changes in COVID and things like that. We’re walking in and I’m having meetings with guys who have been doing this for 20 and 30 years, and we’re seeing stuff where everyone’s looking around going, Wow, I haven’t really dealt with that before. How would we handle that? And so for me, that’s what I enjoy the most, is that strategic challenge. And I love the fact that I’ve got a team of role individuals, independent business brokers, but yet we’ve got guys, 20, 30 years, guys who have only been doing it two years, and we are able to come together and help each other and say, All right, what is the best move for this client? How do we advise them strategically? What’s the proper move? And let’s go forward with a plan of action. And having that strong team behind me is just something I love.
Stone Payton: [00:10:24] Yeah, well, I can hear it in your voice. I know. It translates to the airways. I also got to tell you, I personally find it particularly attractive, the prospect of working with someone who has personally had a successful exit that. Yeah, that’s that, that checks a big box for me and it probably would for my business partner Lee and I as well. So going back to this, making your business pretty, you know, Lee and I have talked about and we’re a little further out probably, but we’ve we’ve talked about, you know, if and how we might want to exit. And one thing that I think we would have to continue to get better and better at and you tell me if this can be a friction point or one of those conversations. We we think we’ve got to get this thing where it really doesn’t depend on Lee in stone. Right. To to be successful.
Joshua Carnes: [00:11:16] You know, it’s interesting, too, and you get a lot of people who have spent 20, 30 years building up a business and then they think, okay, I’m ready to exit. And they had their own strategic plan. But where they never really brought in a professional, they just said, I’m going to do it for 30 years. It’s going to do X, Y, Z, and at the 30 years they’ll just sell it. And then you walk in and you go, Yeah, but if we remove you, the business dies. And that’s really a bad position to be in. And so, you know, even down to the thing, like I took this into consideration for myself with line business brokers, you know, I could have started Khan’s business brokers or something like that. But if you remove the coins from Caan’s business brokers, it dies, right? So line business brokers can live on past me. And so that’s probably one of the basic entry points that we try to get in to. Business owners that are going to exit is make yourself not a linchpin of the business. And for a lot of business owners, that’s hard to stomach, right? I built it up.
Joshua Carnes: [00:12:20] It’s mine. I’ve done all of this. And you’re telling me that it has to run without me? Yeah, that’s. That’s going to be the most valuable business is I mean, what? We’re closing on a business later today, knock on wood, where the business owners live in Florida, and they fly in once a quarter to meet with their management team and to make sure everything’s good. Guess what? That business is selling for a premium. Why? Because a new owner only has to do is come in and write a check. And at the end of the day, if he makes no changes, he knows how much money he’s going to make. Now, every owner thinks that they’re going to do a better or every buyer things are going to do it better. And that’s the great thing about it. But yes, the best business is are ones where the owners have strategic insight but yet could easily be replaced at any moment and the business could continue on or do even better.
Stone Payton: [00:13:12] Yeah, so we talked a little bit about I guess what I would call a prep window. It might be as much as five years or more, but once you get to that point of putting the business on the market, what what does that timeline look like? I mean, can it go pretty quick? Does it often take a year or two or is it just really depend on case by case?
Joshua Carnes: [00:13:35] Yeah. So it’s honestly a little bit of case by case, but more case by case with the broker that you choose to hire. Right. Theoretically speaking, we can put a business up online and market it within 24 hours, but that’s not going to be what’s best for the business coming up. So every business broker has their own process. And and we like to feel this. Our process is one of the. Things that separates us out from our competition. So our onboarding is somewhere in that 30 to 45 day window because we actually take the time to do a deep, in-depth analysis on every business that we bring on. And we create marketing material specific to that business. And the standard terminology for this stuff is called a CVR or Confidential Business Review or a SIM, a confidential information memorandum. And these documents are anywhere from 30 to 60 to 120 page documents, depending on the complexity of the business where we do a deep dive and really create a sales brochure for potential buyers to come in and buy this business. Now we do a couple little extra things where we also do what we call executive summaries, which are a little like two page highlights that are confidential. So you don’t get to know the business, you just know the numbers and the industry. We do some marketing videos around it and things like that, so our process does take a little bit longer to get you out to market from the time that you get there. But we feel the strategic prep in the beginning is what’s going to allow you to get maximum value in the end. So, you know, 32 to 45 days, I think is a good, good judgment for that.
Stone Payton: [00:15:16] So it sounds like you really do have a strong process for marketing someone’s business. How about how about your own sales in marketing? Like how do you get new business for four? How does the whole sales and marketing thing work for a business like yours?
Joshua Carnes: [00:15:34] So you know, what’s funny is I think that this is probably my biggest complaint about coming into this industry. You know, I used to be and I laugh because when I introduce people, I tell them I go, look, I’m an old sales schmuck, right? I’m an old marketing guy. I know marketing. And this industry is so archaic and so old for for lack of a better term, that unfortunately it’s still direct mail and cold calls. Wow. Probably one of the hardest things about coming into our industry is the lifecycle of a deal is 12 to 18 months. Right. So you need to be financially in a situation where you can go 12 to 18 months without a paycheck if you’re trying to come into this industry from from scratch. And not everyone can do that. But the other thing is, you know, the reality is there’s no market for people looking to exit their business. Right. There’s no there’s no checkboxes for. Yes, I want to exit my business in 6 to 12 months. That’s not a question that people ask to get on Facebook. Right. Right. So there’s no data list that you can just buy people looking to exit. It’s all right time, right place. And so it’s unfortunately for our industry, it’s just a consistent drumbeat of direct mail and getting in front of people. And then once they’re ready to start a conversation or have a conversation, hopefully they’re holding your post card instead of your competitors and at least start the conversation with you.
Stone Payton: [00:17:05] You mentioned a little earlier in the conversation a really important person in your life, a mentor that kind of helped you reframe where you were going to take the next chapter. Have I think I already know the answer to this. I’m going to ask it anyway. Have you had an opportunity to, to be a mentor to to others as as as things unfold for you?
Joshua Carnes: [00:17:29] I would hope so. Yeah. So, you know, thankfully we actually have brought on a couple of guys onto the team in the last couple of years who are brand new to the industry and they’ve been successful and I’ve been able to support them and do that and it’s really interesting. So some people when they they look at turnover in the industry, it can be pretty high because of that 12 to 18 month time. And, you know, knock on wood, we have seven brokers in the state of Texas. They work kind of all throughout the southeast. But we have seven brokers that are that are all spread out. And in all this time, we’ve yet to have any turnover. I, I say knock on wood, but we’ve made everyone successful. And it’s because I believe I take a personal interest in their success. And I want to see these guys succeed. And I feel that if I’ve hired someone, that I have a responsibility for them to be successful, to feed their family and do those things. And so it’s a little bit of a unique approach, but it’s worked for us. And so we have two brokers that have been doing this for less than two years, but they’ve already successfully closed at least two or three deals. They’re out there, they’re running, and I believe that they will have long term successful futures in this industry, whether it be with us or anyone else. And I would hopefully like to think that it was our base foundation that put them there to say, go be successful in a great industry.
Stone Payton: [00:19:02] That’s got to feel so good to know that you contributed to that. That’s got to be a real high in and of itself. Man.
Joshua Carnes: [00:19:09] No, I appreciate. And it’s for me, it’s it is it’s one of those joys of of this industry has been great for me personally. It’s a lot. It’s given me the freedom to coach my sons and youth football and do all of that type of stuff. Right. And so we really have a family oriented type of business where, you know, the other day I got a call and someone he was like, hey, I have to go babysit my grandkids for the next two days, but yet I’ve got this meeting and I was like, Not a problem. I’ll hop on the call. Right? And so we’ve really created that atmosphere of Family First and just do what you need to do and everyone will be successful. And let’s move on.
Stone Payton: [00:19:49] And I know in our work at the Business Radio Network, we Lee and I and our studio partners in other parts of the country, there are just some what would you call misconceptions, preconceived notions, assumptions, things. And some of them that we that we almost know we’re going to run into. We’re talking about to a prospective client on the on the client side of our work. My instincts are they’re the same may be true for you that there are some misconceptions and patterns of misconceptions, things that you’ve got to educate, inform, reframe for people. Is that accurate or are there some of those kind of things in your world?
Joshua Carnes: [00:20:29] Yeah. And in fact, I would say two of the largest ones are around our relation to real estate. Right. And so and it’s a problem because even I describe our industry is a lot like real estate but different, right. And so a lot of people think that a commercial real estate broker and a business broker are the same thing. And look, it is so far from the truth. We are two different worlds. I mean, even to the point where we don’t do commercial real estate, if there’s commercial real estate involved, we bring in a commercial real estate broker because that’s their specialty. So one of the biggest misconceptions is a, either that we do real estate or they can go to their real estate broker and that they cross translate and that that one’s pretty hard to say. Hey, look, these are just two very, very different industries and you need to specialize in both. And then the other one is kind of around timeline. I spoke to a gentleman the other day and he was like, Well, I need you to sell my business in four months. Average transaction time in our industry is 9 to 12, sometimes 18 months, like it can go out that long. This is not a quick, fast industry. And so sometimes setting sellers expectations of you’re going to walk on a journey with me for the next year. Just, you know, and we tell people to keep that in mind. When you’re hiring a business broker, they’re offering and their services are one thing, but you actually have to go work with this person for the next year. That is a big commitment. So personality should be something that people consider when they’re hiring a business broker. Can I allow this person into the inner depths of my business and can I have this person tell me what to do? Send me updated financials, talk to this guy. We’re going to hop on the phone with this guy and really do that and be intimate business wise for a year. And so timeline and industry are two of the biggest misconceptions in our in our that we run into.
Stone Payton: [00:22:37] Well and I don’t think it’s hyperbole after hearing you talk to you actually use the word intimate there’s this is a much more relationship oriented relationship dependent process then then I think some of us might have thought, you know, I guess my frame for it has been that this is more of a transactional thing. There’s a lot of relationship dynamics going going on here and there.
Joshua Carnes: [00:23:08] There is, especially when you get up into larger deals. So like businesses with enterprise value of north of 10 million, if the buyer pool at that level is so small that the reality is so, you know, we’re working with a manufacturing company that’s probably enterprise value, somewhere around 18 million. There’s there’s probably only about 10 to 15 people nationally that are going to take that business on. And so if we internally, as business brokers don’t have relationships with those buyers, we’re never going to get that business sold. And so there is a lot of relationship there and putting you know, it’s kind of nice. We’ve gotten some good feedback from private equity firms and family money firms that say, hey, we enjoy doing business with you because of the professionalism, right? But yeah, the relationship side is really big on both the seller side and ensuring that you trust us enough to get the best deal for you. But also from a buyer standpoint of knowing who the players are in the certain industries that actually have the money to buy your business. It’s a very that side is very relational as well.
Stone Payton: [00:24:19] So I was just thinking, as you as you were describing, that Lee and I are very much on the same page. We work incredibly well together. He has skills and knowledge and a perspective that I don’t. I sometimes can bring some things to the table and I’ve got to believe, like if we were sitting down with you, you might have to be like a couples therapist too at some point, because now we’re talking about the balance of our lives, right, if we’re wanting to. So do you ever find yourself like being part therapist? Like if you’re working with a with partners.
Joshua Carnes: [00:24:52] Especially with partners or you know, unfortunately, a lot of some of our best deals are partners that are splitting up. And so there’s a lot of the the counselor side that comes into play there. But also one of the questions that we ask all of our sellers, okay, so we we put a check for a couple of million dollars in your pocket. What’s the plan afterwards? Have you thought about what retirement looks like? What are you going to do with that money? Because you can’t just take $1,000,000 and go to Belize, right? Right. The federal government will come in and have a field day with you. So, you know, have you strategically thought about that? And and also to win it, it’s pretty, pretty funny. But almost always, when we go through this process, we’re eight, nine months down the road, we’ve got a buyer, they’ve made an offer. And then we tell the seller, all right, take a couple of days and consider it and think about it and make sure it’s right. Because, again, nothing is quick in this process, how emotional they become with. I’m really going to sell my business for this. Maybe it’s more, maybe it’s less, whatever it is. And so we really do have to do that piece of, hey, this is where we’re at. This is what’s going on. Yes, it’s your baby and you’re going to sell your baby. But we can do it in, you know, really walking them through that piece. So it does happen with partners or even with just regular, regular people who spent 20, 30 years building up a business. In that moment, they realize they’re about to let it go.
Stone Payton: [00:26:26] So. Yeah. All right. So before we wrap, let’s leave. If we could. Let’s leave buyers and sellers alike with some pro tips. Number one pro tip is, you know, reach out to Josh and his team. But, you know, maybe some things they can begin thinking about, maybe some reading some some little tweaks they can begin to start focusing on in their business. But if we could, let’s leave buyers and sellers with a few little pro tips. I guess you’d call them.
Joshua Carnes: [00:26:52] Yeah. So, you know, buyers are are unique in nature. If you’re a buyer, make relationships with as many business brokers as you can. And I know that’s not advantageous for me personally, but the reality is there’s no buyer representation in this industry. There’s no national MLRS system, anything like that. So if you’re a buyer, you need to be out there taking business brokers to launch and making relationships with them so that you can get on our list of notifications once a business comes available that you’re looking for. So that’s the pro tip. If you’re a buyer, if you’re a seller, clean up your financials. Make sure that your financials for the last three years or the next three years are nice and clean and tight. And what I mean by that is, look, some buyer or some business owners use their business as their personal piggy bank. Right. We have seen everything from a business owner that every day takes himself out to lunch at a nice lunch and spends 30 to $40 on a lunch on just himself. And he puts it on the business credit card to cell phones, to family trips, to seen everything to girlfriends who are getting leased vehicles. Right. The reality is, is the very first thing that a buyer is going to look at is your financials. So clean them up, tighten them up, make sure that everything is nice, neat and ready to go for buyers. And for those buyers that might have to go get bank financing. Right. A bank might have to look at your financials. So the cleaner your financials are, the easier it is to price your business, the easier it is to ask for a premium for your business and the easier it is to convince buyers to buy your business.
Stone Payton: [00:28:37] All right. So if someone would like to connect with you, what’s the best way for them to do that?
Joshua Carnes: [00:28:44] Yes. So you can call the team at one 800 5253542. I’ll answer that line directly if no one’s there, or you can get a hold of anyone on the team or you can visit us online at ion business brokers dot com that’s in business brokers dot com.
Stone Payton: [00:29:02] Well Josh Cairns with Lyon Business Brokers, it has been an absolute delight having you on the show. Thank you. Thank you for what you do. We appreciate the work. And we’re going to continue to follow your story with your permission as well. But this has been a real pleasure, man.
Joshua Carnes: [00:29:18] Hey, I appreciate you guys having us all. And thank you so much for inviting me out.
Stone Payton: [00:29:22] All right. This is Stone Payton for our guest today, Josh Carnes with Lyon Business Brokers and everyone here at the business radio family saying we’ll see you next time on Buy a Business Near Me.