Andy Cagnetta With Transworld Business Advisors

Intro: Broadcasting live from the Business RadioX studios in South Florida. It’s time for South Florida Business Radio.

Now. Here’s your host.

Lee Kantor: Lee Kantor here, another episode of South Florida Business Radio, and this is going to be a good one. Today on the show, we have Andy Kenyatta who’s the CEO with Transworld Business Advisors. Welcome.

Andy Cagnetta: Thank you. Thank you Lee. Thanks for having.

Lee Kantor: Me. I am so excited to learn what you’re up to. Tell us about Transworld Business Advisors. How you serving folks?

Andy Cagnetta: We help people sell businesses. I think that’s the easiest way to describe it. We’re like a realtor. We go to businesses who are looking to sell. We package them up for sale. We do a worldwide search, and we bring them someone who is hopefully very qualified and wants to pay them a lot of money.

Lee Kantor: So what’s your background? How did you get into this line of work?

Andy Cagnetta: It’s funny, I bought and sold the business in the northeast. If you couldn’t hear it in my voice yet. And I, my wife grew up down here in Florida. And so 30 years ago, I, my wife and I decided to raise our family in South Florida. We moved here and I was looking to buy a business, and I went to a lot of business brokers. And in that process I ran into Trans World, and they invited me to join the team as a sales person, which I did, and I thought it was a good way to get to know Florida. I didn’t know anybody, so I was successful in selling in my first year, and I really loved the business. And two years into my salesmanship here at Transworld, uh, the owner decided to retire. And so I bought the company in 97, and I’ve been running it ever since.

Lee Kantor: Now, was it a franchise at that time?

Andy Cagnetta: No it wasn’t. We were one office in East Fort Lauderdale, and we were. We had about six people at the time, and we sell about 30, 40 businesses a year. And we grew from that point. We we, we we took on some capital along the way, and we grew to ten offices in Florida, which we still own and operate. And then in 2009, of course, the world was crumbling. Uh, everything was we were trying to figure out what to do next. And, you know, it took us 13 years to kind of grow to ten offices in Florida. And we realized that we really needed people on the ground, partners in other cities like Atlanta and Charlotte, and which we thought were our next stops. And we figured out that, you know, what’s a good partnership arrangement out there in the business world? That seems to work. And we said franchising. So when we looked into franchising, we realized that we didn’t know what we were doing. And we were introduced to United Franchise Group, which most famously owns Cinerama for over about 40 years now, and they own several other brands venture X and Great Greek and, uh, and several other things. So we partnered back in 2010, 14 years ago, and we’ve grown Transworld to over, you know, 250 offices and over a thousand associates around the world.

Lee Kantor: So when you decided to franchise, um, obviously a franchise is a business that folks are buying into because of their expertise and their, you know, industry knowledge. Did you have your business kind of, uh, formatted in the manner you needed to franchise, like, you know, the kind of the business in a box with the operations manuals and all the all the methodology that helps a person in a new market get up and running.

Andy Cagnetta: Yeah, I want to think we did. Uh, but, you know, certainly over the last 14 years, we’ve continued to improve our systems. We had a good system. I mean, we had ten offices in Florida. We were managing, managing them from afar. So we had pretty good systems and good training program, things like that. Uh, I have to say that getting a, you know, together with the United Franchise Group, uh, they taught us a lot about really putting your business, uh, you know, all the recipes, all the systems, all the, uh, you know, I always tell people my job is to provide tools for people to succeed, and that’s what we do, you know, as far as providing tools to our franchisees.

Lee Kantor: Yeah, I’ve had the, uh, I’ve been fortunate enough to, to run shows where I’ve interviewed. I had a franchise marketing show for many years, and I’ve interviewed a ton of franchisors and franchisees over the years. And, um, you decided to be a franchisor but still operate as a franchisee. Is that important to you in order to kind of really understand what your franchisees are going through? So, you know, you’re living it as well? Because a lot of times when people franchise, that’s a whole other business is being a franchisor that’s no longer the business of whatever your franchise was.

Andy Cagnetta: Yeah, it’s absolutely a different business. And you’re absolutely correct that what’s nice is when we come out with something new at Transworld or we change something in the system, they everybody in the system realizes that, you know, Andy’s and his Florida offices have to do the same thing. And so there’s, you know, you can’t they can’t really point to something and say, well, you just did that to save money or you’re doing that and it’s hurting us. It’s like, no, what we usually do is when we decide to roll out something new, we first test it, uh, here in Florida, I might even pay out of, you know, my Florida budgets to do something, and then we roll it out. I mean, things have changed over the last several years since we’ve gotten so big. We have several franchisees that are extremely successful across the United States. And we have a franchise advisory council, and we have an ad fund. And everybody kind of pitches in in testing different things. But you’re right, it does give us a unique perspective that we’re on the streets still every day. And I get to hear about what needs or what shortcomings certain things would have, or what’s changing on the street, like raising interest rates or things like that would immediately, you know, uh, be a headwind in selling businesses.

Lee Kantor: Now, when you decided to franchise, how did you kind of develop your avatar of who the ideal, um, franchisee would be? Were you just modeling it after? Who was managing your offices throughout Florida, or did you have to kind of do a different calculation on who that entrepreneurial person in a new market who maybe isn’t as familiar with Transworld would be?

Andy Cagnetta: You know, I really have tried to profile what the perfect franchisee is, and, uh, I, I still can’t predict who’s going to do really well in this business and who’s not. Um, but I think we’ve narrowed it down somewhat. Uh, you know, X entrepreneurs are very good. Uh, and certainly when you have a franchise system, you want people who are going to follow the system. So we have some ex-military people, people at, you know, that have been in corporate jobs that understand finances but can follow a system. Uh, so we do look for those kind of people, uh, to, you know, become franchisees. Uh, it is a different kind of game being in the business brokerage world. Uh, you do need some upfront capital to kind of fill the funnel, uh, and eventually get commissions. Uh, so, uh, it does take a unique person to get in this business.

Lee Kantor: Now let’s talk a little bit about kind of the nuts and bolts of Transworld Business Advisors in a given local market. Um, you mentioned you’re helping people sell their businesses. Um, are you handling both sides of the marketplace or are you helping them also buy businesses?

Andy Cagnetta: Yeah, the short answer is yes. We handle both sides of the transaction. Uh, and oftentimes we’re cooperating with other brokers out there in the world, much like realtors do. And we, um, so, yes, we we actually handle the whole transaction. We it’s kind of starts on the seller side because for the last 30 years, at a 28 of those 30 years, it’s really been a seller’s market where there is less inventory of businesses for sale and more inventory of buyers that are looking to buy. So. So for the most part, when we get a good business for sale, we’re we can probably find a good buyer for it if it’s priced correctly and it’ll sell. Uh, the hard part is, you know, that we have so many buyers sometimes, and and Florida is unique, uh, to and not unsimilar to other places. But Florida is unique in the fact that we have a thousand people a day moving to Florida. We have a lot of money moving into Florida over the last several years. So there’s a lot of kind of people chasing opportunities or looking for opportunities. And there’s a, you know, basically a a scarcity of opportunity.

Lee Kantor: So what is a day in the life look like for a franchisee in a market?

Andy Cagnetta: You know, a day in the life of franchisee in the market. You know, it begins with, uh, becoming a trusted advisor in your community. And we do a lot of things to go out there and get into the business world. We might join chambers, we might, uh, get into networking groups. So, you know, when when a day in the life, the first, the at first early morning light, you’re probably attending a BNI meeting. Uh, you’re getting together with other business people in the world because a lot of what we do, uh, just kind of comes up. We need to be there when they need us. And so getting together with accountants and attorneys and investment advisors and landlords when they’re dealing with the people that are in small business and they all of a sudden have to get out. And one of the the D’s happened to him. They have a divorce, they have a death, they have disability, they have, uh, disagreements. Uh, so we’re there when they decide, hey, it’s time to sell my business. So the really the day in the life of the franchisee is going out there into the world, uh, and finding businesses that want to sell. Once you have them, then you are also at the same time fielding inquiries, setting up zoom meetings and or in-person meetings to tour those businesses and then managing the the deal process, uh, which can be, you know, long and complicated.

Lee Kantor: Now, when people sell their business typically are is this something that you find? Most people are proactive and they go, okay, you know, I’m going to sell in five years. So maybe I got to start now, start doing some of this stuff to get ready for this sale. Or is it, like you mentioned, that something, um, changes like one of the DS, I guess sneaks up on you and all of a sudden now you have to sell, and now you got an emergency situation where you. In that case, you probably don’t get as much as you could have if you had planned for it.

Andy Cagnetta: Yes. To all the listeners out there in the world, if you would just get with us 2 to 3 years before you wanted to sell your business, and we could give you some practical advice to increase the value of your business, uh, that would be great. But realistically, that usually doesn’t happen. What usually happens is people come to us, like we said, after one of these life events, uh, and they come to us ready to sell now. And it really at the best, uh, it’s a on average nine month process to sell your business. So it could be maybe as short as 3 to 6 months. But really, as long as, you know, it could be over 12 to 18 months to find a buyer and get a deal done, uh, to sell your business. So it would be great if people came to us.

Lee Kantor: So coming to you, does that require, um, okay, I’m, I come to you, I meet you at the BNI. Now, do I have to cut a check to Transworld today, knowing that in three years I’m going to sell my business? Or is this something that we get to know each other? You do some general things, and then you know when it’s time for the transaction, you get paid like a real estate agent.

Andy Cagnetta: Yeah, we get paid a success fee for the most part. Uh, unless there’s maybe other things like valuations that need to get done or something like that. But for the most part, 90% of the time we’re getting a success fee. Uh, when you come to us and you say, hey, I want to sell in two years, it’s usually just a general conversation. We’ll get together. We’ll look at your books and records, and we could at that time either do a just kind of back of the envelope kind of valuation on your business, and I’ll give you an idea of what we think the business would sell for in the marketplace now, and maybe some things you could do to increase that value over the next 2 or 3 years and start doing some of those things are is making it more appealing for a bank financing, increasing the revenues and earnings over the next five years, maybe having better books and records, uh, maybe having more, uh, uh, customer um, not having a customer concentration issue, having more diversity in your customer base, uh, getting the right employees in place, though, all those things can increase your value over the next couple of years. Uh, to get you the best price.

Lee Kantor: And then is the typical transaction to a stranger, or do you help if the, you know, maybe the managers of the organization want to buy the thing or the, you know, the employees, like, do you help in those kind of manner in that manner, or is it typically somebody else is looking for a hardware store so you sell it to some stranger.

Andy Cagnetta: Yeah. So the interesting thing is, yes, we do that. And in fact, we just closed the deal yesterday and I forget what kind of business it was, but where the employees bought the business. Uh, that doesn’t happen often. Uh, sometimes they think that’s going to happen. I just recently have a friend of mine who wants to sell their business to their employee. And really, when push came to shove and they realized they had to sign a, uh, go out and get a loan and sign a, you know, maybe pledge their house. Uh, if you’re going to get an SBA loan, you have to, you know, sign personally, uh, a lot of people don’t want to do those kind of things. Uh, they’re not built to be an entrepreneur. So a lot of times we are selling to a stranger and most often, which is unusual. A lot of people don’t. Wouldn’t think this we’re selling to a first time buyer, a buyer who or the first time is buying a business.

Lee Kantor: And are the businesses that you’re selling? Are they other franchises or are they independent businesses?

Andy Cagnetta: Yeah, 90% of the time it is an independent business. Um, certainly franchising is incredibly hot and we sell a lot of franchises, you know? Um, mostly what Transworld does is sell, uh, resale franchises where someone, someone has already owned the franchise. They’ve ran it for several years, and we’re going to resell it to somebody else. Uh, you know, the the big brands out there in the world, the McDonald’s, the the Dunkin Donuts, the chick fil A’s, they’re selling their franchises directly and in and a lot of those cases, very popular franchises. It’s very difficult to get into that system. Uh, but if you find an up and coming franchise, sometimes we, we handle those things as well.

Lee Kantor: So can you share you don’t name the brand or the company, but your biggest success story in terms of you help somebody get maybe more than they even imagined?

Andy Cagnetta: Yeah. It’s funny, we just had a business where the person was going to close the business. Uh, they felt like there was time to retire. They didn’t even think about selling. Uh, they were going to walk away from the business. Now, they had, uh, about $300,000 in, uh, in, in inventory. So they would have walked with maybe $300,000. Uh, once they sold off that inventory. Uh, but we wound up getting them almost a million and a half dollars for their business. Uh, and, you know, they were very happy. Uh, and and we there’s lots of stories like that. Uh, we just sold a roofing company, uh, for about $26 million. Now, those are very large transactions. We sell, uh, small mom and pop business businesses as well. I actually sold my own father in law’s, uh, medical practice for under $100,000. And, um, you know, he was just wanted a given opportunity to a young doctor to come in to South Florida and get a good, uh, medical practice.

Lee Kantor: And do the. Do the companies you sell typically have real estate or they have things that can be collateral collateralized like that? Or can they be service industry like an advertising agency or something like that?

Andy Cagnetta: You know, you got to think of the cross section of here of South Florida and South Florida is is unique in the fact, I think, as opposed to the northeast, where businesses have been around for hundreds of years. You know, Florida for the most part grew in the 1960s and 70s and and so a lot of the real estate down here is not owned by businesses. So about nine, you know, very few times about 90% of the time, uh, the business is just renting. Um, and listen, owning the real estate, there are a lot of businesses that own the real estate. We actually were helped to make, buy, sell. And that was a real estate transaction where the real estate was there. And that was a big asset in that, in that transaction. And uh, so, uh, but as the prices of real estate go up down here in Florida, sometimes it’s actually making it difficult for those small businesses to remain, uh, in that place. Um, signature Grand, perhaps an example of a business where the real estate is so was so valuable that it was hard to sell it. The catering company to somebody else. Um, and it was more valuable as just a piece of real estate.

Lee Kantor: So what, um, what are you seeing as kind of the trends in this space? Is this a good time to be a business broker?

Andy Cagnetta: Yeah, it’s a great time to be a business broker. Uh, we were having record years over the last several years, uh, that baby boomers need to retire. Uh, there are 12,000 baby boomers turning 65 every single day. Uh, this year, um, there are there’s a $12 trillion of private equity that needs to pass along to the next generation. And what we see out there in the world is the next generation doesn’t necessarily want their parents or their grandparents businesses, uh, they’ve grown up, they’ve done other things. Uh, they’ve gone to college and they don’t want the full service. They don’t want the, uh, convenience stores. They don’t want the restaurant. They don’t want the, uh, cleaning franchise. Uh, you know, there’s all kinds of businesses out there we sell, and, uh, you know, again, there’s people immigrating to Florida from all over the world that want those types of opportunities. And and so it’s been a good it’s been a good run over the last several years, uh, even during Covid.

Lee Kantor: So before we wrap, any advice for the person that, um, you know, it would be great if they sold their. Maybe they are not ready to pull the trigger yet, but what steps would you take today? If you know, at some point you’re going to sell your business? Is there any low hanging fruit they could be doing now to make them get the best price?

Andy Cagnetta: Yes. Keep good books and records, please everybody. Number one, have a great CPA. There’s plenty of good CPAs out there. Have a good one. Number two, make sure your books and records are in order, and somehow you’ve put them in some sort of computerized system, whether you have a POS system, uh, purchase of sales system at a retail store, or have some sort of, uh, system inventory system inside of a distribution company, or whether you have some sort of work in progress, uh, system, uh, inside of a construction company, whatever it is, uh, get everything so you have up to date minutes of KPIs, uh, keep, you know, performance indexes that you can eventually show a buyer and say, this is exactly what you’re getting, and then, uh, don’t wind things down. Uh, you know, the banks, uh, the buyers all want to see businesses that are in a growth mode that, you know, over time. And here in Florida, again, thousand people a day moving here, if you’re doing the right thing out there, you can’t help but grow. And so as the business grows, you’ll be able to sell the business.

Lee Kantor: And then what about in terms of keeping having a good manual or, uh, standard operating procedure.

Andy Cagnetta: You know, anything you can do to, uh, number one, read the E-myth by Michael Gerber. Right. So, uh, and systematize your business, and you don’t want to be the chief cook and bottle washer. You do not want to be working 60 hours a week. You want this business to be easily transferable. So that means that you have employee manuals in the place. That means that those people are doing jobs that can be replaced. You don’t have, you know, business business, uh, employees that are so specialized that they no one else can do that work or no one has that knowledge. Yeah, that’s really important as well.

Lee Kantor: So what do you need more of? How can we help you?

Andy Cagnetta: We need more people who want to sell their business. Uh, you know, and we’re always looking for people who want to work at Transworld, too. We could always use more people. If you have your real estate license out there and you did, you know you don’t want to sell homes anymore. And you’re thinking, hey, maybe I could sell businesses. Uh, we’re always looking to hire people around the country, literally around the world, uh, who want to get into the game of buying and selling businesses. And of course, uh, you know, if you want to buy a Transworld office somewhere, uh, out there in the world, we could talk to you about that as well.

Lee Kantor: So if somebody wants to learn more, where should they go?

Andy Cagnetta: Go to T Worldcom. That’s the easiest thing. T Worldcom. And you could go to LinkedIn, look at my profile and hit me up there or, you know, shoot me an email at AC at world, and, uh, I’ll be happy to talk to anybody.

Lee Kantor: All right. Well, Andy, thank you so much for sharing your story today. You’re doing important work, and we appreciate you.

Andy Cagnetta: Thank you. Lee. All right.

Lee Kantor: This all right, this Lee Kantor. We’ll see you all next time on South Florida Business Radio.