Brian L. Shields is a business development and acquisition expert with 15+ years of experience. Throughout his career he has owned, operated and invested in over 15 industries, and has worked on over $4 billion in various investments.
Brian has had a lot of experience acquiring businesses from retiring entrepreneurs. In the last 5 years, he’s led 16 transactions and put over $16m to work. His most recent business rollup sold for ~3x it’s original purchase price, after significant hands-on operational improvements were implemented.
Connect with Brian on LinkedIn.
This transcript is machine transcribed by Sonix
TRANSCRIPT
Intro: Broadcasting live from the Business RadioX studios in Atlanta, Georgia. It’s time for Buy a Business Near Me now. Here’s your host.
Stone Payton: Welcome to another exciting and informative edition of Buy a Business Near Me. Stone Payton here with you this afternoon. Guys, you are in for a real treat. Please join me in welcoming to the broadcast with Handoff Partners. Brian Shields. How are you, man?
Brian Shields: I’m doing great. Stone, thank you so much for having me on today.
Stone Payton: Well, I’ve really been looking forward to this conversation. Brian, I got a ton of questions. I know we’re not going to get to them all, but. But I think a great place to start would be if you could just share with with me in our listening audience mission. Purpose. What are you and your team really out there trying to do for folks, man.
Brian Shields: Yeah. So with hand off partners, myself and my partner, we really endeavor to be the best stewards of businesses from retiring entrepreneurs. And we look to shepherd in the next generation of entrepreneurs to run those businesses. So we really think of ourselves as a part of an ecosystem that we’re building to ensure that people who have toiled and labored and built something that’s meaningful get rewards for their hard work and and also play a role in ensuring that their legacy continues on by supporting the folks who are going to take over and see it into the next generation.
Stone Payton: Well, it sounds like a noble pursuit and good work if you can get it. But I gotta know, man, what is the backstory? How did you find yourself doing this kind of work for these kind of folks?
Brian Shields: Oh, man. Well, big picture. I went to Morehouse College, actually. So, you know, my cell phone is still a 404 number, and I got recruited into Wall Street from there, which is great. And I learned about this thing called private equity. And I was like, what is that? And I came to learn that it is, at its core, really about maximizing the value of an asset that you own, which was super cool. But then something about me for that felt like unfulfilled. And I realized what I really liked doing is actually having a hands on ownership and involvement in the day to day of the businesses that I work with, and so that sent me on a journey that ultimately put me in a position where, while I was at a venture backed company, I acquired 12 small businesses. They were property management businesses from people who wanted to retire, wanted to shift their lifestyle a bunch of different reasons. And I realized, hey, there are some great businesses out there, and B, we are, you know, in the early innings of a generation of people looking to retire, but not having people to hand off the business to. Whether that’s internally or their family. You know, a lot of people have built businesses to put their families through college or support them through the ups and downs. But, you know, now their kids are lawyers or doctors or software engineers and they don’t want to take over the, you know, accounting business or the, you know, like the stone cleaning business or whatever. And that’s where we come in.
Stone Payton: Well, if you’re up for it, I would love for you to walk us through kind of a use case. Of course, you know, you don’t. You may not want to share any names, but everything from identifying a good. I don’t even know what you call it. Target a good business to to acquire to to valuating that business to, you know, just the the whole process of making sure that you are buying what you think you’re buying because this is a whole new world for for me.
Brian Shields: Oh yeah. Oh yeah. I’m happy to jump into it. Well, so. So I spent like, almost two decades now, like, looking at businesses and stuff like this. So I’ll break it down for you. So there’s an here’s an example. There’s a business that was a software enabled business we were looking at recently. Um, the owner, super great guy, um, experienced some family tragedy a few years ago and from that suffered a lot of burnout and has started to step more and more away from the business. Uh, that tragedy unfortunately, put him in a position where he did not have a family succession plan anymore, but had a great business, um, a team that wasn’t really ready to sit in the ownership seat, but were great at their jobs and with the right guidance, could potentially grow into leadership. But they were looking for someone who understood how to modernize businesses, how to tweak them so that they could grow a little bit faster, and who could shepherd that talent to reach a little bit higher than where they were today. So we got connected and we started doing diligence. And so I would say first, like in just finding a business, a lot of it’s just talking, man. Like doing, having conversations like this, being in the market, I suggest to people all the time, if you are currently a CPA or you work in procurement at a large company you likely already have relationships with, like the vendors of those companies or in your industry to just start having conversations about what people’s succession plan is.
Brian Shields: And that’s the framing I like to use for myself. And I also suggest other people use, because it opens the conversation in a way that that feels approachable to the potential seller. Um, and then, you know, you got to do a whole bunch of things like look at is the industry the kind of industry you want to be in? Is this business type the kind that you want to own? So in that diligence packet, we usually look at the unit economics of the business or service. Right. Does this thing, once we sell the thing, do we make 50% margin? Do we make 20% margin? When I say margin, I mean profit. Do we make barely any profit, etc.. And like that’s one benchmark. We also look at the financials for the last few years just to understand the trends. And is this on the upswing. Is it on the downswing. Is it struggling. Is it stable. So we can pay the right price for the risk that we’re taking. And there’s a bunch of other like odds and ends that go into that. But ultimately we want to be able to look ourselves and our investors in the eye and say, we looked at this business.
Brian Shields: We think that it’s stable and we can keep it stable. We think that it’s needs a little bit of TLC, but we know how to get it there. We have the team in place and we’ve structured a deal that protects everybody involved, and we think the industry is one that’s going to be here for the next 20 years. So once we have all of those pieces in place, then you get down to having a conversation with the seller and say, hey, look like this is what we think that it’s worth, and we’d be willing to pay. What do you need? What’s important to you? How can we get creative, etc. and start really starting to find middle ground, right? That reach across the aisle kind of energy that helps you get to agreements and compromises that everybody’s happy with. And so, you know, we not every deal goes through. I would tell people that I think the statistic for most people who are like searching for a business to buy is they they acquire something like less than 5% of the businesses that they look at. So you have to have some comfort with with rejection and with failure because it’s all a process, right? But you only need one, you know, instead of it being YOLO. I tell people, yo know, you only need one.
Stone Payton: So I got to believe that given your experience, you’ve probably seen some patterns and, you know, have your your key list of I’ll call them red flags. Like, you know, if we see this, this and this, you know, we’re out. We’re not taking it any further. Is that accurate?
Brian Shields: Oh, yeah, man. I’ll tell you. So one big red flag is usually when people position their business as tech enabled. And, you know, we’ve talked to a couple of businesses that have tried to sell us on the fact that they are technology enabled when in reality. And as a derivative of that, that means that they want a valuation based on their revenue, not on their profits, which is a Silicon Valley metric. There’s a bunch of reasons why that exists. Um, but not every bit. Most businesses don’t qualify for that. But people try to get that right and listen like, if you can get it, fine. You’re not going to get it from me, stone, because I get it. I understand what creates a business that should be valued on RR. Most of them aren’t. So that’s one red flag. I would say. The other red flag, honestly, is we spend a lot of time talking to the sellers about why they built the business, the values that they run the business from. You know, I described our mission to you in, in a, in the context of values, right.
Brian Shields: Like not necessarily in the context of investment returns and stuff like that, because truly we’re motivated by our values. And when we talk to the seller, a lot of times we can suss out, you know. Excuse me. Excuse the abbreviated French, but like, if they’re an a hole or not. Um, and and like that that has downstream impacts on the team on how they feel, on how they deliver the service or the product to the customer, what they think is acceptable in terms of excellence and performance. And like you start to see all these little things that come out of how the founder and the owner operator holds certain values in their lives and how that imputes down to the company. So that’s like a big red flag. Like, we like to work with people that hold high standards for themselves and maybe don’t take themselves super seriously, but take the work and their obligations seriously. And you can tell in a conversation and like, you know, spending some time across the table from someone where they land on that side of the fence.
Stone Payton: So what are you finding at this point in your career? What are you finding the most rewarding. What’s the most fun about it for you these days?
Brian Shields: You know, I love the creativity of sitting across from somebody and hearing what’s important to them in their life, whether it’s they’re ready to retire and they want to have ongoing income, or they want a big cash payout now so they can make investments that set them up for success because they need to take care of elderly parents or, you know, some people are just ready to move on to the next thing because they’re burned out. And I have experience with burnout myself. So I respect that. And and being able to come up with creative solutions for that. Right. It’s just a ton of fun to get creative and just like, take out a blank sheet of paper and start sketching out stuff and be like, oh, I think this might work. And this will address what they want. But this also saves me from what I’m worried about and just kind of connecting dots. That’s a ton of fun. And outside of that, honestly, I just love the discussions, right? You get to learn about new industries, about new ways that people have built things and solved problems for people in those spaces. And there’s always something new to learn. And I think you said this to me on our pre-call. But, you know, it’s just nice to be a lifelong learner. There’s a lot of things that you don’t know and I don’t know. And I’m like, I just love learning more stuff. So it’s it’s a fun day to day.
Stone Payton: Say more, if you would, about your experience with burnout, because this really has shaped your character. It shaped your approach to to serving. Yeah. Say say more about that.
Brian Shields: Absolutely. So so I had acquired a business in 2019 and then sold it in 22. Um, had a really successful exit. Um, you know, sold ahead of schedule. Like, wasn’t intending to sell it. So I remember when we had when we closed. My daughter came up the stairs with this banner that she had made and little crayon, and it said congratulations. And I was like, cool, thanks. Just like that. Very flat. Like I didn’t have emotion. And she walked back downstairs, kind of disappointed. And I was like, what was that? What’s wrong with me? And so I started to recognize that I was so emotionally drained, having turned around the business. Uh, navigated it through Covid, ensured that we integrated with the acquirer. Well, that I was really, really, really, really exhausted to the point where not only were my decisions not as sharp, my attentiveness not as consistent, but also I didn’t have enough energetic and emotional capacity to deal with what was coming, which I didn’t, you know, obviously know this was happening. But we got pregnant with our second kid and my wife had a really hard pregnancy. So, you know, I’m holding down the house, the daughter making sure my wife is okay and she’s not sick. And then we moved into a new house and like, you know how that is when you move in, new stuff’s happening around where you live. And then the cherry on top was my father passed away that year. And so and I and I had this realization stone that I was the same age that he was when he had me. And I was about to have a son that year. And so I was like, man, if this is halfway like, I’m a terrible dad right now, I’m a terrible husband.
Brian Shields: I’m a terrible leader. And it’s all due to this stress. And so I had to take time off. And I took a year off. Didn’t intend for it to be a full year, but it ended up being that. And through that really kind of found my connection to the value of rest and recovery and recharge and have started to look at it differently because the first part of my career was all just like full speed ahead, power through the work, keep grinding, and at some point, mostly in line with the change in responsibility, being in charge, being an owner, I had to come to appreciate, and it took me a while to appreciate this, that you really do have to approach things differently. It’s not all about the grind. It’s about like the mental capacity and the quality of decision making and the energetic reserve that you have to recognize trends and issues ahead of time without having to grind at it. And so I’ve taken a different approach to how I work now, which has been really, really fabulous. It’s unlocked a huge amount of productivity for me. And yeah, I’m sensitive to all those business owners out there who have, you know, buried themselves to make sure that the business is working, to make sure that their employees are taken care of and their livelihoods are protected, and that their customers and clients are getting the promise of what they asked for. But you know that that crown weighs really heavy on you. And so I’m just here to say, I see you and I hear you and I feel you.
Stone Payton: I know in our business, but my business partner, Lee Kantor and I, we own the Business RadioX network and we’ve had some success. But in our business, there are at least a handful. I’ll just call them myths, but preconceived notions, just fundamental assumptions that are really largely off the mark, at least in our experience, in terms of the best ways to truly leverage this platform to help people and make money. I got to believe there’s probably at least a handful of myths or misconceptions or just some misinformation out there about buying and selling businesses. Is that accurate?
Brian Shields: Oh man, there’s so many. The first one I would say that’s probably like well-trafficked in the interwebs is you can buy a business for no money down and listen. I mean, that is technically possible, but it is factually inaccurate as an example. Typically, how that works is you have some other assets to leverage to get you cash to use as a down payment and then get more debt on the business asset you’re buying. So then in total you’re effectively buying with all debt. So one of my buddies bought a business recently. He refinanced his house, took the equity that he’d built up, used that as a down payment, then got an SBA loan for the remaining 90%. So his business was 100% financed by debt. And, you know, you have to personally guarantee the SBA, SBA loan. And obviously your mortgage is backed by your house, so he’s in effect bet the house on this business. So I would say like, don’t fool yourself into thinking that it’s just like a risk free, no money down, like free and clear opportunity like there is a lot of risk tied into that. And that is a very difficult thing to pull off. So I’d say that’s number one. And number two. Listen, man, the grass isn’t always greener. Uh, a lot of people who come to me are employed at a corporation and have a nice, steady paycheck and benefits and an assistant who will, you know, call to schedule doctor’s appointments for them, and then they’ll say, oh, man, you know, I’m just tired of this bureaucracy.
Brian Shields: And I want to I think I want to go do my own thing. I want to go run my own business. And I’ll say to them, hey, if you water your own grass, that grass will be just as green as the grass on this side of the fence, because it’s hard being an owner man, I know you can speak to this like you are responsible for everything, whether it’s the, uh, the the Comcast account that sets up your internet and making sure that that’s good to go to the contracts that go out to your clients to protect you and them from each other. It’s all on you, man. And so understanding that it’s like being a parent, like you don’t really understand it until you’re in the seat and then you’re like, oh, this is this is different. Like every all the books I’ve read, all the stories I heard, that was just tip of the iceberg stuff. But, you know, for those of you who it does fit for, I welcome you with open arms because it is a it is a unique fraternity to enter into. And, you know, really only other entrepreneurs understand what entrepreneurs go through.
Stone Payton: Okay, let’s talk about me for a minute. It’s my show. Oh, so no, I mentioned Lee Kantor. He’s my business partner. We’ve been at this a while. You know, we’ve been in this business for a little over 20 years. We’re not there yet, but we want to carefully plan our exit. And there I’m operating under the impression that there are some things we should be doing now, even if we’re five, ten years out to get ready. And I suspect that there are things that someone that wants to acquire the kind of business that we have, they need to think through. Okay, what’s the best way to work with, you know, a couple of guys like that that spent their, you know, much of their career building this baby. So yeah, any counsel you have on either side of that equation would be great, man.
Brian Shields: Oh, yeah. So I’ve looked at enough media businesses to have a perspective. So don’t hold this as gospel, but just hold it as like, you know, like a parable. Yeah. So I think the number one thing for businesses in your space is to just demonstrate a real strength of consistency of audience, right. And that might mean having a few shows that monetize like a certain demographic consistently. So we always get, you know, X amount of people from this demographic across these shows. Right. Um, and or your ability to have a like, own a topic That is presented to different audiences in ways that capture the diversity of those audiences. So I think an example would be, um, uh, The Ringer Network, right? Like, I’m a huge basketball fan. Mhm. Uh, and so Bill Simmons approach was kind of like, hey, number one, traditional media is dying. People are moving into their cars and want something to ride along with them. That’s like sports radio, but more customizable, more intimate. So he got off ESPN, built, uh, a podcast network, right. And was able to consistently capture the attention of, you know, male adults between the age of, let’s call it like 25 to 50 and get a demonstrably, demonstrably, demonstrably consistent, uh, amount of time from them. Right. Like they, on average listened to 60 minutes of our podcast a week, a day, whatever, because that then communicates to a buyer that there is consistency in an asset and you have a market that you own.
Brian Shields: Right. And so that that makes it acquirable. Right. I can step into your shoes. And I know that if I believe in this market and its growth or its, you know, value because these people love to spend money on, uh, you know, buck knives and coffee and basketball shorts and whatever, then I can take that audience and market it to all the different advertisers that, you know, we can we can generate revenue from. And I can add in additional shows, additional experiences. So capturing that audience and then having consistent metrics that are clear, number one thing for you. Number two thing is just consistent financials man. Like like just demonstrate that this is a financially viable business. Right. Uh, and like you’re off to the races. So I think I would look at those two things as like steps for you first, which I suspect you’re already doing. And then the last thing, honestly, Stone, would be to start networking. Like, I can’t tell you how useful visibility is to the people who could potentially acquire your business, right? Like if you were to just have friends at Sirius, at Spotify, at Yahoo, at other places that I probably can’t think of off the top of my head and just like, be in relationship with them, play golf, ride bikes, you know, whatever.
Brian Shields: Have a poker game. But just keep that, keep top of mind. I will tell you as they will watch your ascent. Right? And I think the best deals are built out of watching a trend line. Right. Like not making a bet at a point in time, but saying, hey, I’ve seen you over time and a stone and Lee and Lee are good people. Um, so they they like to my values point. They’re not going to they didn’t build, like, a house of cards. So cool. Then second, I’ve seen them grow and I’ve seen them consistently own and capture this audience. So there’s something there and oh, they’re ready to retire. Mm. Well, you know, we could be interested in that or. Hey, we’re Spotify. We’re looking to get into that market specifically. We’d love to own some content and some audience there. Bring them in. And I thought of you first, Stone, because, you know, you know, we’ve been playing golf for the last three years. So so I think those three things combined will help position you to be in a good spot when.
Stone Payton: You’re on the acquiring side of things, how important is it or is it important at all really to try to keep, um, I guess some anchors in place, like keep some of the, the key cultural dynamics the same, and surely you’re going to come in and make changes and improve the business if you can. I mean, is that an important factor or just that’s just a case by case thing?
Brian Shields: Hugely. So one of the number one questions I get and things that I hear sellers care about is I want to take care of my team. Right. And it’s tough, man. It is so hard because I am not you. Right. So there’s just going to be a basic difference between you and me being in charge, just from a vibes perspective. Um, and then if I am, say, a private equity firm with institutional investors and a ten year fund life, or a search funder who has a ten year fund life, I’m going to manage the business and create a culture of accountability that is different than someone who has a little bit of patience, a little bit of flexibility, who understands some of the cultural dynamics that are going on in the business. Right. And so that just creates discomfort in different ways for the team. And so yeah, man, like it is as an acquirer, it’s important to preserve that insomuch as it allows me to accomplish the financial goals that I’m setting out with this investment. And so yeah, things can change. Right. Like if you I don’t know, like let’s say you gave everybody free coffee and lunch every day. And if we get into a position where, hey man, that’s cool. But that is a not the same as what other radio networks do and be costing us a ton of money. And we need that for debt service, because I bought this business with a lot of debt, then that’s going to change. And then you can imagine what that does to the morale, right? That shifts things. Or on the other side. I’ll give you an example from my last business. I brought in a project management system so that I could understand what people were working on.
Brian Shields: And when I got a call from a client, I wouldn’t be like, oh, I don’t know. I got to get back to you in like two hours. I could answer their questions right then. And people struggled with that because it was very quickly evident that there were some people who were knocking their work out of the park. Right. Like if you ask them to do ten things, they got 7 to 9 things done by the end of the week. But then there were some people who came in and were like, you asked me to do ten things, and I got to two of them and then the rest I forgot about. But now you can see that I was BSing, and you’re holding me accountable to that. And that then creates like this environment where people were feeling like, oh, I could kind of get away with stuff. And then they start freaking out about that. And like, it can create some temporary discomfort. But it’s kind of like the positive discomfort that you want. So so it can go a lot of different ways, man. And I will tell you personally, the reason we ask about values up front is because we want to ensure that there is as much alignment as possible, like, I’m going to hold all of my teams to a high standard of excellence, but I’m also like a super cool dude. Like I’m just chill, man. Like, I would love to just hang out, like, do stuff that’s fun, like create culture so that people want to work there. Because I do fundamentally believe that happy teams produce better than teams that feel on edge.
Stone Payton: So what’s next for you, man? Anything in particular on the horizon over the next? I don’t know, 6 to 18 months?
Brian Shields: Well, we expect to have a first close for this fund. So, you know, happy to have conversations about that. Um, and we expect to close on a business acquisition in the next six months for sure. We have an offer out on one right now and you know, fingers crossed everybody send up some prayers for us. We’ll hopefully get that done. Um, outside of that, man, you know, we’re just trying to enjoy life with two kids and a wife and, you know, all the crazy stuff that that God puts in my path.
Stone Payton: Okay. What’s the best way for our listeners to tap into your work, connect with you, maybe, uh, have a conversation with you or someone on your team, learn more about this arena, whatever you feel like is appropriate. But let’s let’s make it easy to for for them to come into your circle, if it makes sense.
Brian Shields: Absolutely. Um, you can find all of my stuff and bio on my website. It’s Brian Lee shields l e e e um. Com Brian Lee shields. Com. And then, um, you know, there will be a bunch of podcasts and stuff there. I’ll put this, uh, this, this conversation on there as well, so you can kind of get to know me that way. And then if you want to chat, man, just find me on LinkedIn. I’m super active on LinkedIn. Brian Lee shields on there. Just DM me. Happy to chat if it makes sense. We’ll get on the phone. Like I try to be as available as possible. You know, I don’t have infinite time, but I make time for conversations.
Stone Payton: Well, Brian, it has been an absolute delight having you on the broadcast this afternoon. Thank you for the insight, the perspective, the enthusiasm. You’ve got my wheels turning. I can’t wait to tell Lee that that we had this conversation on air. Man, you are doing really important work, meaningful work. And we we sure appreciate you.
Brian Shields: The pleasure’s been mine, stone. Keep up the good work. And I and I look forward to chatting again soon.
Stone Payton: Oh my pleasure. All right, until next time. This is Stone Payton for our guest today, Brian Shields with Handoff Partners and everyone here at the Business RadioX family saying, we’ll see you again on Buy a Business Near Me.
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