#195 – Mergers & Acquisitions With Khalil Stultz

I can’t stress enough if as an entrepreneur, I call that the next rung in the entrepreneur lateral right? It’s building a business so forth, but just really started thinking what if you could grow by a whole company tomorrow, just think about that, right? What if you could double your company with one transaction? Start thinking that way, you know, so but yeah, I got a few things in the pipeline that I’m excited about Thomas Green here with ethical marketing service on the episode, today we have Khalil Stultz. Khalil welcome, Hey thanks for having me Thomas. It is my pleasure. Would you like to take a moment and tell the audience a bit about yourself and what you do? Yeah, absolutely. Um So um I’m a growth strategist and consultant. Um I help companies drive rapid effective growth. Um I’m also a business investor acquiring software and in sales tech companies as well, so um in other words I wear a few hats right, like most entrepreneurs do, right, But um so that’s high level what I do.

Um My background came from B to B sales um cold calling as well as sales training um and have since kind of rolled up a lot of those expertise to a to help others through their entrepreneurial journey. Thank you for the introduction of the things that you mentioned because there are so many things I can ask you about, what is the thing which you find to be the most interesting for you or perhaps your passion? Great question. Um I would have to say for sure acquisitions and strategic mergers um I found that to be the most selene effective way to grow. Um in other words, you know, most of us think of growth and incremental steps, right? How can I just grow only through marketing, which hey, I own a digital marketing company. So I love the value of marketing, right? But most of us are focused on growing one customer at a time, right? How can we transition to grow exponentially or in bulk? Right. Because growing company at a time is a lot more fun, Right?

Um but in essence, even without acquisitions, but strategic partnerships, joint venture alliances, power partnering, right? Imagine if you could grow through gaining access through the customer lists of others, the media channels of others, et cetera. Those are the things that drive massive windfalls of profits for your business and operations. And ironically with less effort and work. So by far for me it’s I love finding the creative unusual way to attain particular goals. Um that that requires less effort in time to achieve them. Right. So by far that would be my, my most favorite thing too. I typically focus on, I have heard, you know, in relation to acquisitions, but it can take decades to build up a business and you know, you can almost leverage that that time in a very short amount of time. Um but I think that in terms of the the example you used of, you know, getting one customer that’s that’s quite clear in people’s minds, but with the acquisition, I think the perception is, it’s much more complex, much more difficult to do.

So what do you think about that perception? Great question. I like to tell people, it’s just what you’re exposed to at the end of the day because we’re exposed to sales and marketing, right? That’s what most entrepreneurs are used to. It becomes familiar to them the same way that at one point it may not have been familiar and they push to make it familiar to become proficient, right to grow their business. Likewise, you’ll find that, you know, once you start to expose yourself to it and get out there and try it. Um, you get a lot of feedback that will drive, you know, your understanding concerning the topic and you most likely will actually find, once you expose yourself to it, that it’s a lot more simplistic in many ways. Um, you know, to do that right, when you understand and a lot of the mechanics are actually similar right to get a customer. You have to understand your value proposition, you have to understand the customer and what their needs are, what their pain points are, what their desired reality is, that they’re trying to achieve right? And typically your solution, you believe as entrepreneur is the bridge to bridge that gap.

Likewise, when it comes to a strategic merger or joint venture partnership or an acquisition. A lot of those principles are very similar. You’re dealing with typically another business owner who has goals, knees, desires, pain points and you potentially partnering with your solutions that you developed in your own operations. Could be the answer to their problems. Right. So you’ll often find a lot, a lot of times those sales components are very similar, interesting. Have you, do you help people with acquisitions or do you sort of are you referring to acquisitions that you’ve done yourself? Yeah, So both. Right. Both. And so I do also help others guide us through that process, um through structuring strategic joint venture alliances. Right? So what I would like to call a soft merger, right? As well as how to go about strategic acquisitions and you know, higher skill marchers. So I do coach people through those processes. Um and you know, those ways to drive rapid growth, you got some favorite examples to share with us?

Oh yeah, I’ve got quite a few. Um I’ll kinda funny enough, it kind of how that started if you will, was actually throughout my corporate career, I was in transportation and logistics. Um and we were cold calling, I was cold calling 150 calls a day for about 3.5 years. Right. I was successful at it. Right. Also became a sales trainer, top performer, all that sort of stuff. Right? So, But one thing that makes uh corporate B2B sales very competitive is not just external competition. It’s internal. Right? So you’re competing with hundreds of other brokers and sales reps. Uh, and the systems are such to where only one person is allowed to prospect a particular company at a time. Right? So amazon is already taken ups is already, you know, all these major companies that would normally come to mind, right? Already spoken for in the, in our internal crm. So I had to get creative. I was like, okay, how can I land the big, you know, the big fish if you will the whales as we like to call them in sales? Right? How can I land them most consistently?

So I got to thinking, I was like, you know, what, what if these people who we think are our competitors? What if I could just provide our solutions to them because they already have those accounts that I want access to? And it clicked for me. And that ironically it was easier for me than trying to close these larger scale accounts because those types of accounts that you pursue could take upwards of two years to close. I kid you not. Right. So I was getting, you know how I was framing it to these quote unquote competitors. Like look, we have the best fulfillment, you know, systems out there when it comes to finding truck drivers and so forth. I can help you set and keep the customers happy. You just keep focused on getting more of those customers, like those large scale customers. I got access to major enterprises like walmart trader joe’s etcetera to run their transportation in various forms of fashion by strategically partnering. So that’s where it started for me. Um if you will Now applying that in my business, you know, an entrepreneurial journey. Um I also own a digital B2B digital marketing firm Um and applying those same strategies, we grew 240% in four months.

Right, So rapid aggressive growth from just joint venture relationships. Right? And what I did there was I targeted other prospecting and marketing companies that didn’t have the particular arm of our solutions in their wheelhouse and plugged it in as a solution. So I integrated, right. In other words, you know, we talked about building a pipeline, my mindset was how can I just kind of get some water from a pipeline that’s already built, Right. How can I just, you know, kind of smoothly interject there and then you just jump right in down, you know, flowing downstream with less effort. So, and that’s what happened. Right. I was for lack of better terms, interjecting myself into systems and processes that were already flying that I didn’t have to rebuild or recreate or manage even Right. Um so this is just a few examples just from my own experiences that have made massive, you know, changes positively for us just by, you know, looking at pipelines that are already established.

So that last example, was that a that was a joint venture or was that someone? Okay, that was a joint venture. Mm hmm. And the ones where say acquisitions, what sort of timeframe would you say are on those In terms of finding something, negotiating, acquiring, you’re saying that kind of, uh, pipeline if you will. So this can vary, right? Um, you can have some as quickly as 30-45 days. Right? Just dependent on motivation. Right. And again, this goes back to kind of a similar something I mentioned earlier. The sales processes are very similar between getting clients and getting a company very similar depending on how motivated someone is. And that’s a part of your sales process. You uncovering motivation, what their needs are etcetera. Right? How you go about sourcing them. That’s the marketing component. Both are very similar in both regards. Um, you could have something as quick, That’s 30 days. If you have something that takes as long as 4-6 months.

Right. Just depending on some of those factors. Right. But when you understand that, do they come to you or do you go to them next to both? Right. I believe in a two pronged approach. Um, I eat my own cooking. So, you know, a first thing I do is I look for circles of influences, right, that already have my target acquisitions attention. Right. And that could come in various forms. Right. Could be C. P A. S. It could be other marketing folks that serve my ideal acquisition target right? For off market opportunities. Um So those are some ones where they’re now sent to me, hey you need to go talk to Khalil right? Because I’ve given my circle of influence, key criteria on who I serve in and what scenarios I can help them. So when it comes up for them they see it and say okay yeah you need to go talk to Julio, right? Um So those are some examples, Right? So it’s a both and process um of direct outreach to my targets as well as utilizing circles of influences strategic partners to drive opportunity.

The funny thing is I want to hear what your answer is but when I asked the question because you’ve used the analogy of marketing, I kind of know what the answer is but I’m going to keep going with it anyway. So we’ve done, I was going to ask you about financing. So I think the reason why there are less acquisitions than let’s say more activity around marketing for example, is because of that problem. I think if plenty of people were willing to lend it, I think that there would be more. So what are your thoughts around that topic? Great question. That’s usually I would agree that’s a sticking point for most people when they begin to consider something like this and I can actually tell you um it can be quite simplistic in getting the resources right? And I go I use it’s it’s almost cliche, but it’s so true. It’s not about having the resources, it’s about being resourceful, right?

And I’ll give several examples, right? You have different financing tools depending on the type of company that you’re looking to acquire. Sas companies reoccurring models, something I particularly focus on and prefer to focus on. I have tons of revenue models that will fund based on their annual reoccurring income. So let’s say, okay, this company is generating this amount. Well, you can use the company to fund capital for acquisition, right? That’s one example, right? And you can use tools like there’s a company called pipe, right? That will fund based on a company’s annual reoccurring revenue, right? So I can go in and say, okay, this company’s doing that pipe will say they’ll do X amount in funding based on that company’s revenue and you just pay them back over X amount of time based on the cash flow of the business. It’s one example, right? Other examples are for strategic mergers and so forth. Are saying, look, if we just do what’s called a paper roll up, right? Which is we both we create a new entity and we swap our shares for the new entity are multiple increases for an exit, Right?

So that’s called a share swap. Alright, I didn’t actually exchange capital, right? I just extend shares in a newer entity for us to get a larger buyout because now we’re one larger entity. So companies buying companies that acquire. Alright, we’ll pay more for larger sized companies, quote unquote. That’s a share swap example, right? There are several others that we can look at. We can look at exchanging resources, Right? Hey, you know, Let’s, Let’s, let’s say there’s a smaller company doing 300 grand per year. He’s a solo preneurs, he’s burnt out. He doesn’t like focusing on fulfillment, right? You can go to that, that type of person to say, hey, look, we can help get you off fulfillment, right? Help drive growth through these three or four ways, right, etcetera. And you can focus on the parts of the business that you love, We like, you know, 40-60% of the business to make that exchange to resources, right? Or help or support, etcetera. So you can exchange internal resources, right? Which is a form of capital and most people don’t think of it that way.

But your expertise and the systems, you’ve developed our capital, right? When we say capital, most people only think of finances, that’s actually just one form of capital, right? Your relationships, your, you know, if you ever watched a tv show like shark tank, if you’re familiar with it, right? You know, there’s a couple areas that they negotiate. It’s not just how much money they’re putting in. They also incentivize these, these entrepreneurs and say, hey, you know, I’m a tech entrepreneur, you know, I’m Mark Cuban, I have these relationships that you get access to by becoming a partner with me relational capital, right? These are all things that you can begin to exchange right for access to their resources or equity, etcetera. Right. So I would challenge all the listeners. Right? Think about what you have in your wheelhouse that is of that. You may not have thought about it, but it’s a huge value to even what looks like competitors, you know, piers in your industry, etcetera. All right. Because those are things that probably some of your competitors are looking for.

They’re trying to solve that problem that you solve regularly and say, hey look, we could cross sell with each other to drive growth. We could merge, there’s a ton of things you can do there or they could just be burnt out or here’s my favorite right on how to drive acquisition opportunity, drive, you know, capital for it. Somebody who’s, you know, as, so as serial entrepreneurs, they probably got two or three other projects they now want to go focus on instead of what they’re doing now. You’d be surprised. You could also get what’s known as seller financing, which is, they’ll say, hey, I want this amount for the business. I want you to pay me monthly installments for the business or it’s pretty cool that you can buy a business. Um, and the business actually pays for the fact that you for that business. That’s crazy, right? That’s it. Right. You know, it, a lot of us might be familiar with how real estate investing works, right? The traditional ways, hey, typically you might get alone and the tenant pays the mortgage plus a cash flow on top right after all expenses.

And to that point, yes, it could be, that concept can be similar, right? That business could be paying right? Everything that’s needed. Oftentimes for for the acquisition, you mentioned shark tank. And since we’re on the topic of mergers and acquisitions, what do you think of the show? I love that show that. And then I’m not sure if you’ve ever heard of this show called the Prophet. Um oh, check it out. It’s on, if you’re familiar with the streaming platform called Peacock, it’s on there. Um, one of my favorite entrepreneurs that I look up to a lot, his name is Mark Lehmann is um, he’s a turnaround expert, so he goes into investment companies that are, you know, borderline, insolvent or borderline feeling, you know, good legacy businesses. Um, and he helps turn them around by, you know, optimizing their internal infrastructure and so forth. So that’s probably one of my favorite, let’s bring your focus shows along with the shark tank. I will look into it because I’m surprised that there’s one out there that I don’t know about, but like shark tank, like Dragon’s Day in the UK version and then there’s plenty of other good ones.

But it makes me think about how I know you told me like you were looking for a, should we say you were looking for leverage in order to get access to those companies that you wouldn’t have otherwise done. But how did you start implementing in terms of getting into this area of expertise? Yeah. So um so after I left um the transportation company, I went to become an insurance agent and so forth. Um I was the top performer there, but that’s where I caught that entrepreneurial bug. Um and to kind of tie that into your question After that my first attempt at becoming an entrepreneur was to buy a $7 million dollar trucking company. Now I’m smiling because I guess I was really bold, you know like because I didn’t exactly have a million dollars in the bank account after leaving my job right To buy a $7 million so what I did was I tried to go find a credit partner right? Um I searched through various facebook groups of other acquisition groups, All this type of stuff to to find someone else who you know who’s already in that mindset has done a deal to try and bring the mind to help me close this one because I had a background in logistics.

So I had a growth opportunity. So um it turns out though that the bank would not touch the deal because the business owner went through a non compete and a divorce back to back and ran those expenses through the business? So the deal was unbreakable because of that. So this is kind of really where what what kind of drove me to do what I do now. So in essence, you know, I wasn’t able to fund it traditionally and I had to get creative and this goes back to resourcefulness so I wasn’t able to produce $1 million dollars in cash for the transaction. But what I was able to do after looking at his financial infrastructure Was to add $880,000 per year back to his net bottom line cash. It’s just through a bit of financial re engineering, negotiating with vendors restructuring how he had some of his debts and so forth. So in that sense I got creative and was able to add close to a million dollars in value, right to this business. So that’s kind of what really led to it.

Like I, my mindset is that, you know, I believe, you know, 80 20 rule as they say, right? If we can focus on the thing that drives most of the results, then we amplify our inputs and outputs, right? So I’m always looking for the mostly ineffective way to do stuff right? Um you know, so that’s kind of what drove me down that path. Like, you know, I thought to buy a business Before I thought to build one right? Because it made sense to me personally that hey, what if I could get access to systems that are already producing, right? That was kind of, my mindset would lead me down that path, right? Um, so, um, those are some things that kind of attributed to my kind of initial journey to thinking that way was what’s the lean, most effective way to get to where I wanted to be? And often times there’s a more effective way or a better way than typically what we’re aware of staffing sense, perfect sense.

It does make me think about the difference between, let’s say creating and growing a company which is, you know, seven million versus acquiring one, I think most people, you know, would, would choose the latter. But it makes me think about the question that what do you think about being in the company that you just acquired? And let’s say your experiences maybe less than it would be far less than if you grew it. So what do you think about being in that company is the owner? Great question. So a few things, right? You can, um, there are partial acquisitions you can do and I’ll say that upfront and what I mean by that is you can acquire an equity stake with an owner that also wants to stay on, so less work load for you, right? But the one thing you want to do, let’s say in a scenario where yes you’ve become the new owner, the new operator of the business if you will, you’re gonna want to ensure that S.

O. P. S. Are established from the previous owner. Um And most owners don’t do this for you know initially. So developing a skill set and being able to ask questions and walking into the process to ensure things are documented, it’s going to be key, right? Um And these are things you can learn right? I’m of the I’m of the mindset that the best way to learn is to dive in. So um by no means were these all things that I just had together up front. It was out of necessity and I was just open and willing to do what was necessary to expose myself to what was needed, like the needed information and so forth. But yeah so to answer your question to be able to do that effectively, you’re gonna need documentation. You’re gonna need an open line of communication with the previous owner, right? Where in these agreements you can negotiate. Hey I’d like you to provide me access to you, give me training, you know from you. I can ask questions. I can give you a phone call a week or whatever the case is. So I’m familiar with what needs to be done in particular situations, right?

Um So there’s a lot of things you’re you’re going to, you can do to you know better prepare yourself to run the ship if you will. Um, now there are other advanced strategies. One thing I love to do again. Um, you know, is you could look for a strategic merger with another company in the area. That’s similar to the one you’re, you know, you’re acquiring, why? Because the best way to find someone who is capable of running a business like yours, is to find someone already running a business like yours. Right. Um, so again, we could solve the problem with same philosophy, the resources or skill set that someone already has established. So, and those examples, right? We can look for a company that is similar that has an operator, right? And then negotiate a strategic partnership or merger and they become the new ceo of the new, larger entity is one is another strategy that we found, you know successful. And worst case scenario, you could always look at potentially, um, promoting someone who’s been with the company for X amount of time.

Right. Those are all ways to get around kind of, that perceived lack of experience. Perhaps when coming into a company? Great answer. I think a lot of people maybe, who are, who are watching, I think there’s also going to be an interest in selling their business. So, have you got any thoughts on maybe the key things that people need to do in order to make their business appealing to a buyer. Oh, yes, that’s just a great question. Um, I want, I want everybody listening to start thinking of their company of course, is arguably one of their greatest assets that they have right throughout your entrepreneur joining, even especially if you can do this even from the start of your business the better, Right? Don’t just think about customer, it’s all you. Right. And that’s where most of us are, especially in the early building stages trying to get clients and what’s important to them. That’s very important. But I want you to think about shareholder value throughout your journey, even especially from the start, why would somebody want to buy your business?

Right. Think about that, you know, are, are things more, if things can be more systemized, more organized, if your processes can become repeatable and predictable, these are all things that are a value of someone who might want to come in, right? So think about those things from the start and if you haven’t yet, that’s okay. Think about it. Start thinking about it today, right? Because the majority of entrepreneurs who grew wealthy did so through some form of acquisition and exit strategy, whether that’s going public, you know, all the entrepreneurs, we hear about Elon musk, whatever the case is there, there was some form of liquidity event or exits that happened to get them to that point, right? So, um, it’s something that should be on every entrepreneur’s mine. Um, but most of us get caught up in the day to day right there in the business as opposed to being able to think on it strategically. Um, so think about ways to make your business, uh, to build redundancy in the business bill, repeat repeatable processes within the business, having growth plans for your business.

Right? These are all things that, and a new acquirer is willing to pay a premium for businesses that are organized. So if you get your things and get your numbers organized, get your P and Ls together, all of those things have those ready, right. Um, and being able to source buyers is not as hard. Again, it goes back to sales. It’s a sales and marketing process. Right? So the other side of that is, how do I, how do I find someone who wants to buy my business? Right. It could be one of your competitors when you’re larger competitors. It could be, you know, one of the strategic partnerships that you’ve developed is usually the easiest ones to source and adequate, you know, a pending buyer through, if you’re already making money with some of your vendors. Right? You’d be surprised, Right? Um, you know, just kind of, you know, personally putting the word out there, Hey, I’m interested in exit. Were you surprised when mike comes up, you know, from, from some of your already, you know, established partnerships is that from experience? Yes. Oh, absolutely, absolutely. Your current partnerships could be some of the fastest ways to source somebody interested in buying, right?

You know, and it may not end a lot of times, it doesn’t have to be someone who’s in the framework of being in acquisitions, just, you know what, hey, you know, my business has, these are these things that are of value, especially in a relationship with them, you know what their pain points are. Okay, I’m I’m kind of open to considering some exits. Do you know anybody, you know what, I’ve been trying to fix this thing in my business and your business could be the solution like that happens all the time. Businesses will acquire other businesses just to fix something in their own operations all the time. Right? So yeah, that network is key. You’d be surprised. You might have a few deals on your phone right now. Ha ha ha well, if that’s the case then let’s take a few a few steps for people to perhaps get started on maybe an acquisition, what do you tell them? Yeah, I would say, you know, whether it’s acquisition or just joint ventures, right. Uh Start to think here’s some ways to think about what could be a great target in terms of thinking about your and this moment, think about your end client, right?

Think about what they buy before doing business with you instead of doing business with you during business with you or after. And those are some great ways to build for lack of better terms and ecosystem or supply chain of acquisitions. Right. I’ll use this example. Right? Or for partnerships think of what a realtor does, which has helped someone buy and sell a home think about some things that a home buyer is probably looking at or purchasing along with buying a home. Well, they need insurance, right? They’re probably looking at furniture, they might be looking at home services like lawn care, right? Those are all things that are probably spending money on along with that home purchase. So you as a realtor could build strategic partnerships even with, you know, furniture companies, etcetera insurance companies because I’ve got to buy insurance for home, all of these, you know, lending, they need a mortgage. Right? You could be building relationships with all these types of folks for a to drive referral business, which is in my opinion, the best business you could get.

I mean referred business closes faster with less effort, they close it, you know, they convert a lot higher. So, you know, that’s another thing I always tell people if you want to grow effectively without needing to really scale internally focus on driving systematically driving referral business. But um, those are some big steps I would start with is use that framework to begin to identify even growth opportunities where they are acquisitions or just partnerships to drive referrals start there and he deals in the pipeline at the moment for you. Oh yes, yeah, I do have a few. I have, I do have a few. Um, I have a pending a few pending mergers and exits. Um, and I do have some additional acquisitions, uh, depending on the table that I’m really excited about. So, um, I can’t stress enough if as an entrepreneur, I’d call that the next rung in the entrepreneur lateral, right, it’s building a business so forth, but just really started thinking what if you could grow by a whole company tomorrow?

Just think about that, right, what if you could double your company with one transaction, start thinking that way? You know, so, but yeah, I got a few things in the pipeline that I’m excited about. So well, I’d love to know maybe if you could get in touch when, when that happens, that would be great because I’d love to know that. Is there anything that I should have asked you about today? Um, Other than that my goal is always to expand someone’s imagination on what’s possible for them, Right? Um, you know, you and I talk, I’m a dad, right? You know, so I got three kids and I’m always trying to find ways, how can I build wealth while spending more time with my family. So, um, that’s my motivation and you know, if there’s anything that someone asked me to speak on, its, I’m always hoping to expand someone’s imagination to think about what’s really possible, right? If you can really, you know, just kind of challenge yourself to expand kind of that framework on how you think you’ll be surprised on what’s achievable.

So uh that would be what I what I got on that. So any any goals, long term goals that you’ve got? Yeah, short, both short and long term, I’m always looking to, to grow the sizes of my transactions, right? Um but my goal is to um achieve a certain amount of earnings while working less than part time. That’s my goal, right? Because I wanted as much as I can become more and more hands on the family and just so forth. But you know, and that’s kind of really, I would say my passion, you know, how can I build wealth to the level I want to build, It Did not have to work 10 hours a day, one day. Am I gonna see you on shark tank then? Is that what you’re telling me? Perhaps it could be a possibility. You never know, you never know. So, but yeah, that’s my goal, is how can I, how can I build wealth while while truly, you know, as I put it working less than part time best way to do that is focused on uh swinging for the fences, Right?

So that’s the goal. So if people want help with an acquisition um and they want to talk to you, where do they go? Yeah, great question. Um I love, you know, um just I love being social, right? I’m on linkedin in particular. Um If you’d like help with whether it’s acquisitions, even just a growth strategy through driving partnerships, it is a great place to start, right to get your feet wet wet, but if you want help with any business development, you know, or coaching, that sort of thing along those lines, you can reach out to me directly on linkedin. Um I do have a custom Lincoln U R L um Khalil, you know, linkedin dot com slash in slash ready for growth now. Um So you can type that in to find me and just search my name, Khalil F stultz, reach out and connect directly. Um I managed my own length then. Um So I’ll answer and respond right, so reach out, connect to say, hey look, I’m interested in learning how to grow more effectively um and we can have a conversation well for everyone listening or watching.

Review the link in the description and Khalil thank you for being a great guest today. Hey thanks thomas. Thanks for having me