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E193: Anthony Lawson on Real Estate Entrepreneurship Through Assisted Living and Group Homes - Watch Here

About the Guest(s):

Anthony Lawson is a real estate investor and entrepreneur specializing in buying and operating real estate-related businesses. He started his journey in the real estate world by purchasing his first property and turning it into a veteran housing facility. From there, he expanded into sober living homes and group homes for individuals with disabilities. Anthony is the founder of Global Investment Capital Group and has successfully raised capital for his debt fund, which focuses on acquiring and operating group homes and assisted living facilities.

Episode Summary:

In this episode, Ronald Skelton interviews Anthony Lawson about his experience in buying and operating real estate-related businesses, specifically in the field of assisted living and group homes. Anthony shares how he got started in the industry and the impact he wanted to make by providing housing for veterans and individuals in need. He explains the process of acquiring and transforming properties into assisted living facilities, as well as the various types of group homes and the potential for high cash flow. Anthony also discusses his unique approach to raising capital through a debt fund, which allows investors to receive fixed returns and provides flexibility for scaling the business.

Key Takeaways:

• Anthony Lawson started his real estate journey by purchasing his first property and turning it into a veteran housing facility, which inspired him to create a business model that is impactful and cash-flowing.

• Assisted living facilities and group homes for individuals with disabilities have the potential for high cash flow, with some facilities generating up to $10,000 per month per bed.

• Acquiring existing facilities through mergers and acquisitions is a scalable approach to growing a real estate business in the assisted living and group home industry.

• Anthony's debt fund structure allows investors to receive fixed returns and provides flexibility for scaling the business without the complexities of equity-based funds.

• The key to success in the assisted living and group home industry is understanding the target demographic, building relationships with organizations and caseworkers, and leveraging government contracts for additional revenue.

Notable Quotes:

• "You pay someone in life to go further. So I have a really good mentor. He's very big in the commercial real estate space and he has two funds and has been operating them since the market crash in '07." - Anthony Lawson

• "Assisted living and group homes have the potential for higher cash flow compared to traditional rental properties, making them attractive investments in the real estate industry." - Anthony Lawson

Article:

How to Scale Your Real Estate Business by Acquiring Assisted Living Facilities

Secondary Sponsor:

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Growth & Acquisition - News Newsletter

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E194: Navigating Business Success: Insights from Entrepreneur and M&A Expert Richard Tunnah - Watch Here

About the Guest(s):

Richard Tunnah is an experienced entrepreneur and mergers and acquisitions expert. With a diverse background in various industries, Richard has successfully built and sold multiple businesses throughout his career. He specializes in helping businesses grow through strategic acquisitions and exit planning. Richard's expertise lies in identifying opportunities, maximizing value, and navigating the complexities of mergers and acquisitions.

Episode Summary:

In this episode, Ronald Skelton interviews Richard Tunnah, an accomplished entrepreneur and mergers and acquisitions specialist. Richard shares his journey in the business world, from starting his own online classified site to acquiring and selling multiple businesses. He emphasizes the importance of forward planning and exit strategy when it comes to selling a business. Richard also discusses common pitfalls and lessons learned from his own experiences. The conversation highlights the significance of financial organization, customer diversification, and realistic valuation of assets. Richard provides valuable insights into the world of mergers and acquisitions, offering advice for both buyers and sellers.

Key Takeaways:

• Forward planning and exit strategy are crucial when selling a business. Proper preparation and organization can maximize the value of the business and attract potential buyers.

• Customer diversification is essential to mitigate risk. Relying heavily on one customer can be a red flag for buyers and lenders, potentially affecting the sale of the business.

• Valuation of assets should be based on current market value, not the original purchase price. Overvalued assets can negatively impact the sale of a business and deter potential buyers.

• Acquiring businesses can be a viable strategy for growth. By identifying opportunities and leveraging existing skill sets, businesses can expand quickly and efficiently.

• Professional advice and guidance are essential when navigating mergers and acquisitions. Working with experts who understand the complexities of the process can help ensure a successful transaction.

Notable Quotes:

• "The worst exit is the exit that has to happen due to health, divorce, or other unforeseen circumstances. Planning your exit strategy is crucial to maximize value." - Richard Tunnah

• "Customer diversification is key. Relying heavily on one customer can be a risk and affect the sale of your business." - Richard Tunnah

• "Valuation of assets should be based on current market value, not the original purchase price. Overvalued assets can impact the sale of your business." - Richard Tunnah

• "Acquiring businesses can be a fast and effective way to grow. It's about finding the right opportunities and leveraging your existing skill sets." - Richard Tunnah

• "Seek professional advice when navigating mergers and acquisitions. Experts can help you avoid common pitfalls and ensure a successful transaction." - Richard Tunnah

Article: 

How to Grow Your Business Through Acquisition: Insights from Richard Tunnah

Seeking contributors, if you are an advisor or willing to do deep research on a topic for some recognition, please email [email protected] with the subject: “I’d like to contribute to DEEPER”

FROM THE Editor:

Disclaimer: This newsletter is provided for informational & educational purposes only, and should not be relied upon as legal, business, investment, or tax advice. We are not attorneys, tax, or financial advisors and not qualified to give any such advice.  

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Deeper: Exit Strategies for Acquisition Entrepreneurs: Planning Your Future Sale Before You Acquire

In the world of entrepreneurship, the adage "begin with the end in mind" resonates with profound significance, especially for acquisition entrepreneurs venturing into buying their first business. An exit strategy, often overlooked in the initial stages of business acquisition, is not merely an escape plan but a blueprint for building a successful, sustainable venture with a clear path to liquidity. This approach ensures that every decision made from the outset is aligned with long-term objectives, maximizing both the business's value and the entrepreneur's return on investment. This article delves into the essence of exit strategies, illustrating their critical role in the entrepreneurial journey and guiding acquisition entrepreneurs on how to incorporate this foresight into their business acquisition and growth strategies. By understanding and planning your exit strategy before making a purchase, you're not just buying a business; you're investing in a future that aligns with your personal and financial aspirations, ensuring that the venture you embark upon today is one that can thrive, evolve, and ultimately, transition smoothly to its next chapter when the time is right.

Understanding Exit Strategies

An exit strategy is an entrepreneur's strategic plan to sell their ownership in a company to investors or another company. In the context of acquisition entrepreneurship, it is the foresight to plan for this eventuality even before purchasing a business. The purpose of an exit strategy goes beyond merely securing a way out; it serves as a guide for growing and shaping the business towards a future goal of maximization of value and ease of sale or transfer.

Exit strategies come in various forms, each with its own set of advantages and considerations. These include selling to a strategic buyer, who may be interested in the unique capabilities or market presence of the business; management buyouts, where the company's existing management purchases the business; selling to a financial buyer, like a private equity firm, focused on the potential return on investment; merging with another company to create a stronger entity; or preparing the company for an initial public offering (IPO).

Aligning Exit Strategies with Personal and Business Goals

The alignment of an exit strategy with personal financial goals and business objectives cannot be overstated. This alignment ensures that the business not only grows in a direction that is personally and financially rewarding for the entrepreneur but also adheres to a path that is attractive to future buyers or investors. Entrepreneurs must consider their long-term objectives, such as financial independence, starting another venture, or even retiring. Additionally, flexibility is key. The business landscape is ever-changing, and the ability to adapt the exit strategy to new circumstances is vital.

Building a Business with an Exit in Mind

Building a business with an exit in mind involves implementing practices that will add value to the business in the long run. This includes creating robust operational systems that ensure the business can run efficiently with or without the current owner, developing a strong brand and loyal customer base, and maintaining transparent and clean financial records. Additionally, investing in technology and processes that streamline operations and improve profitability can significantly enhance the appeal of the business to potential buyers.

In addition to this, by having a plan you can build what your target buyer typically acquires. For instance, if you want to sell to private equity, it’s not hard to research what private equity (PE) are buying, estimate the size of business they are looking for and build to that. Often the EBITDA that starts getting PE interested is anything above 4 Million. As an alternative if you want higher multiples often paid by strategic buyers, you’ll need to develop something unique that makes you attractive to them. Often this is proprietary IP (intellectual Property) or customers in a segment of the market they acquirer has a hard time penetrating.

Timing Your Exit

The timing of an exit is critical in maximizing return. Entrepreneurs should have a keen understanding of the business lifecycle and market conditions to time their exit strategically. Selling during a market upswing or when the business is experiencing peak performance can dramatically affect the sale price and terms. Conversely, understanding economic cycles and anticipating market downturns can prevent exiting at a less opportune time, potentially safeguarding the entrepreneur's investment and hard work.

Preparing for the Sale

Preparation is key to a successful sale. This includes conducting a pre-sale audit of the business, identifying areas for improvement, and implementing changes that can enhance the business's value. Legal and financial preparations are also crucial, as these can expedite the due diligence process and ensure a smoother transaction. Building a team of advisors, such as M&A consultants, accountants, and lawyers, can provide the expertise needed to navigate the sale process effectively.

If you start from day one, keep all records and infromation needed for an exit updated and on a secure drive often called a data room. When it comes time to sell or when out of the blue someone suggests they may be interested, you’ll be ready.

Conclusion

An exit strategy is more than just an endpoint; it's a critical component of the business strategy that guides every decision from acquisition to eventual sale. By beginning with the end in mind, acquisition entrepreneurs can build, grow, and ultimately exit a business in a way that aligns with their personal and financial aspirations. Planning for the exit before the purchase not only sets a clear goal but also lays the foundation for a journey marked by strategic growth, informed decision-making, and ultimately, success.