Merge Your Culture, Aquire Your Success | John Bly | TEDxBryantU

Summary

The speaker shares his entrepreneurial journey, emphasizing the importance of growth through mergers and acquisitions for small to midsize businesses. He challenges the notion that only large corporations and private equity groups should innovate and grow in this manner. With statistics highlighting the success of acquired businesses and the potential for strategic savings, he encourages entrepreneurs to consider this often-overlooked strategy for expanding their horizons beyond traditional sales and marketing.

Takeaways

• 🚀 The speaker emphasizes the importance of entrepreneurship and innovation, sharing their personal journey of acquiring and growing businesses.
• 💡 The concept of 'merge your culture, acquire your success' is introduced as a key to entrepreneurial growth, suggesting that combining unique abilities and cultures can lead to success.
• 🛒 The speaker highlights the often-overlooked strategy of mergers and acquisitions as a critical component of business growth, alongside marketing and sales.
• 📈 Growth is essential not just for the entrepreneur but also for the company's culture and team, as it challenges people to think outside their comfort zones and innovate.
• 🏆 The speaker's experience of acquiring 13 accounting firms and four fitness businesses showcases the potential of small to midsize companies to grow through strategic acquisitions.
• 🤔 The script questions why private equity groups and public companies are historically the only ones innovating through mergers and acquisitions, suggesting that smaller companies should also leverage this strategy.
• 📊 Only 4% of companies started in the U.S. reach $1 million in revenue, indicating a significant failure rate among startups and the potential for growth through acquisition.
• 🔑 Growth through acquisition can remove the 'glass ceiling' in companies, providing opportunities for employees to specialize and innovate without waiting for others to leave.
• 💰 Acquisitions can provide immediate cash flow positivity and significant returns on investment, making them an attractive strategy for business growth.
• 🔍 The speaker identifies strategic savings and synergies as benefits of mergers and acquisitions, allowing for cost reductions in areas like rent and IT infrastructure.
• 🌐 The current market presents a unique opportunity for mergers and acquisitions due to a high supply of businesses for sale and a potential lack of demand from new startups.

Q & A

What was the speaker's age when they decided to leave their job and pursue entrepreneurship?

The speaker was 25 years old when they decided to leave their job and pursue entrepreneurship.

What was the initial spark that led the speaker to consider buying a CPA firm?

The initial spark was an advertisement in the back of a CPA magazine for a CPA firm for sale, which the speaker read cover-to-cover.

How many accounting firms and fitness businesses has the speaker acquired in the last 13 years?

The speaker has acquired 13 accounting firms and four fitness businesses in the last 13 years.

Why does the speaker believe that small to midsize companies should consider mergers and acquisitions for growth?

The speaker believes that small to midsize companies should consider mergers and acquisitions for growth because it allows them to innovate, expand their horizons beyond just sales and marketing, and provides opportunities for their team to grow and specialize in different areas.

What is the concept of 'unique ability' as mentioned by the speaker?

The concept of 'unique ability' refers to the few things that an individual or a team is particularly good at and passionate about, which can be leveraged for innovation and growth within a company.

How does the speaker define the importance of growth for a company's culture?

The speaker defines the importance of growth for a company's culture as a means to challenge people to think outside their comfort zone, build a legacy, and create an environment that encourages learning, innovation, and collaboration.

What percentage of companies started in the United States reach 1 million dollars in revenue, according to the speaker?

Only 4% of all companies started in the United States reach 1 million dollars in revenue.

What is the percentage of businesses acquired in the US that are still in business five years later?

90% of all businesses acquired in the US are still in business five years later.

Why does the speaker argue that mergers and acquisitions are often overlooked as a growth strategy by small and mid-sized companies?

The speaker argues that mergers and acquisitions are often overlooked because small and mid-sized companies tend to focus on sales and marketing, and may not be aware of the benefits of M&A, such as immediate cash flow positivity, high ROI, and strategic savings.

What are some of the strategic savings that can be achieved through mergers and acquisitions, as mentioned by the speaker?

Some of the strategic savings that can be achieved through mergers and acquisitions include cutting costs on rent, IT infrastructure, and software, as the combined company can avoid duplicating these expenses.

What is the current supply and demand situation for businesses in the United States, as described by the speaker?

The current supply and demand situation is characterized by a high supply of businesses due to baby boomers retiring and controlling a large portion of privately held companies, while the demand is low due to a decrease in new businesses being started by people under the age of 30.

Outlines

00:00

🚀 Entrepreneurial Journey and Growth Through Acquisitions

The speaker shares their entrepreneurial story, beginning with leaving a steady job to pursue innovation and becoming their own boss. At 25, they took a risk without financial backing and found an opportunity in a CPA magazine's classifieds for a firm for sale. Over 13 years, they've acquired 13 accounting firms and four fitness businesses, emphasizing the importance of growth for company culture and team development. The speaker questions why only large entities seem to innovate through mergers and acquisitions and encourages small to midsize companies to consider this path for growth, innovation, and breaking the glass ceiling, which has significantly reduced turnover in their firm.

05:02

📈 The Untapped Potential of Mergers and Acquisitions for Growth

This paragraph delves into the overlooked opportunity of mergers and acquisitions for small and mid-sized businesses. The speaker presents startling statistics, such as only 4% of US companies reaching $1 million in revenue and an 80% failure rate within the first five years. They contrast this with the 90% survival rate of acquired businesses after five years and the significant job growth generated by small to mid-sized companies. The speaker also discusses the immediate cash flow positivity, high ROI, and increased valuation that result from acquisitions, as well as strategic savings from synergies and the current market dynamics favoring acquisition due to retiring baby boomers and a lack of new businesses being started by younger generations.

10:03

💼 Strategies for Small Businesses to Escape No-Man's Land and Grow

The final paragraph addresses the challenges faced by businesses stuck in the $2-8 million revenue range, termed 'no-man's land.' The speaker suggests that mergers and acquisitions can be a strategy to break through this stagnation, allowing businesses to focus on their unique abilities and avoid being overwhelmed by operational tasks. They highlight the current favorable lending environment with historically low interest rates, making it an opportune time for entrepreneurs to leverage loans for acquisitions and grow their businesses. The speaker concludes by urging the audience to embrace mergers and acquisitions as part of their growth strategy, to innovate, and to contribute positively to the economy.

Keywords

💡Entrepreneurism

Entrepreneurism refers to the practice of starting and managing a business venture, often with the goal of making it grow and succeed. In the video's theme, entrepreneurism is central to the speaker's journey, who left a steady job to pursue challenges and innovation, becoming his own boss. The speaker's story exemplifies the entrepreneurial spirit of seeking opportunities for growth and expansion, such as through mergers and acquisitions.

💡Innovation

Innovation is the process of creating new ideas, methods, or products. In the context of the video, the speaker emphasizes the importance of innovation in business as a driver for growth and success. The speaker's decision to leave a stable job for the pursuit of innovation reflects the entrepreneurial mindset that seeks to challenge the status quo and create new opportunities.

💡Mergers and Acquisitions

Mergers and acquisitions (M&A) refer to the consolidation of companies through various types of corporate deals. In the video, the speaker discusses the use of M&A as a strategy for business growth, highlighting how it has been historically overlooked by small to midsize companies. The speaker's own success in acquiring 13 accounting firms and four fitness businesses through M&A illustrates the potential for growth and success using this approach.

💡Unique Ability

Unique ability is the concept of identifying and focusing on the areas in which one excels or has a particular talent or passion. The speaker mentions that recognizing and leveraging one's unique ability is crucial for both the individual and the team in a company. It helps in aligning the team's strengths with the company's goals, fostering a culture of innovation and growth.

💡Growth

Growth in this video refers to the expansion of a business in terms of size, revenue, and market presence. The speaker argues that growth is essential not only for the entrepreneur but also for the company's culture and team. It challenges people to think outside their comfort zone and provides opportunities for learning and development, which in turn can lead to a decrease in turnover and increased innovation.

💡Glass Ceiling

The term 'glass ceiling' metaphorically describes an invisible barrier that prevents certain individuals from advancing in their careers within an organization. In the video, the speaker discusses how growth can help remove this barrier, providing more opportunities for employees to advance and specialize in different areas, thus fostering a more collaborative and innovative work environment.

💡ROI (Return on Investment)

ROI is a measure used to evaluate the efficiency of an investment or compare the efficiency of several different investments. The speaker mentions ROI in the context of mergers and acquisitions, stating that the return on investment can be substantial, often resulting in a significant increase in the value of the business, which is an attractive aspect of M&A for entrepreneurs.

💡Synergies

Synergies refer to the benefits that result when two or more entities work together, creating a combined effect that is greater than the sum of their separate effects. In the video, the speaker talks about finding synergies through mergers and acquisitions, such as cost savings in areas like rent, IT infrastructure, and software, which can lead to increased efficiency and profitability.

💡Supply and Demand

Supply and demand are fundamental economic concepts that describe the relationship between the availability of goods or services (supply) and the desire for those goods or services (demand). The speaker discusses the current market conditions for mergers and acquisitions, noting an abundance of supply as baby boomers retire and a potential lack of demand due to fewer new businesses being started by younger generations.

💡No-Man's Land

In the context of the video, 'No-Man's Land' refers to a stage in a business's growth where it becomes stuck, often between two and eight million dollars in revenue. The speaker suggests that businesses in this stage may not be utilizing growth strategies like M&A, which could help them break out of this stagnation and continue to grow.

💡Interest Rates

Interest rates are the percentage at which interest is charged or paid on debt. The speaker mentions that current interest rates are historically low, which presents a unique opportunity for entrepreneurs to borrow money at a lower cost for mergers and acquisitions. This can increase the efficiency of investment and allow for more capital to be reinvested into the business.

Highlights

The speaker emphasizes the importance of merging culture to acquire success in entrepreneurship.

At 25, the speaker took a risk by leaving a steady job to pursue entrepreneurship, against common parental advice.

The journey began with an innovative idea found in the classifieds of a CPA magazine, an unlikely source of inspiration.

The speaker has acquired 13 accounting firms and four fitness businesses over 13 years, demonstrating significant growth.

Growth is crucial not only for the entrepreneur but also for the company culture and team development.

The concept of 'unique ability' is introduced, suggesting that individuals and teams should focus on what they excel at.

Small businesses often lack the growth opportunities provided by larger entities, which can be addressed through mergers and acquisitions.

Only 4% of US companies reach $1 million in revenue, indicating a significant failure rate among startups.

90% of businesses acquired in the US remain in business after five years, suggesting并购 as a reliable growth strategy.

Small to mid-sized companies are the primary drivers of job growth in the US economy.

Mergers and acquisitions are the often-overlooked third leg of the growth stool, alongside marketing and sales.

Acquiring a company can be cash-flow positive from day one, providing immediate financial benefits.

The potential ROI from并购 is substantial, often exceeding 100% per year.

Bigger companies are worth more, suggesting that并购 can increase a company's value.

Strategic savings through并购 can reduce costs by 10-30% by eliminating duplicate expenses.

The current supply and demand dynamics favor并购 as many baby boomers retire and look to transition their businesses.

The concept of 'no-man's land' is introduced, describing businesses stuck in a revenue range due to lack of并购.

Current low-interest rates provide a unique opportunity for并购, making borrowing more affordable.

The speaker challenges the audience to consider并购 as a key strategy for entrepreneurial growth and innovation.

Transcripts

[Laughter]

merge your culture acquire your success

merge your culture acquire your success

this is a story about my journey of

entrepreneurism and how I've gotten

there in 2004 at the age of 25

especially for you

Bryant students watching I did what most

of your parents would not want you to do

I decided at that time I had a great job

with a steady income at a great company

but it wasn't enough for me

I wanted something different I wanted to

be challenged I wanted to innovate I

wanted to be my own boss

and yet with no private equity group no

backing no financial support to speak of

I had to get creative

I had to innovate and it all started one

day while looking in the back of the

most unlikely place the back of a CPA

magazine first of all nobody should be

reading those things but not only did I

read it I read it cover-to-cover

back in the classifieds those don't even

exist today so if you're a Brian Ryan

student currently you don't even know

what a classified ad is but that's where

it started I found an ad that said CPA

firm for sale and I thought wow didn't

even know they were for sale and that's

how it all began thirteen years ago in

the last 13 years I've continued to

innovate I've acquired 13 accounting

firms and four Fitness businesses with

my lovely wife who's in the audience

over there what I would tell you is that

why why are private equity groups and

public companies the only ones

historically who are innovating in this

way why are they the only ones growing

through mergers and acquisitions why are

small to midsize companies who are the

drivers of our economy not using it so

let's start with why growth is so

important when you think about growth

it's not just important for the

entrepreneur founder it's also important

for the culture of the company it's

important for the team

challenges people it gets them thinking

outside their comfort zone and it all

starts with a concept of unique ability

and when I think about unique ability I

think about there's only a few things

that most people are good at although

many people will say oh I'm a

jack-of-all-trades the reality is you're

only passionate and excited about a

handful of those things I found very

early on in my career that I was really

only good at three or three to five of

these things my wife may say I'm not

good at any of them but I found that

there was three to five that I could

wake up every morning excited about and

to do and unique ability doesn't just

mean that for that person it means it

for the whole team small businesses

unfortunately get stuck and not

everybody can follow their passion they

haven't grown it to a size that allows

everybody to just utilize their

expertise so growth can be that thing

that helps the unique ability that helps

the founder and the team get on the same

page and build that culture build a

culture through growth that allows them

to think bigger to build something in a

legacy that lasts beyond the founder

build something that grows be part of

that foundational team that culture is

really helpful when building an

organization it challenges people to

learn and grow it challenges them to get

outside their comfort zone it challenges

them to innovate it also removes the

glass ceiling in most companies there is

an existing glass ceiling that doesn't

allow somebody to raise to another level

without the company growing or the

person above you leaving that does not

sound like collaboration to me to me

waiting for your boss to leave is not

the best solution to learn and grow

however if a company is growing you know

that there'll always be opportunity for

you to fill in over here on a project or

filling over here or help with this new

customer for us that has helped us in my

firm decrease turnover by 50 percent

compared to the industry average because

we're moving that glass ceiling has

allowed people to continue to be able to

do what they want specialize in

different areas

innovate so why do we talk about when we

think about those things and growth is

so important why do we not talk about

mergers and acquisitions as one of the

strategies mergers and acquisitions is

the often ignored third leg of the

growth stool to join marketing and sales

and people just don't think about it

when you think about small companies and

they should be and I ask you how many

companies are looking to grow their top

and bottom line how many companies are

growing so fast that they're telling

their sales and marketing people to slow

down hit the brakes

we got to figure it out the answer to

those questions make it so obvious that

small and mid-sized companies are

ignoring a big part of the growth

opportunity in mergers and acquisitions

and they need to be thinking about it to

provide opportunity for themselves and

for their people and if that doesn't get

you excited about an opportunity let me

share a few statistics first only 4% of

all companies started in the United

States get to 1 million dollars in

revenue 4 percent that means that the

vast majority have already failed many

statistics show that more than 80

percent of all companies started in the

United States fail within the first five

years the remainder of that are stuck at

the smallest of all levels really self

employed without leverage and sharing

your tools with others combine that with

the second statistic which is that 90%

of all businesses acquired in the US are

still in business five years later 90%

still in business five years later and

nearly two-thirds of all job growth in

the United States since the year 2000

have been created by small to mid-sized

companies well large companies have had

cuts the net job growth really exists at

the smallest levels so those reasons

tell me that we should be thinking about

mergers and acquisitions as a growth

strategy but if those statistics don't

do it for you I'll share a few other

intangibles that

I have found along my journey of

entrepreneurism have been very impactful

the first is that when acquiring a

company not Google but small companies

when they acquire our cashflow positive

from day one right so for you Bryant

students watching this is finance 101

why would we buy something to lose money

that doesn't make a lot of sense to me

as an entrepreneur but it does make

sense in the small business base because

they do actually make more money the

next day which gives the business more

capital more availability to reinvest in

people and resources technology whatever

it might be second is that the return on

investment can be huge there's a reason

private equity groups have been doing

this for years and returning 20 plus

percent a year to their investors now

doing this on your own with your own

capital

maybe leveraging a bank the return on

investment in most cases in the small to

mid-size company is a hundred percent

plus per year return on investment it's

a pretty good ROI even with the stock

market taking a run and a recent dip I

would tell you that I would bet on the

entrepreneur all day long they changed

the world the third thing is that bigger

companies are worth more than smaller

companies so if you're running a company

of a certain size today and you're

trying to grow why not look at mergers

or acquisitions as a way to grow it

faster we already talked about the

statistics and show that the 90 percent

are still in business why not use that

and leverage it so let's say you buy a

company for three times earnings by

plugging in your current resources

growing the company you can quickly get

it and resell it for four times maybe

combining the two companies together

another thing that's really helpful in

mergers and acquisitions is that there

are strategic savings there are

opportunities to find synergies when you

own a company in you're a small business

entrepreneur there are ways to find

synergies to cut 10 to 30% things like

rent an IT infrastructure and software

costs you don't have to pay twice you

already have the infrastructure needs

when you acquire a company you don't

double that

I would challenge that that the risks

are much less than what people really

think they are and then we get to supply

and demand today is like no other in

recent history baby boomers are retiring

at historic rates and they control

nearly two-thirds of all privately held

companies in the United States over the

next ten years it's predicted that all

of those businesses will transition

whether that's they close the door they

sell they give it to a management team

or they pass it on to the next

generation something is going to happen

with those businesses so there's a lot

of supply in the market as for demand as

of July of 2016 the federal government's

own surveys and studies showed that if

we were at the lowest point in the last

50 years of businesses being started by

people under the age of 30 so where the

media believes that there are lots of

businesses being started by a young

younger generation the reality is the

studies show quite the opposite and so

there's going to be lack of demand but

there's going to be a lot of supply

which provides an opportunity for people

who are innovative and thinking about

this as a growth strategy to really take

that time and really build a business

there's a there's a great concept out

there called no-man's land it talks

about businesses that are between this

two and eight million dollar range that

gets stuck they get stuck because they

don't use these concepts they don't use

unique ability they're there to to stuck

in the weeds they're doing too many

things they're doing HR accounting

administration so many things mergers

and acquisitions can be one of those

strategies to help those small to

midsize companies grow out of that space

and today with banks and lending we're

the way it is it provides a unique

opportunity interest rates have been

ahead historic lows for nearly ten years

although they have climbed here in the

last year and a half they are still

really low if you look at what a small

to mid-size company could borrow at in

2006 that was somewhere between 10 and

12 percent today on mergers and

acquisitions they can lend somewhere

between five and six

half-percent that money goes a lot

farther and it saves the business owner

a lot an interest expense it saves them

a lot of cost and allows them to

reinvest even more in their business I

would challenge you to think about that

as the growth strategy entrepreneurs are

the drivers of our economy

they help us develop and innovate each

of you should be thinking about the ways

that expand your horizon beyond sales

and marketing beyond that to the third

leg of the growth stool I want you to

get out there build your dreams build

your entrepreneurial journey and make

the world a better place thank you