Summary

If you’re buying your first business — you need to hear this.

No, you don’t need to become a business broker.  But you’d be crazy not to learn from one.

Because 90% of first-time business sales go through a broker... So if you want to win the game, you better understand how the game is played.

In this episode, Jeffrey Jump (former Navy, now a business broker who’s seen it all) breaks down:

• Why most buyers waste everyone's time (and how to not be one of them)

• What brokers look for in a qualified buyer (hint: it’s not just cash)

• How valuations really work (and why tax returns matter more than fancy spreadsheets)

• Why franchises are a different beast (and how to play by those rules)

• The real reason deals fall apart — and how to avoid it

He even gets into the weeds on:

• Seller financing (structured right, it’s a cheat code)

• Cash deals (why they move lightning fast)

• What markets are 🔥 right now (HVAC, med spas, and more)

And here’s the kicker: You’ll hear how he lost every deal during COVID, rebuilt, and what he wishes buyers understood before stepping into a deal.

If you’re serious about buying a business,
this is a behind-the-scenes look at what brokers know but buyers don’t.
And it could save you months of headaches and tens of thousands of dollars.

Watch it. Study it. Use it.

Takeaways

• Jeffrey Jump transitioned from military service to business ownership.
• He faced significant challenges during the COVID-19 pandemic.
• Owning a business comes with ups and downs, but passion is key.
• Understanding buyer qualifications is crucial in business brokerage.
• 80% of potential buyers may not have the funds to purchase a business.
• Franchises require specific knowledge and compliance with franchisor requirements.
• Valuation of businesses often relies on tax returns rather than internal financial statements.
• The market for HVAC and med spas is currently strong.
• Business brokers must navigate various legalities in sales transactions.
• Personal expenses can impact business valuations significantly. You have to be very tenacious to succeed as a business broker.
• The first closing is crucial for building confidence.
• New brokers often need outside income to support themselves initially.
• All cash deals can significantly speed up the closing process.
• Creating a comprehensive confidential business review is essential for attracting buyers.
• There is no risk-free deal in business transactions; both parties take risks.
• Seller financing can be structured creatively to benefit both parties.
• Preferred lenders can streamline the financing process for buyers.
• Social media is a powerful tool for attracting business sellers.
• Training and support for new agents can shorten their path to success.

 

 What the Episode: 

Listen to the Episode

 

 

 

Chapters

00:00 From Military to Business: Jeffrey Jump's Journey
02:54 Navigating Business Acquisitions and Sales
06:01 Lessons Learned from Owning Printing Companies
08:57 Transitioning to Business Brokerage: Challenges and Insights
11:58 Understanding Business Valuation and Buyer Qualification
14:59 The Landscape of Business Sales: Trends and Insights
17:54 Industry Insights: What Sells and What Doesn't
20:54 Navigating Legalities in Business Sales
23:58 Valuation Challenges: Tax Returns vs. Financial Statements
26:58 Franchises and Their Unique Selling Points
30:04 Emerging Markets: HVAC, Med Spas, and More
34:16 Navigating the Business Brokerage Landscape
38:40 The Challenges of New Business Brokers
42:45 Understanding Financing Options
47:04 Fast-Tracking Business Deals
49:53 Creating Effective Business Valuations
56:17 Seller Financing and Risk Management
01:01:28 Finding and Attracting Business Sellers

 

Transcript 

 

Jon Stoddard (00:00.84)
Welcome to Top &A Entrepreneurs. Today my guest is Jeffrey Jump. Jeffrey Jump served with the Navy, went out and bought two printing companies, sold them. He used to work for Sunbelt for a little bit, and now he owns his own business brokerage. And we wanna talk about Jeffrey's journey there. So welcome to the show, Jeffrey.

Jeff Jump (00:24.684)
Yeah, thank you for having me.

Jon Stoddard (00:27.07)
So let's start back out. You served in a special intelligence. What were you doing there? Just curious.

Jeff Jump (00:35.522)
Well, actually I was an operation specialist. So my job was to use radars to track ships and aircraft and any submarines that surfaced. And we also did it, used radars for radar navigation when we got close to land. So that's primarily my job.

Jon Stoddard (00:52.468)
What kind of ships do you work?

Jeff Jump (00:56.526)
Uh, when I was a full-time active, I was on a fast frigate called the USS Glover and it's now decommissioned. But then I went into the reserves and I did one tour on the John F. Kennedy, the aircraft carrier, and another year the Eisenhower, I did a tour on the Eisenhower. So that was quite the experience working on those aircraft carriers.

Jon Stoddard (01:18.238)
Yeah. Big, big cities with, you know, nuclear power. Yeah.

Jeff Jump (01:25.086)
yeah, yeah, very, enormous ships. Just you could get lost on them easily.

Jon Stoddard (01:30.878)
Wow, that's cool. And then you got out of the military and what did you do here? You bought a couple businesses. Let's talk about that process and why you did it, what you learned, et cetera.

Jeff Jump (01:45.965)
Yeah. Well, actually when I owned my print, my main printing company in Indiana, I wanted to grow through acquisition. So I bought my first, my second company in Kentucky. And then, and I thought, you know, if I'm to buy more and grow in other States, then I really need some more advanced training. So I did some research and then found out that there's people that specialize in this called business brokers.

And then, so I found that they were having a conference coming up in San Antonio, Texas. So I went there, signed up for some classes, talked to some veteran brokers who I still know today. And I really fell in love with the whole industry and the process. I thought, you know, someday when I saw my businesses, that's what I'm going to do next. I'm going to be a business broker. So I kept going to the conferences and training, earned my CBI.

And, and then things happened, and ended up selling my businesses and, and I was excited because I knew I was doing next. So I was concerned about it, moved to Florida and then signed up with Sunbelt business brokers out of Clearwater and then worked underneath them, for about six years. And, I was going to leave them a little bit sooner, but then COVID hit.

Jon Stoddard (02:54.91)
Yeah.

Jeff Jump (03:12.166)
And I lost every single deal that I had, every buyer backed out of all the deals I had under contract because of COVID. So those are some tough times, you know, I was eating bread crackers for a couple of years, but I rebuilt my practice, got it back on track, and then decided, you know, it was time to actually go out and open up my own office. So I did that. it's been this August will be three years since I've opened up my own practice and. Got lots of lessons learned, had a lot of things I went through.

Jon Stoddard (03:18.581)
my. Yeah.

Jon Stoddard (03:37.128)
Yeah.

Jeff Jump (03:41.656)
Good and bad.

Jon Stoddard (03:42.1)
Let me go back to those two printing companies. Did you buy both of those or did you start one or what was the cases to those?

Jeff Jump (03:50.863)
Yeah, I bought the first one I bought in Fort Wayne, Indiana. It was the largest screen printing company in Fort Wayne, Indiana, at least in that area. I was working for a competitor and I fell in love with the print industry. It has three things that I like business, manufacturing and art. And those are three things I really liked. So that spells out printing. Right. So, um,

So I started looking for a business to purchase. I remember I sitting at home too and I put down a pros and cons list of either buying an existing business or starting one from scratch. And it just kind of worked out that, yeah, buying an existing business is really the way to go because you already have customers, employees, process, equipment. And so then I found the largest company in the area and bought it, passed paper six months later.

and owned it for 15 years, owned it rented it for 15 years.

Jon Stoddard (04:50.1)
Yeah, how big was the sale on that one? And did you use SBA loan?

Jeff Jump (04:56.521)
when I purchased it or when I sold it.

Jon Stoddard (04:57.596)
Yeah, when you purchased it. Yeah.

Jeff Jump (05:00.59)
Uh, when I purchased it, I used, yeah, as an SBA loan, was their 504 program as a combination working with, uh, part of the funds came from the CDC, 40 % of it. Uh, 50 % came from a bank and then 10 % came from my cash dumb payment. And, uh, so, oh, and then I had one seller's note involved as well, but.

Jon Stoddard (05:17.747)
Yeah.

Jon Stoddard (05:23.88)
Yeah. Did you enjoy that process for 15 years of owning that company, printing company?

Jeff Jump (05:29.376)
I mean, yes and no, you know, there's always ups and downs, you know, owning a business, but I enjoy, I love the industry. I love the industry and, but yeah, I mean, going through like it's funny because after I bought the company, I bought it in January 26 of 2001, eight months before nine 11 hit. So the business was already kind of struggling, but I knew I could turn it around. So I turned the business around and then nine 11 hit.

Jon Stoddard (05:50.089)
Yeah.

Jeff Jump (05:57.871)
And then I lost 25 % of my sales overnight. Boom. So that was scary. You know, my first year in business and go to go through that nine 11 recession. And I learned a lot of important lessons through that, know, cut making cuts and cutting back on expenses and make things more efficient automating. went through a lot of changes over the next three years at when nine 11 was hit. And that helped me though, because when 2008

Jon Stoddard (06:01.63)
Peace.

Jeff Jump (06:26.52)
came along, we had that recession, I did perfectly fine. I saw it coming. I saw the economic indicators really taking a nosedive. And so I started preparing for it. I started cutting off, stopping my fluff, I call them fluff programs and task, whatever, started stashing money in my business bank account. And then when it hit, I was fine. My biggest customers, were very stable. And then my smaller couple of

smaller customers, cut back, overall I was good. was profitable through that. I did fine during 2008 recession.

Jon Stoddard (07:03.346)
Yeah, and why did you sell it?

Jeff Jump (07:07.118)
uh, end up going through a divorce and, and, you know, so had to part ways and, uh, you know, that's happened to so many people here in America, right? But that's okay. You know, it was.

Jon Stoddard (07:17.576)
Yeah, that's like that you're on the business broker side and you're talking to people that want to buy a business and you're kind of looking for that scenario. Did you sell it at a discount or because of divorce or what would happen to there?

Jeff Jump (07:29.966)
Yeah, it was somewhat sold at a discount. mean, it was, it was a unique structure. Let's just say I knew who I wanted to buy it. So I made a unique structure to make it attractive just for him. And it's funny because I called him up and I said, Hey, now's your chance. You've been wanting to buy my business for years. Let's get together. He goes, well, now's not a good time. That's what do mean? He goes, well, I'm going to school in England and I'm doing this and that.

I said, I promise you, you're going to want to hear what I have to offer the structure of it. So we got together and he heard the offer and he goes, you're right. I can't pass this up. he took my offer and then we passed papers at the end of 2015, the end of the year.

Jon Stoddard (08:15.944)
Yeah, what was it? Seller financing? A lot of it or what?

Jeff Jump (08:19.314)
It, no, no, it was, it was just, well, it was a good structure. It was, he had borrowed some money and, the, the most important thing for me out of that was an employment agreement. So I kept on, on his staff for about two more years and got paid for that. So that was really helpful, especially making my transition into Florida. So it was nice to have a, you know, paying job, you know, moving to Florida.

Jon Stoddard (08:43.912)
Yeah.

Jeff Jump (08:49.059)
So.

Jon Stoddard (08:49.342)
Yeah. So did you have two businesses in there? Did you buy a second business to grow it? Or did you, how did that?

Jeff Jump (08:57.804)
The, yeah, the, the second business, was a kind of interesting situation. bought it to expand. And, one lesson I learned is that wherever you are within the United States, States, there are different work ethics. You know what I mean? So, the employees that I had in Kentucky, let's just say they weren't as ambitious as my employees in Indiana. So.

My employees in Indiana could do things, would do things in half the amount of time as my employees in Kentucky. Now I'm not trying to beat up people in Kentucky. My family's from Kentucky. know, it's just different mindset and everything else. but go, you know, having to, you know, cash out on everything because of my divorce, you know, I had to close everything out and just move on to the next chapter. But I was, I was excited because I, I had a plan. knew I wanted to be a business broker full time.

And before I sold my businesses, had earned my CBI. So I was going to hit the ground running in Florida. And it's funny when I moved to Florida, I didn't know that you had to have a real estate license to sell businesses. And I had, uh, I had a buddy of mine, uh, I called up who, uh, I, who I met at one of the, uh, um, IBBA conferences. He's, Hey, uh, did you get your real estate license in Florida? So what are you talking about? He's well in Florida, it's one of the States you got to have a.

real estate license. I learned that lesson. so then I signed up the Sunbelt business brokers and brought those listings underneath Sunbelt and put them under my brokers, you know, name until I got my license. I got it really fast. And then he handed them all back over to me, but yeah, lessons learned, whatever state you're going to work in, you better check into your licensing requirements.

Jon Stoddard (10:34.674)
Yeah.

Jon Stoddard (10:47.794)
Yeah. Is that an antiquated law? Why would you need a real estate license to sell businesses? I mean, I, I've had, I'll, I'll explain this. I've had some people, but we looked at businesses and they were a real estate agent, but they didn't really understand a profit loss cashflow statement balance sheet.

Jeff Jump (10:55.81)
Well.

Jeff Jump (11:09.592)
Well, I tell you, helped me earn more commissions. Like I just sold a business last month for $7 million, a little over seven, and that included the real estate. So I got a commission on the real estate as well. So it does help you if you've got a real estate license, no matter what state you're working in, then you can earn a commission on selling because it's a separate transaction. So, but in my opinion, I,

Jon Stoddard (11:33.065)
Yeah.

Jeff Jump (11:36.587)
It would be nice if they just had a federal requirement that every business broker has to have some sort of like a certification like what the IBBA offers. You know, they in Florida, they only make us required to have a real estate license, but they don't require the realtors to have a business brokerage license. You know, I think they need to clean up the licensing and because, we get a lot of real estate agents who haven't had any training.

Jon Stoddard (11:58.046)
Yeah, yeah.

Jeff Jump (12:06.606)
been selling a business and they don't have any of our forms. They don't understand the process. They don't understand the legalities, the trouble they can get themselves in. And so they become, they, they just claim I'm a business broker because I have a real estate license. And I know somebody who, had done that and they said, well, Jeff, I'll just depend on you for all my, to know how to do all these deals. said, no, that's not how it works. You need to go to some training and, and, uh, figure out how to do the stuff yourself. I'm not going to do your deals for you.

But if you want to refer them to me, I'll take them, know, type of thing.

Jon Stoddard (12:40.124)
Yeah. Let me ask you about your six years at Sunbelt and what you learned from that to find good buyers.

Jeff Jump (12:52.334)
Well, I tell you, I learned a lot at Sunbelt. It's funny, I'll start off with this, that before I left Sunbelt, I was like 54 years old. I was the youngest one in our entire office. I was like a kid compared to my fellow brokers. We had two guys that are in their late 80s, still selling businesses and some other mature agents. So I got the opportunity to

Jon Stoddard (13:15.102)
Yeah.

Jeff Jump (13:21.432)
pick their brains on any topic, which was awesome.

Jon Stoddard (13:26.066)
Years and years of wisdom and experience. Yeah.

Jeff Jump (13:29.142)
I learned a lot from these veterans and yeah, and I still stay in touch with one lady. She opened up her own office. so yeah, when it comes to buyers, one thing I learned the hard way is that get proof of funds. So I didn't have that requirement early on in my career, right? So then I'd have people making offers on businesses and they wouldn't have any money in their name.

to buy the business. And so I learned that lesson the hard way. then I, you know, I struggling to sell a business. And so then I finally figured out, you know what? I just have to figure out what is the right process to put in place to be successful. And I racked my brains. I spoke to several brokers that I knew and finally I nailed down my process. That's it for now on nobody's going to see my

Jon Stoddard (13:59.091)
Yeah, yeah.

Jeff Jump (14:23.886)
confidential business review or some people call it confidential information memorandum until I see proof of funds. And it's amazing that IBBA put out a statistic a few years ago saying that 80 % of potential buyers are just tire kickers. 80 %

Jon Stoddard (14:31.486)
Yeah.

Jon Stoddard (14:42.452)
80 %? Yeah, that sounds reasonable. Yeah.

Jeff Jump (14:45.39)
Even now I have a CR, I use pipe drive and I have a whole list of potential buyers stuck in the proof of funds stage because they haven't provided me proof of funds because they probably don't have it. I'll follow up with them. I'll call them just to make sure, you know, sometimes they have questions and know their word about the confidentiality of it. So, but some of them are like, well, I don't, you know, quite have the money.

Jon Stoddard (14:59.358)
Did you just cancel them out, just delete them, or what?

Jeff Jump (15:15.278)
So then I, you know, I'll thank you for playing, you know, thank you for working with us and showing interest, but yeah, I don't think you qualify to be able to get financing for this business. So.

Jon Stoddard (15:25.992)
Yeah. How many businesses did you sell at Sunda?

Jeff Jump (15:30.382)
Oh, I don't remember. know at the peak of my salesmanship, I should say I had 35 listings at one time. I was a selling machine back then. And, uh, but now I'm seeing a lot more competition. Um, I used to do a ton of advertising and social media within social media groups. And I always got new listings from that, but now I think everybody's caught onto my social media strategy. So now it's.

It's tougher to get listings now, but, last year was slower. think every political election year, every presidential election year, it's, slower. I've noticed that. But now heading into this year, I'm really busy. I'm ramping up. got a lot of opportunities and, and I even also brought on three agents this year as well. So.

Jon Stoddard (16:23.336)
Yeah. Let me ask you what types of businesses, what businesses do you like to sell? Don't like to sell. Which industries have the worst fraud in them? Specific niches. And we're just talking about small to medium sized businesses, right?

Jeff Jump (16:38.754)
Yeah, yeah, can stay small up to lower middle market. people ask me that all the time, investor, what's the best business to buy right now? I always tell them the same thing, a profitable one.

Jon Stoddard (16:51.444)
This

Jeff Jump (16:53.152)
Right? Because you could, you could put 10 of the same 10 hair salons side by side up for sale. And, and, but, depending on how each owner runs their salon depends on their profitability. So it's, it's really up to the person, the owner who knows how to run a business or doesn't know how to run a business. It's all on their decision-making and their strategies that really make the difference.

It's like business valuations. bet you if I did this valuation on 10 salon, 10 different owners who had exact sales numbers, but different profit margins, they'd all come out to be a different price. You know what I mean? So that's why my overall answer is a profitable one. You can take an industry or a business that maybe isn't so popular, you know, like a scrap yard or something like that. But if it's got good numbers and it's been ran right, you know, can

sell it for a good amount of money.

Jon Stoddard (17:51.016)
Yeah, what do think of laundromats?

Jeff Jump (17:54.297)
Those are really highly sought after right now. are car washes and storage facilities. So I've seen, I've seen people, I've had a lot of people contact me for those same thing too with.

Jon Stoddard (18:06.888)
Why, why are people buying those? mean, those are hard to, to me, you know, if it's a cash business, it's quarters.

Jeff Jump (18:15.736)
Well, they consider them passive income. So there's a big push right now. People want to invest in the business or passive income. That doesn't require much work. But in my opinion, there's no such thing as a hundred percent passive, a business that provides passive income. You still have got to keep up with marketing it and growing it. It may require less operational involvement, but it still requires effort to keep it going. So I don't a hundred percent buy into.

full 100 % passive income businesses. I don't think that's reality in my opinion.

Jon Stoddard (18:49.544)
Yeah. So if, what does it kind of typical laundromat do in a year? I mean, it's got maybe two to three year old machines in a good location. What, what are they looking at and how do a buyer verify actual profitability if it's a cash business?

Jeff Jump (19:09.678)
Yeah, I learned something from this veteran business broker years ago. You know what he does? He takes the water bill and then he can, once he calculates the average amount of water per machine. So they look at water consumption and then that tells you how many loads, how many they charge per load to kind of work it backwards. So that kind of ties into, in a sense, your last question.

Businesses I don't like that like have fraud in them are the ones that are not reporting all their cash It's tax evasion at its finest, but so many small businesses do it and I told them, you know when I see those I won't take them on as a client or I'll tell them I'm only going to Use the numbers you reported on your tax returns because I am NOT gonna assist you in tax evasion You stole once I'm not gonna help you steal again, basically

Jon Stoddard (19:44.584)
Yeah, yeah.

Jon Stoddard (20:06.845)
interesting way to say that. Yeah.

Jeff Jump (20:08.438)
Yep. So I don't want to risk my license or my freedom for somebody who's, you know, doesn't pay taxes on, on all that cash coming in. So.

Jon Stoddard (20:20.724)
Yeah. And how do you value that? And I'll tell you a little story. had a guy in my group that lives in the UK and he said, the government of England, you know, actually says, well, if you're a cash business, they put a percentage of what you think, what we think you earned and what you probably earned. And then there's a percentage in there. I'll attack that out.

Jeff Jump (20:44.354)
Yeah, and you know who's really, yeah, all those little like, restaurants, a lot of them too. Well, not as they don't take as much cash as they used to because everything is going to like has gone to electronic. But yeah, that's, I don't get into selling very many restaurants. They've got to have good cash flow, reporting cash flow. But what's funny here in Florida, restaurants account for a one third of all businesses for sale in Florida restaurants do.

Jon Stoddard (20:54.248)
Yeah, I know.

Jon Stoddard (21:13.684)
That's a lot.

Jeff Jump (21:15.192)
That is a big number. Yeah. And I mean, I'll take on a restaurant if the owner is going to be honest with me. And I had this one restaurant in Ybor City. I won't say who they are, but yeah, they, actually gave me a doctored up financial statement. But then when they.

Jon Stoddard (21:16.788)
Ha ha.

Jon Stoddard (21:30.45)
It wasn't from QuickBooks or was from a spreadsheet or something.

Jeff Jump (21:34.331)
It was, well, he did his own bookkeeping. but then when I got his, you latest tax return, it didn't add, it didn't coordinate. didn't add up at all. Everything was, I could tell he doctored his previous P &Ls. said, you know what? I said, I can't work with somebody who's, who's going to lie to me and try to hide cash and, doctor up their financial statements. You know, my reputation is everything.

Jon Stoddard (21:37.396)
huh.

Jeff Jump (22:01.954)
My freedom is everything and I'm not going to get sued by a buyer because you misrepresented the business. So good luck to you. So.

Jon Stoddard (22:09.106)
You win it, you a buyer can actually sue you?

Jeff Jump (22:12.398)
But nowadays anybody can sue anybody for anything. If they think that the business broker somehow is at fault or involved. Oh yeah. Business brokers go to jail all the time from my understanding. So, so I.

Jon Stoddard (22:23.806)
Huh. Well, what do you do with the business that's just like a, you you go, okay, I'll sell your business. It sounds interesting. I'll take the listing, but they deliver, you know, a very different, ugly books, right? Like it's cash accounting and they sell inventory or it's, they're not balanced or, you know, the, the, you know, QuickBooks stuff doesn't match with their tax returns, et cetera.

Jeff Jump (22:53.87)
So what I learned over the years is that the tax returns are more trustworthy than the internal financial statements. Most of these small business owners, especially the really small ones, can't afford to hire full-time bookkeepers. So they do it themselves, and they're not trained bookkeepers. So what I do is I do my evaluations off their tax returns. Because at that point, I already know a CPA has gone through their messy books and has

corrected things, made adjustments, and the CPA will even put in the tax returns what the changes were, why did this get changed. There's a section in the tax return that they can put that in. So I prefer to do my evaluations off their tax returns because I know it's already been gone through by a CPA.

Jon Stoddard (23:43.144)
What if the, you know, whole purpose of the tax return is to reduce taxable income and the accountant or whoever's doing the books or whoever's, you know, aggressive on taking deductions and it's, it's a lower. Is that, that serves the buyer better.

Jeff Jump (23:58.222)
Well...

Jeff Jump (24:03.018)
I mean, we're primarily, you know, when we do valuations, we're primarily just doing ad backs of what we're allowed to, you know, we primarily use, the formula EBITDA, well, Main Street businesses will use seller discretionary earnings, formula, which is EBITDA plus owner's benefits. So EBITDA or adjusted EBITDA is used for, you know, &A deals. And so, very similar though, not.

Jon Stoddard (24:11.518)
Yeah.

Jeff Jump (24:32.606)
much of a difference in my opinion. I've done it both ways. So like any adjustments, like, you the other thing I look for as a business broker is any personal expenses, right, the seller has put through the business. Well, I want to know what those are. You know, if they would took, you know, took a vacation to Hawaii, they put that on the business under travel expense, you know, we can add all of that back. So our goal is to normalize the cash flow of the business. And then

multiply that by a industry multiplier. mean, the multiplier is very subjective. That's the most subjective number in our industry. You can have 10 business brokers value the same business and come up with a different valuation because of the subjectivity of it.

Jon Stoddard (25:17.074)
Yeah. I think that the biggest dispute is on the SDE because you always see in this, it's the multiple on the SDE and they go, you look at the ad backs and go, okay, that, mean, that doesn't look legitimate. for instance, let me give you an example. It's just like getting very specific is okay. they went on a vacation, but it was tacked on to a trade show, which was an industry requirement. Like how much of that can they add back?

Jeff Jump (25:32.118)
Yeah, I.

Jeff Jump (25:46.851)
Well, can, you you can only, so if they went to a trade show, that is a real business expense, right? That, that stays in there. But if they tacked on, just say another day or two after the convention to go sightseeing in New Orleans, well, but they use their business debit card. Well, they have that, that, that they have to report if they're smart about it.

with their bookkeeper or their CPA, they'll count that as income distribution. So it's gotta be accounted for. That's the other problem with bookkeeping. A lot of owners think that they can run their personal stuff through it to reduce their tax burden, but their bookkeeper or their CPA needs to be catching that and then converting that to income distribution to be proper.

That's way they do it. So you can't just run anything you can through your books. Because it's really considered income to you.

Jon Stoddard (26:47.86)
But let's be honest, most small business owners do.

Jeff Jump (26:53.718)
Yeah, now it's okay to run personal stuff through your business as long as you report it.

Jon Stoddard (26:58.91)
or just taking it out when you're doing your taxes on your 1120s. Yeah.

Jeff Jump (27:03.446)
Yeah. And usually the CPA, the CPA knows about it. They'll, they'll adjust that and they'll, they'll fix that on their end. But yeah, there's, there's a lot of things to consider when you're, when you're trying to do valuation. I mean, we want to, we want to add back the personal expenses. It's almost the opposite. So what you do for your tax returns is opposite of what you do for evaluation. So we want to uncover all those personal expenses so we can add them back, you know.

Jon Stoddard (27:31.859)
Yeah.

Jeff Jump (27:31.886)
because that will increase the cash flow number at the bottom, which then we can value it for more money.

Jon Stoddard (27:37.576)
Yeah. So what have you sold the most of with your new business brokerage, John International, and also Sunbelt? What have you sold the most of?

Jeff Jump (27:50.255)
Um, all together, uh, since I've been here in Florida, uh, franchises. So, uh, fantastic Sam's, uh, edible arrangements. I've sold a bunch of those and that's, that's a. Yeah, that's a haircut place. They're hair salon. They're all over the United States. And when dealing with franchises, just, it is another layer that you have to get through as a business broker. You know, like I'll call up the area manager.

Jon Stoddard (27:55.954)
Yeah.

Jon Stoddard (28:02.056)
Fantastic, Sam's. Is that a haircut place? OK.

Jeff Jump (28:18.346)
And I'll introduce myself and say, I'm going to be selling this business, but I wanted to talk to you, let you know. So you're aware of it. And could you send me your requirements for a buyer that way I'm finding the right buyers that match the franchisers. requirements. that way we're not wasting anybody's time. And they love that I call them and get this information. And, it's a great way to build rapport with the franchisers.

Jon Stoddard (28:43.656)
Yeah. Let me ask you about Fantastic Sam. So, you know, lot of franchises take 10, 12 % off the top. And when you're bringing in a new buyer or in their new business owner, do you set any expectations like, Hey, you know, you're not going to get off rich off one franchise, but it's a, know, you're going to probably get this kind of income.

Jeff Jump (29:03.916)
Normally the franchises from my experience will recommend that they own three locations and if they want to make over a hundred thousand a year as an owner to invest into three locations and so that's pretty normal from what I've seen even with other types of franchises. Yeah, so three now I know guy I actually I was selling his business. He owned 12 fantastic Sam's so

Jon Stoddard (29:21.138)
I was told that by a subway owner. Yeah.

Jeff Jump (29:33.6)
I was busy trying to, I'd evaluate each location individually for the three years and year to day. And that was a lot of work putting all that together and coordinating with the landlords, you know, to try to get that done. yeah, it was interesting. I learned a lot from that one.

Jon Stoddard (29:52.168)
Yeah, so fantastic franchises. What else? Let me just ask you about a couple HVAC companies. They're all hot right now. Everybody wants those companies. What do you think of selling those?

Jeff Jump (30:04.014)
Yeah, I do see a lot of demand for those. And what's happening, you know, what's really happening is like venture capitalist groups. There's not enough large deals for all of these venture capitalists. So what they do is they're buying smaller companies. They'll do a roll up. They'll buy like 10 HVAC companies, merge them all together to make a larger company, because the larger the company, the higher the multiple they can sell the one entity for.

So that's kind of like their playbook. So they're making a large company out of a collection of small ones. But yeah, HVAC companies have become sought after. so, but, you know, but then you get into the challenge of that. I mean, you can overcome it, but you have to have a license to own those companies or you have to have a, owner stay on board to be the qualifying license holder. So they, you know, they have to work their way through that, especially if they're getting SBA financing.

Jon Stoddard (30:43.806)
Yeah.

Jeff Jump (31:03.854)
they can be pretty strict on those requirements.

Jon Stoddard (31:09.0)
Yeah. What do you do with that case? If you've got a buyer coming to you and they need a contractor's license to buy this, whether it's a plumbing or electrical or HVAC company, what do you, what do you recommend?

Jeff Jump (31:21.57)
I mean, getting the licenses is not something you can do overnight. You know, sometimes depending on the license, but once you work underneath the contractor for two years. Yeah. So at that point there, you know, they're not going to buy that business. It's so, or if they get the owner to stay with the company as the qualifying license holder, then they can get away with it. I, I.

Jon Stoddard (31:31.25)
Yeah, this is an apprenticeship, right? Yeah.

Jon Stoddard (31:48.732)
And do you just, when you see that offer LOI and you ask that person, do you just put that LOI in the, you know, on the side or, you're looking for.

Jeff Jump (31:58.261)
well, I'll, I'll reach out to the person submitting the LOI and I'll ask him, so what is your plan for getting a contractor's license? It's like in Florida, you have to have a specific license for, to own a roofing company. And so it can, a general contractor's license does not cover you for a roofing per se. So you have to have a separate individual roofing license in Florida. Florida has got some pretty strict requirements under licenses because we've had.

Jon Stoddard (32:24.313)
really?

Jeff Jump (32:28.49)
So many contractors from out of state come into Florida, like after hurricanes and whatnot, and try to get the business of repairs and rebuilding things, and they were unlicensed. So Florida's cracked down on that. So you got to have license to do work here in Florida.

Jon Stoddard (32:45.204)
Yeah, well, they're like the flyer fires in California. They're to have all kinds of people coming in. You know, they've only actually approved a very small number of permits to rebuild, which was the problem. Yeah. What do you think of med spas? They're people are hot on med spas right now too.

Jeff Jump (32:50.808)
Yup.

Jeff Jump (32:56.705)
Wow.

Jeff Jump (33:03.822)
Yeah, I had one of those for sale. you know, same thing with that. You've got to have a qualifying doctor. Usually the doctor owns the med spa normally. But, so when I was selling this med spa, I had all these investors show interest in it. like, well, wait a minute now. The seller is not going to stay with the business. He's going to move on. So you're going to have to hire.

Jon Stoddard (33:15.667)
Yes.

Jeff Jump (33:30.742)
a doctor to replace them unless you are a doctor yourself.

Jon Stoddard (33:34.356)
There's no inventory of doctors.

Jeff Jump (33:36.586)
So yeah, so yeah, they're harder to find. it's, yeah, see run into those challenges.

Jon Stoddard (33:41.423)
Yeah. We, we had a, uh, we looked at a, uh, I had a student looked at a bed spa and the doctor wasn't a hundred percent want to retire, but they would, uh, rent their, his doctor's license. I mean, he would show up, uh, the offer was like a couple of times a week or whatever the requirements were for like 24,000 a year.

Jeff Jump (34:04.59)
Yeah, that's pretty typical I hear for people renting out their license. It runs around $2,000 per month.

Jon Stoddard (34:11.932)
Yeah. What do you think of nail salons?

Jeff Jump (34:16.428)
No salons. mean, you know, that's going to know, but I mean, it's, it's similar to really to a hair salon. And I sold hair salons that had the did nails too. But, yeah, it's, you just have to, as a business broker, you have to be careful about the unreported cash. And, you know, I mean, I know a lot of agents out there, you know, they're excited if they're new to selling businesses and.

Jon Stoddard (34:18.43)
Have you ever sold one of those?

Jeff Jump (34:44.366)
I mean, I was the same way when I first started, I'd take anything, whether it was profitable or not. I in the beginning, I took anything. I got my butt kicked and that's how I learned. It was a good education, you know, and with my new agents, I'm trying to get them not to take those type of listings, you know, not to make the same mistakes that most of us make. But, um, it's good training to take on small businesses, but then you, if you can handle those, uh, small businesses who are unorganized have, uh, lousy books.

Jon Stoddard (34:47.294)
You take anything, right? Right.

Jeff Jump (35:14.094)
I you're going to learn a lot from that. then as you move up as a broker, you're naturally going to move up and do bigger and bigger deals. It's like last month, I did a good size deal for 7 million. And, so I'm working my way up to those larger and larger deals. So, yeah, I won't do a small deal like that anymore. They're going to have, for me, they got to have a minimum million dollars in sales before I'll do it. If not, I'll just pass them off.

Jon Stoddard (35:38.248)
Yeah.

your sunbelt and 80 year old guys are, why are they doing it? Cause it's lucrative or it's easy to do or what's the, what's the staying power?

Jeff Jump (35:51.137)
It's, it's, I mean, it's not easy to do. It's a very complex, complicated career. the industry statistics state that, 80 % of new business brokers quit the first year. So you've got to be very tenacious and, just not have the word quit in your mindset. You have to be disciplined and be tough to be able to make it as a business broker. You will go through some tough times for, you know, during recessions or whatever.

But, but yeah, you make some really good money as a business broker or &A advisor, depending on, know, everybody charges a different commission rate. is no standard, you know, so, I mean, can, have you heard of the layman scale double declining formula? So I,

Jon Stoddard (36:41.566)
Yeah, yeah, yeah. And everybody knows like the layman went bankrupt during the 2008, so.

Jeff Jump (36:47.31)
So I'll use that scale on the larger businesses, but then I'll use just a fixed percentage on Main Street businesses just to simplify it for them.

Jon Stoddard (36:56.243)
Yeah.

Jon Stoddard (36:59.822)
And what could a, you know, like a first year business broker, you know, somebody just joining your company make? Zero. First year, 12 months. You're saying zero. Yeah.

Jeff Jump (37:08.643)
Zero.

Jeff Jump (37:12.438)
You, the industry statistics show that usually the first year an agent doesn't sell anything or make any money because there is, it's, it's not encouraging at all. Is it? So that's why brokers will ask a new agents, Hey, you know, you need one to two years of outside income to support yourself before you become a business broker until you get your first, you know, one or two closings underneath your belt. So it's, it can be tough, but I think that that.

Jon Stoddard (37:19.336)
Well that's not encouraging! Yeah, no.

Jeff Jump (37:41.683)
A time period can be shortened if a business broker is super proactive in training their agents like I am. I am putting a ton of training into my agents. have mandatory training twice a week for two hours at a time, teaching them all the different steps. even over the years, I put an Excel spreadsheet together on the 105 steps to selling a business.

And so I reviewed that with my agents twice now, and I gave them a copy and we will keep reviewing different things until it's in their memory. So I'm trying to shorten that success time from, you know, one or two years down to hopefully within six months, they'll sell their first business.

Jon Stoddard (38:25.758)
Yeah. Are they, are you looking for somebody that does have a alternative sources income before they join you? Because a lot of people is not going to go 12 months without income.

Jeff Jump (38:34.252)
Yes, yes.

Jeff Jump (38:38.986)
If they're, yeah, sometimes their spouse makes good money so they can live off their spouse until they start getting, you know, closings. But, know, the, most important closing is your first one because that's where you start, you get a new sense of, higher self-esteem, you know, of confidence. Okay. I can do this. I sold one. I now I know I can sell another.

Jon Stoddard (38:40.616)
most people.

Jon Stoddard (38:48.568)
huh.

Jeff Jump (39:05.92)
And so that first closing is so important for your confidence level because it will waver. tell you, I've had times of like, am I doing the right thing? Should I be in this industry? Do I have the right skills to be successful? You will question yourself and your question, your skill set, until you get your first closing. I think everybody does. It's, it's tough industry to be in.

Jon Stoddard (39:30.866)
Yeah. Who makes the most money on this? The deal is like an SBA lender or the business broker or the seller. Yeah.

Jeff Jump (39:37.667)
the seller. I mean, we just, you know, we, get a percentage of what we sell it for. now there's a lender involved. Yeah. They, the, I mean, the lender, we'll get a percentage, you know, for their commission as well. And then the bank, of course, they'll, they'll receive interest and principal payments over 10 years. So they make money on it too. So

Jon Stoddard (40:03.24)
Yeah. And do you recommend, this is something that it's always, I have a question on pre-approved. Do you ever do that?

Jeff Jump (40:14.942)
all the time. It makes your business smart. it's really, you can't even really say pre-approved that there's a legal issue with even us saying that. We have to say they're pre-screened by a lender. so let's just say you got a business for a million dollars. It's for self-reliant. And then you find three banks that will finance it. They like the numbers, they will give you a

Jon Stoddard (40:16.616)
And what does that mean?

Jon Stoddard (40:28.084)
Prescreened

Jeff Jump (40:44.585)
pre-screened saying if we bring in a good buyer with a good credit score and everything else, then the buyer only has to bring in 10%. So instead of paying the full million dollars, then we're only looking for buyers who have 100,000 in their bank account. And the banks even, there's another way to structure it too. I actually teach a class on structuring deal, creative structures where you can get away with only a buyer can.

Just put 5 % down if the seller agrees to hold a note for the other 5 % for the life of the loan. So you can get away with only 5 % down.

Jon Stoddard (41:21.78)
for the life of the loan for 5%. Isn't there a hold back too, like a two year?

Jeff Jump (41:28.29)
Well, sometimes, yeah, sometimes it depends. know, sometimes the lender will allow payments upfront or maybe interest only. Every lender is different. But, but normally it's not going to sit there for 10 years. What's going to happen is after two years, the lender is going to go back to the buyer and say, Hey, let's refinance this loan since you made two years of on-time payments. That's a requirement. And then we'll pay off the seller's note too.

So then the seller gets cashed out after two years. So they normally aren't gonna wait 10 years.

Jon Stoddard (41:57.064)
Jon Stoddard (42:01.928)
And where do they, where does that conversation come in? And the lender's doing that?

Jeff Jump (42:07.316)
Usually the lenders will reach out before the two-year mark and start the process.

Jon Stoddard (42:10.58)
And they're trying to get that off their books and refinance that.

Jeff Jump (42:14.094)
Well, see, for them, it's a benefit for them because not only they're going to keep this loan, but then they're going to finance also the seller's note portion on it. So then they're going to make more money in the long term by having more out there financed. And then it helps the seller because then they finally get all their cash instead of waiting 10 years. They'll get all their cash within, know, roughly around the two year mark or just after. So yeah, it's

Jon Stoddard (42:41.02)
Is that a conversation you have with the buyer or the seller? Yeah.

Jeff Jump (42:45.813)
Yes, both. So I explained to both of them and even the lender too, will tell them, yeah, Jeff is right. You got it. You know, after two years, but you have to have two years of on-time payments. If you miss one payment or well, if you're late on one payment, then that two year mark starts from zero again. And you have to have two years in a row of on-time payments to qualify for refinancing. And usually with the refinancing too, you'll get a better deal. The, uh, the

seller will get a better deal on interest rates and terms and especially, you know.

Jon Stoddard (43:20.628)
Like a much lower. So for instance, like in the last year, it's been up to like 10 % ish. Two years ago was 6%. Are you seeing any issues with loans that SBA loans at high and buying businesses?

Jeff Jump (43:35.513)
Well, tell you what, the SBA has been, I think, pretty good about offering incentives to buyers. It's like, I know during COVID, they offered whoever got a SBA loan during a certain period of time, didn't have to make, they would make, what was it, like interest-free payments for the first six months. So it's like now if you buy a business using SBA loan,

Jon Stoddard (43:57.934)
huh.

Jeff Jump (44:03.15)
The first year there are no fees. So they've waived all fees on the first, well on the first, I'm sorry, the first $1 million. So as a business broker, you know, you've got to keep up with what the SBA rules are. Every year they change, you know, so, um, but, so, but they're, but they offer incentives to help us business brokers really get them sold.

Jon Stoddard (44:21.076)
Do you?

Jon Stoddard (44:25.01)
Yeah. Do you work with specific lenders? I mean, you want to just stay with people in Florida or specific banks that you know that'll do it?

Jeff Jump (44:34.702)
I prefer the lenders that are preferred lenders for the SBA. So those lenders can make up their own, make their own decisions if they're going to loan or not. They don't have to submit a package to the SBA for approval. I, so I only really want to work with those lenders that are approved lenders by the SBA. And then, you know, I like to build a relationship with the lenders, get to know them, find out what they're, how they handle their deals.

So I've got a few lenders who I like and it's good to have a group of lenders you work with because some lenders have a minimum requirement, a very high minimum requirement. So I know one bank that requires you to, the deal has to be $700,000 or more for them to even take on the loan package. And then there's other ones that will do smaller. Some of them like certain industries. So that's why it's good to have.

you know, a batch of lenders that you know and trust and have a good rapport with.

Jon Stoddard (45:37.246)
So how many deals have you been involved with with Sunbelt and Jump International?

Jeff Jump (45:43.06)
All together, you know, I never counted it. I don't even keep track. I don't know, maybe 20, 30 deals. I don't know. I've never counted.

Jon Stoddard (45:55.89)
Yeah. Well, have you had been in a scenario where the seller sells the business, signs a non-compete in the asset purchase agreement, but then goes opens another business doing the same thing?

Jeff Jump (46:13.838)
no, I haven't run into that yet. I hope I don't because the, usually the non-compete agreements are pretty strict. The attorneys like to use pretty strong language and, and, know, I'm a member of the business brokers of Florida association. So we have a collection of contracts that are created by attorneys that we can use. We, just fill in the blanks, you know, the price and the name and whatnot. But,

Jon Stoddard (46:38.408)
Uh-huh.

Jeff Jump (46:41.55)
So the closing attorneys for Main Street, primarily we use a third party closing attorney, doesn't represent the buyer or the seller. And that person will create the non-compete agreement. there's some powerful language in there. yeah, can get in big trouble if they try to do that.

Jon Stoddard (47:00.38)
Yeah, what's the fastest deal you've ever been involved in?

Jeff Jump (47:04.558)
Oh, I just closed on one Monday, two and a half weeks.

Jon Stoddard (47:09.012)
two and a half weeks. So you listed it and was the buyer already on your email list or what? Yeah.

Jeff Jump (47:10.626)
It was an all cash deal.

Jeff Jump (47:15.79)
Oh, I see what you're saying. No, but what I'm saying is by, uh, when I got it under contract, it was, uh, it only took two and a half weeks to close, which, which is, which is fast.

Jon Stoddard (47:24.884)
Oh, okay. How does that happen? How's that structure? What's a cap stack look like in that?

Jeff Jump (47:30.092)
Well, you know, what's nice is if somebody, if a buyer's paying all cash, you have no banks you got to deal with, no bank requirements. They have a lot of requirements. at least 90 these days. Yes, you're right about that. But somebody's bringing it all cash. It's, it's so simple. It goes so fast.

Jon Stoddard (47:38.354)
Yeah, that adds 90 days.

Jon Stoddard (47:47.858)
Where, does that make sense? Because if you do an ROI and somebody buys, has to be a pretty profitable business for that to make sense to pay cash down. Why are they paying all cash?

Jeff Jump (48:00.943)
because they don't want to have to deal with the banks. They want, they want to get to a quick close, primarily a lot of times too, if they're paying all cash, they can usually negotiate some sort of a discount, at least that's their goal. And so most sellers will accept a, lesser price from a buyer if they're paying all cash. So they don't have to wait for their money. They're closing within two to four weeks. But the fastest deal I got under contract.

Jon Stoddard (48:06.278)
huh.

Jeff Jump (48:30.284)
I know that's what you referring to now. It was a pool service business. Great numbers. I put together a really nice package, confidential business review, and I got it under contract in two days time. Two days time.

Jon Stoddard (48:45.828)
Who bought it? Was it somebody outside the industry or somebody already owned?

Jeff Jump (48:50.176)
Outside the industry, the gentleman owned a landscaping company. So it's kind of similar where there's crews involved and whatnot.

Jon Stoddard (48:57.438)
They're still going to the neighborhood and going in somebody's backyards and stuff. Yeah.

Jeff Jump (49:00.589)
Yeah.

So yeah, that I got under contract in two days, offered all cash to buyers. And so we closed within 30 days. So that was nice. That was probably the easiest deal I've ever done. It was just so simple. And the buyer was, he liked my confidential business review. I put a lot into those and he, asked him, said, what, do you require for due diligence? What, do you want to see? He goes, well, honestly, you provided everything I wanted in the CBR.

So I really don't have anything I need to look at. I'm very satisfied.

Jon Stoddard (49:36.572)
Yeah. What do you provide in the Sims different from other brokers? Cause I, I had a student reach out to me and send me a SIM and all it had was the price, the SDE and a whole bunch of pictures. That was just a waste of time. Yeah.

Jeff Jump (49:53.677)
Yeah, I've kind of created my own template over time. So I put in like the business history, information about key managers. I'll put in their list of employees, but only by position only to protect your identity, date of hire, compensation package. I'll put industry information in there, which is easy to get. I'll put in, here's one thing that's different. I'll put in my business valuation in there.

A lot of brokers won't do that. But for me, I figure what I'm doing is for the buyer, I'm doing their homework for them. I don't want them to try to do their own business valuation because they're not going to understand all the ad backs. because I personally, you know, I'm involved with the seller and they told me all their personal stuff. So a buyer is not going to necessarily do that. They're not going to know about those ad backs if I don't provide them with the ad back. So.

I'll put in my valuation in there. It proves my asking price.

Jon Stoddard (50:54.324)
Yeah. So what's that pegged on? Because I always, you know, if you go up to mid market and hire, they always peg it on a debt service coverage ratio of two or higher. Um, and I don't, you know, I don't recommend people buying a business where it's 1.25 or 1.5 where 66 % of the cashflow is eaten up by debt service. I, that's kind of scary.

Jeff Jump (51:20.142)
You know what I do is, um, you know, I'll do my valuation, but then I have what's called my own bankability test that I created from scratch in Excel. You like that bankability? And then, uh, what I do is, um, I'll add back once I, once I uncovered the cashflow for the last three years, um, and then put in what the loan amount would be minus the 10 % on the traditional loan. And then I'll add in the buyer's what a new buyer would pay themselves.

Jon Stoddard (51:28.136)
Bankability, I like that. Yeah.

Jeff Jump (51:48.943)
And I'm realistic about it. And then I still, and I'll do that before looking at the ratio, the debt to income ratio. And so I like to see, I mean, the SBA's minimum is 1.1, but most banks want to see 1.25 or higher. So if I see that it's right on the edge,

Jon Stoddard (52:05.02)
Yeesh. Yeah.

Jeff Jump (52:15.27)
So then what I'll do is then I'll say, okay, well, the seller then is going to have to be open to seller's note to get that ratio higher for them to have less risk to finance that deal. So, and it works out well too for the, for the buyer because then they have to bring, they don't have to bring as much money to, as big of a down payment to the lender because they're borrowing less money. So maybe.

Jon Stoddard (52:26.024)
Yeah. Yeah.

Jon Stoddard (52:40.018)
Yeah, but they are, but they're borrow, but a seller's note is borrowing money, it's just different terms in the SPF.

Jeff Jump (52:48.878)
Well

Yeah, if you had a seller's note, and I had my last deal, had two seller notes involved in the deal. yeah, a lot of business brokers only think only one seller's note. You can use multiple seller notes. I had one deal where it was a long-term seller's note, whatever, but then they added a second seller's note for 50,000 that would pay off in 60 days.

Jon Stoddard (52:59.41)
On top of the same deal? Okay.

Jon Stoddard (53:19.32)
was that based on some kind of cash conversion cycles or something or what?

Jeff Jump (53:25.364)
It was the, the buyer, didn't have as much cash upfront for the deal. So he promised he would have it in two months. He was cashing something then I don't remember all the details, but I mean, there's so much you can do a seller notes. mean, I teach a whole class on doing creative seller notes. You know, the seller notes you can, you can do, let's say a five year seller note, but payments amperized over 10 years. But at the end of the five years, there's a lump sum payout.

Jon Stoddard (53:36.371)
Uh-huh.

Jeff Jump (53:55.423)
the difference. Or you can say, a buyer could offer five-year seller's note, know, eight, seven, eight percent interest, first payment not due for six months. So there's so many creative things that you can do as seller notes to make a deal, get under contract that works for both parties.

Jon Stoddard (53:55.454)
Uh-huh.

Jon Stoddard (54:14.004)
to, to, so the buyer doesn't have to put as much down, but what are you looking for in financial stability with the buyer? If they're trying to put a lot of debt on this, like for instance, it's easy to understand if your balance sheet's bigger than the business you're buying and like, okay, I'll put my risk and then give them a seller note. But if the guy's only got $10,000 or let's just say $50,000 in the bank and he's trying to buy a million dollar business, like, well,

Jeff Jump (54:18.094)
Mm-hmm.

Jon Stoddard (54:43.892)
If I give this guy, this buyer seller note, it's risk, the more risk is on me.

Jeff Jump (54:49.528)
So on seller notes, there's pros and cons to them. So on a seller's note, the buyer is required to sign a personal guarantee.

Jon Stoddard (55:04.615)
huh, okay.

Jeff Jump (55:06.523)
And so if the buyer defaults.

Jon Stoddard (55:10.258)
Is that a separate personal guarantee aside from the SBA loan or are just?

Jeff Jump (55:18.094)
Uh, yeah, this is separate because if it is separate, but it's still in the closing documents that the buyer will have to sign a personal guarantee. So what happens is if the buyer defaults, the seller then has the right to try to get all his business or her business back and then they can resell it and not have to pay any of the payments they already made back. So, um, so the seller does have some recourse. mean, nobody wants to go and take a business back if they don't have to.

Jon Stoddard (55:46.846)
Yeah, I

Jeff Jump (55:48.003)
You know, but I mean, so there's pros and cons to it on both sides. You know, it just depends on how much risk you're willing to take. is, and I'll reiterate this, there is no risk free deal. If you want to buy or sell a business, there is no risk free deal. Both parties are taking some sort of a chance, but you know, the buyers will do their due diligence and dive deep into the numbers, ask for bank statements and everything they can to satisfy.

themselves that they know they're buying a good quality business. Now they're getting SBA loan, the SBA themselves or that lender will dive deep into that buyer. And so if that buyer, they think that buyer doesn't have enough credit worthy credit worthiness or enough cash in the bank, they will shoot them down anyway. So it's like they do that part for us in reality when they're involved. So

Jon Stoddard (56:41.598)
Yeah. Have you ever done any earnouts or kind of profit sharing kind of deals where the seller tells you, Hey, look, I put a, you know, a mass amount of energy into this initiative and it's probably going to start paying off real soon.

Jeff Jump (56:56.174)
Yep. I got a deal now that it's, that's exactly how it was structured. had a, it was a, it's a forgivable seller's note. So, which is very similar to an earn out, but the SBA does not allow earn outs in their deals. So one way to get around that is we would structure a forgivable seller's note. It's almost the same thing, really, you know, but, um, so the, so the S like, for example, maybe the.

The parameter is the company has to hit this number in sales or in profit. You can use so many different parameters. It's whatever both parties agreed to. And then, you know, there's always like, I like to do a true up period. So at the end of every year, there's a true up period to recalculate for the everything for the full year. And then that last payment is an adjustment, whether it's higher or lower. So yeah, there's earn outs and forgivable seller notes and, you know, make it a.

A seller might get just a percentage of the sales if it goes above a certain level. mean, you can create any structure that both parties are willing to accept.

Jon Stoddard (58:07.474)
And the forgivable, your meaning is like, it is actually forgivable when you do a true up, if you didn't measure up to what you said you're gonna do.

Jeff Jump (58:18.668)
Yeah, either they'll get a lesser amount or nothing at all. The seller that is so it just depends.

Jon Stoddard (58:23.732)
This is kind of the thing I was pointing as well. What if the new buyer comes in and he's just not as good. He's just not performing as well. And maybe he's doing it, sandbagging it to get that, enact that, forgive or celebrate.

Jeff Jump (58:34.882)
That it.

Jeff Jump (58:42.658)
That definitely can happen if the buyer doesn't have the skill set to do just as well as the current owner. That definitely can be an issue. That's why for SBA loans, they want to see the buyer's resume. They want to know how much experience they have. Even me, when I'm vetting buyers, I want to know what experience they have in the industry, if any at all, or what their plan is. If they don't have experience, I'm like, well, are you going to keep

Jon Stoddard (59:07.112)
Yeah.

Jeff Jump (59:11.212)
the existing owner on staff, because a lot of business owners will stay on board after they sell. They just want that pressure off of them from business ownership. It's a lot of pressure when your name's on everything and you could lose everything if the business fails. So one of the requirements by an SBA lender is that they usually with the buyer, if they have a house, they'll put a lien on their home. That's very common.

Jon Stoddard (59:20.028)
of managing everything. Yeah, yeah.

Jeff Jump (59:41.858)
So that's something you got to think about if you want to buy a business and get an SBA loan, you better be willing to allow the SBA to put a lien on your home because they want something for collateral besides the business.

Jon Stoddard (59:51.134)
Yeah. Yeah. So there, there is no way around a personal guarantee on an SBA loan, right? There's just no way.

Jeff Jump (59:59.231)
no, that's be a, from what, everything I've experienced and saying, there's no, there's no way around it unless maybe you're getting into some giant deals and they've got some different parameters. haven't, I haven't made it.

Jon Stoddard (01:00:10.728)
Yeah. Are you seeing anything in buying a business without an SBA loan? People lending money at reasonable, fair interest rates?

Jeff Jump (01:00:23.054)
Are you talking like, well, like I've done a structure where a seller was willing to allow for some cash down for the purchase of the business and the rest on a seller's note. So there's no SBA lending. I've done a few of those, but.

Jon Stoddard (01:00:35.893)
huh, yeah.

Jon Stoddard (01:00:40.468)
But what does that buyer look like to, because that's a big risk on the seller that this buyer doesn't screw it.

Jeff Jump (01:00:48.344)
That's right. So, a lot of times if the buyer is, let's just say, doesn't have the experience that they should have, they're going to want to keep that seller on board because they don't, they don't want to risk losing their business either. They don't want it to go down, you know, the buyer, they don't want it to fail. So they'll ask the seller, Hey, will you sign a one year or two year employment contract and help, you know, teach me how you've been running it? I mean, normally there's like a two to four week.

transition time, which is usually free, but if they don't feel competent in themselves to do it as well as the seller, then they'll ask the seller to stand board and help them.

Jon Stoddard (01:01:18.013)
Yeah, yeah.

Jon Stoddard (01:01:28.638)
Yeah. What was this big business that you sold up for just 7 million? What kind of industry was that in?

Jeff Jump (01:01:34.546)
It was, and I have to be very careful because it's all confidential, but it was in the automotive industry.

Jon Stoddard (01:01:38.846)
Gotcha.

Uh-huh.

Jeff Jump (01:01:44.287)
And I can't see who the buyers and sellers were, but it's all everything we do is confidential. It's not like real estate where can brag you sold a house on Main Street, you know, and here's the location. We can't, we just, as business brokers, have to maintain very strict confidentiality.

Jon Stoddard (01:01:54.376)
Yeah.

Jon Stoddard (01:01:59.55)
Yeah. So let me ask you a question. Where do you get your deals now? How do you find people motivated to sell?

Jeff Jump (01:02:09.838)
I'd say about 60 % of my clients come from referrals. The rest of it comes

Jon Stoddard (01:02:16.806)
referrals like centers of influence, like accountants, treasury, wealth managers, what? Yeah.

Jeff Jump (01:02:21.774)
all walks of life I had, I've had one guy who's a loan broker refer to businesses to me. One I closed on one. I just got under contract while a listing agreement with, real estate agents, business owners, you know, people who finally decide, social media. I've gotten a lot of listings from social media. I like a Facebook, you know,

Jon Stoddard (01:02:47.038)
Like what kind of social media? Yeah.

Jeff Jump (01:02:50.54)
I look at Facebook, it's the largest social media platform in the world. really is. So put a lot of effort into that and LinkedIn, I do more in LinkedIn now. So I'll just put educational posts up, you know, say, did you know the SBA is now offering this or, did you know the best way to structure a deal? You know, as I put a ton of educational content, so that, so with all my readers, they're always respond to it or like it, but they're reading it.

And like LinkedIn, I had a guy the other day on LinkedIn told me that he's been following me for a while and I didn't know that. And he said, I own five tech companies. want you to sell for me. I'm like, well, we need, we're going to have our conversation here soon about that and discuss, you know, his goals and whatnot. But yeah, that would be incredible if I get that five tech companies. I'll probably bill retire off that one. So.

Jon Stoddard (01:03:31.54)
cool, did you get the listing?

Jon Stoddard (01:03:43.07)
Yeah, that's girl.

Jon Stoddard (01:03:49.106)
That's cool. Well, I really appreciate it, Jeff. Thank you so much for joining me the show.

Jeff Jump (01:03:55.811)
Yeah. And, I just want to put this out there. If you're watching this and you're located in the state of Florida and you're not happy with your broker and you want to jump ship, I'm taking on new agents right now. So feel free to reach out to me. Yes. I've got three. I, my goal is to have 10 agents by the end of the year.

Jon Stoddard (01:04:07.989)
you're looking for agents. Yeah. Yeah.

Jon Stoddard (01:04:15.144)
Yeah. And these are people that are, they, do you have to bring your own leads or do

Jeff Jump (01:04:21.582)
I'm actually in the middle of implementing a new leads generation program. So they'll get leads from the software that I signed up for. then plus, you know, they're going to go to networking events. They're going to meet up with their friends and family. They're going to get referrals from people. So the lead coming from every direction, you know, you just got to not one thing works by itself. You have to do a multitude of things to bring in leads. So.

Jon Stoddard (01:04:31.305)
Yeah.

Jon Stoddard (01:04:49.086)
I agree with that. That's with most everything. Yeah. Well, thank you so much, Jeff. I really appreciate it.

Jeff Jump (01:04:55.852)
Yes, sir. It was a pleasure speaking with you. I enjoyed this.

Jon Stoddard (01:05:00.872)
to stop and it's