Hey entrepreneurs and business owners,

Thanks for becoming a subscriber to this newsletter, it's been a while coming, but with 2k subscribers signed up, I thought now would be the best time to launch!

This newsletter is going to be sharing my M&A journey through the acquisitions I am making through my Family Office Private Investment business, as well as giving updates within the UK construction sector, commercial finance sector and passing on the knowledge I have built over the years as a CFO.

For those of you new to me, Bradley Lay, I am a father of 4, have recently discovered a new found passion for boating (power boats, not sails!) and I try to play at least 2 hours of tennis on a daily basis. If I'm not on the tennis court, you'll usually find me with a pint in hand, or eating my favourite food - kebabs!

In the business world, I have acquired 100% of the share capital of several businesses to date, and have many more on the horizon to complete this year to add to my group.

I spent sixteen years helping to scale a construction sector business from £12 million to £150 million in revenue.

In 2022, I walked away from that business with a life changing exit. I didn't have to stay on for an earn out or have to work a notice period. I was able to just leave.

The finance function ran without me because I'd built it that way.

Now I'm on the other side of the table. I acquire construction trade businesses including electrical, cladding, plumbing, HVAC, roofing etc. These businesses all have previous owners who've built something valuable and want to exit properly.

This newsletter exists because I have found that most business owners just don't understand what makes a business sellable or even understand the selling process. They think they own an asset, when what they actually own is a high paying job!

Each week, I'll share insight into getting your business sale ready, as well as the full selling process in order to help you get a better understanding of how it all works. Let's kick off with our first topic: The Exit Illusion.

The Problem Most Owners Don't See

Here's the question that separates real business owners from people who've created a job for themselves: Can you sell your business today and walk away wealthy?

Not in five years or after you fix a few things. Today.

If the answer is no, then I'm afraid you don't own a business asset (Capital). You own a job that requires you to show up every day to keep the money flowing (Income).

I see this constantly. I've met with over 600 construction business owners in the past few years and most of them are playing what I call the Income Game. They optimise for short term profit and to minimise tax. They keep themselves at the centre of every decision.

This approach makes perfect sense if your goal is to extract as much cash as possible right now. But it destroys the thing buyers actually pay for.

What Buyers Actually Want

Buyers like me, don't pay for your effort and we don't pay for your loyalty to your team. We don't pay for the hours you've worked or the sacrifices you've made.

We pay for certainty.

We pay for a business that can operate independently with predictable numbers, capable teams and systems that work without the owners constant involvement.

When I value a business, I look at net profit before tax, not EBITDA. Charlie Munger called EBITDA "bullshit earnings" and he was right. It's a metric that lets people pretend expenses don't exist!

What actually matters is real profit, cash flow and Independence from the owner.

Everything else is theatre.

The Income Game vs The Capital Event Game

Most business owners are playing the wrong game entirely.

The Income Game rewards you for extracting profit today. You minimise tax. You keep overhead low, stay lean and make good money every year.

On the flip side, the Capital Event Game rewards you for building something someone else wants to own. You invest in systems. You build a capable team, remove yourself from daily operations and create transferable value.

These two games require opposite strategies.

In the Income Game, you're the most important person in the business. In the Capital Event Game, you're working to make yourself irrelevant.

I played the Income Game for years before I understood this. I thought I was building wealth when all I was building was a well paid job.

The shift happened when I started reading about how actual wealth gets created. The wealthiest people don't own jobs, they own assets, the wealthiest of which are ones that own listed entities (just read the book, Rich Dad Poor Dad). Companies that generate value independent of any single person.

What Changed When I Shifted Perspective

Once I understood the difference, everything changed.

I stopped being the person who had to approve every decision. I hired people who were better than me at specific functions and built systems that made the right thing the easy thing.

I focused on one goal: making the business non dependent on me.

When I eventually exited, I had my succession plan in place. The business could run without me and that meant I could negotiate from a position of strength.

That independence is what enabled my clean exit.

The Brutal Truth About Valuation

Business owners often pick a number out of thin air when they think about selling.

"I want at least a million."

"I need two million to retire."

These numbers have nothing to do with what the business is actually worth. They're based on what the owner needs or wants. Quick new flash -> Buyers don't care about your needs.

They care about risk, certainty and return on investment.

If your business is heavily dependent on you, it's high risk. If your numbers are unpredictable, it's high risk. If your systems are undocumented and your team is weak, it's high risk.

High risk means low value and often, it means no sale at all.

Building for Exit from Day One

The biggest mistake I see is treating the exit strategy as something you think about later.

"I'll worry about that when I'm ready to sell."

By then, it's too late. You can't retrofit independence into a business that's been built around you for twenty years.

Exit strategy needs to be part of the design from the beginning. You need to ask yourself 3 main questions:

1) Can this business run without me?

2) Would someone else want to own this?

3) What would make a buyer confident they can succeed after I leave?

These questions change how you build, who you hire and change what systems you create.

They shift you from thinking like an operator to thinking more like a shareholder.

What to Expect from This Newsletter

Each week, I'll share insights from my experience on both sides of M&A transactions.

I'll break down how valuations actually work in the construction sector and explain what makes a business sellable. I'll share the mistakes I made and the lessons that cost me time, effort and money to learn.

My goal is simple: help you understand what buyers actually pay for so you can build your own business in a way that a buyer will think is worth paying for.

As I mentioned earlier, outside of M&A, I spend my time on the tennis court and out on the water in my powerboat. Both remind me why building a business that can run without you really matters.

Freedom isn't just a nice idea. It's the whole point!

Next Week

I'll answer the question, "Why would you want to sell your business?"

Until then, ask yourself this question: If you disappeared tomorrow, would your business survive?

If the answer makes you uncomfortable, then you're in the right place.

In the meantime I can help you one of 2 ways:

1 - If you have a business that you want to sell, regardless of sector, feel free to get in touch to see if I could be your buyer. Just reply to this email. The business must be generating at least £5m revenue as a minimum.

2 - If your business needs any type of finance for loans, vehicles, bridging, mortgages or software then I can help you through one of my businesses smefunded.com. Just reply to this email and let me know what you need.

Cheers for reading, see you next week - Bradley Lay