218: Building Bigger Exits Through Acquisitions & Rollups with Tom Shipley

Private equity doesn’t scale the way most founders do. They buy growth.

They acquire profitable businesses, combine them, and increase the value of the whole thing so they can sell at a much higher multiple.

Today’s guest, Tom Shipley, is a serial entrepreneur and M&A strategist who built acquisition platforms applying that same strategy to founder-led businesses.

In this episode, we unpack the mechanics behind scaling through acquisitions and rollups, how combining businesses can dramatically increase enterprise value, and why so many founders stall at $1–2M in EBITDA without positioning their companies for a meaningful exit.

If you’ve ever wondered whether buying businesses is a distraction or a legitimate growth lever, this episode will change how you think about scale. Let’s dive in.

Mic Drop Moments

• “If I have a choice between buying a distressed business at a great value or a really good business at a fair value, I’ll go for a good business all day long.” – Tom Shipley

• “You don’t have to be doing $100M a year in order to scale through acquisitions.” – Tom Shipley

• “If you’re not leaning heavily into technology and investing time into AI, you’re gonna miss the boat.” – Tom Shipley

• “Be very, very careful of the entrepreneur’s natural traits. We have desirability bias and commitment bias.” – Tom Shipley

• “The ninth wonder of the world is multiple expansion.” – Tom Shipley

• “You don’t have to be $100 million a year in revenue in order to scale through acquisitions.” – Tom Shipley

• 00:19 The Two Biases That Destroy Acquisitions
• 02:55 The 4 Foundations of Business Growth
• 06:22 The AVA Roll-Up Story — When the Credit Markets Collapsed
• 15:16 How to 4X Your Business Value (Multiple Expansion Explained)
• 19:06 How Acquisitions Outperform Organic Growth
• 21:01 The Roll-Up Mistake That Kills the Model
• 27:24 Add Zeros: How to Think Exponentially
• 30:46 When to Use Acquisitions as a Tool for Growth
• 37:45 Tom’s Playbook for Acquiring Businesses
• 56:37 What Is DealCon?
• 01:00:48 Turns $1–2M EBITDA Owners Into PE Deals
• 01:07:40 Advice to New Entrepreneurs

Brad Weimert: Tom Shipley, welcome to the new studio.

Tom Shipley: Hey, Brad. How are you doing? Great to be back.

Brad Weimert: Good to see you. So, we recorded Episode 39, which we covered, I mean, you’ve got a pretty crazy background selling a whole bunch of stuff online, $2 billion in sales, then you raised $100 million for Foundry, then you went on to co-found AVA, which is Agency Ventures Acquisition.

Tom Shipley: Aggregators.

Brad Weimert: Aggregators. Okay, great. I want to pick up there. We’re mid 2026, completely different world than 2021 when we recorded. As a starting point, you have built a bunch of stuff around the idea of acquisitions. I want to talk M&A today. Let’s start with what is the most expensive lesson that you’ve learned from M&A in general?

Tom Shipley: Well, that’s a good question. I’m going to say be very, very careful of the entrepreneur’s natural traits. We have desirability bias and commitment bias. Desirability bias is we see the vision, and what’s the magic behind entrepreneurs is why we can create great things. We see opportunities, and we see what can be and where we are. And we create the bridge, and we get there, but we’re so focused on what the opportunity is. And the upside is sometimes we get blinders on as far as the negative side, and therefore some of the red flags we miss. Commitment bias is that entrepreneurs are fantastic. We will do anything to get the football over the finish line.

We will go through brick walls. We’ll smash things down. We’ll make things happen. We will get there, but when you’re doing deals, and that’s why I recommend looking at a lot of deals and having a lot of deal flow, is that sometimes we get emotionally attached to this specific deal and getting it over the finish line when probably we should have dropped in and passed on. And I’m going to say that’s some of the biggest mistakes. Mistakes that I made personally is certain people are really good at turnarounds. I’m not. Okay. I can, and I say the reason why is that the amount of effort and energy you will spend on a turnaround is disproportionate, most cases to the upside.

And frankly, if I have a choice between buying a distressed business at a great value or a really good business at a fair value, I’ll go for a good business all day long because, therefore, my energy is to add a zero to that business and that’s not to rescue that business, which is risky and depletes your energy and your focus and depletes your teams, especially if you’re doing serial acquisitions.

Brad Weimert: Alright. So, there are two different points that I think about acquisitions in general. One is there are a couple of people that I think we both know who teach go buy a business instead of building it. And so, that’s like start from zero, buy a business as the launching pad. The other is sort of a bolt-on, and there are a million ways that you can look at acquisitions, but I think about like bolting on a business to accelerate my current business. So, one of the things I’m afraid of is f*cking that up. What is one integration mistake that you see entrepreneurs make consistently when they’re trying to buy a business to add to their existing?

Tom Shipley: Okay. And it’s a really great distinction between the two. And where I like to focus my time and attention is I really admire and I actually encourage people to be the entrepreneur through acquisitions. It reduces the risk drastically if they have good mentors and advisors around them. If not, then they’re kind of, well, the way I call entrepreneurs who watch a video, hear something, and just jump into acquisitions, especially serial acquisitions, if they own a business, it’s kind of like watching children playing with chainsaws.

Brad Weimert: Right. That’s how I think about it.

Tom Shipley: And so, I say be very careful. However, if you own a business, I look at how are you going to really scale your business and continue to grow. What we’re taught is organic, and we are taught every sales hack, marketing hack, operation efficiency, operating systems to put in it the way to scale organically, which you have to do in every single business, but that’s just one foundation. The next foundation that I always lean into in all my business is data and technology. And now with AI, you get an unfair advantage, and you can get rid of a lot of the inefficiencies in most business models because of AI. So, data and technology.

The third is, I’ve always leveraged joint ventures, let me identify people that I want to partner with, leverage what they built. And the fourth that most entrepreneurs overlook is acquisitions. Because if I look at my businesses, how much time and effort have I spent on new products, new channels, new teams, and what was the success rate and all that? Not that they had a little modicum of success that they actually had significant acceleration to my business and was the catalyst for growth. And in direct response, which is most of my business, is if you have a one in five success rate, that’s great, but how much? I’m going to say, look at the graveyard of initiatives that didn’t work.

If I’m buying a successful business, that is logical, the deal thesis is everything. It is logical to add to my business that adds an extra channel, adds an extra product, add different capabilities that I don’t have, and adds EBITDA to it, then suddenly, and the probability of success if I’m thoughtful of it should be over 80% to 90%. And even that 80% won’t end up in total. And when I say the 20%, that doesn’t work, it might not end in total failure. A lot of that could be it just doesn’t achieve the goals you have. And therefore, I advise businesses, you don’t have to be reaching $100 dollars to do acquisitions. Regardless of your size or resources, you should be thinking about scaling through acquisition as one year for foundations for growth.

Brad Weimert: Okay. So, I want to get back to acquisitions in more detail because I have lots of questions about that. But before we do, I want to talk about kind of how they can be problematic or go wrong. So, you raised money for AVA, and the fundamental principle of AVA was to aggregate agencies, right? That was the business model. What are the lessons? And that did not play out as expected. Well, let’s start with what AVA was, what was it intended to be, and kind of where it went off the tracks.

Tom Shipley: Okay. So, I’ll start with this, is that it all depends, and in this case is what are your fundamental assumptions, underlying assumptions? And that was our business plan. And it was based on my history. My history is every time I’ve ever gone out for funding and especially debt funding and also equity funding, I’ve always been successful. And to me it’s a question of how much effort I’m willing to put into it.

Brad Weimert: Always been successful with the fundraising part of it?

Tom Shipley: The fundraising, yeah.

Brad Weimert: Got it. Yep.

Tom Shipley: Yeah. So, with Atlantic Coast Brands, we did a number of different types of funding within Atlantic Coast Brands, mostly different debt vehicles, is the way we built that business. And it was a question of you go out to, worst case, a dozen different potential lenders, lenders that are out there. You get a few different LOIs, you pick the best one, you close, and it’s anywhere from, initially, for us, our first mezza line to buy our first business was 3 million, and over time, we had 25 million facilities to that business. So, again, it was just very thematic. When we launched, when Brian and I launched Foundry Brands, we went out to seven private equity firms and got six term sheets between $50 million to $100 million in funding from each one.

So, again, that was my experience. Now, when we started AVA, there are different premises that you can start with. One premise is we’re going to raise some capital, and let’s do one acquisition at a time, and do it very methodically, and let’s just stack it. The market we started it from a debt perspective, and equity was pretty frothy at that time, and still in this era, that was very good. So, the premise…

Brad Weimert: Meaning that in 2021, lots of people wanted to put money into companies.

Tom Shipley: Yep, 100%. And then, at that period of time, and therefore that was the premise is, “Okay, let’s do this different. Let’s bring in a foundation equity capital, which will help cover the cost of the platform.” And the other question that you have to ask is, if you’re going off for significant funding, in our case, it was $20 million line we’re going after, do you start with nothing and go out and raise the money, not having a team in place and not having a pipeline of acquisitions? Or you built your pipeline, you have your LOIs in hand, you have a team that can execute, so it reduces the risk from the lender coming in or the funder coming in, and that’s the way you do it?

And based on the market and the bet we made at that time is let’s bring equity into the business that will start initially funding the overhead as we go. Let’s build quickly LOIs, pipeline at the same time we’re raising money, and let’s get a deal closed with deferred funding on it, which again it proved the case that our first acquisition we did was a $6 million business with a $3 million EBITDA. So, everything was traction. But what started happening there is the credit and the equity markets by that September, October, we launched in February, we did the first acquisition in July. The credit markets in September started, and the credit equity and debt markets started getting distressed.

Credit started getting very tight. Equity investors started pulling back and stopped making basically, which you could feel the environment changing. And then we know what happened in March, which is when you had Silicon Valley Bank and Republic Bank also just go under. And so, we had secured that we worked on for six months, a $20 million facility we’re supposed to close in mid-March, but because of their relationships in those with Silicon and Republic, basically our funding source disappeared. And now suddenly we’re at this scrappy mode of we have overhead and getting funding at that period of time. So, remember, I said I typically go out to 10, 12 banks back. Typically, it’s four or five.

At that point, I don’t quit. Entrepreneurs, we don’t quit. And so, I went out to 300 lenders, had conversations with 300 lenders, and it was just a rough period of time where people pull back, didn’t want to invest in aggregators, rollups. Now again, right now we’re back on the flip side of that. We’re back in the frothy. There’s so much capital back in the marketplace. And that’s the challenge. We built it on a certain premise. The market changed.

Brad Weimert: Yeah. So, let me try to summarize that. When I think about almost everything in business, people get lost in language, and people that are really deep into anything use shorthand to explain things for the sake of acceleration, which is what loses people that don’t know what’s going on. So, you’ve got brand new entrepreneurs that don’t know anything about raising money. You’ve got bootstrapped entrepreneurs like me who has never raised money. And then you have people that spend their whole life raising money, right? So, the AVA model was raise money from friends and family to get a team in place to acquire the first business, tack that onto an existing agency, and combine them.

And the idea was the whole time was that you were going to need another round. You were going to need, and this time you were going to go to a bank to get debt, to get a $20 million line of credit,

Tom Shipley: A mezzanine lender to partner with us, that would give us a $20 million facility. And that way we could do that. And we had a number of LOIs ready to go, I mean, already signed. So, we had the pipeline there.

Brad Weimert: Yep. And at that point in time, and just so I understand, like the financial structure of this, what was the money for, and what prevented operation without the money? Were you running it a negative to get to that point?

Tom Shipley: The answer is yes.

Brad Weimert: Okay, got it.

Tom Shipley: Yes. Yes. And that’s why we built that foundation capital of investors in place.

Brad Weimert: Yep.

Tom Shipley: And like a lot of business, we ran out of runway, and then we got extremely scrappy as we had to be for the next two years in coming up with alternative solutions for this, while we kept on focusing and growing the agency we did, which we continue to successfully grow that. But the challenge is when you run out of money, and then you have different options when you run it into challenges. One is, in a very hard cold business sense, if I was to take that from a face value and say if we didn’t have investors, if it was just my personal money at that period of time, I would’ve at that period of time saying economics have changed. The funding’s, basically, the world has dried up from a capital perspective.

It’s better playing a different game from the next two years and then come back to this model. And might do it the same or slightly different, but right now the economics aren’t there where the wind’s not in our back. And basically, it’s very challenging to pursue this model. If it was only my equity, I would’ve said, “I’ll take the loss,” and walk on. With investors, you don’t have that choice. You don’t. You have an obligation. So, forget about whatever legal fiduciary responsibility is. Also, to me, it’s more important is the moral responsibility. So, we basically got scrappy for two years to try to create a win for everyone. So, that’s it. But a certain period of time, we looked at it to move on, sell the agencies off that we acquired, and just move on.

Brad Weimert: So, I want to use this as an opportunity to compare and contrast the general fundamental idea of M&A to grow the business, or sort of let’s not, like you were looking at a large-scale roll-up, right?

Tom Shipley: That’s correct. The whole plan was how do we get to a half a billion dollars through acquisitions.

Brad Weimert: Yeah. Your plan is roll up a whole bunch of similar models, right, marketing agencies, and make one giant one that you can sell to private equity to take you out. Is that the general idea?

Tom Shipley: Yes and no. And what envisioned this model is we are going to create groups. Let’s create a great theme on what really that great agency will be, and let’s buy a core agency underneath it and then do additional acquisitions. And with the partners’ side in the business, their job was to integrate that and then help create that elite agency. And every group, when we get to about $10 million of EBITDA, we’d sell off that group. And again, for a lot of people who don’t understand is the ninth wonder of the world is multiple expansion. Now, what the hell is multiple expansion? Let’s say I have two agencies I buy. One agency has a $0.5 million EBITDA, and the other agency has a $0.5 million EBITDA.

Now, I’m going to be very, very conservative on the low side, just for easy math is I’m going to say, let’s say that I could easily sell those businesses, and there’s a strong market for two times their EBITDA, meaning that they’re both worth $1 million piece in the market. Now, imagine then I put these two businesses together. Now, suddenly, I have one agency. They’re complementary. They make sense going together, going back to the deal thesis, and it could be an Amazon agency, for example, and a TikTok agency. But now I have a million-dollar agency, which is a great theme on that. There is a lot more money, and there’s a lot more competition to buy a $1 million EBITDA business. So, the value you can sell that business for is four times.

So, synthetically, I went from a business to businesses owning that are worth $0.5 million a piece, $1 million total. Now, suddenly, putting them together, integrating them successfully, now I have a business that’s worth $4 million. So, synthetically through one acquisition, you just generated $3 million, some people say out of air, but that’s the power of multiple expansion. So, that’s where you’re going to do is just stack $0.5 million EBITDA to $1.5 million agencies together to create that $10 million. And then we can actually sell the businesses for somewhere between 7 to 9 times EBITDA. And we’re going to just create group after group after group and just have a factory of doing that.

Brad Weimert: So, I understand the general, I understand that these different markets exist, right? So, there are different people that want to buy $10 million of EBITDA, or want to buy 100 million, or want to buy a million, and those are all different parties, right?

Tom Shipley: Correct.

Brad Weimert: Why do those multiples happen that way? How does multiple expansion happen? Like, what is it that makes the business with more EBITDA more valuable in a geometric way and not just a linear path?

Tom Shipley: Risk and predictability. The better the margin and the better the EBITDA, the less risk there is in a business disappearing to nothing. If a business has $0.25 million in EBITDA or a $100,000 in EBITDA, it can go away like this. It’s very risky. A couple of bad things happen, it’s gone. You have a business, you buy it with $10 million of EBITDA. It’s been around for five or 10 years. So, it has predictability from a growth perspective. And you look at it, the concentration risk isn’t with just one client or one customer. Therefore, more sophisticated money. Private equity will bet on that. And there’s the larger you go from an EBITDA perspective, it’s a supply and demand. There’s less companies that meet the criteria, and there’s more money out there bidding for that. And people with significant deep pockets would rather buy things that are less risky than highly risky.

Brad Weimert: So, that makes sense. So, fundamentally, the space that you’re moving into or that you’ve spent a lot of time on now, and we’ll get to DealCon, but is teaching M&A and helping entrepreneurs kind of expand through acquisition, your fundamental model of aggregation and rollup is completely different than the path of, “Hey, you should acquire a business to grow, to build your own independent business.”

Tom Shipley: That’s correct. And that was, again, I built two aggregators so far, but there’s different strategies, raise the money and scale that way, or start with one. And again, in hindsight, if I knew the credit markets were going to collapse, what I would’ve done is we start with one agency and then scale from there and raise money one deal at a time, or do deals one at a time. But again, this is all hindsight. But for businesses doing acquisitions, you do it thoughtfully. Let me just share with you a really powerful number. Imagine this. Imagine you spend time building your business, and you think you’re doing great. You’re shooting for 20% growth every year. But on a five-year basis, typically there’s a bad year. There could be a black swan event.

What’s a black swan event is COVID, tariffs, 9/11. Again, keep on going back 2007-2008, there are black swan event that happens that impact every industry. So, if you end up over a five-year period of time growing by 10% a year, that’s amazing, and you compounded year after year, and after five years, you’ve increased the value of your business by 60%. Now, let’s just flip it. I dedicate, as a CEO 10% of my time, 5% of the company’s time to do one acquisition every year that’s half your size. Methodically, one acquisition, half your size every year for five years, you’ll increase your enterprise value by 2,000%. Now, again, it’s a way to create the opportunities for your business, the wealth of your business by doing acquisitions.

Now, you don’t have to do one acquisition a year. It could be one every other year. It could be a third of your size versus half your size. And so, that’s what I like to teach entrepreneurs is that this idea that you should only focus on organic growth and organic growth strategies and hacks is, basically, you’re pushing a boulder up a very, very steep mountain. And there are better ways to creating the outcomes you want to, and therefore you should be thinking about it, but thinking about it with intention and not cavalier about it.

Brad Weimert: Yeah. Well, I mean, you’ve just isolated 80% of the entrepreneurial community who don’t think about things deliberately with intention. What’s the most common mistake that people make when they start to, and let’s go back to the rollup thing. So, you found yourself in a credit market crunch.

Tom Shipley: Yep.

Brad Weimert: Right? What’s the most common mistake post-close with an aggregator play that bites people trying to do that?

Tom Shipley: Repeat the question.

Brad Weimert: So, your mistake stated is that unforeseen big shift, black swan event, the credit market got crushed.

Tom Shipley: Correct.

Brad Weimert: Right? It was very, very difficult to raise money, debt, or equity. Other than that, if you’re aggregating businesses and rolling things up, what is the mistake that you see happen most often that destroys that model?

Tom Shipley: Oh, yeah. Okay. So, let me start with this is every acquisition you have should fit a theme while you’re doing it. If I slap together a bunch of not compatible businesses because I like the EBITDA and I’m doing things, just think in mind from an economic situation that while I’m going to slap together these different businesses, but they’ll have EBITDA and therefore have one buyer, that’s foolish. And you don’t understand this. Ultimately, the buyers out there will determine the value of what you’re building. So, build something that’s very valuable to the market. If all I do is slap together 10 different businesses, and I think I’m going to find one buyer, that’s insane. Why would that actually happen?

So, I would rather identify a theme and a thesis of what I think will be a great business and build a great business that makes sense, and there’ll be a lot of buyers and not a Frankenstein. But I’ve seen a lot of people and also I’ve seen too many financial architects that don’t understand how to operate a business and they think they don’t understand the nuances and the operations and they appreciate the operators, and therefore, they think they can just hire people off the streets and put people in like brand managers or someone from large Fortune 500 companies to come in and run the different divisions, and they don’t understand what it takes to build these businesses. And I’ve seen too many businesses blow up from that basis.

Brad Weimert: Yeah. Well, that’s my fear. So, one of the things that I just heard was the idea of framing this through enterprise value and exit. And I think most bootstrap entrepreneurs, myself included, have built a bunch of things from a cashflow perspective and aren’t looking at the sale. In fact, one of the most common things that I hear from people that have gone through exit is by the time exit seemed like a possibility, I realized that I wasn’t even sort of prepared to sell it. Right? And then I spent one year, two years, three years, one year, two years, three years prepping for sale in order to be able to get rid of it. Your general hypothesis, thesis in the beginning, as you said, is to make sure that everything you’re acquiring is in the name of the exit.

Tom Shipley: No. Is in the name of building a great business. So, I want to be careful is that having my eye towards the end goal of what is the timeframe I want to exit, understanding things can shift, and it could be pushed off by a year or two. So, there’s no such thing as perfect market timing. But if I’m building a great business, so I want to buy a good business, throwing off good cash flows, adding great values to customer, and then with an eye on what makes sense. And I’m also addressing discount factors. What’s a discount factor? Discount factors are things that the buyer’s going to look at, and it’s going to reduce the value. They’re going to discount the value. But what does that mean? And so, people say that, but I’m going to flip the other side on. If I’m buying a business, what I’m going to discount is anything that causes more risk.

And therefore, you should be anyways looking at what can reduce the risk of your business. 70% of my business comes from one customer. I’m relying on someone else’s technology. I look at Atlantic Coast Brands, where we almost lost the business. I think we talked about our last podcast is that most of our supply chain for our most important continuity product came from one manufacturer and only one manufacturer in the world was licensed with, had the FDA approval to manufacturing. So, when this $500 million a year manufacturer went Chapter 7 without notice for us, we couldn’t ship our auto ship product. And that’s how we went from $600,000 a month profit to a $600,000 a month loss.

So, you look at the discount factor. In that case, it would’ve been risk from supply chain. So, understanding what the discount factors and what a buyer would say, and you just fixing it, you’re just having a healthier, more stable business.

Brad Weimert: Yeah. I guess, I still think about that in terms of you still having your eye on the exit, your eye on how would an external party that’s looking to acquire you perceive the business.

Tom Shipley: Correct.

Brad Weimert: And I think that that’s practical for the operating entrepreneur, no matter what, but it’s also low on the priority list for most people. Most people that are operating are like stuck in the game of how do I optimize this right now? And the immediate risk to them is the unknown of acquiring a new business, making it integrate smoothly, and does it actually add profitability to my business and functionality right now, without operational debt, without a whole bunch of new sh*t that I need to focus on, right? As opposed to somebody is going to like this and buy this from me because it’s a better business ultimately.

Tom Shipley: So, maybe I can share this story with you. So, I remember when it was 2015-2016, and we were thinking about selling the business, and we went into a process, and we had one group come in, and they actually put an LOI on the business, and we’re going back and forth. And then they brought in their expert team, then they shared with us, “Here’s what we’re going to do with the business.” And they were selling us because they wanted us to roll forward some equity. They left the room, and Drew and I looked at each other, and I said, “What they laid out that they’re going to do is everything you and I have talked about doing strategically, but we’ve been focusing on the urgent and important and not the strategic and really important.”

We said to each other, “Why are we going to let them do that?” We rejected their offer, and that’s exactly what we did. And that’s how we had exponential growth in our business because we made those long-term investments that were being too cheap to do, and we were focusing on little things. And so, that made all the difference in our business. So, that’s just an example of going to market and identifying what a strategic would do when they buy your business, is things that we don’t get to, but we should. So, one of the things that I like to talk about is the practice of adding zeros. I think we talked about it in our last conversation is I like to take my current business, and I like to imagine it by adding a zero to it.

What does that actually mean? What would it mean if my business is 10 times the size? What it mean from a headcount, from the way we process technology, customer services, and then what would have to be true to make it possible? What would I have to do to be able to get to that, and then operate at that level? Then I do another exercise, which is, and this is how Foundry Brands came about, is then I add another zero to that, and then say the same thing is what would that look like? What would that mean? What are the opportunities that were there? But then what would I have to be true to make it possible, and then rewrite the operating assumptions?

And I’m not saying you should always add one or two zeros onto your plan, but we get so stuck in the framework that we do of really incremental because it’s how we’re trained as entrepreneurs that sometimes we’re afraid or we don’t know how to think exponentially and just get out of our head. With Brian Burt and me when we started with Foundry Brands, it started with during COVID is, “Let’s do something fun and buy personal care brand with each other.” “Yeah, let’s go for it.” Next day was, “Why don’t we build a platform that can do 10 over time, and what would that mean?” And then after a weekend, it was, “Why don’t we build a platform that actually can build, it can buy and manage a hundred brands over time?”

And then we have spent time saying, “What would have to be true to make that possible?” And then we built that plan, and that’s how we were able to raise the money because we thought bigger, and it created the opportunity. So, what I’d like to look at with the businesses is, what is that real opportunity for your business? How would that change the opportunities that are there in getting out of the incremental thinking and really thinking exponential, and is it realistic?

Brad Weimert: So, one of the traps that I think most entrepreneurs find themselves in is exactly what you just said, which is that they’re attending to the urgent quadrant and specifically the urgent and important quadrant.

Tom Shipley: Correct.

Brad Weimert: Now, there’s also a lot of urgent stuff that really isn’t important that people are doing all day, every day anyway. But even if you look at the urgent important quadrant, meaning stuff that is important to the business and it’s super time sensitive, the trap is anytime you hear yourself saying, “Yeah, but I need to.” The answer as an entrepreneur is you don’t need to. You can do whatever the f*ck you want at any point in time, and you just have to look at the actions and outcomes. So, you don’t need to do the thing. It might also be true that if you ignore a certain thing, you’re going to have a negative outcome that you don’t like.

Tom Shipley: That’s correct.

Brad Weimert: But sometimes that is the right choice and the name of allocating time and space for the more strategic. And so, there are situations in the era of AI that we’re in, there have been rapid advancements in the short run that warrant letting some things hit the ground to reallocate time and space towards leaning into technology in the future to make sure that not only we don’t miss the wave, but we can invest time now to save time later. And strategically, that makes more sense to drop some things and focus on that than it does to keep running the course because you’ll never get to the strategic important things. What phases of business do you think it makes the most sense to start looking at acquisition?

So, you’ve got an entrepreneur that, and let’s pick a business model to kind of have some stability and make it less conceptual. Let’s say that you have a marketing agency right now. You’re at $0.5 million in gross revenue versus $2 million in gross revenue versus $5 million. Is there a better or worse time in business? And maybe those aren’t the right metrics, but what’s the right time in business to start looking at acquisition as a mechanism for growth?

Tom Shipley: Okay. So, it’s a really good question. I’m going to say the time to really start looking is when your business has some level of stability. I have $250,000 in revenue, and I have two people on my team. You don’t even have time to service your own clients. Okay. So, the one thing. You’re $0.5 million, you’re struggling at that level of your pure revenue. Now, you’re at $1 million. Now, you have some optionality. You have a team that’s operating. So, even at that point, even if you have no resources, you have the option to look at it to start growing skill sets.

I’m just going to go back to a story that I told you in my first podcast that I think is really important is, with our second business that we had, when Drew and I started Atlantic Coast Brands, we had this idea and we said we had certainty in 2005 that we can create the first $100 million beauty brand using direct response marketing. We were in Richmond, Virginia, and everyone laughed at these two former Special Forces guys said that we’re going to do this. It was a joke, people said, but we had certainty that after a year we went financially in, and everything in the business had our personal credit cards. We mortgaged our home. We even took out loans against our cars, and we were just scrapping together, doing some consulting so we can feed our families. But we had such conviction.

At the end of the year, we actually hit $331,000 in revenue. We proved the model worked in two different channels. Lifetime value was great. Customer acquisition cost was great. We’re getting online to work, but we ran out of cash. But I remember my lesson from my first business when I ran out of cash, and then it was 8 million in sales, but now we have 330. What did I do to solve it? I bought a company and happened to be a company twice my size. In this case, we ended up acquiring a business that was $15 million in revenue, $1.5 million in EBITDA. But what was our challenge during the point at that time is we had no cash in cashflow. That was very, very clear. But we were doing everything manually because we didn’t have a CRM.

Our website, we hired on-site contractor to build our website, which is a little bit kludgy. We had no ability to do AB testing on it. We didn’t have a technology team. We didn’t have a designer. We had a part-time bookkeeper. We didn’t have anything. We bought Urban Nutrition in Hoboken. What did it have? It had a great programmer, great designer, great internet marketing expertise. They had great affiliate relationships, fulfillment, customer service, accounting. So, we put our little brand of Hydroxone on top of this platform, and within three years, that $331,000 brand did $100 million in revenue.

Why? Because we solved almost every business challenge like this using acquisitions. So, again, that was our size, and we had nothing. So, I’m going to say there’s always, typically, if someone talks to me, they have $331,000 in revenue. Do I say, “Is it time for them to start acquisitions?” I say, “No. Get more stable.” However, what I’ve proven over and over again is you don’t have to get to that scale in order to do acquisitions.

Brad Weimert: Yeah. God, I have questions about that. So, first of all, let’s timestamp that because you said that you didn’t have a website or a CRM, et cetera.

Tom Shipley: We had a website, but it was a very half-assed and it didn’t… So, timestamp, 2005.

Brad Weimert: There we go.

Tom Shipley: And that’s why you didn’t have the on demand, and you think about even scaling from $315 million to $100 million. You didn’t have on-demand phone, T-1s, websites, bandwidth. So, everything was painful during that growth, but it was incredible.

Brad Weimert: Yeah. So, pulling that into today, that could be a content production team, that could be a marketing agency, or a marketing funnel. It could be a sales team. It could be somebody that has expertise in ads, whatever, right? Those are the additional things that you might look to add on or that you might not be performing well at. How did that first sale, and we might’ve already covered this, but I want to hit on this briefly before we get into kind of the DealCon side of things. When you look at going out and strategically looking at that first acquisition, did you stumble upon it? Or did you go out and directly pursue it and say, “Hey, I want to buy something that has all these features and functionality that we don’t have?”

Tom Shipley: Oh, at that point, I didn’t have my programmatic M&A playbook, meaning a system wide of actually generating leads and having conversations, so that then it was opportunistic. It was a client, basically, one of the consulting clients that we brought on. It was a conversation that, and people are just not asking the questions and having conversations. We are sitting with them in their business in Hoboken, New Jersey, helping them actually scale their business. And then we said, “We love your business. One day or the next couple of years, we’re either going to build something just like this, or we’re going to buy it. We’d like to buy you.” And they said, “Really?” And we said, “Yeah.” And they said, “How much would you pay for us?”

And we said, “Well, let’s put together an offer.” And we did. They said yes. And since they had a growing business, growing every year for five years, two young entrepreneurs, they were 25 years old at the time, had grown over five years. They were looking for their next chapter because they put five years into it. We were able to buy this at a very opportunistic price, and therefore, it was easy to raise capital for that.

Brad Weimert: So, first of all, that’s a really good use case for helping other people in general. The opportunities that come through investing in other people’s stuff with your own energy can have unforeseen benefits. The other is very, very, very often when you’re outside of the business, you have an easier time seeing the operational levers, right? When you’re stuck in your business, sometimes you miss the obvious things. So, I think that there’s benefit to doing that in general. But what you alluded to, I think, will walk us into DealCon, which is don’t do that, which is look at the deal acquisition model as a dedicated initiative and do it strategically to look at what you’re going to do to add things to your business so that you don’t blow it up inadvertently.

And I think that, that rightly so, should be the fear for entrepreneurs when you look at growing your business through acquisition is, “Yeah, but I don’t know how.” So, why did you start DealCon, and what’s the underpinning of it right now?

Tom Shipley: So, who gives me energy is entrepreneurs. I love entrepreneurs. I love helping entrepreneurs, and I love watching them succeed. I learned through a number of my businesses that the lever that I wasn’t pulling was acquisitions, even though my first two businesses, we had no choice but to do an acquisition when we ran out of money, as insane as that was, and both those situations saved my businesses. And then I’ve learned over time the process and the system for doing acquisitions, and I believe that every entrepreneur should be thinking strategically is acquisitions. And it’s how it started originally having M&A events is basically friends wanting to know our playbook on how to do acquisitions, and us doing it.

But I have this passion for this community that we built very incredible entrepreneurs that want to grow and are looking for better ways than just growing organically. And that’s why we built DealCon. And our M&A events have grown from 12 person event to 25, 30, then went to 80, then 100. And now, this one was, we said we’re absolutely going to be sold out at 150, but somehow we ended up with 165. And so, the committee we built, but my goal very simply is I don’t want entrepreneurs to not be doing acquisitions, but I don’t want entrepreneurs to be feeling like they’re children playing with chainsaws. I want them to know the playbook for doing it. And I want them to have whatever resources that I vetted have access.

Here’s my M&A attorney, here’s the broker I use for funding when I want to do it. Here’s the person I turn to for integration. So, whatever challenges they have, if I can show them the who that I trust and not just the overall structure for how I think it’s a win, and I can, over time, break this ecosystem. Why is it that Jess, I mean Cody and Roland, there are so many people that have done a successful job of teaching people that if you want to get out, you’re stuck in your nine-to-five jobs and be an entrepreneur is do it through buying a business. But there is really no one out there that’s really dedicated to the entrepreneurs, teaching them that you don’t have to be $100 million a year in revenue in order to scale through acquisitions.

Brad Weimert: Alright. So, let’s talk about the mechanics of the playbook. One of the things that terrifies me is the idea of suggesting that a blue-collar worker goes and buys a business to create passive income, and then they dump their life savings into buying it and realize they don’t know how to run a f*cking business. What is the fun? How do you prevent that? And what is the fundamental structure of the M&A playbook as Tom Shipley sees it?

Tom Shipley: Okay. So, let me put it this way. I don’t work with that. I love those people that have the energy and passion to do that. I don’t work with those people that basically are the entrepreneurs wannabe or basically wannabe entrepreneurs through acquisitions. I admire them, but it’s just not a group of people that I work with, that I help out along my way, then great. The overall playbook is very similar, but that’s why I love working with entrepreneurs, because they have the grit, tenacity. They’ve gone through this. They have the scars of basically bad decision-making, and therefore, they have, and I know they have the grit and tenacity to actually take a more cautious approach at acquisitions.

And that’s why it’s this. From a playbook, it really starts simple, is that you want to have seller conversations, so you want to create a predictable way of being able to talk to, ideally, at least two to three sellers a week. Now someone says, “How am I going to find the time for doing that?” I said, “You can always find, for that first half-hour call, you can always find like an hour and a half during wait.” More important than that is imagine you’re buying a business. Either you’re in your niche or just tangential to your niche. You have efficacy and integrity. The reason why you have those dialogues is because you’re interested in either doing a joint venture, investing in their business, or buying a business.

You have that real intent. Out of a hundred conversations, you may end up buying one but look at the knowledge you’re getting along the way. You’re taking years of mistakes that you haven’t made yet, and you’re compressing them because what do founders teach you? They share with you their processes, what works well, what doesn’t work well. They share with you the mistakes they make in business. Every call you get to get a PhD in their business. So, think about the amount, and if you actually go to an entrepreneur and say, you knock on the door and say, “You know something, I want you to teach me everything about your business. Tell me about your customer base, your concentration risk, what marketing has worked, what hasn’t worked, things like that. And what’s your most successful channels? What’s your lessons learned?”

Entrepreneurs aren’t going to share that with you. Close friends will, but in an acquisition process? So, I want entrepreneurs to think about is it’s a process, but you’re learning, you’re growing the whole way, and you’re developing relationships. And if you’re really good at what you do is you’ll be doing joint ventures with a lot of these people along the way. And I love people to do joint ventures before you do an acquisition.

Brad Weimert: Well, that answers the question that I have, which is, how do you allocate time and space for it? And so, one of the fears that I have with spending my own time on it has been historically that it’s a shiny object, right? Keep my head down, stay focused, run my own playbook internally. And this seems like a distraction. But the other thing, the other framework that I have internally is that I need to be allocating time to learn and grow in general. There are times when I want to just spend all day learning and growing, and then I get pulled back into, I’ll call it reality. But your framework here is to allocate 10% of your time to pursue acquisition deals. And part of that is looking at it through the lens of learning and growing the business, period, because you’re going to get an opportunity to see how other entrepreneurs are executing in your space.

Tom Shipley: Now imagine this, you have an Amazon agency, and you have this interview, and you talk with a really great TikTok agency a lot smaller than you. But the beautiful thing now about TikTok is Amazon having more dialogues, people getting calls with you is a little tough. And then every one of my clients in my Amazon agency wants TikTok shops and TikTok services. So, first of all, I have great dialogues. I learn about this niche by having this dialogue. Then I found one company I really like to work with, and I say to them, I said, “I really like where we’re going with this. I think there might be an opportunity maybe for an acquisition to merge or something in the future. Why don’t we start working with each other?”

So, the first thing is you’re getting to get to know them, and you’re building great value to your current customers. And they may be a source of lead-gen for you in the future, but ultimately, you’re going to find out if you like to work for them. You’re growing your EBITDA because you have a referral deal with them coming in. So, you get revenue from that. But then you really get to see, are these people I want to work with long term? But you learn, and therefore you learn saying, “Yes, I want to buy them,” “No, there’s probably a better partner,” or, “We’re going to build it internally because we know how to do it.”

And I’m going to say that everything’s open. I always lean into if you can do an acquisition with good people with a good heart that know their business, it is the lowest risk thing you can do, rather than start to hire people from the outside where you don’t know anything about them and they’re going to be successful building this new division.

Brad Weimert: Well, let’s scratch my own itch here and try to address my own fears. What’s your immediate post-close checklist? So, what do you do in the first 30 to 60 days after you acquire a business?

Tom Shipley: Okay. So, you just said… I’m going to go through really quickly, you develop your lead flow.

Brad Weimert: Yeah. Let’s back up to the actual system. That’s too way the f*ck ahead.

Tom Shipley: Yeah. You develop your lead flow. Okay. So, that means is at one time we had a $1,000 per month support person in Serbia that was using Apollo and filling our calendar with leads by doing the outreach from our LinkedIn accounts and doing emails, basically using Apollo. So, that’s how we did originally, and through that system, we had 2,000 seller conversations in our company. Okay. Just to understand it, it doesn’t have to be that expensive and that crazy on there. So, first of all, have regular seller conversations. The next is then you learn more about the business, and you do your preliminary due diligence, and all that means is get preliminary information to decide…

Brad Weimert: Let me press pause on that for one second. What are the basics of the seller conversation? So, mechanically, I see a whole bunch of people like scheduling calls with sellers and then sort of stumbling through a conversation that’s totally random and not that helpful. Do you have a punch list that you go through for that?

Tom Shipley: There’s a script. There is a tight script on that. Now, with me, I’ve done this for so long, it’s intuitive of how I get to, I want to understand them, I want to understand their story. I want to understand if they like, if I like them, I want to understand what’s really strong in their business, and I want to get some ideas. And I’ve never had someone not share with me their revenue and their EBITDA or the EBITDA margin. A lot of people feel comfortable of the EBIT margin or without really saying what the real EBIT is, but that’s fine. I just want to get a sense in how many employees they have. But I can actually look number employees up through LinkedIn, so that’s easy.

But I want to get a sense is, are they great, and is it really a conversation that’s worth us investing more time in after that 30 minutes? But typically, I have a script on that. And the next call I say, “Okay, really like this. And the other thing I’m doing is I’m selling. I’m developing a high level of credibility and trust with them that they like me, and they understand the vision of what I’m building, because there has to be a mutual agreement at the end of 30 minutes. Now, at the end of the call is, “What I love to do if you agree that I like to have a more, deep dive call on our next call and schedule an hour where we really get to learn a lot of the fundamentals of your business, and if you’d be okay signing an NDA and me sending, basically, sending some basic information, we can have a higher quality call, but then the next call the hour is your deep dive call where you really learn about the business.”

If at that point you say, “Wow, this is a really good match and I want to go further,” then you say, then you can go into, “There’s information I’m going to send you out of what I want to do is we want to put together a structure of an offer for your business and there’s some information we need in order to get there.” And so, you send them out to your preliminary due diligence list, which is just to find out the information you have. Now, what’s really important on that second call is, in addition to finding out the information and continue building the trust, the most important thing that happen is between the first call and the second call. What is their motivation?

And I always cover this in the first call. Always conversation is, “So, tell me, what do you love about the business? Do you want to keep on continuing doing it? What is your goals? What’s your vision for this business? If you are going to your next chapter, what’s your next chapter looking like?” And I really want to find out what the goals are because, ideally, the worst thing that happens and the mistake in most businesses when there’s a sale process is the seller tells you stories of what they think you want to hear. And it is the worst thing that can ever happen for you and for them.

If a seller wants to leave in day one, “I want to sell my business, and I want to…” No seller will tell you that, “I want to be gone in day one.” I want a seller to tell me that, because if I can orchestrate that or work around that, I’ll work around that. “Tell me about your team. Do we need to bring in somebody from the outside, or is there someone that can take control? How do we do the transition successfully?” So, that’s what the first two calls are about is your initial call, your business deep dive call. You get some information, you develop a thesis, and then you have your letter of, basically, your deal call that you describe a deal. It’s, again, there are ways and a process of doing it and presenting it. We won’t go into details now. And then you go into your due diligence.

Now, here’s where it’s leading up to your question. From the minute I sign an LOI, before the LOI, I have some thoughts, and I have some thesis on what the integration or what the end goal’s going to be. However, during the whole due diligence process, which can take anywhere from 60 days to 120 days, I’m going deeper and deeper in finding all the different negative things about the business and reaffirming the positive things of what I thought confirming that. Now, everything you find that’s negative has to be solved in several ways. One is if it’s material, it either has to be solved before we close, it has to be addressed in the agreement, or it has to be minor enough that we have a plan for after day one, which is the most important thing.

Because, when you close, it’s the marriage, the honeymoon, and then the real marriage happens after the wedding on day one. So, everything I do during the due diligence process is informing me for what I’m going to do after we’re married and what that 90-day plan looks like, period. And until I have addressed every single concern that I have and know how we’re going to address that, and the red flags or the yellow flags, I’m not going to sign on the acquisition agreement. There just has to be a plan. I don’t have to solve it all. There has to be a plan that is be confident on how we’re going to handle it. And then we can talk about theses, full integration, partial integration, running totally separate.

Brad Weimert: So, let’s talk about that. But what you just described from an acquisition pipeline sounds to me very, very, very similar to a hiring pipeline for any role in the company, right, which is source the person, screen the person, onboard the person. And one of the lessons that I continue to learn, which is really ridiculous that I’m saying this right now, is having a 30, 60, 90-day plan for a new employee and the importance of that. And if you don’t know what the 30, 60, 90-day plan is, you probably shouldn’t hire the f*cking employee.

Tom Shipley: That’s correct. And you shouldn’t do the acquisition. People who just say everything is about just get this deal signed, and then we’ll worry about it, that’s just foolish. It’s just stupid.

Brad Weimert: Yeah. So, let’s go into the different plans that you might have for 30, 60, 90.

Tom Shipley: Okay. First of all, my premise is, don’t ask me what company I took this from, is I do no harm. That’s my goal. I want to minimize my risk. Okay. So, there are some people whose playbook is on day one, basically, we’re getting rid of the name of the company. All the clients are now doing business with the now the parent company. We’re going to send you out our culture Bible on this is the new culture of the company. And from day one, this is it, and that the prior company disappears. Be very, very careful. That can be risky, and especially most employees do not know about the acquisition and should not know about the acquisition until day one.

Clients don’t know about the acquisition until it closes. Why do some acquisitions never close and create a level of stress and risk with your clients and your employees? It’s not worth it. And besides, it’s extremely distracting. And therefore, I say do no harm. So, there are several different paths you can go down. One is that we’re going to keep this company permanently a separate entity, and it’s going to be a division of dah, dah, dah. Okay. It’s easy to do it that way. The other extreme is we’re going to do as quickly as possible in integration, but you will become where you’re going to get rid of your name, and you’ll be part of this company. And a lot of times there’s somewhere in the middle, which is companies say that this company has a great reputation in the industry.

Different where we have is we’re going to keep them as a division of our company from a name perspective, but we’re going to integrate accounting, finance, HR, all in the backend, which is really transparent. And we’re going to keep what’s unique about the skill sets they do. We’re going to keep that independent. So, you have to choose which path you’re going down and plan accordingly. But even if I’m going down with the plan of they’re going to actually get rid of their name and I’m going to do it, I’m going to spend the first 30 days having more of my team get to know them, identifying, and ideally it would be 60 days to 90 days really understanding their business and for my team to have the fundamental understanding.

So, because what I’ve learned years ago is that I’m an industrial engineer, systems thinking. Everything affects everything. And you don’t understand how this factor, which is totally unrelated to what is happening over here, but ultimately in your organization, there are connective tissues that you don’t understand. So, you better learn them when you acquire a company.

Brad Weimert: And basically, I think what I heard is that through the vetting process, there’s tons of stuff that you just can’t know until you go into the integration process. And so, the beginning of the integration process, again, very similar to having a new employee, when we bring a new employee on, one of the things that I say consistently is, “I’m bringing you on because I know you have the capacity to do this. I know that you’re a smart person. I know that you’re going to contribute to the overall picture. Also, all of the ideas that you have in the first 30 days, realize that there’s a very good chance that we’ve already had them. So, write them down. And after you’ve had a chance to assess everything and get to know the culture, community, what we’re doing here, then we can look at your ideas.”

Tom Shipley: That’s very good. And remember, when you’re buying a company, what are you buying? You’re essentially buying people and relationships. With every business, sometimes there are core technologies that are the proprietary moat, but most businesses you’re buying relationships. So, if you go in and start doing things drastic day one, the probability that people are going to flee, if unless you have really tight comm. Everything is about communication. Without tight communication and giving people comfort that they can stay focused on their job and not view that everything around them is going to be disruptive. So, your goal is to make them feel comfortable at first. Don’t lie to them.

Always tell the truth, but to give them comfort so they can keep on going. And also, the same thing from communication to the clients in the business or the customers from what has to be facing. You want to make sure there is continuity there. So, by not doing everything day one and making sure that you understand and everyone feels comfort and everyone understands there’s not a massive disruption, after 90 days, if you have to, do massive disruption. And a lot of times it happens. You have to. You have no choice. You come in, you buy a business, and the information that you did due diligence on turned out to be false. And the team that turns out to be false, and the revenue isn’t what you expected the profit. And you have to make adjustments because you’re not going to let take down that business you just bought, then you have to do what you have to do. But typically, you want to avoid that.

Brad Weimert: Yeah, I love it. Okay, so let’s talk about DealCon and let’s talk about the next phase. So, if people want to find out about DealCon, what is the promise? Who’s your target market? And where do they go to do that?

Tom Shipley: Okay. First of all, it’s entrepreneurs. We’re industry agnostic, and again, we used to be 95% agency. Now, we’re about 50% agency. We have people that are buying law offices, manufacturing, e-comm businesses that get really across all spectrums now. So, basically, if you’re a seven to nine-figure entrepreneur, and you want to learn how to grow businesses, and I can say 50% of the people have never done an acquisition or acquisition curious, there’s about 10% that actually have done 10 or more. And so, everyone else is in the middle of it. Some people said, “I did one five years ago, but haven’t done it programmatically.” So, our goal is to raise the bar from an EQ and an IQ perspective on how to do acquisition, lower risk, and compressed time.

So, if that’s you and if you’re curious, join us. And also, what you’ll find in the room is that people in the room are very, they’re good people, and it’s not a highly, while they’re there to learn how to do transaction, it is not a transactional environment where everyone is selling to another person there. So, again, that’s the DNA of the people we want. If you want to learn a little more about it, go to DealConLive.com. Our next event is October 19th through the 21st here in Austin. And we’re going to be capped at our capacity in that one, so we’ll sell out earlier in this next one than we did at our last one.

Brad Weimert: For the question that I have with basically all, and I have my own answers to this, but the question I have for basically all live events at this point is, what value am I going to get from a DealCon event that I wouldn’t get from doing research on YouTube or talking to a robot?

Tom Shipley: Okay. There’s only so much… Well, first of all, I’m going to say it’s relationships. You’re going to actually develop one-to-one relationships with everything from funders, people that will fund, people that will broker money from you, people that do implementation, people that will, again, it’s your lawyers that you’re going to want to use. Yes, you can research them, but getting face to face and spending time with them is the best way.

Also, there is a lot of businesses, there’s 10% to 15% of people come to DealCon or people selling their businesses. Now, imagine you’re selling your business and you get to come to DealCon and you get to be in a room with people that are mostly buyers. Oh, my God. It’s like the best thing you can do, but you might actually find the next business you’re going to buy in the room or someone you’re going to partner long term with.

So, again, and those live learning experiences, there’s nothing, you just don’t get the same level of learning. And we push hard. For two and a half days, we try to compress as much learning, trying to balance with building relationships. But our goal is this isn’t when the events where we’re just going to teach you theoretical or just conceptual and not give you information so you don’t know how to do things. We try to say, here’s the strategy, now here’s how you do it and here’s the tools to do it with.

Brad Weimert: Yeah. I think for me, one of the things that I’ve realized with live events, first and foremost, I spend a ton of time right now interacting with LLMs and learning, asking questions, growing, teaching myself. Live events for me are an opportunity, of course, for relationships and you can’t replace that. And that’s like, I think that we’re going to see, we’ve already seen a resurgence of the human of the real, because people want connection, relationship. That’s what humanity is.

Also, I get to talk to people about how they’re interacting with tools like LLMs, et cetera, to apply these things and to learn and grow and execute. And you have to find that somewhere. It also forces a dedicated space where that’s what I’m focused on. And so, if I’m having a hard time prioritizing something in my own life, going to an event where it is the focal point and everybody’s talking about that thing forces me into a bucket where I’m saying, hey, I’m dedicating energy to this thing right now and I’m investing in it. So, I like that. When we sat down, you told me that you had something else on the horizon that you’re building as well.

Tom Shipley: Yes.

Brad Weimert: What is it?

Tom Shipley: So, I’m always looking at the first, second, and third order impacts of things. And just for people who aren’t familiar with first, second, and third order impacts, we can think back to, let’s go to Henry Ford created mass production, Model T’s coming off the line because it was mass production. Prices drive for automobiles. Therefore, the average American was able to buy a car, and millions of cars on the road. So, that was the first order impact.

Second order was obvious, is people are traveling further. They needed to get gas, so suddenly, you see gas chasing chains Highway 66, going out through or throughout the United States. The third order impact was that people were driving further. They needed places to stay. And that’s where you see the motor hotel, motels. Chains started for the first time, hotel. So, you look at a lot of the hotel chains that created during that period of time that are the big chains now, as that’s where that started, first, second, third order impact.

So, I’m looking for that right now. And because of AI, I have less confidence in what I can predict what a great business is 5 and 10 years from now. Therefore, I want to take shorter bets. The people that are in the worst shape that have the most difficult challenge that I view there in a hamster wheel are people that are making between one to two businesses with $1 to $2 million of EBITDA. Because they keep some of the money in the business, they reinvest, a lot of them, most business I found have two partners. So, they’re splitting this.

Now, what? And they’re living a really great quality of life. They’re putting in their 401(k), but they’re not creating real wealth that when they’re ready, if they want to sell their business now, they’re going to get a best case, typically four to five times their EBITDA or their annual profit of the business. So, therefore, if they’re getting that after taxes, can they retire off that? Most of the time– unless they put a lot of money away, and some do, most do not, is they can’t retire. Or if they want to retire, they have to drastically cut their standard of living. Or they need a job or they need to start a new business.

And therefore, most people are on hamster wheels. And so, I am leaning into how can I help them? And that’s where the great opportunity is. So, what I’m doing is my next platform is in Q3 that I’m launching, is I’m identifying and I have partners that I’m working with on this. I’m identifying a niche that I think this will be a great business to sell in three years. Then I’m finding entrepreneurs that are great entrepreneurs that have really good businesses generating between $1, $2 million a year that are in this niche that are complimentary.

And then I’m putting this business together and merging the businesses. And my role over the next three years and my team is to integrate the backend, create a parent company brand on it, pick one of the CEOs to be the CEO of the parent brand. It’s a lot of EQ and IQ and pulling this thing together. So, there’s a very sellable growing asset at the end of two and a half years and take it to market. The first six months, we’re doing a virtual merger, which means it’s just a paper merger. Anyone can leave at any time, or we can basically kick them off the island if they don’t have the right temperament to be in this group and really understand the rules in which we’re going to operate in a cell.

But after six months, it’s a real merger. Virtual mergers are bullsh*t. I’ll just say that. Virtual merger is this paper. Some people think that you can just tie business together synthetically. Just say we have an agreement of collaboration and therefore, we’re going to sell. And suddenly, private equity firm is going to give us, instead of a three times multiple of EBITDA, they’re going to pay us an eight times multiple because we have this paper agreement. It’s not, they have to be real businesses. People want to reduce risk.

If we take most of the risks on both sides after two and a half years by putting this together, then what we have is they’re going to get two to three times what they would right now for their business. We’re actually replacing that first level of private equity or investor coming in.

Brad Weimert: Right.

Tom Shipley: And they’re getting the most of the value of that. And I and my team, we primarily get paid by a percent of the increased value. If all we do is increase the probability of them selling in a million to $2 million of EBITDA from 35% to 95% because a business of $10 million in EBITDA will transact, then we work for almost three years for almost nothing. But my goal is that we all incentivize to grow this, to grow the EBITDA, to have it healthy and growing and do tuck-in acquisitions to give them a disproportionate return. And that’s how we get paid.

And I’m building a platform to do two groups this year. Four groups, assume four groups next year, and then eventually, do a group a month. So, we’re having about a quarter billion to a half a billion of exits every year. But more important for me is I get to change the lives of a hundred entrepreneurs every single year long term and create that real wealth for them.

Brad Weimert: Okay. So, the idea with this basically is being the private equity-like vehicle for the market of businesses that aren’t big enough for private equity to care about.

Tom Shipley: That’s correct. And I’m their vehicle for them.

Brad Weimert: Awesome.

Tom Shipley: And just a real quick example is, imagine I go to the state of Florida and I want to create, let’s say, a regional roofing company. Okay? And I’m going to go and I’m going to pick operators in every different cities. And I said, you guys are great. You guys are doing between $1 to $2 million of EBITDA. It could be $10 million of revenue. And what we want to do is we’re going to pull you together. And our goal is in two and a half years to bring this to market as a $50, $60 million business, $10 million of EBITDA business.

But in the meantime is, we’re going to create the parent brand around that. We’re going to implement AI technology and an AI backbone in your company on how you generate leads, how you make quotes, how you do QA. We’re going to implement draw technology. We’re going to implement QA and augmented reality technology in the top of helmets to make sure that the work is not missed in certain quality. Something you could not do at a regional.

And then we’re going to sell it to the private equity. They’re doing national roll-ups. And very simply, we’re not going to say, let’s group a bunch of these together. That’s not our business. Our business is just to keep on just repeating this and changing the lives of entrepreneurs.

Brad Weimert: I love it, man. Awesome. Well, I know we’re coming up on time. Is that out yet? You said Q3 is when you’re going to start pushing that forward.

Tom Shipley: Correct. We’re focusing on the first group. I have an operator who is helping recruit the people together and will be the interim managing director of that group until we identify them. So, basically, I always want to partner with an operator who will basically have the expertise in that niche.

Brad Weimert: And so, DealCon as an event for people to learn, mergers and acquisitions will ultimately be a feeder for this.

Tom Shipley: It could be.

Brad Johnson: Great.

Tom Shipley: It could be.

Brad Weimert: Do you have a name for this at this point?

Tom Shipley: No. We’re working on that right now. Right now, we just call it our merge extra platform.

Brad Weimert: What advice do you have for a brand-new entrepreneur starting out in 2026?

Tom Shipley: A brand-new entrepreneur who has a business?

Brad Weimert: Let’s go with that.

Tom Shipley: Okay. Well, I’ll start with this is, if you’re not leaning heavily into technology and investing time into AI, you’re going to miss the boat. So, everything you should be doing, looking at the lens, because those businesses, if you have a great– let me start with this. If you focus onto a niche and you’re great at that niche and you understand how to leverage AI and technology to be more efficient than everyone else, then I’m going to say, then when you do an acquisition and you want to acquire a business that does not have that competitive advantage, you’re taking their inefficiency and you’re really making it efficient, and therefore, that’s where you get a significant return on your investment.

Brad Weimert: Love it. Tom Shipley, love seeing you, man.

Tom Shipley: Appreciate you, Brad.