Ep 491 Inside the Mind of an Acquirer: The Case for Unsexy
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Hi there, and welcome back to another edition of Built to Sell Radio, the podcast designed to help you punch above your weight in a negotiation to sell your company. I'm the executive producer, Colin Morgan, and this week we're diving into another edition of Inside the Mind of an Acquire, our series focused on helping you understand how professional buyers think. Now, if you own a traditional or so-called unsexy business, this episode is for you. John Pohl has acquired 19 small local market radio stations.

Now, while many would overlook the industry, Polsi's value where others see decline. He shares how he evaluates deals, structures simple transactions without seller financing, and why he believes culture, not just cash flow, is the real asset in a business. Also, as a reminder, if you haven't yet listened to our episodes with Adam Coffey or Kerry Kelsch,

both offering deep insights into the acquisition process. I have linked them in John's episode page over at BuiltToSell.com. Without further ado, here is John Pohl. Enjoy. John Pohl, welcome to BuiltToSell Radio. Thank you. Pleasure to be here. I am so looking forward to this conversation on so many levels. I

you have acquired 19 small businesses, small radio stations, local stations. So I want to talk to you about that. I have to admit, I'm also, uh, excited because I started my career in radio. I was, uh, uh, you know, my first job at a university, I worked at CIGM radio in Southern Ontario with, uh, uh, a whole cast of characters. So I feel, you know, um,

Really excited to be chatting with you. Cool. I'm excited to chat and I'm happy to answer any questions you have. Awesome. Okay. So let's talk about my broadcasting corporation. So you are, along with your partner, Andrew, acquiring radio stations. Maybe walk me through the thesis. Why radio stations and how are you thinking about this as an investment? Yeah. So we started in 2004 and...

And since 2004, our group has grown by sort of two lanes. One lane is we went to markets that didn't have a radio station and started it from scratch. That was sort of our original lane. That's branched off now that we have acquired radio.

Retiring broadcasting vets who are looking to retire, buying assets that they were looking to get rid of. And through that 20-year road, we've accumulated 19 with a few more in the pipeline. And our company was founded on a simple premise that...

At the end of a laneway, there's a little girl waiting for a school bus that's not coming because there's a snowstorm. And we want it to be the outlet to let the community know that sort of information. And we still believe that that driver is still there.

The little girl at the end of Laneway now can get the school bus cancellations from text messages and Facebook posts and things like that. So we've had to reinvent what we do and just create a new thing that we provide that no one else provides, which is very easy to do. The other thing is our markets are very unique in the sense that

We're very hyper-focused on market size. So our biggest markets are populations of 300,000, but the majority of our markets are somewhere between 30 and 100,000. And we have a few that are smaller because we believe those size of markets have something in common, which is they still care about their communities.

They care about what's happening at the arena. They care about what's happening at town hall. They care about traffic delays. They care about, you know, their neighbors and little girls that have cancer and raising money to help, you know, their family get to the CHEO hospital or whatever it is. They care. They're still not, they're not big enough that they're generic. They're still specific. And that's where we come in because our strength is,

is providing news and information. And yeah, we wrap that in classic rock or oldies or top 40 or whatever it is. But the sort of underlying carriage of the car, so to speak, is providing that information and being involved in the community. And in those sides of markets, I don't want to say it's easy to do,

But like you can get around quickly. You can be at four or five events in a day. You're not stuck in traffic. Like it's, it's, you can execute the dream.

Awesome. And it's so relevant for a lot of our listeners who have small companies who are the local guy or gal, right? They have a local small business that part of their point of differentiation is proximity. They're the local person, the local distributor of a certain product. They're the local taxi cab company that's still going, even though Uber is right there. And, you know, there are these businesses that...

are run by founders many more baby boomers who aspire to retire they aspire to sell and and maybe they feel like they're sitting on a bit of a kind of a melting iceberg whereby you know take the taxi cab owner who is sitting there saying like it's every day that goes by less and less people are ordering cabs and more kind of using uber i mean do you get a sense um

When you look at the economics of buying a radio station, do you think of it as a melting iceberg? Like, is it eventually going to go away or is it growing? I don't know what the latest stats are. Yeah, it's interesting because in the mind of an entrepreneur, everything you just said, I've felt for 20 years.

And I felt my entire life like every day I go, God, we're doing so well. When's the bottom going to fall out until you have an aha moment where you're like, hey, I kind of know what I'm doing. So I feel that way. The interesting thing is I have no evidence to support it.

Our business has continued to grow. I will share with you that through the 2008-2009 downturn, our company grew. Our strategic objective, which we updated the third time in 2017 to be a 10-year goal of hitting fairly significant numbers in the millions,

We hit that target three years early going through a global pandemic. So I have no evidence in my life that the core of our business is changing in any bad way. When I look to the future and I say this to our staff frequently, because again, I'm 50. So I'm at a point in my life where 20 years ago at 30, I was like, let's go take on the world.

Now I'm kind of like, well, I want to take on the world, but I kind of want to run a few days off. And, you know, I got to start thinking about selling this. And I'm in a problem a lot of your listeners have. I have a successful business in what is no longer a sexy industry, but it's a really successful business. We have good margins, great cash flow.

Like our, you know, your built to sell book, if you read it, our company operates very system oriented. I don't need to be in any building on any day for it to run. We have a good team of people that frankly run the company. You know, so all of that is really great. However, I still worry and think about it. But when I talk to my staff, I always ask, I say, these are the things I ask myself.

20 years from now, like the recent stations we acquired from Bell Media, we just closed on and we took over March 24th. So a month ago, 20 years from now, will people still want to know what's happening in their community? I believe they will. Will they want to know local news? I believe they will. 20 years from now, will people want to help in their community? Like, will they want to attend a food drive or a concert to raise money? I believe they will.

And number three, will business owners still need someone, a person that can walk into their place of business and say, I can help you with your marketing.

And I can make you famous in your community because I have this tool set behind me, digital, radio, events, all the things that we do to help your business. Do I think business owners will want that help? I believe in 20 years they will. What I don't know is in 20 years, will our FM tower be more valuable than our website?

Or will our email data list, you know, email subscriber list be more important? Will that event we do be more important? I don't know that. But I know those three things will be true 20 years from now. And if we're working towards those three things, I'm not worried about 20 years from now.

Yeah. I'm reminded of the old, you know, you and I are old enough to remember the video killed the radio star. And that was the first, you know, iteration of like radio is going to die because television and then the internet, it's still going. Well, we're in a horrible industry for press because we never get any good press.

Even when there is a torrential problem in the world, whether it be a flood, a hurricane, and radio is the only thing that is keeping the community connected. We just went through a big ice storm here in Ontario. The amount of... We had our news teams working 24 hours a day, backup generators, all that stuff. The amount of people that stopped us on the street and said, you kept us going. So radio has this long track record of being...

you know, the little guy that gets it done when problems come along. Long list of business owners that we've made incredible millionaires that they run their business. They've been on the radio every day. They're successful in what they do. Shoe stores, insurance companies. So a good medium to advertise on. We're just not sexy like we used to be. We lost our sexy appeal and we're just as cool as an insurance company now. We're just as cool as a but we have better margins.

And the weird thing about it is that's not even sexy enough to some people, which is weird to me.

Okay, so you mentioned margins. I want to get into the numbers. So how do you value a radio station? Is it a multiple of EBITDA? Yeah. How do you go about it? So historically, it's either a multiplier of revenue if there's not a lot of profit. So if you had a radio station that was doing, say, half a million bucks, you might pay $600,000 or $700,000 for it.

So a little more than one time. A little bit more than one times. You know, again, depending on, there's a lot of variables in the equipment, the buildings and things like that. But generally speaking, in our 20 years, we have paid a multiplier of, on the high side, maybe seven, but on the more consistent side, five and a half. And stations that we might call distressed, much less. And I would say,

My observation would be a couple of the stations we might have been in the right place at the right time where we

They're like, hey, we did okay on these other deals. We're just going to give you guys these ones for a better price because it plays into some other master plan that we have. But I tell everyone when we go to acquire a business, because these are businesses and most of the people we're buying from, Bell Media, which is like the iHeart of the United States, they're the rarity.

The majority of people I bought, you know, a guy like you that's looking to retire, a guy like me looking to retire. And I tell them all the same thing. What I pay is not relevant to me. What is important to me is three years from now, when I've implemented our systems and when I have implemented our culture, is it worth more than I pay?

So whether you want to charge me, whether you think it's a 5.5 multiplier or 5.3 or 6 multiplier, the only thing I'm thinking about the guy that's paying the bill is three years from now, I'm either going to look good or look stupid. And I won't do the deal if I look stupid. That's it.

Love that. So how do you, and I think that again, for folks who have no interest in the radio business, I think it's exact same for an acquirer of a taxi cab company or a local dry cleaner, whatever. They're doing the same math.

So how do you do that math in your head? Because you've got to write a big check in many cases. What are you doing to evaluate whether you're going to look stupid or not in three years? Just walk me through the calculus. Yeah. So it would start with where are they at now? And what do we think the market can do? It is...

I have learned one thing over my 20 years of doing this, 30 years in radio. And look, I'm a local business guy. Like I talk to a lot of big business owners, whether they run shoe stores or car dealerships or restaurants, whatever. And we talk business. Really great locally run businesses rarely leave money on the table.

Like, if there's a power ratio of how much money you should get out of a market based on your category and the traditional spend, the guys and gals that are really good at what they do traditionally beat those numbers by a significant amount.

So if you look at radio, which historically, even now, it gets about 8% of all the advertising in the market. So you can do a little bit of math and sort of figure out, okay, here's this market, here's the retail sales based on 8%, or based on how much they would put on advertising, which would be 5% to 6%. We get 8% of that. Here's how much it should do. With our systems and things we do, we know we traditionally overperform that. So we think

If this station is doing a million, we think we can get it to two and a half million. Oh, that's interesting. So it's very geographically focused. You're looking first and foremost, how much does this geography...

Yes. What can we get of that and how much of that is the current business owner capturing? Yeah. So then I would say, okay, if the number was hypothetically two and a half million, well, I'm not going to get that day one. That's why I say in three years. And then, you know, what changes do I need to make in the business itself based on our systems? Because I tell all the people when we acquire a station, you know, we're McDonald's, you're Burger King.

It's not negotiable. We're McDonald's.

So everything that we do is what you're going to be doing. Like whatever automation or software we use, everybody's using it because we don't have a McDonald's and a Taco Bell and a KFC over there. We just run McDonald's. So there's going to be change and we got to be we're going to do 100 days of chaos. Everyone join in the fun. But on the backside of it, we're all going to be on the same systems, which means everyone's going to have more strength. So the question is just the math on what's that going to cost?

Is that does that mean we're going to have to buy a whole bunch of new stuff or not a lot of new stuff? You know, because radio is probably like a lot of industries, people, there's only six suppliers. So it's possible they might be on one of our suppliers. You know, geographically, do we have if you look at a map of our radio stations, it's sort of a Warren Buffett design. It's built with a moat.

It's everybody's close together so we can help each other. We don't have any major outliers where it's like, well, that one's 10 hours away from everybody else. We, you know, I can get in the car and drive from one end of the province to the other and hit almost every one of our stations because they're all on the same route. And that's by design. And it's by design because it's where I want to go. But it's also by design by like if a manager gets sick,

Their mom and dad are ill, you know, hit by a moose, whatever it is. There's another manager 50 minutes down the road that can sub in and help immediately. And nothing's foreign to them. I love this idea of, you know, you're the McDonald's. You're going to switch out their systems. There is no area for debate. It's going to happen. At what point in the process do you make that clear to the current ownership? Day one. Day one. And legacy is important. So...

When I'm dealing with a local owner, I make it very clear that the legacy that is important is what the stations do in the community. Like, I really believe in the power of radio. One of the powers of radio is to make local business owners famous, but more importantly, to be a leader in the community. Like, when there's a crisis, we're there.

When you need help, the answer is yes. You know, when the local hockey team is in the playoffs, we're at the game. Like all that stuff's important and that's our DNA. So like if you're worried about selling to us and that we're going to change everything, there are things we are going to change because it's the only way that it works. However, what won't change is the legacy of these stations doing great work in the community like you have been doing.

So what about the brand?

The brands are interesting. So we very early on, the original brand we came up with was called MyFM. And the concept of it was our original station is in a town called Renfrew and everyone calls it the Frew. So we were going to call the station the Frew. Makes sense. Except that weeks before we went on the air, I said, guys, here's the problem with this. We can't.

copy it it's so specific to the fru that if we go to the next market and they don't have a cool nickname it doesn't work also it doesn't work in the sense of some of the how we execute some of the programming like if i want to go buy a hundred shirts or 200 shirts i don't get a discount because now i need 10 that say the fru and 10 that say you know bozo fm or whatever so um

we just kind of got to a point where like well what do we want people to say about the radio station i'm like i want them to say it's my radio station i want them to take ownership of it i want them to feel like they're part of it and they're like well why don't we just call it my fm i'm like that sounds genius why didn't i come up with that so do you rebrand like do you buy a station like the ruin or the renfrew local station you rebrand at my fm we do now it's interesting we've been lucky

Because the first station we did it to was called CD 98.9 and it's located in Simcoe, Ontario. And so it was an easy transition because we told the story on the air that like, hey, it's time for a fresh new coat of paint because no one has CDs anymore.

And the town was like, yeah, you're right. So we asked everyone, like, when you talk about 98.9, what do you say? And you hear clips of people going, well, I'd say it's my radio station. You're right. We should call it my FM. Boom. And it all ties in and everyone goes, great. Makes sense. So that fresh coat of paint has successfully worked in every market that we've gone to. And with the exception of Peterborough, I think, we've never had to make

like a 180 degree change or a big monstrous change. It's just been like a fresh coat of paint. Got it. So the, and, and to be honest, what our system brings to the advertiser and the listener is,

I can't think of a time where they didn't see a higher value coming out of their speakers than what was there the week before. Just because we're so ingrained and our team is so good at executing local news, information, content, being involved. You know, we have all the bells and whistles and the jingles and all that kind of stuff. Like it all of a sudden sounds like something bigger coming out of the box, which also helps. And that's the strength of the group, right? Yeah, for sure.

I guess my question was a little bit around like former owners and

have got a lot of their emotional equity tied up in the name of the company and sometimes like you know if you say it's jane doe's uh coffee shop and then you're gonna acquire it and change the name jane can get upset and say well wait a minute that's that's the pillar of the community that that was the reason i was asking yeah no like to that point i when we change one station you know the script that was being read about the change the old owner was reading the script and he started to cry

And I understood, like, I understood he, it was like the end of an error for him. He like, when you talk to him outside the studio, he 100% understood the logic. It made sense. Like smart guy. Like he, he wasn't, he wasn't saying, Oh no, you don't need to do this. He's like, no, this is really smart how we're doing it. But when he had to say the words that it's time for a change, like he teared up and you could hear it in his voice. And I was like, I know how he feels like. And that's why I think it's so important that we really, uh,

We really reinforced that. Look, the name is just the name. The songs come and go. The morning show guy will come and go. What won't change is the culture of serving the community. And that is what is like, that's what we're buying. Like I tell the staffs when we, when we first meet the staff, I always tell them the same thing. I am not here because I got to buy something because I can buy desks and transmitters and towers. I can buy that anywhere.

Why we are interested in this property, why we are excited to have you come be part of our family is we are like-minded broadcasters. We believe in super serving the people that listen and work in this community and help in this community. And that is why we are excited to be here because we're going to do that together. And yeah, like, I mean,

I don't see any value in the desks. I don't care. I can get that anywhere. How hard does it get past the bullshit meter? Because I know when a new acquirer comes into a small business, one of the things that every employee in that business is worried about is their job, right? Oh, here comes the guy or gal from...

you know, some big city or some big company. And, and I know my job's on the cutting block. Like, is it hard for you to kind of make that case that you care about their local communities when you're talking to a jaded group of people who are just frankly, just nervous about their job? Yeah. And you know, that's a very rare thing because our industry has been horrible at downsizing. Like, uh,

I always tell people, hey, when our HR lady comes in, she's going to give you a hug. She's not here to fire anybody because that's not what she does. That's not her job. So the comfort or confidence that I can share with those new staff members are a few things. Number one, we've never had mass layoffs. We've never done it. In the pandemic, our message to the staff is we're a big company. We're going to figure it out.

Period. We have no roadmap for this, but the roadmap isn't getting rid of our best assets. I know that. So we're going to all have to work together and get through it. And we did. And, you know, we had stations hitting budgets, like some stations were down a little bit, but we didn't have any of the sad stories you were hearing from the big guys. We didn't have any of that. And I think it's because we were working it. So we have no track record of that. So that gives them confidence to we never have a plan to get rid of people.

We, when we buy us a station, we keep everybody. That's our policy. And we, we, we, we tell everyone, you know, Jim Collins, right people in the right seats on the bus go in the right direction. That's my job. So you have to be open to understand that I might see you in a different spot.

And you got to be open to want to stay on the bus. Like you have a part in this, like you got to want to be part of our team. But I'm not here to, I'm not going to make money getting rid of the best assets. That's a bad play. It never works. And here's the other thing.

So walk me through the economics again. So you're buying these businesses for five to seven times earnings. I mean, today it'd probably be five and a half would be like today in today's environment.

Got it. So let's just say around five times. You're looking at it and you're saying, under my leadership with our systems, what's it going to be worth three years from now? That's super helpful. You're also looking at the market and what it can bear effectively. Like what is the natural sort of advertising spend in this market and how can I get a disproportionate share of that? That's helpful. So where do you get the money to buy these businesses? I mean, are you using...

Bank debt, are you just super wealthy and you can buy all the businesses you want? Where do you get the money to write these checks? It depends. So...

The most money when we started this, the most money Andrew and I have ever put into the company personally is $5,000 each. So we started out using a very small Main Street bank, RBC, small business loan. That's how we started out.

Personal guarantee? Yeah. Oh, yeah. Personal guarantee. Do you have a personal guarantee now to this day? No. In fact, fun story. The bank, which will remain nameless, suggested on our last acquisition that they would like a personal guarantee. And I told them, no, I don't do that anymore. I'm a grown up. Like 20 years ago when you needed it, I gave it to you. But now we have a big company that makes lots of money. We've never been a problem for you. So no. No.

And they were like, but no one says no. I'm like, I say no. And I said, like, and with a bank, I'm the perfect bank customer. I use them for my personal investments. I use them like I'm the guy they wanted. I said, I've been loyal to you. So you guys have a choice to make either be loyal to me, like, because I or I'll like I can use my own money and lend it to myself.

I can go to any other bank and open a door for a conversation with another bank. These are the decisions you make. I'm telling you, I'm not doing a personal guarantee for this sum of money based on the size of our company. At what point did you get off the PC, the personal guarantee? So we're 20 years in. I would say it was probably around year six or seven, maybe year eight. Like it was a while. And it was always a thing that bothered me because...

like business owners understand the relationship with banks, which is I know more about the relationship than they do because the person we're working with leaves. And then some new person comes in and thinks they know more about what we're doing than me. And I'm like, but I've been here the whole time.

the whole time. You haven't. So, yeah, so we, through the years, it was those small business loans and that we were, we, both Andrew and I are very conservative and we're not extravagant human beings. Like we don't have private jets or anything. So we always paid down debt really quickly. So,

There was a period of time that 20 years where we just self-funding everything acquisition. We just self-fund it. There was a time there, there's been times where we you know, we've gone to the banks and we borrow money because there was an opportunity and it was a little, little bigger or, or,

Again, we saw that opportunity that we're like, hey, in three years, this is going to be rolling. So let's why use our money? Okay, so let me just understand. So you're using debt originally with a personal guarantee. And the reason I ask about personal guarantee is I want my listeners to understand when they go to sell their business.

they're going to be selling to an acquirer. And that acquirer may be literally signing their house away to buy your company. And so cut them a bit of slack when they ask questions and they need help because they've got a lot on the line. Now, in your case, you've been doing this for 20 years. So in the early days, you had a personal guarantee. You got off that. One question I had though is where's the recourse? So if you buy radio station A,

and have a bank loan, presumably that...

you know, that bank would have recourse to go after that asset if you went bad on that loan. Would they also have recourse to radio station B, C, and D in your group? Or is the recourse only to the one radio station that they are effectively lending you money to buy? Over the years, it might have changed. But I think our relationship with the bank and how we're currently set up our corporate structure is it's just one big company.

that owns these assets. So it would never be one market that wasn't going right. It would be the whole ship going down. And, you know, I will say this, we, we, we,

I'm, I'm, Andrew is probably the better statesman at a lot of things like dealing with the government and dealing with the banks. Like he's, he's a calm gentleman type. I'm the wild, like, you know, bull in a china shop. Oh, we're going to do what I want to do. Right. Like I'm crazy like that. But one of the things that I think Andrew, I would say really instilled in me is we've got to really work hard to have a great relationship with our bank. And we have done that.

And we have great bankers. And again, to credit of the bank, you know, when we put a little pressure on them saying, no, we don't do guarantees. That's where we're past that. You know, they rang it up the ladder and it came down and they're like, yeah, you're good. We're good. Which is good. That's what I want. Because the test for me with a bank is I don't need you right now. Like you're like where I am at. I don't need you right now. But the day I need you, I want you to show me you're in my corner.

And I think it's important that you have that relationship with your bank. And you've got to show them you're in their corner. You know, that's why I do all of my stuff. You know, I've become the perfect client for you because I want you in my corner and I want to be in your corner. Because that relationship is very important. How much equity would you put into a typical deal? It would depend. Some would be zero.

And it would be 100% financed. Not many. Like, it's hard to say over the years because it's such a big mess. It would depend on the acquisition. But...

Like most of them would either be like, I don't, not many would be a hundred percent, but we have, we've have done it where it's a hundred percent for sure over the years. And what about the vendor, the, the, the owner who is selling the business? Do you ask them to lend you some of the money in a form of like a note or do you give them a hundred percent of their cash? No, we've never done that. And I might be a fool, but I,

the reason why is because i don't want someone to do it to me so i'm hoping i'm sending enough karma out there in the world that someday when i want to get out of here someone just goes yeah john here's your check see you later um you know uh but we have we have sold some assets over the years whether it be buildings and things like that and we we do take back mortgages and we do hold paper we have done that um you know we're we're just two guys that try and make

everybody win and you know we don't have to be the you know we don't have to win everything every deal every uh you know we don't have to come out on top on everything that we we know that people helped us along the way we want to help people along their way too so um you know i've been in that side on the other side but we've never asked any of the people through uh to do that now that being said in our industry it is a little bit different because we are a regulated industry

so yeah you know if we don't buy it someone else will and someone else won't be asking for that so we generally try and make the deals as clean and easy as possible for the vendors because

Not as much today, but certainly 15 years ago, the people we were bidding against were big companies that could certainly outpay us. But what they couldn't do was out simplify us because they were a big company that had a table of lawyers that needed 15 things signed off. And John would just come in and go, hey, give me the keys. I'll be here on Monday. Here's your check. And I'll deal with all the crap. Right.

Right. So we did everything we could do to make it simple for them. To make it simple. And what a difference between a sort of very sophisticated private equity group who would sort of structure it in a different way. Some of our listeners would be in a business where there is some regulatory hurdle that

That stands in the way of passing over their business to another party. It could be a franchise agreement that, you know, the franchise or has to approve the new buyer. It could be a lease where the owner of the building has to approve the new buyer. It could be...

a situation like you where there's a regulation a regulator that is approving the transaction in in the case of canada we have the crtc i forgot what it's called in the u.s fcc ftc but when you know a radio station owner changes hands i believe tell me if i'm correct in this the crtc needs to approve that transaction is that correct yes

And it's the hardest part of the whole thing. Not that it's hard. What's hard about it is imagine that you want to buy something and someone wants to sell it to you and all the staff are excited to work for you. And when they say, hey, when are you going to be here? You have to say, well, whenever the CRTC approves it. And the last one took a year.

So it's not as speedy as it used to be. Maybe that will change in the future. I don't know. I know they're doing their best to check the balances and make sure that the public is being served. And that's valid. There's nothing wrong with it. But it does make it hard from a capitalist point of view because I'd like to be able to take over tomorrow. How do you structure deals? Do you make your offer contingent on the CRTC approving the transaction? Yeah, we do. But that's...

the crtc doesn't deny a lot of deals like you'd have to be it'd have to be pretty weird i i can't remember one where someone was buying something and someone said no like you'd have to be almost like taking over every radio station in town or something which no one would do because there's rules but uh timing thing is yeah so the basic rule is uh you know hey based on crtc approval and then we generally always say we'll close within so many days of that approval uh and we're ready to go

So, okay, let's just play this out. I own a radio station in a small town. You say, John, I'm going to buy your business for a million bucks. I say, sounds great. But you would say it's contingent on getting CRTC approval or will close on the deal once the CRTC approves. So we sign a letter of intent, presumably. Yeah.

And then it could be a year before I get my money. Yeah, it could be. Yeah. And that's the hard part because you know what life is today. What does a year bring?

And also people check out, you know, we saw it with the Bell deal that good people left because they have a life and they as much as they want to wait, you know, someone else comes along and goes, well, why don't you come work for me? And they go, well, I'm kind of waiting for these guys, but I don't know when it's going to happen. And look, the reality is when you say it to some people, no one believes it should take a year. Like in their brains are like, you're BSing me. No.

No, actually, this is how it is. So now, historically, with the CRTC, you could almost set your watch by it. Like if you made a deal and it went to the public gazetting after that, you could set your watch by it. COVID onwards, it's more of a wild card. I think they've been disrupted like everybody else. So that does make it very tough. And again,

uh you hope that in that year nothing crazy happens things don't break things if you're the vendor you're trying to make sure like guys don't Mark the walls don't crash the vans don't because because you would be able to just want to make sure I understand you would be able to use

the CRTC denying the application as a rationale for getting out of a deal. Correct. You would be able to do that in theory. Has that ever happened? No.

um not for us and i can't speak to other deals but i can tell you in our deals like if we buy your stations based on a multiple of five and a half let's say five doesn't matter um we honor that period like when we make the deal whatever the multiple is unless you're like it goes completely sideways like the wheels fall off if sales are down a little bit we're like don't worry about it we're good like because by that time we're already locked in on our mission

Like, we're ready to go. We're not like, oh, you went down in sales a little bit. We get it. Someone left, you know, salesperson was sick, whatever. Like, that's just the business. We've got a solution for it. And when I just want to be clear. So in the event that sales were down or EBITDA was down during the time you're waiting for the approval.

would you continue to do the deal at the multiple you agreed to or at the price you agreed to? Do you know the difference? Yes, for sure. Yeah, I know what you're saying. We've always done the price.

Although, to be fair, I can't think of a vendor we ever had where things were off the rails. But like if we were buying something, say, in COVID, it would be completely understandable why their business might be disrupted. We would have still bet and we bought stations during COVID. We just bet on things getting back to normal. And that's a gamble. But I'm a believer in

markets and people and you know governments doing the right things and you know it worked out okay how much of your net worth is tied up in this business that's a great question uh and i'm a hundred percent sure that um a financial planner would probably say too much um but it's too much in a weird way uh you're not gonna answer no no it would be uh like i

I think our company probably is worth, here's a problem. We're in an unsexy industry. So while I can sit there and go, here's what I would pay. Would someone pay me? I don't know. Because the problem with paying me is it's a big number.

Yeah. Right. So like when I bought, when I buy a station for a million bucks, not that that's not a big number it is, but ours is going to be 20 million or whatever the heck it is. Yeah. And that, that makes it a little bit different group of characters you're dealing with. So you know, so my net worth is, it's probably the majority of it. I mean, I've done pretty smart at saving and paying down and buying buildings and things like that, but the majority of it is, is tied up in this. Now,

The flip side, I always say to the financial planner is if I got to bet on you or got to bet on me, I'm betting on me because I get a better return every year and I control it. Like when things go rough, it's my, it's up to me. So, and we have a really good team, so I bet on them every day. So, but it is a, that is a real problem. In fact, one of the guys we bought a radio station from, I said, why are you getting out? He goes, just too much of my net worth was wrapped up in it. And he was maybe 70.

And he says, at 70, I can't have most of my net worth in this business that takes, you know, it's, it's, it's, it's, uh, the radio business is about hustle, like not, not nefarious hustle. Like you're, you're at an event on Saturday, you go to something Tuesday night, you're up early mornings for morning shows. Like you're always moving. I remember it. Yeah. Like it's, it's a, I don't want to say it's a young person's business, but like, you gotta like being active, right?

And I think everyone, every one of us gets to a point where we're like, yeah, I don't need to go to the Christmas parade anymore. I've done it. Kiwanis festival. I've done it 30 years in a row. I'm good. You know, so there is a time where, you know, father time catches up to you. So, you know, that is a real problem. And, you know, the question that we have in our company, Andrew and I all the time is like,

If you had asked me when we started, it was we're going to build this up and one of these big guys are going to come give us a TV size check and we're going to go on a beach. Well, now we're buying the stations from the big guys. So I'm like, who's coming with my check? So that's one of our big, one of our big,

big challenges because it's not a negative thing. It's a positive thing. We have this really good business with really good margins, with really great people that run the company. I don't need to be there every single day. I basically do what I want every day. So I don't know why I would sell it, but someday I'm going to have to sell it. Our biggest challenge is Andrew is, I don't know if he'd like me saying significantly older than me, but he is. So his life is going to get different

faster than my life. And we're going to have to figure that out because

If I go, well, I'll just buy you out. Well, 10 years down the road when you're 50 is now I'm 60. Now at 60, who's bringing me the check? So like we have all these conversations. So we've kind of drilled down to say, look, the best thing we can do is run a great business. The best thing we can do is elevate our people. The best thing we can do is make people want to work here forever. The best thing we can do is make sure everyone feels they're part of a family and they're taken care of. Because if we do that,

It will just continue on and we'll figure it out. Or someone will call us up someday and go, hey, we want to get bigger. Or, you know, we like the great thing about our business is two things. One, the digital growth that we're going to see in the next five years is potentially we're able to double the size of our business.

by not doing anything else, by not adding any more staff, just maximizing the digital opportunities we have in our current model. Number two, we have what most companies don't have, an incredible sales team.

People that actually know how to sell stuff, customer service, take care of people. So when you look at business to business, I could see our company folding in with someone very non-traditional. Like somebody that's saying like, look, we just need people that can take our product to more business people or integrate it into what you guys already do. We could integrate this in. So again, we have that. We also have scale.

Like, you know, we're a really good size. Would you ever, and maybe you're already doing this, but would you ever contemplate the idea of like, hey, maybe there isn't,

a giant TV size check on the end of this, maybe we got to throttle back and start paying ourselves along the way. Like, do you, do you guys talk about that? A hundred percent. You know, one of the funny things is when we started this company, we only really had a few rules. One of the rules we had

as partners, because partners are very hard. You know, there's not a lot of great partner stories. I believe ours is a very great partner story because my skills and passions are different than Andrew's and his compliment mine and vice versa. But one of our rules was that we don't agree, we don't do it. We just don't agree, we just don't do it. That's how it is. So if he wants to convince me to do something, he knows that if I say no, we ain't doing it. And I know the same of him. We've never had that problem.

we've negotiated through that together uh very well and do you have a shotgun clause we do we do but um at this point it's like kind of like it's like hey you're gonna pull the shotgun clause because i'll be happy if you do because you can take it like give me a big check i'll take it from you um

That's interesting. So it's gotten to a big enough number that it's. Yeah. It's just like, it's yeah. It's like, well, I mean, I just have to go borrow some money to pie out and the company's worth it. It's just who wants to take the time to get the money back. Right. And unfortunately, if you'd asked me 10 years ago, I'd feel differently than I do now at 50. Right. So, so that's the, and the other one is we always want to have a fun place to work and we,

The business has to pay us. That's one of our rules. We're not, it's not charity. We're not here for free. So we made it even in those early days, the business paid us. Now it didn't pay us well, but we built it so that it had to give us a check. We weren't going to be owners that worked for free.

Because we work the hardest, right? We were the ones doing the 60. So there are a lot of years I didn't make more than the staff. There's a lot of years where I make a lot more than the staff. But in our functions through dividends and all that kind of stuff that we do over the years, you know, we have made it a point to say, look, when times are good, which we've had a lot of those years.

You know, we do aggressively make sure that we are building our net worth outside the company because

Moving forward, if we can't sell the company or we have to sell it at a discount or whatever crazy thing happens, we have our nest egg over here and we've just had fun, I guess. Yeah, I'm sure it won't come to that. And I appreciate you going there with me. The reason I was asking that line of question is, again, I want our listeners to understand that when they are selling their company, if they want, like, I got to get five times, for the acquirer, they've got to,

be able to see, okay, great. I got to buy five times. I get that. Maybe it's worth that. But then I got to see how five years, 10 years down the road, I can get seven times. Or there's some appreciation of multiple or it's hard to make any money. I mean, there's obviously other ways, other levers you can pull. But do you think about it in the context...

we did an interview with Adam coffee who wrote the private equity playbook. And he talked about multiple expansion being one lever. So buying for five and selling for seven, uh, uh, operational efficiencies. And we've already touched on that a little bit, you know, making it all, you know, the, my FM way. Um, and the third being just size, right? Bigger companies are worth more than smaller companies. Do you think in the same three levers or are there others that you're pulling? No, that's, that's pretty much it. I mean, obviously there's, there's some, uh,

You know, if you go back to the McDonald's angle, there's some real estate plays in there that, you know, that we do subtly here and there. But those are the basic three things that we're always looking for. And I mean, again, we're still a little bit old school, too, which is like, I don't know, maybe it's when you work with a team for as long as I have. Like, I don't think we want to sell it to just anybody like that's that. And that's also something that makes it very difficult.

Because probably the person with the biggest check might be doing something different than I would do. So, you know, corporate culture aligning is very important to us. And one of the things that I think, again, it's interesting when you talk about selling your company and over the years we've had people ask us,

Like the guy asking to buy, and we're not, we're so not like this, always wants to tell you all the shitty things about your company.

right right uh so we've tried to build a fortress that there just are no shitty things and we've done that because i i take it so personally so one of the things i'm most proud of and i would advise any small business owner to do this when you go to our corporate website we have seven years of surveys from our staff saying why they like working for us and when you read seven years worth like they're all by year um

They tell the same story every year. It doesn't change. And while the people have changed and, you know, some have come and gone and all those things, the core culture of what we're trying to do, it resonates in those words.

every year for seven years, right? Love our mission, love serving the community. Bosses are nice to me. They believe in me. They've, you know, I've made more money. They train me like all those things we would want. So I would want some, I would want to say about my boss. We've, we strive to do that. And look, we're not perfect. Don't get me wrong. I'm sure there's people out there that go, he's a maniac, but more often than not, I think we win. But those like little words, they,

and year to year asking the staff those questions and keeping it so consistent. It's to me, it's so important because it speaks to the value of what the company really is, right? Like that's really what it is. It's about these people doing the job that they believe in. And that's probably one of the reasons why

When I look at other companies we've bought, or in the case of Bell Media that says, hey, this isn't a valid business for us, we're trying to exit the space. When people say, well, why will you succeed where they failed? I say, well, look at the seven years of what people in this company do. And that's what I'm betting on. You mentioned people coming and going, and it got me...

thinking about something that I've heard before and I'd love to get your reaction to. And that is,

Being a business owner, some people refer to it as a lonely endeavor. You've obviously got a partner, which is great. But one thing it is, is a long journey. It's a marathon, not a sprint in most cases. And you have employees who've left over those seven years, although the consistent themes are there, they come and go. You have business owners who you write a check to and they ride off into the sunset once the CRTC approves that. Do you ever feel jealous of

that they get to run off into the sunset and you get left holding the bag? Oh, every day. Every day. Like I can tell you one of the things, and again, I'm a guy that, you know, I'm wired that if I worked at Wendy's, I would be the best damn Wendy's employee there is, right? If someone else could serve three sodas in a minute, I'd figure out a way to do four. So I see some deals where guys like me have sold their groups, whether it be in Canada and the States, and it makes me mad.

Because I'm like, damn it. Now I have to get more because I can't let that guy or gal look like they did better than me, which is is unhealthy in many ways. There are shrinks that deal 100 percent. But one of the reasons it's good is it is a driver for me. Like I've literally looked at our company sometimes and said.

No, we're not big enough yet. I am not going to exit and get less than that guy got over there because they're not as good as we are. Our people work harder. Our brands are worth more money. And I don't care what anyone says when we exit, it's going to be a good exit and it's going to be a good story. So it drives us to innovate. It drives us to put more money on the big, I mean,

think a lot of business owners uh you know myself included you know sometimes you get running your business and you're like what does it matter whether i make this much or that much at the end of the year like i want to have fun and you know well where it matters is when you go to sell it so we always have tried to work like um you know i try and get my manager to understand that while we are not for sale we should be operating every day like we are

Because someday we will be for sale and we can't go back in time and go, well, we shouldn't have bought seven port-a-copiers. We shouldn't have made that deal with that talent that doesn't make any sense. We shouldn't have partnered with that hockey team because, you know, no, we got to make deals like if we were going to sell this tomorrow, we could maximize our opportunity. Are they shareholders or are they options holders? No.

No, they're managers, but we treat them, you know, certainly, I mean, they're in our inner circle and they certainly mold the company. We, you know, obviously we have a bonus structure where they win everything.

you know everyone gets paid before i do so uh that when they win they they win big so there's something in it for them and you know i try and phrase it in a way like guys i'm not i'm trying to get you to run this like a business like i run it like a business because if you run it like i run it and you train your people to run it like i run it instead of it being like the wizard of oz where no one understands how this works everyone in the company understands

This is how we treat our staff. This is how we treat our customers. This is how we treat our listeners. And we do it for a specific reason. It adds value to our company.

Uh, and when we have a valuable company, we can do bonuses, raises, treat people, right. Buy more stations, gives people more opportunity, et cetera, et cetera, et cetera. Uh, and our staff has, you know, they have embraced that. And, um, you know, you know, we, one of the hardest things that I have to deal with, um, I don't know if I should have phrased it that way, but, uh,

So we started giving people really nice expensive watches after five years of service. Very nice watches. People love getting them. I'm sure there's some people that have stayed on an extra few weeks to get a watch. And at 10 years, you get a significant check that would allow you to go on a vacation. We would basically pay you.

At 15 years, you get five weeks sabbatical paid. We want you to go do something you dreamed of doing for five weeks. It does two things. It makes sure that you know how to replace yourself for five weeks and you still have your vacation time. So this is in addition to you. But for five weeks, if you've always wanted to be a professional golfer, go golf every day for five weeks and see how you do. Right. If you've always wanted to travel across the country, go do it. We're paying you. Go do it. Come back recharged.

we'll prove that someone can do your job while you're gone, not in a bad way, but in a good way that we've trained our team well enough that you can take five weeks off. That's awesome. And then at 20 years, which we had our first staff last year at 20 years, I said to our staff, because we have a big annual retreat every year, I said, like, first of all, I just found out that other companies at five years give a pin. And I Googled the pins are $4. Um,

And I feel at 20 years, I should get a gift. Like I've been here 20 years. Someone got to give me a gift. But at 20 years, we, we literally were like, I don't, we don't know what to do it. Like, what else can we do? We didn't anticipate. We didn't anticipate someone being with us. And, and when you look at our arc of five years, 10 years, 15 years, subsequently 20 years, like,

It's, I didn't think it out. The liability is getting bigger and bigger. We're going to have eight people on five-week vacations.

runs this year that's crazy it's like the airlines who have the loyalty programs and that that balance on their balance sheet is getting bigger yeah yeah but again it's a good problem because yeah it's a testament to your leadership yeah or again just that we built something together that people feel is worthy of their time because that's what i always tell our staff like we've got to make it a fair trade for your 40 hours or 37.5 or whatever it is

it's gotta be a fair trade that it, cause you know, we're not making more time. So if you, I don't wake up, I say this to yourself all the time. I don't wake up hoping you hate coming to work.

So if something's bugging you, call me and we'll fix it because you got to like coming to work because it's what we spend most of our time doing. And, you know, we've been trying to be innovative in that way with flex time and things like that. But it does as a business owner, when you think about that guy that runs away and goes to the beach or he's retired, I do envy them. I envy when our staff retire. I'm like, oh, got it.

It must be nice. It must be nice. I envy when our staff go on vacation because I'm terrible at taking vacation. Like, taking vacation again? How'd you get so much vacation? I'm so grateful for you sharing the story because, again, there's a lot of time spent on companies like Instagram and Meta and Tesla. And I think while those stories are interesting, the reality is most small businesses are local businesses. Ooh.

pillars of the economy, pillars of the community. And when they go to sell, it'll be a buyer like you, someone who recognizes their role in the community. And I think you've done an amazing job of describing how you think about that acquisition, how you will eventually sell your company. And that allows our listeners to get inside their head. And I just, I'm super grateful for you sharing in such candor. Yeah. Let me share one more thing with you because I think it's an interesting observation. So

Probably in Canada, I don't know if in North America, but definitely in Canada, I don't think there's a guy that's seen more balance sheets of broadcast entities than I have in the last 20 years. Because we've been an active buyer and because we're an active buyer, everyone thinks we want to buy everything they have. So I get sent a lot of stuff.

One of the things that was interesting is there was a time a few years ago where a newspaper chain was going to shutter a bunch of their newspapers. And we got approached to take over some of their newspapers, which you would think, okay, well, we sell ads and we do news. Their newspapers are in our towns. It might be a good mix. Yeah.

I didn't know anything about newspapers, but I had friends that owned radio stations and newspapers in the state. So I spent time with them. I talked to a bunch of newspaper owners. And here's what I found. Now, newspaper can't be any less sexy, right? Like it just can't be. In 1985, it was the cat's meow. You know, you could open your door and people bought ads. People couldn't wait to read it every Wednesday. But that is not today in 2025. But here's what I found.

When I did the research of successful newspapers, which there are many that are doing, you know, nice small little towns of 10,000 people, a guy or a gal owns a local newspaper. They're involved in the community. They write great articles. They go and ask people to advertise. People read the, still read the paper. People still have to, and they run a business that has good margins and does like a million bucks. And you go, great business, just completely unsexy.

And then the other type of newspaper that exists is the one where the big guys have run it and they've run it right into the ground.

They've sold off the trucks and the printing plants and they've tried to spin things a different way, but it's just like their revenue is terrible. And you would go like, where do I even get the, where would I even start with this? And I'd say that because I think there are so many great businesses that exist because really smart and passionate people run them. And again,

while I say the newspaper's not that sexy, I don't know if radio is that far behind. You know, like it's not what it used to be. Like my kids come in to our studios now, they're brand new and we're really proud of them. And they're like, yeah, my phone does this. Yeah, you're right. Your phone does do this, right? Like, you know, so I don't want anyone to be discouraged because there are, there are really good businesses, but, but you do have to be thinking about your exit strategy and,

for a bit of time every single year, no matter what stage you're in, because selling businesses, I think is, it shouldn't be as tough as it's going to be. But I think it's going to be a little bit tougher. So I don't know if we're going to see more employee owned companies. I don't know. Again, maybe there'll be guys like me that will just like, one of the things that I say to the staff is when, when one of my problems was when we wrote our strategic objective,

Somewhere in our second or third update, I wrote, we're going to have 20 stations. And I probably should have said 100. Like in all seriousness, because in that time period, I had the energy. I wasn't adverse to risk. You know, I was crazy. And I probably could have done it.

And now you ask me, like, could I get to 100? Yeah, I could go buy it. Like, we're a unique company because we own a broadcast company in the States as well. We're the only Canadian company that's like that. So I could go buy stations in the States all day long. I could get to 100 stations in the U.S. in a week if I really wanted to. I just don't know if I want to. I kind of want to just, you know, stop.

go on a trip with my wife and do something fun so um i didn't dream big enough is maybe what i'm trying to say all of that stuff and running great businesses uh we should celebrate it more than we do uh if i gave a an owner advice it'd be celebrate your wins better i'm terrible at you know people come and go hey it's our 10-year anniversary of this station i'll be like

All right. Like, no, we should have a party. Okay. Like, and they're right. I'm wrong. Like we should be celebrating it. So, you know, take that time to celebrate your wins because, you know, business is tough. It's not that easy. Well said. John, I know people are going to want to reach out. Are you, are you a LinkedIn guy? Yeah, I'm on LinkedIn. It's J-O-N. Yep. It's J-O-N-P-O-L-E.com.

And at Twitter, I'm J-O-N-P-O-L-E. We'll put both of those credentials in the show notes at BuiltToSell.com. John, thanks for doing this. Thank you very much, John. Pleasure chatting with you.

And there you have it for today's episode between John and John Pohl. If you enjoyed today's podcast, be sure to hit that subscribe button wherever you're listening to today's show and help support this podcast. I'd encourage you to leave a rating and review. Ratings and reviews truly help our show grow and get in front of more owners just like you.

If you happen to go over to YouTube and want to watch this full video interview, you can leave a comment and reviews over there as well. For show notes, including links to everything referenced in today's podcast with John, you can visit his episode page again, which you'll be able to find over at builttosell.com.

Special thanks to Dennis Labataglia for handling today's audio engineering. And thank you to our community of certified value builders who help us bring our message to you. Our advisors are experts in helping you build the value of your company. To get in touch with an advisor or learn how to become one yourself, head over to valuebuilder.com. I'm Colin Morgan, and I look forward to talking to you again next week.