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55: Arthur Petropoulos: Building to Sell – Strategies for Maximizing Business Value

Summary

On First Customers 55 Arthur Petropoulos, Founder/Managing Partner at Hill View Partners, goes deep into the process of building a business with the intention to sell. Arthur shares valuable insights on enhancing enterprise value, strategic customer acquisition, and the pivotal roles of people, process, and product in preparing for a successful transaction.

Episode Highlights

  • Building with an Exit in Mind: Arthur’s philosophy on creating a business that’s attractive to buyers.
  • Key Strategies for Value Creation: How focusing on people, process, and product can drive enterprise value.
  • Navigating Customer Acquisition: Tactics for securing the first and subsequent customers to fuel growth.
  • Preparing for the Sale: Arthur’s advice on positioning your business for a successful exit.
  • Insights on Capital Acquisition: Strategies for securing capital in preparation for growth or sale.

Arthur Petropoulos Quotes

  • “Building a business isn’t just about the immediate gains; it’s about creating lasting value that’s attractive to potential buyers.”
  • “The three Ps—people, process, and product—are crucial for any business preparing for a successful exit.”

Links, Resources, and Mentions

  • Arthur Petropoulos on LinkedIn
  • Hillview Partners Website
  • Book Recommendations by Arthur Petropoulos:
    • The Intelligent Investor by Benjamin Graham on Amazon (For business overview)
    • $100M Offers by Alex Hormozi on Amazon (For sales & marketing)
    • $100M Leads by Alex Hormozi on Amazon (For sales & marketing)
    • Meditations by Marcus Aurelius on Amazon (For entrepreneurial character/Stoicism)

Takeaways

  • Focus on creating enterprise value by defining and measuring people, process, and product.
  • Consider building a business with the intention of selling it in the future.
  • Nurture relationships and engage in conversations to find customers.
  • Explore various capital sources, including banks and non-bank lenders, to fund business growth. Create content that is applicable to your target audience and within your expertise.
  • Define your target audience and consistently connect with them.
  • Know what works for your business and leverage the right platforms to reach your audience.
  • Read books like ‘The Intelligent Investor’ by Benjamin Graham, ‘Hormozis’ by $100 million offers, $100 million leads, ‘Meditations’ by Marcus Aurelius, and religious texts to build fortitude and gain insights.

Chapters

00:00 Introduction

00:24 Getting the First Customers

01:51 Overview of the Company

02:40 Finding Customers

03:40 Building a Business to Sell

06:46 The End Goal: Selling the Business

07:27 Considerations for Building a Sellable Business

10:08 Common Problems in Business Exits

11:33 Acquiring Funding for Businesses

25:05 Types of Capital Sources

34:56 Content Strategy for Customer Acquisition

38:53 Creating Applicable Content

39:49 Defining Target Audience

41:09 Knowing What Works

42:16 Recommended Books

43:58 Closing Thoughts

Show Transcript

Paris Vega (00:01.97)
Welcome to the first customers podcast. Today we have Arthur Petropoulos with us. He’s the managing partner of Hillview partners who’s generated a billion dollars of value across a hundred plus transactions over the past decade. Arthur, welcome to the show.

Arthur Petropoulos | Hill View Partners (00:18.254)
I appreciate it, Paris. Good to be here. Appreciate the kind introduction. Look forward to the chat.

Paris Vega (00:24.01)
So how’d you get those first customers?

Arthur Petropoulos | Hill View Partners (00:26.946)
First customers for our business.

I always like to start with the theory of the power of the $1 thing versus I think everybody thinks of the billion dollar idea, what would make a million dollars, a billion dollars. But when we first started the company, the idea was what can we make a dollar doing and then how do we iterate that? And so initially we had always been in the idea of helping companies sell themselves, helping companies secure capital. But when we first started, a lot of our early clients was much more…

smaller projects. And so what we used to do was we were very good at building financial models, building presentations for companies that were looking to sell or looking to secure capital. And so initially we had talked to some people who said, we’re looking to sell our company, but we’re doing it ourselves or we’re going to put a value on our company, but we want to know how to look at it. And so we said, let us build you the models, let us put the presentations together. And so kind of worked our way towards getting the full engagements.

in short order, but the first customers were, let’s build the thing for you, let’s build the tool for you so that you can perceive the value of your business. And so as much as we like to talk about the $100 million deals, it all started off and the first customers really started off building models, putting materials together, helping companies analyze their values and the different gears and levers within the companies.

Paris Vega (01:51.11)
Okay. So explain a little bit about what your company does.

Arthur Petropoulos | Hill View Partners (01:55.938)
Sure. So fundamentally we do two things. We help companies sell themselves, we help companies secure capital. Our area of focus is primarily privately held businesses, typically owned by a family, entrepreneurs, small group of investors, and generates one to $10 million in pre-tax profit. Really do it across the spectrum of industries.

That’s those are the two things we do. That’s our strike zone. That’s really what we define the edges of our strike zone as. And we really try to stay within that. When we first started the company, we had a third prong of the business that did more consulting oriented work and more project oriented work in addition to those two things. But as time has evolved, we’ve really funneled it down and focused purely on the latter two.

Paris Vega (02:40.786)
Okay, and how do you find those customers?

Arthur Petropoulos | Hill View Partners (02:46.542)
Sure, so really a combination of traditional methods as well as newer ideas as well. And so we are talking to people via LinkedIn and Twitter. We are putting out content on YouTube twice a week. We’ve got videos that we put out on LinkedIn twice a week. And at the same time, there’s just some good old fashioned.

Paris Vega (03:06.184)
Okay.

Arthur Petropoulos | Hill View Partners (03:09.67)
chatting with people via email, talking to different affiliate and referral sources, whether it be attorneys and accountants, and then you do enough of something well, ultimately you get good referrals from just word of mouth and basically your customers being advocates for you as well. So we say that we do everything and try to kind of be as omnichannel as possible in terms of sourcing those clients. But at the end of the day,

The best thing you can do for yourself is I think a good track record.

Paris Vega (03:40.15)
That makes sense. That reputation builds up.

Arthur Petropoulos | Hill View Partners (03:42.606)
Correct.

Paris Vega (03:44.686)
Okay. Do you have a sense of where the most leads come from, or I guess the most leads that turn into sales, like the most quality leads come from?

Arthur Petropoulos | Hill View Partners (03:57.266)
I’d say it’s from, broadly speaking, it’s from conversations. And so if we are reaching out to people on LinkedIn, because we’ve closed a transaction in a particular industry, we’re talking to talk to other people within that industry, if it’s via email, doing the same thing. But I think obviously there’s the direct means of it, and then just through as relentless of networking as we can undertake as well. And so in combination of…

casting nets or outbound outreach in addition to kind of the old fashioned hand-to-hand combat and chats. But it all comes down to getting the conversations and figuring out where pain points are and solving those pain points.

Paris Vega (04:42.49)
Okay. All about conversations. It seems like you guys would be big on building relationships. How long does it take for some that wanted to go through kind of your sales funnel, so to speak, like once you get a lead or a contact, how long does it take to build that relationship and turn it into a deal?

Arthur Petropoulos | Hill View Partners (05:02.454)
Sure, so it really varies, right? And so we always like to position ourselves as a resource for people that are contemplating or pursuing the eggs that are capital for their business. And so there are some situations that we come into where someone says, I wanna sell right away, I wanna find capital right away, and we’re able to facilitate that. And there’s other situations where we have a nice chat, we review some information, provide some guidance, and someone says, great, let’s check back and.

in two years. But I think of that as kind of top of funnel in terms of when someone’s going to be coming into the process. Once they are ultimately engaged, if you will, it’s a six month process of selling a business or securing capital can be somewhat shorter than that. But from the time of initial conversation to someone engaging us, it’s been as short as a week and as long as two years. It really depends on the situations. That’s why

it’s not a huge volume type of business. If we’re closing 10 to 20 transactions in a particular year, that’s a wonderful year. And so from our perspective, it’s about having those dialogues, beginning the relationship and getting that trust level instituted. Because again, it’s a big thing that we’re asking people to hire us to do. It’s a big decision in their lives. And so a lot of these things that come to the front of the conveyor belt was something that was placed back.

two years ago, but that’s the idea of this business. It’s a long-term business. And although it takes long to, for that gestation, if you will, at the same time, it’s a very difficult business for someone to just jump into and there’s high barriers to entry because you have to have that track record. You have to create those relationships. And so the momentum we’ve created over these eight years is exceptional and I think difficult to replicate in.

Paris Vega (06:30.643)
Right.

Paris Vega (06:35.219)
Mm-hmm.

Paris Vega (06:46.558)
Right.

Arthur Petropoulos | Hill View Partners (06:52.394)
Sometimes things just take time and that’s certainly the case in our industry.

Paris Vega (06:58.214)
So you guys are involved with kind of the end goal of a lot of entrepreneurs. You know, a lot of people that listen to this podcast, starting their business, you know, they’re learning about how to get their first customers. That’s part of why people listen to learn the different strategies and tactics. Other people are using, others listen to, you know, learn how to grow their existing business, but I think for a lot of entrepreneurs and business owners, the end goal is to sell.

Arthur Petropoulos | Hill View Partners (07:07.223)
That’s correct.

Paris Vega (07:27.366)
at some point, unless they’re trying to build out just a long term family empire that’s they’re just going to live off of and pass down to their children. So could you speak to any of the things that you guys look for as, you know, considering other entrepreneurs listening to the show, what’s something they should consider when building their business to sell, structuring their business, making decisions when they’re in the midst of it?

Arthur Petropoulos | Hill View Partners (07:36.066)
Sure.

Arthur Petropoulos | Hill View Partners (07:46.35)
Sure.

Arthur Petropoulos | Hill View Partners (07:55.874)
Sure, that’s a good question. I’d say there’s two things to contemplate here. So the first is that the business will transact at some point, and what I mean by that is whether the business is sold to a third party or it is given to the next generation of children, given the finite lives that we have, it will change hands. And therefore,

Paris Vega (08:04.181)
Okay.

Arthur Petropoulos | Hill View Partners (08:16.898)
the business should always be thought of during the building process of how do you make it sellable in trying to make a business that has that enterprise value because at some point it’s going to change hands and it’s important to do that. You know, I always use the analogy that even if you didn’t wanna get married this year, wouldn’t you wanna create a character and a personality and characteristics and attributes that a wonderful person would want to marry you because even if it’s not something you do today,

It is going to be something that perhaps down the line you want to do. And it’s not a running a good business is like being in fantastic health. You can’t decide to do it on any given day. It has to be something that’s very gradual and compounding. And so I’d say, so that’s the one perspective of it is that these are going to transact. So people should have the perspective of making a business sellable or creating enterprise value along the way. And then digging more into the

Paris Vega (08:45.502)
Yeah.

Paris Vega (08:59.894)
It’s a good metaphor.

Arthur Petropoulos | Hill View Partners (09:11.95)
granular details of what that actually means. We always say, and I believe it was Marcus Lamonis quote, was people, process, and product, right? So focus on what are the people in your company? Is it definable what they do? Is it definable the things they focus on? Are the processes in the company repeatable and are spanning sales, execution, operations? Are they, again, in a machine-like fashion that’s not random? And then lastly,

You can really define what the service is, both why is it special and what end audience do you solve pain for or product the same way. That creates the enterprise value. So we always say the goal should be creating enterprise value. Enterprise value is consisting or comprises of people process product. The more you can make those things seamless and self-perpetuating, the more value you’re going to have in the business.

Paris Vega (10:08.97)
Great insights there. That’s really good. Yeah, I really like that analogy of looking at it like health. You can’t just say, all right, now we’re going to get healthy today. Because yeah, it’s like that compounding result over a long period of time. It’s not something you can just do all of a sudden.

Arthur Petropoulos | Hill View Partners (10:15.863)
Right.

Arthur Petropoulos | Hill View Partners (10:29.034)
Right, I think, look, it’s easy to get into the headspace of saying I should have started this then, I should have, but we say the best time to do something is when you want it to do it, the second best time is now, so might as well pick the second best time.

Paris Vega (10:36.63)
Mm.

Paris Vega (10:41.916)
Yeah.

Yeah. What do you think the most common problems are that come up when you guys are looking at, um, helping a business exit or do you acquire businesses as well or you’re just helping? Okay.

Arthur Petropoulos | Hill View Partners (10:57.406)
No, yes, we are, you call it in the investment banking world, sell side advisors. So we never represent the acquirers or the capital providers. We’re always representing the company and the ownership and executives looking to either sell or find the capital.

Paris Vega (11:13.558)
I got you. All right, so working with these companies that you help get sold or you help them get acquired, what do you think the most common problems are that entrepreneurs or business owners have when they’re kind of going through this process maybe of not being optimized for selling and trying to transition?

Arthur Petropoulos | Hill View Partners (11:33.47)
I think it’s poorly defining and measuring those three variables, right? So when you dig into people, there needs to be an organizational chart for the company. It needs to be defined what is everybody’s area of expertise. And it’s a good thing if people are cross-trained such that there’s no one point of failure within the personnel of a company, but at the same time, they do need to be defined. When you have, oh, that’s…

Paris Vega (11:38.469)
Okay.

Paris Vega (11:54.422)
Sure.

Arthur Petropoulos | Hill View Partners (11:58.57)
you know, that’s Elizabeth, she does just about everything. That’s Bob, he does all this stuff. When it becomes difficult to define, it becomes difficult to ensure for and therefore it becomes difficult to value in many ways. And so processes are the same way. Is it repeatable, is it dependable? So you alluded to sales. Is there a repeatable sales process that could be depended upon that is durable? So if a company says to us,

Paris Vega (12:04.918)
Thank you.

Arthur Petropoulos | Hill View Partners (12:25.118)
Well, we do outbound marketing. What does that look like? Well, we do some email and some cold calling. Well, how many emails do you send a day? How many cold calls are made a day? What does that typically yield in terms of leads, in terms of new customers? And although it sounds nitty gritty, those are the important variables because if you can define it to say, well, we put out this many emails every day and therefore we get this much back, it A, substantiates that it is a reliable process and B, shows that

If you did more outbound, you’d probably get more response. So it shows there’s an ROI on that. And so again, you can dig into similar metrics relative to operations of businesses, as well as the execution of businesses, but those are that from that side, and then I’d say from a service product or offering side, you really want to know who your best audience is. Or you can’t, if you try to do everything for everyone, you do nothing for nobody. Right. And so how do you define your audience?

Paris Vega (13:20.757)
Yeah.

Arthur Petropoulos | Hill View Partners (13:23.966)
What is the niche and sub-niche, right? And so we always say, okay, we help companies sell themselves that generate one to $10 million in profit a year that are privately held, that are owned by families, entrepreneurs, or small groups of investors, right? So there’s three layers to that. And so when we work with other prospective clients, who’s your audience? Well, they are physicians. What types of physicians? Okay, any particular geographical, demographic, age, subspecialty.

The more you can define it, then that’s helpful. So what I’d say is that it’s never a fatal issue because a lot of times, if a company’s been in business for a long time, they do something right. They are exceptional at something. It’s just a matter of defining it and then safeguarding all of the pieces that work around in the machine. But that’s a lot of the preparatory work, if you will, that needs to be undertaken to. It’s not that a company won’t sell without that, but if you do that, the terms and the…

structure and the transaction would be a lot better.

Paris Vega (14:25.578)
Do you guys help a business narrow their target market, for example, as part of the process?

Arthur Petropoulos | Hill View Partners (14:34.002)
I think oftentimes it’ll happen incidentally in a way. Like if we’re having an initial conversation with someone and they say, hey, we sell this service, who do you sell it to? Well, 90% to doctors and 10% to circus actors. We say, well, that seems like a very disparate group of people is one more profitable than the other. What you oftentimes see is that sometimes businesses will do a lot of work that’s effectively not profitable for small…

things just to get business or maybe they hung around for a long time, but the core profit driving center of a business is usually the meat of what they do. And so sometimes if we’re having very early conversations with someone, we’ll have a chat and they’ll say, you know what, we are going to narrow things down a touch. Other times when we’re selling a business, it may not change as part of the transaction, but we’ll at least highlight the opportunities that Ford Perspective acquires to know this is the real core group of customers where the profit is driven.

Here’s the addressable market and how we think we would pursue it further. So there are certain things that are executed as part of the plan. And then part of the plan is just painting the picture so that an acquirer really knows where the value drivers are, which again allows them to pay a higher price for something.

Paris Vega (15:51.838)
This is a lot of value you’re putting out here for entrepreneurs.

Arthur Petropoulos | Hill View Partners (15:54.748)
I appreciate that.

Arthur Petropoulos | Hill View Partners (16:00.714)
I think it’s a bit of, you know, we’re in the age and every time I’m on YouTube and there’s an ad that says, you know, get more passive income and more side hustles. And it’s really difficult to be a dabbler in anything and do well, right? Because there’s somebody obsessed with every single space in the world, right? Like if you said, I want to dabble in buying and selling collectible coins. I mean, it could be anything. There’s someone who

Paris Vega (16:11.316)
Yeah.

Arthur Petropoulos | Hill View Partners (16:29.37)
eat, breathe and sleeps that thing. And that person’s gonna eat your lunch if you’re not equally obsessed. So I think the one thing with businesses is as they evolve, they sometimes get these appendages of opportunity, right? Oh, we saw this opportunity, we chased this thing down and we were doing a little bit of this and, oh, we do a little bit of this on the side. And sometimes it really has to be focused. And that’s why people sell businesses sometimes. You know, we’ve had, I can give you an example. We had a…

a client who owned a wonderful business but was focused on buying and developing real estate. Over time, proceeds from the business were being redeployed into real estate to the point where the real estate was becoming the business. There was this other legacy business that was no longer the obsession. We were ultimately able to sell that business at the highest point possible because it hadn’t

you know, I think if it went too much further without the person being obsessed with it, you can lose market share, you can lose opportunities. So the gentleman was very smart to sell the business at a point where he was still obsessed with it so that he could maximize value, but then he could be obsessed with the new thing, right? Because as the saying goes, we can’t serve two gods and that’s true in business many times too. So some food for thought.

Paris Vega (17:47.894)
Bye.

Paris Vega (17:51.45)
Yeah, that’s, I think that’s tough, especially for modern entrepreneurs. When the barrier to entry for any kind of digital type business is so low, you can start 10 businesses a day if you want to, you know, it’s so easy. Right.

Arthur Petropoulos | Hill View Partners (17:59.278)
Correct.

Arthur Petropoulos | Hill View Partners (18:03.838)
Right, but the competition is fierce. Look, I’ve seen people do it where they had five businesses and one of them just takes off, but most of the time you see people kind of killing themselves on five businesses until they say, this is the one I’m really obsessed with, get rid of four, focus on one and c’est la vie.

Paris Vega (18:26.583)
I’ve been there and I’m living that I feel like.

Arthur Petropoulos | Hill View Partners (18:30.71)
I know the feeling well.

Paris Vega (18:32.206)
Yep, too many irons in the fire sometimes, for sure.

Arthur Petropoulos | Hill View Partners (18:35.978)
Look, it’s indicative of good characteristics, right? Sometimes our best characteristics taken too far become negative, but life is more of a, particularly in the digital age and the information age, life is a buffet. It’s not a, it’s not, you know, we don’t risk starvation, we risk overload. And so the point of being able to focus on the one thing, and then the cost of excellence in one thing is having to pass up all the other good things that come along. Those can be painful.

Paris Vega (18:44.768)
Mm-hmm.

Paris Vega (18:53.736)
Right.

Arthur Petropoulos | Hill View Partners (19:05.91)
to say no to the things because you have to focus on the main thing.

Paris Vega (19:09.774)
Yeah, I think that’s super difficult, especially because you can’t tell the future necessarily. And there is that little bit of uncertainty where you don’t know which opportunity is the best opportunity. You know, it’s like in the moment, it’s hard to say like, hey, this is just another good opportunity. I have to say no to versus, oh, wait, is this the thing that’s the opportunity I should focus on and let go of the current? So I think I’ve seen a lot of people kind of get into that mode of.

Arthur Petropoulos | Hill View Partners (19:18.039)
Right.

Arthur Petropoulos | Hill View Partners (19:22.699)
Right.

Arthur Petropoulos | Hill View Partners (19:28.077)
Right.

Arthur Petropoulos | Hill View Partners (19:34.605)
Yeah.

Paris Vega (19:38.75)
you know, kind of not sure which one’s the best to focus on. So you kind of keep a few of them around, you know.

Arthur Petropoulos | Hill View Partners (19:41.528)
Right.

Arthur Petropoulos | Hill View Partners (19:44.998)
Yeah, I mean, what it’s worth over time, we’ve seen that the grass is greenest where we water it. And so, or people say, you know, we’ll sometimes hear people say, I really want to do the thing that I like. But, and this isn’t from clients necessarily, but just other entrepreneurs we chat with. And they’ll say, I really want to do the thing I like. And my perspective is you’re only going to like something when you’re good at it. And you’re only going to get good at it if you do it enough.

Paris Vega (19:53.996)
I like that.

Arthur Petropoulos | Hill View Partners (20:13.866)
and you’re only going to do it enough if you’re willing to do it when you’re not good at it and you’re only going to do it when you’re not good at it if you’re okay doing it when you’re unhappy. So the point is, if you find an angle that works, do it through the misery and then when you get good enough at it, you become happy because you’re good at it and then you get the results.

Paris Vega (20:13.909)
Yeah.

Paris Vega (20:21.822)
Yeah.

Paris Vega (20:26.868)
Yeah.

Paris Vega (20:32.478)
beautifully said. Now that’s great advice. I like that a lot. It kind of flips on the head. Some of the other things you’ll hear preached around. I think in some of the hustle culture or the different entrepreneurial advice you’ll you might hear on the internet. I really like that just pushing through the struggle. If you’ve kind of done some basic evaluation of the direction you’re headed in and it’s a good productive direction to head in. Yeah.

Arthur Petropoulos | Hill View Partners (21:01.974)
And I’ll, right, and I will admittedly steal this concept from Alex Hormozi, but I think he says it really well, is that there’s this concept of uninformed optimism when you start something, right? I mean, if you started playing chess today, you’d be thrilled because you’re getting through the easy matches and you’re getting good, right? If you started a business today, the first few steps are easy, you’d get it all lined up, but then you hit this point where you say, wow, this is really hard.

Paris Vega (21:02.09)
the grind is necessary.

Paris Vega (21:11.527)
Okay.

Arthur Petropoulos | Hill View Partners (21:30.902)
this is something that somebody’s obsessed with. And then you become, you get this, so your uninformed optimism into informed pessimism. And then that informed pessimism leads to that, what he coins is the Valley of Despair, which I think is a good metric, right? Because then you say, this is never gonna work. I can’t believe I was dumb enough to try this, blah, blah.

But then if you push through that, that’s where you get to that informed optimism and that’s where the result lies. And so I think what happens with most people is they start with this uninformed optimism about a particular angle. They then see it’s hard, they get discouraged and then they jump to the next thing because it has that initial easy first 10% again and they say, wow, this is exciting. I’m going to do this thing. And then they hit the same level of hard. And so, you know, if you go back to like the Bible, after they left.

after Moses escaped, they walked around the desert for 40 years because it was a, they say it was a three week walk, but they took 40 years doing it because it kept messing up and having to go in circles again. So what we find sometimes is that people pivot when it’s just hard, it’s not impossible. And if you do that, you ultimately just hit the same wall the next opportunity, the next time. You keep rebuilding the foundation, but never clearing through. So at some point you need to take your beatings. We always say better to take them sooner rather than later.

Paris Vega (22:25.383)
Right.

Paris Vega (22:36.703)
Hmm.

Paris Vega (22:52.07)
Yeah, that’s good. I can definitely think of some specific examples in business where you end up doing a lot of things to try and avoid this really uncomfortable situation or thing or hard new skill that the team might need to learn to move forward. And yeah, over years, it just becomes a recurring problem until you break through and just decide to go ahead and do whatever it takes to.

to acquire the new skill or technology or whatever it is that you have to do to push through.

Arthur Petropoulos | Hill View Partners (23:25.47)
Yeah, what’s the expression? How do you eat an elephant? One bite at a time. That’s it.

Paris Vega (23:30.046)
That’s right. That’s right. Yep. All right. So another part of your business is helping the businesses acquire funding. Okay. A little bit about, okay. Speak a little bit to that part of it.

Arthur Petropoulos | Hill View Partners (23:42.082)
Correct. Yeah, capital of all sorts.

Sure, so as a business grows, sometimes they need something as simple as a new banking relationship and other times they may need capital to acquire another business or capital to pursue a new growth idea of hiring people, of starting a new sales effort, of sometimes just facilitating contracts or sometimes it can be something that’s more akin to…

one partner buying out another partner. There’s a million different scenarios for capital, but capital is the oil that keeps the business going. And so we are very good at creatively finding capital in different situations, depending on what the objectives are. And so it tends to be, so when we’re selling a company, it tends to be one to 10 million in pre-tax profit. We’re finding capital for a company. It oftentimes fits the same parameters, but ultimately with that,

boils down to his capital that tends to be a million to a hundred million dollars in amount of capital that a company is looking for. But again, across all different scenarios, across all different industries with the same complexion of ownership, same complexion of business size though, because what people don’t realize is that when you’re talking about billion dollar companies, it gets very industry specific. But when you’re dealing with the lower middle market, it’s oftentimes…

Paris Vega (24:45.663)
Mm-hmm.

Arthur Petropoulos | Hill View Partners (25:06.818)
the same exact participants looking across industries just the same to deploy capital or to buy businesses. And so swimming in that swimming pool every day is the most valuable way for us to have a pulse on the market and insights and really some of the inside baseball of what’s going on.

Paris Vega (25:24.954)
Okay. So could you maybe give us a hypothetical situation, maybe like a really common situation where somebody might use that service to get capital and maybe the most common ways that you guys would find that capital.

Arthur Petropoulos | Hill View Partners (25:31.886)
Sure.

Arthur Petropoulos | Hill View Partners (25:40.718)
Sure, so I mean a very common situation that someone will come to us with is they have a call it a distribution company. They buy things and then they sell those things. They stock up inventory and then they sell it and then oftentimes there’s a delay of when they receive payment for it. And so they say, you know, we need working capital because we need to keep buying stuff whether it’s pharmaceutical supplies or whatever it might be.

and then we need to sell it, but then we need to go buy more stuff before we receive payment. And so you have these accounts receivable, you have inventory on the balance sheet, but it’s not cash. And so there are lenders. And so sometimes it’s simply a bank coming in and providing a line of credit for that working capital. In other situations, for one reason or another, the banks aren’t as interested in the company and we’re able to secure similar capital from non-bank lenders. And people don’t realize is that

There’s this enormous spectrum. I think what people think of when they think of capital is they think of a bank, they think of a venture capital firm, and they think of a rich person. And those are the three people that provide capital. But in reality, there’s a million different, there’s family offices, there’s non-bank lenders that are SBA backed, there’s non-bank lenders that are private equity backed, there’s industry specific lenders, there’s asset-based lenders, there’s, and in this case, you’d call it either factoring or inventory and accounts receivable.

financing. So that’s an often though situation we see is that kind of working capital solutions are what a lot of growing companies kind of run into at a certain point where they just don’t have enough cash to keep meeting all of the inventory and AR demands of the company.

Paris Vega (27:19.874)
Okay. And what’s the most common capital source that you end up using?

Arthur Petropoulos | Hill View Partners (27:29.638)
Yeah, it’s a mixture of bank lenders and non-bank lenders and the non-bank lenders being private equity ask lenders that will look at more storied situations. So a situation where either company is turning itself around, either the company’s working through some things, company needs very, I guess the expression in business sometimes is, if you want something, you can have it good, fast or cheap, pick two, right?

And so if you can get capital good and you can get it at a low cost, it will come from a bank, but it will not be fast. Right, and so if you have a situation that you say, I need capital in two weeks to really capitalize on this contract that we’re gonna get and I need to get it done, right? So you need good capital, you need fast capital. It’s not gonna be as cheap as a bank can do it because a bank can’t be that fast. So the non-bank lender in a situation may come in at a short-term loan.

to facilitate that so you can get that contract. And then oftentimes what we do is we bring in short-term capital on a one-year basis, let’s call it. And then once that deal or that opportunity has been digested, well then you can bring in a traditional bank to refinance out that shorter-term capital. So almost think of it like when people buy houses, they’ll sometimes bring in a hard money lender or a construction loan. And then once they get the renovations done, they’ll bring in a bank to just kind of give it a traditional mortgage.

Paris Vega (28:31.082)
Gotcha.

Paris Vega (28:55.954)
Yeah.

Arthur Petropoulos | Hill View Partners (28:57.802)
Sometimes you’ll see that with businesses. They’ll bring in short-term capital to solve for the acute situation, but then the goal of effectively refinancing them out with a longer-term product at a lower cost of capital.

Paris Vega (29:09.894)
And so that’s basically different interest rates when you’re saying like cheap capital versus expensive capital.

Arthur Petropoulos | Hill View Partners (29:14.686)
Yeah, for the most part, there’s other variables as well. I mean, every lender has the right to foreclose. So if you were to default on a loan, bank can oftentimes seize the property or the assets or whatever it is, right? Banks are less likely to be as aggressive. So the non-bank lenders can be more aggressive. And that’s why it’s important. We tell people not all capital is the same. So if you had three non-bank lenders that would each give you $2 million at 12% for one year,

Paris Vega (29:28.019)
Right.

Arthur Petropoulos | Hill View Partners (29:42.69)
just because they’re giving you the same terms does not mean it’s the same risk profile because you have to know which of these lenders are notorious for pushing a company effectively into a default and then seizing the assets. Which of them behave more like banks and are more willing to kind of work with you. And so there’s part of it’s science, part of it’s art, but that’s some of the nuance that we see in the market.

Paris Vega (30:07.798)
Hmm. And are some of the situations like just selling part of the company to raise funds, that kind of thing?

Arthur Petropoulos | Hill View Partners (30:18.686)
Yeah, so I think that hits a good topic is that we think of exits and we think of capital as a binary, but in many ways it is a continuum where I think people think I can either sell 100% of my company or I can borrow a bunch of money and I can keep 100%, but in reality, to your point, there are situations depending on the size and what the company does where people will come in and buy 10%, 33%, 49%, 51%, 80%.

and sometimes they’ll sell 70% of the company, but a private equity firm will come and fund the next five years of growth. Sometimes they’ll buy 33% of the company, but then they’ll sit on the board and help you with sales. And so there’s a lot of nuance in between, but it’s all situationally driven. And so what we always say to clients is, because sometimes clients will come to us and say, I need venture capital to do this thing. I need growth equity to do this thing. I need a bank to do this thing. And what we say is,

Paris Vega (31:02.234)
Okay, that’s cool.

Arthur Petropoulos | Hill View Partners (31:16.822)
let’s define the thing that we want to get done and then kind of work our way back to what is the best capital that would solve for that. Because oftentimes when you really kind of define what it is that you’re looking to achieve, maybe the cost of capital could be lower, maybe it could be a less onerous counterpart that you could deal with. It’s important to really crystallize the goal and the path and then you can kind of piece in who the optimal capital provider would be.

Paris Vega (31:44.374)
Okay. So that I think gives us a really good understanding of what you guys do, how you bring value to a business. And it’s got my wheels turning now about, oh shoot, I might need to get some capital in some way. So your target, what was that?

Arthur Petropoulos | Hill View Partners (32:02.382)
You know what? All good things come from the mirror.

I said all good things to keep on the radar. We should, I always say, money is like air. You only think about it when you don’t have it. And so, important to always keep it in mind so you don’t get to that situation.

Paris Vega (32:09.275)
Yeah, for sure.

Paris Vega (32:15.699)
Mmm.

Paris Vega (32:21.014)
Nice. And so your target, you said, it’s like companies that have like one to 10 million in profit. Was that one of the metrics? Okay. And if you found that like below that level, it’s basically like you should just go get a loan from the bank basically, or is that just what you guys have found the most success with or is that like a principle? You know what I mean?

Arthur Petropoulos | Hill View Partners (32:28.225)
Yes.

Arthur Petropoulos | Hill View Partners (32:39.382)
It’s.

Arthur Petropoulos | Hill View Partners (32:44.218)
Yeah, I don’t think that it’s not doable at a level smaller than that. I just think that when we, when we talked about process, when we talked about people, when we talk about product, when you have all of those things together and you’re north of a million dollars in EBITDA or pre-tax profit, effectively you’re de-risking the key person risk of a business, right? Like think about it, the more profitable a business gets and the bigger it gets, the less important one person is to kind of

Paris Vega (32:48.669)
Mm-hmm.

Arthur Petropoulos | Hill View Partners (33:13.014)
building or destroying that business. And so when you get lower than a million dollars, and we’ve done situations that have been called 400,000 to a million, when it’s north of 500,000, it can be, we’ll still take a look and have a conversation because it can be situationally dependent. But for instance, a company that does a couple hundred thousand dollars of profit, or doesn’t do profit, but has sales in the more early stage, the capital available for that is going to be so dependent on the founder that oftentimes,

Paris Vega (33:40.767)
Hmm.

Arthur Petropoulos | Hill View Partners (33:43.018)
it would just be easier for them to go and have the conversations themselves. And so we’ll provide guidance and we’ll say, hey, here are some ideas of people you wanna talk to. But if we go to a VC firm and say, this company is not making any profit, but it has this revenue and it’s got this idea, they’re gonna say, well, why am I talking to you? I wanna talk to the owner, right? But, or the founder. But if a company is making a million dollars a year, then the founder is important, but there is a machine in place. And so the more the business gets out of one person’s head, the more readily financeable it is, and then the more…

Paris Vega (34:00.095)
Yeah.

Arthur Petropoulos | Hill View Partners (34:12.81)
value someone like us can actually add to the process. And so it’s not so much that it can’t be done for smaller situations, I think it just becomes a much heavier lift and much more dependent on the founder to the extent that the value add we can provide for the cost that we have is diminished. And that’s why we always wanna be in situations where I think we can optimize our value add.

Paris Vega (34:37.962)
So let’s go back to kind of the customer acquisition side of things and how to get customers and some of the stuff you guys have seen. Let’s get into some of the tactics a little deeper. You mentioned you’re on the different platforms. You’re doing different things certain times a week. What type of content do you put out there? Is it video-based or just text?

Arthur Petropoulos | Hill View Partners (34:56.429)
Sure.

Arthur Petropoulos | Hill View Partners (35:03.054)
Sure.

Paris Vega (35:05.962)
type messages, images, is there a certain pattern or any kind of strategy that you could share?

Arthur Petropoulos | Hill View Partners (35:11.922)
Yeah, I don’t think there’s necessarily a pattern to it as much as

We’re constantly speaking to people all day and so potential clients, existing clients, and there’s always these interesting things that come up where people say, what are, how do you really value a company? What are the variables that are important? What happens during diligence? How do you actually reach out to people? How do you move a dialogue with an interested party from conversation to giving us an offer? And so whenever those things kind of strike and we say, well, that’s an interesting topic, that’ll be the subject matter of the video that we put out. And so we’ll say, okay, the five things to consider when.

you’re doing this, the four steps to doing that. And that’s kind of our source of content. And so there are situations where people reach out to us because they’ve seen the content and they wanna have a conversation and that ultimately becomes a new client for us. But oftentimes we want the content to be nurturing in a way where let’s say we get introduced to someone or we have a conversation with somebody and it’s cold or there’s going to be a phone call and it’s going to be cold. We haven’t chatted with them before.

we’ll send a link ahead of time in addition to kind of our Calendly and say, hi, find some time, we’d love to chat. But in addition to that, check out our YouTube channel where we tackle a lot of these items. And that way, I think A, people get to self analyze and answer some questions they have, but then B, there’s a level of familiarity. And so when ultimately we have that dialogue, it’s not quite so cold, right? Would they feel like they know you to some degree? And most of the time that’s a good thing, right? I’m sure some people watch it and say, boy, this.

This bloke is so boring, I don’t even want to talk to him. Thankfully, that does not happen. But I would say is that that’s how we use the content. It’s more, if you want to think of it as lead nurturing or just educational in that way. And that way when we chat with people or before we chat with people, they can get a lot of questions answered.

Paris Vega (37:00.052)
Mm-hmm.

Paris Vega (37:05.578)
So all the content that you create, is it only for your defined target audience? Would you say that? Because you said it kind of bubbles up from all the conversations you’re having with your target customers. Is that kind of the general strategy is we’ve really clearly defined our target audience, so that’s who we’re making.

Arthur Petropoulos | Hill View Partners (37:28.411)
The answer to that is no, because I think that there are universal truths in business and life. If you and I watched a video from David Goggins, neither of us are going to go run 50 miles tomorrow. But many of the concepts of what he, and forgive me if you’re an ultra marathoner, I’m just making the assumption here. But the idea being that

the things that were necessary for him to build the ability to do these things were likely, they are still applicable. And so a good, the fundamentals of a good business are not that different. If the business is small or if the business is big. And so although our conversations and clients and prospective clients make their way through the content and it is all applicable to them, it does not mean it’s not applicable to people that fall outside of that curve as well, because at the end of the day, a good business, just like

A healthy person, a smart mind, a good soul is, a lot of times has the same attributes kind of across the spectrum.

Paris Vega (38:32.594)
Got it. Yeah. But it does, I guess, speak to your target audience as well. I guess that’s the focus, but you’re not saying you’re like hindering it from being spread to other things, because a lot of the stuff that you’re sharing is just basic truths that apply to so many other types of businesses, even those that are outside of your exact target audience. OK.

Arthur Petropoulos | Hill View Partners (38:41.195)
Yes.

Arthur Petropoulos | Hill View Partners (38:53.362)
Right. That’s correct. So I think we don’t, all of the content we create is applicable to our target audience. We don’t create any content that’s not applicable. So you wouldn’t see a video for me saying, how do you sell a $10 billion publicly traded company to a multi-national conglomerate? Cause we don’t do it. We haven’t done it. And I think.

Paris Vega (39:09.266)
Yeah. Right.

Arthur Petropoulos | Hill View Partners (39:14.614)
The trouble people get into with content is they start talking about things they haven’t done. And that’s one thing that we never wanna do. We’ve done all the things we’ve talked about and therefore we can speak to it with the utmost confidence because we’ve had the experience. Now someone can draw a conclusion and say, despite the fact that you’ve done that Arthur, I still think you’re an idiot, but they cannot take away the fact that we did the thing and that was our observation, our experience from it. And so that’s, we really wanna stay.

within our strike zone because that’s the things we’ve actually done and the things we can attest to.

Paris Vega (39:49.97)
So that goes along with the pattern that we’ve kind of uncovered throughout all the episodes of this podcast. It seems like the best businesses have clearly defined their target audience and find some way to connect with that target audience, whether it’s in person through events or digitally through, you know, dedicated YouTube channel or steady stream of content or something, but they all seem to find that really clear distinction of who they’re targeting. And

and consistently connecting with that audience. And I share often the, one of the most kind of unique versions of that, that just shows the importance of it, was John Darbyshire from, I think it was episode like 17 or 27 or something, but he ended up building this business that sold for like $200 million, and they never did any advertising or marketing or anything other than an event that was only for his customers.

And they built basically a community around the customers of their business. And they would end up, they’d meet like a couple of times a year and the customers would end up upselling each other. And it just showed that even if it’s a, the old school kind of traditional tactics, it just shows the value of connecting with your, your target audience and how powerful that is.

Arthur Petropoulos | Hill View Partners (40:48.046)
That’s wild.

Arthur Petropoulos | Hill View Partners (40:51.971)
Sure.

Arthur Petropoulos | Hill View Partners (41:09.398)
Look, I think you’re right. I mean, the most successful hot dog stand is the one next to the starving crowd, right? And so it doesn’t have to have the best hot dog. Now, obviously you wanna have the best product at the end of the day, but that being said, you’re right. It’s knowing what you do, knowing who you do it for, and then being able to tell them about it. And that’s the important part. And I think sometimes in this world of these ultra fast, you know, hooks and CRMs, it can be very complicated, but the…

Paris Vega (41:15.434)
Yeah.

Arthur Petropoulos | Hill View Partners (41:38.19)
end of the day, all that should really be doing is accelerating or multiplying the effort you can put out there, giving you leverage, but you have to know what actually works, right? And so if we help people sell their companies, if we are marketing on LinkedIn, that’s where people who own companies are congregating. If I went and was dancing on TikTok talking about what we did, I assure you we would get no business because again, it’s not where necessarily the audience that we address congregates. And so I think you’re absolutely right. It’s knowing

defining the audience and then figuring out where they are and then telling them about your stuff.

Paris Vega (42:16.528)
Would you recommend any books to entrepreneurs or maybe to other folks in your industry who are trying to build this type of business? Anything you want to put out there that you recommend people to read?

Arthur Petropoulos | Hill View Partners (42:20.974)
Sure.

Arthur Petropoulos | Hill View Partners (42:29.89)
Sure, I would say four things. One, being a high level business book is the Intelligent Investor, Benjamin Graham. It just tells you how business fundamentals work, why they’re worth what they’re worth, and it just makes you understand how the business machine works. If I was gonna talk about sales and marketing and growing a business and building on operations, that’s where I would point to Hormozis, either $100 million offers, $100 million leads. If I was saying character,

in terms of building up your own fortitude to withstand the entrepreneurial journey, I would point to Marcus Aurelius’ meditations and kind of that stoicism. And then the last thing I’d say is I keep behind me because you’re going to have a lonely, a lot of lonely nights of just you and God in this business is you better pick up a Bible or a Koran or a Torah or something too. So that’s the…

Paris Vega (43:10.935)
Mm. Yeah.

Paris Vega (43:19.786)
Hmm

Arthur Petropoulos | Hill View Partners (43:25.57)
The four books I tell any young man or woman to pick up as they go through this battle.

Paris Vega (43:29.238)
Nice. That’s an epic list. How you have been through. Most of the yeah, I think I’ve been through all those. All great recommendations. I’ll put links in the show notes to all those books and Arthur, I’ll put links in the show notes to your business, the Web Hillview partners website and your LinkedIn. But thanks for being with us here today. This has been a great episode.

Arthur Petropoulos | Hill View Partners (43:33.314)
I appreciate that.

Arthur Petropoulos | Hill View Partners (43:46.062)
Sure.

Paris Vega (43:58.962)
lot of value that you added here today. So yeah, is there any closing thoughts, anything you want to promote or put out there in the world?

Arthur Petropoulos | Hill View Partners (44:09.222)
Oh look, I appreciate the time, Paris. I think you have a great podcast. We love tuning into the episodes and so happy to be part of the archives and now look forward to the next one. So this is all good. Appreciate it.

Paris Vega (44:17.797)
Hehehehe

All right, we’ll see y’all next time. Bye.

Arthur Petropoulos | Hill View Partners (44:24.991)
Be well.


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