Scale To Win with Dominic Monkhouse The 80/20 Deal Structure: Why I Never Buy Businesses Outright | E363
Council estate South London to 30 mergers and acquisitions. No capital, no plan, but always knew wealth was what he wanted. Lee Smith went from DJ to jewellers to law firms to web design and IT—then discovered mergers and acquisitions in 2014 and everything changed. Now he's building two sector groups to £10M in profit, buying businesses at 3-4x multiples and exiting at 7-10x, and he's got some contrarian views that'll make you rethink everything about UK business ownership.
In this episode, Lee reveals why buying 100% of a business is almost always the worst deal structure, why you don't need to understand what a business does to own it successfully, and why by the end of this decade the most valuable asset in Britain will be an SME producing profits. He shares his ethical partnership structure that keeps founders and directors aligned, explains how he bought an HVAC company he barely understands and grew it while only being there one day per week, and why he thinks the UK government is waging war on business owners—making it harder to employ people, easier for rogue employees to sue, and creating a clear choice by 2030: own a business with options and spare cash, or be an employee struggling more than ever.
What you'll learn:
🏢 Why you don't need to understand a business to own it (just need right people in right seats)
💰 How to structure deals that keep founders and key directors aligned (20% founder retention + director equity)
📊 What to look for when buying: £2M+ revenue, second-tier management in place, profitability doesn't matter
🎯 The buy-build-sell playbook: buy at 3-4x EBITDA, build to £10M+ profit, exit at 7-10x
⚠️ Why the UK government is anti-business (more taxes, more regulation, easier to sue companies)
Book recommendations:
Who? - Geoff Smart & Randy Street - https://www.amazon.co.uk/Who-Method-Hiring-Geoff-Smart/dp/0345504194
Think and Grow Rich - Napoleon Hill - https://www.amazon.co.uk/Think-Grow-Rich-Napoleon-Hill/dp/9388423526
Die with Zero - Bill Perkins - https://www.amazon.co.uk/Die-Zero-Getting-Your-Money/dp/0358099765
The Fourth Turning - William Strauss & Neil Howe - https://www.amazon.co.uk/Fourth-Turning-American-Prophecy-Rendezvous/dp/0767900464
About the Guest:
Lee Smith grew up on a council estate in South London with no capital behind him and no plan to wealth—but he always knew wealth was something he wanted to achieve. His career path was unconventional: DJ, jewellers, law firms, then starting his own web design and IT company. In 2014, he discovered mergers and acquisitions, which "completely flipped the switch" in his life. He's now completed 30 M&A transactions and is building two separate sector groups (HVAC/construction and renewable energy) to £10M in profit.
His key message to business owners: the UK government is waging war on individuals through cost-of-living, energy costs, and employment regulations. By 2030, there will be a clear choice—either own a business and have options and spare cash, or be an employee struggling even more than now. His ideal scenario: buy more businesses, make all employees shareholders through EMI schemes, so when they exit, everyone gets a payday that gets them onto the wealth ladder.
Connect with Lee Smith - https://www.linkedin.com/in/leeantonysmith/
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Chapters:
00:00 Introduction
02:03 Views on UK government's impact on business
06:58 Why Lee chose to buy into HVAC sector
08:44 Structuring deals with existing management in mind
12:28 Challenges small businesses face in scaling and compliance
14:36 Critique of UK government’s business policies
20:02 Advice for first-time business buyers
25:11 Offering employee share schemes to improve engagement
31:27 Reflection on challenges like contracting with tier one customers
35:27 Recommended books that influenced Lee’s outlook
37:46 The Fourth Turning's impact on Lee's family planning