Zero-Dollar Distressed Asset Acquisition
Walk someone through acquiring a business — or its most valuable assets — for zero dollars out of pocket, using Codie Sanchez’s distressed asset playbook from My First Million Ep. #176.
When to Use
The user wants to buy a business but doesn’t think they have the capital. They might say:
- “I want to buy a business but I don’t have money”
- “How do I structure a no-money-down deal?”
- “There are competitors going out of business — how do I take advantage of that?”
- “What is seller financing and how does it work?”
- “Can I acquire a customer list without buying the whole company?”
The Core Principle
From Codie Sanchez (CarCWCl1JFk.md):
“Think about those businesses going under — they’re worth zero to the market, but they have value. They have a client roster. They have goodwill they’ve built up.”
Most people look at a distressed business and see a corpse. Codie sees decomposed value waiting to be reassembled. The business may be worth zero as a going concern — but its component parts (customer list, equipment, brand, relationships) still have real value to the right buyer.
The zero-dollar framework exploits this gap: the seller is about to walk away with nothing. Any structured payment you offer is better than nothing. That’s your negotiating position.
“If I owned any business, I would be out there right now — for every business closing on Yelp, sixty percent of the businesses on Yelp that close temporarily close permanently — going after every one of their client lists. Give the owner a rev share. Pick up the customer base without spending a dime.” — Codie Sanchez
Step 1: Find the Distressed Targets
Don’t wait for businesses to hit Craigslist or BizBuySell. By then, they’re either gone or someone else has picked the carcass.
Where to look:
- Yelp “temporarily closed” listings — 60% of those close permanently
- Industry Facebook groups and local business associations
- Your own network: “Who do you know that’s struggling or thinking of closing?”
- Sector-specific newsletters (gym owners, restaurateurs, boutique retail)
- Local chamber of commerce — they know who’s in trouble
Ask the user: What industry are you in or adjacent to? What kinds of businesses in that space are currently struggling? Who do you know who might be quietly winding down?
The best distressed deals come from warm introductions, not cold lists. Start with your existing network — you may already know someone whose business is failing.
Step 2: Identify the Stranded Asset
Before approaching anyone, identify exactly what value still exists in the distressed business. Not the business as a whole — the specific asset that has value to you.
Codie’s example (CarCWCl1JFk.md): When pandemic-era Pilates studios and barre studios were going under:
“They have a client roster. They have goodwill they’ve built up.”
The equipment could be bought for pennies at auction. The lease was underwater. But the client list — a database of people who had already demonstrated willingness to pay for fitness classes — that was the real asset.
Ask the user: What specifically does this distressed business have that you want?
- Customer list / email database
- Equipment or physical assets
- Brand recognition in a local market
- Supplier relationships
- Trained staff
- Physical location / lease
Focus your offer on acquiring that one asset, not the whole company. This reduces your risk and simplifies the negotiation.
Step 3: Frame the Pitch for the Seller
Distressed owners are exhausted, embarrassed, and scared. They’re not thinking like sellers — they’re thinking like people drowning. Your pitch has to meet them there.
The framing Codie used:
“Hey, I’m really sorry you’re going through this. What if we could help annuitize you a little bit? You could get some revenue off a business you’re about to close for zero.” — Codie Sanchez
Three things this framing does:
- Empathy first — “I’m sorry you’re going through this” lowers defenses
- Reframes zero to something — any payment is better than closing with nothing
- Makes it mutual — “your clients have a new home, and we have new clients we can serve”
Don’t open with a price. Open with an observation about their situation and a question about what matters to them in closing down.
Ask the user: What does this seller care about most — getting some money, making sure their customers are taken care of, their reputation in the community, their employees? Tailor the pitch to what they’re actually worried about.
Step 4: Structure the Zero-Dollar Deal
There is no single zero-dollar deal structure — there are several. Match the structure to the asset and the seller’s situation.
Structure A: Revenue Share on Migrated Customers
This is Codie’s Pilates studio playbook. You take over the customer relationships and pay the seller a percentage of revenue from those customers for a defined period.
“For every client that comes over, I’ll pay you out for a year, or six months at X and twenty-four months at Y — however you want to structure it. That way you actually make money while closing.” — Codie Sanchez
- No money upfront
- Seller gets ongoing cash flow from something they were about to abandon
- You get customers — and only pay when they convert
- Risk is minimal: if customers don’t convert, you pay nothing
Structure B: Seller Financing
The seller lends you the purchase price. You pay them back out of the business’s own cash flow. Common in small business acquisitions when the owner wants to retire and has no other liquidity event.
Terms to negotiate:
- Purchase price (often 2-4x EBITDA for distressed assets)
- Interest rate (2-5% is common)
- Repayment period (3-7 years)
- Balloon payment or straight amortization
Structure C: Earnout
Pay the seller a multiple of future earnings over time, not a lump sum today. Seller gets paid more if the business performs well after you take over. You pay nothing if it doesn’t.
Structure D: Assumption of Liabilities
Sometimes you can acquire assets for free by agreeing to assume the business’s liabilities — lease obligations, vendor accounts, payroll. If the liabilities are manageable and the assets are valuable, this is effectively a zero-dollar (or even negative-dollar) transaction from the seller’s perspective.
Ask the user: Which of these structures fits the situation? What can the seller agree to — do they need cash now, or is ongoing income acceptable? What liabilities exist, and are they manageable?
Step 5: Migrate the Asset Carefully
Acquiring the asset is only half the job. If you’re taking over a customer list or a client relationship, how you handle the transition determines whether you actually get the value you paid for.
Codie’s principle: the migration has to be gentle and credible to the customer.
“We do a rev share. We’ll transition your clients from your business to mine, very carefully.” — Codie Sanchez
For customer list acquisitions:
- Get the seller to send the first communication — ideally a warm personal note introducing you
- Frame it as “we found a great home for you” not “we bought your gym”
- Honor any existing commitments (classes, memberships, credits)
- Give customers a reason to convert — a free trial, a discount, a personal call
For other asset types:
- Employees: have introductory conversations before the deal closes
- Suppliers: call key vendors directly and establish your own relationship
- Equipment: document condition before acquisition, not after
Ask the user: How will you communicate the transition to the people affected — customers, employees, suppliers? Who makes the first call?
Quick Reference
| Structure | When to Use | Upfront Cost | Risk |
|---|---|---|---|
| Revenue Share | Customer list acquisition | $0 | Only pay on conversion |
| Seller Financing | Full business purchase, retiring owner | $0 upfront | Must service debt from cash flow |
| Earnout | Business with uncertain future earnings | $0 | Seller may dispute calculation |
| Liability Assumption | Asset-heavy, debt-heavy distressed biz | $0 or negative | Liabilities may be larger than expected |
Search the Archive
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grep -ri "client roster\|customer list\|rev share\|migrate.*client" transcripts/
grep -ri "Codie\|Contrarian Thinking\|micro PE\|boring business" transcripts/
Output
After the session, deliver:
- Target profile — the specific distressed business type and where to find them
- Stranded asset identification — what exactly has value in the target
- Seller pitch — empathy-first framing tailored to what the seller cares about
- Deal structure recommendation — which of the four structures fits the situation
- Migration plan — how to transition customers, employees, or assets carefully
- Offer terms — draft terms for the rev share, seller note, or earnout
Source
How to Buy Distressed Assets, How to Network with Codie Sanchez | My First Million Ep. #176 — Sam Parr and Shaan Puri interview Codie Sanchez.