Latest / The Slump Monkeys Concrete Podcast / 024 - Pierre Villere
Transcript
- CW - Day 2 - 101826: And welcome into the Slump Monkeys Concrete Podcast. Well on our way to being the world's number one concrete podcast. And the way you get to be number one is you get Pierre on your show. Pierre Vill Villary Villary. Villary. Rhymes with Villary. Just screwed up the show. Rhymes with Hillary. You'll never forget it. This is so now I have to shut down my podcast because when you have the most famous guy in all the whole industry sitting at your table and you screw up his name. you just have to shut you just have to shut down and go home. But thank you so much for joining. Well thank you for having me. So I enjoyed doing this, you know, and giving imparting my view of our industry and the and the world we live in. So that's it. So that's exactly what this show's about. So the guests the guests that we have on from Justin Lazenby who's you know got all the QC experience in the world on the concrete side, Ben Lentinny, QC for the cement side. You get Amanda Moeller from the NRMCA, Scott Brewer from From the N RMCA, and you get folks that have different viewpoints, perspectives on the industry, what's important, what are the challenges, where's it going in the future? And you have a very unique perspective on the industry. Maybe for the five people listening that don't know who you are, maybe you could explain what Alan Villary does for the industry. Yeah, let me let me start with that, because that that would be helpful. I will I'll tell you that looking at these different viewpoints is very important and the reason I say that is I learned a long time ago when you get into a conference room and you've got your team and then the team on the other side and you're negotiating a transaction let's say it's very interesting when you break. You go out with your colleagues and I I can this is a perfect example right where I'm sitting and I ask them what did you see and he says I saw a Schumacher sign and a load and go. I said, that's not what I saw in the room. I saw this charcoal gray wall with a green shelf. We were both sitting in the same room. Completely different perspectives. Because it's it's it's the it's where we're positioned within the industry and the angle at which we view into the industry. So let me tell you a little bit about Alan Villary Partners. We are, very simply put, a mergers and acquisitions advisor. we have a real niche, it's a very large niche, because we're the only firm in the country that practices exclusively in construction materials. So ready mix concrete, construction aggregates, and concrete products. we've done over 150 transactions over the course of our our span. We were founded in 1981 by my late partner Bill Allen, and we've had clients in 44 states. So we we represent the vast majority of principles of independently owned companies, family owned companies that sell to their larger competitors, whether it be large regional. players, super regionals, as I like to call them, or the multinationals whose ownership is traded on stock exchanges in Europe or here in the US. So that's what we do. You know, we get hired several times a year by small and large companies, and I've got a wonderful team of guys that do an outstanding job for us in terms of managing the day-to-day of the of the deal making process. got a lot of experience, seeing a lot of things, never stop seeing new things. So so that's our story, that's what we do. No, it's great. So I've I was part of a company for 15 years that that did change hands a couple of times and would bring in a company like Alan Villary. Right. We we used Grace Matthews at our company, and th they aren't specific to construction industry, but we're in the mining space. Grace Mat Matthews liked being in the mining space. And they would come in and they would do that. And I didn't think I didn't even consider that. As like a job that someone could have or a company that could be formed until you met like our CFO and they would come in and say, All right, we're gonna do the due diligence, we're gonna put together the packet of all the financials so people can come in here and they can review the company and the assets and think about doing a sale. And they came in and they're like, well, let's see, let's see your finances. Can you pull that? It's one spreadsheet. Yeah. You're like, this is our master finance spreadsheet. Like, whoa, whoa, whoa, you can't sell to a public company and all your finances are just one. We've got to we've got to really put this thing together. And so you guys are helping companies get in and we're gonna do this right and make this a saleable business. Yeah, well you all did the right thing being represented. And I can tell you that our competitor is this is a all it always makes people smile when I say this, our competitor is the unrepresented principal. And that's the owner of the company, and and I'll tell you what happens. If he gets a lawsuit. He goes straight to his attorney and says, okay, we gotta, you know, defend this lawsuit. If he gets a letter from the IRS, he goes to his CPA and he says, you know, what are we gonna do about this IRS issue? If he gets, if he finds a lump on his neck, you know, he goes to his doctor. He says, Well, what are we gonna do about this lump on? But for some reason, when a buyer shows up and says, hey, you know, Paul, we'd really like to talk to you about buying your company. Amazingly, they feel like they can represent themselves. We belong to a group called the Alliance of Mergers and Acquisitions Advisors. It is the largest middle market trade firm, trade association for the mergers and acquisitions industry. They conducted a big in-depth survey that showed that a represented principal got 18 to 25 percent more money. than the unrepresented principal who doesn't know what the value of his business is and therefore leaves money on the table. They think they know, but money gets left on the table. You led me right into what I was gonna say where sometimes you just don't know what you don't know. Right. And when you've been running, you've built a business and you've been running a business and maybe it's a successful business, you're like, no no no, I understand my business, but do you understand the sale of businesses? Right. the nuances that are involved in that, the things that you're an expert at. That's right. Sometimes you just don't know what you don't know. That's what the that's why the survey that AMNAA did was so interesting because it showed in, you know, very specifically that across the board the represented principal wound up with substantially more money. 18% on the low side, as high as 25% more on the on the high side. And you're paying the advisor a few percent. It's very very small comparatively speaking. I mean, why wouldn't you invest a few percent to get a a 10 or 20 percent boost on on the sale price of your business, you know? Yeah, well, and especially if you're gonna be selling to these multinationals that are on a public stock exchange, they're gonna ask a lot of you and in the process that you may not be equipped to answer. So you're gonna be you're gonna need somebody's help eventually, might as well get it up front. That's right, exactly, exactly. And we're always Pleased when we get phone calls from our good friends in the industry. Like you say, I know lots and lots of people here, and we get phone calls from people in the industry, and they say, you know, we're really thinking about making a move. You know what motivates sales is a whole host of categories, reasons why people sell. The biggest one of all is it's a second generation or maybe even a third generation business. And there's no family succession. And so the patriarch says, you know, I'm 70 years old, my kids are no longer interested in the business. They tried it for a while. And so I'm going to move on. That's one health, divorces, just estate planning, you know, there's just all kinds of reasons. One of the things that we think one of our great allies, in convincing a principal, to sell their business. Is their CPAs because their CPA will say, look, you've got 90% of your net worth invested in this business. And if you sell it, you're turning that business into the most fungible item known to man, which is cash. And once you've turned that business into cash, there's so much more you can do from an estate planning standpoint. And my best friend at home, Car dealer. And his son got the dealership and the daughter got a lot of other assets and he's explained all this to them. And it's created schism. You know, she's unhappy he's getting a dealership and he's unhappy that she's getting all these other assets outside of the dealership business, you know. Neither of them is pleased with the outcome. And so my buddy, who's, you know, in his late seventies, says, you know, I was trying to do the best I could here and the the son has worked in the business since college, so he's the logical candidate to continue on. It's a big dealership. So you know you just sometimes You gotta move on. You gotta, you've got it, you've got to turn those assets into cash, and then you've got something very fungible to give your heirs. I I love Dave Ramsey, and he'll he'll talks about that every year he has a What if Dave dives meeting and so that the whole family's involved. Yeah. Like if if I were not here tomorrow, like what happens to the business? You know, who gets what? What's the succession plan? They've been having those meetings for a while. What you know, the the show brings on a lot of different perspectives, and I had an interesting Question asked to me today, and I was like, man, you know what? I'm gonna ask Pierre what he thinks. And the question was, do you think there's more consolidation happening in the industry now than any time prior? No, I think it's steady eddy. I mean, that I there was a time leading up to 2008, if you recall, five and six were two of the most spectacular. Well, I'll give you an example. I mean I've only seen the data on that time. I was in college at that time. The data I'm going to tell you what it was. 458 million cubic yards were produced in 2005 and 456.5, I believe, in 2006. You've got to remember there's a 9 or 10 million cubic yard margin of error in those numbers. But what it was telling us is what we knew, was confirming what we already knew, which was there was probably 500 million cubic yards of demand that the industry couldn't ship. There weren't enough trucks, there weren't enough drivers, there wasn't enough cement. And and you know the we we went through a horrible recession in in two starting in 2007, 2008, we got down to we lost 201 million cubic yards, and we've never come back to the 400 million cubic yard. 20 plus years later, we have not come back to 400 million cubic yards. So we're hopeful we've got our fingers crossed. Obviously the housing market's gotta come back. I was gonna ask I was gonna say do you think those those missing yards. Well the the tough thing about the housing thing is the prices are so high and the answer to get the prices down is supply, but the cost to build is so high that's so it's it's a we're stuck in a weird catch twenty-two. But And you don't hear this coming out of Washington. But Congress can fix that, and I'll tell you how they could do it, is the same way they did it in the 1970s, which is to do some federally backed mortgages with buy downs on the interest rates. That would dramatically improve affordability. And you know, the buy downs would be for a three year period or five year period when until things settle down and you can re refinance your mortgage conventionally. But being able to offer much lower interest rate mortgages helps bridge the gap on affordability. Yeah the the federal subsidization of anything scares the living crap out of me. So we don't have to go down that route. But didn't successfully but didn't right after didn't right after that the interest rates you know went sky high and we had 17% mortgages a decade later? Well that and that's what I'm saying. That's what that that's what I'm saying. That's when the Fed stepped in. that's when they stepped in the stepped in and did some and did some federally insured buy down Gotcha. and they did it for a period of time until that was Paul Volker. That's right, yeah. In 1972. Because he he got super aggressive on raising the rates. He raised at that time nobody had raised rates faster than that, sort of tame things down. He was pretty courageous to do that. He was very courageous to do that. Because it it plunged us into a pretty bad recession and killed the housing market, really killed the housing market. The federal government stepped in, did these buy downs, made it possible for people to to get loans and qualify for loans. And of course, the the the farther down you could bring that interest rate, the more affordable the house is on a monthly payment basis. On a monthly payment basis. And that's where you can afford a house that may be out of reach right now for two reasons. The selling price is high and interest rates are high. So you bring the interest rates way down, you'll be able to you'll be able to qualify more people. I wish we could keep this conversation going for an hour. We are live at Concrete Works here in Nashville, my favorite trade show of the year. I'm so thankful that Pierre took the time today to come over here and join our show. Pierre, is there any other words of wisdom you'd like the audience to hear from you, any message or any way they can contact you potentially? Well you can go to our website, Alanvillery.com. it's A-L-L-E-N-V-I-L-L-E-R-E dot com. Or you can just put Pierre Villary into Google search and I'm gonna come up. So and all my contact information is there, including my cell phone number. So you're welcome to call me. But I I would tell you kind of as a as a a parting thought here is that I described this to a friend of mine on the bus going to the pack meeting last night. I can't imagine how great things would be if housing was back to normal. But we've got a lot of infrastructure work, a lot of public roads and streets and roads, work coming up in most of the United States, big L and G industrial projects. Back in my home state of Louisiana, we've got SpaceX coming. And SpaceX, it's going to be a fence, we're getting a lot of largest spaceport in the world. All of that is speaks to an industry that's pretty steady eddy, you know, it's just kind of, it's, it's kind of, it's kind of operating at a at a pretty steady level with, you know, slight blips up and down. When housing gets fixed, you can expect all that to go up. And I will say, as a final parting thought, there's no recession in sight for the construction industry. There's just none. There may be other slowdowns in other parts of the of the U.S. economy but construction is not slowing down anytime in the foreseeable future. From your lips to God's ears. Yes. Thank you everybody for joining into this episode of the show and we'll catch you on the next one. Okay. Thank you so much. Good to see you Pierre. Thank you.