Latest / Owned and Operated - A Plumbing, Electrical, and HVAC Business Growth Podcast / He Bought a $1.5M HVAC Business. Here's 18 Months Later...

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He Bought a $1.5M HVAC Business. Here's 18 Months Later... · Owned and Operated - A Plumbing, Electrical, and HVAC Business Growth Podcast

• 0:00
  SPEAKER_01: What is one thing everyone should know before they sell?
• 0:03
  SPEAKER_03: Guys, it's not just it's even uh that multiple.
• 0:06
  SPEAKER_03: It's not that we as a private buyer, we pay up when a business is ready to roll, but what you don't hear about is well, there's a reason why that one company may have sold for ten times because they were ready to sell.
• 0:17
  SPEAKER_03: It was quite literally a plug and play.
• 0:19
  SPEAKER_03: If you're not thinking about that, you don't want to wait until the last minute when you're finally ready to sell.
• 0:24
  SPEAKER_03: Well, I wish I thought about that two or three years ago.
• 0:26
  SPEAKER_01: What are some common owner mistakes that you feel like you're seeing or fundamentally is you know, they welcome back to owned and operated, a top 200 business and entrepreneurship podcast.
• 0:43
  SPEAKER_01: I'm your host, John Wilson, and on this show, we talk about how to grow, buy, build home service companies.
• 0:49
  SPEAKER_01: Uh, we talk about my own company and what we do there, and then we also bring on my friends where we talk about home service companies.
• 0:56
  SPEAKER_01: Today I'm bringing on a returning guest, Will Scriver from Tradesman Group.
• 1:00
  SPEAKER_01: Will was episode 189, and we talked about his journey from investment bank to the first couple months of owning his HVAC business in Florida.
• 1:09
  SPEAKER_01: Will, welcome back to the show.
• 1:11
  SPEAKER_01: Thanks for this time in person.
• 1:12
  SPEAKER_03: That's right.
• 1:13
  SPEAKER_01: Yeah, all right.
• 1:14
  SPEAKER_01: Thanks for having me.
• 1:15
  SPEAKER_01: It's always fun to have like a returning guest and like check in.
• 1:19
  SPEAKER_01: Uh, we've had some like Mike Botkin's a great example where we had Mike Botkin on the show.
• 1:27
  SPEAKER_01: I want to say he was like the first 20 episodes.
• 1:30
  SPEAKER_01: And then three years later, and he was like, I think I'm gonna roll up landscaping companies.
• 1:35
  SPEAKER_01: And then like three years later, like he had already exited.
• 1:38
  SPEAKER_01: So it it is always kind of fun to do these like pulse checks.
• 1:41
  SPEAKER_01: Like, where are they now?
• 1:43
  SPEAKER_01: Uh so this is gonna be fun.
• 1:44
  SPEAKER_03: I hope to come back for episode 500 and you can get another update.
• 1:48
  SPEAKER_01: Yeah, yeah.
• 1:49
  SPEAKER_01: We did get to 50 million of EBITDA.
• 1:51
  SPEAKER_01: Yeah, it worked.
• 1:52
  SPEAKER_01: It totally worked.
• 1:53
  SPEAKER_01: This was awesome.
• 1:55
  SPEAKER_01: Um, well, how about we just start, uh, give the listener a refresh and again reference episode 189 if if you want to Yeah, absolutely.
• 2:03
  SPEAKER_03: So last time we spoke, I had mentioned that um I left uh career in investment banking.
• 2:09
  SPEAKER_03: And if you're not familiar with investment banking, that is um advisory on all things mergers and acquisitions, so the buying and selling of companies.
• 2:18
  SPEAKER_03: So um whether it's a family-run business or private equity backed business, um, they would hire an investment banker like myself.
• 2:26
  SPEAKER_03: Um or if they're gonna do a capital raise or um go, you know, go an IPO route, go public like SpaceX was, you know, yeah in the news here lately.
• 2:37
  SPEAKER_01: I'm just gonna cut in here really quick to help.
• 2:39
  SPEAKER_01: I I think it might be worth explaining the difference between broker and investment banker, just because I think a lot of people, like when they hear what you just said, they think business broker.
• 2:49
  SPEAKER_01: Yeah.
• 2:49
  SPEAKER_01: Yeah.
• 2:49
  SPEAKER_01: So can you walk through that difference?
• 2:52
  SPEAKER_03: Yes.
• 2:52
  SPEAKER_03: So there's there are a number of differences between an investment banker and a broker.
• 2:58
  SPEAKER_03: Um I would look at an investment banker as a more specialized, it's more specialized skill set and running a structured process where a broker, and I I don't want to, you know, downplay brokers.
• 3:13
  SPEAKER_03: I know some great ones out there, but there's a lot of them that quite frankly, they're selling real estate on Saturdays and they're trying to sell your plumbing company on Tuesday.
• 3:22
  SPEAKER_03: Um, they don't understand the market because they're generalists.
• 3:26
  SPEAKER_03: They'll sell a plumbing company right next to an ice cream shop.
• 3:28
  SPEAKER_00: Yeah.
• 3:29
  SPEAKER_03: Um, and they list it, quite literally, list it just like you would a home for sale, like on Zillow.
• 3:35
  SPEAKER_03: They listed it on websites like bizby sell.com.
• 3:39
  SPEAKER_03: Uh, an investment banker develops relationships in your industry and understands who the likely buyers are.
• 3:47
  SPEAKER_03: And we as an investment bank would run a structured process.
• 3:51
  SPEAKER_03: So I know, John, who the list of likely suitors are for your business.
• 3:56
  SPEAKER_03: And I'm gonna run a structured, we call it a broad auction process.
• 3:59
  SPEAKER_03: If we want to go broad, broad means over a hundred likely suitors.
• 4:04
  SPEAKER_03: That's a mix of private equity, strategics, and family offices out there, folks with a lot of money that are looking to buy and build.
• 4:12
  SPEAKER_03: And it's a coordinated process with a defined timeline of here are all the groups that we are going to reach out to they'll express interest.
• 4:19
  SPEAKER_03: And imagine like a giant funnel.
• 4:21
  SPEAKER_03: Yeah, we're reaching out to to those 150 some odd parties and we're narrowing it down to the the right fit for your business.
• 4:28
  SPEAKER_03: Yeah.
• 4:30
  SPEAKER_03: That's that's very structured, that is not listing it on a website.
• 4:34
  SPEAKER_03: Um so it's that that's a that's a key distinction between an investment banker and a business broker.
• 4:40
  SPEAKER_03: They may sound very similar, like, oh, okay, well, I'm hiring you, I'm paying you to sell my business.
• 4:45
  SPEAKER_03: But yes, but at the core of what we're we're both essentially doing the same, but uh there's a there's a a massive difference between the two.
• 4:54
  SPEAKER_03: Um and then within the process itself, um there's a there's a lot of hand holding.
• 5:00
  SPEAKER_03: I mean you're selling or recapitalizing your baby, it might have been in your family for generations, right?
• 5:07
  SPEAKER_03: Um, there's a ton of work that takes place up front before you start reaching out to those groups.
• 5:14
  SPEAKER_03: Um, an investment banker is gonna roll up his or her sleeves to get start working with you sometimes years in advance.
• 5:21
  SPEAKER_03: Yeah.
• 5:21
  SPEAKER_03: Right.
• 5:22
  SPEAKER_03: So that might be a lot, but just kind of wrap your head around there.
• 5:26
  SPEAKER_03: There is a there's a a massive difference between an investment banker and a broker.
• 5:31
  SPEAKER_01: But I also think timing is uh like size is an important part of the conversation.
• 5:35
  SPEAKER_01: Oh, absolutely.
• 5:35
  SPEAKER_01: Because a lot of banks, as people think about it, a lot of banks won't take you under certain EBITDA thresholds, like William Blair and Piper Sandler are really big in plumbing and HVAC.
• 5:46
  SPEAKER_01: You basically need 15 million of EBITDA to open up the conversation with them.
• 5:50
  SPEAKER_03: 100%.
• 5:50
  SPEAKER_03: You're you're you nailed it.
• 5:52
  SPEAKER_03: So if you are, you know, a five million EBITDA business, you're gonna fall below the radar of those larger investment banks, including the one where I left.
• 6:03
  SPEAKER_03: But you're also uh too large.
• 6:05
  SPEAKER_01: You're too big for a broker.
• 6:06
  SPEAKER_01: It's a weird space broker.
• 6:08
  SPEAKER_03: So it's this weird no man's land.
• 6:11
  SPEAKER_03: Um, there are some smaller, lower middle market um investment banks, uh, MA advisors that are trying to focus on that space.
• 6:21
  SPEAKER_03: And quite frankly, that's why I decided to launch my my recent MA advisory firm, Scriber and Company.
• 6:29
  SPEAKER_03: Because I saw an opportunity in the space where if you exceed a million of Ebita, that is entirely too small for an investment bank, but entirely too large for a business broker.
• 6:41
  SPEAKER_03: So what happens?
• 6:42
  SPEAKER_03: Yeah, who do you call?
• 6:43
  SPEAKER_03: Who do you call?
• 6:44
  SPEAKER_03: And the thought of you being left to a business broker um just gives me heartburn to think about that.
• 6:51
  SPEAKER_03: So I my idea is well, why don't I use my background in investment banking and bring it down market?
• 6:57
  SPEAKER_03: Right?
• 6:57
  SPEAKER_03: I have the ability to do that because I don't have the overhead of like Raymond James, William Blair, these large firms, right?
• 7:04
  SPEAKER_03: I have a team, but not the same that they have.
• 7:07
  SPEAKER_03: So I had that flexibility.
• 7:09
  SPEAKER_03: Yeah.
• 7:10
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• 7:14
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• 7:17
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• 7:38
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• 7:45
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• 7:49
  SPEAKER_01: Yeah, walk me through.
• 7:50
  SPEAKER_01: So you you that was investment banking.
• 7:52
  SPEAKER_01: I think it's a good primer.
• 7:53
  SPEAKER_01: You spent some time there, you helped build out a practice for plumbing HVC like home service.
• 7:59
  SPEAKER_01: Right.
• 8:00
  SPEAKER_01: And you decided so I'm gonna yeet and go buy one.
• 8:04
  SPEAKER_03: That's right.
• 8:05
  SPEAKER_03: All right, let's do it.
• 8:06
  SPEAKER_03: I I decided, well, one, I I mean, I actually fell in love with the the space.
• 8:11
  SPEAKER_03: Um, I've always dreamed of buying and building something of my own.
• 8:15
  SPEAKER_03: And I wanted to do it in a space that I knew very well.
• 8:17
  SPEAKER_03: Um, I spent my entire investment banking career in building products.
• 8:22
  SPEAKER_03: So I was very comfortable with um something in and around the home.
• 8:26
  SPEAKER_03: Um and I knew that's where I so I wouldn't the the point I'm trying to make is I I wasn't gonna go get into tech or healthcare because I know nothing about the space, but I know plumbing, I understand roofing, I understand HVAC, fencing, windows and doors, worked on a number of those transact transactions.
• 8:44
  SPEAKER_03: So after I closed a pretty sizable um electrical contracting business in Georgia, the last firm I was with, I decided to spin off, go acquire a small residential HVAC company.
• 9:00
  SPEAKER_03: Did that about 18 months ago.
• 9:02
  SPEAKER_01: Yeah.
• 9:03
  SPEAKER_03: Um and that has been an eye-opening experience, more so from the the ops side.
• 9:08
  SPEAKER_01: Yeah.
• 9:09
  SPEAKER_03: I bought something that was I would call it very subscale, you know, below the five million dollar mark in revenue.
• 9:15
  SPEAKER_03: So it was even too small for what I'd prefer.
• 9:18
  SPEAKER_03: But in my market in Florida, it's so competitive that even something that has a lot of hair on it, or yeah, it's incredible what private equity is bidding up some of these companies.
• 9:30
  SPEAKER_03: And you know, I'm just going at it with on my own with a business partner.
• 9:34
  SPEAKER_03: We're not gonna pay what they're paying.
• 9:37
  SPEAKER_03: So went down market, bought a small business.
• 9:41
  SPEAKER_03: I feel like I just got a crash course in ops for the last 18 months.
• 9:45
  SPEAKER_03: The the good, the bad, and the ugly, how to run a small business.
• 9:49
  SPEAKER_03: I've I've learned a lot that you you're not exposed to as an investment banker, to put it that way.
• 9:54
  SPEAKER_03: Um which is which has been good uh for me to learn that and see that.
• 10:00
  SPEAKER_03: I think that's gonna help me become a better business owner for the next acquisition.
• 10:05
  SPEAKER_03: Um and that's kind of where we're at today at this point in time.
• 10:09
  SPEAKER_03: So the whole intention was not to just purchase the one, but to build, build around that, use that as you know, planting the flag, so to speak, in Tampa, Tampa, Florida, and then build a you know, a small little platform of our own.
• 10:22
  SPEAKER_03: Yeah.
• 10:23
  SPEAKER_03: Made up of HVAC and other plumbing companies.
• 10:25
  SPEAKER_01: Yeah.
• 10:26
  SPEAKER_01: I want to dive into like what the market's thinking about home service in 26, but before we do, I just want to spend a little bit more time on the on the the business itself.
• 10:34
  SPEAKER_01: Do you think that like I've we have a number of friends because we met over Twitter X I still prefer Twitter to be honest.
• 10:41
  SPEAKER_01: Rolls off the tongue.
• 10:42
  SPEAKER_01: It does not have to it does, it does.
• 10:44
  SPEAKER_01: Uh, but yeah, we met over Twitter probably three years ago, two years ago.
• 10:47
  SPEAKER_01: And um in inside the Twitter sphere of like this audience, a lot of people are coming from investment banking backgrounds, a lot of people are coming from corporate backgrounds, and they're they're buying into the trades, and they see it as a great opportunity, like really similar to what you just said.
• 11:06
  SPEAKER_01: Like, hey, this feels really great, feels durable.
• 11:08
  SPEAKER_01: And that seems like um there's a really big ETA, like entrepreneurship through acquisition movement in during COVID as like business influencing from probably Cody Sanchez and Alex Ramosi really started like pumping out this content.
• 11:23
  SPEAKER_00: Absolutely.
• 11:23
  SPEAKER_01: Um, so like it became way more approachable.
• 11:26
  SPEAKER_01: SBA was easier, which I think is harder now.
• 11:29
  SPEAKER_01: Yeah, I haven't looked at SBA in a while, but someone said they made it harder.
• 11:34
  SPEAKER_03: I personally didn't go the SBA route, but um, I know many folks that did, and I believe there was a rule change uh June of last year.
• 11:40
  SPEAKER_01: Yeah, licensing, I think, was a thing, and something else was a thing.
• 11:44
  SPEAKER_03: Yeah, there they made a few changes that it made it materially more difficult to get a deal done with the SBA.
• 11:52
  SPEAKER_03: And my understanding is that changes with every administration.
• 11:55
  SPEAKER_03: So that feels right.
• 11:57
  SPEAKER_03: Under the Biden administration, I guess it was easier, and now it's become a little more challenging.
• 12:01
  SPEAKER_03: Got it.
• 12:01
  SPEAKER_01: So um my but yeah, my point is uh that's obviously like not my background, right?
• 12:06
  SPEAKER_01: So my background is grew up in the business, was a plumber, bought the business, bought 14 other ones.
• 12:13
  SPEAKER_01: So yeah, nice.
• 12:15
  SPEAKER_01: That part's cool.
• 12:16
  SPEAKER_01: Yeah, that's very cool.
• 12:17
  SPEAKER_01: Yeah, that's good.
• 12:18
  SPEAKER_01: But um, but not like not uh corporate background.
• 12:23
  SPEAKER_01: So as when you think about your journey, uh like do you think it helped?
• 12:27
  SPEAKER_01: Do you think it hurt?
• 12:28
  SPEAKER_01: Like, because a lot of people are thinking this.
• 12:30
  SPEAKER_01: We had this event yesterday, just like a shop tour, and I think 22 or three people came and it was really fun.
• 12:36
  SPEAKER_01: But there was a guy there with an investment banking background, and he's like, I'm kind of thinking about buying in the trades.
• 12:41
  SPEAKER_01: And his name was Dan, he was a really cool guy.
• 12:43
  SPEAKER_01: But like, he's like, Oh, look, yeah, what do I think about this?
• 12:46
  SPEAKER_01: You know, I want to do the shop tour like exp exploration.
• 12:49
  SPEAKER_01: So, like, how do you think it helped or hurt your ability to operate the business?
• 12:54
  SPEAKER_03: So I would say for me, it I it helped my my investment banking background helped in the sense that I understood the industry, but more so from a macro level.
• 13:08
  SPEAKER_03: Yeah.
• 13:08
  SPEAKER_03: Um, because I'm accustomed to dealing with the C-suite, the principles of the business, CEO, CFO, much larger uh organizations than especially the one that I acquired.
• 13:19
  SPEAKER_03: So it was beneficial from that viewpoint, but that would that's at like a 35,000-foot view of the world.
• 13:27
  SPEAKER_03: What I lacked, and I'm still working on it today, still learning, is I didn't grow up in the business.
• 13:34
  SPEAKER_03: I didn't know the people side of the business and how to manage people, right?
• 13:39
  SPEAKER_03: And I don't mean just technicians or plumbers, I also mean the customers too.
• 13:43
  SPEAKER_03: Yeah.
• 13:44
  SPEAKER_03: Everything that makes this a reality.
• 13:46
  SPEAKER_03: It's not just you can't manage the business through a spreadsheet like so many folks do where I came from, the investment banking world or the private equity world.
• 13:55
  SPEAKER_03: So that's what I mean.
• 13:56
  SPEAKER_03: The last 18 months I've gotten a crash course in that world and understanding that I was comfortable with learning and I accepted that reality that it's gonna be very different from corporate America.
• 14:07
  SPEAKER_03: Yeah.
• 14:07
  SPEAKER_03: You don't have that infrastructure in place, you have to really know how to roll up your sleeves and have that entrepreneurial like spirit to you that like I don't know how to do this, but I'm gonna figure out a way, come hell or high water.
• 14:20
  SPEAKER_03: Just get shit done.
• 14:21
  SPEAKER_01: Yeah.
• 14:22
  SPEAKER_03: Um and if you hit a wall, you figure out a way to go through it, go around it, do whatever you have to do, go over it.
• 14:29
  SPEAKER_03: Um if you don't have that, and you think you're just going to get deals done, you're gonna slap a few of them together, and you're just gonna watch eBay.grow on a spreadsheet, you shouldn't be doing this.
• 14:42
  SPEAKER_03: You should like prepare yourself for like some very long days, cash flow issues, people issues, you name it, fans getting in an accident, like flooding somebody's house.
• 14:55
  SPEAKER_03: I mean, it just goes on and on.
• 14:57
  SPEAKER_03: It's it really does.
• 14:58
  SPEAKER_00: It never really does never end.
• 15:01
  SPEAKER_03: Yeah.
• 15:01
  SPEAKER_03: So is investment banking cannot prepare you for that.
• 15:04
  SPEAKER_03: Yeah.
• 15:05
  SPEAKER_03: Um, you can you can be able to do that.
• 15:07
  SPEAKER_01: I think what it does help with is it helps like here's how the business can work.
• 15:12
  SPEAKER_01: Yes.
• 15:12
  SPEAKER_01: I mean, some of the best, some of the best people that I know today running incredible businesses in our space, their background was investment banking.
• 15:21
  SPEAKER_01: And I I think it's interesting because they and I it's not even like MA.
• 15:27
  SPEAKER_00: Yeah.
• 15:28
  SPEAKER_01: And that's I think that's the most interesting thing about it.
• 15:30
  SPEAKER_01: So two of the best operators I know have investment banking or private equity experience, and they're not driving MA, they're growing organically.
• 15:40
  SPEAKER_01: And I think it's because they've seen inside a company and they can sort of like take apart how it works and they can understand the levers a little bit more naturally than me.
• 15:51
  SPEAKER_03: Yeah, that's that's actually a really good point.
• 15:54
  SPEAKER_03: Um, I will say that so with my background, I understand what the business could look like one day.
• 16:00
  SPEAKER_03: Yes.
• 16:01
  SPEAKER_03: And so where I'm at is today, I'm I'm I'm working to build what I know it needs to look like.
• 16:07
  SPEAKER_03: Not just the the PL, but putting in the processes in place, the systems, so that one day, five, 10, 15 years from now, Tradesman Group looks exactly like this.
• 16:18
  SPEAKER_03: Yeah.
• 16:19
  SPEAKER_03: Because I know what that is worth.
• 16:21
  SPEAKER_03: And so I have my sights set on that because that that's the world that I came from.
• 16:26
  SPEAKER_03: So to your point, um, you know, if if I dive into an opportunity and I see and I hear, hey, I don't understand, you know, we're we're selling out there, but it's not converting the cash on the balance sheet, like, where's it all going?
• 16:38
  SPEAKER_03: Yeah.
• 16:39
  SPEAKER_03: Well, with my mind, the way it works, I can dive through and understand the numbers and trace it and make improvements.
• 16:45
  SPEAKER_03: Say, okay, well, we make these little modifications, these tweaks, we're gonna start to see that margin, you know, take a U-turn, right?
• 16:52
  SPEAKER_03: And then we're gonna start to see the cash accumulate on the balance sheet.
• 16:55
  SPEAKER_01: Yeah.
• 16:56
  SPEAKER_03: So I would say and from through that lens, it's certainly helped me.
• 16:59
  SPEAKER_01: Yeah.
• 17:00
  SPEAKER_01: Right.
• 17:00
  SPEAKER_01: Yeah, I think the uh the I'm thinking of two people in particular and I guess three.
• 17:07
  SPEAKER_01: And they're I think they had exposure to um good businesses.
• 17:12
  SPEAKER_01: I I was thinking about this yesterday because we we had this shop tour.
• 17:15
  SPEAKER_01: And um so people come in and they look around and they get exposed to what uh I'll sell flatter here, what good can look like.
• 17:26
  SPEAKER_01: Yeah.
• 17:27
  SPEAKER_01: Uh so and and for many of them, this might be the first exposure to what, oh, okay.
• 17:32
  SPEAKER_01: So this is what$50 million looks like.
• 17:34
  SPEAKER_01: Yep.
• 17:35
  SPEAKER_01: Got it.
• 17:36
  SPEAKER_01: Uh and I think that that can help like connect a but a lot of dots.
• 17:41
  SPEAKER_01: Um and yeah, I think I'm I'm of the two or three people I'm thinking of specifically, they had exposure to great businesses and they got in there enough to think of it like a system.
• 17:55
  SPEAKER_01: And I because it it some there was maybe a little bit of MA, but like not that much.
• 17:59
  SPEAKER_01: And I think that's really the wild part.
• 18:01
  SPEAKER_01: Because if you'd expect somebody from an IB background, yeah, you'd expect like just like a roll-up.
• 18:06
  SPEAKER_01: But these guys are like incredible organic operators, like way uh frankly, way better than I am, which is like amazing.
• 18:12
  SPEAKER_03: That that is a that's amazing.
• 18:14
  SPEAKER_03: Um, maybe I come down on my part of myself, but I don't view myself as a good operator.
• 18:19
  SPEAKER_03: Like I've made drastic improvements over the last 18 months.
• 18:24
  SPEAKER_03: Um, I mean, it night and day compared to when I first stepped in early last year.
• 18:30
  SPEAKER_03: Um, we still have the name on the door, but that's really about it.
• 18:33
  SPEAKER_03: So I've made those improvements.
• 18:35
  SPEAKER_03: Um, I guess maybe my expectations are too high for where I I wanted to grow or how quickly I wanted to get there.
• 18:42
  SPEAKER_01: Good name.
• 18:43
  SPEAKER_01: Um, I didn't think I was a good operator uh from one to like maybe 20.
• 18:48
  SPEAKER_01: I thought I was the wrong person for the seat.
• 18:50
  SPEAKER_01: It's actually pretty well publicized on this podcast.
• 18:53
  SPEAKER_01: Uh I talk I talked about it a lot in those early years.
• 18:56
  SPEAKER_01: And then um the further we got along, it became clear that uh me thinking that I'm a bad operator has actually helped me to hire really talented people around me to help build a business, which by definition makes me a good operator.
• 19:11
  SPEAKER_01: So surround yourself with the right people.
• 19:13
  SPEAKER_01: It was kind of a funny because I started looking around and I was like, well, if I'm not a good operator, then like why have not many other people done what we've just done here?
• 19:22
  SPEAKER_01: Right.
• 19:23
  SPEAKER_01: Because like I don't think I'm that talented, and I can see so many, so many other more talented people around me.
• 19:29
  SPEAKER_01: Yeah, but here we are, you know.
• 19:32
  SPEAKER_01: So it's kind of a funny, uh kind of a funny problem.
• 19:34
  SPEAKER_01: I think you're gonna have the same reaction.
• 19:36
  SPEAKER_03: Well, to your point about building the right team, that's what I'm working on right now.
• 19:40
  SPEAKER_03: So maybe maybe I am a decent operator.
• 19:42
  SPEAKER_03: I'm not sure.
• 19:43
  SPEAKER_03: I'll give you some grace.
• 19:44
  SPEAKER_01: Yeah, let you let's do it.
• 19:46
  SPEAKER_03: Um, but what I am a big believer in is leveraging um your strengths to offset what I perceive as my weaknesses, right?
• 19:56
  SPEAKER_03: So I'm working on a new partnership where um one of my soon-to-be business partners, he excels in in operations and managing people, you know, um doing the training, doing the sales training, the technical training.
• 20:13
  SPEAKER_03: And in my eyes, that's where I've come up short.
• 20:16
  SPEAKER_03: But his weakness is understanding the the MA world, right?
• 20:20
  SPEAKER_03: The inorganic growth, or like the big picture strategically, this is what it needs to look like.
• 20:25
  SPEAKER_03: How do we get to a$50 million company when we're five today?
• 20:30
  SPEAKER_03: Like that's a that's a big gap.
• 20:33
  SPEAKER_03: So we're putting our heads together now.
• 20:35
  SPEAKER_03: And again, I think my strengths offset his weakness, and vice versa.
• 20:40
  SPEAKER_03: Building the right team, surrounding yourself with the right talent.
• 20:44
  SPEAKER_03: I think that's how we get to 50 million top line.
• 20:47
  SPEAKER_03: Yeah.
• 20:48
  SPEAKER_03: So um sounds very similar to you know your experience over the last few years.
• 20:52
  SPEAKER_01: That's yeah, I think I think my main comment is I is like, I think you have imposter syndrome where like you think you're not the thing that you're you're currently doing.
• 21:02
  SPEAKER_01: And like, me too.
• 21:04
  SPEAKER_01: Yeah.
• 21:05
  SPEAKER_01: And I think I will always have impossible.
• 21:07
  SPEAKER_01: I think it's just like a part of the deal because you look around and you you see everyone else and they appear to be doing better than you.
• 21:14
  SPEAKER_01: Uh, and you just don't know that, like, oh, that guy is imposter syndrome too.
• 21:17
  SPEAKER_01: And that guy's probably looking at me and seeing some quality that I have that's admirable.
• 21:21
  SPEAKER_01: True.
• 21:21
  SPEAKER_01: And just like I'm looking at him and being like, Man, I wish I was like that.
• 21:24
  SPEAKER_01: You know, I wish I could drive culture that way, or I wish I could drive sales that way, or I wish I could do whatever.
• 21:28
  SPEAKER_03: Absolutely.
• 21:29
  SPEAKER_01: Uh, but yeah, I think um I don't think it matters how big you get, like everyone, everyone thinks they're an imposter.
• 21:37
  SPEAKER_04: Yeah.
• 21:38
  SPEAKER_01: Yeah.
• 21:39
  SPEAKER_01: Um okay, so you're 18 months in.
• 21:42
  SPEAKER_01: Can you give us the scope of the business a little bit?
• 21:44
  SPEAKER_01: Like break it, break it down, ear it, ear it.
• 21:46
  SPEAKER_01: Like plumbing HVAC, how large?
• 21:49
  SPEAKER_01: How big's the team?
• 21:50
  SPEAKER_03: Yep.
• 21:50
  SPEAKER_03: Uh, like I said, it uh really small team that we started with.
• 21:54
  SPEAKER_03: Uh when I stepped in, and I don't know if I'd recommend this, it was a million five.
• 22:00
  SPEAKER_03: Of top line.
• 22:02
  SPEAKER_03: Yeah.
• 22:02
  SPEAKER_03: Now we're on track to do three million.
• 22:05
  SPEAKER_03: Yeah.
• 22:06
  SPEAKER_01: Um, that's any acquisitions are all organic.
• 22:09
  SPEAKER_03: That's organic.
• 22:10
  SPEAKER_03: Yeah.
• 22:11
  SPEAKER_03: Um that's tough.
• 22:12
  SPEAKER_03: It's tough, yeah.
• 22:13
  SPEAKER_03: That's tough sledding.
• 22:14
  SPEAKER_03: Um, there's a lot of ups and downs.
• 22:16
  SPEAKER_03: If you're to look at that in the spreadsheet, it looks, oh, this looks easy.
• 22:19
  SPEAKER_03: This is great.
• 22:20
  SPEAKER_03: Uh, it's not easy.
• 22:22
  SPEAKER_03: Yeah.
• 22:22
  SPEAKER_03: Um, anybody that has ever owned, operated um a sub$5 million revenue business would understand that.
• 22:29
  SPEAKER_01: We we've spent more time.
• 22:31
  SPEAKER_01: So I've been in this for 10 years, and still today, the majority of my career was under five.
• 22:37
  SPEAKER_01: Really?
• 22:38
  SPEAKER_01: I I was thinking about I was uh this morning, I was drinking coffee, and most of my uh reflection happens over coffee in the morning.
• 22:44
  SPEAKER_01: I was uh drinking coffee and reading Chris Hoffman's uh newsletter.
• 22:48
  SPEAKER_01: He sends it out this morning.
• 22:49
  SPEAKER_01: It's a good read.
• 22:50
  SPEAKER_01: Yeah, and um he was talking about how they bought the business at nine million and they went to um I think they're 160 or 50 now, and uh in like a decade, which like obviously is crazy.
• 23:01
  SPEAKER_01: Like that's amazing.
• 23:02
  SPEAKER_01: Good, uh, 17 times.
• 23:04
  SPEAKER_01: And and I was I was reading that and I was like, again, imposter syndrome, like, well, I didn't do that, you know?
• 23:10
  SPEAKER_01: So like, am I good enough?
• 23:12
  SPEAKER_01: Uh uh, but then I was reading that and I was like, well, when did I cross 10 million?
• 23:16
  SPEAKER_01: And I was like, I actually just crossed 10 million like 36 months ago.
• 23:20
  SPEAKER_01: Like, I think that just happened.
• 23:22
  SPEAKER_01: So, and then I started thinking about how exactly to your point, how much of my time was really under five.
• 23:29
  SPEAKER_01: I mean, we I bought the business in 2016 and we crossed five in 2021.
• 23:33
  SPEAKER_01: Oh, wow.
• 23:34
  SPEAKER_01: Like, that took a long time.
• 23:36
  SPEAKER_03: That's a long time.
• 23:36
  SPEAKER_01: That's a long time.
• 23:37
  SPEAKER_03: That's a really long time.
• 23:39
  SPEAKER_03: Yeah, that's um, I didn't appreciate that.
• 23:43
  SPEAKER_01: That's uh yeah, but I I think it's it's such uh what's such a well you've yeah, you've talked about this before.
• 23:49
  SPEAKER_03: There you hit a moment like where there's like this crazy inflection point when you pop up.
• 23:55
  SPEAKER_01: We're in one right now, yeah.
• 23:57
  SPEAKER_03: Getting to five, and once you cross that threshold, I mean I've heard of countless folks out there.
• 24:02
  SPEAKER_03: Once there's nothing magical, I don't know that there's anything magical about the five million dollar mark per se, but I think what it allows you to do is build a level of management that frees you up so you're not in the business like I have been for the last 18 months.
• 24:19
  SPEAKER_03: Yeah.
• 24:20
  SPEAKER_03: And so I I recognize that I knew that even before I closed um early last year.
• 24:25
  SPEAKER_03: So I've been anxious to either one grow out of it organically, grow our way to five million, or inorganically combine with an opportunity that we can use the same resources spread over um more opportunities.
• 24:40
  SPEAKER_03: So I'm focused on the latter at the moment, and which should bring us to about 6.5 million of revenue.
• 24:47
  SPEAKER_03: Yeah.
• 24:47
  SPEAKER_03: Um and then collectively we'll have the the basis to hopefully springboard on our way to 50 million.
• 24:55
  SPEAKER_03: Yeah.
• 24:56
  SPEAKER_03: So yeah, that's that's the journey over the last 18 months.
• 25:00
  SPEAKER_03: Um and right now our focus is so it's low threes today?
• 25:05
  SPEAKER_01: As of as of right now, like 15 people, 10 people, 8 people.
• 25:09
  SPEAKER_03: Uh no, we're at like we're at 10.
• 25:11
  SPEAKER_03: Okay.
• 25:12
  SPEAKER_03: Yeah, right around 10.
• 25:13
  SPEAKER_03: It's a mix of back office and and folks in the uh in the field.
• 25:17
  SPEAKER_01: What what's the org chart really quick?
• 25:18
  SPEAKER_01: Just most people care about that.
• 25:21
  SPEAKER_03: Right now we have um an operations.
• 25:24
  SPEAKER_03: Well, you have myself.
• 25:25
  SPEAKER_03: I'm I guess I wear many different hats.
• 25:27
  SPEAKER_01: Head honcho would be the that's the title on the door.
• 25:31
  SPEAKER_03: All right.
• 25:32
  SPEAKER_03: Uh so operations manager, um two CSRs, and we we don't have a dedicated uh service manager or install manager.
• 25:45
  SPEAKER_03: I know that's an opportunity for us, but everything kind of funnels to the ops manager right now.
• 25:49
  SPEAKER_01: Yeah.
• 25:50
  SPEAKER_03: And then we've got our service team made up of uh three, three service technicians, and we have four installers at the moment.
• 25:58
  SPEAKER_01: Nice.
• 25:59
  SPEAKER_03: Again, I know what is all HVAC.
• 26:03
  SPEAKER_03: Yeah, all HVAC.
• 26:04
  SPEAKER_03: Yeah, yeah, yeah.
• 26:05
  SPEAKER_03: So um I would really like to get into plumbing, which is something I've been gunning for.
• 26:11
  SPEAKER_03: Yeah.
• 26:12
  SPEAKER_03: And that what's driving that is to help smooth out the seasonality of the business.
• 26:17
  SPEAKER_03: I mean, the peak to trough between summer and the sh shoulder seasons are just brutal.
• 26:24
  SPEAKER_03: It's crazy.
• 26:24
  SPEAKER_01: We had someone on yesterday, and um, I want to say they were nine.
• 26:28
  SPEAKER_01: Yeah, they're going on nine million, so they're going from four to nine million, like really big jump, right?
• 26:33
  SPEAKER_01: Yeah, uh, they're doing awesome.
• 26:34
  SPEAKER_01: They're down in uh Cincinnati.
• 26:36
  SPEAKER_01: And um they their trough was like two or three hundred thousand, and their peak is a million.
• 26:43
  SPEAKER_01: Wow, like that's fucking crazy.
• 26:45
  SPEAKER_01: Yeah, that's crazy.
• 26:46
  SPEAKER_03: It's it it that's tough to stomach.
• 26:49
  SPEAKER_03: I mean, when it's 68 degrees and sunny with no humidity in in Florida, like the phone does not ring.
• 26:54
  SPEAKER_01: Yeah, I mean, that's today here.
• 26:55
  SPEAKER_01: Like it's that was beautiful.
• 26:57
  SPEAKER_01: I had a phenomenal walk this morning.
• 26:58
  SPEAKER_01: Yeah, a little chilly.
• 27:00
  SPEAKER_01: I was bad the whole time.
• 27:02
  SPEAKER_03: Um, but in the summertime, the heat and the humidity on there is suffocating.
• 27:07
  SPEAKER_01: And so you're right on the oceans, you've got salt water, yeah, destroying units.
• 27:11
  SPEAKER_03: And I need uh that AC to work.
• 27:14
  SPEAKER_03: Um, you can live without it in January.
• 27:16
  SPEAKER_03: Um, and we don't have we don't our heaters don't turn on, right?
• 27:20
  SPEAKER_03: Um occasionally they do.
• 27:21
  SPEAKER_03: You get some no-heat calls, but the point I'm making is like that drop-off is extreme and it's very real.
• 27:27
  SPEAKER_03: And I think about it obviously from a cash flow perspective, but I I really think about it from trying to get my guys as many hours as possible.
• 27:36
  SPEAKER_03: I want to keep talent throughout the entire year, not just staff up for the busy season and then have a bunch of layoffs come, you know, Halloween, you know, November time.
• 27:46
  SPEAKER_03: Like there's a lot of P groups that do that model that have that model where they flex up and then flex back down.
• 27:52
  SPEAKER_03: Yeah.
• 27:53
  SPEAKER_03: So I view obviously increasing memberships is one avenue.
• 27:58
  SPEAKER_03: Um, but plumbing is another opportunity.
• 28:01
  SPEAKER_03: It's um you would know this better than I would, but plumbing the phone should be ringing throughout the year, regardless of what there's a little bit of seasons, but it's nowhere near nowhere near as Stark.
• 28:11
  SPEAKER_03: Yeah.
• 28:11
  SPEAKER_01: Yeah, there's still peak and trough, but instead of like an 80% swing or 400% swing, depending on which side you're doing the math from, yep.
• 28:18
  SPEAKER_01: Um, uh, there's like a 20% swing.
• 28:23
  SPEAKER_01: Yeah.
• 28:23
  SPEAKER_01: Maybe 30.
• 28:24
  SPEAKER_03: And you know, it's it's the seasonality point, but it's also um, you know, our customers are naturally drawing us into plumbing, anyways.
• 28:32
  SPEAKER_03: I mean, you're you already have a foot in the home.
• 28:33
  SPEAKER_03: Sure.
• 28:34
  SPEAKER_03: They're already at the time.
• 28:34
  SPEAKER_03: They trust you.
• 28:35
  SPEAKER_01: Yeah.
• 28:35
  SPEAKER_01: Hey, yeah, you built that ship.
• 28:36
  SPEAKER_01: They're like your guys, yeah.
• 28:37
  SPEAKER_03: You guys did awesome on my new heat pump, my mini split, whatever.
• 28:41
  SPEAKER_03: Like, do you guys happen to do water heaters?
• 28:43
  SPEAKER_03: We're not licensed for that.
• 28:44
  SPEAKER_03: So I would love to have it when our vans roll up and it's you know, heating, cooling.
• 28:49
  SPEAKER_01: I'm la I'm laughing because I'm thinking it's like it's Florida.
• 28:51
  SPEAKER_01: Like you, yeah, you don't need a license.
• 28:53
  SPEAKER_01: You'll be fine.
• 28:55
  SPEAKER_01: You whoever's listening, you do need a license.
• 28:58
  SPEAKER_01: Yeah, Florida feels like uh it's a unique area to compete in.
• 29:05
  SPEAKER_03: A lot of man in a vans run around.
• 29:08
  SPEAKER_03: Yeah, yeah.
• 29:08
  SPEAKER_03: Uh good luck calling them back if anything goes wrong.
• 29:10
  SPEAKER_01: Yeah.
• 29:11
  SPEAKER_01: Well, the funny, the funny thing about Florida, like, I've been at the trades my whole life, and Florida is everyone's retirement plan.
• 29:16
  SPEAKER_01: So, like everyone, everyone that we've had go through the business and they're like prepping to retire.
• 29:21
  SPEAKER_01: They're like, Yeah, my plan is I'm gonna go test backflows down in Florida when I retire.
• 29:26
  SPEAKER_01: It's like a two-hour a day gig.
• 29:27
  SPEAKER_01: They can make a little bit of money, they can live in Florida.
• 29:30
  SPEAKER_01: So yeah, it's like the plumber's dream is like being a one-man dude down in Florida.
• 29:35
  SPEAKER_01: So, yeah, it is it's kind of funny.
• 29:38
  SPEAKER_01: Um what what are some common owner mistakes that you feel like you're you're seeing or you lived yourself?
• 29:46
  SPEAKER_03: Uh I would I'd say just fundamentally is you know, they've and I and I'm thinking a lot of the the fantastic business owners that spent an entire career in the trades, they started as a plumber and built a you know nice nice business for themselves.
• 30:03
  SPEAKER_03: And one day they wake up, hopefully it's not because of a health issue, but one day they realize I need to retire at some point.
• 30:10
  SPEAKER_03: What is my business worth?
• 30:11
  SPEAKER_03: And they haven't spent the last couple of years prepping it for a sale.
• 30:16
  SPEAKER_03: And so whether that is getting the right systems in place, the right processes in place, um, some of them occasionally you don't see it too often, but occasionally they're still on paper.
• 30:28
  SPEAKER_03: Um, they're not even on a house called Pro or Service Titan.
• 30:31
  SPEAKER_03: Um, I know Service Titan is expensive, but you gotta you have to look past that and realize like the capabilities of like what it offers.
• 30:40
  SPEAKER_03: Yeah.
• 30:40
  SPEAKER_03: Um if you're a small business owner, you've been doing this for 35 years, you're you're just thinking about the cost.
• 30:47
  SPEAKER_03: You don't view it as an investment.
• 30:49
  SPEAKER_03: Um and build I would say building the team the same thing.
• 30:53
  SPEAKER_03: You know, oh you know, I don't want to take on another hundred hundred thousand dollars of overhead um because they look at it as an expense when really no, that's an investment in human capital.
• 31:04
  SPEAKER_03: So that you can build a team and it frees you up to manage the overall business and not be stuck in the business.
• 31:10
  SPEAKER_01: Yeah.
• 31:11
  SPEAKER_03: Um many of these independence uh business owners that I come across, they they don't think think like that.
• 31:19
  SPEAKER_03: And uh so one day when they're ready to sell, or maybe they get an unsolicited offer from one of the many private equity groups out there, like hey, he says it it could be worth this.
• 31:29
  SPEAKER_03: And then when they take a look under the hood and they realize well they don't have management in place, they don't have they're still on paper, and then suddenly that big value gets cut, you know, 30-40 percent.
• 31:43
  SPEAKER_03: Um those are I would say so those are some of the common things that I'm seeing out there is just the maybe a lot of it's just a lack of understanding of like what should I be working on?
• 31:55
  SPEAKER_00: Right.
• 31:55
  SPEAKER_03: And so my one of one of the things I enjoy doing is getting in front of those owners a year, two, or even three years before they've thought about a sale, which is actually the smart move.
• 32:07
  SPEAKER_03: Is I can't tell you how many clients I've had from my investment banking days where you go through a whole process, you meet with all these sophisticated buyers, um, private equity types, and they tell you everything they love about your business, but then they also poke holes in your business and say, I wish you had done these three or four things.
• 32:26
  SPEAKER_03: Yeah.
• 32:26
  SPEAKER_03: And I can't tell you how many very smart CEOs and principals have pulled me aside and said, Well, had I known that two or three years ago, I could have easily done that.
• 32:36
  SPEAKER_03: I just didn't know.
• 32:37
  SPEAKER_01: Yeah.
• 32:37
  SPEAKER_03: Um, so light bulb went off of my head and said, I know they're not the only ones experiencing this.
• 32:43
  SPEAKER_03: I wish I could get in front of owners early and often.
• 32:46
  SPEAKER_03: Yeah, you know, before they think about a sale, so I can help prepare them for that event.
• 32:52
  SPEAKER_00: Yeah.
• 32:52
  SPEAKER_03: Um and what I found is it's obviously beneficial to the family run uh plumbing or HVAC business.
• 33:00
  SPEAKER_03: But also buyers appreciate it too, right?
• 33:03
  SPEAKER_03: Because somebody's been in there to help them clean up, um, put in uh KPIs, uh implement some processes, uh, raise prices, hire the next uh service manager, maybe switch to a house call pro or service titan, do all these things that that's one less thing than private equity group or whoever they ultimately sell to.
• 33:26
  SPEAKER_01: I mean, even us, even like private buyers, like we've done four transactions this year, and there is a very big difference between a setup to sell business and a not set up to sell business.
• 33:37
  SPEAKER_01: Um, it's kind of shocking.
• 33:39
  SPEAKER_01: Yeah.
• 33:39
  SPEAKER_01: Um, like we as a private buyer, our own money, our own debt, like we pay up when a business is ready to roll, and I can just put it into my system and immediately activate the upside versus, you know, if I've got a lot of the even price changes.
• 33:58
  SPEAKER_01: So that was a conversation we had with uh we did a deal like two weeks ago, and that was a part of the conversation.
• 34:04
  SPEAKER_01: When was last time you raised price?
• 34:06
  SPEAKER_01: It's been three, four years, I just haven't felt like doing it.
• 34:08
  SPEAKER_01: Okay, so I'm I can't be that guy.
• 34:12
  SPEAKER_01: So I that's gonna dock price, or you can go do that tomorrow, and then this doesn't have to be a conversation.
• 34:16
  SPEAKER_01: Like, but you have to take some of this risk, otherwise, I can't be your employers are gonna look at me and say, I raised pricing day one because you were half of market and I become the bad guy versus just do it now.
• 34:28
  SPEAKER_03: Yep.
• 34:29
  SPEAKER_03: That's that that you nailed it.
• 34:32
  SPEAKER_03: I mean, that that is lost in when you hear about oh, so and so sold for you know 10 times or so crazy multiple.
• 34:39
  SPEAKER_03: Um, that spreads like wildfire on social media and word of mouth.
• 34:44
  SPEAKER_03: But what you don't hear about is well, there's a reason why that that one company may have sold for 10 times because they were ready to sell.
• 34:52
  SPEAKER_03: They did all those things that you mentioned, and it was a quite literally a plug and play into a larger organization, whether that's a a private investor like one of us or institutional capital like private equity.
• 35:04
  SPEAKER_03: Um what you don't hear about is well, he sold for 10 times, fantastic outcome.
• 35:11
  SPEAKER_03: Why am I looking at an offer for five or six times?
• 35:13
  SPEAKER_03: Yeah, it's because of all these things that add up over time.
• 35:17
  SPEAKER_01: There's like a there's a list.
• 35:19
  SPEAKER_01: I'll see if we can publish it.
• 35:21
  SPEAKER_01: Um probably a good idea.
• 35:23
  SPEAKER_01: But there's a list, there's like a hundred items, and it's I think it's very easy.
• 35:29
  SPEAKER_01: I actually had this conversation about not with you, but it was about a post you made on Twitter with uh well, I think it was with Jack, like Jack Carr.
• 35:39
  SPEAKER_01: Okay.
• 35:39
  SPEAKER_01: And we were we were talking about that.
• 35:42
  SPEAKER_01: Um, there was some post was it or eight someone?
• 35:45
  SPEAKER_01: No, I think this is like a year ago, and you were talking about a price that a company got for a relatively low multiple.
• 35:53
  SPEAKER_01: And the only two data sets we had from your post was like EBITDA and multiple, which is not enough information.
• 36:02
  SPEAKER_01: Right.
• 36:03
  SPEAKER_01: Yeah, right.
• 36:04
  SPEAKER_01: But like that was the conversation he and I were having.
• 36:06
  SPEAKER_01: I want to say it was like uh a 10 times on two million of EBITDA, which in 21 was maybe normal today.
• 36:12
  SPEAKER_01: Like, that is not very common.
• 36:13
  SPEAKER_00: Yeah.
• 36:14
  SPEAKER_01: So uh, but like that was the only information we had.
• 36:17
  SPEAKER_01: So it's like, okay, well, what are we missing from that 10 and two?
• 36:22
  SPEAKER_01: Are we missing revenue?
• 36:23
  SPEAKER_01: Like, what if it was 50 million of revenue but two million of EBITDA?
• 36:26
  SPEAKER_01: Well, I would also pay a 10 times for that shit tomorrow.
• 36:29
  SPEAKER_01: Like, let's go.
• 36:31
  SPEAKER_01: Uh uh, so yeah, I think like what's the extra context?
• 36:35
  SPEAKER_01: Um, what's gross margin?
• 36:37
  SPEAKER_01: How many members?
• 36:38
  SPEAKER_01: What's churn rate of employees?
• 36:39
  SPEAKER_01: There's like a hundred things that make you go from the five times to the 12 times.
• 36:45
  SPEAKER_01: Yeah.
• 36:46
  SPEAKER_01: I talked to a ton of home service owners, and if you're anything like the one to five million dollar shops that I know, you're probably getting hammered with AI pitches right now.
• 36:56
  SPEAKER_01: Most of them sound great until they hit the real world and just completely fall apart.
• 37:00
  SPEAKER_01: The one that we keep coming back to is Voka.
• 37:03
  SPEAKER_01: What stands out is they actually understand how contractor businesses operate.
• 37:07
  SPEAKER_01: This isn't just another AI answering service.
• 37:10
  SPEAKER_01: Voka handles inbound calls, outbound follow-ups, text, web leads, even dispatching, all in one system built specifically for service companies.
• 37:20
  SPEAKER_01: If you're on ServiceTitan, then this is a big deal.
• 37:22
  SPEAKER_01: Their integration is deep, so you're not duct taping together five different tools and hoping that nothing breaks during your busy season.
• 37:28
  SPEAKER_01: I also respect that they're realistic about AI.
• 37:31
  SPEAKER_01: When a call needs a human, they've got a 24-7 live transfer built in, so nothing slips through the cracks and your customers don't get stuck in a bad experience or like an AI loop.
• 37:42
  SPEAKER_01: Owners using a voca are seeing whole times basically disappear and booking rates jump, some by 30% or more.
• 37:48
  SPEAKER_01: If you want an AI partner that actually helps you book more jobs without creating more chaos, this is worth checking out.
• 37:55
  SPEAKER_01: Book a demo at the link below.
• 37:58
  SPEAKER_03: And I I've you you're absolutely right.
• 38:01
  SPEAKER_03: I I have attempted to put together a list.
• 38:06
  SPEAKER_03: Um, and I think I got to like 10 or 15 items on on X or Twitter and sort of stopped like that's a starting point.
• 38:14
  SPEAKER_03: But there are so many other um attributes out there and different qualities of a business that uh generate that outsize outcome that is pretty rare.
• 38:24
  SPEAKER_03: Yeah, not everybody's just it's not about that's the point I was trying to make is like, guys, it's not just this Ibita, that multiple.
• 38:33
  SPEAKER_03: Well, that's what so many people think it is.
• 38:34
  SPEAKER_03: Oh, I know.
• 38:35
  SPEAKER_01: So there's um uh yeah, there's people uh like I saw a deal and he's he's saying he's two and a half million of he might be two and a half million of you.
• 38:44
  SPEAKER_01: I have no idea.
• 38:45
  SPEAKER_01: You can basically fake your way up to a million of EBITDA very easily, or you adjust your way up to pro forma, yeah.
• 38:51
  SPEAKER_01: You can get there.
• 38:52
  SPEAKER_01: Um so and I I think you can kind of do that with two as well if you've got enough revenue.
• 38:57
  SPEAKER_01: But but uh I I want to say this guy's like eight to ten of revenue and like two and a half or two to three of Avita, which maybe.
• 39:09
  SPEAKER_03: Maybe those are exceptional margins, yes, yeah.
• 39:12
  SPEAKER_01: But like the reality is if that if they go to market, they're not getting 30 million dollars for that business.
• 39:18
  SPEAKER_01: No, they're not.
• 39:19
  SPEAKER_01: There's just no fucking way.
• 39:20
  SPEAKER_01: Nobody would pay that.
• 39:21
  SPEAKER_01: I and it's because we're we're only focused on two pieces of data, which is EBITDA and multiple.
• 39:27
  SPEAKER_01: That's right.
• 39:28
  SPEAKER_01: How did we arrive at that multiple?
• 39:29
  SPEAKER_01: Yeah, and I think that and multiplying on what?
• 39:32
  SPEAKER_01: And I I think that that that's the big like thing that gets lost when people talk about MA.
• 39:37
  SPEAKER_03: There are like you said, there's a hundred different things that feed into the right multiple, and then a multiple of what?
• 39:44
  SPEAKER_01: Yeah.
• 39:45
  SPEAKER_01: Um, yeah, pro forma, TTM, past five years average.
• 39:49
  SPEAKER_01: Like there's a big fucking difference.
• 39:51
  SPEAKER_01: Oh, absolutely.
• 39:52
  SPEAKER_03: Absolutely.
• 39:53
  SPEAKER_03: Um, yeah, and that's these are the conversations that I enjoy having.
• 39:59
  SPEAKER_03: That it's um yes, that that the big splashy headline number, it gets fair, you know, that's really exciting.
• 40:05
  SPEAKER_03: And everyone, I I think why folks like to gravitate towards a multiple and then eBITA because, like, well, I can quantify my own EBITDA or I think I can.
• 40:13
  SPEAKER_03: I if I could slap a multiple and now I know the value of my business.
• 40:16
  SPEAKER_03: Yeah.
• 40:17
  SPEAKER_03: And I think what you're hitting on is it's not that simple.
• 40:21
  SPEAKER_01: Yeah.
• 40:21
  SPEAKER_01: And I think you can find out pretty easy though.
• 40:24
  SPEAKER_01: Because I think like you could do a little bit of research, but I think if I was trying to figure out exactly this, well, how do I do I engage with a banker a couple years early?
• 40:33
  SPEAKER_01: Which I do think that is the right answer.
• 40:35
  SPEAKER_01: Yeah.
• 40:36
  SPEAKER_01: Alternatively, or maybe in addition to go under contract with somebody.
• 40:42
  SPEAKER_01: Like literally enter due diligence, and they will give you the list of things that you need to work on, and then get out of there.
• 40:48
  SPEAKER_01: That is one way to find you'll spend a thousand dollars on legal and you'll make millions of dollars when you go to X.
• 40:54
  SPEAKER_02: Yeah.
• 40:55
  SPEAKER_02: My recommendation is the former.
• 40:58
  SPEAKER_02: Yeah, yeah, yeah.
• 40:59
  SPEAKER_02: Give me a call or talk to a banker.
• 41:02
  SPEAKER_01: But a buyer picking through your business and like, hey, your gross margin in this trade line isn't good enough.
• 41:06
  SPEAKER_01: This yes, you will get you'll get feedback from you will understand very quickly how to go from a five to a 12.
• 41:13
  SPEAKER_03: Yes.
• 41:13
  SPEAKER_03: Yeah, absolutely.
• 41:15
  SPEAKER_01: Honestly, I think people should do that more.
• 41:16
  SPEAKER_03: I think that well, to avoid that going down that road, yeah.
• 41:20
  SPEAKER_03: Uh I try to share my thoughts.
• 41:22
  SPEAKER_03: And I know you're doing the same on social media.
• 41:25
  SPEAKER_03: Yeah.
• 41:26
  SPEAKER_03: And you know, I recently launched a website and I'm active on LinkedIn and X like all these little things.
• 41:31
  SPEAKER_03: I might just um put together a little more meat to some of my posts and describe that yeah, it's not just a multiple.
• 41:38
  SPEAKER_03: Uh there's more.
• 41:39
  SPEAKER_01: Or here's the checklist to be ready or something.
• 41:41
  SPEAKER_03: Yeah.
• 41:42
  SPEAKER_03: Yeah.
• 41:42
  SPEAKER_03: Um, you know, the other point to think about is um, and I posted on this recently, it's not all cash at close.
• 41:50
  SPEAKER_01: Oh, yeah.
• 41:50
  SPEAKER_01: You know, if yeah, 10x depend depends on the buyer.
• 41:54
  SPEAKER_01: I actually responded to I responded to a post about that once, and uh Twitter did not like my comment.
• 42:00
  SPEAKER_01: And I'm like, my guys, this is how it works.
• 42:02
  SPEAKER_00: What did Twitter do?
• 42:03
  SPEAKER_01: Uh well, no, like people like the community.
• 42:06
  SPEAKER_01: Yeah, the community was like, that's how all private equity buys.
• 42:09
  SPEAKER_01: I'm like, no, it's fucking not.
• 42:11
  SPEAKER_04: Yeah.
• 42:11
  SPEAKER_01: Like, so someone got an offer, and I was like, oh, well, that's clearly Apex because that's how Apex offers.
• 42:16
  SPEAKER_03: Now Apex is unique in that respect.
• 42:18
  SPEAKER_03: Apex is unique.
• 42:19
  SPEAKER_03: Yes, they are.
• 42:19
  SPEAKER_01: Uh so it's like, oh, okay, well, that okay, Apex offered on the business makes sense.
• 42:23
  SPEAKER_01: Anyone that knows how Apex offers thousand Apex offer, got it.
• 42:26
  SPEAKER_01: You should take it and run.
• 42:27
  SPEAKER_01: Yep.
• 42:28
  SPEAKER_01: Uh Twitter did not like that.
• 42:31
  SPEAKER_01: Um yeah, it was kind of funny.
• 42:33
  SPEAKER_01: But but yeah, I I agree.
• 42:34
  SPEAKER_01: Like there's a lot, there's a lot going on.
• 42:37
  SPEAKER_01: Uh it can be cash, it could be seller note, it could be debt that they bring in from somebody.
• 42:43
  SPEAKER_01: It could be an earnout, rolled equity is a component of it.
• 42:46
  SPEAKER_03: And you could you could probably do an entire um episode just on rolled equity and what that looks like.
• 42:53
  SPEAKER_01: Sure, yeah.
• 42:53
  SPEAKER_01: Um we're doing our second rolled equity deal this year right now.
• 42:56
  SPEAKER_01: Are you?
• 42:57
  SPEAKER_01: And uh it it's interesting.
• 42:59
  SPEAKER_01: Like it's an interesting, it's interesting.
• 43:01
  SPEAKER_01: And we ended up using it to cover a value, well, not cover a value gap, but like one, it's better for us.
• 43:06
  SPEAKER_01: But like we don't we only want to lend up to X turns of their EBITDA, and but I still want the business.
• 43:13
  SPEAKER_01: And we're paying it seven times, which is reasonable for that size of a business.
• 43:17
  SPEAKER_01: So, okay, so we're gonna take like three and a half turns of debt, and we're gonna allow rollover, and then we're gonna do cash.
• 43:24
  SPEAKER_01: And there's an earnout.
• 43:25
  SPEAKER_01: So, like all four of those components are in that deal, which is kind of a funny that's yeah, that that is a very common structure, the way you just uh laid that out.
• 43:35
  SPEAKER_03: And the the rolled equity is meant to yes, one bridge any sort of gap, more so an earning.
• 43:42
  SPEAKER_03: Keeps them tied in.
• 43:43
  SPEAKER_03: Yeah, it keeps them tied in.
• 43:44
  SPEAKER_03: Yeah.
• 43:44
  SPEAKER_03: You know, they have skin in the game, quite literally, with uh a a piece of the overall uh platform or the holding company.
• 43:52
  SPEAKER_03: And so they have a vested interest in seeing that hey, I didn't just dump all this on them, like I want to grow together.
• 43:58
  SPEAKER_03: So that's the whole point.
• 44:00
  SPEAKER_03: That's why private equity, other than Apex, generally offers rolled equity.
• 44:05
  SPEAKER_01: Yeah.
• 44:06
  SPEAKER_01: So um yeah.
• 44:08
  SPEAKER_01: So what are we seeing this year, 2026?
• 44:10
  SPEAKER_01: It's been a kind of an interesting year for MA.
• 44:12
  SPEAKER_03: It's been very active.
• 44:13
  SPEAKER_01: Yeah.
• 44:14
  SPEAKER_01: Very active.
• 44:14
  SPEAKER_01: We were talking about this last night, but I mean, there's it feels like I mean, there's money sloshing through the system.
• 44:20
  SPEAKER_03: There's a lot of money sloshing through the system.
• 44:23
  SPEAKER_03: There's and there's a lot of new money and new capital coming.
• 44:27
  SPEAKER_03: That's been interesting too.
• 44:28
  SPEAKER_03: Yeah.
• 44:29
  SPEAKER_03: Um, there's a lot of established capital that needs to find an exit.
• 44:34
  SPEAKER_03: Yep.
• 44:34
  SPEAKER_03: You know, rates shot up and they stayed up.
• 44:37
  SPEAKER_03: Yep.
• 44:38
  SPEAKER_03: And a lot of that capital hasn't been recycled and recapitalized.
• 44:42
  SPEAKER_03: So you're starting to see that damn break a little bit with a lot of these uh big groups um going, they're either in market, gearing up to go to market, or they've since recapitalized.
• 44:55
  SPEAKER_01: Yeah, I mean, we've had three or two major recaps just this year.
• 45:00
  SPEAKER_03: Apex.
• 45:01
  SPEAKER_03: Yep.
• 45:01
  SPEAKER_03: You had um was Redwood late last year?
• 45:04
  SPEAKER_03: Redwood was late last year.
• 45:05
  SPEAKER_03: Okay, like December.
• 45:07
  SPEAKER_03: Yes, uh November, December.
• 45:09
  SPEAKER_03: Yeah.
• 45:09
  SPEAKER_03: Um, before them was uh was Sila Champions.
• 45:13
  SPEAKER_03: Uh yeah, Champions is the other one this year.
• 45:15
  SPEAKER_03: Um, that one's really interesting with Blackstone getting into the mix.
• 45:18
  SPEAKER_01: Yeah.
• 45:19
  SPEAKER_01: I um offers a lot of validity.
• 45:21
  SPEAKER_01: Honestly, Apex does too, because they raised a 20.
• 45:24
  SPEAKER_03: Yeah.
• 45:25
  SPEAKER_03: Yeah.
• 45:25
  SPEAKER_03: Yeah.
• 45:26
  SPEAKER_03: So the the Apex deal, if you want to talk about that one for a little bit, that that one's interesting.
• 45:31
  SPEAKER_03: Yeah.
• 45:32
  SPEAKER_03: Because based on my conversations in the in the industry, that was more out of necessity because they were so highly levered.
• 45:42
  SPEAKER_03: Uh, they had over eight times uh leverage on the balance sheet, which is incredibly difficult to to manage and service that debt.
• 45:53
  SPEAKER_03: So my understanding is the Apollo deal was meant to come in and help them delever as a minority slug.
• 46:00
  SPEAKER_03: And eventually, so they've done a number of minorities.
• 46:05
  SPEAKER_01: What's that?
• 46:06
  SPEAKER_01: I think this is their third or fourth minority race.
• 46:09
  SPEAKER_03: Yes.
• 46:10
  SPEAKER_03: Uh they did one, they did a uh continuation vehicle in 23.
• 46:14
  SPEAKER_03: Yeah.
• 46:15
  SPEAKER_03: And now, but this one was really out of necessity, is what I'm what I'm told.
• 46:24
  SPEAKER_03: Um in the event that they're they're gearing up for eventual IPO.
• 46:29
  SPEAKER_01: Yeah.
• 46:30
  SPEAKER_03: And that's how they'll they'll exit.
• 46:32
  SPEAKER_01: Yeah, that's been their that's been their stated plan forever, which I think is gonna be good for the industry, uh, or bad.
• 46:38
  SPEAKER_01: I mean, we'll basically find out.
• 46:39
  SPEAKER_01: But once they go to market, I think like the dam breaks.
• 46:43
  SPEAKER_01: I think six or seven other of these guys go IPO.
• 46:46
  SPEAKER_03: Yeah.
• 46:47
  SPEAKER_03: I yeah, I mean, over 500 million of of EBITDA in the buyer universe is quite small, other than going public, right?
• 46:54
  SPEAKER_01: Yeah.
• 46:55
  SPEAKER_03: Um, I personally think it's gonna be a great thing for the market because once we see where that asset trades and the public, it's that's yeah.
• 47:03
  SPEAKER_03: That that is our ceiling, right?
• 47:05
  SPEAKER_01: Yes, yeah, and so even now 20 is our ceiling.
• 47:07
  SPEAKER_01: To me, that that was like really like okay, 20 just became the ceiling, whereas previously it was 18 or 19.
• 47:13
  SPEAKER_03: Yeah.
• 47:14
  SPEAKER_03: I uh well, after I started doing some digging at 20 is uh generous, yeah.
• 47:20
  SPEAKER_03: So it was actually uh high teens.
• 47:22
  SPEAKER_01: Yeah.
• 47:23
  SPEAKER_03: But the point still stands currently in the private markets, that is our ceiling, right?
• 47:28
  SPEAKER_03: If Apex or any one of these folks go public, who knows where they trade?
• 47:33
  SPEAKER_03: I like to think that they'll be in the low to mid-20s as a uh publicly traded uh company.
• 47:40
  SPEAKER_03: We'll see what the market decides.
• 47:42
  SPEAKER_03: Um, but if they ultimately do go public, that'll have a ripple effect all the way down market, which is fantastic news for other guys like myself, even the small independents, because if they're trading at 25 times publicly, they get supported.
• 47:58
  SPEAKER_01: This is pest control.
• 47:59
  SPEAKER_03: Like you have Orkin, you have like Rollins consistently trades 32, 33 times.
• 48:04
  SPEAKER_03: That's why all these pest control deals go trade at 10.
• 48:07
  SPEAKER_03: Yeah, because it doesn't matter because 12 times, like it's not a big deal to these guys.
• 48:10
  SPEAKER_03: Yeah, um, if your own um asset trades for 30 times, like it's immediately accretive.
• 48:16
  SPEAKER_03: Yeah, why wouldn't you do this deal?
• 48:18
  SPEAKER_03: Yeah, um, the reverse is true.
• 48:20
  SPEAKER_03: Like, if the markets decide no, it's not worth 25 times, it's worth 15.
• 48:26
  SPEAKER_03: Well, that compresses all the way down.
• 48:28
  SPEAKER_01: Yeah.
• 48:29
  SPEAKER_03: Um, so yeah, the apex deal was was interesting.
• 48:33
  SPEAKER_03: The Blackstone coming into the space with champions at 18 and a half times, they really leaned in for that opportunity.
• 48:40
  SPEAKER_03: Yeah, my sense is through the conversations I've had and what excites me with what Blackstone's gonna do, they're gonna build like a um a home services platform.
• 48:52
  SPEAKER_03: Yes, and not just stay within HVAC and plumbing, but broaden beyond that.
• 48:57
  SPEAKER_01: They're actively talking garage.
• 48:59
  SPEAKER_03: They're acting, yeah.
• 49:00
  SPEAKER_03: Yep 100%.
• 49:01
  SPEAKER_03: And that to me is is really exciting where you as a homeowner, you essentially have, you know, one one throat to choke, as we say, or you know, one phone call to make for most of your needs around the home.
• 49:15
  SPEAKER_03: Um, I think that's the longer term play.
• 49:18
  SPEAKER_03: Maybe we're talking the next 15, 20 years, but eventually I see that's where the industry is gonna go.
• 49:24
  SPEAKER_03: A home services platform made up of HVAC, plumbing, electrical, garage doors, roofing, yeah, window and doors.
• 49:34
  SPEAKER_01: Yeah, that's interesting.
• 49:35
  SPEAKER_01: Uh yeah, the Apex 20 times or was interesting.
• 49:39
  SPEAKER_01: Uh kind of a fun nugget was uh unadjusted, was 350.
• 49:46
  SPEAKER_01: And so 150 was integration cost.
• 49:53
  SPEAKER_01: Wow.
• 49:54
  SPEAKER_01: That's a lot.
• 49:55
  SPEAKER_01: That is a lot.
• 49:56
  SPEAKER_01: That's a lot.
• 49:57
  SPEAKER_01: Can you imagine being the one?
• 50:00
  SPEAKER_01: I'm sure like the team, but like that would be a funny list to compile.
• 50:05
  SPEAKER_01: Like it's 150 million of adbacks and integration costs.
• 50:08
  SPEAKER_01: Yeah, just that line.
• 50:11
  SPEAKER_03: It's as crazy as that sounds, it's it's not uncommon.
• 50:15
  SPEAKER_03: I would say that this well with their amount of deal for it makes sense.
• 50:18
  SPEAKER_03: Yeah, they're so acquisitive.
• 50:20
  SPEAKER_01: Um, I mean, we have we have a lot of integration cost, yeah.
• 50:23
  SPEAKER_01: And we're not apex.
• 50:25
  SPEAKER_03: Like, yeah, it's all so directionally it it makes sense.
• 50:29
  SPEAKER_03: The the sheer size of it might like it's hard to wrap your head around that, um, and just how much of that EBITDA is adjusted.
• 50:36
  SPEAKER_03: Yes.
• 50:37
  SPEAKER_03: Um, but you know, Sila, I heard nearly uh 40, 45% of adjusted EBITDA were adjustments as well.
• 50:45
  SPEAKER_01: Yeah.
• 50:45
  SPEAKER_03: So I mean it makes sense.
• 50:47
  SPEAKER_03: It's not it's not uncommon, it's it's not that crazy because you have you've built this just MA machine that's just bye bye bye.
• 50:54
  SPEAKER_03: Yeah.
• 50:54
  SPEAKER_01: Um I mean, we're we're seeing the same thing now.
• 50:56
  SPEAKER_01: So like our stated EBITDA year to date is uh I don't know, like a three and a half, I want to say.
• 51:03
  SPEAKER_01: Um and there is when we look at our EBITDA, it's sort of like okay, but they weren't on our vendor yet.
• 51:14
  SPEAKER_01: So is that$300,000?
• 51:17
  SPEAKER_01: And how should we be thinking about that?
• 51:19
  SPEAKER_01: And it's like multiply that by Apex.
• 51:21
  SPEAKER_03: Yeah.
• 51:23
  SPEAKER_03: But if you I mean, if you think about it, I mean they're they're legitimate.
• 51:27
  SPEAKER_03: Yeah, they should be legitimate.
• 51:29
  SPEAKER_03: Yeah.
• 51:29
  SPEAKER_03: Um, because if you were to just stop what you're doing, you included, or Apex, just stop the MA activity.
• 51:36
  SPEAKER_03: Those costs disappear.
• 51:37
  SPEAKER_03: They those should disappear.
• 51:39
  SPEAKER_03: Yeah, and that's the whole point of doing the the the add backs.
• 51:42
  SPEAKER_01: Um what else you see in the market this year?
• 51:46
  SPEAKER_03: I am I'm starting to see new capital come into this space.
• 51:51
  SPEAKER_03: Um, you know, we were talking about um, and I'm not thinking of like Blackstone coming in at with champions, yeah.
• 51:58
  SPEAKER_03: Not that type of new capital.
• 51:59
  SPEAKER_03: I'm talking about family offices wanting to come in and find the next platform, yeah, and buy a build buy and build around that platform.
• 52:08
  SPEAKER_03: Yeah.
• 52:09
  SPEAKER_03: And I have been kind of piecing it together, and I I think what where I'm landing on, and and I posted about this recently.
• 52:19
  SPEAKER_03: You mentioned at the top of this conversation about the tailwind right out of COVID, everybody working from home, um, replacing, you know, their AC systems, plowing a lot of money back into the home.
• 52:32
  SPEAKER_03: So there's a nice um shot in the arm in home services coming out of that.
• 52:36
  SPEAKER_01: Yeah.
• 52:36
  SPEAKER_03: I think there's a second shot in the arm, and it's driven by AI.
• 52:41
  SPEAKER_01: Yeah.
• 52:41
  SPEAKER_01: We actually did an episode on this maybe a month ago.
• 52:44
  SPEAKER_03: Yeah.
• 52:44
  SPEAKER_01: And I had three shots.
• 52:46
  SPEAKER_01: So one was the technology appearing, Service Titan, Google My Business, LSA, like mid-teens, like 2015, 2016, drove like there wasn't a 10 million, like there was a couple 10 million dollar businesses 10 years ago.
• 53:04
  SPEAKER_01: Right.
• 53:04
  SPEAKER_01: Right.
• 53:04
  SPEAKER_01: And now like you're considered small at 10 million dollars.
• 53:07
  SPEAKER_01: It's kind of crazy.
• 53:08
  SPEAKER_01: Uh so like mid-2010s, you had technology enter the space meaningfully.
• 53:14
  SPEAKER_01: 2020, you had COVID and the wins from that, and absolutely to AI.
• 53:19
  SPEAKER_03: And I what I mean by that, and I I think you're going along the same uh route that I am.
• 53:24
  SPEAKER_03: It's and I don't mean like AI um automating the tack different tasks or answering phones, replace, you know, replacing CSRs.
• 53:33
  SPEAKER_03: It's a haven for money.
• 53:35
  SPEAKER_03: Yes.
• 53:35
  SPEAKER_03: Yes, you know, 100%.
• 53:37
  SPEAKER_01: It's a durable industry.
• 53:38
  SPEAKER_01: You're protected, yeah.
• 53:40
  SPEAKER_03: In our industry, we're beneficiaries of AI, but also we there we're a place to hide out.
• 53:45
  SPEAKER_03: Yes, right, because AI is not gonna replace a plumber.
• 53:48
  SPEAKER_01: Capital needs somewhere to go.
• 53:49
  SPEAKER_03: Capital has somewhere to go.
• 53:51
  SPEAKER_03: If I if I owned and operated a SaaS company right now, I'd be terrified.
• 53:54
  SPEAKER_03: Yeah, it's tough.
• 53:55
  SPEAKER_03: Claude can destroy your business tomorrow.
• 53:57
  SPEAKER_01: Yeah.
• 53:57
  SPEAKER_03: Um, and I think there are so many other industries out there that are gonna go to zero.
• 54:01
  SPEAKER_03: And because of that fear, capital is gonna find a place to hide out, and we're one of those industries.
• 54:08
  SPEAKER_01: I I I mean, we're seeing that now.
• 54:09
  SPEAKER_01: Like I'm seeing um like landscaping companies, painting companies, like companies that have no business trading for the numbers that they're trading for, like trading for numbers.
• 54:18
  SPEAKER_01: Like I saw 500,000 SDE landscaping business go for a 12 with debt assumption.
• 54:25
  SPEAKER_01: So it was like 14 times on a half a million dollars of discretionary earnings.
• 54:30
  SPEAKER_01: It was ridiculous.
• 54:32
  SPEAKER_01: Did it close?
• 54:34
  SPEAKER_01: I actually gotta check back.
• 54:35
  SPEAKER_01: I gotta check back because when they said that, I was like, you need to, and and the guy was like, Do you think this is a good offer?
• 54:41
  SPEAKER_01: I'm like, yeah, yeah, yeah.
• 54:42
  SPEAKER_01: This is a fucking good offer.
• 54:44
  SPEAKER_01: You need to run, my brother.
• 54:46
  SPEAKER_00: Oh man.
• 54:47
  SPEAKER_01: Yeah, no, it was it was crazy.
• 54:49
  SPEAKER_01: I'll actually, I'm gonna find out if that closed.
• 54:50
  SPEAKER_01: Yeah.
• 54:51
  SPEAKER_01: Because it was so ridiculous.
• 54:53
  SPEAKER_01: Uh, and this this was earlier this year, and I was like, the only thing I can think of is someone needs to hide capital.
• 55:01
  SPEAKER_01: The second only thing I can think of is they have a robot lawnmower's play.
• 55:05
  SPEAKER_01: That cost of goods sold goes to zero.
• 55:07
  SPEAKER_01: It wouldn't surprise me in 2022.
• 55:09
  SPEAKER_01: Something has to happen to make that make sense.
• 55:13
  SPEAKER_03: Yeah, the the only thing I could think of that were you lean in on multiple like that is if you have some angle where you see something where you can do something jack prices up, you know, the realize some material uh cost savings that just drops to the bottom line, and then you what the the headline price of paying 10 times actually looks like five or six times after you do all these initiatives.
• 55:40
  SPEAKER_03: Or it's you need somewhere to hide out.
• 55:42
  SPEAKER_01: Yeah.
• 55:43
  SPEAKER_03: And I think I I agree with you though.
• 55:45
  SPEAKER_03: Because of that, we're gonna see more and more of these family offices hide out in this space.
• 55:50
  SPEAKER_03: Um surely driven by AI.
• 55:53
  SPEAKER_03: Yeah, it's disrupting so many other industries out there right now, so yeah, which is good and bad.
• 55:58
  SPEAKER_03: I mean, if you're if you're trying to buy and build like like I am, like you are, it's like, well, we better be prepared to um yeah, pay a little bit of a different price than we thought we would even a few years ago.
• 56:10
  SPEAKER_03: Yeah, um, but we know that if we recapitalize at some point the value of that, right?
• 56:15
  SPEAKER_03: Yeah.
• 56:16
  SPEAKER_01: Yeah, I think uh as um as people I've been encouraging this, uh I don't know if I've said this on the show, but like 2026, when there's and you and I talked about this last night, but when there is money flowing through the system, if you're thinking about timing, it's probably a good time, right?
• 56:38
  SPEAKER_01: Like if if Apex just got invested in, well, hey, they get paid fees to deploy that.
• 56:44
  SPEAKER_01: So them having flush pockets is a really good moment to talk to them for the first time.
• 56:49
  SPEAKER_01: Same with champions.
• 56:50
  SPEAKER_01: So there's like this window where you want to be right before they trade or right after they trade, because either way, you'll get like a strong offer, potentially stronger than you deserve.
• 57:04
  SPEAKER_01: Yeah, which I think people get caught up in that.
• 57:06
  SPEAKER_01: But like I had to have a real conversation with that uh for a deal we did recently.
• 57:11
  SPEAKER_01: We closed on it, um, but we made an offer and it was a strong offer.
• 57:15
  SPEAKER_01: And I had to communicate up front, like, hey, this is a strong offer.
• 57:18
  SPEAKER_01: You can go test the market.
• 57:19
  SPEAKER_01: This is a strong offer.
• 57:20
  SPEAKER_01: This is more than your company's worth.
• 57:22
  SPEAKER_01: Right.
• 57:22
  SPEAKER_01: Here's why I'm paying that.
• 57:24
  SPEAKER_01: Basically, it was convenient to me, it was in the perfect location, it solved a few of my problems.
• 57:28
  SPEAKER_01: Like, yeah, I am down to do this, but like the contract that we're about to negotiate is only going to go one way because like you can't get this anywhere else.
• 57:36
  SPEAKER_03: That's right.
• 57:37
  SPEAKER_01: Uh, but you he did get top dollar.
• 57:40
  SPEAKER_03: So, like, I I 100% agree.
• 57:44
  SPEAKER_03: And I I don't say this, you know, a banker could say this at literally any time, any year, like, oh, now's a great time, best time ever to sell.
• 57:55
  SPEAKER_03: It's like that's what bankers are incentivized to do that, right?
• 57:59
  SPEAKER_03: But I I really do mean it.
• 58:00
  SPEAKER_03: Like this this moment in time, uh, however long it lasts, yeah, is quite special.
• 58:06
  SPEAKER_01: Um, so well, and I think what'll start happening, I think this will wake people up.
• 58:11
  SPEAKER_01: Names that you never thought would trade are about to trade.
• 58:13
  SPEAKER_03: Yep.
• 58:14
  SPEAKER_01: And uh like the privately held ones.
• 58:17
  SPEAKER_01: Yes, I and uh and I think I think that's when people are gonna be like, okay, got it.
• 58:22
  SPEAKER_03: But you know what?
• 58:23
  SPEAKER_03: I don't look at it as like selling out.
• 58:26
  SPEAKER_03: I look at it as I mean, I had a post on this recently, and I've had countless conversations where me personally, if I have a meaningful portion of my net worth tied up in one stock, just happens to be a privately held company, it's just smart financial planning to diversify some of that.
• 58:44
  SPEAKER_03: That would be like if you had 90% of your net worth in Apple stock.
• 58:49
  SPEAKER_03: Is that wise?
• 58:50
  SPEAKER_03: Uh maybe you better really hope and pray that Apple's gonna take off.
• 58:54
  SPEAKER_01: Yeah.
• 58:54
  SPEAKER_03: Um, so just to sleep at night, it's not never a bad thing to diversify and recapitalize, take some chips off the table, keep some in, maybe partner up with a larger group.
• 59:06
  SPEAKER_03: So I don't view that as uh necessarily a bad thing to sell out.
• 59:10
  SPEAKER_03: I mean, we're gonna do it one day.
• 59:12
  SPEAKER_01: Yeah, businesses like they only sell or shut down, like you only exactly.
• 59:16
  SPEAKER_03: Um, so I think about that, and where we sit at this moment in time, if I was already a few years into it, I would strongly be considering recapitalizing.
• 59:27
  SPEAKER_01: Yeah.
• 59:27
  SPEAKER_03: Um, I just happen to be a few years behind some other groups out there.
• 59:31
  SPEAKER_01: So yeah, this market's almost every private owner that I know, like almost everyone, north of call it three or four million of IVA, is aiming for either a minority or majority recap this year.
• 59:43
  SPEAKER_01: Yeah.
• 59:44
  SPEAKER_01: Like it is wild.
• 59:45
  SPEAKER_01: Yeah.
• 59:45
  SPEAKER_01: But there's enough money flowing through the system that uh this is like a this is a moment.
• 59:50
  SPEAKER_03: This this is a moment sign.
• 59:51
  SPEAKER_03: How long it lasts?
• 59:52
  SPEAKER_03: Yeah, we'll see.
• 59:54
  SPEAKER_03: Um, but it's a pretty interesting moment.
• 59:56
  SPEAKER_03: And I think a lot of it is a function of that the new capital coming in.
• 1:00:00
  SPEAKER_03: Uh, because if you think about like Blackstone, for instance, or any private equity firm, they have a fairly defined window in time where they they're gonna buy and build over the next call it four or five years.
• 1:00:13
  SPEAKER_03: The first half of that life cycle, they're in acquisition mode.
• 1:00:17
  SPEAKER_03: They're very interested in acquiring new companies.
• 1:00:20
  SPEAKER_03: As they get deeper into that holding period, they want to focus on integration, um, building out the back office, creating, building out the platform.
• 1:00:30
  SPEAKER_03: And then at the tail end of that holding period, they're really gearing up for a sale themselves.
• 1:00:35
  SPEAKER_03: So they'll become quite selective and their future additions to their team.
• 1:00:41
  SPEAKER_03: Um, because they just don't have enough time to make all these changes.
• 1:00:45
  SPEAKER_03: You know, if the profile of the business isn't quite right, if you do it in the beginning of that hold period, they have the next four years to make it whatever they want.
• 1:00:53
  SPEAKER_01: Yeah.
• 1:00:53
  SPEAKER_03: If they only have 12 months left, it better be like right down the fairway.
• 1:00:57
  SPEAKER_03: Um, so I say all that because we have so much new capital coming in.
• 1:01:01
  SPEAKER_03: That shot clock is starting at like zero.
• 1:01:05
  SPEAKER_01: Yeah.
• 1:01:05
  SPEAKER_03: So there's a lot of opportunity there.
• 1:01:07
  SPEAKER_01: Yeah, no, I agree.
• 1:01:08
  SPEAKER_01: I agree.
• 1:01:09
  SPEAKER_01: What is one thing every owner should know before they sell?
• 1:01:14
  SPEAKER_03: I would say think about the sale, even if that sale, that event may not take place for another three years.
• 1:01:24
  SPEAKER_01: Think about it kind of takes years.
• 1:01:26
  SPEAKER_03: It really does.
• 1:01:27
  SPEAKER_01: Like it takes years to prep.
• 1:01:28
  SPEAKER_01: We um we were not prepping, but we started focusing on EBITDA back in 2024.
• 1:01:34
  SPEAKER_01: It's well documented on this show.
• 1:01:36
  SPEAKER_01: Uh, and it was about halfway through the year we had someone on and they really challenged us on like our lack of focus on EBITDA.
• 1:01:41
  SPEAKER_01: So we're like, all right, oh fine, I'll start focusing on EBITDA.
• 1:01:44
  SPEAKER_01: And um, we only did a million of EBITDA in 2024, and we did 18 million of revenue, I think, or 22 million of revenue.
• 1:01:52
  SPEAKER_01: It was one of those.
• 1:01:53
  SPEAKER_01: It's like a million's not a lot, yeah, right.
• 1:01:55
  SPEAKER_01: That's like five percent.
• 1:01:56
  SPEAKER_01: And I was like, okay, got it.
• 1:01:58
  SPEAKER_01: So then we did yeah, three and a half last year, and this year I think we do 10 or 11 or something.
• 1:02:03
  SPEAKER_01: But like it it took years.
• 1:02:07
  SPEAKER_01: Like it's uh whereas when I was growing the business again, well documented.
• 1:02:11
  SPEAKER_01: This is the problem with podcasting for six years, is like every bullshit you say on the internet, like you can just find again.
• 1:02:16
  SPEAKER_01: But like I'm I said a lot in the early days, oh yeah, profit's a light switch, like we can just be profitable once we think we can.
• 1:02:22
  SPEAKER_01: Yeah, sure.
• 1:02:24
  SPEAKER_01: Over three years, yeah.
• 1:02:26
  SPEAKER_03: That's that that is so true.
• 1:02:28
  SPEAKER_03: I mean, it's that's what I mean by that is like think about like they may not even know, like, what should I be thinking about with the sale, but think about that event and back into it where you're today, yeah, and understand what should you be looking at?
• 1:02:41
  SPEAKER_03: What are other KPIs that you should be looking at?
• 1:02:43
  SPEAKER_03: Like put a scorecard, how do you grade yourself?
• 1:02:45
  SPEAKER_03: You know, we were talking about this last night.
• 1:02:47
  SPEAKER_03: Like, what's the right gross margin?
• 1:02:49
  SPEAKER_03: Yeah, you know, is 40% good or is 50% good?
• 1:02:53
  SPEAKER_01: Yeah.
• 1:02:53
  SPEAKER_03: What happens if I'm above or below that, right?
• 1:02:57
  SPEAKER_03: If you're not having those conversations now and starting to track these things and understand EBITDA and gross margin, the mix of business, right?
• 1:03:07
  SPEAKER_03: The number of memberships that you have, um, the the Google reviews, all of these things, um, and your tech stack.
• 1:03:15
  SPEAKER_03: If you're not thinking about that, you don't want to wait until the last minute when you're finally ready to sale and say, Well, I wish I had thought about that two or three years ago.
• 1:03:24
  SPEAKER_03: Yeah.
• 1:03:24
  SPEAKER_03: Which is I have those conversations countless times.
• 1:03:27
  SPEAKER_03: So start thinking about like, what does it need to look like in year three years from now in 2030?
• 1:03:33
  SPEAKER_03: How about that?
• 1:03:34
  SPEAKER_03: 2030, I want to exit.
• 1:03:36
  SPEAKER_03: What should it look like?
• 1:03:37
  SPEAKER_03: It's 2026, I have three and a half years.
• 1:03:40
  SPEAKER_03: Let's build to that.
• 1:03:41
  SPEAKER_03: Yeah.
• 1:03:41
  SPEAKER_03: No, I agree.
• 1:03:42
  SPEAKER_01: Uh, what's the best lesson you've learned from owning a service business?
• 1:03:46
  SPEAKER_03: It's a people business.
• 1:03:47
  SPEAKER_03: Yeah.
• 1:03:49
  SPEAKER_03: Yeah.
• 1:03:49
  SPEAKER_03: Uh it's taking care of people, understanding people, what their needs are.
• 1:03:55
  SPEAKER_03: And I'm when I say people, I'm thinking of obviously your customers, but it's all stakeholders, it's vendors, and I think most importantly, your people, technicians, right?
• 1:04:06
  SPEAKER_03: Yeah.
• 1:04:07
  SPEAKER_03: Because without them, like your greatest asset goes home at night, walks out the door, and leaves every night.
• 1:04:14
  SPEAKER_03: And that to me is, you know, you you understand you hear that phrase, but you really don't know it until you're in it, right?
• 1:04:21
  SPEAKER_03: Until you own and operate.
• 1:04:23
  SPEAKER_01: Yeah.
• 1:04:23
  SPEAKER_03: You understand this really is a people.
• 1:04:25
  SPEAKER_01: You rely.
• 1:04:26
  SPEAKER_03: Yeah, you rely on them.
• 1:04:27
  SPEAKER_03: They rely on you, but you rely on them as well.
• 1:04:29
  SPEAKER_03: Yeah.
• 1:04:29
  SPEAKER_03: So take care of them.
• 1:04:30
  SPEAKER_03: Yeah.
• 1:04:30
  SPEAKER_03: And if you do that, they're going to take care of you, they're going to take care of the customer.
• 1:04:34
  SPEAKER_03: And it's like this feedback loop.
• 1:04:36
  SPEAKER_03: Yeah.
• 1:04:37
  SPEAKER_01: And then uh finally, wrapping us up here, if people want to connect with you, how can they find you and learn more about you, your story, and scriber and co?
• 1:04:44
  SPEAKER_03: Yeah.
• 1:04:45
  SPEAKER_03: Um, obviously, um big on X uh Twitter, um, LinkedIn, or you can find my website, which is uh scriberco.com.
• 1:04:55
  SPEAKER_03: Uh shoot me an email, will at scriberco.com, and we'll take it from there.
• 1:04:59
  SPEAKER_01: And you just launched a YouTube channel to sort of help educate sellers on prepping their business, or what are you talking about on that channel?
• 1:05:05
  SPEAKER_03: Yeah, absolutely.
• 1:05:06
  SPEAKER_03: Um, so I'm working on it right now, launching a channel on YouTube where I'll uh uh release short informative videos, three to five minutes, where I'll cover certain topics that I think owners will find useful.
• 1:05:21
  SPEAKER_01: Yeah.
• 1:05:21
  SPEAKER_03: On what can I be working on between now and when I do plan access at when yeah?
• 1:05:26
  SPEAKER_03: So I'll be dripping that out and on the new uh channel, which we'll launch here shortly.
• 1:05:30
  SPEAKER_01: Awesome.
• 1:05:31
  SPEAKER_01: Well, thanks for coming on today, Will.
• 1:05:32
  SPEAKER_03: All right, thanks for having me.