Selling Your Business to Private Equity – Full Interview

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I grew up in the private equity industry where I bought a lot of, uh, uh, small businesses here in the U. S. and so. You have a lot of experience transacting. I will say more recently, um, I joined an organization called white P. O. members in here, but I’ve met through that process.

A lot of other, um. Uh, business owners, mostly here in the, in the Southeast, and I’ve come to appreciate that. They’re really the backbone of the American economy. So I appreciate all that you all do. It’s been a very interesting ones to hear about, uh, all the ups and downs of owning a. Small business here in the US, and I have been impressed with just the scale and reach of some of the businesses that are much bigger than I would have guessed.

Things like hanging drywall and doing waste water treatment, much bigger businesses than I would have guessed. Matt asked me to talk a bit about putting you all in the shoes of a private equity buyer and what they’re looking for when they think about opportunities. I wanted to just talk through some of the basics of [00:01:00] private equity, what private equity firms look for, how they, when they look at your business, what they’re kind of thinking through and what they’re evaluating.

We have a slide up front that just talks about the types of the different ways 1 can attract equity capital and it really runs a spectrum of on the top side. Um, you’re, you’ve got a slide deck in front of you. Um, and then he’s just gonna reference for the, um, folks that , I’m looking at page, uh, say here, page four, I guess.

Page four. On, on the top side, you’ve got, um, venture capital and growth capital. Are someone buying a minority interest in your business and likely having you continue to run it? So it is a great way to bring in large, largely bring in primary capital. Primary capital will be money that comes into your business that has a use within the business.

The secondary capital would be someone buying interest in your business and you put that money in your pocket. Generally, these folks are financing some sort of growth initiative. Hey, I’ve got a, [00:02:00] um, I run a service business that serves maybe the insurance industry. And I’ve now developed a software product.

I’d like to grow and develop as part of that. Maybe someone might give me venture capital, hire more software engineers and effectively fund losses until that business gets the viability. Um, not really in scope we’re talking about today, but it’s certainly part of the mix of financing options that are out there.

Um, you have a mezzanine financing, which would be, um, taking on debt capital, usually again to fund primary projects, you know, usually do that to take, uh, to take secondary proceeds. Um, and so, again, that’s going to be, hey, I’ve got to, I want to build a building. I want to, you know, I want to invest in some sort of some form of new business venture, build some software, whatever.

Oftentimes folks will take debt financing if they don’t otherwise have an age or debt within the business. And then the topic of conversation today is leverage buyouts. So this is the predominant type of private equity financing. That’s probably most relevant to you all. And on the next slide, we’ve got, you know, kind of this view of how [00:03:00] how that industry is is carved up.

I would, I don’t know, admittedly about many of your businesses, but I would presume most of you are. Uh, would fall on the on the left side of the category, the lower middle market, um, these are going to be companies with, you know, kind of, uh, 1 to 30Million of earnings sort of things. If you look at how, um, companies are generally sold, uh, here in the US, um, there are different cohorts of investment banks that serve companies at different sizes.

So generally below. 5 million of earnings, that’s going to be a broker and someone who’s just sort of a, they’re going to blast out to everybody. And there’s going to be pretty light diligence in terms of what the banker will do in terms of prepping you and getting you ready. Uh, part of it is that that’s more of a numbers game that, you know, they’re going to take on a bunch of ideas, post on the website and kind of see who wants to.

Who wants to buy the business, you know, 5 million of earnings up to up to sort of 20 to 25, you’re going to have smaller investment banks generally going to be a little more specialized as well. Um, and they’re gonna really specialize in [00:04:00] kind of bringing in a first institutional owner into the business.

Typically, these are gonna be founder owned, you know, own owned and run by the founder or friends of family. Um, and then at that point you’re kind of bringing in the first outside partner and then, you know, 25 to 30 you’re gonna start to hit the minimums of some of the really prolific investment banks that that run really processes.

Harris Williams, Holihan, Lokey, uh, here in town it would be Black Arch. It would be, uh. But it used to be called Edgeview. I don’t know what it’s called now, Deloitte or something. But anyway, there were a bunch of them actually in Charlotte that were quite good and remain quite good that are that, you know, once you get to that size, you sort of can meet their minimum fee.

It’s important to understand the sell side landscape because, um, if I had to describe what lower middle market firms are trying to do. The name of the game is to try to buy founder owned businesses where the founder has not optimized the business. So you’ve got a business with, you know, three, four or five of EBITDA.

And what you find generally is that, um, in these companies, the founder tends to have come from the industry. They tend not to be somebody who was a trained, you know, CEO. They didn’t go to [00:05:00] CEO school. They went to school of hard knocks. They did whatever the industry thing was, and they became the CEO eventually.

And so what you find is that they tend to have under managed in terms of. Some pretty simple operational items. They’ve never pushed price increases on their customers. They’ve never priced their product based on value add versus just on, you know, negotiated rates or things like that. They never looked at buying their nearest competitor down the road who might have a lot of logical synergies with them.

They’ve never hired a real CFO who can actually give them, you know, pricing by product. Maybe half the products don’t make any money and the other half are areas you should really want to invest in. Um, they’ve never, um, you know, invested. We often find these smaller companies, you tend not to invest in talents.

There might be. The founder is terrific, but they’re kind of doing all the jobs. They’ve got a good number 2. And then, like, the 4th person at the firm is not somebody who’s super qualified to be doing that job. And so the name of the game for these lower middle market firms is they get in there and say, you know, I’m going to try to buy the company, you know, on a multiple of what we call EBITDA.

Do we know what EBITDA is? Is everyone familiar with the term? So proxy for cash flow. [00:06:00] And, you know, ideally you do it at a, at a, at a sort of low multiple. So to speak, you want to buy that generally four to eight times, I’ll say on average, and whether it’s four, whether it’s eight, it’s going to depend on a variety of factors, including.

Is your revenue project based? Are you in an area that is a hot area with a lot of organic growth or even an area that’s declining? So there’s a whole range of factors that go into that, but ultimately that kind of comes out to, they, they, they would quote it as, Hey, I’m buying this company for, but has 5 million to be able to offer six times even tough.

And the name of the game and the way a lot of them make money is. They generally are experts in certain areas. They might be healthcare businesses, which are actually very compliance focused. And so they tend to be, uh, really thoughtful within those verticals. And the name of the game is they buy these smaller businesses, ideally at prices that they need to be attractive.

And, um, they implement their playbook, which is usually some version of, again, tons of industries, but. Pushing price increases, looking at competitor consolidation, looking at other, uh, ways to optimize margin, whether again, depending [00:07:00] on the industry, whether it’s, you know, uh, in the franchisee space, it’s very common to do things like, uh, uh, staff labor based on units, not on based on dollar volume, because if you push price increase.

So there’s a bunch of different ways you do this, but usually they have some sort of playbook they’re implementing. And the goal is to say, if you buy a company for 5, you want to get it. Let’s say you bought it outside of a bank process or from a broker. Usually, you can then find things that are more kind of attractively priced because it maybe wasn’t as broadly marketed and then you want to sell it with a with those larger bankers.

I mentioned where you can kind of dress it up, sell a story and then get a meaningful kind of multiple uplift. And so you can see, as you work across this page, lower middle market companies generally trade for kind of 4 to 6 times or 4 to 8 times. Um, they tend to have. We say three to five turns of leverage.

I mean, I’d say in most cases, they tend to have zero to three in most cases, and you know, there’s a pretty natural step up in size as you are in valuation multiple as you get larger. And the reason is because leverage becomes more available. And when you [00:08:00] run, when you look at the fundamental math of how a private equity investor invests, it’s a pretty simple formula.

They assign an enterprise value to your business, which is just an EBITDA multiple times the EBITDA is enterprise value. Whatever the debt they can command is, you get to deduct and the remainder is the equity. And so the name of the game is to try to Finance as much of it as you can with cheap debt, and that’s going to be dependent upon your, your level of endurability, cash flow.

And, um, you know, as you get larger, and these companies tend to generate more scale and become more predictable, they then can attract more debt and therefore command a higher price. And so there’s a pretty natural step up. Are you basic leverage off EBITDA or Revit? EBITDA, EBITDA. And so, um, we also find that you raise a good point, which is usually, as you get into the middle and upper, and then the mega market, those are going to be, um, uh, cash flow based loans.

They’re going to be based on EBITDA. In the lower middle market, we actually see a lot of companies that are initially financed with asset based loans, because what we find is that the, um, [00:09:00] Early on the found within the small business construct, it’s never had outside money. Oftentimes the founder owns the real estate as well.

And so they often will sell the real estate with the business. And so often 1 of the tricks of the trade is that you buy it and you actually finance the real estate and use that as a way to command a higher percentage of debt in the structure. And so that’s a common thing we see to sort of choose.

Equity obviously more leverages higher equity returns in theory. Um, and so it’s a, it’s a common thing. We see where folks will say, oh, yeah, the real estate, you know, if I’m going to buy the ice cream, I have to come and like, I got to sell me the real estate too. And so they’ll use that to lever it. Uh, into into, uh, command higher return.

So you tend to see that as you get larger, these companies can support more leverage and therefore can support higher prices. We didn’t have it on here. The 3rd or the 4th 1 would be being public. And so if you look at public companies, those can generally support. Okay. Conceptually, they could support very large amounts of leverage.

In reality, they don’t, they don’t tend to have that for for different reasons. But at the bottom here, we just, um, just for fun, but some firms here in town. So I don’t know how much you all [00:10:00] traffic with the firms here in town. But, you know, you’ve got folks like the park, which is very good from here in town.

They’re kind of a 300 million dollar fund, very much a lower market investor. Carousel’s got a little bigger, but at one point was more lower, lower, middle market focused. Um, and then you have Ridgemont, Valfyrius, uh, Ridgemont, I was still P of A, uh, private equity team, and then Valfyrius is the old CEO of V of A, his PE firm, uh, both sort of north of a billion dollars.

My guess is, um, I don’t know this to be true, but I imagine it’s true. You know, at a billion dollar fund, you’re going to, you can work backwards and say, hey, you know, you probably want to have 10 percent of the fund in each company. So that’s probably 100 million of equity. So you can then work backwards too.

Okay. If you, on average, lever it kind of one to one, it’s about 200 So they’re going to be paying. If I had to guess, you know, they’re paying 10 times EBITDA for 20 billion EBITDA covers. That’s the heuristic of what they’re doing. Um, I will say from GEM’s lens, just so you know, uh, we mostly invest on the left side because that’s where the juice is.

That’s where you tend to see the highest returns. I am giving you all the tricks of the trade so you guys can optimize it and lower the PE returns. But [00:11:00] I will say the, we find the fastest pitches tend to come on the left side because you haven’t found that the businesses are optimized by 20 Harvard MBAs just yet.

As you go to the right, you know, you’re really getting into pretty sophisticated value creation initiatives, which are much more about like industry structure. You know, changing the customer value, things that are much more McKinsey value property type issues as opposed to like, Hey, we’ve never raised customers price and we doubled it the day after close and they didn’t, they accepted it kind of thing.

That’s a, that’s the only group. Whereas you tend to see, as you move to the right, you’re working on much sort of complicated things. We talked about for just a second. Yeah. Um, so you just fired the 4th employee. Um, right. You said you didn’t fire. You said, yeah, you have 1 and 2 were good. And then the 4th and um, the 4th employee is Matt.

Um, no relationship to that Matt. Yeah. It’s a different Matt. Other Matt. Yeah, I just got laid off. Been with the company for 22 years. Uh, they sponsor the little league team, so he’s not an eight [00:12:00] player, but he’s been a little employee and, um, and then you come in and you execute the playbook, um, which means, um, we just made the whole business still and not community player anymore.

Right? Yeah, institutionalize everything. Right. And so, um, for somebody that spent 20 or 25 years building out a business, um, you just fired my, um, yeah, my 4th employee, Matt, who probably your brother in law too, brother in law. Yeah, just left him at home without a kid. Yeah, it’s just his kid. Yeah, a little too real, but, um, I mean, it’s, you know, how do business owners, Danish through that reality, right?

Yeah. I think the, we often see the private equity firms will use it as a negotiating chip. So they’ll usually be like the kids are in the business. And I think I bought a lot myself, and I would say 97 percent of the [00:13:00] time, the seller knows in their heart of hearts that the son is not the answer and then they bought him a job.

And so we often see it becomes sort of a negotiating point. It’s like, yeah, I’ll be, you know, Matt, we’ll get we’ll give Sam a job over here. You know, you can work in the, we’ll get red state. We’re going to the basement. So you see that quite often. And what usually happens is there’s sort of a negotiated, like, yeah, 2 years.

We’ll have a standstill and then 2 years later, we’ll kind of close that department or whatever. And so you find that, um. Yeah. And I mean, I empathize with this, and it’s sad in some cases, but like, usually someone, the person who built the business is usually remarkable, right? By definition, if you, if you’re an American entrepreneur, and you build a 10, 15 million dollar business to sell it, like, good for you.

That’s a hard thing to do. Um, it’s not likely your brother in law is as good as you are. And so that’s just the cold hard reality. But, you know, when you’re at the Thanksgiving table, it’s not, that sort of will spoil the turkey if you bring that up. And so what happens is they tend to kick the can, and then leave it to the PE firm to sort of solve these problems.

And so we see often that, um, a lot of the, not a lot, some of the value creation is like, [00:14:00] just, you know, if you replace the brother in law with a real controller, who has a CBA, that, boy, you know, suddenly the cost pricing gets a lot better. And like, there’s just certain things that you tend to see done very effectively.

Um, you see over and over. And so one of the things it raises a broader point, which is that one of the big issues we see in small companies is they struggle to attract talent. And oftentimes the reason is because, um, the good ones that we’ve seen operate most effectively tend to have a model of, um, I’m going to hire.

You know, a young talented, I’m going to take a chance on a kid from Clemson who seems really talented as younger. And I’m going to get too much responsibility too soon. That generally works quite well when you, when you take talent to people and give them a lot of rope. And I think where you tend to see them run into issues is again, the brother in laws, the head of that department, and they’re threatened with, you know, what have you.

And so you can just see where, you know, they struggle to, especially even if they can attract it, retain that talent, because eventually they know, I’m never going to give up. So, and so I think, I think the, uh, We should talk to me now about like, I think is, I don’t know that you want to soak in this out, but it’s exactly [00:15:00] you are, I would, I would advise that you will.

Leave a lot of money on the table if you leave those problems to the next buyer. Um, and so I think you will do yourself a real favor if you clean up your books, if you, you know, have a real set of financial statements that are ideally reviewed, if not audited. If you, you know, give them real pro forma as it takes the car and the vacation and all that stuff out of it.

And we, everybody knows. We do some of that jam. I’m an over a jam. Like we do some of that as well. But like we used to buy all these companies where it was like, they would report. You know, it’d be like, it’s 8 of EBITDA and we’d be like, well, your financials say 2 and like, well, that’s because we took 6 of, you know, we got this and that in the car and whatever, and the insurance and, um, and so the more you can clean that up and provide ahead of time, a lot of where these firms try to make their money is they actually think you don’t know what your earnings are.

And so, you know, you think you’re selling a 4M earnings business, and it’s actually 6. And so I think by doing some homework and working with smart guys like him, you know, you can clean that up ahead of time and really know. You know, here’s the package. Here’s the here’s the value proposition. And I think the more [00:16:00] you can position, you can almost put yourself in their shoes and position what the plan is to go kind of hand them the plan, you’ll, you’ll be assigned a much higher multiple.

So, when you look at, you know, going from that left side, where you were lower into the middle, the way you sell to a middle market firm to be clear is you. Clean up the management situation. You have a clean set of financials. You have ideally an end market with organic growth. You’ve pulled all the easy levers.

You do two add ons of nearby competitors and then you, you line up 10 more. You go ahead and set up a facility and you go to the next seller, the next buyer and you say, I’m selling you a business with 15 of EBITDA, but it could be 25. You know, if you just get all these deals done, that’s all you got to do is, you know, These 10 deals and problem solve.

Now, it’s a lot of work, as you know, so it’s not as easy as that, but they will dilute themselves to believe it’s easy if you, if you see it up for him. And so I think as an owner, um, where you can do that cleanup work and sort of present it to them, the higher the value, you’ll command the business. Makes sense.

I’ll keep pinging you with random questions. Okay.[00:17:00]

Unless there are other questions, I was going to. Starting to get on page 7, um, I think the can’t emphasize enough, preparation, um, and really, again, a lot of, a lot of where these private equity firms in the lower middle market make their money is just in the, how these small companies can be misunderstood.

And so I think the, these are some ideas we’ve been on the page, but, um, financial preparation, having a clean set of financial statements with a, an account of, of some sort of. You know, it’s reputable again. Ideally, they’re reviewed or have some standard of of how they’re cleaned up. And again, it’s okay to show performance saying, look, yeah, I run the car on the plane or whatever through it.

Like, here’s the real he’s a guy who wouldn’t be behind. Um, I think the more you can present that in a very clean way with some history. Very important. Question on it when you just say clean, just just again for clarification, do you mean clean in terms of don’t doing it or clean? Sorry, [00:18:00] clean in terms of saying, like, yeah, I can even carve out of, like, the goodies for the vacations or the.

No, I think you should do it because until you sell is yours and you want to, you don’t want to pay for Sam, but I think you want to be very clear about. Giving them that we see a lot of folks who sell a business where they’re like. I’ve got three cars I run through the business and two of them are mine and one’s for work and you’re like, well, okay, and then you get into this whole, like, now, if you’re lying to me about this, what else are you lying about?

Kind of thing. Whereas the more you can be transparent with them about, Hey, you know, I don’t know you, obviously you don’t want to write an email the IRS can print out and sue you, but like, you know, you can verbally tell them like, Hey, we’ve made some adjustments based on some yada, yada, yada. Okay. And then get into detail on that.

So I think the more you can be transparent about it, and then ideally, if you have some history of the financial being assessed, reviewed, whatever standard you want to use, probably not audited. That’s really helpful, because again, where they make all their money is on the sort of forensic analysis of like, you thought you had X, and you actually have Y.

A lot of, a lot of sellers to, I forgot to mention [00:19:00] this. A lot of sellers quote a dollar amount that they want to be paid as opposed to a multiple huge, huge bad. Don’t do that. Like, I’m surprised. We actually bought one recently where the guy was like, I want to be paid 40 million dollars. And we were like, well, is that enterprise value or equity?

He’s like, I don’t know what that means. I want a 40 million check. And when you did the math on it, that was like. 3. 5 times even or something. We would have paid him 6 to be clear. We were like, Oh, Greg, like, where do we see you? We should post tomorrow kind of thing. So, like, I, I think you do yourself a real disservice when you think in terms of dollars, like, I, you want to optimize your earnings number, because that’s what they’re going to value.

And then you can, you know, the broker and they can, can compete on who wants to pay the highest point for that. But again, they will ding you on your multiple if they don’t believe your financial statements. That’s the number 1 issue we see. Um, operational efficiency, um, I think just. I think it’s okay to have, like, when you buy a small company, you expect there to be some things that need to work.

And so it’s okay to have that. I think the key [00:20:00] is to have, um, one who acknowledge it, show them that, you know, those are issues. Hey, my brother in law is running commercial sales, and we haven’t sold anything, so like, Probably should upgrade there. Like, I think it’s okay to leave a little something on the table for him, but like, show them, you know, what you’re doing is important.

So just just trying to identify anything that should be fixed ahead of time. And then anything that is a bigger. They’re going to want to have some say, and like, who’s the lead finance executive? Who’s the lead commercial? So, like, you don’t want to do all that ahead of time. You want to. Give them something to work on, but I think you also don’t want to be blind to.

Oh, they’re great. You know, Tony’s been with me for 20 years and it’s like, well, you’re just surprised how often. Well, you know. You replace the finance executive, the whatever finance or whatever, and you bring in a new 1 and they’re like, I never knew this is 20 X better. And it’s like, yeah, you’ve had the same person for years and you could upgrade it a long time ago.

Um, growth strategy is important. Um, number 1 way private equity firms make money is by having earnings grow. And so I think obviously there’s a educating them on [00:21:00] your end market, tailwinds. Um, educating them on the unit economics of your business are very important. I find often I’m actually surprised often, um, owners don’t understand their own unit economics.

And so that means if you, I don’t know, again, what you all do, but if you sell a widget, right. What does it cost to make the widget? What is it? What is it? Uh, what how did you decide what to price it at? Um. I offered to buy 1000 of your widget versus 100. How would you price it? Like, just having some crisp answers, I think are pretty important.

Um, just technical approach strategy. Um, I. Hitting all of the potential growth that’s easy, low hanging fruit to make the business as profitable as you can versus leaving some of that out there on the table for the buyer. Yeah. How do you, um, I maximized out and I don’t know how to take it to the next level, but I’ve maximized and so my, my tailwind looks really good, but I don’t know what my headwind is.

Sure. How does that work [00:22:00] out? Well, I think the ideal time is to, there’s some optimal collection point though. You don’t want to. You don’t want to have reported recent declines. Generally, you’re going to get a ding for that. Um, but you also don’t want to show rapid growth, because people aren’t going to believe that’s sustainable.

And so the ideal is if you have like some form of linear growth, and a good story as to why that linear growth will continue, you’re generally going to be assigned a very high So that’s What have we seen a lot of recently is you’ve had a really weird 5 year period where you had up until 19, you had low inflation, low rates, etc.

Then you had a pandemic, you had, it costs 40 grand to ship it in from Asia up from 7 grand, then you had lumber went to whatever, however much, way more. And so, like, you’ve had all these weird inflationary winds. And so you’ve had businesses that. If you, you could be a real beneficiary of that in the sense that if you had like a cost plus model, suddenly a higher price system is great for you.

If you had a fixed price, if you’re a fixed price aerospace manufacturer and everything suddenly costs more, your margins were down. And so it’s been a really [00:23:00] challenging time to sell companies recently because a lot of them will come to market and say, keep it as grown at a 40 percent K or the last four years.

And they’ll usually hand it to you. Yeah. Aero, you know. We’re not building less airplanes, or they’ll be, they’ll give you some like kind of B. S. answer. And like, I think sellers or buyers are smart. They’ll do some work on like, what’s causing this growth is that price increases that fundamental and they’ll understand what the drivers are.

And so I think the more you can understand that, and then tell a story in front of that, and I’m surprised how often sellers try to, you know, Kind of hand wave to ask because we’re great. That’s why because we’re us, you know, that’s where we’re going. And I think the more you can say, yeah, listen, we’re up because, you know, we are levered to lumber prices and they haven’t been up.

That’s certainly a thing. But you look over 25 years. We’re only actually at the average. And so you can. You can tell a story and still get the answer, but you will be dinged heavily if, uh, and will be disappointed on your multiple. If you think, oh, I’m up 3 years in a row. Because of some variable, I don’t control and now I’m going to sell that for 10 times.

So that’s just not it. People will see through that. And frankly, lenders won’t finance it. That’s actually the, probably as big an issue as even if the equity wants to believe it, they’re going to need to loan the bank that [00:24:00] they won’t believe it. Stay on thinking, um, so you’re kind of talking about thinking as you go through the due diligence process, right?

It’s 1 of the reasons we talk to clients and they say they, you know, um, they don’t want to sell the property equity because they know they’re going to get into the due diligence process and they’re going to get. An offer here, and then they’re going to get ding, ding, ding, ding all the way down to the point where, well, shoot, I have what I was looking for.

And now I got 60 percent of what I was looking for, because they took away everything once we got into the negotiations. So, how do you, um, how does a business owner manage through that? Yeah, I think the, um, 1 is to get them to give you a detailed offer. So, oftentimes they’ll quote, uh, they’ll quote something high level.

Hey, I’ll give you 6 times your business. That’s like, okay, like, tell me more, like, What enterprise value? What are the deductions? What’s the I was told, but I’ve had friends have sold. I’m like, tell him what cash don’t your father tell you do the math down to pre tax income, um, where you tend to see a lot of [00:25:00] the shenanigans have been worked out that the people used to use the 1 that still is quite prevalent and is the biggest issue by far is working capital.

And so, again, I, I, we see this often in, um, This is a large working capital needs where, you know, what you’ll find. We see this a lot where it’s like, okay, business has grown a lot. And if I was going to keep growing, but it’s a business as it grows, it consumes more capital. And so the seller will think, I’m just going to take all the work capital with me.

And the person’s like, well, no, I paid you a multiple growth. You got to give me the capital to fund that growth. So that’s where I think you tend to see, like, oh, I thought I was getting. You know, 50 million of cash, and then there was an adjustment that was 20 million at the end. So I think the more you can, um, set a target for that and understand it, it would be helpful.

It’s actually really important. Um, and the target is going to be set based on some assumed level of, uh, smart financial mind to help you. But, um, it’s going to be set based on, you know, okay, you’ve got inventory. What’s the, you know, an inventory [00:26:00] currency inventory that you need to support the revenue.

What’s the days payable, et cetera. So there’s going to be some assumptions. They make it where some of these people are really good as they come in and say, you know, um, I’m going to set our artificial targets. I’m just going to cross the board, you know, Okay. They’ve historically operated it, and you actually see a lot where sellers won’t always collect as fast as they should.

They’ll do stuff that’s not as efficient, and so they’ll, they’ll use that against you and say, oh, well, you usually collect in 60 days and, uh, or usually pay in 30 days, so I need 30 days of receivables. And it’s like, well, the day they close, the better, but I’d say now it’s 60. So they’ll like, just free up some of the working capital, put it in their own pocket.

And so I think as a, as a business owner, the more you can clean that up ahead of time and make sure. One, you have a clear expectation as to what it should be, and the underlying logic for that, and why that ties to whatever growth projection the potential buyers. That’ll be really important. We see it a lot where people say, oh, I’m forecasting a bunch of growth and pay me 10 times for that.

And someone’s like, I’ll pay you 10 times if you give me the capital to fund it, because it’s, I think both. That’s a big source of disagreement. One [00:27:00] more question on that same vein since you mentioned smart bonds, um, Anybody’s going to sell their businesses and they’re talking to somebody about helping them sell their business, right?

Whether it’s on the smaller ends, a business broker, M& A, investment bank, or whatever it is. Everybody’s got a pretty, um, deck. Everybody has a story that they can tell. Um, how do you separate that? What makes a good M& A? Bad for y’all in terms of negotiating issue. What’s the, what are the key things that you look for as you sit across the table from the good ones that are already going to really are for their clients.

I think the more they can, I think the more they can articulate why that’s helpful. I’m surprised. Uh, within the private equity community, the broker, the business brokers have a very poor reputation because they’re known to be kind of like salesy kind of sleazy bunch in general. So. They often will make promises to owners.

Oh, yeah, I can get, [00:28:00] you know, I’ll have you sold by Christmas and they’ll like, throw you on the side of that website. And it’s just not there. Actually, it was very little diligence. Like, they don’t really coach. And so I think the, I think if the person seems high quality, um, not because they have a great golf swing or because they look good in the blue suit, because they actually talking about, like, that’s probably a good sign.

Um, and then I think the, you know, just, I just. I was fine, just keep asking why, like, generally, you’re going to kind of pretty quickly figure it out whether they’re serious and understand something or whether they’re just kind of. But again, a lot of the, a lot of the brokerage community is. It’s a volume game, they actually don’t necessarily make a lot on the.

On any 1 deals, but the volume of deals, and so I think, you know, we. Be mindful when you negotiate the fees with them, like, in some ways you’ll get what you pay for it. So they give you. The cheapest 1 with the best fee, we may have won the battle lost a little bit of time. So. There’s no syllable. You all [00:29:00] send me an email, I’ll interview you for it if you want.

There was a free advisor. It’s awesome. Thank you. Yeah, it’s funny, my colleague, um, my colleague Lindsay, who runs the, one of our small buyer strategy with me, uh, she worked with me at StuntPoint. Um, she, uh, left Stone Point and Granite, uh, same time I did, moved to Atlanta, and she and her husband bought a fleet watching business, uh, the largest franchisee of Fleet Fleet, if you guys know that, they watch Yellow Iron before it gets shipped on the ocean, it’s the last thing they do, they put it on the boat, great business, um, she jokes like, you know, she went to the school of hard knives, like, boys pulled guns on her, like all sorts of stuff happened, you know, And they, they eventually professionalized it grew and sold it, and they were so disenfranchised by the experience they had.

They actually run their own little brokerage and that called RICO. So her husband, she works here now, but her husband runs it and the stories he, we should have him as a speaker because the stories he tells of like some of the stuff he sees and it’s mind blowing. It’s truly the Wild West. So, it’s great.

Let me ask you a question. Do [00:30:00] you think we’ll be smart to Would you business sell, listen to the offers, get DD, d, and then turn around, fix all those issues and turn around and try again with him? Yeah, I think the, um,

or Charles to a small, you probably get one bite at that apple. So I think there definitely are owners that are like, thanks to the playbook, I’m gonna go do it. But. Like, word spreads and so I think like, yeah, I would also say, like, hopefully 1 of your takeaways from this is like, you should do a lot of prep work before you go.

Like, I think it’s easy. I think you see it a lot where people are like, some broker calls, like, your business is worth 10 times. You’re like, here’s my 24 numbers. Like, let me know what the bids are. And it’s like, no, no, no, you got, that’s where you got to do the prep work. You got to get it all. And so it’s like, if you’re going to spend the 4 months, presumably, you should be.

Um, and I find that tends to be the best. Value maximizing thing. It’s also worth saying, oftentimes, most private equity wants to keep the owner, by definition, as we [00:31:00] established up front, the owner is a force of nature. He or she built this damn thing, it got to where it is. And so they don’t want, they don’t want you all to go away.

In most cases, they actually want you to stay there. They want you to roll a substantial part of your equity and you get that second bite of the apple. And so, um, there is, um, like if you’re retiring short, that’s fine. We see a lot of baby boomers whose kids don’t want business, they sell and that’s it.

But, you know, if you’re gonna, uh, if you’re in a role and stay with them, I think. The more you can clean it up and then that the partner at a time, and then you can share an evaluation. Actually, that’s a great way to create kind of a win win. Thank you. Um, legal compliance is an important 1. we see often that.

They’re especially in certain industries where, uh, you know, if you guys are doing any sort of bonding work, do work with the government and things like that, like, those are contracts that are like, we’re definitely so people are going to want to really scrutinize those. And so. [00:32:00] I would say scrutinizing yourself first, do the work ahead of time, make sure you got your ducks in a row.

Um, because that’s the sort of stuff that people will walk away and where they’ll heavily discount what the valuation would be. Um, buyer engagement is important. This kind of goes to what I was just telling you, like, often times they want you to stick around for even if you step away, they want you to roll some just so they don’t even sell the lemon.

Um, and so that’s where I think it’s kind of fun where you can kind of get in their shoes and say, well, this is somebody actually. Ideally it’s a partner you’re talking to that you’re like, I never thought of that. That’s a great idea. Like, do that, you know, I’m gone, kind of thing. And so, uh, but it’s also somebody who has a track record of, um, treating their partners well.

I would, I would call up some of the found prior founders they worked with. I’d ask for, I’d ask for, you know, for two that have worked to, that didn’t independently just ’cause you wanna hear how they treated the ones that didn’t work out. Oftentimes the way these are structured when you roll over is your equity is subordinate to the equity of the sponsor.

Um. Which works fine unless [00:33:00] things aren’t going well, and it works real poorly. And so I think just understanding what your rights are, um, some, not all, but some private equity firms, part of their strategy is to get you to roll a piece and then come to you later and try to buy it at a discount. So there’s, you know, you just want to just do your homework on having the right partner.

Again, I would say 80 percent of small business owners, I would hazard a guess, that sell and roll, like have a good experience to be clear. So it’s not like it’s, this is bad. It’s usually ends well, but I think the. Scope for misunderstanding is, is I think an advisor is critical. Figure that, and then prep is critical.

Um, talking about the current environment of selling the private equity, we think about 2000 or 2020. Um, obviously Covid 2021, um, the, uh, [00:34:00] the market for private equity, right? That all of a sudden everybody was selling private equity, their spac, so like 2021, beginning of 2022. Was super hot and then everybody said, oh, gosh, the markets have replaced it.

And kind of maybe sort of pull back a little bit and then now we’re in a world where it’s the opposite. The equity market, the public equity markets are close overvalued. And, um, private markets might not be so sure once the oral fight for private equity for 2025 and 2026 and 2027. Look like from funding deals, are they cautious?

Are they still sitting on a boatload of money? Because things were unattractive from a price perspective, or they couldn’t unload past deals. Let’s just talk about their appetite for deals going forward over the course of the next couple of years.

There’s 2 sides to this. There’s the capital markets time. So there’s like, how [00:35:00] much money is private equity raising to equity in the deals? Robust lots, lots of money has been raised by your businesses. So that’s that’s not an issue. And then the 2nd, uh, and probably just as a more cyclical issue is availability of leverage.

And that’s going to be a combination of just the absolute real level of interest rates, which J pal controls and then the spread, which is the amount of money sloshing around the market. Leverage is oxygen in the LLVM market. So when it’s not available, we tend not to see transactions happen, which is really what you saw in 22 and 23.

Um, more recently, the leverage environment is much better. Obviously, the Fed is now cutting rates, at least for now. Um, but importantly, you’ve had spreads compressed pretty meaningfully. Part of that has been, um, that there was a ungodly amount of private credit money raised, uh, both from institutions and from wealth, frankly.

There were a bunch of 40 act funds raised and they have one flaw, which is that the money shows up day one, and they got to put it to work. And so we see that they call our [00:36:00] sponsors and say, hey, your finance that S plus 700 a year ago. Do you want us by 50 now? And their equation is I’m sitting in T bills at 4, so I can finance it at 11.

That’s great. Even if I took a credit, the price to 14 by the market price at 11. Now, that’s not part of their equation. And so the availability credit has been much better. And so you’ve seen where. Equity can now afford to reach a little more price and that tends to bring sellers back to the table, right?

So that was the. You can look with hindsight, like the, the drop in interest rates really just went right into sellers pockets effectively with higher prices. And so you’re, you’re not, you’re definitely not back to the paydays, but you’re from a capital markets perspective, you’re probably at an equilibrium, I would guess, relative to history.

And then on the fundamental side, I would say the picture is easy. It’s honestly a very confusing time where. We have some partners that do industrial investing, and they would tell you, like, we’re an industrial recession, like, you know, backlogs are down, like, you know, big customers are behaving very quickly, which is a very difficult time.

Um, [00:37:00] healthcare has gotten very challenging with labor inflation, so healthcare is sort of out of date with technology. There’s value to create, you know, so there’s all these things that are kind of, um, fundamental headwinds, but, um, it’s very company specific. So I’d say if you have a business that is in a favorable end market with organic growth, it’s up to them.

Provide some input into how data centers are built, right? Which is the everybody’s favorite thing right now. Like I’m sure that’ll trade for, that’ll sell tomorrow, please better market quickly. Um, but I would say most businesses, people are a little, there are some strange crosswinds after 20 years of globalization and offshoring and whatnot.

Now you have a lot of nearshoring. You have a lot of, you have an incoming president talking about tariffs, which have, you know, some real pros and some real cons. And so like, it’s just a very hard time to underwrite fundamentals, especially in small businesses. And I will say you haven’t really had since the GFC.

You haven’t like, small businesses in the U. S. have largely been insulated. They’ve been pretty well protected. And the only time they were ever really, truly challenged, I would say, [00:38:00] at a systematic level was during the pandemic when pretty good was a solvency crisis of, like, hey, revenue might be 0 for a while, which is like, not that’s a bad day in the office.

I know the Fed nationalized credit, right? So the Fed sort of stepped in and said, we’ll just guarantee the whole thing and kind of solve the problem, which was helpful. But you haven’t really been challenged. And so it’ll be interesting to see, you know, how the, I’m not sure inflation has been tamed. We’re talking about tariffs, you know, there’s a push to near shore.

I don’t know. It’ll be interesting. I think each, you would need in a lot of a company to know whether it’s a fundamental winner or ahead with today. How much of the funds themselves look at that perspective? Like, we’ve got construction, marketing, restaurant, um, uh, more construction on the call. How much do the funds look at the tailwinds or the headwinds for the sector versus.

It doesn’t matter. The company’s really damn strong and we’re just going to invest in the company. Um, is there an interplay there between what’s ahead and what’s behind? Yeah, I think [00:39:00] it’s going to fit there. I mean, most private equity funds have six to 12 investments in the fund. So they have some inherent diversity, right?

So they’re not going to do, not going to buy 12 of the same business, right? And so they’re willing to, I think they are willing to accept some concentrated risks, sort of some of the businesses we buy have 50 percent customer concentration, right? And the plan was to buy the competitor across town immediately and make a 25.

That’s kind of the, that’s part of the playbook. I would say the There are some heuristics that tend to the private investors tend to use where they’re going to want to see things that are they like predictability because ultimately they’re dependent upon having access to leverage. And so predict the things that are going to be rewarded are going to be where revenue is visible and recurring, uh, where costs are ideally variable and tied to the left, um, ideally tied to the revenue, um, where the end market is predictable.

So if you’re serving, it doesn’t matter what you do, if you serve an auto and market, people won’t like that. Some of the generally not well [00:40:00] regarded just as a general matter. It doesn’t mean founders don’t make tens of millions of dollars. Telling to them, it just means that buyers struggle with buying from people who do that.

Whereas, if you’re selling into the big data center developer is here in town, but if you’re doing all the development for that. Yeah, it’s probably, uh, people are going to kind of view that as like a. The tailwind play, right? They’re going to sign our multiple that. So there’s definitely some, like. Uh, Some, some bottom up business fundamentals that matter, but there’s also some top down what in markets you’re serving where you leverage to that matter as well.

And I think, especially at the size we’re talking in this room, I mean, no, no business is immune to whatever’s going on in the market. And so. That’s where I think the more you understand and can articulate to the buyer, the more they’ll, they will believe you. And bid very credibly and aggressively, whereas when you can’t explain why your business is going up, they’re going to be terrified.

Okay. And, or they’re going to do their own work, come up with the real reason if they like it, they’re going to underbid you. So that’s, that’s where I think you, the more you understand your own business, [00:41:00] the better.

Cognizant that you said 545, get out of here, and it’s already 540. So. Questions? I keep asking questions all night. So any questions on kind of current market?

Fears that you might have about handing the keys over to somebody else? Taking Lane off the mat over there? Right, can you talk about the industry valuations? Like, how is it determined? What are all the top value industries? Yeah, I mean, um, generally, generally anything with a, it’s going to be a combination of business characteristics and, um, organic growth tailwinds.

So, for a long time, I’ll tell you the most, so anything software generally is highly valued. The reason is that you that it’s [00:42:00] hard to pull software out and we all probably use software and it sucks. It’s like. You’re mad at yourself. It’s hard to pull yourself. So it’s a very sticky business can be therefore very leverageable.

So it tends to trade a high value. Um, I would say for a long time, the, the most favorite industry was healthcare because you have post Obamacare, a push for access over containing costs. So revenue went up and cost didn’t keep up. So you had margins that expanded pretty dramatically. And so it was, I mean, it’s kind of like magic.

Frankly, you buy a health care company, it will grow and get bigger and they can sell it. And like, there were a lot of people who did that for a long time. Um, and so, and then during the pandemic, what happened was a lot of these are reimbursement based contracts. So Medicare is a fundamental payer. They update their rates every few years.

Well, the cost of nurses triple in a year, guess what? That’s your problem, not theirs. And so they don’t come out and say, oh, so sorry, we’re going to rate them. They don’t care. That’s your issue. And so you saw where it went from being in favor to out of favor. It’s actually 2 of the firms here in town.

They’re on this page. They close their health care practices. I don’t, they don’t invest in health care anymore because I think it’s a, it’s a bad trade. [00:43:00] Um, today, I would say the things that are next on the, on the hierarchy would be anything that’s like a high quality service. That has a either recurring or reoccurring aspect to it.

Um, for a while, it was like. Anything that was a residential service, plumbing, HVAC, roof, tree service, gutters, or whatever. Um, and as you know, there’s a HBS grad, there’s about 50 of them rolling up every one of those areas. Um, low barrier to entry, but very sticky businesses when done well, and still even to this day, quite, it’s a way to determine how they operate.

Um, I would say anything that is, um. More project based. Is going to be, um, just have a lower multiple associated with it. Because again, what they what they fundamentally values predictability, right? If you have a business that is where the revenue is project base is a chance to. Don’t have revenue, or you have less revenue, and if you have leverage, that’s that’s death.

So what you [00:44:00] find is that, um. Those tend to be businesses that, uh, they still sell, but you’ve got to demonstrate some real backlog. The hardest ones are ones where it’s project based, and the projects are like 6 months on average, where it’s like, you can’t show a backlog. You just can’t show up certainty.

Again, they trade, that’s fine, but like, they just don’t trade the same level of value that you would see from larger. Um, and then I would say anything, there are certain businesses where, um, I’m not sure anybody else could run it. I mean, those are the ones that tend to be the hardest grade. Uh, I have a, I won’t disclose exactly what it is, but I have a person here in town who’s a YPO form mate who runs a business that, um, uh, Does reverse logistics those were crosses returns and if you saw the factory and how it operates, uh, I don’t know that anybody, but him could do it.

I’m not sure. I’m not sure anybody could ever buy it and replicate what he does. Uh, and so I’m not sure it’s sellable, frankly, because [00:45:00] usually, the more something and kind of run itself, the more you’re going to have bidders for that. I think the more it’s tied to you, the founder in some way, the more it’s tied to your know, how you’re saying.

It’s just hard to sell it because ultimately you’re selling your know how. I think people really struggle with that. Again, that’s where you’ll want to do evaluation ahead of time and know that, transfer that know how to somebody else, or somebody who can convince the seller or buyer that they have the know how, um, or structure some arrangement where you still provide it in some way, shape, or form.

The other one that’s tricky, I’ll say, is, um, we see a lot of small businesses that are built on one key customer contact. Um, so it’s like, hey, I have a machine shop in Boeing. 60 percent of my revenue. And the guy at Boeing that buys from us is my fraternity brother. And we play golf at Charlotte country club three times a year.

And so that’s just not a replicable unless Boeing has a contract for 10 years. So sure. That’s fine. But like what you find often is they’re like, Oh yeah, Spencer loves me. It’s be fine. Like buy the company and he’ll still work with us. And it’s like, no, I mean, most of what happened. So you tend to find those are heavily [00:46:00] discounted because people can’t.

So the more you can make the business independent of you, the probably the higher the value. How small do you get into in terms of ebitda? Uh, we, we work with partners. Um, we buy companies as I would say, for platforms. So maybe one thing we’ve covered, like there’s a question of like, is this the first business you’re buying?

And then that’s kind of the main business that you’re then gonna add more management to. Whereas at an add off, those are the business. You’re bolting onto a bigger business of asset management for platforms? I’d say three or more in part because. You know, small company CEO probably still cost three or 400, 000.

And so at some point you buy one per million and then you have to see it. I don’t even know. So it’s kind of like that was not useful. Um, so there’s some minimum amount of scale to be a platform, I think. And then for add ons, we see companies about all the time that are half a million or something, but they’re going to be much more kind of.

We say it tastes like chicken, either kind of just, there’s got to be a fast process to do it. Can’t be a, [00:47:00] can’t be a 9 month process.

Talk a little because I see my client struggle with. How you talk to the buyer when they’re at, because almost all these deals are asking for 20. 25 percent rollovers. Sure. I mean, that really is an issue that I see a lot of sellers see as a black box. Yeah, I think, you know,

again, the people who build these businesses are smart and know how to grow them. And so if this. I would ask the buyer, but what their plans are to grow the business. You know, if it sounds smart to you. I mean, what you’re really doing when you roll is you’re buying stock in their, their company now. And so I think if what they’re saying sounds smart or novel or interesting, like, probably a good signal to be clear.

There are plenty. There are tons of horror stories of, you know, things that if you just do X, it’ll work and it don’t work. And people know that the people who are in that industry. So, um, there’s, there’s an old joke that, like, if you see an oil and gas deal that came out of Texas and Charlotte, [00:48:00] like, something’s wrong.

And so, like, I think that’s true. And a lot of your industries where it’s like, if somebody’s telling you, like, oh, I’m going to. Yeah. But it changed the way your company works. And you’re like, I know that doesn’t work that way. It’s like, that’s probably not somebody you wanna roll with. Um, and so I think that’s one references are important.

You talk to, talk to a couple of founder. I, I would actually get their marketing deck, get ’em sent to you, and then I would request CEOs from that. I’d pick the, the biggest winner, I’d pick the two biggest losers, and I’d pick one in the middle. I’d say, Hey, all right, the two that you wrote off, what, what, what happened to that guy where , uh, and then you can ask him like, how’d they treat you?

How’d the, you know, what happened when it was down? Did they have a plan? You know, like what’s the, we learn a lot, uh, by. What’s not when things aren’t going well.

Thanks. I appreciate it, man. One more. I was looking at, I was looking at the graphs on page 12. it looks like there’s a lot of money sitting on the sidelines. Is that am I interpreting that? Right?[00:49:00]

Yeah, so dry powder is a measure of how much money has been raised, but not spent by private equity firms. Um, well, you find it deal flows down, but there’s more money sitting on the sidelines. Yeah, well, what you’re seeing is that, um, What you’re seeing is that the appetite for private markets from large, really from like scale, like sovereign wealth funds and like state, like really a hundred billion pools is up.

They would like to do more private equity in part ’cause public markets are volatile as hell and they’re tired of that. And so they’d like to put more privates. Um, so there, there is the supply of capital is up. The issue is they’re staring at the math that I was just telling you about, which is that they’re going to sellers and sellers are coming and saying, I want my 2021 value.

And they’re saying, well, rates are way higher, so I can’t afford to pay you as much regardless. By the way, the fundamentals are not as obvious now. So, um, a lot of deals don’t pencil anymore to an [00:50:00] IRR that makes any sense. So what happens is they, they’re telling their LPs it’s a generational buying opportunity and give us money for a new billion dollar fund.

And then they’re turning to the sellers and saying, well, guys, like, I want to pay you six times you want to know what we do about this and bid ask spreads and fight live for quite some time. And so you’re seeing that, I think the, a lot of folks will look at this chart and think, oh, like, that means I can get a higher price.

I think what will matter is the cost of debt for anything, um, because they, they will not put that money to work at 11 percent pencil returns. They, they need to think they can earn a team’s return and the way they’re going to do that is by paying you less or advancing it more cheaply. You’re not going to like the former.

I’ll flip that will set real quick later and talk about what to do. Um, so if there’s all that drop powder out there. Um, how do y’all make good investment decisions. And the businesses that this and entities, like, how are y’all not having to drop out [00:51:00] a problem this up on the board as an investor. So, flip your hat and sell.

Sure. So this is a power law, uh, the way this operates. So, most of this dry powder is sitting with mega cap funds. So we had the slider that showed the market in the market and making gas prices get higher funds get bigger. Frankly, the private jet get bigger for the manager. If you get kind of go up that spectrum.

The real money is made at the lower book market, frankly, by folks like Gil, and she’s professionalizing it and selling it to the first private equity buyer. And so what we do when I was working at stone point on fire from what I learned was when I was, uh, when I started, we were about a billion dollar fund.

I was being asked as a, as a young person to go to conferences, sort of deal about market, try to buy for 6, 7, 8 times even, uh, and I, again, I found there was a lot of counters hadn’t done. So there was a pretty durable way to, like, double earnings over a reasonable period. And you could hire a low key and sell a curb.

If I bought it at six, sell for 12, and if I could double the earnings that was and lever it, [00:52:00] that was a great way to earn, you know, 4, 5, 600 money. Um, once you got bigger, uh, once I was leaving standpoint, we had a $6 billion fund. Um, we got a lot of success results. Very good. And at that size, everything was kind of the same.

It was like, here’s a Goldman Sachs auction book with a, a BA report and stable financing. And it had been owned by 2 prior private equity funds usually, who had optimized, they had every GE executive and they had Harvard MBA in there to turn every screw just the right way. And I mean, it was all about, like, rates and equity, what S& P do over the whole period.

And so it was, it was all things that, like, I, as the lead investor didn’t control. And so, when I came to JEM, I just said, look, we should just focus on lower middle market. But so what we specialize in is, uh, backing, um, uh, Small bio managers, which we would define as folks who have a fund under a 1B dollars and we have kind of a unique take on it, which is that we’ll actually back a lot of these folks on a pre fund basis deal by deal.

And then use that information to back them and to [00:53:00] eventually back them in a fund, but 1, but 2, but 3. At a long track record, but I don’t know, Matt 2B to work now since I’ve been here. But.

It’s not, you know, when you buy a company for 6 times EBITDA and you put 2 to 3 returns of debt, it’s not a rate driven strategy. It’s not a what’s going on with S& P multiple. It’s about did the person you back do the thing they said they were going to do. And if they, if they have a plan and execute it, that has nothing to do with what’s going on in the markets.

And obviously, if you can invest privately and have attractive and uncorrelated returns, that would be the Holy Grail in any given thing. I will say, I’ll just. Put a plug in for us, you know, we, Jim, we have 35 ish nonprofit clients for Elon up the road. John C. Smith here in town. Asking us to a bunch of great nonprofits, and then we, uh, we really want to focus on investment excellence.

So we have Matt, and there’s. The only kind of person is out developing business. Um, our job, we want to have a small, close to that number of partners that work with. Um, and so, as we were looking for partners, um, and so we’re, this is not something where we have.[00:54:00]

You know, 400 and he’s the 1st, we’ve just got a handful of partners we chose to work with. And so we’re. I’m so honored that you’ve agreed to work with us as well. Thank you. Yeah. Thanks for, um, thanks for your knowledge, your time, your office. Um, greatly appreciate it, um, and for helping to carry out the due diligence on M& A advisors as they pull across the chamber.

Absolutely. Got my email address. Sorry. Um, so again, so thank you everybody for coming out. Thank you for the folks that stuck around. It was nice to meet you all. Um, we’re going to go down the street and well, this is a join us. We’re going to go down to QC courthouse. I’m not ready. I’m an appetizer to, um, tab for, um, like, 5 minutes and then we’ll close it.

Um, but feel free to come on down with this continue to talk. Um, Matt, are you going to be, are you going to join us or are you going to make an appearance? They make an appearance and they chase going to take off. So it certainly needs to be for us. Um, don’t forget we’ll have our event. It is December 12th.

[00:55:00] Um, right. Is that right? Caitlin or our next event with Harold? How I’ll talk about insurance. Um, narrow just for reference points, 1 of our clients, uh, was staring at a 200 to 250, 000 dollar insurance bill. Uh, we brought him to Harold, um, and he helped repurpose their insurance. We brought down that, um, about 150 to 200, 000 dollars a year, um, as they went into a shared risk pool instead.

Um, it was a 25 to 30 million dollar business. So it’s great because they’ll save 150 to 200, 000 dollars a year. Which is good savings, right? That’s nice to put in your pocket. Um, but then on the flip side, when he goes to sell in 2 to 3 years, which he wants to do, we multiply that by 4, 5 times, 4, 5, 6 times multiple, and now we’re talking about another million dollars in value created, um, through evaluating that insurance.

That’s operating efficiency, right? So you got those little things that you can bring into the equation. Uh, that’s a big win. We can say 200, 000 over 2 years, made another million dollars on the sale. That’s good. That’s good money. So. It was going to talk to us about how he looks at [00:56:00] insurance. He’s been in the industry for 20 years.

That’s really not job where it might make sense for some of y’all as you think about it as well. So, join us for that, and let’s go down the street and have a risky. Cool, thank you. so much. I’m just going to get it looks better.