Acquisitions Anonymous - #1 for business buying, selling and operating - $1.3mm carveout of IoT / supply-chain software from a BigCo - a $2.8mm maker of software for multiple gov't uses - e32

Episode Date: June 21, 2021

Joined this week by special guest Steve Ressler! We talk about two deals for sale:- a $1.3mm carveout of IoT / supply-chain software from a BigCo- a $2.8mm maker of software for multiple gov't usesEnjoy!-----* Do you love Acquanon and want to see our smiling faces? Subscribe to our Youtube channel.* Do you enjoy our content? Rate our show!* Follow us on twitter @acquanon Learnings about small business acquisitions and operations.-----Past guests on Acquanon include Nick Huber, Brent Beshore, Aaron Rubin, Mike Botkin, Ari Ozick, Mitchell Baldridge, Xavier Helgelsen, Mike Loftus, Steve Divitkos, Dzmitry Miranovich, Morgan Tate and more.-----Additional episodes you might enjoy:#62 Two Landscaping Businesses for Sale - Mike Loftus CEO of Connor's Landscaping#66 Analyzing Software Businesses for Sale with Steve Divitkos, experienced industry CEO#42 $900k Moving and Storage Company / $500k Rural Mini-Storage#61 Two Manufacturing Businesses for Sale - Brent Beshore - Founder and CEO at Permanent Equity#24 $5mm pool services and lifeguard staffing co / $2mm septic services business -  featuring baller @WilsonCompanies as a special guest!#45 $800k/yr cleaning business in Midland, TX / a $565k/yr window cleaning business in San Antonio, TX #48 Two Landscaping Businesses for Sale - Mike Botkin of Benchmark Group--- Support this podcast: https://anchor.fm/dealtalk/supportSubscribe to weekly our Newsletter and get curated deals in your inboxAdvertise with us by clicking here Do you love Acquanon and want to see our smiling faces? Subscribe to our Youtube channel. Do you enjoy our content? Rate our show! Follow us on Twitter @acquanon Learnings about small business acquisitions and operations. For inquiries or suggestions, email us at [e-mail]

All right, welcome to Acquisitions Anonymous. Second recording of the day, both me and Bill, that I'm Michael Gretherly, your host. Me and Bill are getting into our group, so excited to be back with you all. Bill, good morning to you. You look handsome as always. Thank you. Have I gotten more handsome since the prior episode?

Well, yeah, have you considered a beard? Mills is lobbying me to grow a beard, actually. But, you know, I think he's got to be the only bearded one. We'll get you there. Every M&A person except for you have made me. needs a beard. So for new listeners, this is a podcast about small business M&A in particular. Each week, me, Bill, and Mills look at two deals for sale. So two small businesses valued under 20, 25 million in total value for sale. And we look at those and then we talk about them.

And that's the whole podcast. And along the way some wisdom gets dropped and we learn from each other and it's super good. So today we have two really good deals. They're both in the software space. getting back from kind of plumbing and HVAC and going back to where the real sexy happens in tech. And we're very excited to welcome a really cool guest today who has a lot of background in the space. Steve Ressler. So Steve, good morning to you. Thank you for having me on the pod and joining the Friday fun. I just want to give myself a pat on the back, by the way. I have not misnamed the pod. I've said my own name correctly. And I seemingly have pronounced everybody's name correctly so far.

So just so for everybody keeping it scored home, this is going great for me. So far so good. So far so good. Well, just give me a few minutes to insult some entire city in Texas. It's just we'll get there. Yeah, me and Corpus Christi have some problems, Steve. So Steve, love for you to introduce yourself. Give us like a one-minute thumbnail sketch of your career.

And you're doing some really interesting stuff with searchers, search funders. So love to hear about how you got to today and what excites you and all that kind of stuff. Cool. So Steve Russell here. Thanks for having me. I'm not the son of the billionaire. Anthony wrestler who owns the Atlanta Hawks. But if you know him, I want an intro.

I want free tickets when they play the Wizards in D.C. My background is a, basically, I worked in government for five years in technology, left and started a website called Govloop.com and mini LinkedIn for government. We sold it to a software company, Gov delivery. Basically, MailChimp for government. Gruen sold that to Vista Private Equity, which is a big software P.E. shop. They're famous for the all software tastes like chicken. I don't know if currently agrees or not on the chicken analogy.

And then I ended up leaving and became the president of a small law enforcement software company called Collio that we grew and sold to Motorola. So kind of software's in the blood. And then I've always loved investing. So originally did that with kind of startups in D.C. and GovTech and realized didn't like the nine strikeouts for one grand slam and like the math of value investing. So do that. A lot of search fund investing.

So I do that kind of traditional search, kind of the HBS Stanford kind of folks as well as self-funded and probably done 15 to 20 deals in the last two or three years, everything from a lot of software stuff, but done the HVAC plumbing and even a female athlete company, which is the one my wife enjoys. So that's the one minute. You got to always have one in the portfolio for the spouse. Got to. Exactly. It's the only one that's like cool. You can't really feel the product of the HVAC in Oregon or whatever, or the security cam monitoring in Long Island doesn't quite hit his home at the Thanksgiving party. There is, I've noticed there's an in terms of personal portfolios,

there's an inverse correlation between size and impact of the deals and how interested everybody else is in them. Like I'm doing this coffee thing. It is like minuscule in terms of personal net worth and stuff. And everybody just wants to talk about that. Nobody cares about the other stuff that's really big and important. I'm like, okay, well, fine. Whatever works for you.

So it sounds like the same thing at your house. Exactly. Cool. So I'm going to do the first deal. So Steve brought both of these today, which is really exciting. You know, we were talking before. That's what makes these episodes really good when the guest is totally in their wheelhouse. So I will try to do my best.

We're talking about the first one. And then Steve will introduce the second one. So this company is a software company in the IOT space. So it basically is called IoT Asset Visibility. software for enterprise supply chain management. Okay, so you're an enterprise and you have supply chain management and you want to see what's going on with all of your IOT, so internet of things, devices, and this is software to give you visibility into those.

Sapphire is, and that's the code name from the broker, so we don't know who the real company is. So we'll refer to this company as Sapphire, but it's not really called Sapphire. A software business unit of a larger organization is this one. It's SaaS solutions have been licensed to commercial enterprises and the Department of Defense, and for three decades, the Department of Defense has trusted Sapphire's parent company to supply RFID technology solutions for in-transit visibility, so what they call ITV. And then in 2015, the parent company entered the enterprise asset tracking software market

by repurposing the government-focused ITV experience. So this is a carve-out of a bigger company, it looks like they were trying to sell these assets. So the customers have complex supply chains, shipping high value assets in markets like defense, chemical life sciences, and consumer goods. And in these markets, the risk for delayed or lost shipments are high. And Sapphire has two SaaS offerings that have code names for them that I won't read. And they leverage big data and analytics to equip shippers, carriers, third-party logistics, and governments with real-time actual insights to optimize their supply chains. Before, during, and after transit, the visibility into their land, air and sea assets in transit

It helps them reduce costs, manage inventory risk, and improve service. There's been $25 million put into this software. It has key customers, including Corning, Dell, SGS, and Singenta. I've never heard of those last two. I guess they're big enough to be listed there. They're cool. Okay. Well, fine.

They're good logos. Just trust me. Yeah, I'll take that on face value. The color palette's great on the logo. It looks great. That's great. So annual recurring revenue forecast. for 2021 is 1.3 million. So they've invested 25 million to build this software and it has 1.3

million in annual revenue. So let's see what other numbers here. So they have $1.3 million in any recurring revenue for 2021. It has fewer than 10 SaaS deployment so far and operates with five full-time employees and several outsource contractors. Sapphire believes that a focused investment in sales and marketing could increase recurring revenue and profitability when accounting for contractor overlap synergies, the time to profitability is even shorter. Sapphire has put $25 million into the business while supporting a history of losses over $7 million in 2019. Following a major reorg in 2020, losses are expected to decline to only $3.5 million.

The board of directors believes a new owner with sales, marketing, and operational resources would be a better steward of the assets and could build upon this large investment. they are seeking a cash-free, debt-free divesture of the assets of the supply chain management software business unit. What other things are important for us to know about this? Oh, I love this last bullet. Ready to scale with an investment in sales and marketing. Of course.

Just hired Gurley as a sales guy. We're good. So, yeah, what do you guys think about this dumpster fire? I mean, company. What do you think about this company? I'm speechless, so Steve has to talk. Well, this is what I brought this one because I think there's a couple trends that I see. So obviously a lot of searchers are trying to buy software and they're kind of, they always

going to ask me, hey, how do you buy software and search? The short answer is anything good is expensive, right? So you got to find something that's got some dirt. And so this is, I think, an area you see, which is the carve out divestiture world, which I think sometimes you get deals like this and you're trying to put your head on it and say, hey, is there something here? you know, I'm buying a million in revenue. I got 10 customers.

I got $25 million of R&D. And so as I kind of looked at this, I was kind of trying to dig in and say, hey, what's the asset here and where can we take it? So what I like about the deal is obviously the tech is alive, which is good. They put some money in. Second, they got 10 kind of big name logo customers. So software, usually enterprise customers have higher retention, S&B, they churn a lot.

So you got some good logos to go after. But the real debate is like, can you really not lose $3.5 million a year? Like, can you actually support this thing? And that's the trick. And I love the line in here. Synergies. It actually shows in the model that 100K, even a loss, but 250K in profit with some contractor synergies. So that was kind of my frame of looking at it.

I don't know. What do you think, Bill? What I couldn't square is they said they had a major regularization in 2020 and their losses are going to decline to 3.5 million. So 3.5 million of losses. But then the table right here, it says their pro forma is that it's got half a million bucks of EBITDA. So either they've got a whole bunch of like below EBITDA bridge to minus 3.5 of cash flow. Does this make sense to you, Steve? Is there like a whole bunch of R&D down here or something or depreciation or something? Yeah. Well, I think there's two things. I think that three and a half was 2020 and this is showing 2021 in the table. So you have to buy that story. And then I think that's a big thing with

any carve-out is understanding what are all the costs that we're in it, that they're going to adjust out and show you don't need. But then on the reverse, when you take it, this thing needs HR, needs finance, it may need an office, all this stuff that I'm sure in the model is kind of wiped out. You're trying to build again. So I don't know, Gurley, have you done carve-outs or divestitures at all? Yes. That's a hard yes. That is a pained yes. Well, I mean, yeah, you're exactly right, Bill. And Steve, what you discover is that they always underestimate how much money they're losing or overestimate how much money they're making, right?

Like, because there's always like 10% of one HR person that's not accounted for or office stuff or, you know, their share of the CRM licenses. Like, oh, they just they just free roll off of the. enterprise-wide SaaS stuff, like a Salesforce license, right? So, you know, you end up having to both convince the seller and the broker based on what you know in the industry is going to be more normal in terms of cost to get them to kind of come around to that. At the same time, like carve-outs are awesome and there's entire funds like Marlin built around them because they're really hard. Like it's a specialized skill that you have to be able to do around carving these things out of entities. The thing I will add about this deal is I see this type of stuff all the time where

it's like, hey, please relieve us of our problem. That's basically what the board is telling you. Like we could make this work. Please come do it for us. This is a, in my opinion, this is very much a subscale software company. And there are gradations in terms of how easy it is to run a software company, the bigger it gets. So like say sub 500, 700,000 in revenue for something like this, like that's really hard. Like you're basically buying yourself a part-time job. For something below 2 million, it's really hard to start to think about how you scale your team to where you're not buying yourself a job, right? This is basically the buying yourself a job franchise type deal. So it's fine for a searcher, I think. But if you're interested in being a semi-passive

or totally passive owner, at this scale, you just can't afford to build a real team because you end up having to only be able to afford four or five employees and they all have to be unicorns to make it work. So my kind of rule of thumb is around 2.3, 2.5 million in annual recurring revenue. that's when you can actually start to build a real team of specialists. So I would personally, like I hate deals the size. Like they're too big to buy myself a job and they're too small to run in like a real business. One thing that jumps off the page at me, which is sort of a characteristic of carve-outs, and then there's also this other thing here where they have a huge amount of sunk cost.

How would you guys price this thing? Because they don't have an asking price. This is just a bid what you think is worth deal. And it's losing money. and then you've got the parent who has sunk 25 million into it, supporting a history of losses, you know, all this R&D, et cetera, and it's probably a large company. And if you come in here and you bid half a million dollars for it,

like half a million dollars isn't worth the legal work. Like they would rather shut it down. Like so a lot of times you come into this carve out situation, you got a big company and what's a lot of money to you is no money to them. And it just kind of stalls the whole thing, not to mention the sunk cost. situation here. So how is this price? Like, how do you attack that problem? Yeah, I think that's the hard part with carve out and divest your church is a lot of it's timing. So usually there's, you know, it's like a

quarterly board meeting. It's like we just got in the board meeting. This thing's on fire and the, the board said, hey, now is the time. And so sometimes you want it like that. And other times it's, hey, they've been thinking about doing a carve out for a year, but they never do it because they don't want to get the revenue off their, their books. You see this with PE. Like they might buy 20 assets, two they don't really use, but the whole thing, the 100 million trades on a revenue multiple, so they're not going to sell you that little rinky dink one million dollar thing. But occasionally, like that thing gets a ransomware attack. And at the next board meeting, they're like, yeah, the ransomware attack, let's get rid of

that on-prem terrible software thing. And that's how I go. So stuff like this, I think at price, I go almost like really low and almost just, are you solving the problem with them where, you know, sometimes these. things almost go for like 500k maybe a percentage of the of the new company and you're solving that problem for them and the cash of whether it's 500k or 2 million honestly i don't think really matters because there's not that many buyers for these things either so that's interesting it's as much a corporate psychology game as it is a corporate finance game and so sometimes you know i

like what you said if you offer them 20 percent of new co it lets them kind of let go because they're like, oh, if this works, you know, we don't look like morons, you know, selling it to Steve. And now he made a zillion dollar business out of it so they can cover their butts in the border room. Exactly. And sometimes you'll see, you'll see this. Like one of the best investments, I was part of a fund that did was actually a big

spinoff of Cisco. And it was like, the guy that ran, the best is on this is if a searcher came to me and he worked at that company. And he's like, I have it. You know, I just came in six months. I know what to do with it. I know the mismanaged. I know all the dirt.

And one deal always in was like that was like a Cisco spinoff like that. It just decided it didn't matter, but it had $5 million in revenue, had a good product manager. Those are the dream situation as an investor. Yeah. The thing I would add to this is sometimes like a divestager won't actually end up being a financial decision for the company. Like I worked on one that they didn't ever execute on it until they wanted to make sure like somebody, family member who was in the division got a job afterwards. So they were really less interested in the purchase price. It was more about let's make sure things happen to make sure all the staff gets taken

care of. So, and it was like, that was like, okay, I know what this is about. Like, let's, let's read between the lines. Yeah, I mean, and so Steve, how would you think about like evaluating potential strategies for an acquirer for this? Like, you can obviously just put it into maintenance mode and turn it into 80% gross margins and spew cash and just focus on retention, how would you figure out what your strategy should be, or you could try to grow the thing, right? How would you go and figure that out? Me personally in software, these things sub-scale, I'm trying to get it to five.

Like, that's my mental math of like, hey, can I take some software thing that's sub-whatever, one to two, get it to five million of recurring and flip it to P.E. So that would be kind of my general goal. And I need to figure out, can I do that? Like, what's the math? Is there enough EBAA to play around with the invest in the product, invest in marketing? These things are hard if you drown on like SBA debt, right? Like I wouldn't want to, you know, this one you couldn't get the debt for, so you'd have to do some kind of weird structure.

But even to your point, the million and a half with like 500K of EBTA, I don't want 90% SBA debt on that. right? Because you obviously for software, you need to invest more to go. So that's kind of my move. I try to think, hey, how do I get to $5 million? And that's usually sales and marketing, right? It's usually pricing, you know, try to do something with pricing, trying to do something with take your existing customers and sell them more stuff and try to hire some better reps and go at it. And some companies have those bones and other bones you're like just feels too hard on that line of like, does it feel the level of difficulty if it feels like you're on whatever the ice skating.

If it's like a 9.0 and software at a million bucks is probably not worth it, you know. Well, the good news is not only for $1.6 million, you're not actually really getting, or $1.3 million, sorry. You're not getting a $1.3 million product. Apparently you're getting two products whose total revenue is $1.3 million between the two different stuff. So you're probably getting two $650,000 products, Steve. So this is even better.

You get to do with two code bases, two customer bases. fantastic deal. Yeah. So yeah, that's why I came on this show to see if you want to do this one for me. I would totally price it where you're pricing it. I think that's super smart. And I've personally learned the hard way stuff like this, especially. These are very long enterprise of sales cycles for non-mission critical software for these

enterprises. That is in the quadrant of your sales process going to take a very long time to get through anybody. And so I, you know, my inclination strategy on this would be do not. try to grow this. Just make it an ATM machine and that's what you deserve. The thing that scares me, and I've seen this before, this 25 million investment so far, that is a seller anchoring. That means they are anchored to say, well, we're in for 25 million. And that's somebody on the board who's an old guy with white hair. And he thinks that when you put 25 million into a building, you should get

$25 million out because that's the way things work. Software does not work that way. It is much more into what is the bond going to pay me in terms of cash flow and kind of sketchy. Yeah. One last thing and I'll let you go to the next deal is one trend I do look for occasionally is companies that sell purely the government and build like an asset. And then they're moving into enterprise, which is a little bit of this, the core company is selling to government. That's their core business. And they built some asset that enterprise would be interested in often that's like oil and gas, financial services, highly regulated in industries. And so that's another thing that kind of like piqued my interest on themes I look for

in these markets. That's great. Yeah, let's move on to deal too. So Steve, Steve, you're going to do that one? Yeah. So continuing on the theme on software and government. So this is this is one I found not too different, but again, kind of some similar theme. So this one was in the broader mountain west. So give you kind of a big area for it. And it was a government software. company doing about 3 million in revenue. So neat little business was going 21, 201, 29, 3 million. It was nice that the EBITA was kind of bounced around from 500K to 1 million. It had a neat focus on a couple of different areas that I liked. It was kind of budgeting, financial products, inspections, some really good flagship customers. So it had in government

software, you see folks that sell to cities, county, states, and federal. This one was primarily at the state level. And kind of standard story, husband and wife owned the whole thing. We're approaching retirement. And then they were kind of looking to transition. Potentially the husband would stay on. He was the technology, Lee, which we can talk about as well. And that's the overview of the deal. I don't know, Bill, when you skimmed out, what stood out to you or what would be helpful if I dug into? Yeah. So when I skim this thing, you know, at first blush, this looks pretty good, right? So they're making, they're making software that seems kind of mission critical, you know, that these states and municipalities and various government entities used to run their budgets, you know, and we all know that like government budgeting process is like once it, they do it the same way every single year, right? It's pretty, I would think it's pretty sticky. Totally. That being said, though, I go, also there is way better software than this, I would think. There's a lot. There's a lot. a screenshot of the software in this in this sim and you're going whoa time warp to

1995 uh in fact all of the pictures here look like time warp to 1995 that are that are in the sim i think that's a is a compliment it might be 1985 it might be yeah so what well that was interesting is that the current owners it was founded in 1995 and the current owners bought it in 2006 so this is a as far as software companies go this is an old company uh been around around since 1995 and they're still at two point something in sales. So that would be a big question for me. Why is this, why is this not bigger after 30 years of effort or 20 years of effort or whatever it is? I mean, is it just really niche, Steve? Do you think or they're just not selling it? Yeah. So it's kind of a, to you, same thing. So what attracted me to it is, hey,

super sticky customers. So even on legacy technology, government kind of stays with you forever. So a good government software company will have over 100% net retention. So, you know, you wake up January 1st, you know, you'll get your $2 million in revenue just by, you know, not selling a single thing. And good ones have 120 or 130%. So I like that. And, you know, I worry less that this thing's going to get replaced because of the old technology. I worry how much new business they can sell. So as I was kind of digging in here, my question was, hey, could you see?

sell this to cities and counties as well. So often if you have the state, they have to talk to the city and county. So the question, can you go city and county on this market? The other question was, can you pick up new states, like what states are out there? The other thing I like on government is focusing on states that aren't cool, right? Like all the sexy vendors are chasing New York and Florida. I love it when, you know, you're a government software chasing Iowa, Wyoming, Mississippi. So that's what I like. They're kind of in those kind of non-cool states. And I guess the trick where, you know, when I looked at this business, a couple things I

look for was one, there's a lot of P-E money in this space, right? So there's a couple big platforms. And so that's good in a sense of, hey, if you're doing a quick flip, hey, can you get in here, clean it up, maybe modernize it. Once again, you know, buy it off EBITA, sell it on revenue. I think the dream is software. So I think this one definitely has that play. and the question just like, how heavy is this as a lift?

And can you come in it and do it? So this is definitely one where you need a CEO searcher who's relatively technical because it's heavy product, it's on-prem, it's a lot of product, complex client. So I think your average just banker, searcher, you know, spent two years at UBS is probably not it. But I've been meeting more of these searchers that, you know, worked at a tech company or where former product. managers might be a good opportunity for them. The technology of it is, how many customers can they have here, right? Which probably means they're doing like tweak the, and it's on-prem, right?

So tweak this a little bit for these guys. So you might be running like, you know, 10 different versions, you know, on-prem at each at 10 different states. I mean, is it that type of thing? Yeah. So that was the hard part when I kind of dug in. There's kind of classic software. Is this multi-tenant? Is it one code base or is it 10 different code bases? And so you kind of dug in it was different code bases. And then on a pro and a con, they have a lot of product. So it's even not just budgeting. It's inspections. They have something in quartz. And that's good from a TAM perspective, if you wanted to sell it to the next buyer, the total addressable market. But on a that's a lot of product and complex product to support on two million of revenue. Like, you know, like how do you support enough quality and.

engineers to support that. And even in the SIM, you see kind of some of the comp of the engineers. And you're like, well, will those engineers, when the world goes remote and people start calling them, are they still going to be happy with, you know, 65K kind of deal, you know, on salary? Or will people start poaching them like Gurley from San Antonio and say, I'll pay you 80, you know? Right. I mean, that's a huge risk for kind of non-tier one market software companies that are used to paying software engineers below market, or below Tier 1 market, maybe market for their local, you know, small city, you're caught now software engineer salaries are converging to Tier 1 salaries, I would think, over the next five, 10 years.

Yep, yep. And this is one where I think you get a little bit more, you know, as an investor kind of investing in traditional self-funded search. I would say I see more of these deals in traditional search done. But they're doing like $5 million in revenue. So I think as Gurley was saying, you get over two and a half, you have more fat to play with. This thing's a lot more interesting to me if this was doing, you know, five million in revenue and say it was doing a million a half or two million in EBITA. So you'd have kind of more to invest in the business to play around with.

I think it's a little hard at two to do the investment. And obviously you got some questions there too where the husband's the head technologist. And I love the SIM. It basically talks about how Amazon Web, web services, they host better than Amazon web services. So you're also like, oh, man, am I going to go in and try to like move these guys in the cloud and that, you know, it's a religious war we're fighting over? Yeah.

Well, so there's another thing to mention, you know, the husband and wife combo. There's something buried here in the SIM that I noticed, and I only noticed this because Mills has trained me over a number of acquisitions anonymous episodes, especially around construction businesses and things that have been on government contracts. So at first glance, you see this owned by a husband or wife. The wife owns 51% and the husband owns 49%. And you go, huh, okay, maybe that's just random. Like maybe she's the CEO or whatever. But then further down the page, they specifically call out, this business is a women-owned business. But of course, they swear this designation does not win them any government contracts and they don't use

it. And yet, why isn't the husband 51%? So I would have a lot of questions. Do you see that, Steve, that people are using statuses to win deals? Yeah, exactly. You know, you see that definitely, if I saw that and it was professional services for government contracting, lawn care, project management, etc., I would scream like, you're definitely a winning business because of that. And I actually think that's an opportunity for some searchers. I've helped a couple of veterans look at buying veteran-owned businesses because they trade

really cheap because there's not that many buyer. you have to sell to a veteran or I helped a woman look at women-owned government contractors, same concept. You can buy them cheap. The hard part is you can't exit them that well, right? So you're just basically trying to cash cow. This one, yeah, you want to dig in. And software, you see less folks using that. But that's kind of the trick that they get one or two of those states that are because of the women-owned. How's the renewal been? Is that been because of that? And just really trying to understand the nuances of the government. And that's why I think the, the government market, you know, has this big moat, which is funny because I've been in it

kind of my whole career. A lot of folks just hate government because it's, because it's government, right? So a lot of who just hate it. Second, some folks like it. They just don't want to learn it, right, which ends up building a bigger mode. And so I do think there's an opportunity in niche government services and software businesses where if you build up expertise, it compounds. So what's neat about these, too, is like, this could be one you buy and try to do some, tuck-ins, right? So you can try to, hey, tuck in some other niche small software companies. Once again, I'm trying to get this to $5 to $10 million and probably sell it up the food chain to one of the P.E roll-ups or a new private equity player trying to get into space. And once you get

to five to 10, there's a lot of folks around the horn. Yep. So this might be the type of thing. If you're trying to get into government software, you know, this one, this might have some warts on it. This might be not the one that you could get to five on its own, but you're buying a foot. in the door. You know, you're going to learn the business. You're going to build a platform on it. You know, maybe they've got, you know, contacts at governments. Maybe they're already scheduled or approved. And then you can, you can belt up, just use that as some base from which to expand. Yeah. There's a, there's a great searcher. I love out of Nebraska who bought a GIS training company, kind of, you know, geospatial mapping training. And he bought a company in that space to kind of

get a foot in the door in government services. And over time, he's bought three or four or more things to kind of get to scale. It's been really kind of an interesting one to watch, especially because it fits my go after the states that no one else is chasing. So he's got the kind of 10 to 15 key states that aren't the Florida, New York, where all the big folks are chasing the fish. Yep. Okay.

Cool. So this one, you know, some stuff to like, some stuff to hate. Definitely not one that you can kind of buy and forget about because it's going to be technical. it's going to be, you know, it's not just going to, you're going to have a great outcome by ignoring it. But if you're a technical searcher, you know, you want to be in government, you have plans to expand in government, you know, you could maybe make a pieces for this. Yeah. And I love, I've talked to a couple of folks that are, there's technical searches, like engineer type searches,

but I've met a few that are product searchers. So chief product officer types, this is one you put a new code of paint on it. As you said, the UI from 1985, you know, maybe you don't even change the guts of the software, but just put a new paint of polish on. it up prices, get a couple more folks. So definitely one that's interesting for product focus, engineering focus, searcher, or even a tandem. It'd be a great, you know, product with a sales kind of searcher, two folks going in to really juice this one up. Yep. Very cool. Cool. Well, thanks for bringing it, Steve. We'll wrap this one up. Thanks for

coming. Your great guest is really fun. How can our listeners, you know, help you out? What are you up to? Where can they find you on the internet? Yeah, there's a thing called the internet. You can check me out. I'm on Twitter. It's Steve Ressler is the follow. And yeah, I love basically investing in searchers, traditional self-funded, help in the community. So if you got a question, just hit me up, happy to help. I have a bunch of kind of example models and two-page memos and generally try to help the community. And if you have a niche government sim that you've seen, send it to me too because maybe I'll buy it with you. So there we go. Very cool. And what's your Twitter handle? Steve Ressler, R-E-S-S-L-E-R. All right. Awesome. Go find Steve on Twitter. He's a fun guy. Thanks for coming, Steve. All right. Thanks, everyone.