Acquisitions Anonymous - #1 for business buying, selling and operating - $3M Carve Out Deal? - Acquisitions Anonymous 281

Episode Date: March 19, 2024

In this episode of Acquisitions Anonymous, Michael, Mills and Bill discuss an acquisition opportunity known as "Project Castle." The company being divested, is a manufacturing division with $29.6 million in revenue and $3.5 million in EBITDA. They specialize in contract manufacturing for various industries. The parent company is relocating its operations. The division has experienced leadership and a diverse customer base. However, there are challenges with replacing certain functions like HR and IT. The hosts explore potential buyer profiles, including private equity firms, strategic buyers, or even executives from within the division. They also discuss the complexities of carve-out deals and the importance of understanding hidden costs and dependencies. Despite these considerations, the hosts find the opportunity promising due to Castle's stable revenue and growth potential.Thanks to this week's sponsor:CloudBookkeeping offers adaptable solutions to businesses that want to focus on growth with a “client service first” approach. They offer a full suite of accounting services, including sophisticated reporting, QuickBooks software solutions, and full-service payroll options.Subscribe 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]

Hello, ladies and gentlemen, boys and girls. Welcome back to another episode of Acquisitions Anonymous. My name is Bill Dallisandro, and I am here this week with Mills and Michael with a very unique deal for us. This is a corporate carve-out, a manufacturing company with sticky customers that sells to other OEMs. They say that you probably have an object in your possession with their parts in it right now. It has $3.5 million of EBITDA, $30 million of revenue, and some really interesting

dynamics being a carve out from a much larger parent. So I think you'll enjoy this bit different angle on an episode of Acquisitions Anonymous. Hey, Michael here. Want to talk to you about today's sponsor for the episode, which is cloudbookkeeping.com. So cloud bookkeeping is actually run by my neighbor, Charlie. So I've met him in person and can attest that he's a real human being and a good person. And what cloud bookkeeping does is offer a full suite of bookkeeping services all in the for you around QuickBooks and other technologies that you're using as a small business owner. So if you're interested in getting the bookkeeping part of running a business off of your plate and focusing on running your business, Charlie and his team are one to call.

They can put together a bunch of other stuff in terms of helping you manage and grow your business besides just bookkeeping, sophisticated reporting, definitely helping you get your quickbooks online set up in the right way, and a number of things around payroll as well. So, definitely know them and recommend them. If you want to find out more about cloud bookkeeping, you can go to their website at cloudbookkeeping.com, reach out to Charlie. I know many of you have and see if he can help you, make running your business easier and more fun by letting them help with a lot of the bookkeeping solutions. And when you call, mention this podcast, it would help us and help Charlie know that we're supporting him as well.

So thanks a bunch and cloudbookkeeping.com as the sponsor for today's episode. All right, Bill and Mills special today. Back for another episode. I've done like one or two with Michael lately and all he was growing a beard. I don't know if he still is, but all he wants to talk about is our beard competition. And you're clean shaving, though, so I'm really relieved. That's because I'm smart enough not to get into a beer growing competition with mills now it's just because i'm willing to look homeless for a long time my wife would not tolerate me

losing a beer growing competition to you yeah yeah the only winning move is not to bless yeah yeah well this is a this is a all carolina's episode just you and me and we have a a business that i think is in the southeastern united states if i read correctly um from your your best uh the best named business broker group we've ever worked with you want to tell us about the group. Yeah, so it's business acquisition and merger associates, which I said before we hit record, I can never really remember what their name is because if you search for business acquisition and merger, like in the same Google search, you know, you just get like inundated with all the keywords. But their website is buy sell your business.com. And I really like these guys. I've worked

with them in the past and talked to them. They have, I think we've talked about them on one or two previous episodes, but they do all blind Sims, which I think is very discerning and kind of tasteful because, you know, on the other hand, you're going to sell your business and any person can auto sign or docu sign an NDA and all of a sudden they know, you know, your biggest customers and, you know, your revenue mix and your profitability and maybe your key people in their tenure. And it's like, whoa, whoa, you know, it could get bad fast. So I really like the way they go about things. And they usually have pretty unique stuff like this one that it caught my attention. Oh, okay, great. Now, maybe they could use some better branding, but it sounds like they're very solid intermediaries.

Yes. Yeah, I think they know what they're doing, and they have a pretty good team and the guy who leads it. I can't remember his name, but he's a pretty good advisor and intermediary. Awesome. Well, I guess that's what you really want. That's the substance rather than the sizzle. Yes. All right. So let's get into this one. Mills, you recommended this specifically because it's very interesting. It's a carve out. It's a divestiture, I guess, from a larger. parent company. So I'll read it. We don't get those that often, but it creates some cool dynamics, very interesting, you know, layers as associated with that. All right. Well, let's get into it. This is Project Castle. It has about, it has 29.6 million in revenue and $3.5 million of EBITDA, and it is a manufacturing divestiture. So Castle represents an exciting $30 million corporate divesture opportunity,

which is spinning out of Parent Co. It could be either a platform or an add-on acquisition to financial strategic buyers. Castle contract manufacturers highly engineered products to OEM spec for HVAC, electronics, pharma, automotive, military, power sports, EV, industrial products, and other product manufacturers. The Parent Co manufactured branded products that are sold directly into a different industry. Castle's parent began construction of a new manufacturing plant and will relocate all their attention and branded products to that new facility. The $30 million contract manufacturing division

will remain at the existing facilities. The contract manufactured products are technical in nature and made from a wide variety of raw materials to achieve specific technical attributes and outcomes specced by their customers. It has diverse end markets and it's likely you own a product with Castle components inside it already.

They can be found in thousands of technical applications. The company enjoys a diverse customer base with the top five customers generating 12, nine, eight, seven, and seven percent of revenue, respectively. Let's just pause here, Mills. Interesting so far. I am very intrigued that I may already own a product with their subcomponents. You're like, prove it. Prove it. I want to see it. So basically these guys, this would be, you know, like a tier two supplier. Like they're making parts that go into other things. So it's probably not chips, but like they make a microchip that goes into all kinds of different things.

make a screw that goes in all kind of different things, et cetera. That's how I understand it, right? Yeah. They might make the little metal clip that the chip attaches to, you know, inside the thing. But they probably, it doesn't seem like they're doing something very high tech. Yeah. Although it did say the products are technical in nature and made from a wide variety of raw materials

to achieve specific technical attributes and outcomes specced by customers. I mean, this could be carbon fiber. I mean, this could be a special kind of plastic or metal. We're just really not sure. Castle is led by an experienced team of manufacturing, operations, and sales professionals who will remain with the division. Opportunities to participate in ownership for them, for the employees, are welcomed. The industry is large, but geographically fragmented. It's possible to grow this business by acquiring other technical contract manufacturers in other geographies.

Now, here's some of the rub on Carvout. Castle's parent company will retain senior finance, HR, and IT staff, so those areas will need to be replaced. Management estimates about 500K will cover the cost for replacing this staff, and we have already adjusted EBITDA to reflect this. It's $4 million of EBITDA. They've reduced it by 500K to account for the replacement of those staff, and that's why they're quoting $3.5 million of EBITDA. So the Parentho seeks some flexibility as they move their branded operations out of the company's current plant. They expect to move out in April of May of 23, so I guess that's already happened. After the move, the contract manufacturing division will

have ample room for growth and can support tripled revenue in the current facility. All key operations and sales leaders stay with the division, and they currently run the division. The parent co-CFO will support transitioning the finance function to a new CFO. The business is highly professionalized today and they don't expect a heavy lift in supporting hiring new leaders for HR, IT, and finance. This is a very professionally operated company and the division benefits from being part of a well-run organization. The division has not been the priority of the company. Rather, the company's own branded products have received most of parent code's attention

and resources. It will be great to align with a strong financial or strategic partner who wants to grow this side of the operation. Man, super interesting. Just a couple of other cliff notes. They run a contract manufacturing in is run from two manufacturing plants. I find that weird because they seem to be focused on just one above. So I'd have further questions about that.

And their market outlook says Castle has grown nicely. with its customers over the years. When it wins business, is typically for the life of the OEM product. So example, for HVAC, Castle provides the product for the life of that HVAC model. For automotive, it's the life of the auto model.

For power sports equipment, is for the life of that ATV model, et cetera. That means this business is very sticky and predictable. Castle's product engineers work with their customers and designing products for the replacement models driving long-term customer relationships.

The market is served as highly fragmented geography and an opportunity exists to acquire multiple project castles in other markets or to Greenfield into other markets. So that is all we know. What do you think, Mels? And we got Gurdley too. He joined us. Oh, Gurdley.

Hello. Yeah, sir. Hello, join in late on the beer-grown competition. My Spanish tutor decided to give me 10 extra minutes for free because evidently I'm so inspiring. So, most time, the thing I went to, first thing, I mean, divestitures are hard. that's why they typically trade at slightly lower multiples. The thing I heard you read, and I want to just zoom in on immediately, is they're not selling you a whole division, right?

They're just selling you parts of this stuff, and then you have to go create, like, what they said, HR accounting, sales, like basically just the whole business. They're just selling you a manufacturing line here. And like, well, I don't know. In fairness, it said HR, IT, and finance are the only things you have to. Okay, so we're just recreating. Like your classic back-offs.

Yeah, yeah. So, like, 500K is way low. I'll just tell you right now. Like, there is no way. Like, that is a way low estimate of trying to recreate all that stuff. And, you know, I've been in a deal, which Bill, you're familiar with where, like, we way underestimated what it takes to just recreate that stuff. And, like, don't, if anybody does a deal like this, there's a reason why, like, people are scared when they see something like. It's really, it's a lot harder than just, oh, we'll hire an HR guy.

It doesn't work. Yeah, well, although I will say, like, I've seen worse, Michael. Like, I've seen, like, you've got to replace the entire senior leadership or you've got to replace, you know, like, I've seen worse. At least this is just back office. It's not a deal killer. It's just something to be like, oh, that was the first thing I saw like, oh, wow, that's more expensive than we're putting here in the listing.

Anyway, over to emails. Well, and Michael, we picked this one because it is, we don't really look at that many divestatures. But it's, you know, one of the dynamics that I think is a little bit tricky for me is you have a guy who's been running a division and maybe he's had like P&L level responsibility, but is he, you know, is he a CEO? Because they're kind of telling you, hey, the person who's running the division can step up and, and fill that role. You know, maybe the head of sales for this division wasn't the head of sales across the company, but, you know, they're used to being, you know, they're used to reporting to somebody. And now you're kind of saying,

hey, we're going to switch their hat. And that can be a little bit of a messy dynamic. On the shared services side of things, I've looked at a couple of this type of divestiture. And probably more so than when you're just looking at a business for sale, you kind of want to go, okay, why don't you like this 30 million in revenue and this three and a half million in EBITDA? And how bad is it that you're willing to get rid of it?

You know, like, sure, they want to grow the branded side, and that makes sense. But like, are there so many headaches that you don't want to just continue with it kind of running on autopilot? Like, how big is part of the question? If the parent company is 300 million in revenue, you know, and 30 million in EBITDA, okay, maybe you could see where it's like they're just kind of, you know, the unloved, you know, little darling of our company and let's get rid of them. but those dynamics matter. So you guys are skeptical. Let me take the optimistic angle on this. There is a lot to like about it, all right?

There's a lot to like about this. They have extremely sticky customers because it sounds like their parts are designed into the bomb of finished products. And it sounds like because they also casually dropped that they have engineers on staff. So they are obviously helping to engineer, co-engineer the finished product

with their customers, which means it's going to be nearly impossible to cut them out, kind of mid-run. It's also, like, this strikes me as like sort of like the YKK zipper type thing. Like, it doesn't make sense to save three cents on a zipper, right? If you risk your whole finished product, your jacket doesn't work if the zipper doesn't work, right? So it doesn't make sense, like if you've engineered this into your product and it's a relatively low amount of the total bombs cost, it's very hard to rip it out.

You just wouldn't do it. It's not worth the risk. And they say as much in the bottom half of this teaser is that they're very, very sticky revenue. So it's got super sticky revenue and it doesn't have major concentration. They've got like five customers that make up about 40% of revenue. And then it goes down from there. So I mean, I love it's not concentrated.

They mentioned that they're growing with their customers. So their customers have been growing coming back to them for new for parts for new OEM products, I would think. I mean, that is a very south from a something you want to buy, especially if you're going to use some debt to do it, that's very attractive. I will add to this is actually under contract. So like somebody is down the road on this and they probably have been for a while, whether that's a good or a bad sign, because they're saying, hey, we're planning on moving into a new facility, you know, in basically the fifth month of 2023. And here we are. It's March of 2024. And so, you know, I'm guessing that those things probably have panned out in. some way, maybe not totally perfectly according to plan. One thing that a lot of these divestitures will pitch, too, is a shared services agreement for, you know, 12 to 18 to 24 months to say, okay, you can't get your HR, you know, spun up

overnight just in due diligence. And you can't migrate your insurance, your benefits, you know, your workers comp, like all the different facets that go along with this. It's very, you have to know what you're doing to pick. pick up one of these things, kind of mid-stride and migrate everything over. Things like, you know, computer or printer leases, just like all the stuff, all the minutia that lives at the parent level, a lot of times you'll sign a shared services agreement with the divester and say, hey, we want to continue to use your IT team for the next 18 months and we'll pay you a fee for that while we sunset

at it and, you know, duplicate the efforts and insource it back to ourselves. But the timing of like insurance renewal, you know, the timing of workers comp renewal, but you also have to figure out in stress test, okay, we've been part of a very large organization and we maybe get some, you know, great buying power with raw materials, with insurance, with benefits, all these different things. Is there any way to really get a good idea at, hey, we may be buying, you know, a tenth of what we have been buying to our pricing? Does it? our pricing change. So to kind of where the natural conclusion of that is, is there are private equity firms

that specialize in specifically divestitures. And there's a handful of them that do just this type of stuff. A $30 million manufacturing thing may be small for a lot of them, which may be why this has not been picked up by one of those guys. But like, they specialize in all that kind of hard stuff you just described their mills. like how do we estimate, you know, what, what it's going to cost us to recreate HR and finance and stuff? And then secondarily, like, how do you, you know, manage that transition? How do you price these things? How do you model them out? Because it's harder because you can't assume

you're going to get to keep the things that you're leaving behind. So anyway, just, there's, specialists not only in divestagers and then some of them are like divestager specialists who specialize in industrial or software. Like, it's down to that level of niche. But this is, this This is, I think, interesting to Bill's point, because the size of it is below the radar for a lot of those professionals. So I like that. Let's also talk a little bit about deal structuring sometimes. When structuring a carve-out, how you're going to pay for it, a lot depends on the preferences of the seller. Almost more, it's almost more varied than a standard business sale.

Because if it's just standard business for sale, you kind of know what the seller wants. Like, he wants cash, and he wants it now. and he wants the highest amount of cash at close, et cetera. Sometimes, though, with a carve-out like this, you end up with strange incentives and dynamics at play. Like, I have seen where the selling company wants to, is most afraid that they will sell you this division, and then it will blow up huge and they will look like fools. And they are really interested in retaining 10%, you know, like as schmuck insurance, like to make sure that nobody can point at them and go, you moron, you sold the,

crown jewel. So I've seen that. I've seen all, everything in between. Sometimes they just, they will sell it for a dollar because they need a quick close because they're doing other things and they just want to not think about this anymore. And they're way less price sensitive than you would think and they're speed sensitive. So it's very, very different than kind of your standard business sale that is all about price and cash a close maximization. The speed to close is an interesting one because especially if you're, you know, if it's a division of a publicly traded company or a publicly traded company, there can be this kind of come hell or high water. We're closing by the end of Q3 because we have to announce, you know, in our earnings report

that this is, it's done. It's already happened. And so there can be some interesting constraints there. And maybe even not, right, if they're publicly traded, but definitely if that's the case. Which I find super interesting. I mean, that's how you can get good deals. Like if you, you care about price and they care about speed, that's a win-win. And I think that's where a lot of these carve-out private equity guys win, too, because they are, they know how to spin up HR in 30 days. They know how to spin up IT in 30 days. Sometimes they've got executives on the bench, right? So if you're just doing this over and over, you can swoop in. This also would be where a strategic could really compete. If you already have HR, IT, finance, et cetera, you can just kind of catch this. That was

something that we experienced at Elements Brands. You know, we had a, big infrastructure, we would occasionally see a distressed deal. We bought a business called EB5 in like 30 days. They were bleeding cash, but we said, I can catch this thing onto my infrastructure. We don't need a lot of these people. We're all already set up, and we turn that one around really, really fast, but no one else could buy it either because they didn't have the synergies we had, nor could they handle the speed that we could. Yeah. There have been times where these carve out deals have gotten done that the seller actually pays the buyer to take it. Not just free.

Wow. I've heard of ones where they're like, yeah, we'll take this business over and we'll give you $2 million in cash to see. How do I sign up for that? Look, it's because a lot of times they know that there's something on the other side that you have to deal with. It could be hidden liabilities down the road. It could be the risk of certain stuff.

It could be expenses to handle a carve out. But yeah, especially, I mean, that's the other thing that happens, and I want to point out a lot of times when people do accounting for divestitures, like the true P&L is somewhat a matter of opinion, right? Because like having done a couple carve-outs now, like, I'll look up and I'll be like, wait a second, where were they accounting for this particular thing? And like, that was in somebody else's budget, right? And it didn't show up in what they showed us. So that's just something to be mindful of.

And also why specialists, another reason why specialists are the ones that do a lot of these things, because they know how to predict. They know where the bodies are buried, as one of my, as my grandpappy used to say. Yeah. Similar on a related note, Michael, you have to make sure that they're not benefiting in intangible or tangible, but hidden ways from being part of the parent. Like, for example, is their FedEx contract, do they have great rates? because their rate negotiation is linked to the much larger parent rate negotiation.

And as soon as you spin out, you don't have the volume that parent had and your FedEx rate goes up. Or maybe they have big buying contracts as they're buying metal. And you don't realize that your price is your price on metal because it's free riding on everybody else's on all their volume. So all kinds of hidden things like that. So under what scenario does something like this, you know, get done? is it only a strategic? Is it, you know, a financial buyer only if they know what they're doing and have kind of been down this path before?

What do you all think? I think, I mean, like Michael said, there are, there are carve out private equity firms that do this stuff all the time. There are, I mean, obviously, like if you're a strategic that makes OEM parts and this kind of fits your strategy, it fits. But I don't know. I could see a, it's not going to be an SBA buyer just given the size here at $3 million plus of EBITDA.

And I'm not even sure you can check the box on a carve out for an SBA deal because you need a separate tax return, which this would not have. So, you know, that's going to be out. Like your standard SBA back searcher is going to be out. But I mean, I wouldn't rule out, you know, small equity firms, guys with big pocket books, you know, an exact that's had a successful career and can cobble together equity financing for this. You know, it's small enough that I think the buyer pool is larger than it would be. Would you like to know another way a lot of these deals get done? I've seen them. Yeah.

And I have a friend who got very rich doing this. They are the exec that runs this division, and they go to management and say, hey, I know we're divesting on this. I would like to be put on the other side of the wall, and I would like the opportunity to make an offer. And I've seen it done multiple times. And one of my friends actually did it out of Rackspace here in San Antonio. And he went and raised the money, and he became an independent sponsor.

and he ran the deal and then the deal eventually sold for like a lot, a lot of money. And private equity guys like backing that, right? Because it's lower risk. Like you got an executive in place. He already knows the business. If he seems competent, you know, that de-risks it a lot for the equity. If you go to the PE guys and you're that type of independent sponsor that's going to,

you have an inside set on the deal, you're going to lead it and run it. So the management team is there. You're potentially going to invest a little bit of your capital. They have that all. There's already a really well-defined. structure of how they do that. They'll just pull it off the shelf of how that whole model works for PE. And it looks like the management team is interested in just that.

I mean, straight from this teaser, Castle's led by an experience team of manufacturing ops and sales pros who will remain with the division, opportunities to participate in ownership are welcomed by these people. So that might be even what's going on. So maybe that's what we should have done with this one if we found it a year ago. We called them and say, hey, we would like 1% of your deal. and I'm going to tell you how to make a mint of money and I will coach you through it.

And, you know, who needs to buy it when you could just get something for free? Michael works cheap, 1%. Oh, of this deal? Need to be more than that. This is, I mean, this is unfortunately, or fortunately, like, I think it's an opportunity because of the size of it, right?

It's not very big relative to where PE wants to play. I like it, though. I think this is super interesting. I mean, it will definitely trade. I mean, it sounds like it's under contract already, but I would have said that even if it weren't. I mean, this is way less hairy than a lot of other corporate divestures that I've seen.

Yeah. I like it to. Yep. I mean, I've seen divestures where it's like, on day one, parent co will be 70% of your revenue. You know, it's like stuff like that. It's just way, and we will, and you won't have any employees and you'll have to hire.

I mean, like, there are so many scarier versions of carve out than this. Like, this is quite clean. Like, this is a standalone business with mostly staff. And in 30 days, we will need you to be out of our offices. Yes. Yeah, exactly. Exactly.

So. And we're going to dictate the price to you. We're going to be your biggest customer. We're going to dictate the price to you and we're going to lock it in for a long time. Yeah. Yeah. So, but this is not that. I mean, this seems like a standalone business.

It seems like a good business with sticky revenue. To your point, Mills, I do, I would love to see the parent being. a huge $300 million business and you can understand how this is just forgotten and non-core. Of course, if this is 50% of parent co's business, now I have a lot more questions about why they don't want to own it any longer. And you need to understand that. It could still be legit. I mean, they could need the capital for something.

You know, they could, the parent co could be in trouble, need the liquidity. You know, let's sell off a division. Like, there are fine explanations. It's just, you would need to understand them. And you got to think. I mean, if they're based on just a little bit we know about what they do and the, you know, end kind of markets that they sell into. I mean, this is probably something that, you know, they're saying it's in things that you use,

but it's not, it's not Apple, right? It's the hinge on the laptop or, you know, it's the internal metal components inside, like, your car's, you know, seat or something that you just go, oh, yeah, that has to be there. But I doubt that, you know, Ford is shopping around for that because they, they've already got a fully tested assembly and they just need to keep running with what they've got. Now that you mention that, Mills,

I would like to know how they win deals because you'd want to make sure they're not winning deals because they're credible as a subsidiary of large parent. If this is a subsidiary of Apple, just to run with your example, right?

And their customers are going, oh, I trust you. You're financially extremely strong. Like Apple's not going to screw me over. yeah, I'll let you make this critical part. And then all of a sudden, your Mills manufacturing LLC and all your customers start giving you the side eye, you know, and it's very hard to win deals. Suddenly, you're the small fits pushing against your larger competitors instead of the large

fish punching down on small competitors. So you'd want to understand how they win business. Yeah, that's a great point. But overall, I'll take the SIM. It'll be interesting. Let's go. Yeah. All right.

Anything else, guys? Gurley, you seem to have taken, have you taken a step backwards in the beer competition? Did you trim over there? Did you clean it up? No, I think Mills is just so much more masculine than me that he's growing faster. So, though, my buddy last night,

by the way, this is my buddy who, he walks over to me and he goes, I see you're kind of shaving your neck. You're not supposed to shave your neck. I was like, there's no beard manual. And it turns out he, he used to own a beard company that was one of his side hustles

amongst other side hustles and he's like, you know, as somebody that's had a beard since I was 15, I could be an expert on beard for you. I was like, fine, thank you. And he told me a story about how he did even go so far as somebody hired him to come give a lecture

about beards at a hipster bar here in San Antonio. And then between the time he was hired to go give the lecture at the hipster bar and the time he was supposed to give it the bar closed down because they ran out of money. I was like, yeah,

that sounds like what somebody would do who would pay to come give a lecture at a bar. If you're paying somebody to come speak on beards, you might not be the most financially savvy. So maybe it'll look better if I kind of let this down here grow, Bill, so I'll let you know. Yeah, what does mine look like?

I can't see, but... No, yours looks good, Mill. See, I feel like you are... I disagree. I think you are supposed to shave your neck and your cheeks. Mills, do you shave your cheeks? I clean them up from time to time in between haircuts.

Because you can very well end up being like Kilroy looking over, you know, the fence with beard up to your eyeballs if you don't shave your cheeks. You know, I think, especially as you're growing it in, if you keep the neck and the cheeks clean, it's like, oh, I'm doing this on purpose. If you just let it all go, it's like, ooh, Michael's having a rough couple weeks, you know? It's also true. I'm in support of the cheek and neck shaving in the early days.

And once you reach Mills level of maturity, you can just go full bear. I will not let you down. All right, let's wrap this one up. So come back next week for an update on the beards. We'll see on that episode of Beards Anonymous. See you.