Acquisitions Anonymous - #1 for business buying, selling and operating - $50M a year of shapewear - does this deal look good on us - Acquisitions Anonymous 221

Episode Date: August 22, 2023

Heather  (@EndresenHeather), and Bill (@BillDA) break down a shapewear business that is going some serious revenue with some compelling ecomm elements. Find the listing here.Thanks to this weeks sponsor!Employer Flexible will help you take action to streamline your company’s HR processes. They  are the proud provider of flexible and adaptable PEO services. If you’re a small business trying to grow, and you’re struggling with a lack of internal HR or you’re just dissatisfied with your current HR setup, consider Employer Flexible as your next vendor for HR outsourcing services.Check them out at https://www.employerflexible.com/.------------------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]

Welcome to Acquisitions Anonymous. I'm Heather Anderson, one of your hosts. And this week, it's just Bill and I. And we found a really cool company to talk about. It is postoperative medical compression garments and shapewear at D to C Amazon e-commerce brand or company. It actually had some really interesting characteristics. It had an interesting mix of revenue, did some wholesaling. We got to talk about Brazilian buttlifts. It was really, really fun. I hope you enjoy the episode. Today's sponsor is employer flexible. And what employer flexible does is really function as a fractional HR department for your company or business. I've used them numerous times and putting together my companies. I've used them when I bought companies. I've used them when I started from scratch. And basically, when you're moving quickly or when you don't want to spend the time putting

together your own HR department, benefits, all that kind of stuff, and you want to get the scale of being part of a larger group, you can reach out to employer flexible. And what employer flexible does is give you that buying power as if you're part of a bigger group and all that kind of stuff. And for me, I love working with them for numerous reasons. One is I know the owners and a lot of the staff and they've always treated me super good. And then the second thing is I hate HR.

Like I don't enjoy it at all. And this way I can know it gets done right. I get the benefits of having a big fully staffed HR department and the flexibility of having a vendor like employer flexible being there as a partner throughout my journey and making sure that everybody I work with is happy, taking care of, and we can focus on what really matters in our business,

which is take care of our customers. So you can find their contact details, locations of their various offices, as well as more details on how they will help your business by going to employerflexible.com. And again, that's employerflexible.com, and thanks to them for sponsoring today's episode. Hey, Bill. How's it going?

Ah, it's going good. It's just you and me today. We are unsupervised. I know. What should we do? We should do a really off-the-wall deal, one that Michael would never approve. Right. Okay. Good. I like it. Yeah, which actually, in fairness, a deal was shared in our host group chat today, and Heather and I blatantly disregarded it. So we're not going to do that one. We found what we think is a cooler one today.

Yep. All right. Do you want to take it away? All right. So I will admit I was drawn to this one because it has an e-com component. So let me read it to you guys. I will put it up on the screen for our YouTubers. If you guys don't know, you can watch and listen to us on YouTube if you want, and you can look at our ugly mugs while you hear us talk. Just my ugly mug. Heather's a significantly better advice. I know. I'm so insulted. Okay. But this is a cool one. So this is both a bigger deal and kind of an e-com deal, Ecom Plus. So this is from the folks at website closers. It is a post-op medical compression garments business. They do wholesale Amazon and DTC

e-commerce sales, 31% retail and 70% wholesale repeat orders. I'm not sure which words are modifying which numbers in that sense, but I think we'll get into it. So it has $49 million in revenue and $6 million of earnings. And they are asking $39 million. for it. So what's 39 over six? Six and a half times earnings for this business. So website closers presents an e-commerce brand that has been recognized as a leading player in the shapeware and compression garment industry, particularly in the USA. The popularity of these products have surged and the trend is especially prominent in North America. They enhance body shape, provide a slimming effect. When you read our website closers listing, you got to kind of skim it

because they really bloated in there with the flowery language. So, these garments are required post-surgery. So shapeware is designed to smooth and contour the body and is more of like a, you just wear this all the time under your clothes. Compression garments, on the other hand, are often used post-surgery to aid in the healing process and provide support. These garments are required, and the brand's offerings are highly sought after by individuals undergoing cosmetic procedures, such as the Brazilian butt lift, the liposuction or tummy tuck,

and they help reduce swelling and promote faster recovery. So they have capitalized on this demand by becoming the biggest wholesaler in the United States. It owns the majority of the brands it sells, but also has exclusive distribution agreements with various other popular brands, giving it a competitive edge in the marketplace. By sourcing its products from Latin America, where specialized compression garments in shapeware are prevalent, the brand can offer customers high quality and authentic products. Their success is further demonstrated by its presence on popular online platforms like like Amazon, where it constantly ranks in the top seller in the shapewear bodysuits category.

This showcases the brand's credibility and customer trust. Logistics-wise, they are sourced primarily for manufacturers in Colombia and Mexico. There's a specialized team in every manufacturing plant, and management has negotiated exclusive safety stock with each plant. For the past decade, most products have been exclusively manufactured for the company. For the past decade, they've been around a while. They own the biggest brands and also distribute and sell some others. many with exclusivity contracts.

Orders are placed weekly and monthly with favorable net 45 to net 60 day payment terms. The business has 60 days of sales inventory in its own warehouse and the same amount at Amazon FBA. Additionally, it offers drop shipping for wholesale customers, reducing fulfillment costs. They have around 500 products totaling 7,000 skews, and that's going to be the probably sizes and colors variation. They are offered without concentration on any given product. the top 10 products account for 40% of units sold, while the top 100 account for 83%. It's worth pausing here to note that is rather unusual. A lot of times in an Amazon business or an e-commerce business, you'll have one or two power

skews that just like really fly because they rank really well on a top term. So to have the top 10 be only 40% of the business is pretty good skew diversification. On the other side of it, though, they've got 7,000 skews. Yeah. Holy smokes. Heather, have you ever done, went to a business with that many products? It's funny. That exact number came up in a deal I'm working on right now where it's actually

auto body parts like doors and bumpers. And the system that they had had 7,000 skews. But we said, wow, that seems like a pretty complicated business. Why are there so many? And it turned out that really it was, that's how many lifetime skews had ever passed through their system. and they weren't really carrying 7,000 anymore. They were carrying like 2,000.

So I think sometimes there's a, you know, that can be a little misleading. But if it's truly 7,000 skews, it's kind of interesting what they all are. That's a lot. Size and color. And auto body parts too can have a ton of skews because of fitment.

All the different year-make model can be very skew intensive. Right. So that I would want to understand how much inventory they've got and if it really moves because they said the top 100 skews account for 83% of sales, which means the bottom 6,900 skews account for 17% of sales, right? So there's very much 80-20 going on here that I want to understand more. Like, why are they even doing that?

Maybe you have to have double XL in everything, you know, and double extra small and everything. I don't know. So it says 60% of the sales are derived from the company's own brands, while 40% is derived from third-party brands with whom the company has excellent relationships. So let's break this down. So what they are doing is they're importing all of these shapeware products from Latin America. And then they are selling them, 60% of them, they're selling them under their own brands.

You know, sounds like there's more than one of them, different shapeware brands. And then they've got 40% of them that they are either drop shipping or selling wholesale to other brands. So this would be third parties who start their own brand of shapeware and don't have manufacturing relationships in South America and just go to these guys. And these guys essentially pretend to be their. manufacturer, right? And kind of middleman it all the way through to South America, which can be a good business. It's not a great business if it's your only business, but when you've got it kind of blended with branded, you know, that's not bad. So if I keep going, the company's wholesale channel accounts for 40% of its revenue, which is what we just said. The team has enjoyed

an impeccable growth tracker for six years, improving their margins every year. Blah, blah, blah. Over 1,400 registered wholesale customers spend on average $900 per order with the 70% repeat purchase rate. I would expect the repeat purchase rate to be pretty high because they're the supplier, right? So the 30% of people that don't repeat, they went out of business. Right? It says of the retail sales, which are 60% of the revenue, two-thirds of that are sales

made on Amazon, and the remainder is from their dot-com, Walmart, and eBay. So if you kind of look through these numbers, 40% of their revenue overall is Amazon, 20% of their business is their own website, Walmart and eBay, marketplaces, and 40% of their business is wholesale to other brands. Nice diversification. Yeah, that's a nice mix. Yeah, it's a nice mix. So it is only 40% Amazon, which is chunky, but I mean,

I have seen businesses where it's 90%. Right. Sure. So you got to hand it to them, nice diversification. So marketing-wise, and this is where these shapeware businesses always, get a little squarely to me. So this business has little seasonality and has remained very stable for the past 10 years with a predictable peak in March and April when plastic and cosmetic surgeries spike.

I learned something new today. Did you know that plastic and cosmetic surgery was spiking in March and April? I think I know why now that I see that, but I did not know that. Because summer is coming. Oh, summer. You know what? Summer is coming and tax refunds are coming. Oh, and tax refunds.

Good point. The double whammy. Wow. Yep, that makes sense. The double whammy. Okay, so there's seasonality in plastic surgery. It makes sense. So it says they stock up their inventory by about 20% for that period.

So a little bit seasonal, but not like insanely. It doesn't sound like it. So it says their wholesale strategies include attending trade shows and outreach from an in-house team of sales reps. So that's people on the phone. hey, do you want to start a shapeware brand? Right? Like we would like to supply your shapeware. It says their digital marketing strategies diverse.

It tracks over 2 million monthly impressions through SEO, email, SMS marketing, influencers, social media ads, pay-per-click on search engines for use to the websites. And then, of course, PPC, product placement, and special deals have proven highly effective on Amazon. I know this is a long one, but there's a lot here. Yeah. So human capital. And I guess props for website closers, this is actually more dense than typical for them. So five shareholders of the business work in the following capacities.

CEO, CFO, head of wholesale, head of retail, data, and operations, and then head of logistics and customer service. In addition to these five shareholders, who you got to believe are going to disappear on day one. So on day one, you lose your, let's run them down, CEO, CFO, head of retail, head of hold wholesale head of logistics and customer service. That's a little scary. That's a little scary. That's a little scary. So in addition to these shareholders, there are 28 directors in middle management and

175 employees. Wow. They have in-house sales, in-house customer service, in-house marketing, in-house advertising, in-house creative, in-house logistics, and middle management teams. They have all their operations, blah, blah, blah, is all done in-house. Team is highly specialized in-house. talented and each department head has been with the company for an average of six years. They have great culture. They have low turnover. And the future of the shapeware and compression

garment market looks incredibly promising. That, and that's the end. So, Heather, that was a lot. What popped out at you? What do you think about this, the shapewear business? Well, I think the cosmetic surgery trend, and, you know, I like med spas. So it's kind of in that same category. I I think this has got a great macroeconomic sort of tailwind. You know, it's a growth industry. People are spending more money on these kinds of things. This is both compression garments like post-surgical and shapewear. So I kind of like that too because it's not just only tied to surgery,

although it seems like it's sort of primarily driven that way. I had no idea that there was seasonality. That is really interesting. I'm going to look into that and try to learn more about why that is. And the 7,000 skews, the more I thought about that, I know that the doctors, when they recommend compression garments, they recommend a particular strength and a particular type, you know, depending on where the surgery was done on a person. So I can see where there's a lot of little products in there that, you know, you've got to be able to carry in order to satisfy, you know, this is the place where this particular surgeon refers their clients or whatnot. So I think it's a really cool company. I mean, it seems like it's, it's been around a long time.

They've certainly, they're at scale. They're the largest wholesaler. They've got diversification in their, in their channels. I like it a lot, except the one thing I didn't like was all five of those people, as your sellers that are probably departing. That's kind of scary. That scares me. When I think about the like the skew mix, you know, they've got their top 100 skews are 83% of the business

and their bottom 6,900 skews are 19% of the business. or 17% of business, rather. The first question I would wonder about is, well, the first question is, is it just sizes and colors? And you have slow moving sizes and colors. I would also then like to split the inventory in the business by channel.

How much of this is inventory to support your retail brands? And how much of this is inventory to support the wholesale side of the business, all these other brands? Because you sort of got this double whammy. Any brand is going to have slow moving skews. But then you've got 40% of your business, coming from, I think I said, like 170 other brands. And all of them are going to have different edge case slow moving skews. And brand A is going to have different ones in brand B and C and D.

And I would wonder, I want to know kind of who owns that inventory. You know, if it's on their balance sheet and then the brand goes defunc, do they just eat it? You know, do you relabel it? Like, does it have their logo on it? You know, I'd really want to break down an inventory and say, What of this is truly resellable? One of it has other people's brands on it. Do I have risk here? Do I have counterparty risk? All right.

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Yeah, and I don't know if they have branding on these things because there's something that's worn underneath clothing, so, you know, I don't know. Maybe they do, though, and that would be a risk. I think it's a really solid business, though. And I would love to see the historical financials. I always like to have that long look back so I could see what the trends have been. I have a feeling it's pretty high growth in the last, you know, three or four years, I would imagine.

Yeah, I mean, this has been a category. I mean, even Kim Kardashian is in this category, right, with her skims brand. Yeah. Like this is, so this is a massive, massive category. It's true. And there's honestly, one of the easy mode buttons on business is being a big category. Right. Generally, in a big category, you can be a little less good and still catch some demand, right? It's just you're skiing downhill, right? It's a lot more fun than skiing uphill in a small niche. Absolutely. And it seems like they found something unique to do, which has become this wholesaler. And, you know, they've got a sales team. So they're out there calling, like you said, probably do you want to start a shapewear brand? Maybe you have, you know, you're a surgeon or you're an influencer or whatever it may be. Seems like they kind of built that. niche for themselves. If they are the largest wholesaler, they probably created it. It's interesting,

but it's also risky like you just pointed out because, you know, maybe all those skews really are the fact that they've got to carry inventory for all their small customers, their wholesalers. It would be interesting to try to understand margins between the two channels also because obviously on the wholesale side, you're giving a discount because your customers have to make money, right? So you've got to give them half off or whatever. So they have margin in it or more, who knows? But on the flip side, you're also not doing any marketing. And in an e-com or business like this, especially one in a big market, especially one that's really sold on the internet, right, through e-com, marketing can be a huge chunk of your P&L. I mean, businesses like this can spend 30, 40 plus percent of revenue on marketing.

So you might think initially the brand business is the best part of the business. But if you dug into this, you might find out that the wholesale business actually has better margins. That is a really good point because, yeah, you would actually think the opposite, but you make a good, a strong case for the fact that maybe that's why they got into wholesaling is they realized that the net margin was going to be better and it was maybe a little bit easier because they didn't have to do all the advertising and capture the consumer attention. So that is really an interesting point. I like this business. And even at six, what did we decide? It was six and a half times. Yeah, I mean, for $6 million of earnings, that's, that sounds pretty good to me.

What do you think? I bet private equity will buy this. It's big enough. It's $6 million in earnings. And it's got kind of that we sell the picks to the miners type thing, you know, and it's not just some skeezy shapewear brand. You know, it's got the surgical side to it and it's got the wholesale side to it. I could see private equity buying this.

And they may get six, six and a half times. as an individual buyer, I would be a little nervous about this because here's the thing. First of all, as we already mentioned, you're going to cut the head off the snake on day one. All five of the shareholders disappear. And even that in itself, by the way, may make this totally ineligible for private equity because private equity doesn't have five people to slot in. They want the management team to stay in place and they just buy it and keep running. And nowhere in this description does it say that.

you know, we all the time look at deals and it says management will stay on, you know, or we want to do a minority transaction or whatever it might be. This doesn't say any of that. So, you know, you run a serious risk of your CEO, CFO, head of wholesale, head of retail, and head of logistics and customer service basically checking out after transaction. Even if they don't leave, checking out emotionally, that's tough. The other thing that, and I would be remiss if we just didn't talk about this, this industry is skeezy.

Like, man, is it skeezy? Like, as far as, like, direct consumer e-com, like, this is the, this is up there with supplements in, like, the no-holds barred, you know, no regard for FTC, ethics and advertising, just, like, straight up lying, photoshopping pictures of how this stuff makes you look. I mean, photoshopping celebrities' faces onto bodies. I mean, this industry on marketing perspective is skeezy. And it can be really tough. And this goes for supplements industry too.

And I said this on prior episodes of the pod. It's really tough as an ethical person to come into these industries. Because if you operate ethically, you're five steps behind. Yep. Right? Because everybody else is lying, cheating, and stealing. And if you're not willing to lie, cheat, and steal, it's very hard to keep Yeah, I see that in other industries too. Yeah, definitely. You know, lenders tend to learn some

industries that are like that and they just won't lend because the only way you can be competitive is you're cheating. If you're doing well, you're cheating in some way. Yeah, so that's interesting. I didn't know that, but it makes a lot of sense. You know, I was thinking about the five-person team leaving. It's also kind of interesting that five people agreed to sell the business at the same time. You know, like I doubt they all agree. You know, probably they don't. There's probably some that really want out and others that don't. So you kind of have to sort that out too. Maybe some of them would stay on. Or there's a giant train coming down the tunnel that they all see and you don't. That could be. And we don't want that, right? Yeah, it is strange. That's five people coming to the

table at the same time is a little, a little strange. So maybe they do see something. Maybe there's some competitors. You know, they're manufacturing in Columbia and Mexico. Maybe there's somebody that's trying to manufacture somewhere even cheaper. Who knows? And I was thinking about brand here for the retail customer. And I'm thinking this is a one-time purchase kind of product. You know, it's not something, at least the compression wear is, right? The surgical piece of it.

So I guess that piece, like I feel like your customer just buys it once and it's after a surgery and then that's it. Yeah, I would be interested to see what percentage of the business is actually post-surgical and what percent of it is actually shapeware because if I were trying to sell this business, I would definitely focus on the post-op surgical part of it in my teaser. They do not actually say how it breaks down. But also you never know. People who have Brazilian butt lifts are probably interested in ongoing shapeware as well. These are the types of surgeries. These are cosmetic surgeries, right? And so the people that get them are interested in appearance, right? So they're probably, like, you're probably building a really good list of shapewear customers from your post-op surgery

customers. Well, that's a good point. Right. Yeah, that's a really good point. And yeah, the Brazilian butt lift, that's a thing. That's a big deal. I'm sitting down right now, otherwise you would be able to see my Brazilian butt lift. Did you do it? Okay, good. Yeah, it's pretty good. I read once about it. I was talking to a friend about Brazilian And I read that you can't even sit down like for the first month after surgery, like in a chair. So it's like lay on your face or stand? Like those are your only choices? I don't know.

It sounds like hell. Really awful. But you can't sit. Beauty is pain, Heather. That's what they tell me. Tell me about it. Yeah. I know, but it's not that kind of pain.

That's a lot. That's a lot. I got to be able to sit. The other thing that I would have questions about. And if Michael were on here, this part where he would say, I'll bet you 10 Chili's gift cards that these manufacturers, these owners rather, are from Central America and have history in Columbia and Mexico. Because it sounds like they have really tight relationships with these factories.

Sounds like they've got employees on the floor at these factories. The first question I would ask indiligence, by the way, is do any of the stockholders of this business or have any outside business relationships or equity? or anything in these factories, right? And I think you will find out that maybe these same guys own the factories, and they just want to sell you the brands. Red light, red light, red light, right? You know, why do they want to be in one part of the value chain

and they want you in the other part of the value chain? Yeah. So I would, and like suddenly like, you know, I'm white guy from Charlotte, North Carolina. I show up in Columbia and I leave with a bag over my head. You know what I mean? It's like these might not be transferable relationships. It's not good for you. Yeah, this is not a good business for you, Bill. Sorry. Yeah, it could be scary. Yeah, actually, it really could because there's a reason they establish those relationships in those two countries. And you're right. They probably speak the language and they probably come from there, at least some of them. So that's, and if you don't do either of those two things or both, it may not be a good idea for you to be in this business.

Yeah. And this is, I mean, talk about diligence, by the way. If you don't go to Colombia and Mexico as part of diligence, you are a fool. Right. I mean, you need to be. be understand this deeply what's going on. Yeah, who you're working with over there. Yep, absolutely. I mean, you might get there and it's like a human rights violation in that factory and you go, whoa, I want no part of this. Yeah, right. Right. Yeah, you got to see that with your own two eyes. Yeah, very interesting. If I had to bet that if we, if we signed an NDA and got the financials of this business, I would bet that you saw their retail business pop. and then their wholesale business follow and their retail business start to decline. I basically bet you see them trying to move from the retail side into the wholesale side.

And it's because of the dynamic I talked about before that the marketing in this category is an absolute knife fight. Absolute knife fight. And so if you have the means of production, what you do is you go, I know, I'm going to outsource the knife fight to all these morons. right? Like let's just let's sell picks to the miners. Let's let them create 40 different shapeware brands, slug it out. It doesn't matter who wins because we're selling to all of them, right? Right. And five of them will win and get big and we'll make a great margin anyway and not have to run Facebook, like do all that stuff. I'm going on to Amazon right now just to look at compression garments. And yeah, there's just, it's just, you know, pages and pages and pages and different,

you know, parts of the body that they'll cover. And, you know, you wonder how many, since they've got that wholesale channel, they probably manufacture several of these brands, you know, they probably represent a lot of what I'm staring at here right now. And you're right, the retail side would just be a grind. And that's probably why they got into the wholesale in the first place. Okay. So you're going to forgive me because I am going to share this on the screen, but it just illustrates the skeeziness of of this industry. So I just searched on Amazon for compression garment, Brazilian buttlift. These are Photoshopped like crazy.

Like look at these. Like this is insanely photoshopped. Yeah, right. Like, come on. Yeah, right. It's not even like, look at this one. This is insane. Yeah, that's funny.

Right. And so like if you're not, like, they're all, you know, like, you know, yeah, sure. These are 100% Photoshop, right? So if you are not willing to Photoshop, you're going to get smoked. Right. And look how competitive, too, this is. They're all the same, right?

They've got thousands of reviews, some of them. Notice they all, and this is another thing that's interesting about this category. I'm on the front page here. There is not one product that has more than 4.0 stars. So if you look like, this is actually fairly uncommon for a category. on Amazon, which is basically this stuff doesn't make you look like the Photoshop photos is what this is. Like, I mean, everybody that shops on Amazon, like a 4.0 or 3.9 is not good, right?

And it's really not good in a cutthroat category like this where probably 60 to 70% of the reviews are fake five stars. Right. So what percentage of the real reviews are one stars? Yeah. Right. Right. In this category, this is a knife fight.

Like, this is brutal. This is people promising things that don't happen. I mean, this is, and I'm not going to go on Instagram, an exercise to the listener. Go on Instagram and search for these type of ads and you will see what I'm talking about. Photoshop, Photoshop, Photoshop. I mean, it's just, it's selling hope that it's selling lies to people. Yeah. Sure.

Yeah. Makes the ton of sense. So they, yeah, they had a tough time in that part of the category and they found the wholesale category easier to kind of let the other customers sort of dive into that pool and fight that out. And you're right. The ones that don't repeat just went out of business. They gave it a try and they stopped. You know who's making all the money in this category? Jeff Bezos and Mark Zuckerberg. All the ads, right? This is one of those categories that just the value gets entirely sucked out by the platforms because it's, I'm willing to pay one more cent for

ads. I'm willing to pay one more cent and the margin just goes to zero. Because candidly, they're not differentiated. And that's why they have to rely on Photoshop, right? Because they're all selling exactly the same thing. So it's like, how do we make our thing different? Photoshop the model. Right. And then the next person Photoshopps the model a little bit more extremely.

And it's a freaking arms race. Right. Like this is a real tough category to be the brand in because it's an undifferentiated category and it's an unethical knife fight marketing category. So I'm totally unsurprised these guys went. kind of up the value chain to the manual toward manufacturing yeah so you talked me out of it i was going to i was going to i was going to buy this one but i'm not going to now well i mean it would be really interesting like if they're if they're wholesale businesses on a rocket ship like i actually think

you know usually i right i'm like mr brand like the brand is where you want like a lot of value accrues in the brand like you can get higher margins if you have a strong brand in this case and a few others and industries like this i would rather be selling the picks to the miners rather than than engaging in the knife fight. I want to sell the knives, not do the knife fight. Mm-hmm. Makes sense. Yeah.

A lot of earnings, but a tough business to be in, and now you're losing your entire management team, and we don't really know where they're going. So, yeah, tough one. Yeah. Yeah, this, it's really interesting to see how vertically integrated they are and to kind of talk about this picks of the miners thing. This would scare me the size of it,

$6 million in EBITDA, 175 employees, international, you know, complex and your top five executives are leaving, good luck. That being said, pretty sure private equity is going to buy this for six, six and a half times and lose all their money. Yeah. Yeah. Yeah. I'll lose all their money.

I mean, I've seen this. My friend Metaubogle, who runs Cardo Ventures that does distressed e-com, and so he sends me some of the deals he looks at sometimes. And it's always like private equity buys a business like this, does not listen to our podcast first and just absolutely loses their ass. Wow. That's what's going to happen here. I'm convinced.

Well, I shouldn't tell this story, but I do know a story like that. And it's in a direct-to-consumer business. They didn't sell much on Amazon, but they did, it was a compression sock. So not quite this. Similar, though. Similar. And, you know, that was it. That was the category.

There was nothing else. but those, you know, obviously colors and whatnot, but yeah, it did not go well. And honestly, what hurt that business was the privacy change on the iOS, you know, where you have to opt into. The only way that company did what it did was those targeted ads. And as soon as they lost the ability to really do that, the sales plummeted. And I've seen a few like that. I'm sure you've seen a few like that too, but it was bought by sort of a private equity fund and did not go well. And they got creamed.

Yep, and shapeware, I bet tons of shape where brands went out of business during that transition for exactly the same reason. Yeah, right. Right, really heavily dependent on Facebook ads. And when that targeting gets worse, it hurts. Yep, exactly. And there was no way to replace it. Yeah.

This was a good one. Yeah. I'm glad we didn't do the one Michael said we should do. That was going to be so boring. Don't tell him that we didn't do it, everybody, okay? Well, so, you know, I will admit, I do not listen to. all of our episodes because, you know, I live them, right? I'm pretty sure Michael listens to all of them.

Oh, does he? Oh, shoot. Yes, I wish, thank you. So what's on, Michael? I hope you enjoy this one. And we will see you all on the next episode of Acquisitions Anonymous.