Acquisitions Anonymous - #1 for business buying, selling and operating - All American Series: Get ya hot dogs - Acquisitions Anonymous 197

Episode Date: May 30, 2023

Michael Girdley (@girdley), Bill D’Alessandro (@BillDA),  and Heather Endresen (@EndresenHeather) finish off their 2-part All American series. They review a hot dog manufacturer and it's ability to scale. -----Thanks to our sponsor!This episode is sponsored by Acquisition Lab. Acquisition Lab, created by Walker Deibel author of Buy Then Build: How to Outsmart the Startup Game, is an accelerator with a highly vetted cohort-based educational and support community for people serious about buying a business. After going through the Lab's month-long intensive, you have ongoing access to almost daily Q&A sessions with advisors, regular live deal review forums with Walker, hand-picked vendors for your deal team, and a very active Slack group with other searchers on this path. Our team personally understands how to buy a business and will help navigate all the complexities of the process, as well as provide a trusted framework, tools, and resources to support you from search to close. The Acquisition Lab recently celebrated its 70th business being acquired and well over $100m in aggregate transaction value. The Lab is there to stand by your side, so you can take the right action (at the right time) and avoid wasting countless hours trying to "go it alone".For more information, check out acquisitionlab.com or email the Lab's director Chelsea Wood, [e-mail] 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 another episode of acquisitions, acquisitions, Inonymous, the internet's number one podcast on buying, selling, and operating small businesses. I am one of your hosts, Bill Dallessandro, and this is part two of our two-part mini series, America, F yeah, recorded back to back on the same day. So we were wearing the same clothes if you were looking at this on YouTube. This one is a hot dog manufacturer based in New Jersey. I do not think it's Nathan's hot dogs, but think something similarly. So we talk about, you know, is this a local business? Can it scale nationally? You know, what are the dynamics in meat manufacturing? And we also had some interesting digressions on how you might take this national through social media. So I hope you enjoyed this episode of Acquisitions

Anonymous. This episode is sponsored by Acquisition Lab. Acquisition Lab created by Walker Debel, author of Buy Then Build, How to Outsmart the Startup Game, is an accelerator with a highly vetted cohort-based educational and support community for people serious about buying a business. After going through the lab's month-long intensive, you have ongoing access to almost daily Q&A sessions with advisors, regular live deal review forums with Walker, handpick vendors for your deal team, and a very active Slack group with other searchers on this path. Our team personally understands how to buy a business and will help navigate all the complexities of the process, as well as provide a trusted framework tools and resources to support you from search to close.

The Acquisition Lab recently celebrated 70th business being acquired and well over $100 million, in aggregate transaction value. The lab is here to stand by your side so you can take the right action at the right time and avoid wasting countless hours trying to go it alone. For more information, check out AcquisitionLab.com. Link is in our show notes

or email the labs director, Chelseawood, at chelsea at buy-then-build.com. Here we go. Another episode of Acquisition Anonymous. This is part two of America F-Yeah. I hope you enjoyed our last episode on the fireworks distributor. I'm here today with Heather and Michael. How are you all doing?

You psyched for America Part 2? Totally. I love America. We love America here at Acquisition Anonymous. So we're doing fireworks and meat and grilled meats and case meats. Michael, you're going to read this one for us today? I am. Well, we've got from a business that I knew everything about to one that I'm totally

clueless about. So I'm excited for that aspect of it. So this is listed by the in-bar group. IGI, they look like a brokerage. Anytime the NAB has businesses for sale in it, you know it's a broker. You know, Goldman Sachs doesn't have businesses for sale in the site nav. Thank you. By the way, I posted something on the internet the other day, and I figured out a way to get

engagement on Twitter is to write stuff that people will mansplain me about. And like, it's brutal. like Heather, I'm sorry. On behalf of all the men everywhere, we suck. Yeah, if it's any consolation, like there's routinely, I get mansplained and I'm like, yes, I know the sky is blue. Thank you for explaining that to me, Mr. Anonymous Middle-aged angry account from nowhere.

That actually makes me more better that you get mansplained. Oh, yeah. Men just like to do it. It doesn't really matter who's on the other hand. Okay. All right. So the in-bar group, manufacture of meat products, hot dogs, and provisions. The price is $4.5 million, located in Union, New Jersey, which I believe is North New Jersey.

Are you guys familiar with New Jersey? This is so deeply American. Hot dogs in New Jersey, it's just great. They are a manufacturer of premium quality hot dogs, pastrami, corned beef, salami, and other provisions, finest OU, GLAT, kosher products for deli departments, retail sales, and private label. They are manufacturer. And Heather, I don't know if you saw this, but the listing idea,

they have it listed as 0-0-0-42. So do you think this is the 42nd business they've ever listed? Definitely, yes. When we started our coffee chain, by the way, I insisted that we start our numbering scheme as 0-0-0-0-0-0-1 and 0-0-0-0. Because I wanted to make sure everybody knew

we had big ambitions. And then we quit and sold busy. When I set the ID numbers for a natural dog, I intentionally mashed the keyboard and started it like, you know, in the middle of nothing. So nobody can tell that it was the first order. 100%. Okay, so I'll keep reading. So they make manufacturer premium quality hot dogs, pastrami, corn, beef, salami, and other provisions,

finest OUGlaat, Procher Departments for Deli Departments, and et cetera. Okay, so listing details. They are asking $3 million down payment and then $4.5 million total for the business. So they are asking for you to put $3 million down towards the $4.5 million. So I guess they're seller financing the $1.5 million. Then the gross revenues are $7 million. The FF&E is $1.5 million included in the price. The inventory is $350,000 included in the price.

The reason for the sale, the company is interested in a team with a buyer that can grow the sales in business. Training and support will provide as necessary a typo. Typos. Heather, I apologize in advance for all your future episodes. Typo's drive me crazy because I'm Gen X. I don't know why people can't put periods and spell check stuff. I am Gen X too and totally with you on that. What is wrong with people? Seriously. P punctuation. And grammar. It's a courtesy.

It's a courtesy. All right. They were established in 1954. They were last acquired, our year of last acquisition was 2012. How do you read that bill? Does that mean they were sold? in 2012? Yeah, I think it means the current owners bought it in 2012. Okay, so they've had it for 11 years. 30 full-time employees, two managers,

an absentee owner, they have a $21,000 deposit on their lease. They pay monthly rent of $11,000, standalone location 20,000 feet that is a USDA certified and a couple other certified facilities that allow them to do meat processing. They grew up the last 60 years slowly

and studied from a small operation to a state-of-the-art facility. The owners are knowledgeable and successful with all aspects of technology, manufacturing, and general management. Owners like the need of marketing expense or relationships need to take the business to the next level.

Competition, plenty. That's not me. That is exactly what it says. They just wrote that they have tons of competition. Production is not a capacity. A marketing-oriented, knowledgeable buyer will enjoy a sales growth building on current equipment and facility.

Financing is negotiable. Creative financing and partnership is welcome and available. Contact us about this listing. J.N. Barr, and instead of a picture of his face, he has a picture of meat with the listing, which, look, given this is an episode about America, I'm kind of into it. That's some good look at meat. So what do you guys think? Would you like to buy a subscale manufacturer of meat in Northern New Jersey that doesn't list profits? So that's the first thing. They didn't mention

if they're profitable or not. I think they give a few hints that there might be some problems going on here. Not mentioning profits is one, kind of hinting at seller financing, you know, how much you have to put a lot of equity down, and there's no SBA loan kind of noted, so it's probably seller financing. And they point out, owners lack the needed marketing expertise and relationships. The plant is not at capacity, and they need a buyer that's marketing oriented. So it sounds like this business has maybe been struggling with an absentee owner that bought it, you know, 11 years ago and doesn't really, it probably isn't profitable.

And, you know, I don't know that it has a brand. You know, they don't talk about white labeling here or anything like that. And I don't, I think this one's a little tricky for someone who is just trying to buy one standalone business. Perhaps a strategic, but if there's a strategic out there that one of those, this, they probably would have already picked it up, I would guess. I agree. This makes me a little nervous. I mean, there's a down payment $3 million, and they're asking prices $4.5. So they're only asking for $1.5 at close. And they also say that the owners don't have the necessary marketing expertise and relationships needed to take the business to the next level. I always, this hits one of my pet peeves.

So this is a brief digression. I always hate this when people blame their last. of success on their lack of relationships. Like so many people, I mean, yes, relationships help, right? So Heather, I was talking to somebody the other day who was like, I can't get a loan because I don't have any relationships. And I'm like, you know, that does, like now you go to a bank, like the relationship, Heather, you and I can be best friends and how much is it going to help me get alone at the bank? Zero, right?

Zero. Like now it's all like it's got to fit in the box. it goes to some shadowy underwriter guy behind the curtain. And Heather's like, sorry, I can't see his face either. This guy just deny your loan. Right. I like that. Yes.

Yeah. Right. That's not an excuse. I picture the game show, let's make a deal where like there's the banker and he like says like behind the glass in the dark and he like sends the offers down and you just say yes or no. That's how I picture it going in underwriting. One day we'll talk about what it's really like.

But it is kind of like that. And credit people, they don't want their name out there. You know, they get very touchy about that. They don't want you copying their emails with their name or anything. They are behind the shadow in every sense. That being said, like, I get that because I would absolutely hound the underwriter if I need it alone to try to sell my story. So I get that. Absolutely.

I just spent like two minutes doing the Girdley thing and trying to figure out if which company it actually is. Burdly Holmes. What do you got? So, I mean, I haven't figured out which one it is. And the reason is is because when I went to Union, New Jersey, and tried to find manufacturers and wholesalers of specialty meat products, there's like 10 of them. All sell on the same crap.

So I got to go through all their websites to figure out which one it is. But like, I've gone through three so far that I'm like, okay, well, this one started in 1954. Is it this one? Oh, no, this one started in 1957. That's how I know it's not that way. But like the place is full of a red ocean of these little small scale manufacturers of specialty meats. Like just in union and like the little towns around it outside of New York City.

So that being said, Michael, is it possible that this is more of a local business than it seems like? You know, is this the type of thing where you need to get it nearby because you want it fresh and you want it refrigerated, not frozen and all that stuff? Or now? It's definitely possible. Yeah, I would think it's kind of a low margin business and you add shipping costs and you better have a really good brand to do that. So I would kind of think of it on the margin that way. Yeah. And so what's interesting is they say they've got, I agree, Heather, like maybe that means your growth is sort of confined to your local area.

Like it's almost like fireworks stores. The last business we looked at, like you know, you kind of carve up the geography and however many restaurants and delis and stuff are in your zone. That's kind of the ceiling. Otherwise, you got to wait out in the red ocean and slug it. out with the other guys. So at first you might go, oh, well, this says they've got excess production capacity. All of the equipment is already paid for. You know, we just, there's a lot of scale here on the fixed cost if we just go out and

get more sales. Usually when you see that, usually, not always, but usually when you see that, that is an indicator that it is very difficult to grow this business, right? Because in theory, if you've got excess production capacity, you can underprice everybody, right? Because your marginal hot dog is cheaper for you than anyone else who's closer to production capacity. And yet still, they can't grow this business. That makes me a little nervous. Yeah. And I don't know, this kind of business isn't for everybody. To me, it would be kind of gross to one of them. Yeah. Can you imagine the smell in that 20,000 square foot facility in Union,

New Jersey? Yeah, it doesn't sound like a pleasant experience. Yeah. What's interesting about this is there's a business in Charlotte actually that is like this. And they are over, they were on what was kind of the edge of the bad part of town and now town has come to them and they're like in the cool neighborhood. But they have these green trucks and it's, you know, Heather's sausage company or whatever or in case meats or whatever. And they drive around and they, you know, they go to all the delis and like people in town know what it is and it's not, it can't be much bigger than this one here. Like I don't think it's huge. But they sort of have this local brand and they. They've got recognizable trucks, and like it's just, and it's been there forever, you know, much like this one, which has been around since 1954. I bet they've been around that long, too. And I don't know how they're still around, but they are. I see the trucks all over the place. You see a lot of small businesses that don't make a lot of profit, but endure, you know,

and I don't, you know, not sure if that's good or bad for the owners, but they, they, they last a long time, but they're never really that profitable. I think I figured out which one it is. Here's a piece of it. All right. What do you think it is? I'll pull it up for those other. Michael hasn't been saying anything the whole episode

has he's just been furiously Googling. Oh, I mean, this is, I think this is it. Look at this place. And for those of you listening on the pod, like the front is all torn up. There's like a couple of union guys, like digging up things in front of this building. There's parking lots on either side of it.

The sign is all faded. It has the worst Google reviews I've ever seen. 2.7 stars. Why do you think this is it? It is, this one is in the wrong town. It's in Springfield, but in terms of the exact city they listed here of Union, I think this is the only one that matches, because I went through all the other little stores in Union

to make sure exactly it was the right city and the right square footage, and this is the only one with the right building that does it. Well, you know, there's a Union County, New Jersey also, so I don't know if they mean Union City or Union County. Okay. I don't know. Thank you for mansplating, me, Bill. Exactly. See? That was a total mansplained. I'm sorry. It's worth saying, too,

like, so this is in New Jersey. I don't know if you guys have spent a lot of time in New Jersey, but New Jersey is actually really about, like, their local small town deli stuff, right? You know, like Jersey, think about Jersey mics, right, which like became national. What is that based on? It's meant to be modeled like a small town, fresh sliced deli sheds. shop, right? And it's just culturally very big in New Jersey. So it, you know, it could be possible that this is the one in union or around there, been there since 1954 in an institution, maybe. I don't know. If it's the picture of that one I just saw, it looks like whoever owns that business should be institutionalized. That's what I think. But that looks very, very neglected. And it looked very

sad. Oh, yeah. Also, the dad puns come free as part of this podcast. Heather, I can't help it. but yeah it just this smells like everything you would expect in a neglected business that bad ownership has just not managed to do anything differently with and nobody had the courage to deal with it to me that smells like maybe opportunity like could you find a way to find a niche and you know i don't know if you remember bill but it was maybe like 100 episodes ago we did those boarheads routes do you remember that yeah yeah yeah it's super interesting like Boreshead had created this really, I think, the only recognizable brand in meat. And if you think about it, it's kind of an interesting thing in the grocery business that if

you go around the store, like the meat is basically one of only a couple of things that is still white styrofoam and generic. Like, there is no national brand of meat. Like, there is for milk or regional brands for milk or bananas. You know, everybody can recognize those. And I I was part of an investment group once that we invested in a company that was going to try to create a brand like the jakeeta bananas, but do that for meat and have this specially selected meat. And then they went out of business. But anyway, it was a good try. But that does remind me of an opportunity here. Like, could you figure out how to creatively like take something like this and open up new channels? Like could you become, you know, present on social media and TikTok?

Like, would people be buying your meat through that stuff? So that's my creative. idea. I was about to rant about my cookie dealer. Have you guys heard of my cookie dealer? We talked about that, right, Bill? My cookie dealer? Is this a business? Like a drug plan? Like a drug pun, but it's cookies? So, my first, I read about these guys and then my first million guys talked about them and reminded me of them. It's this guy who's like a Brazilian bodybuilder in Miami. And basically what he and his wife do, they own a cookie shop and an Instagram channel in Miami. And basically what they do is, They go and every week they build these over-the-top cookies,

and then they drop them, like release them out on Instagram and sell them for like 30 bucks. And people buy these over-the-top cookies and get up shipped to their house. So it's called My Cookie Dealer. And it's basically the sales channel they've opened up is how do I do D to C cookies through social media? And that's what I was like, well,

I wonder if there's an opportunity for that here, like my meat dealer. Like could you try to buy something like this? and pair it with an audience. Like it Instagramable, right? Yeah. Well, you need like a cooking website where there's somebody that's an influencer

that would use these products. I feel like something like that might work. But then they've got a national audience rather than a local. So you'd have that problem as trying to market that way. Yeah, this is this weird trend. I mean, the cookies thing specifically, like the My Cookie dealer,

there's also that other one that like a box of cookies is $100. There's like 10 cookies in it or something. But it comes in like this incredibly nice packaging, like a puff of smoke comes out of it when it arrives. Like, it's like a whole thing. And it's like the fact that you, it's really to say, hey, look, I spent $100 on 10 cookies or whatever. And I'm sure they're good. But it's, it's just this phenomenon where like the way something appears is much more important lately,

it seems, than how good something actually is. You see at a restaurants where they've got all these like TikTokable menu items, like so people line up down the street around the corner. it's just kind of as weird phenomenon. I don't love it. It's very, have you guys been in Japan? It's very that way. Like, you'll just be walking along through Tokyo, and there'll be, like, 800 people lined up outside of, like, a, like, a choro shop.

And you're like, why is everybody outside this churro shop? And it's because that has become, like, the best churro shop. Everybody has figured that out. And then, like, they just go queue up, like, in Harajuku or any of these neighborhoods in Japan. You're just like, it's 2 o'clock on a Tuesday. Don't these people have jobs? No, they don't. evidently their hobby and job is to stand outside of this churro shop because it's the it thing.

Like it's a fascinating thing. And it's fascinating bill to see it come to America like you're talking about. Interesting. Yeah, I think this is a tough one. And it's funny at the bottom it says, you know, like in every listing there's a competition section. This one it just says competition, plenty. It's crazy. I've never seen that before.

It's never seen. But I mean, I think that's where there could be an interesting thesis here. Like, you're going to pick this up for cheap. clearly this business has not been modernized. There are clearly trends where people want to get some sort of healthy meat. They want to get closer to their food supply. They want to have a relationship with the people that are bringing in their food. This very French kind of attitude towards food, you're seeing that start to show up more in America.

I'm curious if there's an opportunity for somebody who's very creative and good on the sales and marketing side. It's not going to be old school handing out business cards at the local. delis that would grow something like this. It would be building a brand, modernizing it, and seeing if you could build on mystique to do that. Let me say all that with, yes, like, it feels creative. It also feels really freaking hard. Like, there's easier ways to get rich. Like, I'd rather open up a Dunk of Donuts franchise than try to fix this thing. For real. And also, like, or just go to these guys and go, I'm going to make a bunch of TikToks about meat and you're going to give me 15% of the sales. And you will probably make more money than the guy with the

machinery. Yeah, with no risk, really. With no risk, no CAPX and all that. Bill, that's why some angry at-life commenter on YouTube thinks you're the, you're the keeper of the podcast and not yours truly, so great comment. Little do they know, Michael does all the work. I just show up and shoot my mouth off. Oh, you guys are great. You guys are great. And we have a great team, ties here, and then the people in the background, so the editor's like, it's all good. Yeah, we got to hold fun. It's a behemoth. Acquisitions Anonymous, a machine.

It is technically an enterprise now. We haven't had all seen. Yeah. Yeah, yeah. Heather, since you joined, that caused us to professionalize this thing, instead of just having an email that we sent around and said, here's how it's going to work in virtual handshakes. Given I've still not met Mills in person,

you joining the podcast caused us to actually hire a lawyer and formalize everything. So thanks for being you. I'm so glad I could help you. I needed like reimbursement for something and Michael just like Venmoed me the money. That's how informal we are over here. We're going to get a real bank account now and all that kind of stuff because I just do

you know, I do all the accounting. This is something I tell people early on like don't do all that stuff that feels like business but it really isn't like LLCs and bank accounts and copyrights and all that kind of stuff. Like just go sell some stuff and build products. And so for the longest time, we've been doing basically everything is just synthetic accounting on top of my bank accounts. And that's why Bill's like, yeah, you just fit into me. I was like, yeah, we did that.

And then we put it into a spreadsheet. And we have like 12 transactions a month. And it just works. And look at us now. We have an LLC, like real business people. Proofs in the pudding. We did how many 150 episodes before we incorporated this thing or something? So Michael walks the walk.

Dodges talk to talk. all the lawyers, by the way, are listening to this like, you did what? Do you know how much liability you exposed yourself to? Oh, yeah. The lawyers are freaking out right now. Breaking out. By the way, they're wrong. There's not that much liability. We're just, we're just shooting our mouths off.

We don't have anything to say. But someone, Eric, S&B attorney is going to sue you just to make a point. Just to piss you off. Oh, yeah. He's, they're great guys. Yeah, so that's my great idea. And I do think that's a theme. If you're looking for opportunities,

like you can't just, there's so many opportunities out there, but like our market is so competitive and the American economy is so healthy. Like you've got to look past just obvious opportunities and try to manufacture interesting stuff around them. And so if anybody wants to go do the hot dog thing, this is a good idea.

I like this. Like nobody's really doing it, like in terms of bringing the meat directly to you, as far as I know, in my social media. A thing that's so hard, though, is like cookies you can just mail. This needs dry ice.

and like, you know, this is just, I'm convinced this is a local business and has to be. Yeah, and there's also food safety issues, right? There is a liability there with that. Yeah, now keep, keep me away from the manufacturing. No way. No, thank you. It's not for me, for sure. There's so many easier things out there, and this is not one of them.

I'll stick to the fireworks. Fireworks sound great. I would rather do fireworks in this business any day. Yeah. But, you know, I hope it's an institution and union and it's around for a long time. Just not for us. Let's wrap it up. I hope you guys enjoy this one.

Ask if you are pumped that Heather is on the podcast, leave us a review on your podcast platform of choice or send it to someone and be like, look, they finally got a competent co-host on this podcast I like. Maybe you can listen to it now also. It really helps us out and helps us because you guys have done that for 160-something episodes. That is what helped us recruit someone awesome like Heather. So keep doing it. Spread the word.

Thanks for listening. Before I click start, I have a quote for you. I just saw it on Twitter. Eric Newman said about Heather joining the podcast, I think this is a power move. Well done. Power move. I like that a little nicer than she'll balance all you other bozos out.

That was funny. Here's another one. I love this, not because of the content value Heather is going to bring, although I'm sure she will be great, but because of the your best guest could become a co-host Someday Story. I bet this turns out amazing.

That was Casey Helmick, so lots of good stuff. And then there's the other one that Bill sent around, which was, oh, good, somebody to fix you idiots, basically was the quote from the black guys. I think those are all very loving comments, right? That's guys being guys. That's been. Yeah, we have awesome listeners.

Thank you guys for listening. They're great. All right, cool. All right. See y'all next time.