Acquisitions Anonymous - #1 for business buying, selling and operating - An ecomm business worth another look? - Acquisitions Anonymous 258

Episode Date: December 29, 2023

In this episode of Acquisitions Anonymous, Bill, Heather, and Michael review an e-commerce deal that had been on the pod before.  The business had been around for 15 years, making $4.7 million in revenue with a 20% profit margin. The hosts viewed it as a stable opportunity for someone with the right expertise to take over and potentially explore growth opportunities. The business was listed at a reasonable multiple, reflecting the current state of the e-commerce market.Today's listing is found on Quietlight:Quiet Light is a business brokerage firm that helps entrepreneurs buy, value, and sell online businesses. Every Advisor on the team has built, bought, or sold their own online business and is committed to providing relentlessly honest advice and personalized recommendations to help owners succeed. Because they’re entrepreneurs themselves, they don’t only understand how businesses operate but also what it’s truly like to be in your shoes as an owner. With their proven, hands-on process, they’ve accompanied countless others along their buying and selling journeys.Thanks to our sponsors!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.-------Check out Girdley's new course, How to find a great business to buy. It's chock-full of insights and is perfect for listeners of AA who are looking to start their own search!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]

Hey, Michael here. Welcome to Acquisitions Anonymous Internet's number one podcast about buying, selling, and investing in small businesses. Today, Heather, Bill, and I, Michael Gerdley, went through and examined a deal from Quietlight that we found very interesting. It is a set of eco-friendly patent-pending products that are sold for pet use, organization, display, all that kind of stuff. And it was one of the better deals we've looked at.

So I think you'll enjoy this one. Here it is. Are you looking for a small business to acquire? Well, this book right here is the Bible for people in your shoes. It's the Harvard Business Review Guide to Buying a Small Business. It's the go-to book. But here's the problem. You see this whole book and this little bit? This is the only part that talks about the hardest part of buying a business, finding the right one to buy. And the bad news is it's full of outdated advice and stuff that doesn't work anymore. I'm Michael Gurdley. I own 12 companies and including a couple that go out and buy more companies themselves. And I have a podcast where we look at new businesses to buy each and every week.

I've looked at thousands of businesses for sale, and I've bought and sold nearly 20 of them. And I'm telling you, the old ways, they don't work anymore. So I made a course with the latest and the greatest, and it's called How to Find a Great Business to Buy. It's laser focused on the new way to run a business search with what works today. So you can play smarter than the sea of buyers who are out there competing against you to try to buy these businesses. and you can get the deal that was meant for you. In the course, you'll learn three things. One, how to narrow your search with a tight thesis.

We're hunting with a rifle here, not shotguns. Two, how to scale your outreach to get the most possible leads. This is a numbers game after all. And three, how to run your funnel like a pro so you can boil down thousands of leads to find your one great deal. Plus, you'll get a couple of exclusive Chili's jokes that I've never published before. So what's not to love?

Go to gurdly.com slash great business to take the course today. All right, Heather, you said you had something very nice to say about Bill. I do, I do. So I was speaking with someone today who went to the Main Street Summit, and he said, I think that Bill's talk was the best talk of that whole conference, and I am not alone. I talked to other people who said the exact same thing, and he was awesome, and it was a great talk. And then I was telling Michael this, and he goes, well, what did Bill talk about? And I go, oh, I don't know.

It's hard to say. She's like, I didn't go. Tell us what you talked about. Why would I go to that? I was so memorized. I forgot completely what you said. No, no. I didn't pay attention.

I was just staring into Bill's eyes the whole time. That's what I do. That is an awesome piece of feedback. Thank you for sharing that. And whoever shared that with Heather also. I'm glad you enjoyed it. The talk was about small business finance, about working capital,

about optimizing your banking relationships, how to use debt, What are vendor terms? How do you think about that with an SBA loan? Heather, I got the plug in for the SBA loan. Oh, right. You are awesome. I kind of walk through, like, here's how you finance a small business,

not just as a transaction, but also on an ongoing basis. Yeah. With working capital and lines of credit and all those things. But I think a lot of people got a lot out of it. Well, I hear they did. So good job. Well, they also, the key, here's the key to giving good talk sometimes. is try to cram 40 minutes of information

into a 25 minute time slot. I stood up there and I go, all right, buckle up, here we go. And like, I went full and like finished and I was done and I was like, any questions. And apparently everybody, it went well. But I just, I talk fast. And the opposite is also true.

Have you ever been given too long a time slot for what they asked you to talk about? And it's like painful. It's terrible. I got an easy fix for that. The easy fix for that is to end early and go to Q&A. that's right that's what you end up having to do you have to yeah yeah and early Q&A always Q&A Q&A Q&A to some extent is like the best format for talks I think because you're guaranteed

to talk about things at least one person in the audience is interested in and so like if that except if somebody hijacks the whole Q&A correct that's where a moderator it's for a moderator and like the the question choose or is very important. Indeed. All right, you guys want to talk about this deal? Yes, we got an e-commerce deal today. I'm excited.

Let's go. Let me share this here. Who wants to read it? Michael, you're reading it. Read it to me, baby. That's a level of intimacy I was not expecting today, but I'll go with it. Should I leave? Oh, okay.

We're going to have to have a moment here. Okay, from Quiet Light, Quiet Light brokerage, awesome. So a 15-year-old eco-friendly storage biz, 4.7 million in revenue, diverse home goods sales channels. Cool. This reminds me of why I like Quiet Light. They do such a nice job right in these up. Revenue, $4.7 million, income $876,000 and a multiple for the sales price of $3.54. So they're asking $3.1 million for a business that profits about $900,000 a year.

In income, inventory is not included. the asking price. Online since 2008, this eco-friendly storage and furniture product company is firmly established and continues to grow, as shown by their inclusion in the Inc. 5,000 in 2021. For those of you don't know how the Inc. 5,000 works. Like, there's a reason it's 5,000. They want to put as many people on that list as they can. So it doesn't mean that much, but anyway, good for them. While the business uses 34 channels, 18 of those make up 99% of sales. Amazon generates approximately 65% of revenue. Chewy brings in about 10%, and Wayfair is 9%.

With the myriad additional channels making up the balance. I think this is the first time we've seen a listing with the word myriad, which I appreciate. Good for them. Bringing out a college word. The current owner's background includes IT consulting, product management, and business development. With a flare for aesthetics, developing a line of home and office storage products was a perfect fit. All products are made from their patent environmentally sound material,

is appealing to more and more consumers who are concerned about the ecological impact of purchase goods. The recent surge in working from home has contributed to the increase in sales, and the pet category has grown to 49% of sales in only four years with storage items at 50% and display items at under 1%. New products can easily be added using the current suppliers, all of whom are familiar with the specific manufacturing process. The focus has always been on the U.S. market, leaving plenty of room to expand internationally, starting with countries with a large market for green items, implementing a social media strategy, and continue investment advertising offers potential for increasing revenue, as neither has been fully utilized.

Actively posting new content to the site's blog would also help increase traffic and direct website sales. All inventory is currently at a 3PL where it can be main RB shipped to a new warehouse. The new owner is committed, or the owner is committed to a smooth transition and will happily offer full training and support. Meet your advisor, Pat Yates. Man, look at Pat. sitting on like a brick staircase. Looks like a badass. So, okay, that's it. What do we think about this eco-friendly storage business

doing $4.7 million of revenue that is being sold for $3.1 million? So the thing that jumped out of me immediately is they're doing 34 different channels and yet 18 of them make up 99% of sales. So that means you get 16 of them that are just contributing complexity for no reason.

right and and buy a channel like amazon's a channel choose a channel wayfair's a channel home depot has a marketplace target dot com like all of these different i mean i didn't even know there were 34 different marketplaces that you could sell on i mean like each one of these like so is probably an integration right like you got a if you're lucky it's integrated if you're unlucky it's uh key in the orders manually each day if you happen to get an order you know i bet a lot of this is like list our skews. If we get an order, we get an email, and somebody in the Philippines keys the order into our fulfillment system and the 3PL ships it. And then we key the tracking number back in. And if you were to ask the seller, I bet they would go, oh, it's not really

a big deal. And they would describe what I just said and say, we don't really think about that much. But there is so much overhead that you tend to not think about. Like, your listings go down or, you know, you've got to update the photos to higher resolution or they, you know, they reformat their pages and they need everybody to, your content to be in bullets and not in paragraphs or just keeping all these channels up is a lot of overhead. I have no idea why they don't just turn 16 of the 34 off and still make the same amount of money. So I'm an e-commerce idiot, but I thought there were like, most of these guys will buy like a piece of software and I forget what the names of them are, but it like will manage all of your listings from one centralized

dashboard. And so you're saying, that these kind of oddball, long-tail platforms, really, that I agree with you. They're so little. I don't even know why they matter. But, how much, A, do you, don't people use those kind of centralized posting platforms? And B, would that make those pretty much free? Or am I just thinking about it the wrong way? No, you're thinking about the right way.

These guys probably use something like Channel Advisor, which is the dominant one of these, where you basically maintain one catalog and then it synchronizes it or syndicates it out to all these other platforms. But, I mean, just, that's just your listing. though, Michael. I mean, your order flow, like, okay, it's going to come back in channel or advisor, maybe, but then you've got a customer service inquiry on, you know, Michael'schikins.com, and you got to remember your password to log in. I just, I just don't see the downside of turning it off, you know, is 1% of sales and half your integrations. I'm so confused of what the product is.

It's like storage cabinets? What is the product? I don't really describe it. Eco-friendly storage. I'm confused also because it's something pet-related because they do 10% of sales on Joey. So what is like eco-friendly and pet-related and storage-related? Honestly, I thought it was a self-storage business when we first looked at the title because of the word storage biz, and it took me a while to get my brain wrapped around the e-commerce side of it and what the heck this was. My suspicion is they have figured out how to do some sort of like treated bamboo or like like plastic made from seaweed type thing

or cardboard or something biodegradable. Yeah. And then because of that, if they gave us that level, I know Quiet Light is smart. And because I know Quiet Light is smart, they're going to only tell us really what we would need to know and not enough to figure out what the company is.

And my suspicion is if you knew what this type of platform was or the type of stuff these people are using to build those containers, you could figure out what the company is very quickly. and so but that's that's what it smells like to me it's some sort of weird like we're making this out of like you know yeah left over corn husks right it's like that's what you get and so maybe it's like pet food storage or something like that containers or bins or something could be pet food store i've seen also this whole category of called cat furniture which is if you have cats you know they like to hide in boxes and climb on boxes and all that stuff and i don't know if and by the way those

are often very hard businesses because the stuff is very bulky. So it's not very e-commerce compatible. So you get crushed on shipping kind of both ways. And that's one of, and this I wonder too, you can get into a lot of these bulky e-commerce businesses where your logistics costs far eclipse the cogs, the cost of the materials that go into the product, which often leads to low-quality products because you've got to cut cost out of the cogs. and in those categories,

it's often better to buy those products in person because you can get a higher quality product because it's trucked by the container load to a lows near you or something. Right? Straight up like storage bins, like plastic storage bins, buy those on Amazon,

you just pay three times as much just because they're so bulky. So I'd be interested to learn what this category was and where on the spectrum of the total cost, it takes them to deliver an order, how much logistics and how much of it is materials. Does that 20% profit margin give you a hint at all? Not necessarily. I mean, they could have to, you know, it could be very cheap or very cheap cost of goods or just very high

price points. If it's a 20% profit margin, I would see, I would wonder if it's not a little bit smaller and more compact because it's, those, those big bulky ones are tough businesses. Oh, first of all, I do have smart things to say about this deal, but I didn't want to tell you guys, we just got a kitten. And the other day, he locked himself in our food bin and then took a nap in there. It's really adorable. So, yeah, it's totally been good for our house. Look, I need some cat furniture. Yeah, we have pet furniture too. I mean, to your point about the pet furniture, we have one of those three-tiered ones that's like 10 foot tall. And like the reason we got it is my son's math tutor had cats and then realized that he had bought pet furniture

that basically was big enough to take up his whole apartment. And so they gave us this three-tiered monstrosity that's sitting in the corner of our living room now. The cats think it's great, but it's also just the bulky nature of this stuff is 100% true. So what's interesting, too, is they said the recent surgeon working from home has contributed to the increase in sales,

and the pet category has grown to 49% of sales in only four years. and storage items are 50%. So now I'm interested in that it seems like you have two lines of business here. You could have the storage items and then you could have the pet items and they are not necessarily the same thing.

I have seen this a lot in e-commerce where somebody will start in storage and especially the other clue to this is the owner's background includes IT consulting. So you get people who are very internet savvy. They have success in one niche. They usually tend to figure out how to wire up 34 different sales channels to increase their surface area of their products. And then they do that for a couple years and then they stumble

onto another product that is not necessarily related. And they go, oh, there's a big opportunity on Chewy to sell whatever dog booties. And then they just launched the dog booties and then it kind of takes off. And then they use the same syndication and they syndicate the dog booties everywhere. And before you know, you've got these kind of mishmash businesses. So, I'm I wonder if that's what happened here, because this business around since 2008. So if I had a guess, this guy started in some sign of furniture product or storage, whatever this thing is, they won't tell us. And then recently, it looks like about four years ago, he launched into some other pet category.

And now that has grown in four years to be 50% of his revenue. So it's grown from zero to functionally, you know, two-ish million dollars in four years. So I bet he's got kind of two businesses here. And then the other telltale sign, he's got this third category called display items, which is at 1%. So this is the third category. Like this is the third thing he's dabbling in,

that he did whatever the stores thing, it worked, and then he did the pet thing, and now he's dabbling in display items, whatever those might be. So I wouldn't be surprised to see three very different products sets here. Interesting. What they didn't say was that it's SBA pre-approved.

this is the first time I've seen this. Testament to Quietlyte being super competent. Yeah. It probably is a nice SBA deal there, though. It seems like they have history. They've been around for 15 years. And it smells like there is potentially an opportunity for the brand they've built around this environmentally sound material that differentiates them from all the crap being pumped out of. Southeast China, put on boats and sold on Amazon.

Like, this is definitely clearly differentiated from that. And to me, that's exciting. It's like, okay, well, look, I can go to this client who's going to care more about the health aspect of it and the story behind it and less about can I get it for the absolute cheapest price, which is going to be a race to the bottom, given what's happened on Amazon these days. So I really like that aspect of this. It feels very high quality, you know, as a.

sustainable business going forward. Yeah. It seemed, I was thinking that as well. The patented, there's a patent here, so there's intellectual property. And, you know, the material itself may have a lot of other possibilities. This guy's dabbled in three things. Maybe there's a lot more you could do with it. All right.

Taking a quick pause here. I have something to tell you. This is Michael. I hate bookkeeping. I hate bookkeeping. I hate doing HR. I hate doing all that kind of stuff. but for bookkeeping, I have found a solution.

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with getting your bookkeeping done. He's got a whole fleet of people that are well trained and work for him. He's located here in St. Antonio, so I can tell you because of that, he's awesome. And they're a great partner for you to potentially call to help with all your bookkeeping needs so you can do the important stuff in your business

rather than worry about getting your books right. So give Charlie a call, cloudbookkeeping.com, and now back to the episode. Bill, who should buy this? You know, I think this might be a, a good, a good business for kind of, if you didn't know a ton about ecom, because it's probably not domain specific knowledge. I mean, the fact that this guy launched storage and then he launched pet, and now he's launching display, you know, you could probably, assuming I'm not missing something

huge here, you could probably learn these niches pretty quick. What you're actually learning is sort of the process behind it, like how to run on 34 different channels. You know, every business kind of has a rhythm to it. I like that this has been a around since 2008, it's a little bit lindy in ecom world, right? It's the longer it is around, the longer it's around. Um, because stuff is, I mean, a lot has changed in ecom since 2008. So like if this thing is still around, one of two things is true, either it is somewhat lindy, which is also possible because you've got a five million in sales after, you know, almost 20 years. So like, maybe it's just in a small niche. Maybe no one's coming for you. Or maybe, and then this is

a little bit of the red flag, or maybe this entrepreneur is like a dynamo. And he's, you know, he's figured out, he's juggling 18 different balls at once. And it's like kind of a serious hustle. If that were the case, I would be afraid of it. If this guy is like you meet him and he's like super chill and not that smart, that is a great sign. You know, like if he has been coasting on $876,000 of income for 15 years in this little niche, that's a good sign. It has a lot of potential, but if that were true. Yeah, exactly. I think it could be a very interesting deal for somebody. Well, so you say potential, but it's kind of two sides of the same coin. Like, on one hand, right, if this guy's been cruising, it's probably stable, but you might not be able

to scale it afil. Like if he's in some little niche, like some little backwater, that's caused him to be kind of ignored and maybe, you know, he's on all these different marketplaces and he's kind of clip in his coupons, but it's not a big enough, a juicy enough steak for somebody to come eat his lunch, you know, you may find that as soon as you kind of step out of your $4.7 million of revenue pond, you realize that it's a red ocean all around you. I mean, because e-commerce is a pretty serious red ocean. Like, it is competitive. So that's a good point, Heather. Like, what we can't tell from this listing is kind of where you go from here. You know, is it, basically he's got two product categories and he's launching a third. He's got the storage thing.

he's got the pet thing, whatever that is, and then he's got the display thing, whatever that is. And if display works, you know, great, that could be some serious growth, but I would want to understand how do I grow the storage thing and how do I grow the pet thing, if at all, and that influences the multiple I pay.

And it's a pretty light multiple here, 3.54 for a business that's been around this long. I mean, maybe they, maybe that's a hint, you know, that there's not a ton of growth potential, that this is more of a steady eddy come in and maintain what we've got. Well, yeah, well, and what you've also got here is e-commerce is exceedingly out of favor these days. Oh, that's true.

I mean, just so uncool. Like, nobody wants an e-com business right now, you know, especially one with 34 channels of complexity. And it's not that big, you know, it's under a million bucks of EBITDA. I mean, from talking to the folks of Quietlight and from talking to other people in the market, like, I would say this is probably on the button. Like, this is what it's going to trade for. quiet light is very, very good at pricing it kind of where the market is. I mean, I think of all the online brokers, they have their finger on the pulse of the market the best. And they also don't blow sunshine up sellers' asses. Like, I bet other brokers would

have told this guy it trades for four and a half times. But, you know, if Quietlight's got a place at three and a half, I bet that's where it trades, if I had to guess. I think that's so smart for a broker to price it where it can sell instead of what we see so often, the overpriced deal, you know, you've got to talk the seller down and they're disappointed from day one. This is such a smarter way to go. Yes. But it's really hard if you're a broker, right? Because you're pitching to win business and your client goes, I've talked to three brokers.

These two guys think my business is worth four times. Why do you only think it's worth three and a half times? Are you, if the other guys can get me four, why don't I sign with them? and then what happens is the seller does sign with a guy who says four times. He spends six to nine months getting beat up in a sale process. The thing trades for 3.4, right? And the dishonest broker still got paid, you know, because he reeled him in with an unrealistic price. And the broker who was honest didn't get paid.

So there's a really perverse incentives problem. Honesty gets punished in brokerage. Absolutely. It's too bad, but it absolutely does. And that is why we are where we are with the marketplace. But when we sold our coffee business, the first thing that Glenn Fiore did was like have a chat with us about valuation and be like, okay, what do you guys want?

What's your expectation? And he's just like, I'm not taking a deal. I can't sell. And I'm not going to play that game. So I was really smart. On another topic, I did some Google Gurdly Sherlocking. And I think this is actually the brand here, this new age pet. Nice.

Pet, EcoFlex, Single Door, Furniture, Style Dog, crate. I do think in the future, by the way, Bill, I think the Google foo that all of us have managed to build over the past 15 years, like, people are going to have that, but for large language models. And I think you'll just see some sick thing come out of, like, the AI LLMs just because people will get so good at, like, searching and doing like what I just did for Google, but doing that for AI, and it'll just be crazy powerful. So anyway, that's just my two cents. Well, now we get what it is. So this is the pet line. It's probably not all that. I mean, it's a square.

It's a crate. It's a dog crate. But it looks a lot nicer than your traditional dog crate might look in a living room. Look, they have it sitting here next to a fireplace. So it's a little more aesthetic. I don't know about the eco-friendly part of it. It's still kind of hard to see eco-flux. Well, let me read it here.

It says it's made of EcoFlex, a proprietary composite blend of recycled polymer, and reclaimed wood fiber byproducts, it is non-toxic, eco-friendly, and impervious to moisture and odor, making it the paw-ficked material for your furry friend's furniture. You can easily clean the non-porous material with a mild detergent.

Man, that does sound really good. And then they have multiple sizes here, for those of you, on video, and then there are versions of different colors as well. You can get an espresso, russet, antique white, or this one, Southern California. In June, Heather. Great.

Is that too new, June gloom? Is that too much of a nuanced joke? That's what we call it. Or May Gray. It's something just May Gray. My bad. Sorry. I'll keep my dad jokes to myself.

It's been a long week. So, Michael, amazing Google Foo. If this is in fact the brand, I mean, what this tells me is, is there other storage product? It's probably like some storage bin that looks like a nice piece of furniture, but has storage inside, just like a normal, you know, human furniture thing. And then they realize. that they can make dog crate storage furniture out of it, which is fantastic.

And the dog market has grown significantly. So now I'm a little bit more bullish on this business, knowing what it is. Because now it's not random. Now it's sort of the same thing. It's two different types of furniture made out of EcoFlex, whatever that might be. And I'm guessing that the display products are probably some sort of shelving or freestanding retail display or something also made out of the EcoFlex. So now I'm super interested in this because maybe they've got an exclusive on EcoFlex

from who manufactured it or maybe they actually own the patent, which would be really cool. So now if you think you've got different applications for EcoFlex, like if the company's name is EcoFlex, that is interesting. Yeah. I agree. If they have this patent, this is pretty cool. Though I just scroll down and it says, New Age.

PINTA International, the USA-based subsidiary of Hangwing Environmental Company Limited. So this may not be them. This may be their biggest competitor. Okay. So anyway, maybe I'm dumber than I look. All right. So maybe Michael got it completely wrong. But even in getting it wrong, I think, Michael, you have kind of helped us crystallize, you

know, what this business might be, is sort of the same. the same material as same type of product applied in some different industries. So even if this is not, in fact, EcoFlex or New AgePad or whoever this is, you can imagine something like this with the same core technology, I guess I'll call it, applied in different ways. That's interesting, especially if you as a buyer have an idea or a different industry expertise that you could bring this to. I just clicked on a list of all brands that chewy chewy carries.

And I have been scrolling for close to 30 seconds, and I'm just in the D's. Like, it is unbelievable. Equine Edibles, which I guess is a brand of horse edibles. Is that 420s? I don't know. They're made in a farm in Maui. Yeah. But it's also like,

Just a testament, when you see something like this in business, this is why Walmart is a good business. This is why Target is a good business. This is why Chewy is a good business. It's why Amazon is good business because they have put themselves in the middle of all of these brands who are all competing to try to be the best solution for the customers and Chewy sits in the middle and makes all the money from it. And it's just genius. So if you see something like this, you don't want to be in this list. Or if you are, you want to make sure you you understand why you want to be in that list, the best place to be is where Chewies is or where Amazon is.

Otherwise, you got to know what you're going to get. Yeah, but that is hard. I mean, to build a marketplace business where you dominate consumer mindshare, and so you can extract rents from all these brands because you have all the eyeballs, like that is a really great business. I don't know if I'll ever own a business that good, to be honest. Well, I think where you're at is in a beautifully defensible place, which is you're going directly to the customers,

but also brand is your defense, right? That's why Procter & Gamble is a great business. They have all those brands that people want, and they buy them, and you have natural dog, natural, and it's like super powerful. So that's your defense. But whoever here is selling erythromycin compounded on chewy and is generic, like, good luck, that's a race to the bottom.

Well, so, you know, it's also worth, you know, kind of digging in in the context of an e-commerce business. one of the things that makes an e-commerce business a better e-commerce business is if you have direct access to your customers. You know, if most of your revenue comes from your own Shopify website and you can email all your people and they're coming right to you, that's a high-quality e-commerce business. And also those tend to be lower scale because all the scale is at Amazon and Chewy and all those places. But if you are instead, you have a different business that is totally dependent on Amazon or Chewy. You are now at the whims of their algorithm or their policies

or their incompetent customer service people or whatever it might be. So all else being equal, the business where you have direct access to your customers with no rent-seeking middleman like Amazon or Chewy in between you and your customers, it's a better business to have direct access. But typically, you'll see smaller businesses that have direct access, and bigger businesses that are riding the marketplace wave. So you often get a tradeoff. The best businesses that sell for hundreds of millions of dollars are the gym sharks of the world

that have direct access to their customers on their dot com, don't use any marketplaces and still manage to scale to 100 million in sales. The thing that drives me crazy about fulfilled my Amazon sellers is they refer to Amazon's customers as their customers. And it's like, no, you are a supplier for, Amazon. You do not have relationships with those customers. And the way you can tell is you don't actually know their names. That's how they're not your customers. You can't call them if you wanted to.

They're Amazon's customers. They're just letting you use them in exchange for you fulfilling their Amazon's promise to them, which is to give them, you send them stuff. So anyway, it's a catch 22, though, huge scale, like tons of customers, tons of Amazon's customers that want to buy stuff. But it's still rented. That's all I'm saying. It's just, it's not, you don't own those. They're rented. Lenders figured this out a long time ago as far as not wanting to lend to e-commerce companies that had too much dependence on Amazon or any of those platforms. It's just do have a direct channel and how much, what percentage of sales is it? And if it's not that, that's not a big number, a lot of lenders would just say no. They don't want to take the risk of the Amazon.

But that being said, more and more businesses are that way. So you're not going to make any loans, you know, at least in the e-commerce. In that category, you wouldn't. Yeah. That's right. A lot of lenders don't. Yeah. So I'm intrigued by this one. I mean, it is marketplace, but I think they've probably got some interesting core tech that is allowing them to go

in a couple of different product categories. No, for multiple is reasonable at three and a half. I would get the book on this one. Yeah. Just for the lindiness by itself, it's been around since 2008, 15 years. Like, you know, it's not like one of these ones started two years ago that we see flipped all the time. So this is a good one.

Yeah, so the other thing I'll say, too, very often, another thing good about old businesses, especially if they've been owned by the same person the whole time, you will often see what I'll call compounding blind spots. So, like, you know, the same entrepreneur, like, thinks the same way for 15 years, you know, he's aggregated a lot of wins, but he's probably also completely missed a whole bunch of things. Versus if the same business is 15 years old but has traded three times, you know, you have three different sets of eyes on it who can't in with fresh eyes and really tried to expand and grow it, like how the sponge has been squeezed a fair bit if this is traded three times. If this has not traded at all since 2008, I think there's

a higher likelihood there's more to squeeze as the new owner. All right. If anybody looks at this one, definitely let us know. Before we close, Heather, I have a question for you. Is everybody trying to cram into your loans or what's going on? Oh my gosh. Yes. It is everyone's trying to get their loans closed by the end of the year. The bankers are all backed up. It's very, very difficult. I think there's going to still be a lot of carryover into January, unfortunately. I think about, for me anyway, for Vizzo, about three quarters of the deals that are supposed to close this year will make it. They look like they will. But at least a quarter are probably going to end up, they're already being scheduled into January now. So it's busier than ever. It's not slowing down

from what I'm seeing at all. And I know people tend to think it would because of interest rates or gloomy economic outlook, but that really just changes the structure of the deals more and maybe the amount of leverage that lenders are willing to give. But the trading is still happening at a very, you know, rapid pace. Sounds like a plan. I'm glad to hear that. Let's go American economy.

We need the money. All right. We'll catch everybody next week.