Acquisitions Anonymous - #1 for business buying, selling and operating - Annual Report Filing Software - Acquisitions Anonymous episode 164

Episode Date: February 3, 2023

Michael Girdley (@Girdley), Bill D’Alessandro (@BillDA), and Mills Snell (@thegeneralmills) talk about a Highly Profitable Filing and Document Prep Tech Company. We talk about how this company operates, and the stability of its sales. What is the real transferable value? How did the Covid bump affect this business? Where is the hidden growth opportunity?Tune in for one of Bill’s best takes on how taxes work in eCommerce. Will taxes keep rising? Company:   Highly Profitable Filing and Document Preparation Tech CompanyLocation:   USStated Financials:   2022 AR $ 12,829,000   |   Gross Margin 52% at $ 6,704,000Asking Price:   Contact the broker-----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.-----Show Notes:(00:00) - Introduction(01:20) - Our Sponsor is CloudBookkeeping.com(02:48) - Mills is back!(03:27) - Deals & Financials: A Highly Profitable Filing and Document Prep Tech Company(06:21) - What does this business do?(07:45) - What do we think about the stability of its sales?(09:50) - Is this business really handy?(11:00) - How do we think Covid affected this deal?(15:00) - What’s the deal with the whole theme of businesses?(17:50) - How does sales tax work on the internet?(22:39) - Mike’s discussion about Chinese Sellers in relation to tax work(24:19) - What’s the climate in the economy now? How to take advantage of it?(28:20) - Will tax continue to grow?(29:20) - What is a Virtual Mailbox?-----Additional episodes you might enjoy:#162 - Cleaning up crime scenes for big money!#161 - How to spot red flags in eCommerce listings?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, everybody. Welcome to Acquisitions Anonymous, the internet's number one podcast about small business, buying, selling, and operating. I am one of your co-host, Michael Gurdley. Today, we had the whole team here. Mills was back, and we had all three of us in, and Mirko was around as well. And we went through and talked about a pretty cool business that helps people deal with the government. And along the way, makes some money for themselves. And it turned out to be super-duper profitable and super-duper-inter interesting. And we would, into it, had a ton of fun. Here is the episode. Hey, Michael here, want to talk to you about today's sponsor for the episode, which is cloudbookkeeping.com. So cloud bookkeeping is actually run by my neighbor, Charlie. So I've met him in person and can attest that he's a real human being and a good person. And what cloud bookkeeping does is offer a full suite of bookkeeping services all in the cloud for you around QuickBooks and other technologies that you're using as a small business. business owner. So if you're interested in getting the bookkeeping part of running a business off of your plate and focusing on running your business, Charlie and his team are one to call.

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

as the sponsor for today's episode. Mills is back. It's like watching the last dance on Netflix, except we have Mills here and he's got a sweet beard as opposed to shooting threes. So I'm pretty stoked. I literally just came off of a roof. I don't know if you can see my hands.

I'll send you guys a picture in our, oh my God. It's, yeah, I didn't have time to wash up. For those of you not watching us on video, Mills actually looks like somebody who does real work, Bill, as opposed to whatever you and I do,

it like dirt on his hands. Mills looks like, chimney sweep and Mary Poppins right now. Yeah, I feel really proud when I'm up on the roof and then I hang out with you guys and you're like, man, I would never buy a business that I had to like be so involved in day to day. I just hang my head and shame. Look, last episode, you know, that you couldn't make Bill and I went through a deal where it was a crime scene cleanup, basically, environmental cleanup. And like we spent 10 minutes informing everyone no matter what the teaser says, if the business is crime scene cleanup, you will clean a crime scene. seen at some point on a Tuesday morning because your staff doesn't show up. So just be real about it. And like, I think you're a case in point. Like you own a roofing company.

Every once in a while, you're up on a roof, getting your hands dirty. And that's just part of the deal, part of the tradeoff. Yeah. I hate that I miss that one. I've had to use those guys before. It's a terrible thing. We got a good one today. Get paid to big bucks.

Okay. Yeah. Wait. You've had to use a crime scene cleanup company before. Are we just going to blow by that? Stop the episode. Tell us about that. Not like, oh man, I'm thinking of a TV show.

I wish I could pull the reference, but it's just like, I didn't murder someone, Bill, and then have to have the crime scene cleaned up before the police got there. It was, it's not, it's not an urgent response cleanup. Yeah, yeah, it wasn't that good of a story. Oh, I'm thinking of blacklist. Did you guys ever watch that show? Yes. There was this, there was this tiny woman.

She probably weighed 100 pounds. She had like a Bob haircut. And anywhere in the world, he would call her and she would show up within minutes. It was like the mystery of the show, but she would just completely clean up, you know, the mess and, and it would just make it all go away. I don't think you guys, we didn't talk about one of those businesses, right? That's like black market. No. Yeah.

There's two kinds of climb scene cleanup companies, the ones you call before the police arrive and the ones you call after the police arrive. That's it. That's it. Wow. Okay. Well, down that note. Okay. You want to talk about this deal now?

Yeah, this one looks cool. This looks great. This is global capital markets. Yeah, who's reading? Are you reading? Am I reading? I'll read it. Yeah, might as well.

This is a highly profitable filing and document prep tech company. The company assist organizations, both businesses and nonprofits, with dependable, timely, and affordable filing and registered agent services that keep them compliant. So if you're a nonprofit, you have to jump through some hoops. and I guess businesses will use registered agents like when they file for their articles of organization and stuff like that. Companies private third party entity providing services for a fee. Company is not affiliated or associated with any government agency. They've developed and they own proprietary software to automate processes and auto-check state websites.

The software program automatically files forms directly with the states. It checks the filing status of companies. and it creates an output file suitable to upload directly to third-party email marketing services. So it sounds like what they're doing is they're scraping the Secretary of State's website on a state-by-state basis, and they're automatically reaching out to people through email marketing. They also use bulk business data to create a useful, quote, master file. That sounds so ominous. The automation of filings and checking of business statuses has allowed the company to grow at a fast-past-past.

especially without hiring additional employees. They only have three to four employees working a total of 15 hours a week during peak season. While management and ownership have enjoyed record profits, the company is positioned to grow even more. So they offer registered agent services, annual reporting, business formation, reinstatement of entities, dissolution of entities, 501c3 applications, 990s, a bunch of different things. The company is a for-profit business, or sorry, they serve for-profit businesses and nonprofits. And it looks like, all right, adjusted EBITDA of $4.5 million on $9.8 million in sales in 2021. Revenues are up 15% year-over-year through May 31st of 2022.

So it's a little bit dated at this point because we're recording this in January of 2023. 47.5% average adjusted EBITDA margin from 2019 through 2020, year to date. date. Excellent cash flow, zero debt. All customer payments were made exclusively via credit cards. That's kind of interesting. So there's sales, and we have this pulled up on the screen, sales have gone in 2019, they were at $2.8 million. They've grown sales by almost quadruple in, in, you know, three years. 2019 was 2.8, 2020 was 4.1, 2021 was 9.8. And then year to date, Oh, my goodness. Do you think they're annualizing that?

2022 year to date through May was 11.2. I guess they, something's going on. They comment on the seasonality, and I'm wondering if they do like a lot of like annual filing, like refiling, if all that is happening like the first two or three months of the year because they talk about employees during peak season.

I wonder if like all their revenue happens like in the first quarter. And then it completely, you know, completely trickles down. But all that to say, their gross margins are consistently 67 to 55%. And they're adjusted EBITDA went from 1.4 million in 2019 to 4.5 million in 2021. Margins have decreased a little bit as they've grown revenue, but it's still really, really healthy.

And then their projections, I feel like, I mean, if you were to put this on a graph, it's not incredibly unreasonable. I mean, they have gross margins declining over time as, revenue grows. They do have their adjusted EBITDA margins, you know, growing higher than they are today, which is a little bit, I would want to press on that. But they're not showing that the business is going to keep pace with its historical growth over the past three years, which would be pretty outlandish. I would want to push on that if they had tried to say that.

It is, it is the case to your, to your point earlier, Mills. There are some states that do rolling, you know, filing of these things where they happen year round. But most states, as I understand it, do it like the U.S. government where it's like tax day is 415, while filing day is 2.15 or 315 or whatever it is. So there's a ton of seasonality, I think, for all these types of filings. So are any of you guys customers of a business like this? Are you all familiar with this? No. This business? Only when I get a letter in the mail that looks like a form that is, looks like an official form, but it's not that says I missed my filing and I need to send an 100 bucks to pay.

pay for it. So yes, yes, I am a customer for that reason because I'm also sloppy. That's why. So I am a customer of one of these. The one I use that is not a sponsor of the pod and should be is called Northwest Registrate Agent. I have no idea if that's this teaser is for that business or not. It's actually a really, really handy service because when you incorporate an LLC in a state, you need to have a physical presence in the state. Now, if I want a Delaware LLC and I'm not in Delaware that presents a problem because I need a Delaware address. Similarly, it can also present a problem if I want a North Carolina LLC as I do, and I'm also in North Carolina because I don't want my address in the public record. So very often people will get a registered agent even in the state

that they are in just to disguise the true owners and contact information of an LLC to not put it in the public record. So I'm blown away by the margins on this thing. This one, I thought it was the pilot school yesterday, but actually it is this one maybe the best EBITDA margins in the history of the pod, 48% and trending up to 50. I think what's interesting here is they were doing $3 million in 2019, then they went to $4 million in 2020 and $10 million in 2021. Can you guys think of anything that happened, you know, over that period between?

between 2019 and 2022. I think this business might be a major COVID beneficiary. Because what's interesting is I think this might actually be a durable major COVID beneficiary. Because with remote work and remote businesses, so many companies are giving up their offices and they need a physical presence, a mailbox, you know, a registered agent, whatever it might be. And I imagine the demand for this is exploding also as more home-based businesses are started as well. So you see this major ramp from 2019 to 2020 to they think they're going to end the year at 13 million. The question is, does this revert or not really?

I don't know this will. What do you guys think? I think also worth noting during COVID, I don't know if you guys watch the stats for new business formation during COVID. did you guys ever look at those and saw what happened to them? Like, they went up by like 100%. Now, there's a part of that that was just people committing fraud on PPP, which was the government stimulus that paid to small business owners. But also, like you're saying, go.

Like a lot of people went to start businesses, and that creates a recurring revenue stream where they're going to have to update their filings and registered agents and all that stuff year after year. So even if half of those were fraud, which hopefully it wasn't because I'm a taxpayer, it's still like a lot more businesses. Like the TAM definitely grow during COVID for sure.

And then once you sign up for a service like this, like are you really going to go search for a new one to save $12 like on your filing fee? Heck no. Heck no. So it's got one of those like low customer churn type dynamics and something like this. Just because it's not worth your time to go try to save $3 someplace else or 15 bucks someplace else when you should be worried about bigger problems. It's interesting what you say, Bill,

because like when like if I have not gone this route. And so to be on the other side of the of the value proposition per se, I've registered as, you know, I've used myself as the registered agent to file the articles of organization for a new LLC, like a real estate holding company or whatever. And then I get inundated with, you know, like American Express business credit card offers. And, you know, I get like you line catalogs in the mail after the fact that are made out. to those LLCs. And it's because I put my home address and I get bombarded with those things.

The software that they're talking about having developed is basically doing something very similar. They're looking and just, you know, scraping these sites to say new business formations. And, you know, they're just going to email you out. Hey, maybe you want a credit card. Maybe you need to order some cardboard boxes or something. They're doing the same thing, but they're doing it to sell a service of, hey, don't forget to register.

And by the way, we can take that off your hands. or don't forget to file your annual report, you know, we can do that for you. So I think that's pretty cool. I always respect businesses that figure out how to, how to do this, how to scrape state filings to identify new customers. The other classic example is any services that sell into bars or restaurants. There is a public database in almost every state of every new liquor license that is issued, which is a pretty damn good proxy for every new bar and restaurant opened in the state.

and it discloses their business name and their address and all that stuff. And then there are all these businesses that just scrape it and then try to sell those people things. And that's the same thing that's going on here. All new entities formed in the state. They're scraping it and trying to sell you registered agent services. And that is just an evergreen source of new leads. I love it.

There's this whole theme of businesses that make it easier to do business with the government, which has, I mean, love them or hate them, the government has zero incentive to, make it easier to work with them for most people, right? Unless you're connected, then that's a totally different thing. But think about it. Like, what is into it, basically? TurboTax is just a business to help you deal with the government, and the government's very difficult to file your taxes.

Then there is, I have a buddy whose whole business, by the way, is a fascinating business. He partners with companies and then helps them navigate the government procurement process. And like JVs with them and all the stuff. He does exceptionally well, exceptionally well, because you know what? Turns out it's really, really hard to do business with the government.

And like this is one of those too where it's like they have this pain in the ass filing thing. It's not like you're doing your Goldman Sox Apple credit card on your phone. Like it's super easy. Like, and it just all magically happens with a few buttons. Like you got to like get out stamps to work with the government a lot or send in faxes. Like it's just a crazy kind of scheme.

And I think it's a great place for people to find places where you can create value. Like people have to deal with the government and deal with the government. it kind of sucks. So just go make it easier for them and put yourself in there as a middle band and you can make a lot of money, which, dude, these guys are definitely doing that. Like, that's some crazy margins. Bill, I have an e-commerce related question about this. If you have nexus in a state, you have to file, is it monthly sales tax or quarterly sales tax? Depends on your volume.

Depends on the state. And do you have to... Okay, by the way, there's another opportunity. Isn't that the worst answer possible? That is the worst answer I could have given you, isn't it? It's the best business case answer. sir. Yeah, if you were listening to this podcast and you're like, how do I identify where there's business opportunities? That was just one. That's where you listen closely and you hear the emotion

in Bill's voice just defining how much of a pain in the ass all the sales tax is for e-commerce. And there's people going after this space already, some good, some poorly. But like, that's a moment where you're like, that's a pain point right there. And Bill needs, I know what Bill's solutions are. I don't think they're that great. I think they're all, every solution right now. now in the market is a paying the ass for sales tax. And I think if you're if you're considering starting a company, that right there, that's a case in point for like a business idea. Can we do need like a short 30 second aside on how sales tax works on the internet because it is Oh yes.

It is banana. Mirko. Mirko right now, click the button that's going to do a clip because this one's, this got be a bangor. This could be a viral one. Let's go. Okay, Bill. Okay. Fired up. So for the longest time in the United States, sales tax was based on on what was called physical nexus, which means that if you had a location in a state, you had to collect sales tax in that state. Sales tax is actually, you might think you, the person buying something, are paying sales tax. Actually, though, the business is responsible for collecting it from you and remitting it. And if the business fails to collect it from you, that does not relieve them of the liability

to remit it to the state. That is a huge point, what I'm going to come back to later. If you as a business are supposed to collect sales tax and you don't, that does not relieve you of your liability to remit the sales tax, which can range anywhere from 4 to 10% of revenue, which adds up to a pretty freaking large number if you don't get this right. So about five, ten years ago, there was a case called Wayfair versus the state of South Dakota, I believe it was, where the state of South Dakota sued Wayfair and said, even though you have no presence in the state of South Dakota, we think you should collect sales tax in South Dakota because you're shipping all this stuff into South Dakota.

You're taking advantage of the roads and doing commerce in South Dakota. We still think we want you to collect sales tax from South Dakota residents and remit it to us, the state of South Dakota. And South Dakota of the state won. And that created our modern nightmare called economic nexus. That allowed each individual state to invent whether or not you have nexus in their state just by how many packages you ship into their state, even if you never step foot in their state. Some states, and most states, in fact, have a dollar threshold and a transaction threshold. And they say, okay, we don't want to make this overly on small businesses. So our dollar threshold is going to be if you ship $100,000 of commerce into our state. Okay. But the transaction limit is

often like 100 transactions. So for a typical e-commerce business with a $20 a.OV, or even a $50, you can ship $2,000 to $5,000 into their state and immediately become responsible for collecting and remitting sales tax in that state. That doesn't sound so hard. does it? Let me tell you about the state of Colorado. The state of Colorado has a very low transaction threshold. Inside the state of Colorado, they have a state sales tax. They then have county sales tax. They then have city sales tax. And then also they have separate economic zones carved out inside of cities based on what zip code you're in where you have to pay different taxes like to pay for the train station down the street or whatever. So you as the merchant

now have to know the entire Byzantine tax structure of the state of Colorado down to the zip code level, calculated on every transaction based on the customer shipping address, and file not just a return with the state, but a return with the county and a return with the city. So now you are filing this as many sales tax returns with the state of Colorado as there are in the state of Colorado, all the counties and potentially all the cities in the state of Colorado just because you ship 200 orders into the state of Colorado. Kill me now. That's the state of sales tax in this country right now. How hard could that be?

Like, it seems like 10 minutes a week, 10 minutes of work like once a month, maybe. Michael, how much money do you think my company spends every year purely on sales tax compliance in the United States? I would bet $200,000. You're pretty good. Oh, wait, I'm supposed to. I'm sorry. I'm supposed to, here's how podcasting is supposed to work, actually. Let me take that back.

I'm supposed to say a really low number, so then you can tell me the higher number and then makes the higher number seem like much better radio. So let's rewind that. It's okay. You'll get next time, Michael. Oh, you know, how expensive could it be, Bill? Let's say $5,000. Nope, $150,000 a year purely on sales tax compliance.

That is nearly a full-time head dealing with all this. We also pay Avalara, who is a large public, formerly public company. got taken private, who does all of this. Plus, you still have to deal with all the states. Plus, also economic nexus starts to create franchise tax nexus. And there's like three other different taxes that once you have nexus in a state, you need to start paying also that are not just sales tax. Income tax, income tax nexus is created in some states just by economic activity. It is insane because there's 50 states, all varying flavors of terribly run, all trying to grab their money in various ways, and it's all a little bit different.

So in case you thought e-commerce was easy, it's not. Do you think, are all those, there's all these Chinese sellers that are selling direct to American consumers now? What percentage of them do you think are actually going through what you're going through? Bill just pulled his hair. Oh, no, zero. Zero. This is incredible because it punishes United States small businesses and is a boon to the Chinese

people who are undercutting us. and still taking advantage of all of our infrastructure, but they're not compliant at all. So the IRS or each individual state will come get your ass in the United States and don't, and don't care that your Chinese competitors are not collecting sales tax. It is. I mean, I've banged on this drum a lot. Like, if you look at what's going on with you with sales tax, what it's like to hire an American versus what it's like to hire somebody overseas, like it is night and day.

Like, the regulations, the way we have them are built for, an economy that does not exist anymore. Like, we live in a globally connected economy, centered around the internet, where shipping can happen overnight from China. And our tax system assumes that it's still like 1985 and everybody's driving down to JCPenney. Like it's totally screwed up. Like de facto, like if you're hiring an American, you have to pay payroll taxes and all these different taxes that guess how many when you hire somebody overseas, how many of those you pay?

Zero. Absolutely. No. None. You just send the money over and it disappears. And you don't have to deal with any of that kind of garbage. And, you know, like I hired a New York state employee. Like I had to like go through like all these hurdles.

And I was like this is terrible. Like this is. But you know what my solution was actually? I hired the employee and then I made them do it. It was perfect. It's the best solution to them. So yeah, it was terrible for them to do. But it's so true, Michael, right?

Like, you're exactly right. Like we're now living in this remote economy. It is just as easy for me to hire someone who works. works remotely in Mississippi as it is hire someone who works remotely, you know, in South America. And even if they make the same base salary and at the same cost of living, which they don't, but leave that aside for a second, even if they made the same, the United States employee cost 25% more just because of all the regulatory in tax and misery. Not to mention the fact that if you hire the United States employee in Mississippi, now you

have sales tax nexus in Mississippi and have to do all that crazy bullshit in Mississippi. be there. It's like, it's bananas. It makes no sense. All of the incentives, all of them are to outsource jobs overseas. Please consider hiring overseas. Hirewithnear.com. Great company. Anyway, but it's like, anyway, this was not a commercial for that, but it's like, it's actually, I want America to win. And like, we have to fix this because like right now it's incentivizing us to send more and more jobs and more and more businesses overseas. And like, if you don't want the rest of America to look like the rust belt. Like, we have to start to fix this stuff. And we have to talk about how the current policies incentivized businesses to send not only blue-collar jobs overseas and manufacturing

jobs overseas, but now white-collar jobs, too. And it just should not be that way. So anyway, this is a wonderful podcast about us ranting about the sad state of affairs of American tax policy, but maybe we should we get back to the deal? But to bring it back to the deal, though, businesses that will help other businesses deal with all this bullshit are really good businesses. Because Michael, the odds that our regulators are listening to this podcast and get their head out of their ass are effectively zero. So these businesses that help other businesses comply are in a really good spot. So that's kind of where I was going. Mirko would like for me to say the following. This episode was brought. Oh, hold on. I have to make a joke first.

Mirko told me to say the following. This episode brought to you by the Internal Revenue Service, your partner in growing your small business and employment in America. Okay. So this is the point that this is the point that I was kind of making. Like, is this business, is this type of business a bullish kind of e-commerce case, but you're not having to, you know, ship and, you know, fulfill e-commerce orders? Because, Bill, like would, I know Avalera, like I hear their radio ads and stuff. They help you with sales tax compliance.

And that seems like a much more crowded space. But this seems a little bit less crowded because it's mundane and it's not chasing after the big bucks. This is chasing after. If you have Nexus in a state, do you have to file with their secretary of state? Like, do you have to be registered in that state as an LLC? No, you don't, but you do need to be sales tax registered. And actually, I should, I should introduce the same thing, which is, it's different in every freaking state. So usually no, though.

mills. You usually don't need a presence in every single state if you have economic nexus. Well, in South Carolina, you don't have to re-register annually. You just file your articles of organization and then you can file to dissolve it or you can, you know, like you can, you can, there's not an annual recurring obligation. So, but like in North Carolina there may be or in Georgia there may be. And obviously, if you're operating a business that is domiciled in multiple places, then it becomes much, much harder to keep up with. The easy button is you pay these guys, know, $12 a month per state or whatever it may be and they take care of all of it. Yep.

In North Carolina, you have to pay it's like $100, $175 a year or something just to keep your LLC active. And now on top of that, I pay my registered agent. Do you guys an idea like the unit economics of this business we're talking about? I pay my register agent about $150 a year on top of the state filing fee just to basically use their address on the form. And that's why the margins are so good on this business. So I think it's a good question.

Do you have to worry about the government getting easier to deal with or these regulations getting to change? And the answer is absolutely not. It's only going to get worse. And the reason is that you know who a huge voting block is. Government employees. It's one of the largest, it's one of the largest blocks. And if you go in and you try to convince anybody to make the government easier to deal with, that costs jobs. And we're not going to do that.

So yes, it's going to continue. Taxes are going to grow. They're going to get more and more in depth. So you do not have to worry about any of this because nobody is incentivized to fix it. And in fact, there's many people who are incentivized to not fix it. So this is a booming industry and it will keep booming until things get so bad that we have to fix it. But for now, like, just keep, keep yoloing because this is a great, this is a growing Tam as far as I'm concerned.

So there's a very interesting growth opportunity for this business. And from the teaser, it does not seem like they do this right now. So right now it seems like they've got likely thousands of businesses who are paying them annually or quarterly or however, you know, whatever the state requires to file forms to essentially keep their entity alive in the state. There is a whole other business that can be tacked on to this, which is what I'll call a virtual mailbox. So right now, I assume if mail gets sent to that address, they just bin it. But there is a whole other set. If you run a virtual business, you don't want to be giving your home address out to all kinds of people who might need to send you actual mail, financial statements, utility statements, you know, all sorts of things, right? Bills, who knows?

There is a business type called virtual mailbox, which basically, instead of just putting their address on the form, they will actually receive mail on your behalf, scan it in, and allow you to log into a website and read your mail without ever. being there. The original business that did this was called Earth Class Mail. And I hope they made a bunch of money because they've been around for a long time and I think have a lot of customers. They were located in San Antonio. They went through bankruptcy, got bought out of San Antonio and they sold her private company 12, 15 months ago. Yeah, they were located like a mile from my office. Yeah. Cool. San Antonio strikes again. Dude, never. We're a juggernaut. Economic juggernaut. Economic juggerna. In allowing people to not live in San Antonio, but seem like they live in San Antonio.

But that business is another good business because it's very sticky because you give the address out everywhere. It doesn't cost a ton of money and why would you change to save a couple bucks? And also all of your customers that are using the registered agent service probably need someone to actually receive their mail. So adding that and there's actually white label software providers that will allow anyone with an address to offer this service. So bolting that on, if they don't do it already, I think it would be a huge growth

opportunity. I like the business. And potentially for the right price, I like the deal. It's not going anywhere. And it seems fun. This seems like it's kind of up your alley, Michael. Yes. Did you buy this already?

We didn't talk about this before we recorded. Do you own this? Michael owns this business. This seems like a very girly business. That's all I will say about that. It does. So I want to point out another thing about this listing because I'm starting to notice a pattern in the teasers we review.

This teaser does not have an asking price, and it's a good business. And I am noticing there is absolutely a correlation between the quality of the business and the lack of an asking price. Have you guys noticing that as well? I think it also is a function of size. True. But yeah, I guess that's true. This business is now pushing, based on their new run rate, $5 million of EBITDA. Yeah, I think also there is, you know, if you go try to price a small business like

especially when it's pretty unique like this, it's very difficult for the brokers to get comps on something like this. Whereas like a coffee shop, for example, like you can go get some comps. But something like this, I don't know how many businesses like this trade per year, but it's not that many. And many of them don't hit any of the kind of the broker knowledge sites that those guys have. So anyway, that's just one thing I would add, like uncommon businesses like this, especially it's difficult to price these things if you're a broker. There's just no comps. I'll also say this illustrates the value of hiring a intermediary and investment. and banker or a broker with experience in your industry.

This is a somewhat unique business. If you just go out and hire a broker with, you know, that doesn't really understand this business, doesn't know what the comps are, you're going to get, you might take way too little for your business, or they might price it way too high and you might get no action. But if you hire an intermediary who sold three businesses like yours before,

they're going to know who the buyers are, what the market clearing price is, what the diligence items are that people are going to get hung up on, etc. Do not assume all brokers are created equal. Experience in your industry is critical. I like it. All right. Well, we'll put this one in the newsletter. People should check it out. Yeah, I like it. Okay. Visit our sponsor. It's cloudbookkeeping.com again today. And then please call to action. Go on Apple Podcasts. Leave us a review. Ask your mom to leave us a review. Ask your mom's friends to leave us a review.

Host a Tupperware party at your house and have people fill out reviews for us. All of those things would help us make the podcast, get out to more people and be more popular. We've also heard recently that people are using this podcast inside of business school classes, which, like, congratulations. Like, we're super excited when that happens because this is a lot of practicality that you don't see in some of the textbooks. So, you know, tell your friends about it. We're trying to get more and more people to like it.

And we're loving the growth and we just want more of it. So we'll see you guys next week.