Acquisitions Anonymous - #1 for business buying, selling and operating - Craft Supply Company - Scaling Small Businesses With Capital Pad’s Travis Jameson

Episode Date: January 24, 2025

This episode features Travis Jameson of Capital Pad, discussing how to unlock value in small businesses with growth potential.Sponsored by:Acquisition Lab: Start your business acquisition journey with the premier resource for searchers. Learn more at https://www.acquisitionlab.com/HoldCo Conference: Join the ultimate event for HoldCo operators and entrepreneurs. Get your ticket at https://www.holdcoconference.com/In this episode, we analyze an innovative craft products business with $4.57M in revenue and $281K in EBITDA. Travis shares his expertise on structuring deals, improving operations, and finding hidden growth potential in overlooked small businesses. The group discusses scaling opportunities like Amazon integration, reducing overhead, and solving cash flow challenges for higher returns. If you've ever wondered how to turn under-optimized businesses into goldmines, this episode is a must-listen!Key Highlights:- Travis Jameson's journey from entrepreneur to small business investor.- How Capital Pad bridges the gap between investors and searchers.- Analyzing a craft products business: opportunities and risks.- Scaling through Amazon and outsourcing logistics to 3PL providers.- Tackling customer concentration and maximizing margins.- Structuring deals with SBA loans, seller notes, and earnouts.- Identifying businesses ripe for transformation and growth.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]

This one feels like it's just a product, and the margins are really a lot skinnier than I would have expected. I think they're just totally asleep at the wheel, and you could potentially scale this business a lot by going to Amazon and then improve the margins by going to three-deal. So deals like this are kind of some of my favorite, not necessarily specific industry, but ones where the owners own this thing for 30, 40 years, and they're just kind of checked out. That gets me excited. If you were already in those positions, this would make so much sense, and you could afford to probably bridge the gap with the seller. more than anybody else could. Hello, another episode of Acquisitions Anonymous. We don't have 100% here. Hello, everyone, and welcome back to another episode of Acquisitions Anonymous.

This is the Internet's number one podcast about buying, selling, operating, and this week investing in small businesses. My name is Bill Alessandro. I am one of your hosts. This week, we are joined by my good friend Travis Jameson from CapitalPad. CapitalPad is a pretty cool platform that matches searchers who are a low. looking for capital with investors who are have capital or are looking for search deals to invest in. So we talk a little bit about the dynamics of that market. And then Travis helps us break down a

deal. It is a craft supplies company that sells into Hobby Lobby. And this one is just ripe for improvement for a buyer to come in and really ramp it up. It's been around since 1991. Seems a little bit sleepy. There's just so much we would do with this business. So I hope you enjoy this episode of Acquisitions Anonymous. Are you ready to take a leap into business ownership, but you don't know where to start? Well, look no further than Acquisition Lab, the premier resource for entrepreneurs seeking to buy their dream business. Founded by Harvard MBA and acquisition expert, Walker, Dibble, the lab is your fast-tracked success in the search diligence and acquisition process. With hands-on support, well-class resources, and a community of like-minded entrepreneurs,

Acquisition Lab gives you the tools and confidence to navigate every step of the journey. And we're proud to call Walker and Chelsea, the lab's director, longtime friends of the podcast. They're passionate about helping entrepreneurs like you, take the next big step. So don't wait to make your business ownership dream of reality. Visit AcquisitionLab.com today to learn more and schedule your free consultation. And when you do, be sure to tell them the Acquisitions Anonymous podcast sent you. Hello, everybody. How we doing today? Fantastic, ma'am.

Travis, nice to have you back on the pod. I'm just part of the gang now. Feels good. Yeah, feels good. I'm loving your camera and audio setup, looking very crisp. You want to hear some bullcraft, though? I promise you, when you look at the recording, it's not going to look as good as you see it right now. I have hired experts. I've tried to figure this out. It's just something about it.

It's not going to work. Well, you got to join us live then. Are we live streaming this? We're going to start live streaming later this year, I think, on X and YouTube. Timmatition. Yeah, I know. That's, if you're listening to this podcast. The editor can't fix it then.

You know, that's what that really comes down to. We still have the out now of like if Gurdley says something really off color, we can edit it out. When Gurdley says something really off color. We can still edit that out. But if we go live, we won't be able to. So it will be even more entertaining. And he's not here to defend himself. That's right.

Like he's not today. So as you guys may have noticed, we have a guest today. My friend Travis Jameson of CapitalPad. The reason we have Travis on the pod is he is a small business expert. I know very few people who have looked at or invested in as many small businesses as you have, Travis. Can you tell everybody a little bit about kind of your background and what the heck then eventually get to what the heck capital pad is? Yeah, yeah. So Reap founder created probably a dozen companies at this point, sold about half of them, kind of put the other half in passive mode where I've got management running them.

They don't really need me. I'm a crap manager anyway. And so then just kind of naturally started allocating the different deals and just about every asset class you can imagine and kind of circle back around actually to these small business space and particular. And once I discovered this kind of like searcher, independent sponsor world, like the lie bulbs went off. Like this is, this really connects with me. And so I started up just deploying capital into those deals. And over time, realized that it's really hard to get access to these. There's a lot of hangups around them, like minimum check sizes are quite large. It's hard for people raising the capital to actually do it. So ended up founding Capital Pad, which is a way for investors

to invest in these deals and for deal sponsors to raise money from investors, much more easily. And so that's kind of what I'm doing now. So I look at small business deals all day long, essentially. So the idea is that you kind of bridge the gap between a searcher who might have a business but doesn't have the capital and any investors or an investor who wants to invest in search deals or in small business deals, but doesn't know any searchers. So it's kind of, you're trying to bridge that gap. Yeah. Yeah. At first it was really seeing my own struggles. Like, I just want to deploy my capital into these deals and you can't really see them. But there's not like an open market for these types of things.

Because the potential returns of these, you're looking at, you know, we don't even look at a deal if it's not over 30% IRA with a large preff, step-ups, really sweet deal terms. But it's hard to get access to these. And then the minimum check sizes were a lot of times like quarter million bucks, and that's, you know, you can only write so many of those. And so the idea of CapitalPad is that it's a place where we pool all investors together. And so they can, you know, more easily get access. these deals, which is the heart bar, but then write smaller checks because you're just using

an SBV. And then during this phase, kind of found like searchers are facing the same issues. When they have, they finally found a deal. They got it under LOI. You know, they're getting, talking to Heather here and getting the SBA financing, but then they've got to raise from investors. And that was kind of a hard thing to do. Talk about like, you know, hundreds of cold emails, dozens of like Zoom calls, back and force, like NDAs by PDF everywhere. Like it's just a, it was a crap system. So I think we kind of centralized it. So they just come. They do it once. We do a live interview with the investors, put up the recording. Just simplified. We wrap all the investors in the one entity so they don't have to deal with all the banking and recording.

It's just a better system for everybody. Wow. That's awesome. And it's relatively new, right? When did you launch? I think we publicly launched probably like Q3, Q4 last year. Kind of been soft launching with, you know, investors who want to co-invest with me that we already know. We've been doing that for about a year. But public launch sometime last year. And how many deals through the platform in six or so months you've been live? Successfully a little over half a dozen, something like that. So not crazy volumes.

I've had two deals fall apart. Unfortunately, they got close to the finish line and like the seller changed their mind. And I forget what the other one was. But yeah, two deals fall apart, unfortunately. But the rest of them closed successfully, looking good. But, you know, small business is messy in these deals. This is what happens. Yeah.

Which I guess is part of the very. value prop, right? Because it's hard to invest in these businesses because it's so messy. You've got to deal with the seller. You've got to find it. So it's nice if you can kind of club together and someone else is bringing the deal flow and getting it over the finish line. I mean, honestly, that's the reason the returns are so potentially high in these deals is that they're really messy. I mean, if it was clean and easy, well, Goldman Sachs would have destroyed our returns by now. But they can't. It's these deals are too small for like the institutional's to enter. And so, you know, small guys get all the alpha and the higher returns. It is very messy, but it can be very worth it. So we have a deal today, which is also smaller, more accessible to folks. It is a innovative craft products distributor and manufacturer. So I'm going to put it on the screen here if you're following along with us on YouTube. And I'll read it and then we'll get the group's take. So this business is $4.57 million in revenue and $281.81.

of EBITDA. They're projecting basically flat revenue for next year, but EBITDA to go up from 281 to 342. It was founded in 1991. This company is a designer, manufacturer, and distributor of mosaic and glass craft tools and supplies. The company's customers include large retail chains like Hobby Lobby, where they've been since 1998, school supply companies, and smaller craft stores nationwide. The company is expecting $4.6 million of sales. and employs nine employees and operates out of 20,000 square feet with the capacity to support further growth. The owners would like to pursue some other interests after a transition period.

They are doing, it looks like, about 68% of their revenue in craft supplies that has shrunk from 82% two years ago. And their art glass supply segment has risen from 17 to 28% of sales. So the art glass surprise seems to be growing. and taking over more of the pie. It doesn't necessarily mean craft supplies are shrinking, but art glass surprise is their growing category. It says the company sells exclusive proprietary craft products,

which have won multiple awards and are marketed under numerous, well-known industry brands. It has a customer base of 2,700 customers with a 96% rate of recurring revenue, including all Hobby Lobby retail locations throughout the U.S. and all major school supply companies. The company's strong international supply. relationships help in negotiating competitive prices for inputs, payment, trade credit, and delivery terms. This has allowed them to produce its designs at low costs. The company's products are

available across the U.S. and are also represented in Canada, the UK, Switzerland, allowing it to service clients wherever they may be located and expand into new markets. It is based in the U.S., in the southeastern United States, and their lease has a few years left on it in the 20,000 square foot building. The asking price is 1.4.4.4.5.5. The asking price is 1.4 5 million plus inventory. So 1.5 million on 340 or so of projected EBITDA for this year is a 5x multiple plus inventory. So many things here. What do you guys think?

First of all, this is the last numbers here from 2022, right? Am I seeing this? I think this teaser is a little old, to be honest. Yeah. I think it was up to date when it was made. But it's a little bit old, but I liked it because there was a lot to talk about here. This is really interesting as a niche. I like the craft hobby niche because I feel like it lends itself to a really kind of sticky and just like nuanced customer base.

Like if you make a specific like if let's just say this is selling to people who are doing like hobby stained glass, you know, and you make a special knife that like goes viral on the blogs, you know, and in Reddit for people doing that. Everybody wants your thing. And I like just the nuance of it a lot. It can be nice. I'm sorry to interrupt you, Bill. I have seen something in the same space. It was, I think it was quilting. And they sold supplies there.

But that business had a content creation piece that really made sense and it created a community. And therefore, it had really nice margins. This one feels like it's just a product. Exactly. And the margins are really a lot skinnier than I would have expected. because I think, what is that, like 6% margin for not the projected, but the as is. Yeah, it's kind of skinny. And it feels like it needs more.

There's more, there's opportunity here. Let's put it that way. It seems like there's almost just acting as the manufacturer right now and then selling it to bigger companies who take all the margin here. But if they are actually making proprietary craft products with multiple awards, you could see maybe like an opportunity for going straight to consumer, especially using like TikTok and Facebook groups, which probably does pretty well with these niches. That's the thing that's jumping off the page to me, Travis. I think this business, there's so much opportunity in this business. So here's the things I'm looking at.

All they mentioned is Hobby Lobby, right? They mention large school supply companies and smaller craft stores nationwide. They've got 2,700 customers. This business views itself as a B2B business. It's selling to retailers. This business desperately, desperately needs to be on Amazon. I mean, all of the craft stuff is bought on Amazon is bought via e-commerce, and this business appears to be just totally missing the boat.

On day one, you take this stuff to Amazon. To your point about the margins, which I agree, Heather, are too thin. I'm looking at the experienced team they've got mentioned. It's got owners and bookkeeper three, six warehouse people, one sales product dev, one customer service manager, one operations manager. That tells me they're doing their own fulfillment in that 20,000 square. feet. No way. We got to go to 3PL. So you got to cut the lease and six of those people in the warehouse. I'm assuming they're not actually manufacturing because in this listing, it said they have

international supplier relationships. So I'm assuming that they're having it manufactured in Asia, they're bringing it over and they're basically running their own fulfillment. Which is why their origins would be low as a distributor. Yeah. Well, so they're, I don't think they would consider themselves a distributor. I bet they're having stuff manufactured with their logo on it. in Asia. I think it's contract manufacturing. It's not someone else's product. But there's just no reason they should be running their own logistics. Like this is a relatively small business. This should be at 3PL and it should be on Amazon. And just those two changes alone, I think,

would add a ton of profit on it. When with your company, when you shut down your own warehousing fulfillment and went to 3PL, what were the huge perks that you saw? Well, we saved seven figures a year in cost. I also, the, the hugest perk was that no one took craps on the floor of the bathroom in the warehouse anymore. No, they did. They did. It just wasn't your warehouse. It was someone else's warehouse. That was no longer my problem. That was the best perk of outsourcing logistics and fulfillment. But we saved a ton of time. We saved a ton of money. And we also got, we went to the 3PL that had bi-coastal nodes. So we have a west coast and an east-coast node now so we can get anywhere in two business days with cheap shipping because we're close to the

customer. So the customer's got a better level of service. We saved a ton of money because 3PL your logistics is one of those things that is is has economies of scale, right? You have better rates with carriers when you move more packages through there. You know, when you have bigger, you have better economies of scale on the space and the people. You're more efficient when you're just fully saturating your throughput. There's a fixed cost to that business. So you move more packages to the same fixed cost warehouse, the margins are better. So a 3PL can do it cheaper than you can do it just structurally. And get better service to the customers.

And it's a total, it's a win-win. So I think given the age of this business founded in 1991, I think these guys have been asleep at the wheel for a while, right? Selling a Hobby Lobby, you know, doing their own logistics. They've been probably doing them since 1991. They don't even know what Amazon is. I think they're just totally asleep at the wheel, and you could potentially scale this business,

a lot by going to Amazon and then improve the margins by going to 3P. So deals like this are kind of some of my favorite, not necessarily specific industry, but ones where the owners own this thing for 30, 40 years, and they're just kind of checked out. They've been making their pretty good income, running off a lot of stuff. Life's good. They're 70. They don't really need it. They're just done.

That's where you find, like, the most easy wins in these businesses time and time again, I think. Hey, Michael here. I want to let you know that I'm hosting a conference. first time I've ever done it, and it's called Holdco Conference 2025. If you want to learn how to manage multiple businesses at once, how to incubate new companies, or how other hold co-owners and operators run their fleet of companies, then should come to Utah next spring. We've got a ton of great speakers, including Walker Diabell who wrote buy-then build and founded Acquisition Lab.

Plus, we're hosting it an all-inclusive mountain resort so you can hit the slopes at the end of the day. So please go to holdcoconference.com for your tickets and get 10% off with your discount AAPod. That's holdcoconference.com and use code AAPod for 10% off. Now, back to the show. Totally. Because they're just set in their ways, right? It's working fine, and they don't need to learn the latest software or the latest channel or whatever. They're doing fine.

So you come in with new blood and energy, and there's just, you just grab the low hang of favorite. You're like, oh, you can add 20% by doing this and this and this. And they're like, eh. Nah. I wonder if they have a customer concentration with Hobby Lobby, just the number of times that it's mentioned here specifically. I actually just looked up Hobby Lobby's revenue because it could be easily one of those stores that's like about to go out of business. Like I don't know. It says the revenue went up.

I didn't check anything else other than revenue. I think they have been, you know, in the crosshair some, but I think they've been increasing same store sales, but they've been shutting down some stores as they like reconcilate. But Heather, to your point, I mean about potential customer, you know, concentration and then the low margins relative to the purchase price, I feel like. the difficulty here in this deal is that they're pricing in some of the potential, you know, but it's right on that line of I don't think that the deal probably pencils for a regular buyer to pay five times for this. But it is SBA prequalified,

as Bill keeps pointing out, you're hovering over the thing. I know, Bill, we're getting there. Unless you're putting in 40% equity. Yeah, it doesn't pencil at this price for any debt. I mean,

if you just look at the 281 of EBIT, and you figure the most SBA debt you can probably afford with that is about 3.5 times, the 281, and they want you to pay five plus inventory. Yeah, you would have to, if you're going to pay what they're asking, you're going to be writing a very big equity check and really banking that equity on this growth that we're talking about. And what I find interesting on the listing is they really, a lot of listings kind of oversell all these growth channels.

I didn't see that here. Because they don't know. Yeah. Well, I didn't scroll down to show the footer, but this is from Mills' favorite business broker, the guys at generational equity. Mills, why are these guys your favorite business broker? I'm not at liberty to discuss. No.

Generational equity, I mean, they have a lot of reach. You know, they get a lot of listings. They have an interesting kind of customer acquisition funnel. They do a lot of free seminars. to get business owners in the door and then they then they kind of upsell you know hey do you want to pay a nominal amount of money for a kind of an opinion of value or evaluation and if you like the valuation we can help build a deck for you but you spend a lot of money uh you know going to market on a sim and uh i've just seen a lot of their uh a lot of their listing agreements and they're kind of

all op sited. I've seen sellers sell them and sign up for, you know, fee arrangements that aren't very equitable to the seller. So seller beware. The, the, and I'm not saying there's not great deals to generationally equity. And, you know, you shouldn't look at their Sims. But sometimes as a seller, you got to make sure you're signing a fair deal. Yeah. And I mean, there's, you know, we talk about this a lot in our, in our signal chat all the time. But there's this inverse relationship. I think, between access of deal and quality of deal, where, you know, if this goes out to, I mean, their email list has to be in the hundreds of thousands.

It's huge. And you can even see the link in this teaser. You can e-sign an NDA. There's no vetting process. So it makes me a little bit skeptical as a buyer. If I'm buying a generational equity deal, how many thousands of people have e-signed the NDA and not been vetted and now know all this stuff about this business? that, you know, I'm going to be the one left running the business speaking from experience.

And there's a lot of people who know my, you know, know all the gritty details. Yeah, that's fair. So I was Googling Hobby Lobby. It says that this business is distributed in 2,700 stores. Hobby Lobby only has about 900. So, yes, they do have some concentration with Hobby Lobby, but it's about a third of their retail store locations. Could be 90% of revenue, but it's just in terms of store count. Right.

But I mean, let's let's talk about that. You know, that probably rules out. Like let's let's say Hobby Lobby is the majority of their revenue, 80% of their revenue. And the rest are small mom and pop folks who buy this, you know, thing. And the throughput is not huge. That rules a lot of buyers out. I kind of like the, you know, the difficulty of it and figuring out is there a way to navigate around it. it influences the purchase price, obviously, if there's a lot of customer concentration.

But if you can solve for something as a buyer that the majority of other buyers can't, that can work to your advantage. But it just has to be reflected in the risk sharing, the purchase price, the structure of the deal. I'm not, it's not a deal killer to me if there's customer concentration. I just would want to figure out how long has the relationship with Hobby Lobby been in place? Who is the buyer that you deal with in what category or that. focused on. How long have they been there? Because if, you know, a lot of these buyers, Bill, you know, you've dealt with it in, in, you know, wholesale and big box, they bounce, you know,

and they may move from Hobby Lobby to Target to Walmart and then back to, you know, CVS and Walgreens where they were before. It's just like, it can be a revolving door. But, you know, it just depends on, on that relationship and what kind of terms they're getting through that wholesale distribution. That where an investor can sort of get sold on maybe this is sticky enough to to buy it with the concentration, the lenders usually will not get there. And that's the problem. No matter how many good things you throw at them about that relationship

and what makes it sticky, you know, they'll just want to do an analysis where, frankly, they back out of EBITDA. What if you lose that big customer, how much is left? And we won't lend you more than you could afford at that level of EBITDA.

That's an exercise I show people all the time that a lender will do, no matter what the story is, no matter how comfortable maybe you could get with the concentration, they won't. How much cash is this business eating up all the time? Like with this much revenue and this little EBITA coming out of there, I mean, it's just got to be tons of cash sitting there in the business at all times. That's what I wondered with the plus inventory, you know, in the asking price. I mean, who knows?

I mean, this business could have a million dollars worth of inventory. That would be a quarter's worth, you know, of, of, of, of, you know, of, you know, of, you know, revenue. Let's say the cost of that is 50%. You know, you're talking about 500,000-ish in inventory at any given time if your throughput is a quarter's worth. I'm also, I'm not familiar with the terms that retailers give companies like this. Do they? Net, net 30 if you're lucky, net 90 if you're not lucky, somewhere in between. But you got all the, all the death by a thousand and cuts things like slotting fees and buyback dollars and, you know, just it's, it's brutal. Yeah.

Well, one thing I do like is they've been in Hobby Lobby since 1998, right? So like clearly the financials here reflect being in Hobby Lobby and they've got kind of a stable relationship there, which is good, right? They haven't been dropped. They're probably not renegotiating pricing all the time. This is a relatively small business on the scale of Hobby Lobby. they probably occupy a niche and the buyer just kind of checks the box. And they might have like less than 10 skews there.

I'm sure. We don't know, but it's not, it's probably not, you know, they don't have an in-cap at Hobby Lobby. I mean, just given the size of this business, they can't have too many more, you know, just a handful of skews at Hobby Lobby. And I'm starting to think through the number of days in the cash conversion cycle a little bit here. It is coming from Asia. I don't know how big of, you know, how much inventory they have to hold because of the lead times there could be a lot.

So you're holding a lot of inventory, and then you've got to have, you know, cash to operate. Their operating expenses are pretty high with these low margins. So if you're going to buy this with a plus inventory, that probably means you're not getting any cash included, any other working capital included in the price. Now the price is getting even higher, you know, because you've got to bring in your own working capital, which is going to be a big number here, long cash conversion cycle, bigger number. Then I feel like it's way overpriced if they haven't included some working capital. And with the plus inventory is always, that's the clue they have not.

They're not, they don't, they don't want to give you that in the price. Heather, I don't understand why you're so bearish on this. It says it is SBA pre-qualified. You're right. You're right. I was thinking, wow. Heather, you're really speaking like somebody who has, you know, been through due diligence before. Yes, actually qualifying loans for SBA, not putting a little stamp on the-

It looks so good on paper, though. Yeah. Yeah. it does. So this business, I think, is so interesting to me because there is a ton of meat on a bone for a buyer, right? But you have a structuring and value challenge, right, to the point of what we're talking about. They are asking $1.5 million plus inventory plus working cap, which makes it a $2 million plus deal on forward $350k of EBITDA, like with some customer concentration. So you're going to have to back that out for purposes of getting a loan. I don't know how any kind of reasonable SBA loan gets over the finish line at anything close to these values, despite the pre-approved seal on here. So to me, this is, you've got an expectations gap between seller and buyer. It got a valuation gap, which you got across either way. But then on top of that, you probably got a structuring gap. You know, how do you find a way, like, how could you

buy this? If you could get in here, take it to 3PL, take it to Amazon, probably raise prices a little bit because they probably haven't risen prices fast enough over the last 25 years of being asleep at the wheel. There's something here, but how do you structure your way into this? I think it's that expectations have to come down on the price. I mean, my deal was very, very similar to this in a lot of ways, but sticker price sounds great to the seller. They go to market, get disappointed, come back down to reality, and then go, you know what, I want, I want find a path forward. It's better than no path forward at all. But I think that this seller has to just get disappointed, you know, by by the prices that come back. And I mean, granted, we're talking

about this. Like, it hasn't already happened. But the, the SIM was probably in early 2023, you know, that they made it with 22 numbers or they were projected. So they were making this in 2022. Something has happened with this business. Who knows what. Yeah, maybe it's still out there. Yeah, I hate to say, I hope, well, I hope somebody didn't. buy it with an SBA loan and end up in one of those default numbers that we talk about, periodically. I don't think SBA would approve this. I don't think the other would approve this.

I wouldn't, but I think the other problem, I agree with you, Mills, the price has to come down, but then you still are probably going to have a gap because there's almost no EBITDA here and then you're backing some out for a potential concentration. So I think you need ideally an earn out, but with SBA, something this small, you can't. It's not allowed. So the closest thing to that would be rollover equity. And then you've got to keep the seller below 20% with an SBA loan so they don't have to PG it, personally guarantee. That's the only structure I can think of here is a big seller note, some rollover equity so that they can get some upside and you can get in there and do all the things we talked about and kind of, you know, make this company grow.

I'm with those expectations have to come down. This is worth a million bucks. Yeah. And I think the highest probability outcome is that somebody who's already selling, you know, in these channels is the likely buyer of this. I mean, there's not that many other people who could, you know, look past the customer concentration, look past, you know, the growth that they're trying to price in and actually know how to achieve it. Like if somebody had a, you know, $15 to $20 million revenue business and they could fold this in, it would be amazing. They could add so much value. The arbitrage would be within the first two quarters.

They would realize the majority of it. And they could fold it into an existing operation. Because the unfortunate truth is they wouldn't need really any of the staff that exist. Correct. Yeah. You'd have total headcount synergy. You'd have total synergy on the building. They could fold it in their existing 3PL or their own building.

It's just a supplier relationship and the customer relationships. And maybe they're already in-hopper. lobby so that just they got freight savings on the way into hobby lobby maybe they're already sending stuff to hobby lobby or maybe they're not in hobby lobby and this is their entree to get more stuff in yeah that's a good phenomenal add-on for somebody that like that gets me excited you know if you were if you were already in those positions this would make so much sense and you could afford to probably bridge the gap with the seller more than anybody else could also think about your advantage in talking to the seller you know you would have a huge

huge leg up. You would be able to talk shop with them. You would understand their pain points. They would understand yours. And you could probably, honestly, in a lot of these cases, you bypass the broker, you know, in terms of momentum and you and the seller are really working things out. And the broker's just along for the ride. And this shows the value of a good intermediary, which they're probably not getting with a churn and burn intermediary like this one. But if you have a good intermediary, they are going to walk into Hobby Lobby. they're going to make a list of all of the other Hobby Lobby suppliers and call them, right? This needs to be in front of every brand that's in Hobby Lobby as an add-on.

Yeah. But yeah, and there are people who specialize, right, in, you know, consumer package products. Like, Bill, you know, I mean, this part of the ecosystem is so picked over and, you know, scrutinized. And there are brokers and investment bankers who just focus on these categories. categories, consumer packaged goods, you know, packaged food products. Like you have kind of a very specific need and you just have a generic kind of listing. Yeah, huge opportunity for ad on here. That's the slam dunk.

I think it's really hard to do on a standalone basis without pretty major seller note and earn out. I think if you're doing this on standalone basis, the only bank debt you really get is like a working capital line. And the entire kind of value transfer has to happen through seller note and earn out. And the price still has to come down. And the price still has to go back. Yes. Yeah.

Yes. 100%. Um, anything else to add on this one? I love, I mean, I thought this was really interesting. I thought killer add on. I think it highlighted a couple different things we often talk about on the pod and the opportunities for a lot of searchers coming in buying an old business like this. Brands and a low TAM business that is not picked over, you know.

Yeah. Yeah. Um, so Travis, thank you for being here with us today, helping us. break apart this deal. Where can people find you and CapitalPad if they want to learn more about investing or searching with CapitalPad dollars? CapitalPad, just CapitalPad.com. We don't have socials for the business. There's no reason to. And you can find me on the socials if you want. Twitter is basically it. Yeah, Travis underscore Jamison. I'm going to tell on myself, while you guys

were doing the intro part of this, I registered for CapitalPad because I haven't yet. It was that quick and that easy. I just did it. And I started scrolling the deals. And I was like, This is really interesting. So it was that quick. Yep, they're good deals. Thank you, sir. That's what I wanted to hear. Travis has to clear some regulatory hurdles.

And then we can actually talk about the capital pad specific deals on the pod coming later this year, hopefully. Yeah, yeah. Right now we can't even talk about them publicly. It's cool. So, like, I won't say anything specific. But, like, I clicked on one that was interesting to me. It looks like it's a searcher, you know, who is looking for, you know, a component of their equity. And, like, you guys have a video of them talking.

about the deal. Like if I want more info, I can sign the NDA. It's really cool. So the way we do it is like, I want a two minute teaser. Actually, my goal is to disqualify people. If I'm an investor, I come through, I just want to know really quickly, is this not a fit? And so we have a two minute teaser where they just kind of like talk about it. And then you can see like, I don't know, a couple hundred words of the specifics. And then if you're interested, you can sign the NDA and go deeper. And once you sign the NDA, like we've got a full interview with sponsor in there or a live call if you happen to be around for that. And then the full deal memo and all the financials, diligence, all that type of stuff. So it's really made to be as simple as

possible to get into the deal if you're interested. And if not, to just move on. I'm going to spend the next hour, you know, going through. So thanks. Thanks a lot. Yeah. Maybe that's good that we can't talk about the deals on the pod because people have to sign up for capital plan and go check them out. Gotcha. Gotcha. Very good. All right. Well, thanks for being here, Travis. And thank you. everybody out there for listening to another episode of Acquisitions Anonymous. If you like this one, go to our website, acqueu anon.com. We have all of the deals tagged by industry so you can figure out what deals appeal to you and binge back catalog of Acquisitions Anonymous on whatever commute or exercise time or podcast listening time that you have. So thank you for joining us this week.

We'll see you on the next episode of Acquisitions Anonymous.