Acquisitions Anonymous - #1 for business buying, selling and operating - Finding The Perfect Buyer for this $14M Data Center Deal

Episode Date: August 20, 2024

Who should buy a data center business? In this episode, we check the details of this IT business making $14 million and who should be interested in buying it. We cover what makes it a good or bad fit for different buyers and why it might catch their eye. Thanks to this episode's sponsor:CloudBookkeeping offers adaptable solutions to businesses that want to focus on growth with a “client service first” approach. They offer a full suite of accounting services, including sophisticated reporting, QuickBooks software solutions, and full-service payroll options.Subscribe to weekly our Newsletter and get curated deals in your inboxAdvertise with us by clicking here Do you love Acquanon and want to see our smiling faces? Subscribe to our Youtube channel. Do you enjoy our content? Rate our show! Follow us on Twitter @acquanon Learnings about small business acquisitions and operations. For inquiries or suggestions, email us at [e-mail]

This is Red Ocean City, and this is a tough market. Man, when you were reading it at first, before we got to the Chapter 11 carve-out, my red flag, my alarm was blaring at the average adjusted revenue. All right, today's episode is one guaranteed to get very few listens. No, I'm just kidding. It turned out great, actually. It was Mills and I, and this is Michael. We had a ton of fun digging through a carve-out of a Chapter 11 technology company

that appears to be located in Southern California and enabled us to talk about a lot of super interesting things around the dynamics of this market. It's a $14 million business with $2 million in profit, but we're not quite sure if that's real. So stick around and see what you think. We have a ton of fun making it, and here's the episode.

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.

It is my friend Charlie's business called cloudbookkeeping.com. So that's cloudbookkeeping.com. They are your perfect partner if you want to get bookkeeping out of your hair and focus on making your company, your customers happier and more successful. So please give them a call.

Call Charlie, cloudbookkeeping.com. Tell them we sent you. They're a great way. If you're a business buyer, if you're a business owner, you're tired of hassling 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 San 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. So I went to, I went to Rand Larson's S&B event in Charlotte last night. Really hoping that I would catch Bill. And Bill's like the one day that, you know, S&B Twitter comes to Charlotte. I'm in Canada on a work trip.

But it was a good turnout and it was at a brewery and I've been there mingling for a little bit. This is all kind of come out on Twitter this morning, but this guy comes up to me and kind of like, he's pointing his finger at me aggressively. And it's like, you heft up my deal. You heft up my deal. And I was like, what are you talking about? And he's like, I had a deal under LOI and you're the podcast people and you messed it up. And I was like, what are we talking about, man?

I was thinking is he the guy from Canada with the, you know, Marina or whatever. And he's like, that was the Canadian, no, that was the Alaska. Yeah, sorry. Alaskan cruise line that we somehow outed because there's not that many cruise lines in Alaska. So this guy's like, no, the tow truck deal. And I was like, oh, yeah, the seller just randomly called me. He's like, yeah, I know. he had like so much interest after the episode he bailed on the deal and I don't want to like going to too much detail because this is people's real lives in real time but I thought he was really mad so I texted you know the podcast group chat and I'm like hey this guy is like really miffed and then 30 minutes later you know he comes back around and he's kind of laughing about it and he's like nah you know it's all good but for a little bit I thought we really made somebody mad and we were going to have to watch our backs.

I guess we did It's kind of cool in a way though That you know This guy calls me out of the blue Which we talked about I think last week's recording And then he gets so much interest That the broker basically reshops deal He said they got 80 phone calls after the episode

The broker was just inundated Yeah It's really interesting You know like we've had people want to have us Like profile deals and stuff like that on the podcast. And we've never really figured out how to make it work. Because a lot of times, you know, they're like, no, no, like, I don't want to tell anybody about my deal or like, you know, that kind of thing. And it has to be, it has to be interesting radio. Yeah. And then again, also, I think

if we have a relationship with the people, it's somewhat tough to be, you know, by unbiased. Or maybe people see me as biased. Either way. Yeah, they're like, hey, I have this deal that's been on the market for a long time and I can't get it to sell. Would you guys talk about it? And then it's like, oh, if we were going to talk about it, it's probably been on the market for a while for a reason, and we're not going to like it, and it probably won't help your odds. Well, let's see.

I mean, we're trying to generate more argument because we think it makes for better radio. So you need to figure out if you're going to be red team or blue team, this one. This is a blue teaser. So you be blue team. I'll be red team. I'm coming out. I don't even know what that means. Nobody knows.

It gets the people going. This is actually pretty interesting. And this is a professional teaser right here, like the infographics, or strong. You need to get on YouTube and see this. Yeah, yeah. Like, they clearly went on Canba and broke out some stuff. A lot of PowerPoint, Microsoft Word, template.

All right, well, I'll read you this one because I brought it. But here, I think you've read it, and I didn't read it. No, I didn't. I didn't. I'm just, it's fancy pictures. I know nothing about the content. All right. So it is a acquisition opportunity listed by a broker called Force 10 partners out of

SoCal on the one day that Heather called in sick. We have a SoCal deal. And it is a data center, cloud, and infrastructure as a service provider. They wrote IAAS. That's what that means. IAS infrastructure as a service. Okay. I don't know anything about it.

Well, that may make two of us. Let's see how far we get. It's not any company. Any other deal on any other week, but I'm just putting it out there. Look, if it's either this or the pizza boat, I think I definitely might, I know more about this than making pizza in a small watercraft. All right. The company provides private and hybrid cloud solutions and customized managed services

as an alternative to big tech providers, serving more than 160 active customers that offers a suite of hosting managed services and advanced security solutions. With data centers in top U.S. markets, Orange County, Irvine, downtown L.A., Las Vegas, Nevada, and Ashburn, Washington, the company has an average annual adjusted revenues of $14 million and an average annual adjusted EBITA of $2 million. Of the last five years, with about 90% average recurring revenue around 25 channel partners and respellers support its market presence. The booming data center and cloud services market is expected to be $416 billion worldwide by 2024.

The sale is driven by the parent company's Chapter 11 filing in an agreement with a secured creditor to sell this non-strategic subsidiary. Dude, this just got very interesting. I was trying to figure out why they were saying average adjusted revenue. I mean, when's the last time you saw that? If this was a telenovela, like a Mexican telenovela, there would have just been like string music just coming in from everywhere. Like, da, da, da, because stuff just got real. The villain just came in from the outside and he's got like a hat on.

I don't know. Anyway. Is this how you're learning Spanish? Is this your telenovelas? Well, Gustavo, who's listening in as our producer for the podcast, is in Costa Rica. So it makes me wonder if there's Costa Rican telenovelas as well. He's shaking his head in affirmation. No, now, no.

He's a Costa. Well, I'm sure what he's going to say is Costa Rica is too beautiful to spend any time inside worrying about Mexican telenovelas. So, all right. Okay, so we have this. It looks like a data center cloud and IAS provider, an MSP-type business. so a amino service provider where they basically host data workloads, all that kind of stuff for clients. And it is a division of a big company that has gone bankrupt and is getting,

so it's getting divested. So 14 million average annual adjusted revenue over the past five years, two million average adjusted EBDA over the past five years. We can come back to the terms EBDA and adjusted. And also that this is a carve out. So we can talk about the considerations around that. Robust customer base, 160 outskirts of customers, 25 channel distribution partners. They have a comprehensive service offering, hosting, managed services and security solutions, private cloud, hybrid cloud, and co-location solutions, advanced services like Kubernetes, bare metal cloud servers, and hyperconverged infrastructure.

They have over 90% recurring revenue. There's some stuff here about the booming market, and then they have historical financials. So it goes back to FY 2019 when they are showing adjusted revenue of 12.3 million and adjusted EBITA of 1.7 million. I don't even know what percentage that is. I guess it's 15% adjusted EBITA margin. They show revenue growing to 13.9 in 2020, shrinking are growing a little bit again in 2021, growing again in 2022, and starting to shrink in 2023. And adjusted EBITA has been averaging 1.7, 1.6. 1.7 to 2.6.

So yeah. Okay. So that's our, we have a, we have a marketed component of a bigger business that's failing, but this looks like a non-strategic thing that could be carved out and got money for the creditors through the Chapter 11 process. And yeah.

So what questions do you have? You probably want to know what do these guys do? They, they have a map here. It looks like they own. I don't think they're leasing. I think the inference. here is that they actually own four data centers.

Two in California, one in Las Vegas, one in Virginia. Are we on the same page with that? You think they actually own these? It could be that they own them. It could be that they have lease space inside of other data centers. And they just function in the middle of those things. Man, when you were reading it at first, before we got to the Chapter 11 carve out, my red flag, my alarm was blaring at the average,

adjusted revenue, but it makes a lot more sense. So if you look at the global balance sheet, you know, global income statement of this business, the income statement is showing revenue of, I don't know, over $100 million. And they're trying to say, we're adjusting to try and triangulate exactly what the revenue would be in this one division. When we carve this thing out, what would it have been doing if it was standing alone, which is a very, very complicated analysis, not the revenue as much as the expenses. So, yeah, maybe you ascribe a pro rata portion of financial and accounting and human resources. Like, how do you tease those things out? It is a mess. Yeah. Well, it, there tends to be private equity and buyers who specialize in carveouts like this.

And my experience is if a company is being run so poorly and has been on the struggle, of us so much that it's going bankrupt and you're doing a carve out from that, there is a 99.100 chance that you can't really trust the accounting for this carve out, right? Like in all the ad backs, like they always are massively low from what the people tell you, right, in the transaction. Not dimension is the deferred maintenance, deferred investment, right? Like, hey, you've got this thing that's circling the drain. They're probably not being very proactive.

with their upkeep and maintenance and their planning. Yeah, there's a very, like, it's not uncommon for that to be there. You know, because this, you know, if a business ends up in Chapter 11, it's been in a death spiral. You know, then, then it's like, okay, well, they say they did $14 million in revenue and $1.6 million in EBITA and FY 2021. And they'll give you the whole breakout and they'll give you the whole everything of how that all matches up. And then you discover once you dig in on diligence that really six million of that 14 million is like really doesn't exist unless it's part of the mothership. Yeah, intercompany. Yeah, activity or something.

So that ends up kind of creating two things in the buyer market for small stuff like this is you have specialists who are private equity firms or individuals that just do carveouts. Right. There's some very successful private equity firms that all they do is just carve outs like this because what they'll do is they'll go. is they'll go in and they have figured out kind of by understanding an industry, how they can build what the right P&L is without really trusting much from the company. Yeah, if you know the industry and the unit economics like the back of your hand, you can kind of, you can spot the fake, you know? Yeah.

So it really limits the buyer pool for stuff like this because Joe off the street, let's say even if you understood this market really well, to me, it looks like a managed service provider that has this handful of stuff that they do inside of these data centers. It would surprise me based on their revenue if they own four data centers, unless those data centers are in like somebody's closet. So, you know, data centers have, you know, kind of the things you expect in the technology market combined with real estate. You know, they have economies of scale, right? Like subscale data centers, you don't want to, you don't want to get too small because then it's hard to staff them and get efficient, right?

That's why, you know, Microsoft just, I don't know, I don't know if you care about what's happening in San Antonio, but Microsoft and all these different data center providers, they love being in San Antonio. And part of the reason is because we used to have Southwestern Bell here, which became AT&T. And that means for a city of our size, we have an extraordinary number of, you know, global interconnects where, you know, it's like comparable what Davelas has and stuff like that. So it makes sense to put data center share plus lands really cheap and powers really cheap. I was going to say cheap energy, right, is a big factor there too. Yeah, it's one thing that San Antonio has done really smart. We've done a lot of stuff that's really stupid, but we've done a lot of

stuff that's really smart. And one of the things that's incredibly smart is unlike the other three major cities in Texas, or I'm sorry, the other, unlike Dallas and Houston, I think Austin still has their their utilities. San Antonio has kept their utilities as part of the civic thing. we own them as wholly owned like businesses run by the city. Interesting. So you have that, you have that kind of beautiful thing where unlike Houston or Dallas where most of energy and the other stuff is deregulated.

So you have, you know, big private corporations trying to charge you as much as possible for energy. You have, basically it's a co-op. If you think about it, the way it works here in San Antonio, like the citizens own,

you know, or taxpayers are the ones that are customers. So totally, totally works there. But anyway, that's just, you know, I think one of the attractiveness about attractive things about San Antonio for data centers and why we have so many of them, especially on the west side of town. But yeah, just to circle back to this, like if you have a subscale data center, you suddenly discover you can't be very competitive because you need to have somebody making sure, you know, being there on premise and stuff like that. And one person can cover 50,000 square feet as easily as they can cover, you know, 250,000 square feet, right? It's not that difficult. So, you know, there's, you know, there's, a lot of questions about how much they really have at a scale of 14 million in annual revenue. It's not that much.

Yeah. I'm thinking the same thing. It, you know, there's been so much consolidation and a lot of reeds in a real estate investment trust who have entered the data center space. And so, you know, maybe, I mean, I would think one data center does way more than 14 million, you know, in revenue of any substantial size. And so it could be that. that these are some kind of like lease or contractual agreement to be able to have,

you know, a certain carve out of space or certain use of somebody else's existing data center. I just, so functionally, what these folks are doing, if you just look at kind of active customers and average adjusted, you've got like between, you know, $85 and $90,000 per year per customer on an average basis. And their customer type, help me understand it, Michael, this is, a medium-sized to larger-sized business that's saying, I need help, but I've outpaced, like I can't use Microsoft Office 365 for my company's like intranet and infrastructure, right? Yeah, yeah.

Like these are mid-sized clients or small businesses that happen to have some sort of oddball thing where they haven't gone full cloud or they don't want to have, you know, they have data where they don't want to have everything like in a rack in their closet. Yeah. Like, um, and so, you know, most of the businesses I'm in are either a full on rack in a closet because they're small enough, right? And you use Google apps for the rest or anything or Microsoft 365. Um, and you're, you're not doing anything fancy with IT, but then there's another, you know,

once you start to get bigger than that, you have to do things like redundancy, right? Um, and, and that can happen with, you know, that can happen with small businesses as well, depending upon the workload. There's some of them that have data that is just so existential to their business, that they're doing, you know, disaster recovery solutions with multiple sites and all that kind of stuff. Like, it works, it works even when you, sometimes when you have a hundred employees, right? You could be in that type of workload.

But it's, it's not the majority of companies if you just look at the total number of, like, businesses in the U.S. But there's a lot of them that are big enough and do need this kind of stuff. Or, you know, something that's critical enough, like if it's health care data or something like that you can't just say, oh, yeah, we get like, like, we locked the door, you know, to our data closet. We, you know, we have a little bit over 100 employees, but we only have about 20 that are, you know, on Outlook and, you know, sitting at a desk and stuff like that.

So we just used 365. But before I got there, the business had a physical server in the closet with a battery backup, you know, and like some redundancy that was like very fragile. So I kind of conceptually can understand this, you know, in thinking about, okay, where do you go? up market from there or if you have very specific needs. And it probably is not like your local IT guy who's giving you this depth or specificity of services is what I would think. What's weird to me is the kind of East Coast West Coast dynamic of their like the one map

that we have. The one thing that tells us anything about their geographical presence. Right. Is both coast? So it makes me wonder like is there something, you know, it's it's outside of D.C. Right. And then it's in, you know, it's in kind of the tech hub of the West Coast. So I'm just wondering, like, is there any customer inferences we can make about what,

what their customer is like, you know? Or maybe I think we can. We can tell some stuff about how this thing came together. So there, I here's here's, you're like, man, $14 million and you're in four data centers. Like, and they're not very like, it's like, why do you have one in Irvine and one in downtown L.A. and one in Ashburn, Virginia. At some point, we can go into why so much is in Ashburn, Virginia outside D.C. is like the world capital of data centers. People are like buying up residential lots, which housing is incredibly expensive in the D.C. Metro and turning them into

data centers because there's so much demand around D.C. If you're not familiar with it, it's a fascinating kind of dynamic, but it's because there's so much, there's so much interconnectivity there, like the thing I talked about was San Antonio. Like, DC has that like an order of magnitude greater. And it's becoming this like massive, like basically Silicon Valley for data centers because then you get the virtuous cycle of all the talent and all the resources and stuff like that. But anyway, back to this deal. Like, why is it a $14 million like MSP hosting provider, which as you're right, like this is not that much, right? If you're looking at renting racks and a data center wants power and all that stuff is in there.

You may be paying each customer may be paying 12 or 15,000 a month to have like a couple of like rack mounted servers in there. So there's not, this is not that big. But what it looks like happened is sometimes a big technology company like this will go and say, hey, we need to offer this service offering as part of our like customer journey. And in this case, like it's going to complement our core business. So we're going to own this like managed service thing that targets these small to medium size businesses.

And we're going to use that as a lead funnel and make our core offering more strategic. So probably what happened here, given there's no harmonization of these data centers. And there's two in like one downtown LA and one in Irvine. Like makes no sense whatsoever. Like my suspicion is they probably went and acquired several small hosting providers or MSPs that were specializing in this and then bundled into this like little mini division that they were going to use as a kind of feeder to their bigger thing, whatever that might happen to be. Which could make a lot of sense in the like the parent org dynamic, right?

The parent org maybe was doing a bunch of acquisitions in source this or something, right? You know, and just was like kind of accumulating. And this is like the leftover thing that actually maybe is slightly profitable. And I don't know, like the weird stories that come out of serial acquisitions and the byproduct of it. could bear well be something like this. Yeah, I mean, companies tend to, when they're serial acquires, they do one of two things. Like, they either go whole hog on trying to integrate them and turn them into a unified, like, highly efficient thing, or they just kick the can and, like, they just, like, run them for cash as

best they can. And in this case, in this case, it's usually the latter, right? There's not the hard work of doing integrating of billing systems and and, uh, customer service systems and Salesforce instances and like like CSM tickets like, um, I'm sorry, CSR, customer support like, uh, record CSRs. Like you don't, you don't, you, you, you often see like stuff like this, especially if it was a sideline. They didn't do the hard work to do the integration because people buy the stuff.

They look at how hard it is to integrate the stuff and they're like, well, let's just like, take the easy way out. And just a Band-Aid and bubblegum the thing back together. I think it's so funny when people do these Tam comparisons. So this company does 14 million in revenue, average, adjusted. Yeah. And they're like, our Tam worldwide is 416 billion. Like, it's just so kind of out of left field.

Like, it's completely irrelevant at this point. I have no doubt those are the right Tam numbers at whatever, whatever, but like it's also just like a totally non-actual number like do you do you include Google Cloud or like Microsoft Assures like

you know all the Microsoft own data centers like do you know or the Amazon data centers do those count like which ones? To me it's it almost is like a local sandwich shop being like the tam of sandwich shops in the United States is you know

$200 billion. It's like well it doesn't matter. We're only going to have one sandwich shop here. It doesn't matter at all. It's not even on my radar. I'm not going to be shipping sandwiches to Tokyo. Yeah. So there are that,

there is that one business. Have we talked about this business? The, the, the, the, the, the,

the, yeah, you told me about it. I think I thought, it's one of the, like, I'm starting to build like this pantheon of all time great businesses,

you know, pizza boat, worm farm, the wine rating business that we've covered. But my, my cookie, is remains my favorite. And for those of you know, it's a Brazilian bodybuilder. And I think I got this for the My First Million guys. They talked about it first. But it's a Brazilian bodybuilder who lives

in Miami with an Instagram account with like 250,000 followers. And basically he does crumble cookies by doing like drops of like cool cookies. And he does like one a week and like announces them. And he's like this big bodybuilder dude. And then and it ships them to people. And like at this, you know, it's like a whatever $20 million your business selling cookies on. Wow. on Instagram. I hear stories like that, Mills, and it makes me question my life decisions. Yeah, you're like, I was trying to do retail coffee.

Well, bro, too soon. You know what? I mean, retail coffee, like I got into it and then, you know, we decided to get out of it. And the guys we sold it to, like, they live and breathe and love coffee. You know, I think no matter what the economics turned out to be, Like, it makes me feel good that the business found a home with some guys for whom that's the reason to be on earth.

Totally. You know? Yeah. And that's how I feel about this podcast. Yeah, I was not trying to, you know, shoot you in the kneecaps or anything and just low blow you. But it was like, it was just right there. You're like, some things are too hard. And I'm like, yeah, drive through retail coffee.

Seems like it's too hard. It was actually not bad. Like, like the, you know, in terms of any hospitality business, I think it, It's got a lot going on for it. As the market has flooded with competition who have cheap, cheap access to capital, it has gotten really, like, tough. Like I think small guys are going to have a difficult time competing with the amount of money that's gone into the space.

And it keeps flowing in. Like we have, you know, we had Dutch brothers come into San Antonio. They built like 30 stores really fast. Every time I go past one of them, there's no customers. Like, I don't know how they're making money. They built two of them a mile from each other before the first one even stabilized. And they're not on hard corners. They're like behind.

They're like old Sonics basically like horrible locations. At least here in San Antonio, Sonic had a reputation for horrible location selection. And then like, but then you go look at that and there's like one of those. I'm like, how was this location even working? I never see a person this Dutch brother. And then like across the street like seven Brew has showed up. And they're building one too. And it's like, oh, you guys are going to be splitting zero in half.

Yeah. Like congratulations. I have a hard corner here in Columbia that I own and they've all wanted it and I'm just like over my dead body. And so then they pitch ground leases. And I'm like, that's the worst possible scenario for me because I can't repurpose this building into anything else when you go under. And it's only a matter of time before you go under. But we've got scooters, clutch, seven brew, you know, the whole, the whole gamut. Yeah.

Look, I think in your shoes, if it was a corporate guaranteed lease and how to spell out of what them winding down looks like like there's something there or if it's you know scooters as a franchise system so if it's somebody who's pging the lease yeah like i think there's something to be said for that i mean in worst case like you know i don't know what kind of like cap rate they were pitching you on but worst case you just collect checks for a while and then they stop paying you bulldoze the damn building and leases somebody else so yeah i don't know girdly ceiling to be able to cheap building to bulldoze. Yeah.

Well, I mean, just go take something, tell some of your, on a slow day, go tell some of the roofing guys. You got to go, we got a different job today. Grab your slum shamers. Yeah. I'm taking some stuff down. Okay, so let's talk about this deal. I think we're getting close to win. Who buys it?

I was good. I think that's, that's, oh, I know who buys this. I'll just tell you straight up who buys this. There will be folks that are, so here's what's going on in this market. Like, this is Red Ocean City. And this is a tough market and it's very difficult to go find new business. That's why you see a customer like this has, or a business like this has these channel distribution partners.

Those are people who have the relationships with the end user customers, their value added resellers are the local managed service providers who are doing kind of the IT consulting for local companies. If you're one of those IT companies or you're somebody that's already in this space offering hosting managed services and all that kind of stuff, you will potentially go buy this if you are already in this business and you just will treat it like a book of business. And it makes it super easy for you to go afford to pay something for this. Because basically just imagine you already have all the infrastructure, you're already doing all

this stuff and you're just suddenly going to be adding whatever, 160 new customers and taking care of it with your existing systems. Yeah. So I don't think anybody will buy this who is like just trying to create a standalone business or something like that. I think it will get sold as a book of contracts and customer relations. Yeah, it's like a tuck in, but not even a tuck in acquisition. It's just like a tuck in like customer acquisition.

100%. Yeah, just it'll be an asset sale of a book of business. I think it's, that's who it'll go to. What will it sell for? I mean, I think it's tough to tell, right? We don't really know much about the dynamics of these customers, like what's the gross margin of them? How much is going out the door and things like licenses and stuff like that?

Kubernetes, you know, is obviously open source. The other stuff they list here is questionably that they're paying big license fees to somebody who is providing software infrastructure. Obviously, they're running it on a Microsoft or a Windows base or Linux or something like that as most more commonly Microsoft, I would guess. So you got licenses and stuff like that. They're hyper-converged infrastructure. Like I don't know what sort of vendors they're having to pay. So I think somebody who knows the space really well would go dig in and understand the dynamics of the gross margin parameters and how. house to gear the customers and then figure out kind of, okay, well, discounting for the pain

and the ass factor and the risk, here's what I'll pay for it. But it wouldn't surprise me if it sells for three, four times this adjusted EBITA number. I was thinking maybe even potentially more with how recurring it is. Now, there's blood in the water, so that's going to discount it heavily. But I think a healthy business like this is selling for, you know, 15 million bucks. Easy. Yeah. Yeah. I am chronically cheap. I'm not saying what you will pay. I think I've shared this line before, but one of my mentors here in Columbia has this famous line, like, all the fools ain't dead. Like, there are people who will outbid you, but like, just because there's still fools out there.

Oh, my God. Interest rates have done nothing to slow down people's desire to deploy capital. Like, I still have people calling me trying to buy businesses. Like, I'm like, bro, don't you see there's a recession out there? I think it created like some near-term scarcity of like, I have. have to act now and I'm under the gun because the song the music may stop and I got to make sure I have a chair to sit in. Yeah. Well, I'm thumbs down. Your thumbs down on this one? Yeah. I wouldn't even know where to start. Like what I wouldn't even know where to start.

Like what I wouldn't know anything about this business, how to run it, how to transition it out. Like I this is the far into the spectrum of what I would ever do. Yeah, this is this is for the right buyer, this is a thumbs up, right? That person who's already in this business and wants to own this book of business, like I think it's a thumbs up. I think it transacts easily for them. And I think they'll just look at it as a set of contracts. But for 100% of the roof repair and seven brew landlords who live in Columbia, South Carolina, this is a hell no. Like this is just one to stay away from, you know, you need to, you're the Tam for this sale and who should buy this is people that are already in this business and otherwise you should just walk away. The one thing I'm curious about

if this broker, you know, is is discerning, which it seems like they know what they're doing. My guess is that even if you tried to sign the NDA on this, they would probably, I would hope they would vet you a little bit and just be like, what are you talking about? Like, you're an independent sponsor. You don't have capital. You don't have experience. Like I'm not even, I'm not even giving you the NDA. I don't want you to have the SIM. It's a waste of my time. I haven't looked up as force 10 partners, but I would be willing to bet they are a specialty bank that just does this type of stuff. Oh, okay. Actually, I can pull this up.

They, you're a consultant, huh? Corporate restructuring, challenge businesses, litigation and specials. Yeah, these guys are, my suspicion is, let me see if I can share the screen here. My suspicion is these guys specialize. I thought when I first saw them, I thought they would be I, am IT, IT, is. investment bankers. Yeah. But it looks like their IT investment bankers and corporate restructuring.

So they. Which frankly, frankly would be kind of fun. These are really interesting problems. Oh, they're fascinating. If I ever blow up in all my other stuff, like I definitely can see I have a future doing something like this.

So they, a lot of work, but a lot of fun. If you look at their engagements, they helped restructure the debtor during Tuesday morning's chapter 11. Tuesday morning like the retailer? Yeah, yeah.

Look, click on their engagements it's like the the first one at the top on when it when i pull it up oh nice okay so that explains why this deal has a bunch of stuff in there that you're not um you wouldn't see if somebody knew this knew the IT market really well and it's also probably why there's not a lot of um a lot of specifics um but if you look holy crap they did rothenberg ventures this was a vc fund where the GPs started stealing the money and doing improper stuff. Oh, wow. So if you just look, this is actually really interesting.

If you look at the type of stuff they're doing, like the carbon light industries, over $250 million of assets within Chapter 11, financial advisor to the official committee of unsecured creditors for Serta betting. This one down here really, out of court wind down of operations and assets. I mean, these guys are like scumption. They are rolling up their sleeves and these are true like workouts. This is this is very interesting. Yeah.

Super cool. All right. Well, we're 33 minutes, which is where people drop off if we don't shut up. So we rated this one. And yeah, thanks for, thanks for joining us today. If you enjoy the podcast, tell a friend. Mills and I had a great time recording it. So talk to you soon.