Acquisitions Anonymous - #1 for business buying, selling and operating - For Sale: A 100-Year-Old Salad Company Doing $10.5M in Sales

Episode Date: September 10, 2024

In today’s episode of Acquisitions Anonymous, we take a deep dive into a unique business—a 100-year-old salad manufacturing company in Los Angeles County. Hosts Michael Girdley, Bill D'Alessandro, Mills Snell, Heather Endresen, and special guest Chelsea Wood from Acquisition Lab discuss the ins and outs of this $4.6 million deal. From potato salads to military contracts, this business has strong growth potential, but with a few possible red flags. The team explores potential buyer profiles, operational challenges, and whether this company is ready for a modern makeover.Thanks to this week's sponsor:Acquisition Lab and their team have been longtime supporters of the pod.Acquisition Lab exists to help people buy a business and navigate all the complexities of the process, as well as provide a trusted framework, tools, and resources to support you from search to close.If you are serious about buying a business, check out acquisitionlab.com or email the Lab's director Chelsea Wood, [e-mail] and mention us ;) Key Points Discussed:1. The Business Breakdown – Overview of the salad manufacturing company's performance, including its product mix and client base.2. Growth Opportunities – How the business has grown from $6 million to $10.5 million in sales in four years and what potential lies ahead.3. Operational Concerns – Challenges with scaling, customer concentration, and the company’s long-standing history.4. The Real Estate Factor – How LA real estate could impact the business's profitability and future growth.5. Diversification & Expansion – The possibilities of expanding the product line to healthier or more modern offerings.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]

Okay, so obviously Michael loves this job because it involves huge quantities of his favorite food, mayonnaise. That is clearly why you were immediately drawn to this listing is just massive vats of mayonnaise. Am I right? Hello, another episode of Acquisitions Anonymous. We don't have 100% here. Welcome back, everybody to another episode of Acquisitions Anonymous. We've got everybody on board for this one, including a special guest, Chelsea from Acquisition. Lab. She's been with us before. She looks at a ton of deals and helps people bring them to fruition,

where we are mostly just talking and bantering about them and focused on deals we've already done. It's a great episode. This is really interesting. It is a salad manufacturer, which, you know, we all were thinking lettuce when Michael told us about it. But then as we started to read, they make pasta salad and macaroni salad and jello and things like that. It's a California-based business. We talk about some dynamics there that I think are particularly interesting. 10 million in revenue, over 800,000 in SDE. It's in a really kind of competitive size range. And we talk about the niche, you know, food processing dynamics, the financing, what we like about it, what we don't like about it.

And I think that it makes for a really good episode. So stick around from a quick word from our sponsor and hope you enjoy the episode. This episode of Acquisitions Anonymous is sponsored by Acquisition Lab. Acquisition Lab and their team, they've been longtime supporters of the pod and they provide a really great service for people who are looking to acquire a business. So it's created by Walker Dival, who's become a friend, the author of Buy, Then Build, how to outsmart the startup game. So Acquisition Labs is an accelerator with a highly vetted, cohort-based, educational, and support community for people who are serious about buying a business.

So a lot of our listeners like you, you tune in every week to our deal reviews. You want to get in on buying a business. You're on this podcast because you're trying to learn how to buy a business. But if you're not quite sure where to start, Acquisition Lab is a great place to start. So they exist to help people buy a business and to navigate all those complexities of the process, everything you hear us talk about on the show. They provide a proven framework, tools and resources that support you all the way from search to close. They do it. There's a whole bunch of educational material and support.

So if you're serious about buying a business, check out AcquisitionLab.com or you can actually email the program director, Chelsea Wood directly. Her email is Chelsea at buy, then build.com. I think this podcast today is going to be kind of like cheers where like people just kind of wander in. So I don't know, Heather, if that makes us old that you got the cheers reference. I did. I totally got it. I like it too. I like that style. I agree. It's super works. Well, Chelsea, thanks for being here. We're glad to have a guest today. I think this will be the first time we'll ever do a podcast with five of us.

Just we won't be here for the whole time because the other guys are late. We'd love to take a moment for you to introduce yourself. We're so glad you're here. I'm Chelsea Wood. I am co-founder of Acquisition Lab, which is an elite accelerator that helps people buy businesses. Amazing. Super cool. Well, that's why I think the majority of, well, I think we have two types of people that listen to this podcast. Well, maybe three types.

There's one type that just wants to make fun of me. And that's a large percentage. But then there's other folks who are looking to buy a business. And I think the third type is just kind of business nerds. And so we get a lot of those types. But the second one, and maybe the first one, I don't know if you want those people with customers. are totally up the alley of who should be a customer for you guys.

And I had another one, students. I got an email this week from a student and their professor has the whole class listen. And this student asked me if I would present for 10 or 15 minutes for their project because they were offered extra credit if they could get me in their class. Nice. I love that. So after 350 episodes or how are we? remember we've done. I did find a type of deal that we've never done before that I found fascinating.

And I'll explain to you the number one thing I think is most fascinating about this listing. But also, Bill's here. And I like to play a game with Bill called Guess Why Michael thought this was interesting. So after I read it, we'll see if we'll see if Bill can guess it. Oh, I love this game. This is so fun. All right. So this one is on Biz by Sell. It is an established salad manufacturing company with strong growth based in Los Angeles. County. So Heather, you know, that's where you go. You have to put on your park when you go that far north, right? They have a picture here, which may or may not be tied with why I found this interesting, but it's a salad company. And the asking price is $4.6 million.

Cash flow is $836,000. The gross revenue is a little bit over $10 million. They don't talk about inventory when it was established, EBITA, or furniture, fixtures, and equipment. So those are all listed as NA. So asking price is 4.6. Cash flow is 800,000. So looks like a little bit. 56X. Yep. And gross revenue is 10.7 million. So established in 1937, this enduring salad manufacturing company has a longstanding reputation for quality and reliability. The business produces a variety of salads, including potato, macaroni, coleslaw, alongside salsa's and jellos. Serving a diverse clientele of major markets and restaurant chains, this company has consistently adapted to market trends and customer needs, driving its growth from $6 million in 2020 to $10.5 million

in 2024. So gone from $6 million to $10.5 in four years. The facility operates efficiently with a dedicated team, many of whom have been with the company for decades, ensuring smooth production and high standards of service. Ownership has been stable and committed with the current owners taking the helm in 2020 just before the pandemic. Their hands-on approach and strong customer relationships have been pivotal in maintaining the company's upward trajectory. The business prides itself on on-time deliveries, full order completions, and the ability to cater to unique customer requests that larger competitors may overlook. The company is positioned for continued success and growth, and opportunities abound, such as developing new product lines and expanding market

reach. The facility is well equipped with mixers, flyers, and conveyor belts, and occupies a substantial 25,000 square foot space with additional parking facilities. The business holds SQF, kosher, and military approvals, making it a trusted supplier in the industry. With the owner's engineering retirement, this business presents a valuable opportunity for a new owner to step into a thriving operation with a solid foundation and loyal customer base. Located in Los Angeles, this deal is on the market. So what do we think about this longstanding solid manufacturer? Do I get to guess why you love it? Yes.

Okay. So obviously, Michael loves this job because it involves huge quantities of his favorite food, mayonnaise. That is clearly why you were immediately drawn to this listing is just massive vats of mandos. Am I right? Okay. So, yes, pretty close. If you look at the picture on YouTube, it says there are a salad manufacturing company. I don't know about you guys, but when I think about salads, I think about iceberg lettuce and kale and all that kind of stuff.

And you look and there's a picture of pasta salad. I'm like, what is going on here? And it turns out they don't actually make salad, salad. they make potato salad, macaroni salad, coal sauce salad, salsa and jellos. So they don't actually make real salad. So to me, that was why I liked it the most. I was like, wait, this is super weird.

Like, why is there a picture of pesto and pasta? They make the more fun version of salad. It's fine. This reminds me vividly, I don't know if any of the listeners or hosts are how I met your mother fans. But this reminds me of when Marshall, or when Lily goes to Marshall's family in like rural Minnesota,

and she is tasked with making, the Christmas salad, the traditional family Christmas salad, and it is like layers of mayonnaise and jello and Cheetos and like all of these things. And she's horrified that the salad is mostly mayonnaise. And that is exactly what this reminds me. I feel like manufacturing is such a weird word to pair. I mean, I get it. They're making large quantities of potato salad and pasta salad. But I don't know. Manufacturing, salad and manufacturing when they're like side by side like that. It just gives me like a weird vibe. Like I don't want to, I don't want to taste it. You don't want to eat food that's been manufactured bills? Is that what you're saying? Well, it's just,

I feel like it's a weird connotation. I get it. We've talked about, you know, large scale food processing. And, you know, when you see that stuff, it doesn't make you want to eat it. So. So, so Chelsea, one of, you know, let's say one of y'all's program participants, uh, brings up this deal and starts to think about it. Like what, what, what's the initial kind of reaction y'all would have and how to help somebody kind of think about this. I think my first thought as I'm reading this is like, okay, so which member do we have that I think this would be a good company for, right? Like every deal is a good deal if the structure's right and if the buyer's right, right?

And so I think it would be really great for somebody that has a background in food manufacturing. So we have a member who built a keto, I did like keto food manufacturing, right? He exited that company and is buying with his proceeds. And so somebody that already understands the market or somebody that has connections to the market. So I don't have this client now, but I once worked with in my consulting days, a food brokerage. Right. And so that's the middleman between brands and grocery stores, right, to get them into grocery stores like that. Somebody with that connection would be a great background.

It's got a healthy cash flow. So that's great. I think that as somebody that is the only one in my family, that is like, I don't love mayonnaise the way Michael does, apparently. I come from a family growing up that does, like a father specifically. And so I love the foods that they make, know what in my family, my immediate family eats them, though. So I love the product. I love the age, right?

So this company is almost 100 years old. Like, that is beautiful. We've had quite a few members acquire companies that are 100 years old or close to or over. And those, I just love those, right, for obvious reasons. I love the structure, right? It's a very mature infrastructure. It's a solid operations. And so the likelihood of being able to fill your own skill gap is pretty high with finding that talent internally.

I can't imagine that a company that's been around this long, this many generations isn't transferable, right? Because it's existed this long. And I promise one person hasn't been operating at that entire time, probably, because I would assume they'd be at least one. person would have passed on to, you know, greater pastures. And so I love that that, yeah, so current owners have taken helm in 2020. So I think that the question that I have is whether or not the current owners is a family member or if this was acquired. So I feel like we're seeing a turnover recently of deals that were acquired by AEs and are exiting fairly quickly, quicker than I'd anticipate, right? And so I'd like to understand why.

The current owner was in 2020. So those are my random thoughts. When I hear taken, the current owner is taking the helm in 2020. That sounds like succession to me. Agreed. You know, stepping into it. And then it says the current owners are nearing retirement. So that's kind of the only thing that would make sense.

It would be weird to me that you would buy a salad manufacturing company four years before you wanted to retire, you know, like as a 60 year old. and then be like, up, I got to retire. And also that you would close on it just before the pandemic, like in 2020. So this is probably like third generation family or something. And they want to sell it. It's a good thing to sell. I don't know, right?

They finally got their 80-year-old, you know, parents to be like, okay, fine. We'll retire. And they're like, well, we're in our 60s now, you know, like our late 50s, early 60s. And we don't want to wait until we're 80. right but what's interesting is whoever took the helm right they scaled it from six million to 10 million in sales in four years and this sort of gets at kind of my biggest question mark around this listing because i agree with chelsea i love how old it is but you know our friend brent bshaw always says small businesses don't say small on purpose

and this business is a hundred years old and it is making 800 000 a year even after growing 4 40%. So this tells me that, you know, in 2020, it was 70 or 80 years old and doing 6 million in sales. Why? Like, why is this still so small is my only concern? And then our current folks took it from 6 to 10. Like, hooray. I want to know how they did that. But like, could it be 50? You know, could the manufacturing facility support 50? Because that's the other thing you would hope is that there's scale in the fixed assets, right? In the current process, in the machine. etc. Or is there a ton of CAP-X to make this bigger? So that trajectory is a big question mark to me. I'm curious about distribution for a business like this. They say that, you know, they have military approval, which tells you, okay, this is not, you know, this is not a niche, like novelty food distributor, you know, food manufacturer that just distributes to like the local, you know, cafes. They at least kind of know what they're doing in terms of compliance. My wife texted me this morning and was like, when's the last time we had Boar's Head?

There's a, you know, Listeria outbreak with Boar's Head and, you know, multiple people have died. You have to, I mean, there's huge risk, right, with anything food manufacturing related for those type of foodborne illnesses. But these folks, they know what they're doing. If you can sell to the military and you can figure out procurement and compliance, but it just makes me wonder, okay, if you can do that, what's stopping you from doing it more broadly? or, you know, just pushing more volume.

Yeah, and I, that's the thing. Like, they've got SQF, kosher, and military approvals. Like, they got all this history. Like, why is this thing not bigger? And maybe that's recent. Maybe it's recent, right? And they have just been small scale up until this point. But I'm just dying to know, you know, what, what's the backstory with this?

I'm curious about customer concentration as well, because this is, I can almost imagine the potato salad at the market, you know, in the deli counter. This is kind of that sort of stuff. And it's very easy when you're serving that market to have a concentration, you know, of one particular chain, even with the military. Perhaps some of this growth was a military contract. And I've actually seen a food service company recently that had a lot of swings in revenue because of the military. It wasn't really a long-term contract. They sort of came in as, you know, a provider for a military base and kind of off and on, you know, the military would bring them in and say,

know we don't think we need you and then bring them back. So, you know, there's a lot of swings that can happen in in revenue if there's any concentrations. And I would imagine there's got to be some in this kind of business. I wonder about the consumer habits, right? So like when I was working with that client, they were doing a lot to try to get more helpful brands, right? Because consumer patterns have changed. And so I have to wonder what the expansion capabilities are for this company because there's a reason my family doesn't eat these foods and I do, right? And so what are the options to take less, um, less mayonnaise based like healthier food options, right?

Like yeah, like a, you know, and so I think that would be interesting because like jello salads are very old school. Like I don't know anyone that brings a jello salad to a party anymore. Um, and so the salsa, Hold on my wife listens to this. You haven't met my in-laws, is what I was going to say. Well, exactly. So we don't want the product to age the way the company's aging, right?

They need to stay current with the product offering. And so I wonder what the capabilities and the expansion, like what the possibilities are there to introduce new products. Okay. All right. So thank you for this segue, because I want to give you guys my crazy idea of how to make this a $30 million business. Are you guys ready? Yes. Okay.

This is where Bill puts me on mute. All right. Okay, so we've talked about one of our favorite businesses on the podcast, which is My Cookie Dealer. So if you guys haven't heard about that, the way my cookie dealer works is an Instagram account. They have hundreds of thousands of followers. And every week, they're a cookie shop based in Miami run by a Brazilian bodybuilder. And they do a drop of cookies that are just over the top kind of crumble plus, like imagine crumble cookies like took crack for a month. That's what you would get with these cookies.

So I think we're at a cusp where I think somebody could do the same thing with pasta salads, quinoa salads, just like crazy cool inventions around these things and make them cool again and sell them through social media. So you would get shipped like in dry ice, like different potato salads that you could break out to your family. So that's it. That's my grand idea. 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 Hodeco Conference 2025. If you want to learn how to manage multiple businesses at once, how to incubate new companies, or how other whole 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 at 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 AAP for 10% off.

Now, back to the show. I think you should do that. contract out the manufacturing to this company. Even the word potato salad is old school. Like if I say that to my kids, they don't even understand it. They're like, what? Salad with potatoes in it? You know, I mean, I think you have to have new names for the salads too, Michael, for this to work.

So delicious. It is. I was at a restaurant. We drove my son off at college. And we went to a cafe near the school and I asked them how the potato salad was made and if they made it on site. and the young lady waitress, who I think was the cafe owner, looked at me like I had asked her, you know, she was going to rob me.

She was so mad that I would insinuate they would go outside to get potatoes out. But I know a lot of restaurants do. Yeah. So these guys probably supply them. This is the California, Texas difference. In Texas, like the potato salad is assumed to me made in house. Excuse me. Excuse me, Arizona people.

Where did you make this? How did you procure your potato salad? I'm very curious. This is this heirloom potato salad or what? Yeah, pretty much. What is like the best possible in market for this product? Like what if you had to kind of rank, you know,

highest quality revenue to lowest quality revenue. Like I'm thinking based on what you're saying, Publix has like, you know, coolers full of, you know, different types like southern style and, you know, Midwest style and all this different stuff. To me, that's probably high volume, low, margin. The military is probably high volume and better margin. But if you could sell like,

you know, on demand, you know, weekly or something to local restaurants, but what do you think is like the hierarchy of quality of revenue for this product? I don't know. So I think number one, to answer your question, I think number one would be like catering and like one off type situations where it's like, hey, you know, we're going to be, we're going to feed 50,000 people at this, you know, at this race, right? And like a caterer calls you and says, I need, I need 1,500 gallons of potato salad, right? I think that's going to be your best, which, by the way, I kind of just want to be in that business where, like,

somebody calls you, it says, I need 1,500 gallons of potatoes. I think number two is going to be kind of mom-and-pop markets in terms of just being able to have pricing power and some sort of uniqueness there just because they're not going to be shopping around like a big grocery store chain is. Then I think you're going to start to work your way down to military. Like you talked about, military is hugely inefficient with stuff like this and doesn't shop around as much. But then I think the bare bones bottom that you don't want to be in is like selling this stuff to the scaled grocery chain or being a safeway supplier or whatever, vons or whatever it is in Southern California, where they, like, tell you what the recipe is and they tell you what they're going to pay you and tell you how to deliver it and all that kind of stuff.

And you end up making no margin. So, you know, I think that's the hierarchy of who you end up selling to here. Yeah, I also wonder how local it has to be or is, you know, because I find it weird that this is in. LA County, California. I mean, this is a manufacturing business. It's a food manufacturing business. All of your costs are through the roof in LA County, California, right? You could be almost anywhere else and pay less for labor and taxes and rent and all of the things that you have to pay for unless, of course, like we need potato salad overnight delivery to the grocery stores in L.A. County, in which case you have to be there. So that's a question. I think that's what it is.

I think because they made a comment about on-time deliveries, you know, so I think it is probably almost a route business in that respect that you're serving the groceries and the cafes and sandwich shops in a certain trajectory mile range around around the plant. That's my guess. So we probably have really expensive potato salad here just so you know. You're really expensive everything. You're really expensive. That but for everything you buy.

And it's not as good as Texas, it sounds like. So, you know. So our producer, Gustavo, just sent me that. And it is yearly, yearly search terms for potato salad and pasta salad. And I pulled it up on the screen for those of you on YouTube. Those things mostly get eaten during the summer. July 4th is what this looks like, right? Hell yeah.

Let's go fourth of July. Fireworks and. So we talk about who an ideal acquires is I'm going to say a summer seasonal fireworks business. Yeah, yeah. Just branching into the potato salad. Oh, yeah. Buy your fireworks and potato salad at the same same. Just what I need, more CAP-X and time in Southern California.

Perfect. So I think that's a testament to one of the features to like about this business is they're not just selling one product. Like they have a variety of products that they're selling, right? In terms of- I think the other peak's Thanksgiving. Macaroni and all that stuff. Like looking at that map, it's Thanksgiving and Fourth of July. That's when you want pasta salad or potato salad. Are those two holidays?

Speak for yourself, Chelsea. I want something right now. I'm getting hungry just thinking about it. It's so funny. My grandfather passed recently, and the best part was that I got so many different varieties of potato salad at the after the fellowship. And I remember telling my mom, there was pasta salad. There's like four times of potato salad. My kids wouldn't or husband wouldn't eat anything.

And I'm like just stuffing my face with my, you know, what I'm used to eating from my family. So what I do like about this, like if you're a buyer, if you're a buyer, if you're a researcher, right, if you're going through Chelsea's program. It's not, it's manufacturing, which is good. Like Chelsea, I'm sure you got a lot of people looking for manufacturing, but it's not like highly technical manufacturing. You know, you're basically mixing up potatoes and mayonnaise in a big bat. And like, yes, you've got to do the cleanliness and you got to be, you know, food safety and all that stuff. But this is not like tight tolerance CNC machining. Correct. You know, like there are much harder types of manufacturing than this. So I actually

like this for a searcher to come in. You can actually, you have a chance of coming up the curve here. And it's not like you employ a bunch of engineers who are going to look down their nose at you forever, you know, because they know way more about manufacturing aircraft parts than you could ever hope to. So I do like this for that reason. I also feel like it's got, I mean, I love it for that. I also love that it has hard assets, right? Probably I don't know like where the real estate plays in to it. So that's a little complication that I don't feel like dealing with right now. But I really like the idea. And this is just me as a human.

I'm kind of a collaborative community-based person. But I like the vision of like sponsoring like a community picnic. And it's like the brand name picnic because it's come eat as much as you can of our mayonnaise, you know, extravaganza. And maybe Michael can come. Right. Yeah, pasta salad competition. Like food unites people. So I do really like that.

Right? I like that aspect of this business. So here's a question. Are we walking into a buzzsaw with this deal, right? Like, I'm trying to think about my kids. They don't like potato salad for sure. And they're, they're teenagers. You know, we do not have the early 20s demographic, you know, represented a lot on the, on this podcast. Like, but like, I don't know that folks, you know, are we running into a bus saw that manufactured food like this is just going to be in trouble. And it's going to, it's the start of a big decline for. a business like this. I think if you could diversify it, I think if you diversify it, you'd have to, for me,

I'd want to diversify the product base. Like Heather said, I'd want some kind of quinoa, celery salad, something, right, that speaks to the younger generation. I also wonder about white labeling, right? Like if there's, can I manufacture for someone else instead of just try to sell my own products? Well, that's having been in manufacturing facilities like this that have made different types of pet purposes.

products, food, supplements, et cetera. A lot of this equipment is very generalizable to Chelsea's point. I mean, it's like the fillers and the mixers. I mean, you can make almost anything here. So yes, I agree. Like, will they still be eating potato salad in 30 years and the quantities they're eating now? Maybe yes, maybe no. But that's a long time.

Like, I don't think potato salad demand evaporates next year, but it probably trends down, you know, over time. So you have time to diversify. And you could very likely use the same fixed assets to do a whole bunch of different things, which is nice. So then a buyer needs to be maybe from the food industry or bring somebody in because they've got to kind of create new recipes that could sell. And then they've got to pull sales job and a pivot sort of that has to happen. So I think there's a little bit of risk there. And given that, I think the multiple is too high.

you know it seems way too high to me even even without thinking about the pivot and the need for it this is to me max four turns uh is what i would pay i wouldn't pay any more than that i'm not even sure i would pay that if there's concentrations agreed yeah i hadn't even got into the numbers yet but i agree and i wonder what cash flow actually means because everybody seems to use different words for different things and even the wrong words for the for things and so you know is that, am I talking about even a multiples? Am I talking about SDE multiples? Right?

So based on what we're seeing here, it seems too high. But I also wonder about, I still wonder about the real estate. So that's why I made the statement about real estate. Sometimes the multiple looks high, but it's because they're including, does it say anything about the real estate? I guarantee there's not, that's not L.A. real estate. It's a 25,000 square foot building. That's what I was thinking. That's not in there.

Yeah, they're renting it. They're just paying rent is hopefully in there. Let's hope that's in there. Well, that is a cause for concern for me because I feel like a lot of times this company's been there for 100 years. And so what are the term, what kind of terms are you going to get coming in as a new leasy in an market that's, you know, insane with real estate prices? Like how is that going to impact your model? And so while it looks like it's cash flowing like a reasonable amount for the searcher's typically looking for, will it get? eaten up, right, by increased lease costs or anything like that.

Mills, I think you need to do your bit about EBAA and CAPX and all the fixed assets in this business. I just was thinking, you know, even if you get forced out of the facility, you know, a lot of the compliance for these businesses is, you know, it's facility based. So, you know, you've got to get like the fire marshal and like you got to get your CEO and all those kind of things. But you're also going to have to get like the, you know, the health inspector to come sign off on this building, but also if you move buildings and maybe the real estate, the location is important or maybe it's not. Like you said, Heather, maybe it's route base.

So that that would be critical. You can't move an hour away to an affordable building. But yeah, who, I mean, who knows, you know, 90 year old business. My guess is that, you know, there's some deferred maintenance cap X. I would not even call this one, even though it looks pretty good. Here are the data points, right? Like, it's been sitting around and available for a couple months now. So I have a list of deals that I like to bring that I build up over time.

And so it's been sitting around. It seems too good to be true. And it's just like, I can imagine 15 different ways that this thing is just like a total non-starter because of some element of what's going on. For example, you know, customer, concentration. We talked about the real estate, pretty good chance you're going to, I would be shocked if looking at this deal are like, oh yeah, well, our lease is way below market and it expires in 18 months. I would not be surprised one bit that that's the case going on with this deal.

And they're not going to honor our terms. It's like grandma and grandpa, like one of those more senior generations probably own the building. And they're like, we're not renewing your lease because we want to sell. Like we're going to get a little bit of money for the business, but we're actually just going to retire off of the real estate. get out. Unless I was a specialist in food already coming to this, I would just swipe right and keep going on.

Go back to TikTok. Mills just made a really important point, though, right? Because this is like probably one of those classic American businesses that the real estate is worth more than the business. It's happened tons of times. They've probably been in this building forever. And the problem is in real estate, the value of the building is directly proportional

to how much rent they are collecting. right and so what they hopefully have done already is raise rent aggressively on themselves but they have almost certainly not done that so what will happen is as soon as you are in there they're going to start thinking about selling the building and they're going to realize they need to stick it to you on rent to maximize the value of their generational real estate and then you're very very quickly on opposite sides of the table yep yeah the real estate is the biggest for me we're coming up on time do you guys want to rate the deal thumbs up thumbs down Heather's

a thumbs down. Yeah, thanks. I'm sideways. You're always so positive, Mrs. Lender. Well done.

I need more. You're supposed to like this. There are fixed assets here. It's really aged. I mean, there's stuff to like. Potato salad. Come on.

Horrible. And this folks is why you should talk to a bunch of lenders because some lenders just don't like mayonnaise-based salads. Wow. Shot's fired. That's why you need a loan broker, right because I find someone who does like potato salad that's right right the

loan broker helps you find someone who likes potato salad or at least doesn't not like it Mills I I would totally I'm like enthusiastically thumbs up for the next step I want to know the exiting owner they've only owned it four years what's the story behind it are they just tired and they need like a growth partner do they need a catalyst I mean there's so many what ifs I could very easily imagine situation where you have a call with the seller and you're like, why did I just waste my time? Or scenarios where you're like, I need to get on a plane and go talk to this person because this could be a huge opportunity. Chelsea.

I'm with Mills. Like I'm, I'm concerned about the things we talked about, but I'm like super excited. I need more information. But I'm also a deal nerd. Like I will always talk to a seller. Right. And so, yeah, for all the things we said, I actually really love the business and I have a member in mind that I think would actually love the business and I'm going to go message after that. We need a follow up.

then we need a debrief like a month from now two months from now we uh yeah we definitely need to follow up and i need you to tell me i'm right when they call and there's some huge favorite that's that's all that's all i'm asking that's my only request for today just help me with my self-confidence because i'll bet i'll bet a large amount of money this deal there's when you click out of the you're like yeah like it doesn't work at all so we'll see how it goes but i think this is like part of what you have to do is a searcher right if you're a searcher you got to say I'm going to get the book on this and hopes that there's not a fatal flaw because that's how you find a good business. You can't just cruise around if you're searching and just be like, oh, I bet this has something wrong with it.

You'll eliminate them all and you'll never. It will stop. Like I always tell our members, number one, you can't assume anything. And number two, everything is a data point. Right. And so everything you learn gives you information about the business. But I would hope any lab members listening that you never assume the worst before actually confirming it, right? Yeah, that's why I'll thumbs up on this one.

I think this is a frog you got a kiss. Like, you never know. Because it could, I like the end. Like food manufacturing can be a good industry. There's fixed assets here. There's stable demand. People will be eating food forever. You know, this could be good.

I'm not saying it is. But you kiss this frog and you think you might find out that it's very good. So that's from a searcher perspective on thumbs up. There's still questions, of course. But, you know, if it was perfect, it wouldn't still be on the market. Exactly. Awesome. All right, everybody. Tell your friends if you like this episode and we'll see you next week. Thanks again, Chelsea for being here. We really appreciate you.

My pleasure. Talk soon. Bye.