Acquisitions Anonymous - #1 for business buying, selling and operating - Inside a High-Cash-Flow Waterworks Deal in the Carolinas

Episode Date: November 12, 2024

In this episode, the Acquisitions Anonymous team dives into the ins and outs of a $32 million waterworks utility contractor business in the Carolinas. With a strong cash flow of $2.3 million, this company’s focus on installing and maintaining underground utilities for residential and commercial developments makes it a fascinating opportunity for strategic buyers.Thanks to today's sponsor:Connor Groce's expertise in product innovation and strategy has driven exceptional growth for numerous brands, both in scaling their presence and creating transformative customer experiences. With a proven track record of blending data-driven insights and creative approaches, Connor helps businesses thrive in competitive markets. Learn more about how Connor's strategic insights and innovative approach can empower your business to reach new heights—visit connorgroce.com.Key Highlights:Region-Specific Growth Potential: The Carolinas are experiencing strong population growth, making this a potentially lucrative investment. But with heavy dependence on development cycles, how sustainable is this market?Growth Opportunities and Challenges: The business has a record backlog and is primed for expansion with the right infrastructure and talent. However, labor shortages in the industry and a lack of costing software raise questions about scaling potential.Ideal Buyer Profile: This episode explores who could be the perfect buyer—possibly a military veteran looking to leverage government diversity contracts or a strategic acquirer looking to expand their portfolio.Risk Factors and Due Diligence: From client relationships to transferability of the business, our hosts discuss the potential risks involved in acquiring a contractor with network-based sales and key dependency on skilled personnel.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]

The one thing that is worth betting on is the continued growth of this area. There's massive tailwinds for the Carolina's region as far as continued population growth, which drives everything. This is tied to a lot of home development, and, you know, which is a cyclical industry. So right there, I'm a little concerned. They're making $2 million in cash flow, but they have a backlog of work. And they say you could scale by just hiring more people is basically what they said. Hello, another episode of Acquisition Anonymous. We don't have 100% here.

Welcome to another episode of Acquisitions Anonymous. I'm your co-host, Heather Anderson. Today, we are joined by Chelsea from the Acquisition Lab, Chelsea Wood. She really helped us out on this episode. We talked about a contracting business that has to do with water infrastructure or plumbing infrastructure. Pretty interesting business. A lot of interesting points to it.

And we hope you like the episode. Hey, everybody. If you've listened to the show, you've probably heard us talk about franchises. While franchises can be a great path to business ownership for the right person, like there's a lot of pitfalls, and it's important to be really careful, as there are certainly good franchises to be in and bad franchises that you don't want to be in. Connor Gross is a friend of the pod and a resident expert on franchises, and Connor not only owns and operates his portfolio of multiple franchises,

but he's also a franchise consultant and helps others work through while picking the right franchise for them. So as he's sponsoring today's episode, everyone should totally click in the show notes below to join Conner's newsletter and attend one of his Gateway to Franchise Ownership workshops. If you're ready to move and move quickly, schedule a call with Connor and his team today. Election Eve, Acquisitions Anonymous tonight. How's everybody doing? We're all just constantly checking our phones for updates instead of doing the episode. Sorry, what was that?

It was 3 p.m. today, and I texted my friend's group, my CEO's group trap. I was like, I officially cannot concentrate. like I'm done for the day. I'm just refreshing X and texting people. Blam alone. And podcasting, I guess. So when I can't concentrate at work, we podcast. And here on the West Coast,

we basically have to go to bed at some point tonight. We just have to go to bed. No, you don't. Yeah, you could stay up until 3 a.m. and maybe know something. Well, yeah, but isn't it better for you, Heather? Because, like, I've got to stay up till 3 in the morning, but that'll be only midnight.

I guess it is worse for you. But I guess the last. time around it went so late you know we thought we would sort of know before we went to bed and no we did not so we'll see whereas we have gone to sleep and woken up and then we find out next morning yeah i if i go to bed without knowing i'm just going to turn off my phone i don't want any you know distractions we'll find out in the morning your best bet is probably sleep at like 8 p.m make at like 5 a.m and then you'll be breaking i'll plan for that that's good idea one of my guys today was like, I know I have to wake up at 4.30 a.m. to get to work. So I think I can stay up to

1.30 a.m. and follow along. And I was like, bad idea. Just go to sleep. I don't think, I don't think it will be over by 2 a.m. There's betting markets on that, too, about when it'll be called. I like the drinking game that you posted. That was a pretty good idea. Yeah, that was good. Yeah, the free press had a good drinking game for the election tonight, which you can find on my Twitter. Morgan Housel had a funny tweet about, you know, he's a, like, so the exit polls are not really trustworthy. Let's turn it over to the degenerate gamblers at this point. It's like, let's bet on what time.

That's a recession-proof business right there. Let's bet on what time the election results will be called, not just the election results. Well, last time we tried to profile a casino on this show, it ended up being a brothel, unbeknownst to us. Also, recession-proof business. Yeah, we did this whole casino. somewhere in South America because it was a really interesting deal someone sent us and then we published the episode

and we got all these tweets and it's like hey I'm from this country like all these code words you guys totally miss like that's a brothel it's a casino with like a lot of hotel rooms but like not a lot of like extended stay bookings you know and we were like huh yeah

in hindsight that makes sense yeah we had a really strong thesis about it on the recording and we were totally wrong. Well, we were right about the ditch risk is what we call you. You buy this business. High chance you end up in a ditch. There's been a couple like that where I'm like,

I think this might have interesting ties you should dig into before you go any further. Or don't. Or don't. Just avoid it. There's a lot of businesses that the mafia is borderline involved in. And we may have one of those for today. This is a site work contractor, a Waterworks business. I'm going to share the screen.

And I don't know. It's interesting that in the heading, this is from Viking mergers and acquisitions. They say it's a referral-driven waterworks utility contractor. I don't know, you know, a business like this, I don't know how they get business other than referrals. So I think it's kind of a funny way to lead it. But it says it's an electrical and plumbing or slash plumbing contractor. List price is market price. The revenue is $32 million.

768,000, cash flow of 2.3 million. The region, they say, is other unspecified, but the location is in the Carolinas. So Bill and I have very strong opinions about this. The overview is it's a premier utility contractor specializing in the installation and maintenance of water, sanitary sewer, and storm drain utilities across the Carolinas. Its primary focus is on installing and maintaining these underground utilities in commercial and residential developments. Sellers willing to stay on board in a potentially significant role. That's ambiguous, but I like it. Strengths, they say they have strong financial performance.

They have a record backlog, high growth market and industry, large recurring customer base, efficient operations, experienced and tenured staff, and abundant growth opportunities. They list the growth opportunities are implement new software for quotes, project management and payroll, increased capacity to take on more work, currently turning away business, bolster the marketing effort with a new website and new hire and sales role, and then pursue municipal and federal contracts, and then expand geographically. They again list that is just listing price of market value. There's a form you can fill out. The broker here is a senior advisor for Viking Kevin Carlyle. He sold his company in 2015.

became a broker, which is, you know, something that you see pretty often. Of note, Kevin lives in Charlotte. So I would put high probability, according to his bio, he lives in Charlotte. So I put high probability in this business being in Charlotte. Yeah. And then there's a picture here for those of you who are on YouTube. There's a bunch of site work going on. A bunch of dirt is getting moved. And there's some really big pipes in the ground. And yeah, what do you guys think about this? Interesting. Seems like it's tied to new home construction. that's my first thought is this is this is something recurring they have repeat customers these are probably the home developers i'm guessing you guys know the carolina's better than i do and

bill certainly knows charlotte better than i do but i'm guessing this has to this is tied to a lot of home development and you know which which is a cyclical industry so right there i'm a little concerned revenue's great at 32 million 2.3 cash flow but where is it going how long will the new home development be a thing in that area? And, you know, where does this business go when home development is on the down swing? So I think you're right on it, Heather. I mean, this is very leverage to expansion of the local market, right? I'm not sure if this is resident, like if it's single family home residential or if it's apartments or if it's additional, like we're not, or it could even be commercial, additional commercial developments. We're not quite sure what drives

this, but it's definitely development driven. like this is. So one thing, I live in Charlotte. The broker's in Charlotte. I'm going to guess this is in and around Charlotte. The one thing that is worth betting on is the continued growth of this area. There's massive tailwinds for the Carolina's region as far as continued population growth, which drives everything.

One interesting thing to know about Charlotte is that the municipal waterworks and plumbing is dramatically underbuilt. So we are actually at the point where we can't build more condos and homes, even though there's major market demand for it because there isn't plumbing infrastructure and waterworks infrastructure to satisfy that additional density. So now there's all these arguments between the developers and the city about who has to pay for upfitting because they've got to go back all the way up the sewer lines and the water delivery lines and the drainage lines, all this stuff and way upstream, like far away from the developments that are actually being done, to like make the big pipes like extra big, like even miles away.

So I would imagine that is what is driving some of this in the Carolinas. I found it interesting, though, that they said municipal was a growth area and didn't list it as their main clients. And contracts. What this business does, there's kind of segmentation within the plumbing sector. right and we talk a lot about home services and this is kind of downstream pun intended from you know the toilet that is in the house right so there's a plumbing contractor who will come you know fixture you know toilet that won't stop running or will install a new hot water heater for you or we'll install all that stuff under residential or multifamily new construction

this business is not doing kind of end user plumbing work what they're doing is is, hey, we're building a new development and we need to, like, let's just say it's residential and it's like a track home builder. We need to put storm drains in the road and we have to put that water somewhere. And then also we have to run all the wastewater out of this site and tie it into the wastewater system that the municipality provides. In addition, whenever you're disturbing this much dirt and whenever you're paving a lot, you have to displace all that water.

So the reason that there's that massive like retention pond, you know, outside of Walmart is because all the water that falls in the parking lot has to go somewhere and not flood the system. It has to naturally dissipate. So these guys are not probably really, you know, installing one inch PVC pipe in somebody's crawl space. They're installing like probably three foot or four foot diameter precast concrete pipe in the site, you know, prior to things actually getting built just to kind of frame it for people of the scope of what they're doing. Would you think that this is a subcontractor as part of the site prep for whatever GC is managing the project? Yeah, yeah, definitely. So you've got, you know, the GC who is the, you know, the prime contractor who's at risk. And then they're hiring probably a site work sub.

And then they're also hiring this type of, sometimes I see them bid together. But usually the site work guy is like, look, I just want to come in and I want to remove, you know, a thousand tons of dirt and I want to backfill and I want to get something like maybe pad ready. And then you have this other type contractor who they don't have, you know, tons and tons and tons of rolling stock. They need their equipment to, you know, move this type of infrastructure. But it's a different business and their infrastructure is different. So I do think it is probably a separate sub from the site work contractor. That's why it's referral base because they have relationships with those GCs, probably.

Yeah, interesting. Which sometimes says it's not really transferable, at least, you know, the lender's opinion in the construction industry, there's always a concern that it is so network-based that these are not easily transferred businesses. A new owner comes along and they don't know that network. Are they going to still get the opportunity at those same jobs? Maybe, maybe not. That's a good point. Chelsea, I was going to ask you, you know, what do you, you talk to a lot of buyers. do you steer them towards this type of opportunity or away from this type of opportunity

where there's maybe some relationship transfer that has to happen that's, you know, maybe a little bit more just kind of traditional business development, not, you know, build a great lead gen pipeline and just, you know, pour more into the top. It would depend, right, on their background and what the likelihood it is of the transferability being possible. So I love this business in general, right? We love infrastructure. If it was in St. Louis, I'd say no.

but being in the Carolinas, which is just something to bet on growth, it makes perfect sense, right? If it's somebody that has a background like a veteran or somebody that's done government contracting, somebody that has been in this space that can come in and become a partner and be introduced to those contacts, I have less concerned with the transferability. I don't know that I would recommend like Bob off the street, you know, that has no, like, no, like, fit, no value to the business by this kind of business. What I do think is interesting about this listing and just listings in general is you can totally tell who they're writing the listing for, like if it's a financial buyer or if they're

targeted PE or strategic buyer. And so I always just kind of members will come and they'll be like, why does it say this? I'm like, because they don't want you to buy it. They want a strategic acquirer to buy it, right? Like, they're not targeting you. So they don't care that you need to know that information. How do you think this one is written? Chelsea. Strategic. It feels like it's written for a strategic acquire. And what are the things that make it pop out like that for you?

Number one, like no listing price, right? Because a strategic acquire is going to pay a hell of a lot of money for $32,000 or $32 million of revenue, right? They're more worried about revenue than cash flow. And then if you scroll down, there was something in here about the owner being involved at a significant level. And so I can see that being. kind of an expectation when a strategic acquires the seller stays on and typically transfers into some

lesser role. PE firms maybe, like this could speak to me, like they're targeting a PE firm potentially. But the funny thing is I do have members that I could totally, now that we do have resources in the lab that can help folks buy bigger businesses, typically over two of EBITDA. And so I do have members that I think this is amazing for. And so, I love seeing infrastructure specifically because we all know, I guess it depends on the results of tonight what's projected. But I like the listing. I feel like we've been talking a lot.

Somebody I was just talking to, not in the lab, but like external about the value of investing and buying in this space. And so it is market dependent, though. Let me make that clear on this episode. I wouldn't buy. I wouldn't recommend this business in St. Louis, right? Which is not a growing market. 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 Holdco 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 Diable, who wrote Buy Than 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 AA pod. That's holdcodeconference.com and use code AAPod for 10% off. Now, back to the show. So, hey, I'm sorry I'd be late.

Hi. My buddy bought a business just like this, almost the same size. And the way he did it was entrepreneurship through apprenticeship. He actually went to go work there, worked his way up for two different jobs, eventually got the owner to a place where he could basically become a partner in the business and then bought the guy out, and now the guy has a boat and a corvette. And now my buddy works hard. So that's how that one worked.

It's such a great model and something like this because, like, you could ask probably five questions and maybe even less than five questions and like really pin down some key facets of this business. Residential versus commercial, what's the mix? And a lot of people will lump multifamily, you know, into commercial, which it is, but you kind of want to know the end. market. So that would be the first question, residential versus commercial. They mentioned installation and maintenance. I mean, I think if this was an 80% maintenance business, they would have said it from the get-go. But I'd be curious, what's the mix on that? They also, third, they tout a really big backlog, record backlog. That could be terrible, right? Depends on what's the gross margin, you know, on these jobs? Did you just run up your backlog? Like, I really want to drill into and

understand, you know, that for this type of business, for a subcontracting business, you can ask for a WIP schedule, a work in progress schedule that will show, right, contract value per job. It'll show the anticipated budget for a job, the cost incurred to date, and the anticipated profit. And you can tell really quick, how well have they been managing their job cost? And are they, did they just low bid a bunch of stuff for two years leading up to a sale? and now they're, you know, they've already baked that cake and you have to be the one to eat it.

But, Michael, to your point on the apprenticeship model, you can really dig in and understand where all the skeletons are. And not that there's always like intentional, malicious things people do in deals, but you can mitigate a lot of that kind of key systemic and also acute level risk by just being there day to day for a month, much less, you know, six months or two years. To your point, Mills, they indicate that implementing new software for costing is a growth opportunity, which means if they have this big backlog, you're going to have a hard time knowing what the margin on those projects is because there's not any kind of sophisticated way or makes it seem like it. There may not be a very sophisticated way for costing to be done today. A lot of times when I see contracting businesses, we get really concerned if the seller is the one doing the costing. because that's, again, another skill that may not be transferable. And so a little bit of a concern there. And to your point, yeah, what's the profit margin in the backlog?

Sometimes it's really hard to know. Can you diligence that, Mills, like the backlog costing, like how well this has been estimated? It's very tricky, especially if you don't know that much about, you know, about subcontracting, but also this specific trade. I mean, at the end of the day, this is a relatively simple trade. you're buying precast concrete you're probably buying um you know storm drain covers and like manhole covers and things like that and then you have a certain cost on the labor to go put it in and then you rent equipment where you own your own equipment and you take it out there the problem is is that

you know depending on what system they're using like there's a lot of businesses that are this size or twice this size who still do all of their takeoffs that's what they call it in the contracting business is a takeoff. They're doing all their takeoffs in Excel. That's their estimating. And where they're like, okay, they're looking at a set of plans and it says we need, you know, 24 storm drains. And so they, you know, put in a unit price for storm drain. Then they look at the plans. And what you don't know in this business, you live and die by the quality of your estimates. But the joke in, you know, in the estimating world is the first question when you win the job is, oh, what did I miss? Like everybody else knew it, right? And I left.

something out. So like, crap, go figure out what did you miss and then figure out how bad is it going to hurt you? You don't really know a lot of times until the end of the job or until you've gone to buy the materials for the job. It's one of the questions. It reminds me one of the questions that I tell people to ask after you buy the business and the seller kind of hangs around. Like, ask me, ask them like, hey, what is all the stuff I should know that you didn't tell me during due diligence? Like, and you'll be surprised what you find out. They didn't hide anything from you. But there was definitely some stuff you didn't realize that. that you hadn't asked about yet.

And they'll tell you, they'll tell you real quick. One of the things that I think is not talked about is number one, they're making two million in cash flow, but they have a backlog of work. And they say you could scale by just hiring more people is basically what they said. Why are they not hiring people? And it's because of the massive labor shortage

of qualified workers in the space. And so that is gonna be a hurdle that anybody that buys this is gonna face. And so making sure that you And this is a lot of these kind of types of businesses. You need to make sure you have a very clear pipeline for where you're planning on getting your talent because it can be real, real, real messy, real, real fast. Right. And that's probably why they have such a backlog is because they can't find talented workers. And to expand on that, I mean, people say, oh, like, let's get into municipal work or let's get into federal work.

Well, those are really, really difficult jobs to staff. You have to comply with Davis Bacon and Prevailing Wage Act. You can't just say, oh, like, let's just, you know, go to labor finders and pick up, you know, a truckload of people and take them to the job. They have to be W2 employees more than likely, you know, what? You can't do that? I thought that was a super sound strategy. Yeah. Come on.

But, you know, people are like, oh, this would be great. Like, let's just grow into, you know, and do federal work or municipal. And there's a lot more barriers to entry there, which is why, you know, it pays. So speaking of barriers entry to federal work, There's kind of an acquisition strategy hypothesis that I'm kicking around, which is that, and Chelsea triggered it when she said that if you were a veteran of this industry, you'd be a good buyer for this deal. But I was actually thinking if you were an actual veteran, you would be like a military veteran,

you would be an excellent buyer for this deal because veterans count for minority status when bidding for government contracts. So if this business is not minority or veteran owned right now and it could suddenly become minority or veteran owned, all of a sudden you have $32 million a year of experience doing this type of work. So all of a sudden you're a super experienced qualified waterworks utility contractor that is now checks the box for diversity criteria. I have a friend who is a veteran who bought a business and is crushing it with the business. this strategy because it's not just governments that have the diversity sourcing requirements. All large companies have that. So they can hire his company to do part of their construction project and a huge number of

dollars get put in the diversity bucket because he's a veteran. And let me be clear. Military veteran is what I meant for exactly that reason. Exactly that reason. I'm really excited to share something. Could I have 30 seconds? Okay. So, Bill, it reminds me of one of the coolest business models we've ever seen.

there are people who are military veterans who are business savvy, and what they do is take what your buddy did and go even a step further. They just make themselves middlemen primes for government contracts. So what they do is they go find contracts, and then what they do is they go out and they sub out to normal businesses who don't have any of the advantages of being veterans or minorities or whatever, and they just act as the prime and sub it out to them, and then they take a cut of the difference from whatever they charge on both ends.

and there are some people that have done there are some incredibly wealthy veterans that have totally just made a career out of doing exactly this so literally they just like left hand right hand like they have a contract they have a single sub who just does all the work and they just sit in between and do the billing basically they have a well to help an office of them and like five other like smart people and they're just sitting there going through open bids

that are out there with the government and then they say okay well how could we go make that bid happen and then they go find somebody who can like like a private company and say, okay, well, here's a cleaning bid. Like, okay, well, I'm going to go find this cleaning company guy or this education company guy, whatever. And I'm going to take 30% of every dollar just by managing the contract and being in the middle and making sure the procurement happens and being a veteran. And I know this works because I was one of the suckers that, you know, was on the back end

and was barely making money. And then I was like, oh, wait, the government's paid all this money. Anyway, so it's a genius idea if you could be, you know, find a loophole and take advantage of it. I think it's a little bit gaming the system, but it's fair. It's allowed. I have seen it many times, and I actually saw it in Hawaii where there was set asides for Native-American, Native Hawaiian-owned companies.

And what I kind of learned is there's kind of one group that is the Native American-owned prime that sits in the middle of all these other government military contracts so that everyone can do business there and comply with that rule. So yes, totally have seen it before. And it can be a moneymaker. It is a little bit of a workaround, I guess. There are some checks and balances with it, too, that don't get talked about that often. So it's called DBE status, disadvantaged business entity status.

There are personal net worth caps for DBE status. So the government says, hey, this is fine. You can claim DBE status. But we're going to limit. It doesn't include retirement assets. but right now, I think it got raised earlier this year in May, the cap now is like $2,047,000 in personal net worth cap for DVE status because what they don't want to do, they want it to be a propellant, right? We want a veteran to come. We want somebody who is minority owned, female

owned or service disabled veteran. We want them to get in the game and we want them to have a leg up. you that status starts to fall off in terms of how beneficial it is to you in receiving set aside contracts because of that net worth cap. Yep. There's set aside contracts also for just small businesses. So they interesting. I've seen people try to buy those businesses and realize there's not much of a growth thesis because as soon as you get past a certain size,

you won't be eligible for some of the contracts to renew. So yeah, they do sort of trap you into some of those sort of size standards, if you will. But it's very interesting how government contracts work and it's kind of its own world. Okay. Let's bring it back to the Waterworks Utility Contractor. So 32 million in sales, 2.3 million EBITDA. It's like a 7% EBITDA margin. What do you guys think this thing is worth?

Three times cash flow. It's a general contractor, dude. Like, I don't know what to tell you. I was going to say $6 or $7 million, depending on the structure. I mean, it's, these, these don't trade for that much. There's a lot of risk. I don't actually know in the Carolinas what the licensure and the regulation is around this subclassification. So if you, if it's a, if there's a specialty license that has to be held, then the price is, is going to tick down because, again, you need that surrogate.

You need that kind of, you know, son that you'd never had to step in and take over the reins for you. Do you think the price would go up if it was 80% maintenance? 100%. So we're assuming this is 80% new build, 20% maintenance. If it were flipped, you would probably get a better multiple. Yeah. Yeah. And there are some facets of this that have like really taken off that I think we've talked

about like those, you know, repair, you know, infrastructure in place. I can't remember what it is. But, you know, they like fill the pipe with like, you know, foam. And then it like is like a cast in place, you know, kind of fix. for aging pipes, like those businesses have boomed in the same way that people who are installing like fiber alongside the road, like those businesses have boomed and not necessarily busted, but I think the tide is probably going out. I think if this was that, you know, they would emphasize it a lot more. I think the focus on commercial developments, like commercial being listed

first, unless they did it alphabetically, I think the likelihood is they're probably heavier in commercial because they typically list the heaviest one first. I think based on the listings I see in the lab putting off this much cash flow, I don't have enough information to say what I think it is worth, but based on what I see, it would be higher than a 3x. If it's an EBIT a multiple, if that's an SDE multiple, then maybe 3X, but if it's an EBIT a multiple, I would say fine. It depends on what cash flow means to this broker. As it does always. All right. So, Heather, is this SBAable? Or, I mean, I know it's going to be a little bit above the limit, but.

Yeah, a little big. That's the main problem that I see. And, you know, if you could make the size work, maybe with the multiple or enough equity or seller note, then a lender would really scrutinize who the buyer is. And lenders with SBA are really big on the buyer having the license. Whenever we have a buyer buying a licensed business that doesn't have it at close, it's really difficult to get lenders on board with that. an SBA bank would want someone licensed.

If license was required. Our members would use private lender probably or, and they would also want somebody that has that connection, right? Like, it's just not a good investment otherwise for anyone watching that wants to know. So if you're SBA in this, you get the $5 million max. This is probably going to trade for $6 or $7 million, which means you need to come to the table with $1 to $2 million of equity.

Or a big seller note that has no payment requirements for at least the first two years. Yeah. So you could maybe squeeze this into SPA, assuming you could get underwriting comfortable with it. This is like at the top end for size. Right. That's right. Unless after this election, we get the $5 million increased like we are all hoping for. Ooh, that would be fun. We've been we've been hoping for it for a while. That plays into the general advice that we've given on this podcast, which is if you're going bankrupt anyway, you're PG and alone, you're going bankrupt anyway. You might as well go big. Girlie, advice. That was your back. Yeah, no, it's fine. Like, what's the difference between bankrupt and really bankrupt?

Like, just go for really bankrupt. Like, that's a big deal. All right, I think we're going to wrap it up there. Thanks for joining this episode of Acquisition Anonymous. Thanks to Chelsea Wood from Acquisition Lab for joining us. If you were interested in buying a business, go check out Acquisition Lab. I assume it's AcquisitionLab.com, or you can find it at the top of Google for Acquisition Lab. So thanks for being here, Chelsea.

And thanks to you, listener, for being here. We will see you next time. Thank you.