Acquisitions Anonymous - #1 for business buying, selling and operating - Make Millions Moving Dirt in Michigan - Acquisitions Anonymous episode 159

Episode Date: January 18, 2023

Michael Girdley (@Girdley), Bill D’Alessandro (@BillDA), and Mills Snell (@thegeneralmills)  talk about a Non-Union Heavy Civil Excavation Contractor in Michigan. We dig into the operations, CapEx dynamics that you should consider, and we dig into the Union vs Non-Union tradeoff.Would we buy this? Tune in to find out.Company: Non-Union Heavy Civil Excavation ContractorLocation: MichiganTTM Revenue 09-22 -  $ 10,213,927  |  Adj EBITDA 09-22 -  $ 3,142,246Equipment value   $ 4,000,000  |  Real Estate Value  $ 700,000Asking Price: Undisclosed-----Thanks to our sponsors! CloudBookkeeping offers adaptable solutions to businesses that want to focus on growth with a “client service first” approach. They offer a full suite of accounting services, including sophisticated reporting, QuickBooks software solutions, and full-service payroll options.----- Show Notes:(00:00) - Introduction(00:55) - Our Sponsor is CloudBookkeeping.com(02:28) - Deal & financials: Non-Union Heavy Civil Excavation Contractor in Michigan(03:15) - What is water skiing?(03:53) - How does this deal work?(05:29) - Red flag. Is it a deal-breaker?(06:44) - What are our first thoughts?(08:33) - Mike’s take on this deal(09:49) - Why should we give this deal a shot? Mills’ take(11:44) - What are the operative dynamics around the heavy equipment part of the CapEx?(15:00) - Why is this business easier to run when interest rates are lower?(15:50) - Are Unions that bad? What are the ups and downs of Union involvement?(21:41) - How much involvement is required from the owner in contractor based- businesses?(25:06) - What’s the catch with C-Corps & S-Corps and Real Estate? Is the hype to flip your company to an S-Corp advantageous?(26:30) - What fees should you pay to avoid future problems?(28:30) - Would we buy this? -----Additional episodes you might enjoy:#158 - $1.2mm revenue Court Maintenance Company for Sale! #157 - Make a $1mm/yr with a Language School#156 - 60% Profit Margin Amazon Online Community for Sale#155 - A $3mm profit-a-year water delivery business!#154 - A Truck Driver School for sale in Texas#152 - Should we buy this Ambulance company?#150 - Let’s buy a medical staffing business#148 - Growth Marketing explained: Shopify Superfood Greens Brand with 40% subscription rate w/ Baller Jesse PujjiSubscribe to weekly our Newsletter and get curated deals in your inboxAdvertise with us by clicking here Do you love Acquanon and want to see our smiling faces? Subscribe to our Youtube channel. Do you enjoy our content? Rate our show! Follow us on Twitter @acquanon Learnings about small business acquisitions and operations. For inquiries or suggestions, email us at [e-mail]

Hey, everyone, it's Bill Dallessandro and welcome back to another episode of Acquisitions Anonymous. On this week's episode, I really encourage you to stick around for the second half. Michael comes out blazing about why he hates this deal, but there's actually some real gems for Mills on the back half of this episode about what it takes to buy and run a business with a heavy amount of CAPEX. So there's some things I like that some things I'm not like, but it's a really instructive episode about buying businesses that do large jobs. with heavy equipment. If you guys like our podcast, I need to make a request. Every time, Mirko tells me every time I come in this intro and ask that you go leave us a five-star review, our rankings go up. So here I am, please go wherever your podcasts are sold or listened to and leave us a five-star review. It actually helps us out our rankings bump every time people do this.

So thanks a lot. I hope you enjoy this episode of Acquisitions Anonymous. Hey, Michael here. Want to talk to you about today's sponsor for the episode, which is Cloud. So cloudbookkeeping.com. So cloud bookkeeping is actually run by my neighbor, Charlie. So I've met him in person and can attest that he's a real human being and a good person. And what cloud bookkeeping does is offer a full suite of bookkeeping services all in the cloud for you around QuickBooks and other technologies that you're using as a small business owner. So if you're interested in getting the bookkeeping part of running a business off of your plate and focusing on, on running your business, Charlie and his team are one to call.

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

Charlie know that we're supporting him as well. So thanks a bunch and cloudbookkeeping.com as the sponsor for today's episode. So we're going to talk about a deal in Michigan. Have you guys been to Michigan lately? Not lately. It's January. Yeah, not good. You know what I've heard, actually, Texas is pretty famous for outsourcing our people during the summer to Colorado, but there are more and more Texans now going to upstate Michigan and being on the lake. Like, I've heard really good stuff. So I have friends here out of San Antonio that are well off, and they're like, yep, we'll be in Michigan. I'm like, no way. And they just say it's pretty great. So anyway, something to think about.

I'm aware, listeners, that Minnesota is not Michigan, but I went to Minnesota to last summer, two summers ago. And it was super nice. It's like same part of the country. We went on a lake. Like, it was cool in the summer. The water was even a little chilly in the lake, but it was really nice weather and beautiful. I assume Michigan's the same.

So funny story about Minnesota and Wisconsin. So I used to date a girl during college who was here in San Antonio and she was working at Sea World at the water ski show. And I was like, I was like, why are you from Minnesota? Like, what's water ski? And it's like there's a, whatever, it's the land of a thousand lakes. The thing to do is, as soon as the water temperature gets above freezing, you hop on the lake and you're water skiing. So like the entire Sea World Water, Professional Water Ski Show was a bunch of kids from Minnesota, because that was the thing to do. Interesting. All right. Well, let's talk about this Michigan deal. So you're going to, you're going to read it there, Bill? Yeah, yeah. Let me take us through it.

So it's called a non-union. They lead with it. Like very important. First words in the listing. Non-union heavy civil excavation contractor. And they lead off with ready to dig up some massive profits. And there's a picture of a huge excavator. The company completes excavation work, water lines, sewer lines, chemical sewer lines,

site development and restoration, pile driving, snow removal, and utility repairs for large industry-leading industrial companies. Typical job sizes range anywhere, this is a big range from $2,000 to $4.5 million per job. And I should tell you before I read the rest of this, they did TTM September 2020 revenue. So the trailing 12 months revenue is 10 million, 10.2 million, and $3.1 million of EBITDA on that.

They've got $4 million of estimated equipment value. We will throw it over to Mills for his typical rant about equipment. and value cabex and depreciation shortly. And they say they've got $700,000 of real estate value. So I'll keep reading here. It has 60-year relationships with its customers, and the company is one of the two specialty contractors in its geographic area of operation. It has minimal competition during the bidding process. The company consistently produces elevated margin levels compared to commercial and Michigan Department of Transportation contractors.

The company maintains a long. longstanding and experienced employee base with an average company tenure of 16 years and zero union ties. The owner supports the employees and does not micromanage, but will work alongside the employees in the field when necessary. Red flag, red flag. The company's top six managers have an average tenure of over 22 years. The management team is fully capable of running the company's day-to-day operations without oversight from the owner because he's not overseeing them. he's digging ditches next to them. The owner has spent most of his life working in the business and is ready to begin

the transition to retirement. He'd like to sell the business so it can continue providing service to its customers and employment to its loyal employees. Currently, the owner assists in day-to-day operations, purchasing materials and equipment, and working in the field as necessary. He is willing to continue in the business full time for one year post-transaction before transition into a part-time slash ad hoc role slash going to the beach. The company's facility is owned within the business entity, and the owners are flexible in selling, releasing the real estate with the business.

Buyer will be required to have a minimum of $2 million of available liquid capital to receive information about this listing. By the way, the brokerage here is Calder. This is a, you know, we've praised Calder because they're very professional and they write good stuff and they have good deals. But this is a strong Calder filtering move. You know, we talked about that before when we reviewed one of their deals, bill. They love to put this stuff out there. I do like Cullner, and this is also a great listing, but I think this is such cheese when people do this. It's like, like, who is sitting with, you know, like a fund here would not have $2 million liquid capital.

They would call the capital, you know, for the deal. So you end up jumping through all of these hoops or like if you're going to borrow or whatever. It's just, it really, I think it's a little bit cheesy when they say this. And the people who are buying $3 million, even. businesses are so turned off by that line for a bunch of different reasons. So like I think what this tells you, right, is that this is, you know, this is a larger deal. I don't, I don't, I'm not going to say this about Calder, but for most brokers, they use this line when they are doing a bigger deal and they're not used to doing a bigger deal. And it's always a tell for me that like, oh, this is at the

kind of top end of their normal size range or maybe past it. Yeah, because most of the. their buyers, they don't think we'll be able to afford it. So they're trying to filter them out. Yeah. Like when you're signing an NDA and they ask for your driver's license number, like, and things like that, it's, it's a complete tell that, you know, they're used to dealing with like, you know, $50, $200,000, you know, SDE businesses, not, you know, lower middle market. Yep.

Yep. So let's just last bits. It has 25 employees and operates the facility discussed earlier is a 12,000. 600 square foot facility, the split between a little bit of office and then a larger maintenance shop and the property is in an industrial area and there's other expansion opportunities nearby. And he's selling because he wants to retire. So what do you guys think? There was a lot of information there.

So I would like to point out the giant peak elephant in the room about a deal like this is this is a business that has been loving low interest rates and construction boom over the past 12 years. And that is all changed. Like all construction is grinding and slowing down massively. The first thing I would be very curious about is understanding how this business is going to get affected by the reduction in new housing starts, new neighborhood starts. Like even in the hot markets like San Antonio Austin, like it is slowing down drastically. Like the construction, the construction stuff.

And I like talked to one of my buddies yesterday who does development. And he's like, look, some deals don't even get past the permitting. They're getting stuck before permitting now because the interest rates are changing so much. We can't even underwrite the construction loans appropriately. And it's just like, oh, man, like what's going to happen to a business like this that's mostly new builds? That has me terrified about, you know, this is a bad timing situation for this. Michael, Michael, were you not around in the pre-show? Mirko just told you not to dump on these deals like first words out of here.

I like the deal. I like the deal. Sorry. Bad timing. Bad timing. Timing. Timing. So I think it depends, Michael.

Like, you know, they say that they're, they have higher margins than like DOT work. But DOT work is steady. And it happens year in and year out. And it doesn't really matter what's going on with, you know, track home development. It really depends on what their business is. If they're doing a bunch of industrial work for like big industrial parks and it's all maintenance related, Like, you know, we need to, you know, expand our yard and, you know, regrade it and put new crush and run out, you know, those, those are, those are kind of reoccurring types of things.

But if most site work is new construction related, and that's where the big dollars are, and you're right, it can be very boom or bust. It's the same with steel erecting businesses. And you're not making money unless something new is coming out of the ground. And that is incredibly cyclical. So I do like the size here, though, right? I mean, it's $3 million of EBITDA. It's been around for a long time. It seems like they know.

I mean, Mills, as I was reading this, this reminded me a little bit of the business you bought, like the roofing business, right? It's been around for a long time. It's got an owner who's kind of embedded in it, right? It's got decent size. This one's $3 million of EBITDA. You know, like some of the contracts are government, right? Like, yep.

I mean, you bought a business kind of like this, right? Yeah. Yeah. I think, though, well, but we don't have anywhere near this type of heavy equipment and this asset base. I would say that, you know, this business, you probably have to underwrite it to less than $2 million in like true free cash flow that's available for debt service. And so, you know, the sticker EBITDA is not even close to, I think, the starting point of what you could actually underwrite this deal around. What do you think it would trade for, Mills? I think it probably doesn't sell for, like, just actually what happens, this business doesn't

sell for more than like $8 million. I think it's- On $3 million. Yeah, yeah. So really, that's kind of like four times sellers discretionary earnings or four times free cash flows, what you're kind of talking about there. Yeah, yeah, because I think there's probably $700 to $800,000. dollars a year in CAPEX that has to be done, you know, maintenance related CAPEX, not even growth. Fixing equipment, buying new equipment, all that kind of stuff. Got it. Okay. Go ahead.

They say right on here that there's $4 million of equipment value, right? So I would love if you expand, this harkens me back to the it doesn't even pencil episode, 100 episodes or so I go. But expand a little bit for the listeners on kind of, so it's got $3.1 million of EBITDA and $4 million of equipment value. Why are you saying that EBITDA is fake? Well, just because that $4 million worth of equipment isn't static, you know, it's trucks, it's skid steers, it's tracos, it's probably like some small bulldozers and some semis. The big thing is you have to move this equipment around. You can't just like drive it from the job site back to your shop. You got to put it on like a low boy trailer and then you have to have a guy with the CDL to take it back and forth.

Things always break on the job. If it's a really big repair, then you have to take it back to your shop. to repair it. It's just incredibly problematic. It's always, always, always, always something is breaking. And so that $4 million worth of equipment probably has like, you know, just straight line, maybe a five to six year life. And so I'm just kind of round numbers saying $700 to $800,000 a year just to keep it going. And there's some replacement in there, but, you know, you're not, you're not totally replacing all the equipment day one. These types of businesses that are founder-led are just notorious for squeezing every last drop of life out of their equipment. So that $4 million worth

of equipment, you would really want to press, like, is that an appraised value? Is that cost? Is that, like, you know, a ballpark market value today? But my guess is that this equipment has been, like, road hard for a really long time. And they are just, you know, at the end of their life more than, more than not. Yeah. I don't want to call call her out specifically because I don't know that they're doing this. But speaking of being no. notorious for things. Business brokers are notorious for listing the equipment value at cost. Like, oh, and so are business owners, I spend $4 million on this equipment, right? Like, there's real value here, but actually it's like fully depreciated, barely hanging on and

needs to be replaced next year. Yeah. When it's, you can kind of do a mental math there, right? When if you understand, okay, this business requires $4 million of equipment to, to own and operate, right, and run, you can ask yourself, how long is that equipment going to last on average? And let's say an excavator lasts five years, right? So pretty much you can assume I'm going to divide that like value of what my equipment value is. And that's going to be at least the minimum of my annual CAPEX that I'm going to have to spend to buy new equipment, replace the old stuff, fix the things, deal with downtime, like all that kind of mess. So it's, to me, it's actually scary. That bigger number is is actually counterintuitively worse, right? They put

But the brokers think it's a good thing. And I'm like, ooh, that's not a good thing. Like, actually, I want that number lower. Now, banks love it. And to your comment, Michael, in a low interest rate environment, this business is, you know, it's at least marginally easier to run because you go to the Caterpillar dealership and they offer you like 97% financing, you know, on a piece of equipment that you can generate revenue on day one.

And as long as that stuff's not sitting in your yard, it's probably cash flowing. So let's talk a little bit about the union. union situation here. And a stout I heard the other day, by the way, I was trying to figure out why GM cars are so bad. And like, like, did you guys see the thread where people are like, you know what you should do, buy a Buick? And I went to go look at Buick's and they were horrible. Like the worst looking cars I've ever seen. Anyway, so it turns out GM in Michigan is 99% union based. And I was like, oh, like, now I understand why the cars are so terrible. So what is the union thing? What is the union? Well, I mean, ultimately, you end up with institution. capture, right? You have a situation in which does the company exist for the benefit of the customers, then the stockholders, and then the employees. And when you have a union, oftentimes the company like American Airlines starts to exist for the benefit of the union and not for the benefit of the customers or the shareholders. So, like, Mills, talk to me about

this idea of their trumpeting. There's no union involved here. Like, am I happy about that? Am I sad about that? Do I want that? Do I not want that? It totally depends on the market and it depends on their customer type. So my brother, I've talked about this before, but he owns a moving business. And he had somebody who wanted to, wanted him to do a job, move their stuff from South Carolina to New York. And he started looking into it. And he realized that he can't move anything to New York. He could take his truck there, but he can't unload it because the unions control the docks, all the loading docks. And so like literally, you can't take stuff off the truck and get it into the building unless it's a union employee. And they just control all the loading docks. And that was

that was basically their moat. So in the moving business, it means a lot. I think in the site work business, it largely depends on the source of funding. If these are federal dollars or state dollars, then it matters a lot. If they're doing a bunch of site work for schools and new construction and things like that, then, yeah, it matters a lot. And it's people, people make the unions out to be like the boogeyman. And I've known guys who have bought union-based businesses,

and I know people who run union-based businesses. It is very difficult and you have a lot of liability associated with the like long tail of union, you know, dues and obligations. But the really nice thing is, is if you need new employees, you call the union hall and they send you somebody and they're qualified. And they've kind of been through some training and rigor. There's parts of me, I don't want it, but there's parts of me that really find that appealing to just be able to call and say, I need 15 new bodies.

and for those guys to have probably much lower attrition than you deal with in the skilled trades otherwise. Yeah. Well, it's really interesting in that, like, I'm in Texas, which is a very low union state. Like, it's, they're actually, it's not a favorable state for unions. But if you look at what has happened is the government has actually displaced a lot of what the unions used to do. So like what you're talking about with that, like, the quality of potential employees, right? So like if you want to hire a licensed plumber or a licensed HVAC contractor or whatever in the state of Texas, the state of Texas has taken over that quality control. And also, I mean, and so the way they've done that is you have to pass this licensure, like you have to pass these tests.

You have to spend so much time in there. And then they've actually, the state of Texas has gone in and by doing that reduced supply as well. So the other thing unions used to do is because there's so few HVAC people or there's so few plumbers or electricians, like the rates are much higher than they could be, right, if it was very easy to become one. So it's really interesting to see in the non-union states how the government has stepped in and basically said, okay, union, thanks for trying. We're going to do it better. And there's parts of me that like it and there's parts of me that hate it. And just like you said, there's tradeoffs and everything. Well, and the same is also true from a workforce development standpoint, right?

So instead of, like in South Carolina, instead of unions providing that, we have a technical college network that provides welding and HVAC and framing and, you know, all kinds of skills-based training. in a two-year associates degree or in a certificate degree. And by the way, it's all federally or state funded. And so it's benefiting the workforce, right? But it's also benefiting us as employers because I'm subsidizing some of that training or, you know, the industries are getting subsidized training. Reading this listing, I think they don't have a ton of government contracts because it says they list out it's large industry leading industrial companies.

And I mean, there's a lot of things here. They say they enjoy super normal margins because apparently they bid on the, you know, they know how to bid well and they bid on the stuff that has good margins. I mean, if you are the type of searcher who is interested in a business like this, you know, and we've talked about, yeah, there's cap X requirements. Like, you know, yeah, there's some complexities here. But if you're the type of searcher that is not afraid of that, this strikes me as a better than average one of these businesses.

Do you guys agree with that? I think that these businesses can be surprisingly low competition because the barriers to entry are, you know, millions of dollars worth of equipment. That's really helpful. And if you can mobilize, any guy can go rent a tracko and go like pull some stumps out of the ground for somebody. But if it's a large scale project and you need a coordinated effort of multiple different pieces of equipment and multiple different phases of site work that has to coordinate with other, trades and engineering and stormwater and, you know, like they say utility and all kinds of different things. That is not a mom and pop. Mom and pop can't compete with you on this because you have to mobilize in force in a coordinated way. That is really cool. And I will just say if you're

into this kind of thing at all, it's a very, very, like these are massive toys for the right type of person. I think it's so cool to go on a job site and see this stuff. It is really, really cool, big, like if you're a kid, you kind of feel like a kid at heart with this stuff because it's, it's really freaking cool equipment. Yeah. And so for me, Bill, like, it's kind of like there's these types of businesses and like contractors are one, MSPs, so managed service providers in the IT space. They could be really, really good or really, really bad, even though they're both in the same community, in the same category, right? And so like an example there, like I have a buddy who runs a contractor that's, you know,

an order of magnitude bigger than this, but all they do is traffic lights. Like, they just do traffic lights, so they know who their customer is and, like, good luck competing with them. And by the way, they only have one major competitor. Like, that's amazing. Like, pretty great. Then you have the other end of spectrum, you know,

like I know people that do like custom home contracting. Like, guess what? Every time I turn around, I hear about him getting sued. Like, it sucks. Like, that's a sucky thing to be in. It's very generic. So, like, that's where people, you'll hear people talk and they're like, oh, like, you know, general contracting, contracting is a bad business or being an MSP is a great business. Well, sometimes MSPs are great businesses. Like, let's say you're the only one that does DevOps for, you know, high growth cloud startups. Well, that's pretty good. But if you're like helping people down the street get their Windows computers, like secured, like that's a terrible business. But you're both MSPs. So it really creates an interesting dynamic. Or if you're smarter, you can double click on this stuff and find some really interesting things. And this kind of smells like one of those.

Yeah. Yeah. I think so, too. The last thing that was interesting to me, I'm hoping Mills you could unpack this a little bit. This listing goes back and forth like three times discussing the owner's involvement. First, he is in the field digging ditches. Then he is not at all involved in the day-to-day operations. And then he works day-to-day in the business again. Ping-pong, ping-pong. Mills, I know you have some experience, you know, in a related industry with owners that were super

in it and then stayed in it and kind of trying to transition those guys out. Like, is this a red flag? Like, can it be done? Like, what are the best practices to make this work? This is every single construction-based business, period. This is every single one. The owner is in it. And, you know, it's a total, like conundrum because these things, I think, are kind of simultaneously true, even though they appear mutually exclusive. The guy who's starts and grows one of these businesses has to wear every hat. And these types of businesses reach a ceiling at some point because the owner that founds one of these businesses and can get it from zero to $3 million in EBITDA, it's an amazing thing. It's like a phenomenal thing. Like,

most people can't do it. But it is just through sheer grit and like a ton of common sense and the ability to wear a bunch of different hats at any given time. The problem is, is that they reach that ceiling of I can't continue to wear all the hats and micromanage and do all of these different things and all roads lead to me and go from 3 million to 6 million and EBITDA. Or go for, in this case, from 10 million in revenue to 20 million in revenue. It just, the wheels fall off and the person like strokes out, literally because they're trying to do too many things at once. That's just the nature of these businesses.

Five bucks. Based on that point, five bucks they do it looks at this and gets the SIM. I will bet, I'll give you 20 to 1 that this, whoever the owner is, their spouse has run the books for at least a year or longer and has been the account running. Michael, keep in mind, though, the person who signs the NDA doesn't need your five bucks because they have to have $2 million in the bank in order to sign the NDA. So you better up the, you better up the Annie. Okay. Wait, I just gave him a chance to make $100 in real American money based on some conjecture based on limited information. It's a pretty good deal.

So maybe a quality of earnings report would be in the future of this business if you were buying it. Definitely possible. One thing worth noting, and I think people need to understand this, is it says here the company's facility is owned within the business entity. And I'm very curious about how they've structured it. There are certain business entities like a C corporation in the United States that you are not supposed to put land and building inside of them for tax and liability reasons. It makes it very difficult to sell them because you have to basically revalue those things at the time of sale. So it makes it difficult to do an asset sale, for example, which is how a lot of these construction type contracting businesses transfer. So anyway, that's just a point. If you do buy a business, like talk to your lawyer before you buy your land or facility inside of your corporation because you can make a big mistake. Yes.

The S-corp's and C-corp. If you have real estate in them, it can be very hard to get it out. there is, I'm going to go on a brief aside here. There has become this like well-known, supposedly best and best in huge quotes here, best practice that if you own a small business is cash flowing, you should convert to an S-Corp, pay yourself a reasonable salary, and then take the rest as a distribution in order to avoid your FICA taxes on the amount above your reasonable salary, which sounds great on the surface.

But there are other potentially serious downsides to just blindly flip. flipping your company to an S-Corp and you should really, really talk to a tax attorney or a CPA, really, a CPA before you do that about the other implications beyond just saving a little bit of FICA attacks. I have seen people really, really shoot themselves in the foot by then having an S-C-Corp or even a C-Corp that they're trying to sell with big assets, especially real estate in it. Well, here's another great example. Say you own your facility inside of your operating company, right, in the same entity, and you decide you're going to let somebody put a food truck out in the front of your office building, right? They end up killing somebody. You get sued. Well, now not only is your land at risk when somebody comes after you for damages, but your business is at risk as well, which you could have solved all of that by having them in two separate entities. So it's kind of, of interesting. We've talked about how unprofessionally, seemingly this person has run this business, that they're doing a $10 million your business, but they're also running an excavator.

But this putting the land inside of the entity is just like a very basic own goal that you want to avoid when you own a business. Like, you just don't do it. And that your lawyer should tell you not to do this. That's the key thing. Like, where's this guy's lawyer? That's what I want to know. Sometimes, though, you as the buyer, it can be a, I don't know if in this case, sometimes being the buyer, the sophisticated buyer with an unsophisticated seller can bring a lot of benefits to you that seller might not have realized. So always have sophisticated tax and legal representation when you buy a business. Yeah, don't save $20,000 in legal fees because it can cost you millions. I've made that mistake many times. One of those mistakes is really hard to just

have someone tell you not to make. You kind of have to make it. Yeah. There was one time, no specifics, I saved $400 in legal fees. It cost $200,000 in several years to clean up. It was a mess. Total mess. Worth it. It sucks to be me. All right.

So how are we supposed to close this now? We like this deal, sort of. You buying it and at what price? Dude, I like, out of the last four we've looked at, I like the other ones better. But, oh, would I buy this? Yeah, I mean, look, if I found passion of this, I wanted to live in random, Michigan and the prospect of trying to take a contractor that has not scaled beyond where it could and get my hands in there and try to transform it. If that seemed like the right thing for me and

fun and I had $2 million in cash, yeah, I would call. I think Michael is failing the buyer business fit test on this one. So no. Let's be honest, this is a really hard buyer business fit situation. I mean, I like the hands-on nature of it, but I don't want to live in Michigan and I don't want to be in the site work business. And I think they're setting the bar way too high for the people who can actually sign the NDA and somebody's expectations are going to have to come back to reality, whether the seller imposed or broker imposed. It would not surprise me to see this one be the, oh, hey, we want seven times earnings for this business type deal. Or pay us for the assets and pay us for the cash flow, which is how you get to seven times. I mean, I hear all that, right? But if you want to buy a business like this, I think this seems a pretty good one.

We have looked at contractors who are much, much worse businesses than this, right? I mean, I think y'all's criticism here are of the location and the business model, right? If you don't care about the location, if you're in Michigan or yourself or whatever, and the business model is appealing to you, maybe your dad worked in construction, you understand it, you know, or whatever, this is great, I think. I mean, this is definitely like get a book and start negotiating, you know, if this is the type of business you want to buy. You know, I think we're, I think we're saying that if you are a generic business model agnostic searcher, maybe look elsewhere. But if this is the type of thing that appeals to you, I freaking like it. I think it's good. It's big. You know,

it's got private. It's not government. You know, I like it. Let's say you're a 29 or 30 year old recently married person who's been doing estimating, you know, maybe, got a business degree along the way and you're ready to stop working for the man and go, go find your own thing. But the right tool set, I mean, this is a great way to short circuit 10 years are trying to build a, build a contracting business on your own and make the transition from, you know, employee to operator. So if somebody's already in that space, I 100% agree with you, Bill, but that's the type of profile I think this could totally work with. The guy who just graduated Columbia Business School and is out on a search, I would not recommend this for you guys.

Go find something easier, like, I don't know, pet food or what's, I've heard. I've heard of heard e-commerce pets is really easy bill is that something they should get into so easy inventory-based pet businesses on the internet globally competitive on all the all e-commerce marketplaces or you know what searchers go try to buy a software business considering you've never you're barely able to turn on your computer yeah it's a really good idea it's got to go great for everybody buy your business fit matters a lot all right let's wrap this one up that does another episode of acquisitions anonymous we will see y'all next time.