Acquisitions Anonymous - #1 for business buying, selling and operating - Pallet manufacturing for fun and pain - Acquisitions Anonymous 244

Episode Date: November 10, 2023

In this episode of Acquisitions Anonymous, Mills and  Girdley discuss a distribution wood products business for sale in Broward County, Florida, priced at $1.4 million with a $730,000 cash flow and $1.5 million in revenue. They analyze the industry's stable demand for pallets and highlight the potential challenges associated with the owner's skewed perception of the business's value. Despite these challenges, they emphasize the industry's low regulatory requirements, low-tech operations, and potential for sustained demand, indicating an overall positive outlook for the wood products market.Find the listing here: https://www.bizbuysell.com/Business-Opportunity/distribution-wood-products/2162283/?utm_source=smbdealhunter.beehiiv.com&utm_medium=referral&utm_campaign=new-deals-17-oct-2023Thanks 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.-----Double Jump Media is your one-stop shop for creating engaging, high-quality videos.Double Jump is a boutique video production company with over a decade of experience creating professional, memorable videos for clients from around the globe and in various industries. All while helping those clients generate millions in sales through video content.So, whether you’re rebranding a business you recently purchased, launching a new product or service, or want to look awesome, Double Jump is down to clown.Visit www.doublejump.media to check out their portfolio and schedule your free consultation today.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]

Acquisitions Anonymous, Internet's number one podcast about buying and selling and investing in small businesses along the way we talk about these amazing businesses. And today, me, your host, Michael Gridley, and my co-host, Mills Now had a ton of fun talking about a business with a ton of tailwinds that we liked right up until the very end. So stick around for this one, talked about a pallet business in Florida, and we have a ton of fun. Enjoy it. Hey, Michael here. Want to talk to you about today's sponsor for the episode, which is 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 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. at bookieming.com as the sponsor for today's episode. Mills, what's up, buddy?

On that note, I got all my politically incorrect things off my chest. You're hilarious. Well, cool. Well, anything going on exciting in your life? Anything we need to know about? I mean, it's always, it's always exciting, firefighting. I just got back from Chicago. I hadn't spent time in Chicago in a long time.

It was such a fun city. So clean, great green spaces. I'm like, I wouldn't even consider myself an architecture nerd, but the architecture was amazing. But then I got back and people were like, well, you didn't roam the streets at all, did you? I was like, yeah, I ran it an e-bike for like two hours and just peddled around. And they're like, it's like more dangerous than Iraq right now. I had no idea. There's like roaming mobs.

Like, people don't go out after dark apparently in Chicago right now. it's super interesting to see how quickly the social media stuff and the mass media can just ruin the reputation of the city. Like San Francisco, for example, you would think like the place is burning down. And I'm sure some neighborhoods are terrible. But in their case, it's like people who live there are like, well, you know, we're still fine. It's not like it's whatever the name of that Kurt Russell movie was where he goes like back to L.A. or whatever. Escape from L.A.

It's not like that. It was crazy, though. The office vacancy in cities like that is just, there's 15 million square feet of office vacant in Chicago right now. And that's like, that's not even, like people are still, you know,

in leases that are seven-year leases. Like, they haven't even renewed. But I wouldn't want to own, you know, a huge office building in a city like that right now. It's a good time to own industrial and a terrible time to own office buildings. So,

get on the wrong side of stuff you'll see well cool speaking of light industrial we have a deal to talk about what a segue how about that for how about that for a segue i got skills uh i moved all my stuff so hopefully this will uh it's like a surprise in a box every week like what what will michael have changed with his podcast set up new mic new lights new camera new screens i love it It's hilarious because I'm changing this light next week. I don't like it. All right. So here,

let me read this deal because I think it's very exciting. This is distribution wood products from Broward County, Florida. So where's Broward County? That's like Fort Lauderdale, right? Yes. Yeah, Fort Lauderdale. Okay. Cool.

So it is a biz by sale. So I actually found this on our friend Helen Gw's newsletter. And Helen, I love you. I'm sorry if I mispronounced your last name. But she has a website. in a newsletter called S&B Deal Hunter, and she basically sends her favorite five small businesses

for sale each week. So pretty fun. And I think we're going to have her as a guest in the future, which I'm excited about. Awesome. So asking price for this, the picture is a bunch of pallets. It's asking price is $1.4 million.

Cash flow is $730,000, and revenue is $1.5 million. So this business supposedly, Mills, are you sitting down, generates nearly 50% cash flow margins. So description, it's been around since 2008, gross revenue, $1.5 million. I said that, $150,000 in equipment and $5,000 in inventory. Opportunity, pallet business for sale.

Move quickly. All caps, if you're not on you to. Opportunity. Yeah. I'll say it that way. Make a quick offer. You can check out all numbers on DD. This deal will move fast.

This company manufactures new palettes with new used woods. and repairs used pallets. Business has plus 12 repetitive customers, some of them with current PO established, sales are increasing. The sale includes machinery, tools, limited inventory, box trailers, forklifts, straight truck, etc.

Complete asset list is available. Strategic location, very close to end users. Very profitable business and easy to manage. The business was established 12 plus years ago in same location. The seller is moving out of the country with other type of business, which motivates him to sell,

willing to assist the new owner for a smooth transition and for a good amount of time should qualify for a visa. 2023 financials based on July numbers. They're located in a 25,000 square foot building. Seven employees, they rent the 25,000 square foot building for $4,200 a month

with some open storage and awnings, and they've been there for over 10 years. They differentiate from others with service, higher quality, and specialty design products. Their clients are local from different types of industries, which provide seasonal variations,

other pallet businesses purchased from them. they manufacture new pallets and design palettes for special customers, lots of woods material. They can increase sales by increasing in production with the same equipment. Just placing additional workers or increasing the number of shifts. Web page and social media will also be a plus. They are selling because of other business interests. We'll train. You know, I think we'll train for four weeks at zero dollars cost.

Yeah. And, you know, normally Mills, I'm trying to become a new man. Normally I would poop on the English written here, but I believe Jorge, who is the listing agent, is doing this in a second language. And as somebody who just got back from Mexico sounding like a moron, I'm going to give him a pass. Great point.

A second language is really difficult. Kudos to Jorge. He got a lot of the stuff out here. So what do you think? Oh, man. I mean, one thing that jumps out of me right away is up in the very top title, it says that this business is relocatable. But then they also say that the business is very close to end users.

And they pay the equivalent of two bucks a foot for their industrial space, which I don't care where you are in the country. Two bucks a foot is way below market. You're not going to move. They also say that they lease the space, but there's no information. The lease expiration just says NA. So they may be month a month. They may have a 20-year lease.

We don't know. But, yeah, I can't imagine a scenario where this business is relocatable, also just the things involved in this business, it would cost, it would cost a lot of money, a lot of heartache to move this thing somewhere. This is not a relocatable business. It doesn't fit in that category.

They may mean you could relocate it by moving it next door if you wanted to. Yeah, like down the street, maybe. But I mean, two bucks a square foot for, like, even if this is classy industrial with like the roof caving in and no HVAC or heating,

like two bucks a square foot, is just so cheap. So I will say pallet-based businesses, pallet manufacturers, pallet repair people, I know a lot of people who have searched high and low for this type of business, and they are very hard to find, and I don't think they transact that often.

The 50% margins, I think, is probably not accurate when you get down into it. I mean, they can be notoriously kind of under the, radar surprisingly high margin businesses, but there's no way that this business is actually making that. Here's my bet a million percent. I bet the owner is doing all of the sales, all the account management and answering his phone 24 hours a day dealing with customers. And I bet that's why this is so profitable. Like I bet he's doing very efficiently three or four people's jobs. is why I think that's really,

really such outstanding levels of profitability and all that. Before we go there, let's make sure we talk about what this business does. Are you and I on the same page about what they do? I think so. Every major manufacturer distributor has to put their things on a palette to move them. Even if it's, you know, cardboard boxes full of widgets,

you've got to put them on a palette in order to ship them to a 3PL or to, you know, Target or, you know, Amazon or whatever. And most people, even if you're really, really good at manufacturing metal or wood products or widgets or electronics or anything, the palettes are like one of the lowest value aspects of what you're doing. You just want to get a palette and put your stuff on it and focus on your core business. What's weird about pallets is that if you need them, you're responsible right for procuring

them. Like my business, we're on the receiving end. we get stuff in on pallets and we throw them away all the time. Or we set them out on the side of the road and people come and pick them up and it's like, I don't know, they chop them up for firewood or they, you know, use them to build reclaimed furniture or something like that. So it's this weird marketplace where one side of the equation really values the product and the other side doesn't necessarily care.

There are some really big, you know, receivers, you know, big industrial folks who they maybe stockpile them and then we'll resell them to somebody like this or just say, hey, if you'll come take them, like, we don't have to pay to put them in a dumpster or something. You know, we just come get, we get 100 pallets a week or something, just come make them go away. So they're making them, they're repairing them, which are somewhat similar, right? But there's a lot of logistics involved because you got to take, if you have to take 100 pallets to somebody, it takes up a lot of space. It's a lot of, you know, it's not like just throwing, you know, a cup of coffee in your car and driving it across town.

Yeah. Well, in theory, that's a moat also for your business because it's guaranteed to be like a local business. It's kind of the opposite end, but the same benefit as like the people that own quarries, right? Or that own like distributors of like dirt or like this really heavy, like high volume stuff. And I think this is the other end of the spectrum

where you're looking at it and you're saying like, oh, this is a big fluffy thing that these pallets, Like when I was buying pallets, they're $5, $6, $7 a piece. They're probably $12 or $14 now, you know, 10 or 12 years later. But like you fill a whole flatbed truck with those and drive them over. Like, you don't want to be shipping those 500 miles. Like, it's going to cost you more of the ship than the pallets are worth. So that's, I mean, I think that's a big benefit.

If you can find a geographic niche, maybe like these guys have, lock up the customers, you can potentially have a pretty nice business. Yeah, yeah. And who knows, right? I mean, you don't necessarily. get a ton of information, but I mean, it's in Broward County. So like there, this is not automotive manufacturers that you're selling pallets to. Like there's something, some maybe mix of businesses, and we don't really know if there's any kind of industry, you know, concentration. We don't know

if there's like a sector concentration, but this is fairly, you know, fairly run of the mill. This is not finished carpentry. You're not building cabinets. You're not building furniture. these things are kind of rough and tumble. But it's like constantly, there's give and take, right, in terms of pallets, and this is maybe a little bit nerdy, but the best pallets are overbuilt,

and they usually are built to whatever the specifications are. If you're just moving something that's super lightweight and bulky, the pallet doesn't have to be that substantial. We just got in like a ton of really heavy weights for this roofing thing that's really specific. And they were put on power, that really they were probably not engineered for.

And the pallets broke as we received this stuff. And it's just a huge pain, you know? So I don't know, though, that like the switching costs, there's probably not a lot of switching that happens. Like, if you're a manufacturer in Broward County and you're buying pallets from this business, they just have to, like, really quit servicing you and quit showing up with more pallets when you need them

for you to go, like, find somebody else. Maybe even if they're anomaly cheaper. You're just not switching this kind of thing all that much. it's probably not a ton of volume. Well, I think that's a good place to go next with this one, like stuff to like about this deal, right? Like living in Florida is not that horrible compared to some of the other things.

Like we did that shooting range and like the middle of nowhere, North Carolina, it's like, no, no, thank you. So it's got that going on. Like, tons of tailwinds for sure, right? This is definitely a market where as more and more stuff is getting done here in the U.S. and more and more goods are getting shipped around.

You definitely have a situation where there's tailwinds to this kind of stuff. And you're seeing it in the light industrial real estate market, the heavy industrial real estate market, like they're all benefiting hugely from this stuff, kind of the opposite of what we were talking about earlier. And you and I talking about like a, that's being in the office market is not that great right now. So there's that going on.

Definitely appears that there's things to like around the repetitive customers that they have. They've got these 12 customers that they've had for a long time, brand, the staff is there, all that kind of stuff. Anything else that you like about this? It's been around for 15 years, so I like that too. It's relatively low tech, too. I mean, you don't need, you know, CNC routers, you don't need plasma cutters, you don't need real specialty equipment. I mean, you can, they probably have some table saws, some band saws, some miters and, you know, nail guns and compressors. Like, this is not a overly, you know, engineered type business.

So, you know, I worry in a lot of cases like this when you have this kind of, you know, owner operator type business that's, you know, probably been very founder-centric, really high margins like this, you just kind of know that the deferred CAPEX, like if this was a, you know, real intensive, asset-intensive, you know, manufacturing process, I would be worried about like that one guy's maybe like knows how everything is like duct taped together. And like, like, just how to make it run, you know, and you have to go kick it a certain way so that the machine will, you know, not break down. This is relatively lower cost items. These are not, you know, big asset intensive production capabilities. So I like that because you avoid at least somewhat of the ticking time bomb. You do have, you know, they say a box trailer, you know, forklift. These are things that are, you know, relatively, you know, small costs in the grand scheme of things. I also like there's relatively low regulatory requirements. Like there's no licensing here.

You're not dealing with, you know, we've talked about why I don't like being in the child health care or child care issue. It's like, you know, it's very rare that you're going to put out a palette and like put some six-year-old at risk. So I think that all has a huge benefit. The other thing that I like about this also, like you're just talking about it, I consider it like if you're going to staff your manufacturing thing with people and also equipment, like there's not like a bunch of random, like, weird things.

things you're trying to recruit from here to get. And you can buy all your equipment at Home Depot. Like, it's like, okay, cool. Like, I don't have to worry about like all the random crap out there. You mentioned too, like this is a business that is in the path of progress. Like we are moving more things in bulk, right? It's not, it's not, you know, becoming obsolete. When I was doing M&A advisory work, I would always drive by on the interstate in a certain part of South Carolina.

this massive pallet manufacturing place. And we used to joke that the stock in their yard, like how many pallets they had, because you could drive by and you could see, I mean, it was just thousands and thousands of them. And they were stacked, you know, like 40 feet in the air. We always kind of joked that there's almost like some kind of economic indicator. You know, it's like a leading indicator as to like how many pallets they have stocked up

versus how many, you know, they're moving and like what the relative inventory levels are. But all in all, this business is definitely, you know, it's not going to, Amazon's not going to come eat their lunch, you know. E-commerce sales are going to drive more of what they do in general, right, unless they have some really specific customer that we, you know, aren't aware of right now. But I like that it's, you know, it's not a dying industry where you're like, maybe I'll just be the last holdout and just milk it for all that I can forever. And then, you know, never really exists anymore. Like, I don't know, wagon wheels or something like that. you know, a hundred years ago. Buggy Whips?

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They're great folks and can help you on your journey in producing amazing video content to help meet your business needs and goals. And thanks to them for sponsoring today's episode. So about 20 years ago, there was a whole idea to get away from wood pallets for the, a number of reasons. One is they're like, they keep breaking and they're not, they don't have a lot of longevity. So what I have seen and what started to happen back then was they would do these like plastic molded

pallets. Yes. Yeah. And you're like, at first blush, you're like, this is a great idea. We could spend like, we could spend, you know, 50 bucks on one of these and it'll last for 10 years. But it kind of neglected the fact that so many times you're using pallets, you deliver the load and you don't want to wait around to get

your palette back. Right? So it only, it only exists in a very specific band of use cases. Like you're a big shipper, your Amazon or HGB, which is our big grocery here in San Antonio. Like, I'm sure they're using that stuff

over and everybody because it makes sense and they control their back and forth. But for like normal businesses, like I think you're exactly right. I don't see pallets going anywhere, which is a good thing. And I think usually those specific cases are like, okay, if it's food,

if it's a perishable food product or something like that, then you don't want the risk of, you know, wood, breaking, splintering, you know, the introduction of foreign objects, you know, into a regulated manufacturing process. There was also this thing that came up, you know, as pallets became like really in vogue for like woodworking and, you know, like making reclaim furniture and stuff like that, there were a lot of people who were going and sourcing these incredible exotic hardwoods. Because a lot of these pallets, if things are being shipped from overseas, they're just

cutting down whatever tree, you know, is readily available, just like we're going to. cutting down, you know, southern yellow pine, you know, in the southeast and, you know, making pallets out of it. But people would go, like, scour these yards of pallets and would go find this incredible wood and kind of cut it down. And so it's kind of like that idea, right? Supply and demand, we're just going to make this stuff with whatever's, you know, nearby. But these things also come. They get imported. Everything, you know, gets put on a container is usually palletized unless it's just stacked, you know, high in the pallet in the container.

But we end up with a lot of like random stuff. But that also introduces some just, you know, risk like, you know, chemicals and contaminants and formaldehyde and all kinds of things that end up in, you know, that process. Well, we would get China, you know, containers all time and they don't put stuff on pallets because it doesn't make sense to do it when you're loading the palate. But the one thing they did do with all that, what you're talking about, there were like regulations where it had to be fumigated like coming in the United States. they wanted to make sure, I guess the Asian something beetle, like got in here through a palette

that way. So, yeah, they're all fumigated. And you open it up and you're like, yep, smells like cancer. Yeah. That's actually whatever you open up on those things. Wood products is super interesting. Just really quick. So I have a friend who was in the wood product space sold a monster business.

They made light poles, utility poles, which they basically just cut down straight trees and then treated them with creosote and sold them to utility companies. but like you have you know in terms of wood manufacturing i almost wouldn't call this a distributor right they say distribution wood products but that makes them sound like they're a distributor they're they're like a very small niche manufacturer or a similar more than really manufacturer but um you have things like utility poles super niche and very very hard to like high cap x requirements to get into the space very very large customer relationship ships that are sticky and it's kind of semi-regulated.

Basically, like, nobody wants to be the guy who goes and tries to buy a new utility pole. Like, you need to use the guy everybody uses and has always used. And there's a perpetual need because they rot and, like, a hurricane comes through. And then all of a sudden, like, the co-op, you know, electrical provider needs like a thousand light poles tomorrow. Yeah. But same with railroad ties and, you know, other kind of semi, you know, semi-permanent, you know,

wood products. It's interesting. This is less permanent, less capex intensive, lower price point. But I do like kind of lightly manufactured, lightly value added wood products. And a mode around bulk. All right. So that's the stuff we like about this deal.

Let's go into the long list of things that we are going to hate about this deal. And I'll tell you my first one. Yeah, go ahead. My first one is that you are going to run into a seller who has a skewed vision and value. you for this business because to them they're going to see it as you as a buyer should buy his

business that is operating at 50% cash flow margins, which is a mirage because he's actually doing in my view of what's going on here, three jobs himself. So this business is not a $730,000 your business. This business is really like a $400,000 your business with the owners still working full time in it because I guarantee this owner's being a hero in the background. managing all the staff, like doing all the HR, like this person's all in the hustle. And so I think that's the first thing you're going to run into with this deal is just like, oh, like you're going to have to convince the owner of this business. There's a bunch of hidden profits that he hasn't been accounting for and hidden cost he hasn't

been accounting for. But anyway, that's my first complaint. I 100% agree. And I think those things are definitely true. I still think the margins are like high even when you factor in all that. And based on some of the other like clues in this listing, I would not be surprised. if there's some ERTC, you know, like one-time income that's included in the cash flow number where you're like, oh, well, yeah, okay, of course, there's $150,000 one-time, you know,

improvement to, you know, net income that is not sustainable and won't repeat into the future. Or like we saw it, you know, when PPP was coming out, everybody was trying to, like, add back, you know, their PPP loan and get credit for that as like a free cash flow, you know, multiple. but it's just, you know, you can, but I would not be surprised if there's also something like that happening. Another thing that's really interesting, this line of 2023 financials is based on July numbers. It would not surprise me if this business broker took a good July for them and has multiplied that July by 12. And also, right? Like, what if most of their revenue, like, what if 60, you know, 70% of the revenue happens in the first six months of the year and then you go back and you look and it's like, it's always

this seasonal. You've just straight annualized six months, but you can put together that actually the second half of the year is going to be very slow. The other issue is that, I mean, this business is 15 years old and it only does $1.4 million, you know, $1.5 million in revenue. So, you know, is it going anywhere? Maybe not. But is it going anywhere? Also, you know, like, it's probably not growing. The trajectory is maybe flat for recent history. There's these epics in the way a business grows, right? And how far you can, how big you can get until you start to change your skills as a CEO. And so, you know, in my model of the world, there's this ability where you as a single manager CEO hiring, you know, the wagon wheel structure of running a company where you're

the sole manager, you can top out somewhere around a million and a million half in revenue, right? If you just do rough numbers. And that, that of course differs by industry. But this smells exactly like that. Like, I bet there's like whatever number of employees there are. There's seven employees, seven total employees. I bet there are seven people who cut wood and one owner, CEO who does everything else. And that's why this business never got any bigger. So, you know, and unfortunately, the seller's probably going to look at it as well, that's how you run a business. Like, are you crazy? Like, and really, I can't blame them, right? Like, if you go to most people in the world and you say, your whole job is to service 12 clients and make sure,

and then manage these people who are cutting and driving trucks around, cutting pallets and driving trucks around, and you're going to make $700,000 a year. It's kind of like, well, sounds pretty good to me. I mean, you know, the work doesn't sound very fun. So I can't blame them for running the business this way, but as a buyer perspective, it makes it a little bit tough.

I think this is a perfect case of, like, price determines my due diligence. You know, you could get in and find that this business is really making maybe five or $600,000 a year in SDE and go, okay, it's trading probably appropriately. And your due diligence, you almost have to be prepared in this type of deal, in this scenario for like no working capital to be transferred at close, right? This seller is going to die on the hill that the cash is mine, the receivables are mine. and I will handle the payables myself.

And those are really hard, those are really hard battles to fight. But my guess is, is that if you get in best case scenario, the earnings are there, you need to be prepared to kind of pony up on a lot of things that, you know, you might,

if you were paying four or five times for an asset, you know, you would maybe have a little bit more wiggle room on. Well, this size thing, you're going to have to do a lot of work if you want to grow it. Or maybe you're the right person

that wants to buy this and you're happy to just live the lifestyle this guy lived. But guess what he's not doing, the owner of this thing, he's not going on a two-week cruise. You're not stepping away from a business like this. The relatively good news is you can do some of it remotely, but even still, like, you have to be in the office

every day running this business. Like, it's not a good work-life balance thing because somebody's got to be in there, managing the guys doing the cutting and screwing these pallets together and taking customer phone calls. I think probably a lot of their value is we show up, you know, at the drop of a hat and we bring you pallets when, you know, you call us screaming that you need them. It sounds like South Florida listed by a broker who doesn't speak perfect English.

This sounds like the standard, like beautiful thing about America, which is immigrants come in and build a beautiful life for themselves. It would not shock me if, you know, this is an immigrant from Colombia or Guatemala or something like that and just come in and found a niche and just killed it and is living in the American. I can dream. So I just want to, like, I don't know if we're allowed to clap for people, but it's just like, this is why, you know, why for in many cases, immigration is beautiful and the way it's, you know, it's a feature and a bug that it's hard to get into America, but it's like, this is why America works. Like, this is great. Like, I'm super stoked about this. I wish we had Heather on for this one, because the financing on this is kind of interesting. There's not a huge asset base. I don't know what you could actually borrow, you know,

to get this deal done, which I think there is probably some level of third-party debt that you could put on this, even though it is a little bit small, mainly just because of the price, right? But you're going to, you're not putting 10, 20% down. You're bringing a lot of cash to the table. And there's always these situations that are fascinating to me, which is the people who have the money to do this deal are smart enough not to do this deal. Right.

You know, like the guy who could stroke a $700,000 check is smart enough to go, this isn't really the business I want to be in. And I don't know that there's enough runway to realistically quadruple or 10x the size of this business. And so that's not the best use of my $700,000. Yeah. And it's also at a weird place in the SBA. You could maybe get SBA because of all the of all the personal guarantees and stuff like

that. Anyway, it's just, it's like on the small side where it's just like, if I'm going to like pledge my house and my net worth to do an SBA loan, like, and I give up risk my whole life, I'm going to do it for a bigger, more stable business than this. The other thing is, how hard do you think it is to start one of these businesses? From a capital standpoint, not that hard. From a customer relationship standpoint, I mean, you can, you can drive around and get an idea based on, you know, what size building they're in, whether or not they're a potential

customer and you could always, you know, say, hey, I want to start selling you palates. Can I win your business? Can I, you know, undercut, you know, whoever you're using and promise you that I'll show up, you know, whatever you need me and really just get hungry and hustle. You don't start off, you know, with a million dollars in year one. You probably don't get to half a million dollars in year one, but also, you know, your upfront cost, you could probably do for, you know, under 150 grand instead of 700, you know, or a million, million a half. It would not surprise me that if this business started with the guy who's the CEO now and is selling it, it would not surprise me if it started with him and his own mitersaw,

like in the back on an apartment building somewhere. Yeah. He just built it up over time. Yeah. He could have worked at one of these places, right? And they were having problems getting pallets. That's how a lot of these like wonderful businesses started is. They're like, hey, can I do like a side gig in addition to my W-2?

and I'll provide some pallets. And then, you know, a few years goes by. And all of a sudden, he's like, I'm going to leave my job. Because I can do this for 10 people and make a fantastic living. Yeah. Well, kudos to America. I'm on a collision course, by the way, to eventually own a warehouse with, like, quiet air conditioning and just like all kinds of video sets.

That's my thing. I was in a building yesterday. I was like, oh, I should totally buy this and, like, turn it into, like, Gridley's Media Playground. It'd be amazing. That's like the dude perfect headquarters where they can just do trick shots inside a building all day. Just do them all time. It was funny.

I went to like a business mastermind, which is like a two-day conference, which you may know who it was. But I was talking to another creator there of a person who's making a lot of content. And he's like, man, these things give me so much anxiety. Like I don't want to go to a big cocktail party for two days. I was like, oh, man, I totally feel you. Like I'd rather be at home in my office. like thinking about business and like recording videos

and returning emails and doing all that stuff and he's like, you too? I was like, yeah. There's a reason, there's a reason, there's a reason people called Twitter

the place where introverts go to be extroverted. It's pretty true. Anyway, I don't know how I got there, but I would definitely want like a layer. That's what I really want, like a video production. Cool.

All right. So back to this deal. It seems like, it has a thing is it seems like this is just be one that should just trade to some, you know, there should be a kid or a nephew that he's just like, yeah, just like, do this and pay me, pay me, I'll sell our finance 100% of it for you. Or, I mean, if you're in Broward County and, you know, you're scrappy and you're hungry, I mean, this business, you know, over the near term, it does not have to be all roads lead to the owner.

But again, it just depends. You could, you know, make a quick offer. you can check all numbers on due diligence, you know, as the broker says, you're going to know within 30 minutes, you know, of getting this information if the cash flow is actually there. And that's like the past fail

of whether or not this goes anywhere and actually if there's anything to this. It's a good space to be in. I mean, if you're going to pick a space to go explore, like, pallets and the tailwinds here, just it's good. I mean, this is much better than some of the e-com stuff that we've looked at in worth,

sticking into, for sure. Yeah. So, all right, so it sounds like neither one of us wants to do this deal. It's not a good, it's not a good one for the Acquisitions Anonymous, first business purchase partnership. But is this a reasonable asking price? Do you like this? It's like just under two times cash flow theoretically. Yeah, like I think that honestly, the pride perfect scenario here is there's a wealthy guy in Fort Lauderdale who has a couple of kids and there's one of them who's like, I don't want to go to college. I just want to get into business like you, dad, you know, or you, mom. And the parents are like, hey, you know, we would help you.

We'd help finance this. We'd help get you into this business and you're going to run it. And it is like infinitely better than, you know, buying a route of, you know, gumball machines or, you know, window washing or something like that. Like, I think this has a ton of differentiation than, you know, the typical kind of entry point of, hey, I want to get my feet wet and I want to try, you know, some business, so to speak. So I think there is a buyer out there at which this price probably makes a ton of sense,

if, but if the cash flow is real. Yeah. I bet you the books are a nightmare. Oh, my gosh. There's no doubt. There's no doubt. And like the amount of things, it's probably like reported on the tax return $300,000 a year in that income and the actual, you know, like,

like when you factor in the cash and, you know, they're recycling money that they get, all this different stuff, it's probably, that's probably how they get to that. This is one of the ones where there's like, there is no way. The bank account reconciles to the tax return.

Yeah. Like 0% chance. So, and I know that's way, I know it's that way with most, most businesses, because accounting, it turns out,

it's really difficult to have it 100% accurate. But, like, I guarantee there's, like some weird like, oh yeah, that bag of money, we forgot to create an invoice for that. Yeah, intentionally. Oh, who no?

Yeah. That's the, I'm sorry, sorry, we don't take, sorry, we don't take credit cards type move or we don't, we don't, sorry, we don't do ad voices, you just pay cash. Yeah. We had a guy once who was a vendor and we're like, he's like, I'm not taking a chuck. Like, okay.

And we're like, he's like, I want cash. like, okay. And we're like, look, you should know, we're filing a 1099 on you. Like, that's just how it works. Like, we have your Social Security number. We have everything. We're filing a 1099. So they know. It's just up to you decide if you want them to know that you know that they know that you know. Yeah. He's like, okay, the price just went up. Yeah, he's like, oh, okay, maybe we'll take a check. So anyway, okay, well, cool. This is a good one. Any other closing thoughts on it? I took down the share. So I really do want to know. It's the sim.

Please let us know. I'm dying to know if the cash flow is real or how fluffed up it is. Yeah. It's a good space. This just doesn't smell like the right opportunity or that exciting. But look, if you do, if you're some rich dad and you want to do what Mills said and train your kid to really learn business, this is, they'll have to work their ass off to make this business work. And yeah, it's a rough one. It's a rough one.

Cool, man. All right. Well, we'll close it down there. Thanks, everybody for listening today. If you enjoyed this, it was good to spend time with you, Mills. I miss you and your beard more than you know. And it was super fun. We'll click stop on this one.

And if you enjoyed this, tell your friends about it. We continue to grow the podcast. We're creeping up on a million downloads a year, which is pretty nuts considering where we started when it was like, when we first started, it was like, is this thing on? Like, that was our little old podcasting. And we're doing great from here. So thanks, everybody. We'll see you next week.