Acquisitions Anonymous - #1 for business buying, selling and operating - Recruiting Business Valuation: Is 3x SDE a Good Deal?

Episode Date: May 22, 2026

In this episode the hosts analyze a niche executive recruiting firm serving the printing, packaging, and paper industries, debating whether its deep relationships and proprietary network create a durable moat—or a dangerous key-man dependency.Special thanks to Tighe Burke with SRCH for joining us on today's pod! Check out more here: https://www.srchpartners.com/Business Listing – http://bizbuysell.com/business-opportunity/reputable-high-margin-executive-recruiting-company/2446959/Welcome to Acquisitions Anonymous – the #1 podcast for small business M&A. Every week, we break down businesses for sale and talk about buying, operating, and growing them.Looking to build a professional website in minutes? Try Wix: https://wix.pxf.io/c/6898629/3115214/25616?trafcat=templateHubSpot is the backbone for how businesses scale without chaos. Try them out here: https://go.try-hubspot.com/OeG9VrSubscribe for more episodes: https://www.youtube.com/@AcquisitionsAnonymousPodcast?sub_confirmation=1Subscribe to our Newsletter: https://www.acquanon.com/newsletter💰 Sponsored by:CapitalPad is a private equity co-investment group for lower middle market deals. Accredited investors invest in searcher and independent sponsor transactions on a deal-by-deal basis, with minimums starting at $25K. Acquisition entrepreneurs with a deal under LOI can raise equity through CapitalPad's single-SPV structure, closing with one partner and one wire. Raise capital or invest at https://capitalpad.comAcquisition Lab – Your fast-track to business ownership. Get hands-on support, world-class resources, and join a top-tier community of acquisition entrepreneurs. Schedule your free consultation at https://www.acquisitionlab.com and mention Acquisitions Anonymous!The hosts break down a niche executive recruiting business focused on the printing, packaging, and paper industries. The company generates approximately $1.1M in annual revenue with $365K in seller discretionary earnings and is listed for roughly 3x SDE. What initially looks like a straightforward recruiting agency quickly turns into a fascinating discussion about retained vs. contingent search, proprietary databases, and the true value of industry-specific relationships.Key Highlights:- Executive recruiting firm focused exclusively on printing, packaging, and paper industries with ~$365K SDE on ~$1.1M revenue- Hosts debate retained vs. contingent recruiting economics and why the split is unusual in executive search- Major diligence concern: founder generates 60% of client engagements and key recruiters may hold most relationship value- Discussion on whether the company’s 200,000-profile CRM database is truly proprietary or just scraped public data- Deep dive into how AI tools may improve recruiting efficiency but still struggle with nuanced executive sourcingSubscribe to  weekly our Newsletter and get curated deals in your inboxAdvertise with us by clicking hereDo 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]

Welcome to Acquisitions Anonymous. Today's episode was a great one. There were four of us, which tends to make the episodes even better. And we had a special guest today who came in with a ton of industry knowledge and brought a deal that we took a look at and we all had a consensus view on it. So stick around to the end for that. Here is the episode. We'll set acquisition anonymous. Hello, another episode of Acquisitions Anonymous. We don't have 100% beers anymore. And thumbs downing on just the plus inventory line. Hey everyone, it's Bill, and I want to tell you about maybe the most exciting sponsor we've had in a long time on the pod. It's called CapitalPad, and it is the thing that I wish existed when I started my journey of operating and investing in small businesses.

So CapitalPad is a marketplace for acquisition entrepreneurs. That is, people who want to buy a business and need capital to list their deals and solicit capital from other people who want to invest. in acquisition deals. So if you want to back somebody buying a small business, CapitalPad is the place to do it. And if you want to buy a business and need capital, you can go on CapitalPad to be introduced to investors. So the really great thing, too, from the investor side is that Capital Pad takes care of all of the details that can get hairy with small business acquisitions. They handle standardized terms, standardized governance, standardized distributions all up front in Black and White. Basically, CapitalPad professionalizes investing in small businesses. And the returns can be

really, really good. I'm so stoked they exist. It's founded by my friend Travis, who is a phenomenal entrepreneur in his own right. So if this sounds like something that is appealing to you, if you want to buy a small business and need capital, or if you want to invest in small businesses, go check out CapitalPad.com and tell them that Acquisitions Anonymous sent you. I clicked, I clicked record. Oh, we're doing it. Okay. We can't talk about Viata Bravo because we can't let the secret out.

Well, Ty, welcome. Tye's our special guest co-host today. And believe it or not, Mills makes him guest of the day because he brought a deal, which we'll get to in a second. You always get like three gold stars for bringing a fun deal. So, but Ty, before we get started, tell our listeners sort of who you are and why you are qualified to talk about small business. Like, why are you in this world? You know, what's your experience?

Yeah, I run search. Search is a boutique, executive search business. So we've been around for about six years and we recruit primarily operators. I referred operators as CEOs, general managers, president, sometimes COOs, but someone to be going to have P&L responsibility for, for our business. business. I'd say half the time we work with founders who don't want to run their company anyway. They don't want to sell their company. They don't want to run their company. They want someone else to do it. So we'll recruit their successor. And then the other 50% of the time we work on behalf of investors kind of like lower middle market investors, sub 100 million revenue typically

companies are typically profitable. And it started out, we started out doing a lot of internet based businesses, SaaS companies, Indie commerce, you know, working, recruiting a lot of executives for these types of companies. But word of mouth got out and industries have changed. We recruited a CEO for a chain of daycares in New Jersey. We recruited a CEO for an orthopedic brace company. We recruited an executive for a soil analysis company for right now we're working on a CPG meat company.

So it's changed a lot. And that's, you know, so part of like what in my world. is just interfacing with founders and entrepreneurs and investors of businesses all over the world doing really, really interesting niche stuff. And I get to hear a lot about the good and the bad of a bunch of different business models and stuff. So I'm excited to share a little bit about what we found today.

So what I'm hearing is you are the dream bringer. So this is like when people buy a business and are like, oh, I'm just going to put in an operator, like this mystical operator. You find the mystical operator. I wouldn't say it as succinctly as you just did. But yeah, I think you might have just developed my new brand. Are you my new brand guy?

There you go. I am the brand guy. I came up with the name for the podcast. That's why they got me here. I'm the brand guy. So, Ty, are you guys, in terms of your business model, do you do more just straight up recruiting kind of direct tire stuff? So fee per success fee?

Or do you guys do retain search or do you vacillate between the two of them? kind of how do you, where do you guys live in that spectrum? Yeah, good question. We were retained. So we take part of our payment up front. And basically that's a big sign of a commitment that you're, you know, a lot of people, I think that the Twitterverse likes to talk about just hire an operator, just delegate. A lot easier said than done.

And so we want to make sure people are willing to back that up. So we do charge a retainer up front. And that's kind of it. I mean, it's pretty straightforward. We go and we find this person. We ask for a specific set of skills, experiences, competencies that we want this person to have because they do exist. Like whatever, kind of any type of person you want to run your business, they do exist.

And it's just a matter of being really, really diligent about what those skills are, what those experiences are so that we can then go find them. And that's kind of the main core of what we do. go find very specific people to run really cool businesses. I have so many questions about this and we will get to the deal eventually. But how

are the comp packages typically, so because alignment is so important, right? So I'm not talking about quantum of comp. I'm talking about structure of comp. Right? Like, what in your, what have you seen that sort of works best

when designing comp for a high-level executive who's going to run a business that you own. You know, interestingly enough, I gave the talk at HoldcoConf this year. Ah. And what I said was the numbers don't really matter. Like, you can't talk to your buddy, be like, how much do you pay your CEO? Because it's not you as an owner are going to have different motivations than your buddy.

And your business model is going to be different. And the type of candidate you find is going to be different. And so the total number is not nearly as important as the structure. I have a full deck. I could talk about this for hours, Bill, but basically, like, you want to align on kind of four main things. Like, depending on your business model, the economics of your business model, depending on the candidates risk profile as well, you might recruit somebody who's a proven CEO of the done it once or twice. And if your goal is to sell this thing and that guy knows that, then he's going to be like, great, give me a buck 50 salary and I want a bunch of equity on the back end. or if you recruit somebody who's 33 and has a young family and really needs cash, then you're going to weigh that part heavier than potential event stuff.

So that kind of ties into your own goal. If you're just trying to cash flow this, then you don't need to include any equity. But you could design it so that this person is incentivized based on quarterly EBITDA growth, which is a really common thing we see. And then also like there's a time horizon sort of. influence, right? If you're trying to get this done quickly, if you're not trying to get it done quickly at all.

So it just kind of depends. There's like four or five different variables for what you're trying to achieve that will then allow you to design the comp that you want. So it's not a very simple answer. We have lots and lots of data of all the places we made, of course, and no two are the same, which is really good. But typically, like, your buckets are functionally

cash comp, annual bonus, you know, kind of call it short. There's like base cash comp, there's performance-based cash comp, and then there's typically like performance-based long-term comp. Equity and equity-like comp, right? Like those are your buckets?

Yeah, yeah. Now, yeah, generally, yes. Yes. They make it easy. Okay, I could go all day, but I do want to, you brought a deal that I think might draw out some more of these questions.

So who's reading it? I'll do it. You want to do it, Mills? Sure. Do you have it up? All right, it's biz by sell, which is, our most sought-after sponsor. They really want to sponsor us,

but they haven't told us that yet, but we can feel it. It's a reputable, high-margin executive recruiting company, which I can't wait for- Not-type company. Not-Ty's company, but I can't wait for you to just blow our minds with this. It's in Lake Country, Illinois, and it's relocatable. They're asking $1,135,000, and the SDE, which they're saying cash flow, and SDE are the same thing here. There's no evada disclosed, but 365,000 in SDE on a million

85,000 in gross revenue. So it's about 36-ish percent net margin, and they're asking roughly three times SDE. And the description is it's an established executive recruiting firm specializing in high value permanent placements within the printing, packaging, and paper. industries. The company is known for its refined approach to sourcing top-tier passive candidates, utilizing a combination of proprietary databases and industry-leading tools such as LinkedIn recruiter, Zoom Info, and SourceWail. I can't wait for you to talk more about this, but those don't seem very proprietary, but the business has consistently generated around $1.2 million in annual revenue with peak years reaching $1.4 million. Client relationships are structured through a mix of

retained agreements, which is 45% with upfront payments, and contingent placements is 55% of the business, with average placement fees of roughly $35,000. Clients pay promptly, typically within 10 days, and more than 80 ongoing partnerships are maintained through high-quality service and trust. Team has five experienced recruiters and a dedicated research professional. Two senior recruiters have over 15 years experience and maintain extensive networks, while the research director manages candidate sourcing,

providing 50 to 100 qualified prospects per search. That seems like a lot, but maybe not a good thing. The current owner is responsible for business development, generating approximately 60% of client engagements. Wow. And 36% of total revenue, while the remainder of the team handles both client servicing and new business efforts. Internal operations are fully systematized with structured weekly meetings,

401k plan with a 6% match strong mentorship program for new staff firm CRM has 200,000 candidate profiles and 125,000 company contacts. They say it's entirely relocatable, can be operated remotely from a small office. Seller is open to remaining involved for up 18 months for a seamless ownership transition. With strategic leadership and additional hires, the firm has significant growth potential with revenue projections between 2 and 4 million, rare, chance to acquire a reputable niche focused executive search firm with recurring revenue, exceptional client retention, strong industry reputation. So they have seven employees listed here, six full time, one part time. Michael, we scroll down a little bit more.

And, yep, they just lease some property in Lake County, Illinois. That's it. That's what we got. What do you think, Todd? Blow our mind here. All right. Lake County is a little different than Lake Country. You're not to call you out, Mills.

I know we just. Oh, my bad. Did I? Oh, okay. Lake County. Yes, yeah, late country sounds a lot better. It sounds romantic. Wherever Lake Country, Illinois is, like, I want to know.

I've been to the late country in England, which is like up near like, Jessica. I probably did picture that, as I was saying it. Something tells me this is not like that. Well, there are a lot of lakes up there in the border between Illinois and Wisconsin. So that's exactly where this is. In fact, I think I might have found this company, but I'll leave that. We try not to do that tie. People get mad at us when we do that when we announce it on the air.

We'll have the editor edit that part out. Well, it's okay that you find them. We just don't want to dox them. Yeah, we just don't dox them. We routinely will find them. We just don't, we don't tell anybody we've, we don't tell anybody who it is. So that's it. So you're fine.

So a couple of things that kind of immediately stand out to me are, there's, there's some interesting things and some maybe concerns. The 45% of their business that's retained, like I come from the retained world. It is way more lucrative than contingent. And let me explain the difference between contingent retained. Michael needs a CEO. Michael hires Ty. Ty says, okay, you need to give me part of your fee.

I'm taking part of this fee up front to show that you guys are committed to making this hire. Great. Michael pays it. When we find the CEO, the rest of that fee becomes due. Everyone walks. Everyone's happy. On the contingent side, Michael wants a CEO. Michael hires Thai, but he says, as soon as you find me a CEO and we hire him, then I'll pay you your full fee.

Okay, so contingent recruiting is typically done for like lower level positions, I would say. And so immediately that tells you that there even is a split. It's quite rare, honestly, to find recruiting firms, search firms, executive search firms that do both of these. So that's just a little bit odd to me. But there is some retained. Okay, let's say 45% of the revenues retained. That's decent. I would say clients paying within 10 days.

That's pretty good. Is a $35,000 average fee low? So that's, it is, but let's think about the context here because this is a printing and packaging and paper industry business. I don't imagine those salaries, even for a VP of sales or whatever, are that high relative to other industries we might see. So that is, it is lower than I would expect, but let's keep that in mind. And the second part is the contingent fees that they do collect, that they are successful with, inevitably are going to be lower than those retain ones. So it's going to skew that average fee down a little bit there.

And they could be, it does say high value, but like they could be placing everybody from VP of sales to like on the phone salespeople in this industry. Like if they're, I would think, Ty, if they're specifically focused on one industry printing, packaging and paper, you're probably kind of a little bit more full stack, like full org structure, versus if you're like just doing CEOs, you know, it might be a little bit more transferable. I would think so. And that actually brings up another really interesting point, which is you would have to, we would have to understand the off-limits agreements they have. So if they have 80, what do they say, 80?

80 ongoing partnerships. Okay. So that's 80 clients that they've worked with. I don't know the size of this industry, but if you're, if you've got 80 relationships with companies that you've worked with, you probably cannot recruit out of them. At least you shouldn't.

Ethically, you shouldn't. Right? If you're paying you, then you shouldn't recruit out of them also. So that, like significantly narrows down the pool of people that you could be recruiting from, assuming you wanted to recruit people from,

like with industry experience, right? So that part's really interesting. I would need to like understand. a lot more about the quality of these ongoing 80 relationships. You know, are they someone that worked with them four years ago or have they all been done the last 12 months?

That part's unclear to me. I think the biggest thing I would have really understand is like this division between contingent and retained because the other thing about retained is, you know, when you take on a retained project, you're getting some income, okay? You know,

most of the time you're probably going to get the full fee, but 100% of the time, you're going to get some revenue, right? On the contingent side, they say 55% of their deals are contingent. Well, how many of those are actually paid this company? Like, we don't know. Like, what's their close rate, basically? They could have a lot of engagements, and if they don't close any, the pipeline's worthless.

That's a ton of waste of time by their recruiters. That's why, like, recruiting firms are often set up to be, like, purely contingent where, like, they're going to do a six to eight-week sprint, and they're going to get this person, if not, peace out. They're going to go, you know, work on another thing.

And retain is more like three, four, five months. This strikes me as one of those services where the better you are, the more you move up market, right? Like, in terms of,

like, comp for the hired position, like, if you're really good, you are not placing, like, data entry folks in, like,

the payroll department. If you are really, really good at what you're doing, in terms of having a clear expectation from the person about what that role needs and then finding the exact person for that role. You would move up, you would move up market in terms of common. Unless you figured something out. Like there's probably a guy who does data analyst recruiting who crushes and he does way better than we do. You know, but there's probably like one of them. So I don't want to necessarily throw shade on contingent, but typically, yeah, like that's a, it's a lower margin business.

It's a lower successful rate. There are people who do it really well and they focus on. like one specific function and that's like makes them that you know the G at it but but I would agree with you so we had in our business we were constantly placing like people in our warehouse and so we had a search firm that sort of help us did that it was contingent but like there was such a regular flow like we'd hire one a quarter like on repeat so like they were okay with contingency and they just got paid every time so does that typically or was that anomaly, Ty? I mean, like, could it be that these guys are half contingent,

but it's like quasi contingent because it's a repeat business? I would say a protection around being contingent is if you, if the recruiter puts an exclusivity clause in there, right? Because what's stopping you, Bill, from talking to 17 other contingent recruiters to just find you the one person? You're only going to pay one of the 17 recruiters that you hire. Yeah, you might as well get 17 guys working on it and pick the best one. Right, right. At the C level, you don't want that. You don't want 17 recruits, you know, banging down your door, calling the same candidates. It gets messy. It's terrible for the brand. But for that level position, it might make sense. So I don't know. Did you guys have an exclusive agreement with them?

We probably did. Yeah, because they kept coming through and like these weren't pretty, they weren't super high level candidates and they had a big pool and they kind of specialized in it. No, I mean, those could be really great recruiting partners. Like I said, for those types of jobs, even without exclusive. if they've just solved this problem for you and you trust them and they can do a turnkey real quick, then like that's definitely a solution to, you know, some of your people needs for sure. So it kind of highlights, though, you've got to diligence each of the clients of this recruiting firm to kind of understand what is the nature. You know, I would imagine like the best, if you could come up with like the platonically great executive recruiting firm, right? They would have very, I would think, Ty, tell me I'm wrong here,

but I would think they would have long-term relationships with clients that keep coming back to them and that have kind of repeat placement needs and you would just keep placing, you know, the same types of roles over and over and you just keep ringing the register on the same clients because they don't have to visit.

Like a private equity firm or a venture firm who? Exactly, who's like always placing CEOs and you're just like their go-tip. Yeah, yeah, definitely. There's a little nuance to that. I mean, there's like, yeah, There's the nuance of everything.

But like the nuance around that is if you've recruited two or three executives for the same company, they probably shouldn't need your services for another couple of years, assuming you get them good people, right? Or, you know, unless they have open positions. But for like a fund for sure, where they're always kind of going, you know, new deals coming in and out. That's definitely a, you know, it's part of our strategy. Yep. So is this a, this doesn't seem like a very large business in general.

in the executive search world, is this large, small? Like, no, it's just small. Okay. Well, there's probably five to ten very large companies, maybe three of them are publicly traded that primarily do executive search. They're recruiting Pepsi's CFO and they like to beat on their chest. And I think they probably do good work, but they're also publicly traded. So now they have to think about new revenue lines and new services and assessments.

all this other stuff. But these guys are small. These guys are small. Are you ready to take a leap into business ownership but you don't know where to start? Well, look no further than Acquisition Lab, the premier resource for entrepreneurs seeking to buy their dream business. Founded by Harvard MBA and acquisition expert Walker Dybul, the lab is your fast-tracked to success in the search diligence and acquisition process.

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Like, what's to stop, say somebody with your skill set from coming in and competing against this guy? taking his clients and stuff. The key is the relationships. I mean, this is a professional services business, right? And as we see here, I don't know how long, I mean, I do know, but I'll say I don't know how long these guys have been in business. And so, like, everyone in the mother, in fact, I tried, I built a product. I built basically an info product to, like, teach people how to start the recruiting business.

And the recruiting part is very teachable. That's like, here's how you do it. Here's how you filter candidates. Here's how you ask the questions. Here's how you present them, blah, blah, blah. But the business development part is really hard because these sales cycles take six to 48 months. I mean, they take a long time. This is an expensive thing you're selling, right?

And so, like, brand in the industry is very, very valuable. That's why I suspect these guys have been around a long time. And that's why they get people coming back to them. They're known as the recruiters in the printing and packaging space. Now, what's interesting, Michael, is that the owner is responsible for business development generating approximately 60% client engagements and 36% of total revenue. So that's better than 100% of client engagements, right? When you're buying a services firm, like typically the person at the top is like the guy

or the gal who's been developing business and has relationships, and that's what you're buying. You're not necessarily buying any IP or anything. I guess they do have a CRM here, which could be valuable. So my question is like, where do these, this other 40% of client engagements, where do they come from? And further, you know, the current owner takes or is responsible for 36% of revenue. That means that his team who's executing the searches does such a good job that their clients come back to them and say, you know, we want to do a little bit more work. That's really interesting to me. To me, that means that he's not the sole rainmaker. And more than that, his team is executing really, really well and their clients are coming back for more.

That's a pretty good signal, I think. Which also is kind of like the small local like mom-and-pop HVAC business problem where your lead revenue generators could also be your biggest competitors if the transition doesn't go well. where like if these recruiters, these five experienced recruiters, or the two senior in particular, if they're like, oh, well, the seller promised me they were going to sell me the business and then I feel, you know, slighted in the process. I'm just going to go out on my own. There's not, I mean, maybe there's some non-competes in place. Maybe there's non-solicits. Maybe there's some things. But it feels like especially with it being niche down so much in the industry, like I could come in, have all the legal protections in the world. And if the fit isn't right and those people leave,

I've got a really, really uphill battle to try and claw back any of the goodwill that was really stuck with these people. Yeah. I would, I would go pretty strong on both a non-compete and a non-solicit, if I were to do this, meaning we don't want that, you know, we don't want this seller to just start up his own shop and go after the same set of clients. or do the same exact thing. And I might even put that on some of the, you know, some of these other recruiters, these two senior recruiters who are probably like leading

some of the business development as well. I think there's probably, there's probably a world where we could put, could like create some sort of bonus pool for these recruiters to stick around because they do have some value, right? Like some pretty significant value, I think. And so you want to make sure to like treat them right, but also make sure that, you know, they don't, they don't walk out the door with it.

Because if they walk out the door with the deal closed, then we're looking at zero percent of business development from, from anybody left, you know? It's why I really don't like, I mean, and I'm going to say businesses like this type, but you, I don't know that much about your business. I know a little bit, and I'm going to assume yours is different. But it's why I don't like businesses like this because I'm at such a disadvantage in a professional services environment. when I am not the practitioner of those services, like for the same reason that I wouldn't buy a specialty law firm or something like that. Like I just, it's not, it's not my core competence. And I can't fill in the gap that may or may not be created with a founder leaving or, you know, key revenue generators leaving. It just, it scares me. I think it creates this kind of like virtuous cycle of insiders staying in the business and inside the industry. But it makes me wonder,

like usually there's so much value in a niche and niching down, it's kind of the double edge sort here where like the niche is helpful in terms of their competence and their familiarity with the industry. But like you said, there may also be kind of a perverse thing at play where because they're so specialized, they may have like a lot of saturation in the market and then you end up with a limited pool. Like an outsider could come in and get a candidate that you placed who's a great candidate that you now can't like cross. solicit. Yeah. I know of two guys who started a firm, a search firm, great, great business, did really well, exited to one of the kind of big five. And the acquirer didn't put very much

restrictions on them. And after their earnout period, they went and started the same thing. And now that company is almost as big as the company that bought their first company. Ty, how would I grow this business if I bought it? It's a good question. I probably would want to look at the depth of these relationships to understand like where you are you know, how much revenue are we getting from each of these clients? How else can we serve them? Can we, if these clients are asking for searches or for hires that we can't do, can we develop a partnership and, you know, send them to a fully contingent shop or something and take small little affiliate fees? That's like one way. These are hard to grow unless you

bring in headcount, unless you bring in people who have business development and have relationships. The guy who's running this, he's got all of the relationships. So that is probably the best way to do it, which is going to be a cost, right? All the big search firms in the world, shouldn't say all of them, but a lot of them have grown through M&A. They'll buy a little office in Calgary. They'll buy a little office in Atlanta or whatever. And they kind of piece it together that way.

Because only, you know, one person can only do so much business development, right? There's, you probably can't get more than like five to ten. Like the absolute ballers in the world are probably doing five to ten million themselves. A different way to think about this is, I mean, I wonder about, so this is this is one of the things I'm thinking about here is this, the founder or the owner develops 60% of business. we're assuming the other 40% comes from some of these other recruiters. But what if they come from a different source? Like, what if this is a franchise? And I think that's a different thing to think about.

I'm not terribly familiar with franchisees, franchise recruiting businesses, but I wonder if that's where maybe some of this deal is coming, deal flow is coming from. Interesting. Do you worry at all about this industry? Like, I don't think printing is going away. in paper. Are there ever like, are there better industries to recruit in or worse industries

to recruit in? You know, does that make this better or worse? That's a good question. I'm not, I'm not intelligent enough about the printing industry to comment on this one specifically, but I would say typically always good companies need good people. That's like kind of our slogan. And so as long as there are good companies in any industry doing well, they're going to need good people. The market may shrink, the market may expand, but the need for people, people run the business, you know, and that need, it's hard to say that will ever, obviously, go away. AI is coming, Ty. It's coming. What is it? To run all of our businesses. What? I keep hearing about this thing. I'm not familiar with it. Well, I think, look, a lot of contingent recruiting

recruiters have gotten their lunches cut for sure. And it's coming for the lower, lower end of market, I think, you know, I'm hopeful that we have built a bit of a buffer around like our own relationships. But I also do think that's, that's what people want. Like, people will come to us and say, you know, who do you know who's done A, B, and C? And like, very, very specific things. And we know a bunch of people who've done those sorts of things. And so I think, I'm hopeful that the relationships that we and other executive search firms have developed will provide a little bit of stability from AI. because, I mean, look, we're doing a bunch of stuff internally, some really, really cool stuff. We're testing every free demo we'll take on the market.

And all the other recruiters I've spoken to as well, I say the same thing, which is like, it hasn't quite the tool sets, the AI tool sets haven't quite cracked the sourcing code. Like, we've got institutional knowledge, okay? Bill does this today and he knows pet food. And previously, he was an investment banker. and before that he, you know, started an orphanage in Pakistan. I don't know. Like that sort of like detail about Bill specifically could be really,

really interesting to somebody who cares about those specific types of things. An AI tool doesn't quite, can't pick up on like the diversity of experience. They can go find you, you know, Chief Revenue Officer at Oracle, like, no problem. But what about a chief revenue officer at Oracle who was a previous founder of a SaaS company that Oracle had bought and happens to live in? Jack Timble, Florida. You know, like, that's, that's where the, I think that's, that's where the opportunity is in case anybody wants to build that.

I have been, let me just, I've been repeatedly frustrated by how much value recruiters bring because I keep wanting to be able to do it myself. You know what I mean? Like, geez, like, we're paying a lot of money to source these people, but of course it's worth it because good people are really valuable. Like, good people are the engine that makes good businesses go. But, like, it's just not something I have had good luck. insourcing and I keep going back to recruiters because they bring me people that I cannot

otherwise find, which is frustrating and expensive, but people are good at their jobs. Recruiters are good at their jobs, I guess. I've been using OpenClaw a lot to do Topof Funnel for like very specific searches around personas. And we haven't nerded out about OpenClaw Bill on the podcast yet, but like it's, I've been doing it for three weeks. It's ridiculous. Like it is so ridiculous. I've had to do searches for a business I'm in, and it is crazy how good it is it actually stuffing the top of. I don't know. I agree with you.

It's not going to get nuance that a human will get yet, but that whole BDR, where you had a VA going through and scraping LinkedIn and doing web searches and pulling stuff off websites, it is so good. And unlike a person where that work is horrible, just kind of scrolling through Sales Navigator and LinkedIn, in, it seems to enjoy doing the work, which is to me, I'm like, okay, this is a horrible job. I'm not going to tell you open claw how bad this is. But it's, I can see the future.

Like, it's starting to make, it's going to make recruiters a lot more like efficient because it's taken away a lot of that type of funnel stuff. It works. It's really good for me. I hope so. I mean, we're building an internal tool right now. And like our, our focus is on like the lower end of this market, right, the kind of one to $100 million companies. And so it's harder to find people with very specific skill sets, like, at that level, unless you know them previously. And so we've trained this internal agent to look through all 5,000 people that I've interviewed and I know to be able like, okay, can you know, can you find me someone who's sold a, a, who's been the CEO of a high ticket education business and has sold it and has been with a

company for more than five years on three different occasions? Like that level of specific The city is what we're training internally. And I'm super excited about it. It's pretty game-changer. So anyway, Mike, I agree with you about the OpenClaught stuff, and hopefully it'll make all of our jobs better. Bill, by the way, we're coming up on the 35-minute time limit where the producers start to yell at us if we go beyond that.

Well, we have such a good guest who has experience, like, in the exact industry that we're reviewing the deal, is just, that makes a really good episode. So I think, like, one of the things that you were saying, that you just reference of like the 5,000 people you've interviewed is like the quality of the source data that like I could look at this company's source data and not really know whether it's high quality or low quality. And that's where I think the nuance comes in. You have probably meticulous notes on all these people you've interviewed because you're like, these are the things that actually matter to me as I'm trying to place a candidate and this is

what matters to a potential employer or partner, you know, when they're trying to place a candidate. And that's where like the insider knowledge just probably matter so much in this case. Because you could look at this data and be like, it's garbage in, garbage out. Or it's great. That's why I'm not sure if I'm in on this deal or not. I think I need to know the level of quality of the relationships, the level of quality. Like the CRM, 200,000 people like, that is legit. I mean, that could be everybody in this market for all we know.

Or they could have just scraped, you know, what is it, Hoover's. and Zoom Info and like all the other rocket reach or whatever. You know, I just don't know that the quality of this. So that's where I would need to further kind of inspect. Well, so I want to zoom in on the tools because it does say, Michael, if you scroll up a little bit, it says they use all of these proprietary tools and then they lift things that are not proprietary, right? LinkedIn recruiter, Zoom Info, and SourceWail.

How important is it to, is it like, yeah, account of table stakes you go on LinkedIn? And really all of the value is in your proprietary relationships. So if I'm diligent in this business, do I, can I just go, oh, like, they use all the same tools everybody does and the skill is in their sort of their SOPs? Or is a lot of the value in a proprietary network? Is their database everything? And then if they don't have a database, you shouldn't even buy this business. Such a good question, Bill.

I think that's the rub. We need to understand the quality of these proprietary databases. Have they built them themselves? are these people that they've actually interfaced with? Do they have up-to-date contact information of these people? Because if not, like, every, like, when I can't believe that this listing includes LinkedIn, Recruiter, Zoom, Influence Sourceware. Like, those are table stakes, you know, like, everyone uses those things.

There's no differentiator there. The differentiator is in the quality of these databases. So that is the, that's really the, that's the rub, I think. Okay. Okay. My big takeaway from this is I don't want to compete with you, Ty. So thank you. Yeah, me either.

Yeah, I think there's a category of businesses that should be bought by Strategics, like almost exclusively, because there's such a mature industry with nuance, and once you're in it and understand how it works, you have an unfair advantage. And if you're some Rando walking in, I mean, the only way I'd want to become the owner of this business is going in, working for this current owner for 18 months, two years, becoming really, really good at it, and then I'd buy it. But before that, just walking in as a Rando, like, not, interested. I think the buyer absolutely keeps the owner, the seller on. They say 18 months.

I think it's probably longer than that, if possible, because that's what you're buying that guy's relationships. And if that guy goes out the door on day one, like, no chance would this be successful. Yeah, and that's true of any human capital business, right? An investment bank, a law firm, an engineering firm, a recruiting firm, right? The retention and the retention and compensation agreements of all of the staff, not just the owner, are absolutely critical in this deal. Yeah. This was awesome. Yeah.

Really fascinating. I mean, I think this is probably this. I mean, I also what I like, this is not just generic. Like if they have deep experience in paper printing and packaging, I would think that makes this business better. Yeah. Right. Not worse.

Because they have like a real defensible network and reputation. That's probably why they've been a. been able to be around for as long as they have. You're not going to find many successful recruiting businesses who've been around for many years that do everything. Yeah. You know, like, that doesn't sell very well. Yeah.

All right. Well, Ty, where can people find you? You can find me on LinkedIn. T-I-G-H-E, B-U-R-K-E. I'm not really on very many socials other than that. We've got a CEO Loop newsletter as well. I can touch you if you want to be included on that. We send this out to people who are interested in

CEO opportunities. There's no advertisers. It's everybody knows me and it's a really, really good little community. So those are two good options to keep in touch with us. Nice. Well, thanks for being here, man. Yeah, thanks for the good conversation, guys. Really enjoyed it. Enjoyed it. Thanks, Ty.

And I'll give my little outro as I always do. If you like this one, we have 450 episodes, not just like it because this is Ty's first time. But with other guests and other industries, this is the first recruiting firm, but we have done construction. We have done restaurant. We have done e-commerce.

We have done software. We have done anything under the sun. So you can go on our website, ACQU-A-Non.com, and search by industry and find us breaking down almost anything that you are interested in. So check it out. Also, get on our email list on our website. We will send you the new deals and the new episodes in case you're not an audio person. We'll send it to you in writing so you don't have time to listen to a pod every two days,

but you can scan an email. Hop on our email list, ACQU-A-C-U-Anon.com. And we will see you on the next episode. of Acquisitions Anonymous.