Acquisitions Anonymous - #1 for business buying, selling and operating - Specialty Cheese Business for Sale: Aged to Perfection or Trouble Ahead?

Episode Date: January 7, 2025

Discover the intriguing details of a Wisconsin cheese factory business for sale, its unique operations, and surprising insights into the world of specialty foods.Business Listing - https://www.bizbuysell.com/Business-Opportunity/well-established-wisconsin-specialty-cheese-company/2293816/Sponsors:Acquisition Lab: Ready to take the leap into business ownership? Visit Acquisitionlab.com to schedule your free consultation and tell them Acquisitions Anonymous sent you!Viso Business Capital: Get the right SBA loan for your acquisition. Sign up for a free live Q&A session at Visiocap.net.This episode dives into the sale of a Wisconsin cheese factory, revealing the complexities of managing demand for specialty aged cheeses and navigating the challenges of this niche industry. The hosts discuss the business model, the seller's retirement motivation, and the fascinating metrics such as a four-year weighted EBITDA. They also share thoughts on the business broker behind the listing and some unforgettable commentary on related topics.Key Highlights:- Overview of the cheese factory’s operations and specialty product offerings.- Challenges in forecasting demand for aged specialty cheeses.- Insights into the motivations behind the sale (retirement).- Analysis of the EBITDA calculation and business valuation approach.- Engaging commentary on the broader implications of the business model and listing.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]

And I imagine when you make cheese, I think this is probably because you got to age it. Like you can't just run it off the line. Like, yes, if it's mozzarella or something. But, like, the specialty cheeses are usually aged. So this is, like, wine or bourbon or something like this, where you've got to predict your demand in advance to some degree. I mean, you can't sell a million pounds a month to, like, just your regional deli, I don't think. So we know this is somebody that is retiring.

That's what they said, reason for selling retirement. And we don't hear anything about eating. e-commerce, and then they have the sentence here at the end, which is, EBDA is a four-year weighted average. Hello, another episode of Acquisitions Anonymous. We don't have 100% here. Hey, Michael here. Welcome to Acquisitions Anonymous.

Today's episode went someplace. I didn't think it was going to go. It started with a cheese factory in Wisconsin and ended up with Mills saying some stuff that I was still blown away by. So super interesting business. Also listed by a surprising business. business broker and we dug into their business a bit. So here's the episode. 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 Harvard MBA and acquisition expert Walker Dybul, the lab is your fast-track to success in the search diligence and acquisition process. With hands-on support, world-class resources and a community of like-minded entrepreneurs, Acquisition Lab gives you the tools and confidence to navigate every step of the journey. And we're proud to call Walker and Chelsea, the lab's director, longtime friends of the podcast. They're passionate about helping entrepreneurs like you take the next big step. So don't wait to make your business ownership dream of reality. Visit acquisitionlab.com today to learn more and schedule your free consultation. And when you do, be sure to tell them the

Acquisitions Anonymous podcast sent you. Good morning, Mills. Hey man. How are you? I'm hanging in there. It is, well, we're recording today two days after Christmas. How was your Christmas? It was fantastic. Put up a zip line for my kids. How many injuries? Zero. Dude, why you jinxed me like that? The best is when you see those videos of like the grandparents who give their

grandkids like the most dangerous toys possible. And they're like, go home, see you later. Well, and like I, not to name names, but I did, I did have a relative that gave a two year old a baseball bat as a gift. And we're like, this is not a chafurper. was going to die here. So yeah, I look forward to doing that when I have grandkids. I'm closer to that age where I'm looking forward to having great kids. So should be cool. This is 150 foot long zip long zip line. Well, do you guys have tons of trees? I'm sure it's just beautiful. Yeah,

yeah, we got a big backyard and it spans all the way across the backyard. And I was like trying to make it safe. And then the kids are like, this is way too slow. So now we're adding a second story to the tree house to increase the slope. It reminds me one time I went to China for work. And like early in the days of like China's kind of reindustrialization, like you could basically do whatever you wanted. And there's all kinds of weird stuff in China. I don't know if it's still this case, the case because I haven't been there.

But like one of the things that's super weird about China is like what happens if there is a, like a car accident? Like what I was in the car accident is the police usually don't show up to the car accident. What happens is the everybody kind of gathers around and the folks would like argue in public about whose fault it was and then settle it. It's like, okay, well, I'm getting a common court. It's just like they just like settled it right there. And everybody would kind of gather around and watch the trial. That would happen on the side of the road. But so that's the kind of culture it was.

But we went to like this park where for some reason some entrepreneur had created like this basically. death zip line that like people would get on it would go across a gorge like at 300 miles an hour and the safety solution for it was it would just ram you into this like like the basically the padding that's on the side of like NFL stadiums with springs behind it and that was supposed to save you and then we went back a few years later and the whole thing had been torn down except the zip line was still there and all the padding was gone so now if you went through it basically it would just ram you into these spikes of stuff and I was like man China is metal.

Wow. That's bold. Thank you for listening to my rant. So I brought a deal today. And because it's Christmas and because people do a lot of fondue and stuff like that, this is a cheese deal. I love that like, we were like, oh, let's pick a deal for the day. And you're like, oh, I got a cheese deal.

Record. Record. That was all we had. Look, if you guys want to do some of your deals, bring some deals. Otherwise, I'll keep bringing deals. This is amazing. This is it, it's reminiscent of the,

the salad deal that ended up basically just being like macaroni salad. So, yeah, it was, it was totally, uh, totally, totally bait and switch.

Man, so this one is listed by Michael Schfantes, who is, uh, I got to click on him first. Man, he looks like the nicest guy. He's from Green Bay,

Wisconsin is the broker. Yeah. He looks like, it founded in 1979. Creative business services. Man, so, you know, let's see what he does. He does, yeah, basically he has been a business broker since 1979. What, you know, that's, this is some baby boomer style longevity.

Like, who goes to him? I will put the link to the, to the cheese deal in the notes. Don't you just love that this cheese deal is in Wisconsin? It has to be, right? Is there another place you're buying cheese? It's the only other place in the country that makes cheese, right? All right, let me read this one to everybody on the audio and we'll pull it up on video for the YouTubers. It is a well-established Wisconsin specialty cheese company.

The picture is cheese with some parsley next to it, Mills. Is this like, what is this, Colby Jack, you think? I don't know. It's kind of marbled. It's Colby Jack. My funniest joke that I've heard from foreign countries is how the British make fun of Americans, because we put cheese on everything. It's like it's you don't do that in foreign countries. So how could you tell how can you tell an American chef did it? There's cheese on it. It's like okay, great. Cool. All right. So the

asking price for this cheese business is $9 million. It has $1.8 million in inventory. Okay, I'm just going to pause there. That's a lot of cheese. That's a lot of cheese. The real estate is $1.9 million. And last year it did EBITDA of $1.8 million. So what's the math on that? Is that five times? times EBDA or four and a half times. It's nine divided by 1.8. Yeah. 10. 10 and two would be.

It's five times evada. So five times earnings. Five times EBDA. But they don't tell us, they don't tell us revenue. They just, but they have, they have,

you know, one turn of, of EBDA worth of inventory. So they have, that'd be a year's worth of inventory. Yeah. Well, and this is one of those things where a lot of times people

don't include in multiples of ebida, how much capital is tied up in running the business, right? So to some extent, you know, we'll find that out. Is the inventory included in the asking price or not? The problem with cheese is, it goes bad at some point. Yeah, I can't imagine. I can't imagine any of this having a shelf life of a year. So maybe it's, hey, Bill, we're talking about a cheese deal. I heard.

That's why I joined. I heard there was cheese in the air on the pod today. We just started. It's in Wisconsin and has $1.8 million worth of EBITDA and $1.8 million worth of inventory. So that's the point that we're critiquing right now. That's how far we are. Well, but it's, but like it's cheese, right? So you have to age it.

Like, are they aging it? Well, we got to. Listen to this, Bill, we've got a regular cheese expert on here today. We haven't even made it past the headline, Bill. We're not even into this church. It might want to be. wife is super into cheese, so I'll probably have a lot to say. Oh, it's her fault, huh?

Oh, man. I know, this is, by the way, we're just barreling towards me telling some lactose intolerance stories later in the episode. It's not good. All right. Clean-glass, Agnog, Michael. Let's go. Let's go.

All right. This is a craft award-winning cheese for over two decades company, rooted in tradition, ready for, and then it cuts off there. The company has been crafting award-winning cheese for over two decades. They take pride in their heritage, and it has been dedicated to upholding the craft of cheese making. With over 20 years of experience, the company continues to be a pioneer in high quality artisanal cheese production. With continuous growth, their maximum plant capacity can reach 384,000 pounds of cheese per week using three shifts, and they are ready for future

expansion. This company is more than just production numbers. They have maintained GFSI BRC certification with a minimum A rating and ensuring their cheese meets the highest safety and quality standards. Their dedication to quality starts with the long-term relationships with local dairy farmers who provide the finest of milk. They also foster a lasting partnerships with delicatessen markets that appreciate the superior taste and consistency of their cheese. As they continue to grow, they remain rooted in the values that built their company, uncompromising quality, deep community ties, and a commitment to the future of cheese making. With plan to expand and implement new technologies, they are ready to meet the growing demand for their premium products while preserving core traditions. traditions. Ebeda is a four-year weighted average. The inventory is included in the asking price. So you buy the company, they throw in the cheese. And the real estate is owned and also included in the

asking price. The building is 16,000 square feet and the reason is retirement. And we did comment that I think Michael Schwantes, the listing broker here, Bill, started in the business of being a broker in 1976 years ago. So he is perhaps the most 10, he is perhaps the most 10,000. tenured business broker we've run into in our in our in our podcast here wow got to hand it to him he's an o-g business broker uh being in in this business for that long is something so all right so yeah this is it looks like it's a cheese manufacturer what do what do we think so i regret to inform you guys that uh as soon as my wife listens this episode i will be moving to wisconsin and buying this business because this is a cheese factory in wisconsin i mean this is everything she loves

So let's talk about the pricing. So it's $9 million on $1.8 of EBITDA, but they've got $1.8 of inventory included and $1.9 of real estate included. So I did the rough math. That takes you down to 5.3 of asking price. It's kind of like 5.3 plus inventory plus real estate, I think is a way to look at this.

So that is what's 5.3 over 1.8 of EBITDA. It's three times. So, you know, at first the multiple looks high, but it's not, it's three times plus inventory. And then the real estate, I assume you can lease it or buy it in a separate transaction. But this is a legit cheese factory. Is it not like they're buying milk and making cheese? Oh, well, maybe I wasn't following what you're saying, but the real estate is included in the asking price. Yes, but the asking price is $9 million.

Yeah. So if you take nine minus 1.8 minus 1.9, you're getting down, you know, This is like a two and a half times multiple at that point. Yeah. Yeah. So it's $9 million minus $1.8 minus $1.9. That gives you $5.3 million. Yep.

So 5.3 over the 1.8 of EBITDA is 2.95 times. So this is not priced that crazy. Michael Schwante is having done this forever has priced this, I think, appropriately. Yeah. So let's do touch on the inventory thing. So they have a year's worth of EBITDA in inventory, which we could do the math. Actually, we can't do the math on margins because we don't know revenue. But you got to imagine cogs are some fraction of EBITDA, right?

So they probably got one more than a year of inventory, of cogs in inventory at this time. Yeah. And I imagine when you make cheese, I think this is probably because you got to age it. Like you can't just run it off the line. Like, yes, if it's Monterella or something, but like the specialty cheeses are usually aged. So this is like wine or bourbon or something like this where you've got to predict your demand in advance to something. To age cheese. All right.

So I Googled this and it gave me an answer. Soft cheese is two weeks to two months. Semi-chossed soft cheeses is four to eight weeks. And hard cheeses are two years or more. Parmesan is ten to times. 24 months? Yeah, Parmesan's, I mean, stuff like that are really aged. So they do, I mean, they do say here in the listing, it is artisanal.

And I'm just thinking it's probably like if they're buying, you know, milk in West, if they're buying milk in Wisconsin from dairy farmers, this probably isn't, I don't know, maybe it's goat. But it's probably, it's probably like this is not a mass production shop. No. Michael just Googled Artisan Cheese, Wisconsin. Michael, this is like Googling Mexican food, Texas. Hey, come on. Best tacos, Texas.

You're going to have to do a little better than that, Sherlock. That's right. That is awesome. We have given up on trying to figure out, you know, who a listing is. That used to be one things we did on the podcast. I wasn't trying to do that. I was just trying to understand, like, oh, is artisanal cheese? Like, how big is it?

And it turns out it's pretty popular. Yeah, it's like their whole thing. You know, the football team, the Packers, the cheese heads from Wisconsin? Like, this is their thing in Wisconsin. Yeah. This is the mecca of cheese in America. How do you survive in Wisconsin if you're lactose intolerant? I'm asking for a friend.

You don't. You just leave. You don't. They all died. They were thin the herd. Yeah. If you're lactose intolerant, you don't have enough body fat to survive in Wisconsin. It's cold up there.

That's what you need the cheese to insulate. So realistically, this business is out of the middle of like the countryside somewhere where there's cows and farms and processing. That's what's going on here. I just pulled up one of these grazed cheese, which has been around for 100 years. And they're located in DePere, D-E-E-R-E-Wisconsin. We're not saying this is it. It's just an example. Just an example.

I'm just trying to look up where. Yeah, they have their own e-commerce. Yeah, so that's the thing that I'm curious about, right? Mills is go to market. I mean, they say they can, the maximum plant capacity is 348,000 pounds of cheese in a week. So that is like 1.3 million pounds of cheese a month. That is so much cheese. Like who is eating all of this cheese?

The Wisconsinites everywhere. Like, are they shipping it out of state? Are they selling to grocery stores? Michael, go back to the listing because they talk about like, you know, restaurants using and caring about, you know, the superior taste and consistency, like deli markets. I mean, you can't sell a million pounds a month to like just your regional deli, I don't think. I don't think. I mean, like, I'm almost wondering if this gets used in macaroni and cheese or like it's,

it gets consumed in the food supply chain somehow. So this is, this, this caught my eye. So here's scraise cheese, which we don't know if that's it, but it's a, it's an e-commerce, handcrafted business selling cheese. But this one right here, I don't know if you guys can see this, but on their header page, they have this one cheese that they have aged for seven years. So to your point, Bill, they have some cheese. Like, there's an art to like, okay, what kind of cheese are people going to want five to seven years from now or two years from now?

And that's what all this inventory is. It's like wine. It's like sitting in a cave somewhere. Or whiskey, you know, spirits. So I learned something really interesting about the spirits industry, which is that, you know, you're going to age bourbon for five years or seven years or whatever or longer, right? How do you predict your demand five years, ten years out? It's hard. So you get it wrong. People get it wrong all the time. But there is a secondary market in partially aged spirits. So the distilleries are trading amongst each other in like, let's say this bourbon is not going to be ready for seven years, but it's three years in. and somebody needs to unlock their working capital, they will sell it to another someone else who was willing to sit on it. There are also investment funds that you can calculate an IRA on the aging process and you

get what it's going to sell for in seven years and then you discount it out to today's value and you bake in the cost of the warehouse has got to sit in and all that stuff. And there's a math formula for how much you can pay for this. There's a discounted cash flow analysis for how much you can pay for that whiskey now. And I wonder if the same thing goes on in cheese, people trading partially aged cheese wheels. I saw, even taking that to a graders and I saw a fund pitch once where they were going to buy and sell the barrels themselves. Not the whiskey, but the barrels. Oh, there's a ton of demand for white oak casks staves.

People do all kinds of stuff with them. Yeah, they're too. And then a lot of the, a lot of the casks go to other countries and then get used in other people. distilling and manufacturing process. Yeah, there's like secondary, a whole bunch of secondary uses. Like then you make wine in them because for bourbon, it has to be aged in new shard white oak barrels. American white oak barrels.

Which means you make bourbon and one time and you can't use it for bourbon anymore. Yeah. But then people make barrel age, bourbon barrelage wine or syrup or all kinds of stuff in it. And so the barrels have real residual value. Hi, Heather here. When I'm not breaking down deals with these guys, I'm helping people get the right SBA loans for their business acquisitions. Because when you're buying a business, the best financing

isn't one size fits all. There's the best rate, fastest to close, the specific loan structure that you need, or a little of all of those things. That's why my company, Vizo Business Capital, works with over 30 different lenders to find you the best funding in less time and with less friction so you can focus on the deal. Sign up for a free live Q&A session on SBA loans at VizzoCAP.net. Then click Zoom sign up in the top right corner. That's VI. I-S-O-C-A-P dot net and click Zoom sign up. So the best thing about this, about, I know you guys made fun of me for searching for Artisanal Cheese in Wisconsin, but the funny thing is look at how many reviews some of these

places have. Like this place here, Kalima Sagan's House of Cheese. Great name. Great name. Great. Look, it's a cheese house. It's a barn. It's a barn out of the middle of nowhere in Marionette, Wisconsin.

They have 1300 people in that part of Wisconsin. Everyone in that county has been there and left to Google review. It's crazy. Some people did talk really highly about this kind of, if you're looking at places to go in the summer, this kind of Bailey's Harbor, Sturgeon Bay, north of Green Bay, being a very good summer vacation spot, kind of like upstate Michigan. Yeah, there's a big Twitter thing where you. recently on this.

So I thought is, though, they don't mention any e-com on the listing. And maybe, maybe that's, maybe that's Michael, the broker, you know, I don't know, maybe that's an oversight on his part. But I'd be willing to bet that this is a just traditional mom and pop manufacturing business. They sell through wholesale distribution. And they have not turned on e-commerce at all, which is a really interesting facet to this if you if you had that as your expertise wink wink bill yeah you know you could you could

completely amplify one side of the business that's non-existent right now you could well i i would even expand to your point further mills and let's talk about like direct consumer distribution generally and yeah e-com is one way to do it but like the one michael just pulled up where like it's a it looks like a barn like they've replaced the walls with glass so you can see them making the cheese they sell all kinds of cheese-related memorabilia and merchandise inside. And it's like a tourist destination. Vermont is like amazingly good at this with the apples and the maple syrup and all that stuff. You can go watch and make it. But like you could do that and that's really high margin sales. Right? All the you sell tickets, like all kinds of stuff. If you could turn that on plus the econ and like

build your brand as a brand of cheese, I like this a lot. I like it less if it's a, commodity, we just make Havardi cheese or whatever. And then it's packaged up and sold to the grocery store as just Havardi cheese without our name on it and the consumers aren't attached to it. So that go to market, is this a brand of cheese? And if so, then you can start doing direct consumer higher margin stuff while you move volume through wholesale and restaurant and food service and stuff. That's interesting.

Did you guys watch the show Yellowstone? Yeah. So Taylor Sheard and, you know, writer and producer bought the four sixes ranch in Texas. And they have used the visibility, you know, and the distribution. They sell a ton of meat direct. Like they have a massive e-commerce business. They even have now like all these spinoffs of like, I think they have whiskey. They have like spices and rubs for meat, all kinds of things. But because of the brand awareness now, people just search for, you know, four sixes, you know, stakes instead of just four sixes ranch.

which is probably they're just white labeling it anyway. It's the power of a brand. Yeah. Yeah. All right. I would like to highlight something that raised by suspicions in this listing. So we know this is somebody that is retiring. That's what they said, reason for selling retirement.

And we don't hear anything about e-commerce. And then they have the sentence here at the end, which is EBITA is a four-year weighted average. Bill, Bill, you are shaking your head about this as a former investment banker and currently incredibly successful businessman and someone who had an amazing Christmas holiday card, by the way. What does this do for you when you see the sentence? I will answer your question with a question, Michael. If you were selling a business with increasing EBITDA each year, would you report the four-year-year-weighted? average. Right? I mean, like, this is because it's like, have you guys ever seen that graphic where it's like, you know, businesses that don't have profit talk about revenue.

Businesses don't have revenue talk about active users. People that don't have active users talk about press. And it's like the same, like if you don't have growing EBITDA, you talk about the weighted average of EBITDA, you know? So that makes me, what I would say is like, nice try. let me see the financials. Like, you know, like, whatever. Sure, I'm going to ignore that. Let's look at the financials. And then I'll say, like, okay, I'm going to value this on trailing 12. I bet, unless you can really convince me that trailing 12 is not indicative of future 12. You know, there's some huge adjustment. You know, our plant was down for six months and now it's not. You know, something like that where trailing 12 is not indicative. But in my view, and actually,

I will say this is, as much as Michael Schwante has seemed to, who have priced this in the right place, the business broker here. I think this is a really poor way. If you're selling a business where the trailing 12 does not reflect the true performance of the business, a lot of business brokers do this and they reach for this blended average of trailing, which I think is lazy, inaccurate, and not helpful. What you should do is adjusted EBITDA. You should look at the trailing 12, try to quantify the things that were atypical and

that will not continue going forward and present an adjusted EBITDA number, which then you can argue about. But arguing that what happened four years ago was at all relevant anymore is dumb. What I'm wondering is like in a business like this where there could be really lumpy revenue from a from a just inventory production standpoint. Like what if they had a like a just a bumper year, you know, of their five year old, you know, sharp cheddar or something like that? Like it came out really good. Like they cracked it open. It was like, this is phenomenal. Yeah. And like they won some awards or something like that. And all of a sudden like, you know, 2022. was just this an amazing year, and they had enough supply to keep up with demand. But then,

you know, five years ago, six years ago, they didn't make, you know, as much. And so there could be some like lag and kind of boom and bust associated with the revenue for something like this, for something that is kind of, you know, very age defined. And it might have been several years ago when they went to production. Can I get that's fair, Mills. That's fair. If it's actually lumpy, And you have reason to believe that, like, hey, every five years, we do have a vintage of cheese that's phenomenal, right? It is a repetitive thing, but it's lumpy. So can we get the, you know, there's the USDA farm loans. I just thought about that.

And it's sad that Heather's not here because she could talk about these, which are these, they're even a better deal than SBA loans for first-time business buyers. You can buy, this would qualify. Can you do something with this as a farm? Or is it no, because it's food production. Well, a lot of FDA loans are even broader. I mean, there's FDA loans for first-time homebuyers in rural areas. They don't actually have to be a farm specifically. So I know that there are some kind of farming adjacent businesses that fall under the FDA loan also.

Yeah, because you are farms are your suppliers in this business, right? Dairy farms are your suppliers. So you would think at some point, the government stimulus has kind of crept to we want to prop up the people who buy from the people we're trying to prop up. as well. Yeah, there's this kind of all kinds of why Google, FTA loaned to buy a cheese factory. But see, it automatically, it automatically Google thought you mistyped it to FHA. Yeah. My, you know, as your kids get older, by the way, one of the great parenting things you teach

them is like you just ask Google stuff in the stupidest way possible. And that's how you get the best results. And my kids are like, wait, you're supposed to ask stupid questions. I'm like, yeah, you just ask the stupidest question. possible. So, I mean, is the story here that this business is being positioned in a way that is hiding kind of post-COVID return to normal, right? Because during COVID, everybody was sitting in their house, like, Instagram things were teaching you know, build, like, you know, all kinds of different food and you're crafting in your house and you're buying random cheeses and making fondue out of it. and then things go back to normal.

Is that, is that potentially what's going on here? Maybe. That being said, like, this is not, like, they're not selling the rennet or the, you know, the stuff to make cheese at home. You know, in fact, I bet this business got hurt during COVID because they're probably selling through retail stores. Yeah. So I would bet if anything got hurt during COVID and that's what they, but, you know,

I don't know why you would average back and pull that into the five-year window. I will tell you, Michael, on the, on the loans. thing, AI just blew away Google. So you typed FDA loan. I typed into ChatGBTGBT, what types of FDA loans might be available to help me acquire a cheese factory in Wisconsin? ChatGBG says, you moron, you don't mean FDA. You mean USDA. So ChatGVT corrects it automatically. Actually, the USDA, not the FDA offers loan programs. Here are some of them, including a rural development direct loan for businesses in rural areas. This one I think is the one that's most interesting, a USDA value-added producer grant, which helps

agriculture producers create or expand value-added products. If you're producing specialty or artisanal cheese, this program should help with working capital and marketing efforts because you're consuming dairy to make cheese. This is chat GPT. So, and there's like six more. So Google might be in trouble. That was a pretty good answer from chat, GPD. It's interesting. What do I, Google, didn't give me the Gemini answer here? Because it gave me the Gemini answer on the previous one. I don't know. But yes, I think if you are buying a agricultural business in a rural area,

there might be some very interesting financing options available to you. Okay, so it sounds like at least one of you wants to move to rural Wisconsin and make cheese. No, I don't want to, but my wife's going to make me. I'm emailing the broker right now because I want to know more about this one. I mean, it's what? Are you serious? Yeah, yeah, I'm going to email them right now. I was going to text.

I was going to text him, but when you click on the thing on Biz by Sell, it specifically says no SMS calls only. So this is an office line on the thing. Their team is amazing. I pulled it up, actually. So this is Michael Schwantes here. This is a big business that these guys have built. So it looks like they do brokerage, but then they also do business valuations. I like that.

And like I think that's a good combination. Um, yes. Because I think people don't really understand how often business valuations are getting done. They're getting done a lot more than people think. And you know, I had to do them for estate planning purposes. Then they're also getting done in disputes all the time. There's people that, you know, pick niches around that like if you're suing around stuff, a valuation expert will be somebody like, oh, I don't get involved in litigation. There's other people that are like, yeah, put me on the stand. I want to argue about this. But I think this is something I've surprised more business workers don't do.

That's a good point, Michael, because I mean, I had one done and it was semi-expensive. And what's so interesting is it's kind of like, hey, what do you need this valuation for? Are you trying to make it seem low? Are you trying to make it seem high? You know, there's a lot of leeway in there when you're having a business valuation done. It's like an appraisal. Right? It's like, what are you buying it?

What do you need it to appraise for? It's the thing that people don't talk about with real estate appraisals, which is the real estate appraiser has oftentimes has a call. with you beforehand of being like, what's this for? And the answer comes back appropriately. Yeah. Well, because if it didn't, they wouldn't get the next appraisal, would they? Yeah, yeah.

Well, Ari gets, uh, so I mean, for the way lenders like Main Street lenders do it, is they have a pool of lender, of appraisers they can choose from. And they'll get quotes from those four or five. And then, you know, you don't get any business if you don't quote it appropriately. You also get there's unhappiness with the lenders if, if it tends to be somebody that their appraisal gets protested because the borrowers can protest it and go go do it someplace else. So there's this is a weird kind of system where you're expecting like goodness despite bad incentives, if that makes sense.

I used to do a lot of valuation work when I was doing sell side. One of my business partners was a CVA certified valuation analyst and there are a lot of subsets. There's people who all they want to do is expert witness, you know, for really, contentious litigation and things like that. But there is, you know, as much as it is kind of a science, there's a lot of art to it. Like, what's the growth rate? What's the discount rate? You know, how are you like, how are you really quantifying some of the more subjective elements? And you can steer it in any direction. It's also like one of the easiest things in the world to poke holes in evaluation if you know what you're looking at. So like somebody could

present a really bullish valuation and you can go to like five or, six different inputs and figure out what are they skewing up or what are they skewing down? So one of the interesting things going on with appraisers is, I mean, everybody asks, like, are appraiser is going to get replaced by AI or offshoreed? And it hasn't worked either way. And the reason is, is regulatory. They've created all these regulations where the appraisers actually have to write all of that in some regards.

And they have, they can't outsource it. Yes. Well, some of the research can get done. like it still requires like appraisers can't just turn into a software factory it's super interesting yeah yeah we got you know there's a big demand for it though i mean for good and bad reasons but what you see is these really interesting like when the estate tax you know exclusion bump from a million up those guys businesses changed dramatically because people were needing to do it on a semi-frequent basis to make sure they stayed under, you know, the trust and estates gift tax exclusion. And now that it's

over $10 million on an aggregate spouse basis, like, you know, the subsets of that market change a lot based on regulatory changes. All right. So let's see. Do you guys want to wrap up on this one, by the way, like this specialty cheese company? I love it. I emailed Michael. And I don't have like a, you know, I'm not a searcher. I'm just a business owner. But I emailed him from my Gmail. But I'm always conscious about like, let's say he puts this up here. I don't know how long it's been up there. Does he get 100 emails? How do you differentiate a little bit? You know, I just said I'm an existing business owner and I'm a qualified buyer, you know, but there's, I don't have a website of like, you know, Starfish Capital or whatever, you know, that that has my investment criteria and

things like that. But I have to ask, are you trolling us right now? Are you really, you really? No, I'm serious. I sent the email. I was going to copy you guys, but I didn't. didn't want it to be weird where he's like, who is this, who are these other people on the email? No, I'll send them email. I'll tell you what's weird. Like, I've known you for several years and I'm shocked that you want to buy a cheese factory in Wisconsin. Oh, I've emailed multiple others. Remember, what was the one? But they were cool. They were a worm farm and a pizza boat. Like, yeah, like, okay, cool, I get it. But you're not the buyer. It's not business buyer fit. But hey, Michael, you're out. This is me and Bill's deal. Okay. You want to throw, you want to throw shade at us? This is me and

Bill's it for now on. No, I just, I'm shocked. I'm just surprised to learn this about you. This is like, you know what I want to do? I want to spend winters in Wisconsin like squeezing milk out of a cow and I think between the three of us, we could figure out somebody. I would go there in the summers and then we would, you know, like everybody on Twitter makes it so easy. We just find an operator. We just put an operator in this thing. Bill. It's a milk house. Bill, am I wrong to be surprised? Did I just drink too much egg duck? No, mills love. I mean, I don't know about Wisconsin. He's a little thin-blooded.

He's from South Carolina. But other than that, he's got the beer. He loves manufacturing. I think it works. I'm just dying to know more. Like, what about this four-year average even though? That really piques my interest. And then the whole inventory thing.

Like, I'm guessing they don't have, you know, like this isn't $1.8 million of heavy equipment and like an asset list. It seems like it's really inventory. So I, you know, have you ever gotten those like weird? Like you sign the NDA and you get this really cool. quirky thing. Like this, this inventory list would be like, you know, three year sharp cheddar, you know, one month provolone. Like, you know, we have like a really good Parmesan coming up in two and a half years. Yeah. I'm doing it for that. That's amazing. I love it. Yeah.

I mean, I do like like like this is manufacturing. It's not going to get disrupted by AI. It's using local inputs, local milk, right? I mean, you're going to pay a fair price for it, you know, three times plus inventory, which I'm sure will be able to negotiate and come to a fair. I bet you can use an SBA loan or a USDA loan. You know, I bet they're still making cheese in the factory in 20 years. Yes. Ain't nobody buying cheese from Thailand, Vietnam, or China. This day. Exactly. Exactly. So, I mean, there's a lot to like about this. Bill, you don't have to like run it and milk the cows, but if you could find a way, if there's a qualified general manager, you get an operator in here, there's a lot to like here. Once Bill unlocks the e-commerce and the

direct the consumer. I mean, the top is going to blow off this thing. Absolutely. I mean, what if you already live in Wisconsin? What if you're a Wisconsin searcher? Slam dunk. I'm going to lock it down before this episode. I'm going to try and get an LOI before this episode airs. I mean, there are places that are colder to Wisconsin. What if you live in Minnesota? What if you, you know, what if you live in North Dakota? You're a searcher. This is an upgrade. It's practically tropical. Then we go to Taylor Shearitan and we say, hey, we have an idea for a new show. based on Wisconsin, you know, dairy production. And you can have a cut of this deal if we can, you know, fold it in.

Yeah, it's like ice road truckers or something, but for cheese. Love it. All right. Well, cool. Thumbs up, thumbs down. I guess we know where Mills is standing. Thumbs up from you guys. I think y'all, I think y'all crazy.

This is hard. We'll let you know. Hey, we'll let you know. once we've closed on it. And then you can whether or not you want to opt in. We'll send you some cheese, Michael. That's how you'll know.

You'll just get a gift box. I can't eat it. You'll be like, what the heck is this? I can't eat it. And it's not me that feels the pain. That's what I'll tell you. Yeah, so probably not the right fit. The lactose and dollar, Michael.

Buy our business fit. Buy our business toilet fit. Not good. All right. All right. There's the poop joke. That's our sign to wrap it up. See you guys next week.