Acquisitions Anonymous - #1 for business buying, selling and operating - We find a water treatment deal we like (mostly) - Acquisitions Anonymous 245

Episode Date: November 14, 2023

In this episode of Acquisitions Anonymous, Mills recounts a recent dispute over a construction project's billing complexities, reflecting on the challenges of establishing credibility in the industry. After that- Girdley and Mills analyze a B2B commercial water treatment company, discussing its services, market dynamics, and growth prospects. They emphasize the significance of specializing in a niche market for business success and highlight the complexities of managing a team with specialized skills. Check out the listing: https://www.loopnet.com/biz/Business-Opportunity/b2b-commercial-water-treatment-company-158537-mi/2091211Thanks to our sponsors!Thanks to our sponsors!Employer Flexible will help you take action to streamline your company’s HR processes. They are the proud provider of flexible and adaptable PEO services. If you’re a small business trying to grow, and you’re struggling with a lack of internal HR or you’re just dissatisfied with your current HR setup, consider Employer Flexible as your next vendor for HR outsourcing services.Check them out at https://www.employerflexible.com/.------------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.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]

Hey, Michael here. Welcome to Acquisitions Anonymous, amazing episode for you today. And spoiler alert, every episode is amazing. So I say that every week. But today, Mills and I spent a lovely Friday morning talking about a business we actually really liked. It's a commercial water treatment business located outside of D.C., we think. And it does about 700,000 a year in profit. So really a cool deal, one of the best we've seen in a while. And I think you'll enjoy where we took this one. Here is the episode. Today's sponsor is Employer Flexible. And what Employer Flexible does is really function as a fractional HR department for your company or business. I've used them numerous times and putting together my companies. I've used them when I bought companies,

I've used them when I started from scratch. And basically, when you're moving quickly or when you don't want to spend the time putting together your own HR department, benefits, all that kind of stuff, and you want to get the scale of being part of a larger group, you can reach out to employer flexible. And what employer flexible does is give you that buying power as if you're part of a bigger group and all that kind of stuff. And for me, I love working with them for numerous reasons. One is I know the owners and a lot of the staff,

and they've always treated me super good. And then the second thing is I hate HR. Like, I don't enjoy it at all. And this way I can know it gets done right. I get the benefits of having a big fully staffed HR department and the flexibility of having a vendor like Employer Flexible being there as a partner throughout my journey and making sure that everybody I work with is happy, taking care of, and we can focus on what really matters in our business, which is take care of our customers.

So you can find their contact details, locations of their various offices, as well as more details on how they will help your business by going to employerflexible.com. And again, that's employerflexible.com. And thanks to them for sponsoring today's episode. So in typical acquisitions anonymous fashion, I said, good morning to Mills. And then he started to tell me a really good story. And I said, hold on. I'm click and record.

So continue with your story, please, Mills. I was late. So I was making an excuse, really, is what it was. I was making an excuse for being late to the podcast today by about 10 minutes after I said, hey, it'll be four minutes. But I was arguing with somebody about a bill that we put in on a job. And in this business, it's so, like, the bar is so low in construction, people just are like, you're lying.

That's the default. So we put in, when we do project-based work, we have to create these long schedule of values for pay applications where we say, hey, all these different line items, we're going to bill them at a certain percentage completion. It's just the way that, you know, the construction works. And we send it in, and this guy wants to argue about how much we've actually gotten done, because he got a report from somebody with pictures. that didn't line up. And I'm like, well, that report was a week and a half old.

And don't hold up our, you know, $800,000 bill because you haven't been on site. Just amp me up. I'm ready to go. Michael, let's do this. So what you're saying is you have feelings? Yes. All right. All right. I brought a deal and I think it would be pretty fun to talk about it because we've never done one before. Does that sound good, good to you? I love it. Yeah. It is a B-to-B commercial water treatment company. And I don't think we've ever done water treatment. So let me pull this one up here. It is off of LoopNet, which happens to be the owner

of Biz By Self. So let me read this one. Wait, really? Co-Star Loobnet is owned by, also owns Biz By Cell? They do. Wow. I don't know how I miss that. That's right. Yeah. Funny story for you. at one point I wanted to buy BISBicel because they're mismanaging it so much that I called them and I said, can I buy your company? And they're like, why would we sell it? Because we're already mismanaging it. So yeah, co-star owns it. So cool. By the way, we hope you guys advertise and maybe you should advertise because it might be your boss someday if you work for BISB by cell. So say, all right. So this is a B2B commercial water treatment company located on LoopNet

and listed by Trans World Advisors, Mark Irian is the broker. Trans World is a franchise business broker, so it makes it really interesting. I got it. Okay. So, yeah, so the second deal I was considering bringing today is a chain of Burger Kings, but we haven't done that. There wasn't enough on that. There wasn't enough listings on that, listing information on that to make it worthwhile.

So I was like, okay, whatever. All right, so B2B commercial water treatment company, located in Virginia, Virginia, asking $2.6 million, cash flow is $691,000, gross revenue is $2.3 million. And here you can see the listing is provided by Biz by Sell. So it's just loop net, like reposting their listings. It is a well-established, scalable, very profitable with growth opportunities. The innovative water treatment company has served the commercial market for services that include water treatment for cooling towers, boilers, domestic and high purity water, pipe sterilizations, glycol install, and removal recycling system,

system filtration, water softensers, acid cleaning, tower cleaning, and special laboratory testing. Strong and consistent demand has fueled steady profits for this company for more than 30 years. This is owed to its reputation for the highest quality work as well as the fact that commercial water treatment is tied to the perennially strong real estate market in this company's home market, which I assume because they say Virginia is somewhere around the DC area. This is a high margin business with sustainable recurring revenues and low customer

turnover, training and support is included, 14 employees, the real estate is owned, and the inventory is included in the asking price, the owner is retiring, and the location is in Virginia. And that's about all we know. They're asking, just to go back to the math, cash flow is 700,000, asking price $2.6 million, gross revenue, $2.3 million. So they're asking a little over three and a half times cash flow for this business, if my math is right. What do you think, Mills? I love at the bottom it says similar listings. Do you see that? And it's like, it's not similar at all.

Scroll down. It's a franchise for house doctors. Home handyman stuff. Yeah, great. They're like, we have nothing similar, but we just want to cross-promote something. I love this. I think this is super interesting. So my guess is that this is, and they have a really cool picture that looks very complicated, very sophisticated.

It's got like a kind of a home run type circuit of plumbing with water filtration and some like big tanks. It looks like kind of semi-industrial commercial. So the water treatment and when they list things like cooling towers, boilers, you know, domestic high purity water, pipe sterilization, glycol and stuff. I mean, this is dealing with areas that have very hard water, and you can't put that hard water into just a typical chiller or cooler, like, cooling tower, or just you can't just run regular water through it. You have to purify it or you have to, you know, treat and kind of sustain the water before it goes in. It seems very complicated, but I'd be willing to bet this is one of those things that it's not as complicated, you know, once you're in it and once you're in it.

you, once you know what you're doing, there's a lot of perceived complexity, which is an awesome mode. Yeah. My friend owns a business that is very similar to this, that sells to commercial clients, and they specialize in commercial refrigeration. And what ends up happening with the business, and I bet this one looks just the same, is it's a lot of new build and then some maintenance. So it's like 60-40 new build and maintenance. But it's a lot of, lot of very bespoke unique stuff, which the fact that this is a 2.6 million, 2.3 million revenue business, given how expensive some of these systems are, leads me to believe they are dealing with a lot of just like random stuff. Like, hey, we need specialized water treatment for this cooling

tower just because we're the only, you know, their customer is the only pharmaceutical manufacturer within 30 miles. So they win those deals or they get called in as subs. And that's, that's precisely the way my friend's business works because they do these weird refrigeration systems. And it's just like, okay, like we need to refrigerate like this random thing

that happens at a military base, like come on in. And so this smells a lot like that business. I really, really like niche sub of subs. So we just ran into one where we're a fairly niche roofing contractor, all commercial,

but we ran into a job where there have to be pretty, pretty extensive slate tile repairs, and almost nobody does that. So you go find the one person who does it, and they are the one person who gets it all outsourced to them. A lot of glass and glazing, you know, window storefront contractors, they do the same thing with skylights, where it's like, ah, it's really hard. I don't want to mess with it.

So let's just go to the people who specialize in skylights. This would be the same thing. There would be a mechanical contractor who's going to do the HVAC, the boiler, you know, all the mechanical work, the plumbing. But if it's something this specific, the nice thing about it is that when you're working, and this looks like it's all commercial, maybe a tiny bit of residential,

when you're working in this segment, you're usually not the designer. There's an architect or a mechanical engineer who's designing and specifying the system and saying, here's the plans, here's the specifications, here's exactly what you have to put in and how you have to put it in.

And so you don't have any design liability. One of the issues I think with kind of more run-of-the-mill trades or kind of lower-tier residential is you're designing it. And if you design it wrong and it creates problems and also if you install it wrong, you're liable. In this case, somebody's telling you exactly what to put in, how to put it in. You can price it very efficiently because you just go pull quotes. And then it's just about installing the product. and it kind of simplifies the scope. Oh, and before I forgot, I forget,

I found this on Hela Gwo's newsletter. Oh, cool. The Deal Hunter newsletter, same one we did last episode. So anyway, shout out to Helen. Yeah, so the parallel with my friend's company is the reason that this business is a pain in the butt is the people. Like, your deciding thing of being able to do these jobs

is hiring capable techs, and then managing customers. So those are like the two things. Like you talked about your hassle with dealing with this random customer who's like, you know, questioning your bill based on imperfect information. My friend continually is like project managers,

techs, sales reps, estimators. Like they, that whole thing is just like a perpetual nightmare of trying to get those people in the door and then keep them around. And yeah, I think that would be, that would explain to me, I bet dollars to donuts. you go look into this business and ask why is it only 2.3 million, like that, they, they reached a

suitable level of pain in the butt. Didn't go above that in terms of trying to recruit more people. And I think you and I differ on this because I 100% agree with you. That is the kind of ceiling of brute force. You just said you disagree with me, but then you said you agree with me. I agree. You're going to have to be meaner to be. I agree with the observation, right? That is what's happening. We disagree about, you know, whether or not that, rather, whether or not we want a business based on those characteristics. So, oh, I think this is a good business. I know, I know.

I just don't like people. Yeah, exactly. And I'm like people, the person who controls the labor controls the margin. It's hard, but you get paid for a reason, you know, you work hard for those margins. It's a super interesting thing. Like, if you think about any business and you want to understand it, it's kind of like, okay, like where is the value coming from? Like, how am I creating value here? What is the thing that I have that nobody else has?

And sometimes your resources, like, I've just recruited every, you know, HVAC tech in the city of Columbia, South Carolina, and I got this nailed down, so pay me. So I'm totally cool with that. And I mean, so it is super hard, right? And it's a constant battle and struggle to, you know, maintain those competing interests, which is my customers want it for as cheap as possible, as fast as possible. and they are always right. And then your employees and the techs and the project managers and everybody who's involved

in the fulfillment process, they're at odds, right, with those dynamics. But I think this is super interesting. I would be curious if somebody gets the SIM on this, customer concentration can sometimes be a little bit of a smoke screen. I looked at a business actually in the D.C. area on the other side, on the northern side, and the deal fell apart because it was kind of a white night scenario where we were getting a last look at it. But they had customer concentration that didn't look bad.

But then when you went one layer beneath it, the customer concentration was like 80% Bank of America. But it was somewhat, it was somewhat ambiguous. even with customer names because Bank of America was procuring through calliers and CBRE and, you know, Jones-Lang LaSalle, it was, there was an intermediary in between, but the end user for their service. I would be really curious in the D.C. area if that's the case, if this is like 80 or 90 percent federal government work, you may not know even just looking at, you know, at the customer list or an anonymized customer list, but it could be that you're working for. one or two different GCs or plumbers, but all the work is happening on federal complexes, which makes the labor a lot harder. And also, you have to start to adhere and abide by, you know, the Davis-Bacon Wage Act and prevailing wages. And, you know, it just makes things a lot more complicated. One of the things that confuses me about this listing, they say they have 14

employees and they only do $2.3 million in revenue as a contractor and service provider. So it makes me wonder, like, are they counting, you know, I assume they're, when these systems come in, they're reselling those systems, but maybe they're not in terms of how this is operating, because it's, it just seems off to me, right? I think it's probably component built. So it's like, okay, hey, we have, you know, dirty water, hard water that's coming in. We need, you know, a pressure equalizer valve. We need, you know, an actual filter mechanism.

We need a second filter mechanism. We need all the pipes that connect those things. And so they're pulling some ready-made aspects of the system in and then connecting the parts and pieces. All right, taking a quick pause here. I have something to tell you. This is Michael. I hate bookkeeping.

I hate bookkeeping. I hate doing HR. I hate doing all that kind of stuff. But for bookkeeping, I have found a solution. It is my friend Charlie's business called cloudbookkeeping.com. So that's cloudbookkeeping.com. They are your perfect partner if you want to get bookkeeping out of your hair and focus on making your company, your customers happier and more successful.

So please give them a call, call Charlie, cloudbookkeeping.com, tell them we sent you. They're a great way. If you're a business buyer, if you're a business owner, you're tired of hassling with getting your bookkeeping done. He's got a whole fleet of people that are well trained and work for him. He's located here in San Antonio, so I can tell you, because, of that, he's awesome. And they're a great partner for you to potentially call to help with all your bookkeeping needs so you can do the important stuff in your business rather than worry about

getting your books right. So give Charlie a call, cloudbookkeeping.com, and now back to the episode. We were talking about revenue per employee and if it seemed low or high. It seems low to me, but maybe it's understanding the business better. I think you're right, though. I mean, you think if if these are folks in a major metro area skilled trade you know even if let's just say they're making you got 14 people if they're making fully burdened 80 to 100,000 a year you know and that's that's just wages that's before you are paying for any supplies and materials um there's it seems a little light yeah it just seems odd um i mean that the stuff we we, you know, maybe we do the stuff we like drill on this.

Like, got to love the niche. Like we've talked about that. The space is going to continue to grow. And you see a lot of tailwinds with more manufacturing coming back to the U.S., people caring more about what they're putting in their bodies. Like, all of that is a big, big, you know, tailwind for this. And it's a profitable business. It's been around for 30 years.

All the good stuff. So any other stuff that you like that we haven't really talked about? Being in Virginia is good. I like the DC area. I don't know if it's a feature or a bug, but it's listed with a business broker. Trans World I've had a fair amount of interaction with in the past. And because it's a franchise, it kind of depends on who, you know, who the actual broker is. There's some standardization, but a lot of times they're dealing with pretty small, you know,

signorama, you know, like franchises, selling, you know, selling franchise units. of different concepts. So it may be that this person is great. It may be that they're completely out of their depths with a business like this. Sometimes it can help and sometimes it could hurt. I think we also haven't really talked about. This is like a great SBA borrowing business.

Like that's a huge deal, especially at these ratios. The price seems pretty right, right? Three times cash flow, three and a half times cash flow. That's definitely wheelhouse for SBA there. And, you know, I think it's in that. A thing I like also, it's in that kind of what I would describe is messy metal like stuff where it's like the 500,000 to a million a year in profits really presents an opportunity

because it's like too small for big buyers to want to go after and it's too big for small buyers to want to go after if that makes sense. So it's a good middle ground. I think the other thing to like about this is because it's just a hodgepodge of random services, you know, at this size, the fact they do so many different things leads me to believe their service stuff is very bespoke and all over the place, you know, it's unlikely that you're going to come in and have a big competitor try to come in and go after this market, just because it's like, well, it's just a bunch of random, hard-to-do stuff. They want to go after big things. And, you know, it makes sense. This is a, you know, because it's a skilled labor business, they're geographically

constrained. You know, they have guys who can kind of do a handful of different things in one geography, but there's a reason that they aren't only doing tower cleaning for laboratory, all over the U.S. because that is a much more difficult staffing proposition and fulfillment proposition because you've got to have people everywhere. In this case, it's you have people in one place and they can do a handful of different things that are probably just all the things that the plumbers don't want to do, which I love. I mean, that is a great, that's a great competitive advantage, right? Plumbing is more crowded than what these guys are doing. Absolutely. Well, and these projects don't appear to be big enough that it makes sense to fly the A team across the

country and put them into a hotel for three months. So totally just like, yeah, I think that's what we like. This is like a cool niche. So let's talk about the things we don't like about this business. I'll go first. Very hard to grow. I think that when you, you know, very hard to grow. Also difficult to run when you have this hodgepodge of just like random crap,

like that is the most difficult type of business to run. You know, I think the closest example in parallel, we talk a lot about how digital agencies, especially general purposes, ones can only get so big. Yeah. It reminds me a lot of that. It's like, yeah, it's that for clean water. So digital agencies, for those that you don't know, like, the idea is digital agencies are very good to go from like zero dollars starting with to like three million dollars in

top line revenue. And then they all kind of get stuck there. And a digital agency does things like websites. It does things like SEO. Like they'll sell that to all types. of different markets, and they'll sell a bunch of different products. And what they discover is they tend to cap out around like that $2.5 to $3 million in revenue area because managing this type of bespoke stuff and managing a bunch of different

customers who want to have a good relationship, you know, your differentiator's customer service, like it becomes to a point where you can't manage those, you can only manage so many of those small clients, and you can only manage so many employees as a hustling operator. So you end up, you know, capping out right around where these guys do, two and a half million dollars and they don't grow any larger. So, you know, I think that's something that's going to be like, oh, this is going to be very difficult to grow when your business niche is this hodgepodge of stuff. Yeah, it definitely reminds me of that.

I think the agencies that you see take off are the ones that can specialize and say, like, all we do is, you know, headshots for law firms or something, right? Websites and headshots for law firms. and then they just become the one. The thing about a digital agency is that you can fulfill kind of anywhere and everywhere, it's much more difficult for this business to say, hey, we just want to do pipe sterilization

across the U.S. or the East Coast. That's a harder thing to take down. Well, we did look at that deal that was really cool that was like basically what you're talking about, but they only did it for nuclear power plants. So I think that's where people end up specializing in stuff like this. you find like a nichey corner where you're like the absolute best to do a thing.

And you just go after a smaller Tam and you own that. So the equivalent in the digital agency world is you just say we're going to only do it for, you know, for digital creators. We're going to do it for dentists or liquor brands. Like we're going to be the digital marketing agent for liquor brands. And I met a guy who did that and actually his whole stick for his agency was specifically high end luxury brands. and he like schemed himself into becoming the digital agency

for high-end luxury brands. And he got one, and then he got two, and then he got three, and he got four, you got five. And then suddenly, like, everybody went to him because his group just knew how to do that. And it was a $50 million agency. So, you know, that's your one option. You go to very specific productization,

or you go to very specific, like, very bigger customers. And that's the other end of the spectrum where these agencies grow as they go from Main Street to bigger stuff. But in our case, like, we think with this business, we think other people have probably picked up either one of those opportunities for the equivalent of this business. I know we're supposed to be talking about things we don't like, but another thing that I do like about this is within the kind of suite of industrial services, you know, commercial and industrial services, it is becoming so in vogue with private equity right now because of the reoccurring nature. this is project-based work, but like you said, I would not be surprised if there's like a 60-40 split, because guess what? If like in this picture, if one of these pipes or one of these valves or one of these

components goes out, they're not calling the regular, you know, the regular plumber or the regular maintenance guy. They're calling, you know, it's like, this is probably in a room where everybody knows, don't touch anything in there, right? It's a pharmaceutical company. And they're like, nobody can go in there, nobody can touch this stuff. There's like, you know, only one person allowed in. That provides a really nice, you know, and this stuff wears out. Like, it doesn't last forever. Water filtration doesn't.

You got to replace filters. You got to backwash them. And then even then, like, they have to be replaced. And so I've been trying to find some data on like, you know, the installed base of different trades and different, you know, different components of like the installed base of HVAC, the installed base of commercial roofing and the relative. age of it. I'm sure somewhere there's some data on that for these filtration systems. And it would be pretty interesting to see. You could find out your TAM pretty easily.

Sure. Well, and I think you read between the lines, you bring up a good point. Like the stuff these guys are working on is very specific niche stuff. Like the plumbers don't want to do like glycol machine installation. I don't even know if that is. Glycol is, you know, it's a, it's a form of like, Yeah, hermaphroditic alcohols. Yeah, are you familiar with that? I just made that up. That's not sure. I don't even know what that is.

I just pick two words. But like tower cleaning and special laboratory testing, like it's the, hey, you got to call those guys because they're the only ones in town that know this, which is why this business does $700,000 a year on $2.3 million in sales. It's like, you know, who are you going to call? These guys. Like, I think this is definitely that part of it. Okay, I do wonder about licensing for this type of business.

Yeah. I have a friend who took over a mechanical contracting business here in South Carolina. And, I mean, it took him like six or seven years to get all the licensure. He had to be a licensed plumber. He had to be a licensed like boiler mechanic, licensed mechanical contractor, HVAC contract. I mean, it just went on and on and on. And like the boiler test, you're talking about hot water under pressure.

So, I mean, it's just multiple, multiple levels of testing. that took several years and, you know, different experience requirements. And so I don't know what it is for this, if anything, but my guess is it's regulated in some way. And so the previous owner, in these situations, the previous owner pretty much has to stick around and let you borrow their license. Right. Unless a strategic buyer is buying them and it's just a plumbing company who says, hey, we like this and we want to take it in-house, but we already have most of this. Well, I think that's probably a double-sided thing in terms of looking at this business. It's either a good thing or a bad thing, right?

It's a good thing that it gives you a moat against competition, which is great. From a bad thing perspective, it kind of comes back to my next concern about this business. Like, you're, you're to some extent potentially trapped once you buy this business. This may be an owner-operator-only style business. And that would be something I'd want to dig into. Like, you know, am I buying myself a job for the next 20 years as long as I own this business? Like, sometimes you are. And that's a trade-off.

you have to be comfortable doing if you're going to be the person buying this business. Yeah, yeah, absolutely. I think it's probably increasingly, you know, regulated and required. You know, I'm just thinking this looks like something that's in a very specific, you know, building with a very specific manufacturing process that requires this type of water. But it's not like over the next 20 years, I think this probably becomes more and more common, you know, whole house water filtration has become more common. Like you said, people care more and more about what they put into their body.

And I think that this, you know, there is a, there's a time and a place where you could imagine that this is something like this is in every building. I mean, if it's not, I mean, I think large commercial buildings have some elements of this in general right now, but it's not going to, it's not going to become obsolete, if anything, it's going to be, you know, more and more prevalent. Yeah. Oh, look, and I love that they're mostly in commercial. right? That's definitely much more of a blue ocean than some of these other businesses where you're doing a lot of residential stuff, which has its own problems. It's bigger market. But man, if I have to think about being in a market that I'm going to be comfortable is going to be there for a long time, this smells much more durable than some of those other businesses. Yeah. I have a friend who, he's a, he's a listener of the podcast, but he worked with me for a little bit and then bought a business that does very specialty chiller manufacturing.

And they, a lot of their business has been breweries, you know, in hospitals and like large, not just kind of regular HVAC, but, but specialty chillers. And they really started to, um, to find kind of sub niches to grow into. But it's amazing, you know, the bar, the bar is low, I think in a lot of ways in terms of the fulfillment aspect of it. And getting into a business like this, professionalizing it, adding a little bit of incentive from a sales perspective. my guess is they probably aren't, you know,

at their full capacity utilization here. And they probably could do more with what they already have. So I think there's a lot of a lot of, a lot of this that piques my interest. I like this one. If you're a searcher and maybe you're in the Virginia area and you want to go run a business, this is a good one to do.

So I think Helen was great to find this one. So yeah, this is one of the better ones we've looked at, for sure, for sure. Some good questions to ask. Look, I love also that this is not a space that everybody and their mom has discovered, you know, like every scene, seems like every two years, people are like, you know what are really good businesses?

Plumbing companies. Like, yeah, though, we got it a few years ago. Yeah, yeah. But I love that aspect of this. And I think this is a good one to dig into. Very good. If somebody does dig into it, you know, in the ListerBase, let us know, now. We're curious what you think.

There may be something we're missing about it. But, man, this definitely smells like one of the better businesses we've run across for the right buyer. So who do you think is the right buyer for this? I think a searcher could do this. I mean, at this size range, it's probably a self-funded search just from the economics I've looked at, you know, with funded versus self-funded search. This is probably too small for, you know, a funded search. But independent sponsor, somebody who has a little bit of money, you know, set aside, I think you could, I think you would get some traction with the SBA with this. 100%.

Yeah, I love this as like you're a 25-year-old. Maybe you've worked at an H-FAC company or done something different, you know, and are looking for a relatively achievable business to put together. And I think this is one you could structure the way we see. A lot of this stuff gets structured now where you go to investors. You put together $200 to $300,000 in equity, and you raise that from folks, then you go to the seller

and you ask them to seller finance three to four to 500,000 of it. That suddenly means you go to the SBA and you borrow 1.5, 1.6 million via VN SBA note, which is about two times cash flow, so they're definitely going to be okay with that. And then set up a scheme

where over time the investors who work with you, they get a return. And then when you look up at the end of the scheme, you either own the whole business or 80% of the business, and you've got a great business just, you know, from putting the deal together and then go to do a few years of work. Like, I think it's perfect for somebody in their mid-20s to go take advantage of precisely what the SBA is here for.

Like, this is down the fairway SBA loan, and the key innovation there would be, you know, structuring it a way you could get some equity from other folks so you don't have to come out of pocket for too much. Yeah, I completely agree. I think, you know, after debt service, you're looking at probably, you know, half a million dollars a year and kind of cash flow available to equity. Yeah, and you give the, you give the investors a 15 or 20 preff, you know,

until they get their money back, or you give them a scheme where they can get 3x their money and then they own 20, 20% of the business, you know, based on distributions. Like, there's all kinds of schemes you can go there. You know, it's, you're going to have to get them a little sweeter deal than you did in the past because interest rates are not at zero anymore. But, you know, but the amount of cash flow here based on price, you know, it's hard to make a business. It's hard to lose on a business that is steady revenue and it priced it three and a half times profits.

Like, I'll just tell you how that works. That just, that underwrites. Like you can make that work compared to other investing opportunities. Cool. All right. Well, I have nothing else to say about this one. It's a good one. Nope.

Yeah. Kudos to Helen for finding this one. And we'll see you guys next week. Thanks for being here. Oh, and if you enjoyed this, please go tell a friend, a family, neighbor's pet, anybody, print out the listing to our website, put it in your truck stop bathroom. Anything you want to do, tell a friend. That would be super helpful for us as we continue to grow the pod and stay on our march to a million downloads a year, which we're getting closer to. So, all right, man. Good to see you. Yep, likewise. See you.