Acquisitions Anonymous - #1 for business buying, selling and operating - What happened to those Vegas Wedding Chapels? (w/ guest Trent Lee) - Acquisitions Anonymous 228

Episode Date: September 15, 2023

In episode 228, Acquisition's Anonymous features Trent Lee (@TrentBizBroker) to share his insights as the broker from the Vegas wedding chapels featured in episode 130.  He joins Heather (@EndresenHeather) and Michael (@girdley) to provide a behind-the-scenes look at the acquisition.  Trent offers some reassurance that Michael and Bill's initial breakdown of the business was pretty solid while sharing some interesting insights around the seller and eventual buyer. To watch the original episode, click here.  Thanks to this episode's sponsors!The Science of Scaling, hosted by Mark Roberge. Mark is a Senior Lecturer at Harvard Business School and in each episode, he interviews the most successful sales leaders in tech to help you learn how to scale a business. Whether that’s how to find outside capital, or what to look for in your first sales hire.Search for “The Science of Scaling” in your favorite podcast app-----------------CloudBookkeeping offers adaptable solutions to businesses that want to focus on growth with a “client service first” approach. They offer a full suite of accounting services, including sophisticated reporting, QuickBooks software solutions, and full-service payroll options.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, Acquisitions Anonymous. Episode 130, so nearly 100 episodes ago, we did a very special episode with me and Bill, and we went through a chain of Las Vegas wedding chapels that were for sale in Las Vegas, and Bill and I loved this deal. We thought it was great, and we spent a half hour talking about it, and today we have something very special. It turns out that those wedding chapels, they sold, and the business broker, who represented the seller and made the deal happen, joined us to react to that episode. So we played episode

130 and re-reacted to it. And Trent joined us from Vegas. He was great. Audio was awesome and really filled us in on the way that things went down. And I thought it was super educational. And for me, enlightening and also reassuring that I and Bill were mostly right in terms of our breakdown of the business back in episode 130. So I think it turned out really interesting. Definitely interested in your feedback on this one. It's the first time we've ever done it. And here is the episode. Hey, everyone, it's Bill. So funnily enough, today's episode is actually brought to you by another podcast. It's called The Science of Scaling, hosted by Mark Roberge. The cool thing about Mark is he's a senior lecturer at Harvard Business School. And in each episode, Mark interviews the most successful

sales leaders in technology to help you scale your business. So if you're into tech, and especially if you're into SaaS sales, this podcast will be really interesting to you. So whether they talk about how to find outside capital or what to look for in your first sales hire. I check out a few episodes, and I was really impressed with some of the people he got. So Mark had the head of sales at OpenAI, Alyssa Rosenthal, and also Oliver Jay, who's the founding CRO of Asana. So some pretty heavy hitters. So I encourage you to check them out. If you go to any place where podcasts are downloaded, just search for the science of scaling. So that's the the science of scaling in your favorite podcast app. That's it. And thanks again for tuning in to

this episode of Acquisitions Anonymous. All right, we're doing something special today. We have a guest, and we're going to do like a new format we've never tried, which is a reaction episode. So guest, Trent, I'd love for you to introduce yourself. Give us a minute overview of who you are and how we got connected and why you're here today. Yes, I'm Trent Lee. I'm based out of Las Vegas, and I'll tell you how we got connected here.

I did not. Obviously, I'm a business broker. I had listed and sold one of the deals that you guys did a review on. And honestly, I had a buyer contact me and said, hey, I heard about this wedding chapel for sale on your podcast. And I'm like, podcast, what are you talking about? I didn't do a podcast. And so I kind of probed them a little bit, asked some questions.

And he said, yeah, there's this podcast that reviewed your listing. You didn't know about it? And so I looked it up. I found you guys. And that's the story. It's been amazing. and I listened to all your podcast after that. I'm not sure about the worm farm, but I love all of them.

Wait, do you have any worm farm listings or no? I do not have any worm farm listings. I can tell you, I've sold a lot of business, but worm farms is not one of them. We are going to now play episode 130, which is nearly 100 episodes ago for us. So you'll see some things that have been upgraded in the past 100 episodes, including my glasses.

I had my backup glasses on this day, Heather. So you're welcome when we go to Gen X Corner to make fun of them. But then we're going to watch it. We're going to replay it live here. And then we're going to jump in when there are moments to comment on things that we got wrong, things that we got right, things that were interesting. Heather, if you want to comment on my glasses, you're welcome to do that at any point. And so we'll go from there.

So I will get started playing it and we'll rock and roll if that works for you guys. All right, Bill. We have a listener submitted deal that's so good. If we don't do it today, we have to quit the podcast. That's how good this deal is. This is an emergency acquisitions anonymous podcast. We got this deal in from a listener and Michael texted out to our group, emergency podcast. This was an hour ago.

Here we are. We're going live. It all caps. Let's get into it. Okay, okay. All right. So this is so cool. It makes me want to buy an Elvis suit.

We're going to do it. Okay. So it is from first choice business broker is the number one world's authority in business sales, and they are located in Las Vegas. The title, I hope you're all sitting down, the title is three Las Vegas wedding chapel, chapels plural, on the Las Vegas strip netting over $1.2 million a year. Located in downtown Las Vegas, this wedding chapel chain is priced at $3.4 million. It does $2.4 million in weddings per year. Total adjusted net income is one. point two five million so they're asking three point four for it it does one point two five million

adjusted net income has sixty thousand dollars worth of his fixtures and equipment and it is established in 2018 and is located in downtown Las Vegas it is represented by the very perky looking Trent Lee LLC who is located in Las Vegas okay can we stop and I'm just sorry in advance for calling you perky but you are I mean I mean it's a compliment but so I was going to say, I had, I had to think about what does perky mean? That's not really a word I use in my everyday vocabulary, but I'm going to take it as a compliment. I'm going to take that as a compliment. I say friendly. You look friendly. Friendly, lively, happy. It's perfect. I'm okay with being perky. Okay. It's coming from a place to love. I hope you know that. Now is your chance to own three

Las Vegas strip wedding locations. Cellar is semi-absor and according to his tax returns, nets over $1.2 million. The seller has years of profitable history and is moving out of country, which is the reason for the sale. According to the seller, a new owner operator should easily be able

to earn the same amount he has netted. This turnkey business is extremely profitable and all staff are willing to stay for a new owner. For information, including a detailed confidential opportunity summary with financial information and photos, please email Trent Lee at Trent at FcbB.com.

They go again through the financial information, There is lease information listed here. So they have a base rent of $9,300 a month for $5,100 square feet. It expires in 2024, and there's an option for one additional five-year period after that. So your space is locked up through 2029. They've put $250,000 into these wedding chapels and have 10 full-time employees. The seller will do a 14-day training period and has a licensing requirement, which is a handbill solicitation license and wedding chapel license.

So what I understand it from the handbill solicitation license is, if you want to be one of those people that hands out flyers on the Las Vegas strip, you have to have this from the city. And of course, there's a wedding chapel license that I assume comes from the state and county, and the reason for selling is the seller is moving out of the country. So, Bill, let me ask you this. Are you ready to dye your hair black, get one of those Elvis 79 jumpsuits,

and move to Vegas and make a lot of money, selling this, buying this wedding job. I picture that's what you have to do in order to hit the true SDE number. Like, I picture that the owner is dressed up as Elvis marrying people on the Vegas strip. All right. So you were right. The hand bill is exactly what you were talking about. It's funny because the seller got so tired of hiring people to pass out these flyers on the strip who would essentially get the stack of flyers, go out on the strip, and just put them all in a garbage can. And so he quit doing these handbills

because he couldn't find anyone that would put up with the heat and put up with the weather and actually hand these things out. So there is some opportunity there for someone to come in and actually do that type of work, but he got tired of it.

So he does have that license, but doesn't do much of it. Really, I mean, that anecdote, and I'm sorry to interrupt, but that anecdote is just like the stuff I look for when I'm like, oh, this is a pretty good running business, right? That's a sign there.

Like, there'll be more to come. But, like, when you hear somebody actually digging in and understanding, oh, am I getting ROI on my marketing dollars, like, okay, like, good chance I'm stepping into something that's been well taken care of. And this owner appears to, like, actually cared if his marketing dollars are work. So that's a good sign. Yeah. Yeah.

Let me give you just a little background on the listing, some changes. So we originally had it listed as three wedding chapels. And it was a husband and wife that were selling the business. what ended up happening partway through selling the business, the two sellers, the husband and wife decided to get divorced or were in the process of getting divorced. And part of the settlement was that the husband was leaving the country, which was why he was selling. He didn't have any real involvement in the business anyway. Part of the settlement was he was going to give his wife one of the wedding chapels and have some type of an earn out structure, whatever. I wasn't really involved in that.

So what ended up happening is it morphed in from three wedding chapels to two. We had to completely redo all the valuations, redo the offer, and have the SBA approve the transaction based on two wedding chapels because each wedding chapel had their own P&L statement, profit and loss statements that all rolled up to the tax return. And so we ended up just selling two of the locations. and the buyer has the right in the future to buy that third location if the now ex-wife ever wants to sell it. Ooh, that's tricky. We call that a carve-out.

And there's a lot of lenders that won't do those. There are some that will, and usually with some kind of third-party quality of earnings review of those P&Ls. But that's interesting. And really ironic that the wedding people, the wedding owners were getting a divorce. So you know what's even more ironic. And maybe this is a little bit too early. So there's actually two locations. They both happen to be in the very same location in downtown Las Vegas.

One's upstairs and one is downstairs. So it really kind of didn't make sense that there were even two locations to begin with because they were in the same basic, you know, downtown area. Just one on first floor, one on second floor. What they're doing, ironically, is they're converting the, first four location into a bar. And they're calling it the divorce bar. So they're having all sorts of drinks around like,

you keep the house is one name of the drink. Screw you is another name of the drinks. I keep the kids. And so they're going to have the weddings up top and a divorce bar down below and they'll send people back and forth as they wait because they have a lot of weddings going on instead of people just waiting, they'll send them downstairs to buy alcohol and make some

additional money from them while they wait. So there's some really interesting things happening in this business. Well, all right, let's jump back. Let's jump back in. I love how weird this is getting. This is like what I totally expect. And if you don't want to be dressed up as Elvis, you've got to hire an Elvis impersonator. That's how I, that's how I picture this business. But so the first thing I did was wonder how many people are getting hitched for $2.4 million of top line revenue. So I did some Googling. There is, I just pluck this off the front page of Google. I have no idea if this is the businesses for sale at all.

But this is the Graceland Wedding Chapel, Las Vegas. It's Elvis themed. It's kind of everything you pick with a wet or you picture with a Las Vegas wedding. They've got packages as low. The traditional wedding package is 200. So I don't know. I don't know what you spent on your wedding, Michael, but this is a deal. $249. It goes as high as $4.99, which is the Las Vegas VIP wedding. And you got to, you're suggested to tip both the minister, the photographer, the limo driver, and then you pay a marriage license of a couple bucks to the state of Nevada. So two comments there. He asked how many people are getting married on average and what's the cost.

So this is a very like cheap kind of rushed wedding model. They are not spending a lot of money. So on average, they're doing between 18 to 25 weddings per day. And they're spending about, technically what they do is they advertise for $99 for the wedding. And then there's some additional upsells, officiation fees, photos, merchandise, some other fees. they're really, really not good at upselling, which you guys will talk about that here in a little bit. But that's basically how many weddings and their model.

Super interesting. Okay, this is fun because I'm kind of like judging us of how good we were kind of guesstimating about the business. And so far I feel like we're about 75, 80%, which to me is great. That's like I'm super happy with that. So unless I'm like really not understanding like the amount of upsells that go on here, which I imagine there is a ton.

Like average ticket here is like 500 bucks, I would think. So that's a lot of wedding. They're doing 5,000 weddings a year? That's a lot. That's like 15 a day. Do they have a drive-through? You got three locations, right? It sounds like.

So you're doing five a day, moving through. Ooh, that's high throughput. On one hand, I like this business because I think people are being married in Las Vegas until the end of time. You know, like I don't. Absolutely. This doesn't seem. like a thing that is that is trendy or that is going away.

So I kind of like this in a durable market. It's kind of fun. So let me, let me stop you there and interject. I would actually tell you that I think that this market is going to keep growing. Because every like Gen Z that I talk to is starting to get less and less enamored with the, I'm going to have like a giant like destination wedding wherever, right? They are, they just,

they do not see, you know, you talk to my kids who are teenagers. they do not see any validity in this thing. Believe it or not, like, I've been watching my kids. They're kind of messed up, this whole new generation. They, every single kid that I know comes back and says, I'm not trying in this class. And then you say, why? And they say, because it has no utility whatsoever. Because every single one of these kids has grown up, like, watching YouTube.

And they all like, they've only watched practical, useful stuff because that's what YouTube, it's either entertaining or practical. That's it. So they don't understand why I'm in seventh grade and I'm, got to read the outsiders. Like, they don't get it at all. So just comment on that real quick. So you're right on.

Most of these weddings that they're planning are experience weddings. People are not coming here spending $20,000, $30,000 on like the old school traditional wedding. They're coming here for a cheap wedding and then a fun experience after. That's really what they're going after. And to Bill's point, this model is a very high upsuit. sell model and they're just, that's the real opportunity. They were not good at it. They should be upselling limo services, jewelry, honeymoon, affiliate hotel bookings, tourists, transactions.

There was a real opportunity and why the buyer bought this is for what they could do with the business that they hadn't been doing. Yeah, and how did you and the buyer identify that they're not doing well on upsells. Like, like, what was, how did they get to that point where they realized it was an opportunity? Just going through the listing process. As I'm going through listing a business asking and questions, analyzing the financials to try and get a good accurate valuation, which, you know, we could make fun of other business brokers all day long for just doing awful valuations and not checking financials and having

just the worst pitch decks that I've ever seen in my life. But as I try and go through and really could get a good feel for the business for what the strengths and weaknesses are so that I can, one, do a proper valuation. But two, identify what the growth opportunities are so that when we do go to market, we know what the ideal buyer is. You know, is the ideal buyer doesn't necessarily need, in this case, need any wedding experience. You can get ordained as a minister super easy in Vegas and be able to perform the weddings. but if you have someone that's a good systems processes, procedures, upsell, online marketing, they could just, they could double this business. And they're on their way to do that right now.

So it just basically going through me asking questions, I realized, man, there are so many upsell, cross-sale, promotional affiliate opportunities that the seller just isn't taking advantage of because he's not even around. It doesn't even check in on the business that much. Yeah. I can't believe I forgot to mention this at the beginning. But my very first job as a teenager was at a wedding chapel in Anaheim, California. So I kind of know this business a little bit from the inside.

And it was a lot of upselling. I mean, I was just a teenager. I washed dishes. I served food. I saw a few bridesillas go crazy because things weren't right. But it was all about upselling. The ladies in the office. It was all about, you know, paying extra, paying extra, paying extra for, you know, whatever it was.

And it was quite a good business. You know, I always thought about that as I got older. Like, wow, it's a pretty simple and good business to be in. And it's actually a fun business to be in. It was a party every day. They have some great margins. Yeah. Super cool.

All right, let's dive back in. So anyway, that all just ties back to these people. Like, I think this is going to get even bigger. Like, I think it's going to keep growing. Yeah. I mean, it's basically like a lope to Las Vegas for, I bet you could go crazy for $1,000 at a Las Vegas wedding chapel, maybe even a couple thousand dollars, right? Like, that's the top end of the ticket, I would think.

It smells like my last trip to, you know, I took my son to six flags in Mexico City. And I did not live tweet as experience. So I'm sorry, it wasn't as good as my France trip. But the thing that happened, which was just crazy, was how. much they had in terms of price discrimination, where it was just like, you know, you go to six flags in Texas, and we have three of them here in Texas, you pay 80 bucks, and then maybe you get a VIP, skip the line, and it's $120 or whatever. And that's the most they do for price discrimination. The one in Mexico, it was like $25 to get in, but then they just hit you over and over again,

like every stop. Like, there was this one part where they had you walk through the little carnival games in order to get to any rides whatsoever, like just like this choke point where, like, you, You had to avoid dropping 20 bucks on like plushy games, games that give you plushies. Anyway, like, I would bet you there's no way the average ticket is less than a thousand bucks on this. You know, I haven't gotten the SIM, but I bet you the upsells go nuts. By the time somebody's done, I bet it's four or five grand a lot of times. That's the whole ballgame in this business. And that right now is about $145.

Wow, we were really wrong. But it sounds like you can get there. Like, who's not going to spend $50? a bottle of champagne, like, you know, like, or the, like, the special music or the live organ player, like, or the post, the post-nuptial, you know, helicopter ride over the Hoover Dam. Like, but you're saying they were doing a little of that, but not a good job of it at all. Not a good job. Honestly, they could double, they could bump that up to $400 or $500 overnight, just with some really

basic upsell training from the, from the staff and some opportunities. to promote whatever that happens to be, the helicopter ride, the honeymoon affiliate suite, the limo affiliation ride. Yeah. So you knew this from digging into the business even before listing it, right? And then at what point were you disclosing that to buyers?

Like, I mean, we never got the SIM, you know, but like when you're having intro calls with potential buyers, post-NDA and stuff like that, are you telling them, here's my opinion on it? or how did you treat that as a broker? Yeah, absolutely. Because part of what I want to do, when I build out the SIM, the pitch deck, whatever it is, I want to identify who the ideal buyer is based on that business.

And based on, like I mentioned before, the strengths and weaknesses of that business. So part of what I'm looking at when I talk to potential buyers is, what's your background? Why are you interested in a wedding chapel? And that's one of those industries you don't necessarily need to have background on. There's no, you know, it's not like a contractor's license or anything like that. But it's helpful for me as a broker to hear from a potential buyer, one, why they're interested in that business, but two, what their background is so that I can then say, look, based on your background of operational management experience and online marketing, whatever it happens to be, this really is a good opportunity. Here's the current numbers that I've all validated and we've vetted them, but here's really where you could go with the business based on your background because there's a real, opportunity here. This would have been amazing as our first podcast host acquisition, Heather.

Maybe we should have done this. That's one of the things we were working on, Trent. We want to buy a business and live podcasted. So, yeah, right. This would have been a good one. This would have been fun. Too late for us. Right. I mean, the way I see it on this business, you basically got two levers. How many people can you get in the door and how much can you charge them? Like, how much can you upsell them? Right. So like, if I'm diligent this business, diligence in this business, I want to understand how do you guys do marketing? As you mentioned, Michael, I think they've got a hand bill license. So are they like, they got armies on the strip. Like, do you want to get married right now? Like passing out flyers? Like, does that work? What's the

attribution on that? Is it more about, you know, their trip advisor ranking? If you Google Las Vegas wedding chapel, which is like what I just did, the whole first page is like top 10 Vegas wedding chapels, which tells me that there's probably a lot of SEO marketing going on. You know, you could probably pay your way into some of these listicles. You know, I want to really understand where these customers are coming from and understand if it's if it's uh if they're going to take more of my margin so like so like pretty much like the person if you rank number one for top 10 uh you know what Vegas wedding temples they can raise the price on you buy a ton before you're going to cry uncle so i want to make sure i wasn't totally dependent on on a source of leads that i didn't

control and then i just want to say how optimizes your upsell you know i would by the way i would definitely go get married there i would get secret married at the chapel I was looking at by and just see how much I got upsold. Like, see how they really ran the thing. So they primarily drive all their business through Google PPC. They're really promoting this, like, $99 kind of low entry-level wedding. And to Bill's other point, you know, get like secret married, I had no idea this was a thing.

20% of their weddings or revenue, I guess, I should say, is from fake weddings. I didn't even know that was a thing. So people come to Vegas and whatever, they're with maybe a group of friends or maybe even people they don't even know that much. And they go and get like fake married so that they can post it on social media,

flip out their friends and family. Hey, I got married while I was in Vegas. They're not technically, you know, but they pay through it to go through the ceremony. They just don't legally get married. That thing, that never in my life crossed my mind. I would have never gone to a city and think, oh, I'm going to get fake married.

But that's about 20% of their revenue. Wow. Just to be able to say you did it, I guess, just for a Vegas story. Just for like the Instagram pictures and poses. Holy cow. All right. Yeah, that's weird. Okay.

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 eight. 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 St. 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. You know, the interesting thing, too, about this business is kind of, you know, as you mentioned, there's the whole, you got to fly in, right? People come in, you know, you got to eat dinner.

Like maybe you want to do, you know, a bachelor party the night before in Las Vegas. And if you've ever been to Vegas, you know that this like whole town goes around on referrals and legion and, you know, and promoters and all this stuff. So I would imagine, like, the optimum, like, if you're good at this and you can get your, your tendrils into the plane flights and the hotel rooms and the dinner, the bachelor party night before, and the celebratory honeymoon at the Mandalay Bay or whatever, you know, like you could probably rack up a bunch of other ancillary income streams, even on stuff you didn't sell with affiliate arrangements.

Do we think, do, that leads me to wonder about this. So there's three different chapels. Do we think, do we think this owner has done price segmentation around that or optimist? Like, do we think one of these is optimized for the fly-in crowd who is premeditated and looking for you on the internet or the bigger spender? And then there's another one that's like over-the-top cheesy. I mean, that would be something I'd be very curious. Like, how is he segmented this or is it just three like Me Too down market kind of thing?

That would be super smart because you could try to, you know, share leads between them and move people around. So you're right on. The two chapels that were sold were like the cheap kind of like entry-level weddings. the one chapel that the wife, ex-wife kept was inside a hotel, and that was more of a high-end wedding. Definitely a different clientele, price point, everything involved, look and feel everything was different. 100%. Okay. I also wonder, you know, Michael, this comes back to the classic point you always make on a real estate business. You did mention that their lease is locked up through 2029, which is awesome.

You know, I do wonder how much of this is foot traffic and how much of this is, you know, you pick up a flyer, you get in a cab, or a black car, and you drive there. And you had said, Trent, their number one marketing channel is pay-per-click on Google. That's, that's it. Yeah, so location probably isn't. Yeah, they certainly, it's not as important. They certainly get walked through traffic. So that does come up, but it's not vital.

Yeah. You know, how much does location really matter? I'd want to understand that. So I understood how big of a problem I was going to have in 2029 when the landlord wants for double my lease. Yeah, so there we were talking about, and maybe you didn't see this or you did see as an issue, but when you have lease premises like this,

like how long can you stay there? So this is, I guess, nice as a situation because they weren't that location dependent, so it wouldn't be the end of the world if they moved around the block, though, of course, be a pain in the end. Yeah, and as Heather knows, we have to, you know, with an SBA loan,

we've got to get a 10-year runway, so they've got plenty of options to extend that lease up to 10%. 10 years. We had to have the landlord do the waiver, all your traditional SBA requirements there. So they have plenty of time. Yeah. Well, I do recall, and I haven't been to Vegas in years, like I kind of grew out of going to Vegas. And like, I do recall when you go between downtown to the strip, there's a bunch of like chapels, at least three or four, you know, along that route. So I think that's another consideration. Like to some extent, you are selling a commodity here,

whatever positions you've gotten in the SEO stuff or in Google, and then secondarily, like, your network of stuff, I think is also a moat around this business. But by and large, it's pretty low costs required to start when he's up, right? You rent a building, you hire an Elvis personator, and you get 60 grand worth of, you know, furniture, fixtures, and plastic flowers. So I think that would be the other thing I'd really dig into

is how durable is this revenue and profit going to be if other people are coming in? The good news is on the other side, you're selling stuff at incredibly high margin. It looks like if they have 10 employees and they're paying rent and they're paying those guys and then they're keeping 50% of the revenue as profit, like that's a pretty good sign. There's a lot of ability to keep paying more for lead gen and that sort of stuff.

So, Trent, as I listen to this, like, we're to some extent doing a relatively MBA-esque analysis of this business. And whether it's right or wrong, we're throwing around some big words. Like, as you thought about this business, like, how did you first, think, okay, who's my ideal buyer? And then I have a second question there. But how did you think about first about like picking out, you said you went through, did your work, understood the business, and then said, here's my ideal buyer.

Like, who'd you end up with and how'd you do that? Yeah, good questions. Well, first off, overall, your assessment, you guys were spot on. It was nice. I mean, you made a couple of predictions that were a little bit off. But given what you knew about the business, you guys were right on. You guys did a great job. So I'll tell you who I ended up finding as a buyer.

So I didn't necessarily, I just went to the open market and let buyers come to me. And we had a lot of good activity. No one that was really quite ready to pull the plug. The buyer happens to actually be a longtime friend, a guy I go to church with. So this kind of is a little bit of a sign to say, you know what, I had some pretty good confidence that this was a good business. If I'm going to sell a business to a guy I see every Sunday at church, I need to feel pretty good that this is solid. He's not going to hate me two months after he buys the business. And so this guy had, I've known for a long time, he had a job at a hotel.

He made okay money. You know, it wasn't anything crazy, not anything like this business makes. and I went to him because I knew he was kind of looking around and wanting to make a career change. He kind of wanted to start looking at businesses. And I just went to him and I said, look, this is it. Get buy this business. This is the one for you. And he did.

He ended up buying the business. So I ended up selling it to a guy that I've known for a long time and that I see every week. So I ask him, you know, how are the weddings and what's going on? And we strategize a little bit, just like you guys would, basically. business strategy that I help him out with because he's a first-time buyer. But it's worked out really well. He's very happy. That's cool.

He didn't mind, he wasn't afraid to do a personal guarantee on an SBA loan for this? No, because we'll talk about the numbers. Once it plays a little bit more, we'll talk about like the pre-COVID, post-COVID numbers. I'll tell you what it's making, what he bought it for. He got a killer deal. That's great. Yeah.

It's like a worm farm for weddings. Amazing. So anyway, maybe I just talked myself into a circle of like this deal more and more, but that would be other stuff I'd be worried about. Are more people going to open one of these right around the corner from you? Well, that's a really interesting point, right? Because as you mentioned, it's commodity. It's easy to start up.

There's not a huge barrier to entry on starting up one of these. And there's more than three wedding chapels in Vegas. So you're selling a commodity, you don't often see a business selling a commodity service at a 50% EBITDA margins. it just doesn't typically happen. So I would want to know, you know, maybe it's really hard to get a wedding chapel license, right? And they're not handing them out. Like that would be great to know, like a taxi cab medallion or something.

Maybe there's artificial monopoly here, right? I'll give you another one that's running it, a business consumer one that's running at 50%. Funeral homes. There you go. It's like a parallel. I told you, like you're either catching with the beginning or the end. There you go. So, like, I want to understand what is it that these people are earning super normal returns on capital, right?

You know, 50% EBITDA margins on $60,000 of FF&E. Yeah, I guess that's a great question for me and from Bill. Like, what is it about this business that you think makes these relatively high margins so durable trend? Or maybe there's maybe I'm asking about a question, but like, this is good returns on capital, like, extraordinarily good. Yeah, I think it's just the overall model itself. There's very little cost of goods involved here. It's just payroll personnel and performing the service. And then they're just kind of pumping 18 to 25 people per day through their doors and their model. So it's just not a complicated business. There's not a lot of overhead. There's not a lot of cost to the services and it keeps the margins. You're right. It's 100% of commodity business, especially in Vegas, they're surrounded by all sorts of other wedding chapels. But their margin is, or their marketing employees to bring them in low and then do a little bit of upsells. Obviously, the new buyer is going to get better at that. But it's just a good margin business to begin with. So you can't

mess it up that bad. That's freaking amazing. So what is it that's letting them win? Are they better digital marketers? Have they got the on the strip flyer handout hustle really nailed? Do they have the upsell dollar extraction game. Like, what is the part of this business that is better from a business perspective from all the other chapels on the strip? That's what I want to understand before I owned it. For sure. I mean, I think also to go about your idea of buyer business fit, you know, this, we're the

types of things we're talking about to really, you know, bring a lot of value out of this business, required to go get your hands dirty and spend time with the type of people that are hanging out at a Las Vegas strip, you know, what's a. It's a nice way to say. It's strip wedding locations. And these people are not, like, are, people are not getting married by and large at 3 p.m. on a Tuesday. Like, that's the other thing about this.

Like, at, you know, at whatever it is, 20, 25 weddings a day per day, there's people getting married on Tuesday at 3 p.m. Sometimes I'd go in there just to meet the seller to get updated, you know, financials or just check in on them. And I'd walk in in the middle. of the day and there's a wedding going on. And granted, and I don't mean this to sound, you know, judgmental, but this is probably not the type of wedding that you or I would plan to go to. I would walk in and there's these weddings going on. And the guy, the groom, the bride, they're in like

shorts and flip-plops. I'm like, did you guys put any planning into this at all? I could do you just show up and decide to get married? So it's, it's, it's, it's, it's, it's, it's, it's, it's, a different world, a different wedding than I'm probably used to, but there's plenty of people getting married Tuesday at 3 o'clock in the afternoon. Heather, I don't know about you, but I just heard Trent call us classy. That's what I heard. Thank you, Trent. Thank you. Thank you. You know that? I'm sure there's some of that. But I bet you're, I bet you're your most valuable clients are interested in getting it married at 1 a.m. when they take the Uber from, or the, when they take the limo from the black check table at Circus

circus. Wait, they toured it in Circus, did they? I could have been to Luxor. It's terrible. The Excalibur. By the way, I used to stay at the Excalibur because we would play poker there and the best part of it is they would let you play with coins. So we were playing $1, $2

or $0.50, $1 poker. Anyway, that was back in high roller gridly days. To show how pathetic I am and Trent, I was about to tell the same story. That's a posit that I realized it turns out Heather's about to learn. I only have about 15 bits and I say them over and over again.

That's why you have. You got to do something. I can't remember if it was a podcast or an email. You got to do something with all those coins that you put in your suitcase, that story. We recorded that the other day. So it's one of the stories. I'm doing a new YouTube show. So it's one of the eight we've recorded.

So thank you. That was a great trip. But anyway, I mean, I think that's the other part of it is, unless you have a good general manager on site, which hopefully this does. Like, there are going to be problems at 2 a.m. on a Tuesday. And you have to make sure that somebody's going to be there to take care of that stuff. When somebody gets drunk and goes crazy, the bride barfs on the, you know, the altar, like,

all that stuff is going to happen in Vegas because I don't know if you've heard Bill, but crazy stuff happens in Vegas. That's right. I mean, that's, you would have to just not get Vegas. Like, there's an SOP for when the bride vomits on the altar. Like, you know, we know exactly what to do when this happens, right? You know, like that happens once a week. And maybe that's how they talk about, you know, price discrimination or customer segmentation.

Maybe it's not three different locations. Maybe it's by time of day, right? The premeditated folks, you know, to fly in, they take the 3 p.m. on Tuesday slot. And their 1 a.m. on Sunday or Saturday slot, that's a whole different customer. This is amazing. So one thing I think worth digging into is it just, it just occurred to me, these may be COVID-adjusting. of numbers, like big time. Right?

Because, because, you know, COVID, well, I, what I talked about with my, with my colleague, you know, it literally, the poor guy, like, I was like, what are you doing this weekend? I'm going to a wedding. What are you doing next week? I'm going to another wedding. What are you doing the weekend after that? I'm going to another wedding. All those people who didn't get married in 2021, guess what they're doing this year?

They're getting married. It's pretty, it's pretty crazy. So I would definitely want to have historical financials before betting on this. And maybe it isn't really two and a half times EBDA. Maybe this is really five times EBDA. Yeah. You want me to comment on that? This is your cue.

To talk about COVID in the history. Yeah. So there's no question about it. There was a COVID bump. I think you guys talk about this here in a little bit. A lot of people pent up, didn't get out to Vegas, and they did have a positive bump. So let me go over the numbers.

When we recasted the numbers based on just the two low, locations, 2019 showed an SDE of $498,000. 2020 was $515,000. And then they had 2021, which part of that time they were closed. You might not be familiar, but Vegas, the wedding chapel is closed for a while during COVID. but 2021, even with it being partially closed, was $714,000. And then 2022, which in theory, you know, may still have a little bit of a bump, but shouldn't have had a lot of COVID impact was $707,000.

And they maintain that pace. And so when I did my valuation, again, you know, kind of, making fun of a lot of these other business brokers, I'm not taking post-COVID numbers, pre-COVID numbers or their best numbers. I'm trying to take a reasonable approach on a weighted average over the last four or five years to really kind of blend that out

so that we make sure we don't just take a positive COVID bump if that's not going to be sustainable and try and take a market multiple and determine our asking price by something that's not sustainable long-term. So we've really tried to average those numbers out and factor in pre-COVID numbers during COVID and then post-COVID numbers and where they were trending to come up with our asking price and finally the sales price.

Maybe that is why this seems so cheap. This is a COVID blip trailing 12 months, 2022 number. And that has me scared. Totally could be. Yeah, I'd love to see that because on one hand, like Vegas shut down completely with COVID in 2020. But then Vegas opened up decently quickly, I think. And while a lot of the other country was, you know, people's wedding plans have gotten blown up and you're like, oh, we missed our wedding date. And people are like, screw it.

Let's go to Vegas and get married. You know, they're probably a big bump there. The other thing about this is the size is good. Like, this is definitely like SBA loan. You know, the owner is retiring and move out of country, probably joining everybody else and moving to Portugal. And, you know, maybe you could get them to contribute some of the equity for you, you know, and really reduce what you have to put into this whole thing. I mean, this definitely feels like one where you could come up with a couple hundred grand of equity, do an SBA loan, and then you have, you know, the seller with a hold a note on full standby and really lever the heck out of this thing. And it's the type of business I think you'd want to do it. Heather, this is pre-Heather addition to the podcast. Normally, that's the part where you learn me on how to structure deals.

Yeah, I mean, but you were right. You could get into this for a pretty low down payment. We'll hear Trent tell us what actually happened. I think that's the interesting part about an SBA loan, is it really the entry cost is so low. If you're willing to give that personal guarantee and step into one of these businesses, the return on your equity investment can be huge if you do it right. So what ended up happening, Trent? Yeah, good question.

So the seller, because he's moving out of the country, he did not want to do any type of seller financing. He didn't want to do any standby notes. He would rather, and I talked to him about it, I'm like, are you sure you would rather take a discounted offer rather than get a higher price and get some revenue coming in here in the future? No, he just wants out. He's moving, already bought a house.

He bought his Ferrari in Dubai. He was mentally checked out. And a buyer came in with a 10% down payment. and bought it for $1,350,000. So $130,000. And SDE was over $700,000 last year. Over $700,000. That is incredible.

That is incredible. And you know, what's funny about that for me as a lender, is there are banks that would have said, no, because it was a carve out, and they would have said, no, because there was no seller note. But yet, that's a killer deal. That's a yes, for sure. Yeah.

He was a static. Yeah. Yeah. And not to get, not to get too sidetracked, but this is an interesting strategy. So he actually didn't even put up any of his own money. So what ended up happening is there's a couple of these guys I work with. And their model is to identify a business and identify an operator. And they go in and they have, from an SBA standpoint, less than 20% ownership.

They put up the capital. They put up the down payment. And the original, the guy putting up the capital, I should say, does not have to personally guarantee anything with the SBA. The operator does the personal guarantee in the collateral of the home and all that stuff. And so my buddy, the one who actually bought it, he's the operator. He did the PG on the loan, but he put up no money out of his own pocket. He had this other guy who now has ownership and has an agreement where he's getting paid back the capital, plus some sort of a, I wasn't part of their negotiation on what their partnership looks like,

but it was a good deal overall. That's another area where a lot of banks would say no. They would say no to the person not putting in their own money, but yet it's, those are great deals. I like to scream it from the mountaintops. That's still a great deal. Your friend put his personal guarantee on the line, and I'm sure he's working in the business every day, and that's still putting something out there. He quit his job and is a full-time owner-operator.

Yeah, yeah. I hope some banks are listening or some credit people are listening because they would say no to all three of those things. Lots of them would. Yeah. And I think, Heather, to your point, it's why it's so important to get with a good loan broker so that you can take these complexities of a good deal

and go to the right lender. Because just because a buyer tries to do this on their own and they walk into their local Wells Fargo, they're not going to get anywhere. and they're going to think, oh, no one can do this loan, when they really can if you get with the right lender. Yeah, and that's what the banks will tell you. If they say they don't like something,

they have the mindset that no one will like this. This is terrible. And years and years of doing it, I follow up with people, and even the ones I didn't get to lend to, and I ask them how do things turn out? And I learned, you know, they weren't all terrible loans, you know, the ones that certain banks thought were terrible, that you really have to look at the whole picture.

And I love that story. I think that's great. What a deal. It's worked out really well for them so far. They're both of the partnership, the buyers, how they structured it. They're as happy as can be. Revenue's trending just as steady as it did in 2022, if not better. It's a good business, and it's worked that well for them.

Oh, how great. If you just do the rough math on what the equity provider got, right? So like, let's say the business is throwing off 700,000 a year, still, they end up own, they put in 100 grand, and in theory they own 20% of the free cash flow of the business. Like, I know, that's probably not how it got structured, but like, if it was just straight 20% equity for 100 grand on this business, like, that's potentially 140-ish cash-on-cash return per year. If they just straight own 20% forever, that seems like a pretty good deal. I'm not an expert in investing, but that sounds really good. So. Yeah, and I don't know exactly how

the structure was, but I'm pretty sure I've, like I said, I've done a number of deals in this same situation with these type of buyers. And I'm pretty sure they have a structure where they're getting three times their down payment back in an accelerated fashion. And then they're getting some sort of long-term equity stake. So they're getting immediately, at least front-loaded three times, whatever they put as the down payment. And then there's more of an even equity split on that. Yeah. So even more aggressive than what I described. So that's incredible. Maybe I should be doing that. Maybe we should be doing that. Just to clarify for anybody listening. Yeah, you can do that with an SBA loan as long as there's no requirement for those distributions. It has to be just that it's cash flowing and the distributions can be easily supported by the business. But yes, you can do that. And there's a lot of folks that don't realize that. Incredible. Okay. Super cool. Well, Trent, I stopped the video because I think it was the point.

where Bill and I start talking about our kids. Anything else we need to know about the deal or stuff that you think is interesting that, well, I also encourage you to tell us where we were stupid. That happens on that, too. No, you guys did great. You guys were not off on too much. Obviously, there were some basic assumptions,

but you didn't know that much about the business. And so I thought it would be fun just to connect, fill you in on some details. I think it was a fun format to see how this actually works versus the predictions versus what happened in real life, I think the listeners would like to see, you know, what actually happens when the deal closes. So it should be fun for them. Yeah, super cool. Well, you know, we have a lot of listeners for this podcast. We're doing, I guess last look, we have 80,000 downloads a month. How can

our listeners or us support you? Is there anything that you're trying to do more of that we can help with? No, I'm not, I'm not here necessarily to promote myself. I thought it'd be fun just to connect with you guys and talk about, you know, the predictions versus the actual results. I did. I finally, I'm not, I'm late to getting on social media. I finally started getting on social media just a few weeks ago. I set up my accounts. I have like two followers on Twitter and Instagram, but I'm now set up on all of those so they can find me there. I try and post deals before I go public to market. I try and post it on my social media accounts seven days before it actually hits the public market. So they'll find some deals there. What are the handles for

that. I'm following you right now. On Twitter, what are you? Um, you know what? Let me look it up real quick because I don't even know. That's such a sign you knew to social media. I am new to social media. That's a, that's a bad sign. If I don't even know, I won't handle it. It is Trent. Oh, no, Trent biz broker. Perfect. I'm following you right now. Oh, there you go. I got you. Yeah, I'm following you. You are, you have now 22 followers now. Yeah, good. I can tell my wife and my mom, the other two followers,

that I do have two other friends. Amazing, amazing. Super cool. Well, thanks for doing this. Heather, anything from you? Otherwise, I think we're good to wrap up. No, I think this was a great SBA-funded deal example where, you know, we had investor equity

and still it just looks like a great outcome for not just the investors, but the operator. So love it. Thanks, Trent. Everybody. You got a seller gets some. Thanks guys. It's a Ferrari in Dubai.

Everybody wins. Really? All right, guys. Thanks so much.