Acquisitions Anonymous - #1 for business buying, selling and operating - Would You Buy This Business for $5 Million?

Episode Date: September 29, 2026

Inzo Technologies — When you acquire a business, you inherit its accumulated IT and cybersecurity problems too. Inzo helps acquisition entrepreneurs evaluate technology risk during due diligence and manage cybersecurity, IT, and voice after closing, including a complimentary IT risk audit of your target company. Learn more at https://www.inzotechnologies.com/etaMercury - Thanks to Mercury for partnering with me! Mercury gives founders powerful banking, cards, and financial tools built to help businesses operate smarter. Learn more and get started at https://mercury.com/ Quiet Light Brokerage specializes in helping entrepreneurs buy and sell businesses with experienced operators as brokers. They offer a free valuation clarity call to help owners understand what their business is worth and how to increase its value before selling. Learn more at https://quietlight.com/In this episode the hosts talk about a $5M absentee-owned truck and van outfitting business in Southern California that everyone actually likes—but $1.5M of inventory and some major working-capital questions could make or break the deal.Business Listing – https://www.bizbuysell.com/business-opportunity/sba-approved-absentee-owned-profitable-truck-and-van-upfitting/2539476/Welcome to Acquisitions Anonymous – the #1 podcast for small business M&A. Every week, we break down businesses for sale and talk about buying, operating, and growing them.Looking to build a professional website in minutes? Try Wix: https://wix.pxf.io/c/6898629/3115214/25616?trafcat=templateHubSpot is the backbone for how businesses scale without chaos. Try them out here: https://go.try-hubspot.com/OeG9VrSubscribe for more episodes: https://www.youtube.com/@AcquisitionsAnonymousPodcast?sub_confirmation=1Subscribe to our Newsletter: https://www.acquanon.com/newsletterThis week, the crew looks at an SBA-approved truck and van outfitting company in San Bernardino County, California, asking $5 million on roughly $4.9 million in revenue and $1.1 million in cash flow. Founded in 1973, the business manufactures, installs, and sells truck racks, toolboxes, storage systems, towing equipment, fuel tanks, bed liners, cargo-control equipment, and other commercial truck accessories. It serves contractors, municipalities, school districts, leasing companies, equipment users, and truck and van dealers—with no customer representing more than 5% of revenue.The deal gets especially interesting because the asking price includes approximately $1.5 million of inventory. How much of that inventory is actually current and sellable? Will McCurdy of Bedrock Quality of Earnings joins the discussion as the group digs into physical inventory counts, obsolete SKUs, working-capital pegs, COGS add-backs, market-rate rent, and the financial diligence a buyer would need before closing an SBA-financed acquisition.Despite those questions, this is a rare Acquisitions Anonymous deal where the hosts are almost universally enthusiastic. The business has only 11 full-time employees, a long operating history, diversified commercial customers, an experienced manager handling day-to-day operations, and a remarkably clean and organized facility. The big question isn't whether the business looks attractive—it's whether the reported earnings and $1.5 million inventory balance survive diligence.Key Highlights:- $5M asking price: Approximately $4.9M in revenue, $1.1M in cash flow, 11 full-time employees, and more than 50 years in business.- $1.5M of inventory included: A huge part of the deal hinges on whether that inventory is accurately counted, current, and actually sellable.- SBA pre-approved: The seller is reportedly willing to carry the 10% down payment requirement, but working capital and inventory treatment could complicate financing.- Diversified commercial customers: Contractors, municipalities, school districts, leasing companies, and truck dealers, with the largest customer accounting for only about 5% of revenue.- A rare deal everyone likes: The experienced management team, organized facility, commercial demand, and long track record have the hosts ready to sign the NDA—but they still want a serious QoE and inventory review.Subscribe to  weekly our Newsletter and get curated deals in your inboxAdvertise with us by clicking hereDo you love Acquanon and want to see our smiling faces? Subscribe to our Youtube channel.Do you enjoy our content? Rate our show!Follow us on Twitter @acquanon Learnings about small business acquisitions and operations.For inquiries or suggestions, email us at [e-mail]

Welcome to Acquisitions Anonymous. Today was a special day. We had a guest and, in a rarity, everybody liked the deal that we covered. I know a lot of times we get complaints that we hate on a lot of deals. Well, that's because most deals suck. But today was totally different. So stick around for the whole episode and see what you think after you hear more about it. We'll set acquisition anonymous.

Hello, another episode of Acquisition Anonymous. We don't have 100% years anymore. And thumbs downing on just the plus inventory line. When you close the deal, you inherit the cyber and IT problems that have been piling up for years. Inzo Technologies, that's INZO, helps acquisition entrepreneurs evaluate technology risks during due diligence and manage cybersecurity, IT, and voice after close. CEO Nick Acres acquired Inzo and recently led the company through its first ad-on acquisition. He brings a buyer-operator's perspective to what needs to be uncovered before the wire and stable.

once ownership changes hands. Enzo offers a complementary IT risk audit of your target company to help surface the biggest risks in plain English and deliver a 30-day plan to reduce exposure and lower the risk of downtime. Visit Enzo Technologies.com slash ETA and mention acquisitions anonymous. That's I-N-ZO Technologies.com slash ETA. Gentlemen, gentlemen, and no, Heather. Heather's not here yet.

So she's supposed to show up. Hopefully comes in. If not, we're just sick with the gentleman. Yeah. Will, welcome back, buddy. Thank you.

It's good to be here. Yeah. Have you changed your office setup since the last time we saw you? Or is this still the same thing, just new camera? This is a temporary office space that I'm in currently.

So I think the lighting might be a little bit better. Oh, maybe the mic is better too. Has Michael been feeding me tips? He has, but I think it's the same microphone as before. Sounds amazing today. That's on my list of things to get.

10 out of 10. Well, Will, why don't you introduce yourself? Because we're business partners in our quality of earnings firm. And then Mills shockingly showed up with a deal that involves pickup trucks. So what's before? It checks out. We'll get there. Yeah, go ahead, Will.

Yes. I'm Will McCurdy. I run bedrock quality of earnings, and we focus on quality of earnings and financial due diligence for the lower middle market. So a lot of the deals that we talk about on this podcast, you know, we dive into the numbers. So if anyone's looking at a deal and wants to understand the numbers a little bit more, feel free to reach out. I think that is an important step. Yeah, definitely. So the business started in March.

Will is on track this month to have a record, a record month. You have four employees, despite being six months old. Are those numbers correct, Will? Those numbers are correct, yeah. Yeah. Congratulations, man. And it's his first, like, CEOing job and doing an amazing job. So we're super proud of Will.

Yeah. It's been a good, good experience so far. It's a lot of fun. And I'm going to Boston next week. He and I are going to hang out, and we're going to go down to Fenway Park and throw batteries at the opposing team. It's going to be perfect. Right. Yep. I can't wait for that. All right. Well, welcome. I'm sure you will have some insights into the deal we have today. Let me see if I can pull it up here. I just updated my Mac, so it's not that excited about sharing.

But Mills, you want me to read it or do you want to read it? You read it. I'm going to have so many things that say I don't want to steal the thunder. at some point I may just feel compelled to walk outside with my laptop and like walk around my truck mid deal analysis oh dear lord all right so this is an SBA approved absentee-owned profitable truck and van upfitting company located in San Bernardino County California

and they have pictures here will these look like vans with like kits and stuff on them? How would you describe these things? Yeah. They lift the truck. Is that what the business? Is that? It's hard to tell exactly what's going on in these photos.

I think upfitting is like when something needs to become a work truck and somebody's going to put like a, you know, a tool bin or like that little cover thing that's on the back. These are all technical term smells. You can take notes. Like this one here. And it's actually, believe it or not,

my son bought one of these trucks used. And it is the Ford F-150 of the drives. It has 150,000 miles on it, four by four, but it has all, like, the electrical, like, like, I don't know, best radio's ship, like, compartments where they, like, open up and he can lock them. And it has an alarm on them to make sure they don't get stolen, all that kind of stuff. So is that accurate, Mills, like what this group does? Yeah, yeah.

So they're doing service bodies, you know, truck toolboxes, ladder racks, and then conversions and bands. If you're not on YouTube, you need to stop what you're doing and get on YouTube right now because the photo that Microsoft has up is what really caught my eye. It is the CCTV image of their shop.

It's gorgeous. It's like birds-eye view. Will, have you ever seen a business disorganized? It looks like somebody like CEO. There's no CEO here. It's OCD. That's who's running this thing. All right, before we keep going,

I want to tell you about a company I've been using across my businesses for years. Mercury. One of the things nobody tells you about running multiple businesses is just how quickly spending gets complicated. When it's just you, it's easy. You have a card, you know what you bought, and you know where the money went. Then you start building a team. Suddenly there are multiple cards, software subscriptions, vendors, reimbursements, and expenses happening across the businesses every single day. I run several businesses, and even though I have great people running them, I still like to be able to see where the money's going. And that's one of the reasons I'm such

a fan of Mercury spend. It gives my teams the freedoms to actually operate while giving me visibility control from the same Mercury account I already used for banking. You can give people their own cards, set budgets, and spending limits, and Mercury automatically enforces those policies. And instead of chasing people down for receipts, people can capture them through Gmail, text, or just by taking a photo. It's a way better system than having everything funnel back through one person for approval. The real thing it gives me is time, and with multiple businesses running, that matters more than anything. I can stay on top of spending without becoming the bottleneck that slows everyone down. If you're building a team and want a better way to manage how money moves across your business,

check out Mercury Spend. Mercury is a fintech company, not an FDIC insured bank. Banking services provided through Choice Financial Group and column N.A. members FDIC. The I.O. card is issued by Patriot Bank, N.A., member FDIC pursuant to a license from MasterCard International Incorporated. I can't tell if maybe, like the place that we shop at, And if you go to the next photo, Michael, I think this is like partial retail store, like the one that we go to for some of these things. You can walk in and get, you know, some like things like this, like trailer hitches. It looks like, you know, different like shackle locks, maybe some like extension cords, some like things that would be expendable, kind of reusable parts. But then like the bigger toolboxes and things like that or they'll help you install them.

So when you buy a ladder rack, you know, most people get help putting those on or getting them installed. This looks like their actual shop. Yeah. It's spotless. Yeah, it looks very good. Looks very good. Spotless. I, you know, some of my friends own companies that do real work like this, and I've been in there, I've never seen anything that's spotless.

It's pretty incredible. All right. So the asking price is $5 million. Cash flow is $1.1 million. And the gross revenue is just shy of $5 million. They've been business since 1973. It's older than me. They manufacture, install, and sell truck and van parts and accessories. They're a well-established in highly profitable truck equipment business for sales,

serving contractors, fleet, municipalities, truck dealers, and commercial customers. The company has been in business for over 50 years and has built a strong reputation as the go-to source in its market for contractor, truck outfitting, custom truck, equipment, installation, and specialty truck accessories. The business sells and installs truck racks, toolbox, storage boxes, towing equipment, fuel tanks and pumps, bed liners, cargo control equipment, and other truck accessories.

They also manufacture their own proprietary steel storage boxes, which gives them a competitive and stronger margins. Customers include contractors, municipality, school district, leasing companies, heavy equipment users, and truck and van dealers, and drug dealers. I just added that part to see if you guys are paying attention. Thanks for no reaction whatsoever.

The customer base is well diversified with no, major customer concentration. This is a turnkey operation with experienced team in place and a manager already handling day-to-day operations. Over 50 years in business makes it over a million dollars a year, high margins, the loyal repeat customer base, and diversified revenue with the largest customer of only 5%. They have some proprietary manufacturer products, experienced staff, and yada, yada, yada. Including the asking price is $1.5 million worth of inventory and furniture, fixtures, and equipment are $13,500.000. They have 11 full-time, all. long-term employees, and they have a leased facility that includes a retail showroom,

per your point, Mills, people can come by this stuff, a warehouse, an installation area, manufacturing space, and plenty of infrastructure for continued growth. They have stronger reputation, and the new owner could theoretically grow the business in a number of ways. And seller financing is available. SBA pre-approved with the owner willing to carry the 10% down payment required. They're willing to provide transition assistance to help ensure a smooth handoff, and the owner has relocated out of state and is selling his remaining business interests located in San Bernardino, California.

And the real estate is owned, but I don't think it's included. I think it's least. Cool. All right. So, oh, speaking of SoCal, Heather's here. Heather, we're doing this,

we're doing this absentee-owned, profitable truck and upfitting business that, as SBA approved, your favorite words. So, okay. Absentee owned and SBA approved. I mean, a combination that we don't see very often, so this will be interesting. So Mills, tell me why I want to own this business.

Well, so one thing that's perplexing to me about this is that they manufacture. Every, you know, every contractor who has trucks on the road needs some kind of some element of this. They need some kind of ladder rack or plumbers even. have these and electricians have these, not just roofers, but to put their ladders on top of the truck or to like transport large sections of like piping or pecks or electrical conduit, different things like that. That's just a ladder act. But then, you know, they install toolboxes. The way that this works is kind of interesting and they don't allude any of this, so they may not be at this level. None of these are service body trucks, which is where instead of having like a

pickup truck bed, you've got like a pre-manufactured base. The big manufacturers of those are reading and napide. And they're both privately held businesses that do like half a million dollars, or sorry, half a billion dollars in revenue. They're massive, massive businesses. And if you are driving, you're ever behind a service body truck, you'll kind of see like embossed letters in the back of the service body. Those are slightly different than what this business does, I think, because they're like exclusive distributors and you can't buy it directly. You've got to buy through one of their distributors and upfitters. This seems like it's one level kind of below that where they're doing kind of more off the shelf

installs, toolboxes, interior cargo vans, and then these like, you know, tono covers or like the one thing in the bottom of that picture is a little bit more of like a cover for the truck that has some storage built into it. There's tons of manufacturers who make all these different things. But usually somebody wants to go to a place that can both kind of give them advice on it and get it installed. It's interesting to me, though, that they say they manufacture. At first I thought it was maybe just like a typo that the broker had thrown in, but they do double down on it and say they make some of their own. I think they say, is it for Vans specifically? Let's see.

Yeah, they also manufacture their own proprietary steel storage boxes, which gives them a competitive edge and stronger margins. None of these pictures on the listing show anything that looks like a manufacturing, a steel manufacturing business. So I'm kind of curious about that and would want to figure out more. But it almost looks like a blend of a retail showroom and a, an upfitter. So you drop, you buy your truck, you need more things on it than a Chevy or Ford or Dodge are willing to provide. And you drop it off at a place like this. And they tell you, you know, it'll be three weeks and we'll give it back to you, you know, decked out with whatever it is you needed. I mean, this is wild. They have this photo that I pulled up here. This looks like more of the kind of raw materials you were just talking about mills. But I don't see CNC machines or any of that kind of stuff, except for maybe whatever this thing is here on the left. but this picture has like seven trucks just like lined up that they're just like doing them one at a time.

Yeah. Heather, this is in San Bernardino County. Yes, which is what we call in Orange County, we call that the IE, the inland empire, or we sometimes call it the 909, which is the area code. And we say it somewhat disparagingly, I have to say, but it's more where the industrial, you know, there's a lot of industrial. out there. So this is the perfect place for something like this. For light manufacturing, you see a lot of, you know, I can probably

picture where this is and their customers are probably all right around them too. So like perfect location in a couple of ways. Did they say much about the real estate? Did they tell us if they own the real estate or if they're renting it? They danced around it. They said the premises

were leased and they say they're not. It's not included when it's owned by the guy who's moving out of. So your cellar's going to be... In 28,000 square feet, pretty significantly sized building. Yeah. Yeah, good size space.

I mean, there could even be some capacity constraints just from the picture that they gave us, right? Maybe that's just the total number of trucks they can work on. Maybe they have some more in the lot. That would be sort of interesting to know, like, is this a big enough space? It looks pretty packed from the photos that they gave us. So interestingly, your landlord will become, you know, the seller will become your landlord, which is good because you could get favorable lease terms and long enough lease to qualify for an SBA loan. But I guess my question would be is that is 28,000 feet enough capacity if you wanted to grow or would you have, you know, are they at capacity where they are and they've got to get another space to grow?

They look like they're falling all over each other in these photos. They do. Yeah. And I mean, the thing we haven't talked about yet is, the inventory, these racks are packed to the gills. They are literally up underneath the sprinkler system up to the ceilings, which they at least acknowledge that they have inventory that is included. So, you know, I think we're looking at like roughly a maybe four and a half-ish times multiple of SDE a little bit more, but they're saying that they are including $1.5 million of inventory in the asking price. It's kind of a shockingly low $13,500 worth of FF&E. I'm thinking like just the

racking is worth more than that, much less like some of this other actual equipment like on that one more manufacturing heavy picture. So that that takes your purchase price after inventory down to three and a half million. And so now you're at more like a little closer to three times STE. But inventory, let's talk about that and what that means in a business like this. Well, look at the retail shelves. They have a lot of skews. I can already see that.

That's a lot of skews. And I think that's the business that they're in. You've got to be able to walk those shelves and find all the cool stuff that you're going to need. So it sounds like probably what do you think, Will, inventory turnover is probably kind of slow on something like this because they have to stock so much. Yeah. Yeah, definitely. Yeah, with one, was it 1.5 million in inventory, it's, yeah, I would imagine it's relatively slow. And they would need, I would imagine they have some sophisticated inventory tracking system for all the different skews. the more skews you have, the more kind of complex it becomes to track everything and making sure everything's kind of making their way into the balance sheet, into the P&L.

So the inventory from a Q of E perspective is definitely something we would dig in on a deal like this and just making sure that it's properly tracked and recorded and expensed and that margin that they're showing is real. And what about a hard count? Do you like when you go to review something like this, would you say if the seller does a hard count once a year, that's enough? Or what would you sort of look for? Yeah, I would say at least once a year, you know, maybe quarterly for something like this. And to be honest, a lot of businesses I see like this may not even do a count at all. So it's really, if they even do it once a year, I'm happy to see that. That's great. That you can, there's one number that's reliable at one. point in the year. So, yeah, and that's on the inventory. And then one other thing, just going back quickly to the rent, just from a Q of E perspective, is with that lease being owned, you want to make sure that the rent expense is in that earnings number that you're seeing because is the owner charging the company rent or is he not? Because post-closed,

if you're going to lease that facility from them, you're going to have to be paying rent. And for a 28,000 square foot facility in California, I would imagine it's not, you know, cheap. Well, and a lot of times they will say, yes, we've been expensing rent, but then you go compare that rent and it's way below market because it's more in line with the mortgage, you know, the real estate loan that they have on the property. So yes, a lot of times your cash flow shrinks down quite a bit when you're, you're in line. you apply market rent to the ebada there. So, yeah, that would be a question. And I'm not optimistic that they do have sophisticated inventory tracking systems. I was going to say this.

I was thinking that's very unlikely. Dinerous of you, Will. Yes. You would hope they do, but. Yes. Yeah, it's hard to, yeah. I always hope, but I'm usually disappointed when it comes to that. And anytime someone brings us a deal where there's a lot of skews and a lot of inventory is one of the first things we dig in on is, you know, if there's not good tracking, we can already sort of tell that.

We know there's kind of a big swing in this deal that's going to happen when we finally do get to do a hard count and to understand what the inventory turnover is really like. So whenever somebody lists a number like this and says there's $1.5 million worth of inventory, Heather and Will, is that? Are they typically stating a cost number or are they stating a like a list price number? Cost usually. Yeah. In my experience. Yeah. I would say cost is what should, you know, would be on the balance sheet.

Right. They're usually thinking what was the last time I looked at my balance sheet, which might not have been that recent because a lot of them don't have balance sheets recently. but they'll usually just kind of pull that number out of like whatever the last balance sheet I looked at, which would be the cost number. The problem, though, is if the inventory systems aren't good, there could be obsolete inventory in that number. There could be a lot of things, you know, could just be wrong for a lot of other reasons. So, yeah, you're starting with kind of just a big number that needs to really be broken down in a number of ways before you know what you're actually getting. Hey, everyone, it's Bill, and I want to talk to you about Quiet Light brokerage. I was so psyched

when Quietlight agreed to sponsor the podcast because I am a customer. I have used Quietlight to sell three businesses. And if I were selling an e-commerce or a SaaS business, I really would not consider anyone else. Like I said, I went back to them three times. I work with three different brokers at Quietlight, had a great experience all three times. Even on one occasion, they found a buyer for a business that I just didn't know it was even going to be possible to sell. So they have pulled rabbits out of their hats several times for me. Just they've been in the economy. commerce and SaaS business brokering game a very, very long time. They really know what they're doing. They have great reach with both buyers and sellers. And the other thing I really love about Quietlight is

all the brokers there are former operators. So you can't just show up and go, hey, I'm a lifetime business broker. I want to work at Quietlight. You have to be a former operator. So they all know what it's like to be in the operator chair. So if you go to Quietlight.com, they have free business valuation calls, which they'll do with you. No obligation. Just tell you what they think about your business, what they think it would be worth, and then what you might need to do to kind of get it ready for market. Those guys over there are great, great SOPs, great systems. I just felt like I was in really good hands all three times with Quietlight. So if you're interested in selling your business, especially in e-commerce or SaaS, hop on over to Quietlight.com, fill out their

onboarding form for a free valuation call, and you can tell them Bill or Acquisitions Anonymous, essentially. Because I'm thinking like based on this level of revenue at 4.9 million in revenue, depending on what the margins are, this is not a, you know, a cogs only business. There's a service element to what they do too. It's not just the inventory with markup. There's inventory plus labor plus some markup, maybe on both if they're doing it right. One point five million dollars of inventory could be like more than 12 months potentially. of inventory, depending on their terms. And like you guys have said, you know, the seller knows what is stale and they know what is hot. And depending on the system that they have,

depending on how many skews that they have, depending on what's actually getting booked to inventory, like in this picture right now, those racks off to the left that are holding flat sheets of metal that are like four foot by 10 foot sheets. That's what our shop is full of. Like are those are those being accounted for or are those just like an element of cogs for the, you know, toolboxes that they're making or the bins that they're making? It's really, really hard to tell. And I think that this, um, this brings up a really good point, which is how do you handle inventory and working capital on a business like this where it's like, you know, we're talking about, you know, a significant percentage of the purchase price.

I mean, almost a third of the purchase price allocation is inventory. And if you get it right, then you've covered your rear. If you get it wrong, then you're absolutely hosed and there's not really much room to go back on. Yeah, it's your whole deal almost in this case. I agree. And if you just buy inventory, let's just say we go deeper in this deal and the seller saying, no, no, I'm saying a million five of inventories included, but nothing else. I'm not going to give you any cash or AR. You're going to need some liquidity, especially when you learn like how long it takes this inventory to turn over. It's not like it's not going to become liquid overnight. And my guess is it's going to take, it doesn't convert to cash very quickly at all. So you need this inventory, but you also need cash, whether the seller includes it in the price or you have to bring it in yourself. You've got to figure out how. how much you need before you can really even make an offer on this business.

We don't get too far into the weeds on this, on the podcast, but I think it would be helpful to just talk through maybe what you guys have seen on some of the mechanics of inventory treatment as a working capital mechanism, because at least in my experience, what's most common is you set a working capital peg and you say, you know, hey, this much cash, this much AR is normal, this much AP is normal, and then this level of inventory, and then you kind of haggle on all those points, but then there's at least a true up, right, with inventory, where you say, okay, we agree. It's $1.5 million of inventory. But once I buy the business, I have a specific period where I can

go and verify, and I come back to you in 60 or 90 days, Mr. Seller, or Ms. Seller, and it's part of your reps and warranties, right, where you, you've got a mechanism to say, hey, I dug through all this. And those boxes that you thought were worth $200,000 are actually empty. They've been covered in dust and you didn't realize. Is that the typical mechanism that you guys see? I would say, because all of my deals are SBA financed. So the lender puts even more constraints on it. I think you could do it that way without maybe an SBA loan. But with an SBA loan, what the lender wants you to do is kind of figure out the inventory before you close. So you would have to come in and do the hard count. I've had a client. There were so many skews in an aerospace deal that I believe is hard count. You had to hire somebody to come in and do it. And it was like $30,000 to $40,000 just to do the hard count.

So that's what a lender with an SBA loan would rather do. They want to see this settled. They might allow some true up in the AR part of working capital, but they typically don't want to see a true up on inventory. And it's also something that could be legally far. over, you know, could lead to a lawsuit. And we'd rather try to try to clear it before we close. But like major thing you need to know going in in terms of cost related to the deal ahead

of time. Yeah, just the hard count itself. Yeah. Yeah. Yeah. Definitely a hard count is what I see like prior to close. And then as part of, you know, when we look at, you know, historical working capital, we'll look at, you know, we won't just take that $1.5 million.

dollar inventory balance at base value will really go look at the different skews, the different groupings and figure out how old is this stuff. I would imagine that larger compartments or maybe turn over quicker, but there's probably a ton of skews in there that are old, have been sitting there for maybe years. And so for something like that where it's just sitting there, you can't sell it, you know, we would take that off that $1.5 million inventory number and kind of bring it down to a more normalized level and that could be like what you peg to but you definitely want to do an inventory account to just make sure that it's it's accurate this reminds me too of my least favorite ad back and i hate them all so imagine if i hate them all and i have when i hate even more than all of the

others and that is cost a good sold adbacks you will see it sometimes where and it's like what are we even talking about they usually don't make any sense and it's It kind of comes down to the seller was playing some games with how he did, how he adjusted his inventory and wants you to accept that as an ad back. So like of all the smoke and mirrors adbacks that are a red flag, that's that's the top of my list of hated adbacks. Yeah. So I. Yeah. Go ahead, Will. You're about to do you have an ad back grant also? It's it's a therapy session today. Yeah. Get it all out, guys. Yeah. No, I was just going to say, I've definitely seen. that and sometimes they don't perform an inventory account, but they may say they perform an inventory account and they'll write off a bunch of inventory for maybe for tax purposes. But it's, you can't really verify that and it's kind of like a made-up number at the end of the day. So you definitely have to understand that and dig into it a little bit more.

I feel validated. I feel seen. So change tune a little bit on this. Is this a business you want to own. Like, is this, does this business have tailwinds? Is it a good business to be in or is it a bad business? I feel like it's probably, I don't know about tailwinds, but I feel like it's probably pretty steady. And it's, obviously it's tied to, you really have to follow the trends of the trucks and the vans and, you know, how they're selling. But I think it's a pretty good, steady business to be in, like some of it. Mills has already gotten the NDA, so he's not talking.

Go ahead, Mills. Oh. I see, I see the look. on your face. Yeah. If this was in South Carolina, would you have gotten the send by now? Oh, yeah.

Oh, yeah, absolutely. I mean, like, physical work has to happen on premise in people's homes and in their businesses. And people do not show up in hatchbacks to do it. They show up in vehicles like this. And 100% of contractors do not use a company like this. So, like, let me be clear.

There are plenty of people who have built, like plywood boxes in the back of their van and they do it themselves or they're a carpenter and they've built like they've built out their enclosed trailer to hold all their saws and tools exactly how they need so like this isn't a hundred percent you know appeal to every contractor but if you're a really good hvac business or you're a really good uh plumber or you're a really good siding guy you don't mess around and you're doing it as a'll you don't mess around with DIY means we buy trucks with service bodies already on them, and then we pay to put a ladder rack on them to get them in the field as fast as possible. We don't, you know, kind of pit-piddle around with the trucks and, like, do custom modifications.

That's part of what differentiates us from our competitors is we look like a real business when we roll down the road. You know, it's not like a garage door. We had an employee one time who had a garage door that they had retrofitted and converted into a thing like on that truck in the bottom. bottom. And we were like, you can't park that truck here. It looks like we're a bunch of jack lids. So, like, there is, this business has been around since 1973. There will be a need for trucks to have this. It foreseeably, like, you know, at least for another two or three decades, with some level of predictability. They only have 11 employees. So the revenue per employee on this, I think, is like really, really strong. the retail component of this store scares me a little bit because you probably have like two,

maybe two and a half or three employees who are probably just retail focused. And like one of these pictures is like a little orange light that's like magnetic that you can like set on the truck. You know, like it's little things that they, I understand why they started selling them, but it probably is just a huge drag on like energy and focus. But you've got to kind of do it so that when people show up, they can get all the things they need in one place. We have 50 pickup trucks.

We buy five or so a year. We're a repeat customer for a business like this. They don't have customer concentration over 5%, they say. Maybe the only thing that concerns me is population decline in the state of California. But I don't think this business has a tremendous amount of like go-to-zero risk, short of just completely botching the service model and the customers who have been coming here for a long time. So two thoughts on this, one of which is not relevant to the deal whatsoever, but I want to tell you guys about it because it's really fun.

So supposedly in Texas, there's like the highest volume for dealership is like some little random ass four dealership, like in a small town nobody's ever heard of. Like Sherman, Texas or something. Like, just like, you drive through small towns, like out in rural and there's like, hey, we have a Ford dealership. I don't know why, but there's one here. Anyway, can you guys guess why the number one selling Ford dealership in the entire state of Texas happens to just be in some random tiny town you've never heard of with like 300 people in it? Okay, I'll tell you. All right.

So the reason is, and this is all I just heard this secondhand, it may or may not be true. But the reason is they specialized decades. ago into becoming the Ford dealer that would sell pickup trucks into all of the public accounts. So if you're a city or whatever, like they all just go straight to this one for dealership, and they're the ones that have just nailed the entire thing of selling and winning, you know, whatever local city when they buy a pickup truck, they go to this particular thing. So that's why they're the number one. Now, are they making money?

I don't know, but they're selling a lot of forts. All right. So I had a second point. But thank you for this. My first question. I'm Googling, in fact. Oh, is it true? Yeah, ask Claude. He loves me. It looks like, it looks like there's one in Florida and one in California that are the largest by volume in the country.

But a five-star Ford of North Richland Hills is widely recognized as the number one volume four dealer in Texas, which is, I guess, outside of Fort Worth. Yeah, there you go. Never, have you ever heard of Richland Hills? Nope. So here's my second point. And this is something I think that is very observable from the photos of this. Like when you see the photos of a workspace that look like this, with the employees having their shirts tucked in, everything's super well organized,

like there's cameras in there, like everything's in its place, that means that this person, whoever the owner is, has hired a rock star, general manager who's running this thing. Like those are such good signs. You get learned so much about a business just by visiting their office.

And that's the thing that has to be most inspired about this deal is the way the photos look, believe it or not. I agree. That is a really, really great stuff. Yeah. So you got to make sure that if that general manager is a rock star, you got to make sure that he stays on and doesn't leave when you take over.

Well, according to Heather, The Inland Empire is the place everybody wants to live in Southern California. I think it's because it's nowhere near the beach. Is that why? It's nowhere near the beach. That's the problem. That's the only problem. Yeah.

And it's kind of just kind of dry out there. Yeah. Michael, I'm going to the screen share because I just want to show the broker here. This is Mike. He has the listing from corporate finance associates. He is not wearing a hat and he is not touching his face, which are two really good signals. This looks like a very professional firm. He's got a great looking suit.

Yeah. That's a great looking suit. Mike Heidenreich. They're in Los Angeles, so this checks out, and they do exit planning strategies, and they have CFAs and CPAs and financial planners and ESOP consultants. So this looks like... Good signal? Yes, yeah, very good signal. I think the seller is right.

represented well. Right. I just wrote a tweet about how many sellers are coming to market, woefully unprepared, and this is music to my ears when I hear this kind of stuff, because it feels like this is a firm that actually prepares their clients before they list, which is awesome. They still need a Q of E then. They need that Q of E. Right, right.

All right, you guys ready to wrap it up here. Anything else we want to get on the table about this deal that we haven't talked about? I am curious what you guys think about it. What do you think, Heather? I'm going to sign the NDA. I'm going to sign it because I live nearby, and I think it's a good business. Really? There's no horses involved, though.

I know. That's the only drawback. That's a red flag. Their trucks. Yeah, I could drive the truck over to the farm, to the barn, you know. So maybe. I could pull the horse trailer. So, yeah, I like it.

Mills? I too would sign the NDA And I know I say that a lot But I do sign a lot after the episode But I'm just trying to stay true to our name And I won't disclose the NDAs that I've signed After the recording. So I would sign this NDA

And I'm a little giddy about it Man, I just wish it wasn't out the middle of nowhere If this was in South Texas, I would totally look at it It's pretty cool But Or somewhere near a ski resort Either of those two options I would totally consider it Yeah, you got to put your E somewhere

put them on the ladder there. Oh, that'd be so awesome. Actually, the thing everybody does in the ski towns now is they get e-bikes, because living within walking deserts of the ski lifts is super expensive, but parking is a nightmare. So they all get e-bikes, and then all these old, crunchy, like, retirees have put together these, like, versions of, like, ski racks on their e-bikes. So they're all, like, cruising around Park City or Steamboat Springs

or all these places on. e-bikes with like skis everywhere. It looks like Mad Max. It's perfect. It seems like a Nell skit waiting to happen. Yeah, it's a sketch. Will, what do you think? Yeah, I think it's a, it seems like a solid business.

I like the commercial customer base. You know, they're always going to be needing this equipment on their trucks. They're going to be getting new trucks, buying used trucks. So I think it's a good business model. But of course, we're not to dig into the number. a little bit more to really determine whether it's worth buying. That's very own brand. Yeah, and if you were a buyer and you wanted a second opinion and somebody who's an expert,

like yourself, to go look at the numbers and validate them, how would you go about doing that? Would you do like a study around that? Yeah, if I needed like a quality of earnings or something, I would definitely go to Bedrock, QOE. now yeah but yeah definitely want to understand the numbers though because it could be you can't really trust the numbers at face value so

cool all right man thanks for being here I'm thumbs up too I would totally say the NDA if this wasn't like at the middle of Southern California with all the barbarians all the crazies what area could was it

I want to know the 909 the 909 The 909. I'm going to call. I like that listing you have in the 909. See you. He'll be like, whoa, are you local? You will.

All right, everybody, thanks for being here. If you enjoyed this episode, do us a favor. Send it to a friend and tell them that you enjoy learning about business in the context of looking into each individual deal. And with that, we'll see you next time.