E278: Buyer Beware: Jed Morris Exposes the Hard Truths Behind Business Acquisitions

Episode Transcript
Available transcripts are automatically generated. Complete accuracy is not guaranteed.
Speaker 1 (00:00):
And so when you think about it, that's not a
massive company. I think you know, at that at that
revenue range they were doing about a million, about a
million in EBITA or so maybe a little under. That's
not a bad deal. That's that's not a huge business.
But so it doesn't take forever to get to that
point if you build it the right way. But again,
that's that's not a five million dollar business. I was
at least a ten. You know, a lot of times,

(00:21):
you know, first time buyers, we get you get really
sucked into this idea of like do I want to
buy or build? Like, well, you know, it sounds so easy.
Of course I want to buy. I'm buying customers. I'm
buying revenue. I'm skipping the zero to one phase. You know,
why would I not do that? And the one big
reason why you may not want to do that is
because you're you're buying more than just customers revenue. You're

(00:41):
buying culture. Planning on from the beginning means you know
what right looks like when you go to market, when
you go to sell, So your first conversation should probably
be with pe groups who are actively buying in that space.
But more importantly, probably investment bankers in the lower middle
market who to handle these transactions regularly, and they can
tell you, look, if you're buying a plumbing company, and
this is what it needs to look like if it's

(01:02):
going to be marketable and it's actually going to sell.

Speaker 2 (01:10):
Hello and welcome to the How to ACCEP podcasts where
we introduce you to a world of small to medium
business acquisitions and mergers. We interview business owners, industry leaders, authors,
mentors and other influencers with the sole intent to share
with you what it looks like to buy or sell
a business. Let's get rolling and now a moment for

(01:36):
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(01:57):
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I want you to visit acquisition Aficionado dot com today.
Hello and welcome to the Hot Exit Podcast. Today, I'm
here with Jed Morris. He is a managing partner with
Sunset Coast Partners, and we're gonna talk all things mergers

(02:19):
and acquisitions. Thank you for being here, Jed. Fellow military veteran,
fellow Air Force veteran, and it's we're gonna have a
good time having a conversation today.

Speaker 1 (02:30):
That's right, Ron, Hey, thanks for having me. I'm always
happy to chat with a fellow Air Force veteran.

Speaker 2 (02:35):
So I'm a little older than you. I probably was
in and out before you ever made it in. I
got out of the military in ninety seven. Yeah, so
ninety seven.

Speaker 1 (02:45):
So yeah, we missed each other just by a little bit.
I enlisted in August of eighth Wait.

Speaker 2 (02:49):
Okay, yeah, so no, I was in from ninety two
to ninety seven. I did about five and a half years.
I was only gonna do one term, get my you know,
gi Bill, And then they did this weird thing where
they gave me orders to go to Hawaii for three
years and I had to extend to take them. I'm like,
I'm taking So I went to Hawaii and did my
college while I was there. So yeah, but uh no,

(03:12):
so you kind of we have a similar path. We
were both in. We kind of did stuff. I imagine
from meeting your profile. Some of the stuff you did
had security clearances and stuff too, mine did. And then
I got out and I went into the software world.
I went to defense contracting and then dot com. You
kind of jumped straight into the tech side of it, right, So,
and then somehow we both ended up in this mergers

(03:33):
and acquisition space. So it just means we're both intelligent, right, So.

Speaker 1 (03:36):
That's all it means. All this intro is just a
way to tell the audience how smart we are. That's
all it is.

Speaker 2 (03:43):
Just give everybody a little bit more insight about you
and who are how you got here, because that's that's
gonna Let's kind of get them to listen to the
rest of the show, right if they know who you
are and kind of why you're, why you're here, and
why you want to help people. Uh, that'll build a
little bond. So let's let's just do our normal thing
where you do the origin story so we can get
that out of the way. How did you end up
on a show about buying's only companies? Man?

Speaker 1 (04:03):
Yeah, I mean, well what you said, you know, ten
years in the Air Force, got out in twenty nineteen,
did my MBA NYU Stern did the executive program. Excellent opportunity,
but then got a job offer at Microsoft to join
as a software developer, no tech background. I absolutely took that.
The big thing is because I did a lot of
work on the top secret classified side when I was

(04:24):
doing Air Force work, and so at the time, Microsoft
was building out their federal cloud, and so they were
having a terrible time trying to find software engineers who
could qualify for top secret clearances. And so their thought was,
why don't we just hire a bunch of bets already
have the clearance and teach them how to code. And
so I was one of the first and their cohort
in twenty twenty to do that. And so I spent
my pandemic days, you know, learning how to code, you know,

(04:47):
from scratch. Stayed at Microsoft for two years. I had
a wonderful time transitioned to AWS and HP as a
technical program manager, you know, working with software teams. I
kind of found out about the acquisition space on accident NYU.
This was in I finished in twenty twenty one, and
this was before it was cool online to buy a
business right like social media was not talking about it.

(05:08):
We were talking about crypto, you know. And so I
was reading through an entrepreneurial finance book and there was
a spot in there that talked about lower middle market multiples,
and something just clicked. I was like, wait a second,
people buy these things. And so that led to attending
the HBS conference that year, to attending the Chicago conference
the following year, and just kind of learning everything from scratch,

(05:31):
you know, through the conferences, through networking with other searchers
and just kind of figuring out as I go, read
by them, build read the HBr guide, kind of put
all the pieces together. It was like, cool, I'm going
to do this self funded search. And so I kind
of started my self funded search while I was still
working in big tech, which is a great thing I
tell you know, self funded searchers to do because you
don't want to quit your job. You're not getting paid,

(05:52):
you don't want to add that kind of deal pressure,
and so you know, learn how to search on your
own time be as efficient as possible. Originally started looking
and defend in aerospace since that's where all my background
was and tech as well. Could not find anything that
made sense as a SBA loan for that kind of acquisition,
and so ended up pivoting into landscaping, met a lot

(06:12):
of contacts, got comfortable with the space, met a few
owners that I really liked, and long story short, I
spent almost a year and a half, almost two years,
like searching for a business. Ultimately closed on one business
in San Diego, which then turned into a second acquisition.
Only about a month later merged the two and things
were going okay for a little while until ultimately they

(06:33):
failed eight months later, which left me with nearly a
million dollars in personally guaranteed debt. And so that was
a learning experience. It was a lot. And then summer
of last year, I kind of emerged from you know,
basically the the cave I fell into, like after something
like that happens, and I went online and I started
seeing all of this information about, you know, buy a

(06:57):
business with nothing down, one hundred percent, sellar financing, it's
the cheat code to generational wealth, passive income, all the
b sec online and I just started rage posting because
I was like, you know, I having experienced the personal
guarantee myself, I was like, this is insane, and then
that started resonating with people. And then the thing I

(07:17):
didn't expect though, was that as I started, my wife
she sees me posting on LinkedIn and she's like, are
you spitting truth? I was like, yes, baby, I'm smitting truth.
But then, uh, you know, I didn't expect that other owners,
other who had experienced a bankruptcy would reach out. And
I don't know why. I just kind of assumed I

(07:37):
was one of the only people who had experienced it,
you know, because nobody talks about this in this space.
And as a result, like I knew, like intellectually, there
must have been other people who had failed, but I
did not expect that I would ever meet them, or
much less there'd be a lot of them. And so
one by one I started getting dms from people who
would experienced something similar, who like me, couldn't talk about

(07:58):
the details because of nondisclosure agreements and non disparagement agreements
and settlements. But we started comparing notes and that led
to a passion project, which is writing this book by
er Beware, which is a compilation of all of these
stories anonymized to protect the person involved, but also to
get the key lessons out there for new self fundsearchers

(08:20):
to you know, kind of see what happens when things
don't go well, when things don't go to plan, and
hopefully avoid some of the major pitfalls.

Speaker 2 (08:27):
Yeah, I've met all the guys. I've interviewed most of them, right,
And while I know people, I've met people, I've interviewed
people who have successfully done low down, lowdown deals. Well,
most of the time it's for partial equity. It's the
WIBO Work for Equity type of thing where they come
in and do consulting for a piece of the company.

(08:47):
I know it exists, and it's a little less risk
because you're not taking the personal guarantees and stuff like that,
one of the reasons these guys pitch it. But it
is definitely what I refer to as a unicorn hunt.
You're gonna have to talk to ten times more business
owners to get one down, a fifty times, one hundred times.
Sometimes you know where your average search fund or somebody
who has a backing, has a credit can, maybe has

(09:11):
a down payment or has a source of down payment,
somebody's gonna invest in. They scheduled twenty four to thirty
six months to do their search.

Speaker 1 (09:18):
Yeah, right, exactly.

Speaker 2 (09:19):
You've just complicated that and you know, and you're gonna
have to you know, deal flows. The key in that,
I always tell people, if you really think you're gonna
get a zero down or no down or low down deal,
you better focus and be the best deal flow guy
you can get. You know, you're gonna have to talk.
You're gonna have to kiss a lot of frogs, you know,
you know.

Speaker 1 (09:36):
Yeah, And not only that, it's that a lot of
the things that are pitched, the scary thing is that
they're they're one hundred percent possible, you know, like you
can find a good business with a one hundred percent
seller financing. That's not you know, a terrible deal, and
the seller really does just like you that much. It
is possible. It's incredibly rare. And everything else is true

(09:56):
as well. You can find zero down deals, you can
find this kind of stuff. But what you don't talk
about is the risk profile in those deals. And there's
one reason why they're so rare is because the risk
is so high. It is exponentially higher than what you
would have found otherwise on the market.

Speaker 2 (10:11):
And the reason that it's zero down is usually one
of the big d's right, divorce, death exactly, disease. You know,
if it's not one of those, and they're trying to
hand it to you, buy or beware.

Speaker 1 (10:23):
Well exactly. I mean, we know that the vast majority
of businesses change hands do the death disease to force distress, right,
And if you're a first time buyer, the riskiest acquisition
you'll ever make is your first one because you don't
know what you're doing. There's all this information you don't have,
there's the experience of running a business that you don't have,
and then you're gonna take all of that and compound
it with a business that's in distress. That's insane. That

(10:46):
is absolutely insane.

Speaker 2 (10:48):
There's an ego aspect to entrepreneurs and it hurts them
so bad. I hear this all the time where I'll
call people out on it, like, look, one guy, he's
a harved grad in where he's in one of my hangouts.
I have about one hundred fifty people that hang out
in a chat room and then we meet twice a month.
About thirty or forty of them will show up and
we're brainstorming and helping people get over in the hurdles.
That's all that's whole. The whole goal is meet potential

(11:10):
JB partners. And if you're stuck somewhere. A lot of
the guests from the show come to the to this
twice a month hangout. Somebody's there that can answer your question.
There's no reason to leave that, leave that hour and
a half meeting and stuck right, And guy comes on there.
He's just graduated at Harvard, he has it in an NBA,
he's a funded search and he's very ivy, right, got

(11:31):
the vest on and everything. Yeah, and he tells me
he's gonna buy this five million dollar landscape landscaping and
construction type of they do heavy landscaping, like yeah, bobcats
and they move stuff. I'm like, no, you're not. You're
a fucking idiot if you do that. Excuse my language,
but that's exactly what I said to him. And he's like, oh,
how there. You talk to me like I said, that's
exactly why I did it on purpose. So that's exactly

(11:52):
why you're dealing with some redneck blue collar workers out
there who have never dealt with IVY. And you're gonna
show up and you're pretty little best and they're going
to eat you alive, especially if you just got to
fit in my mesa in the F word, right, And
I said, you're walking into a culture you don't understand.

Speaker 1 (12:09):
Well to your very point, Like if you're talking about
acquiring a landscaping company, I have a little bit experience there.
And let's assume like you walk in there. Well, one,
who's your license holder? Because it's not you because you
don't have you don't have the landscaping license. Almost every
state requires one. So someone else has got a lot
of authority in your business that's not you. So that's
problem number one. Problem number two, The vast majority of

(12:30):
your of your employees, well over sixty five percent of
them don't even have a checking account or an email address.
How are you doing payroll? Like, there's all these little
things that we haven't talked through. One of the things
that caught me off guard was I would run payroll
and then I'd be, you know, processing the next payroll cycle,
and there were outstanding pail checks that hadn't cleared, Like
what are we doing with all this uncleared money? And

(12:52):
it turned out that a lot of our employees would
hold onto payroll check and just hold onto it like
it was a savings account and then whenever they needed
it and they'd go down to like the local store
and cash it, and so there's so many nuances. You're
exactly right. It's a completely different environment than you know
coming from that Ivy League perspective, and you can take
that same kind of culture shock and you can apply
it to anybody coming from like a corporate background and saying, Oh,

(13:14):
I'm gonna go buy an HVAC business. I'm gonna go
buy a roofing company. You really need to sit down
and think hard about the kind of environment you're putting
yourself in. And you absolutely can be successful, but you
do need to adjust the way you live your life
a little bit and be a little bit more conscious
of what you're getting yourself involved in.

Speaker 2 (13:31):
Yeah, he wouldn't come on the show, and I won't
say his name was. I don't have permission, But I
know a gentleman in Dallas who bought an eighty ninety
person moving a company. Right they had eighty ninety employees.
He's a stop trader, very New York type, three piece
suit guy. Right now. He first thing he does is
he buys a new office to go for his moving company.

(13:52):
Because it was a real dirty grid mey place that
he was working in. And then he shows up in
his three piece suit and draws all these eighty employees
into this board room that has this big oak table
and stuff. And within six months he's trying to sell
this thing because they eat him all alive.

Speaker 1 (14:05):
Right.

Speaker 2 (14:05):
He didn't know how to deal with their culture, right,
he didn't know how to even communicate with people who
like don't show up and show up drinking or you
know all the different things that happens when you're dealing
with a different culture and different environment and people think
they can get away with something, right. Yeah, and he
got the old business owners, like I got the old
business on their phone or phone and he's like, they

(14:26):
never showed up drunk for me. I was like, yeah,
because they didn't. They couldn't push him around. Yeah, right, And.

Speaker 1 (14:32):
Yeah, it's a learning curve. It's an ownership learning curve.
It's like, you know, in one aspect, you're learning how
to be the owner, how to own the p and
l how to really make strategic decisions because it's not
just the employees. You have to engage with the vendors,
the suppliers, the customers and you know, there is a
there's a certain culture in each of these types of
industries that you need to be a part of. And
just like anything else, like if you don't fit into

(14:53):
the culture, you're going to be kicked out of it
and people aren't going to take you seriously. Well see,
and that's one thing you just touched on that a
lot of first time buyers don't really understand, especially if
they're coming from that corporate background, because they think, you know,
they've read the books and so they know that they
want to work on the business, not in the business.
What they don't understand is that even if you buy
on the high side of the SBA range, like the
five million dollar ev company, that business is already the

(15:16):
smallest business in the market, like we're the very tiniest
portion of the market. And when you do that, there's
no such thing as not working in the business like
its owner operated businesses and so. And especially if you're
the one taking on a personal guarantee for the debt
to buy that business, you're not going to just give
that to a manager and be like, Okay, it's fine,
I'll check in with you once in a while, because
they have no incentive they have no they have no

(15:37):
skin in the game on that. And so you know,
I hope, you know, for every one of your buyers,
like I hope we get to the point to where
you know, we have management in place and you're kind
of removed a little bit from the day to day
and you can be more like that chairman role. But
that is not the job you're buying. That is not
what's happening. You have to be able to get in
there and roll up your sleeves. And one of the
risk factors is from the moment you buy the company,

(15:58):
how long is it going to take you to actually
roll up your sleeves and do the work. Not that
you should be the guy or gal doing the work
all the time, but you have to be able to
know how to do it. You need to understand what
is involved and at least have a little experience doing
it yourself.

Speaker 2 (16:12):
You see these no down low gown guys, and I'm
friends with them. I don't want to offend idy of them.
I'm friends with Jeremy, I'm friends with Roland Fraser. I've
had Carl all On on here three threeteen at different times.
They're great guys. Don't get me wrong. And they do
these deals and they teach people. The people that they're teaching,
they're getting those deals done. But one of the things
that they, you know, kind of they'd like to it's

(16:33):
marketing hype, is what I call it. They oversimplify that
you can just buy a company and bring it down
their operator in and they'll run it. Yeah. Yeah, and
you better be able to run it until you get
that guy. So you know, a lot of people what
they don't tell you. As an executive, search can take
six months to eighteen months if you're good at it, right,
if you're good at it, if the company can afford
a good operator, yeah, to find one, you might end

(16:54):
up you know, it might take you six or eighteen
sixty eighteen months to place one, and then you might
have to replace him into you years or a year
because he's not the right one.

Speaker 1 (17:02):
Right, Yeah, And then what happens if that person take
goes on vacation, or gets sick, or finds a better job,
like all those things. Those are normal things that happen
when you have a have an employee, and make no mistake,
your operator is an employee, and so you have to
be able. You can't just step away and pretend like
you're not involved anymore. It just doesn't work.

Speaker 2 (17:20):
There is a point, and it's not in this SBA
alone realm where a company is big enough where you
can be an outside investor acquire and have it, have
it run family offices do it all the time. And
I think that point somewhere in that ten million to
twenty million dollar revenue above five million dollars and even
a range, you know, to where if somebody leaves, you

(17:41):
can bring a consulting team in really quick to you know, implement.
You know, you have the money to overspend and you know,
pay twelve twice the spot until you get a placement.

Speaker 1 (17:49):
Right, you can definitely get there. And you know, I was,
I was under loi with a landscaping company at one
point that they were doing just under ten million rev.
They had thirty five employees an additional one hundred and
ten contractors commercial maintenance, and it was a two owner
team had been splitting up for decades, like thirty plus

(18:11):
years at this point, and both of them were largely
removed from operations. They had built a pretty a pretty
decent team of managers and foremen who are running most
of the show. And they were kind of overseeing the thing,
but they weren't like neckdebit in it anymore. And so
when you think about it, that's not a massive company.
I think you know, at that at that revenue range
they were doing about a million about a million in
ebita or so maybe a little under. That's not a

(18:34):
bad deal. That's that's not a huge business. But so
it doesn't take forever to get to that point if
you build it the right way. But again that's that's
not a five million dollar business. I was at least a.

Speaker 2 (18:43):
Ten And people just they don't see this. The other
thing I want to, you know, run by you, because
I think you might have the same viewpoint or you know,
have a lot to put in this. Too many people
get in this business thinking they're gonna buy a company
that's been up and running for thirty years, been and
run it better than the guy that just left there
and have been doing it for thirty years because they

(19:04):
have some you know, like me, I have an MBA
in marketing. Well I'm going to be better at marketing
than the other guy. Yes, and no, right, you can
be better at creating ads, but will they work?

Speaker 1 (19:14):
Right?

Speaker 2 (19:15):
You know, you can be better at you know, copywriting,
but you know, can you get in front of the
right people. There's just so many movable factors. I keep
telling people. Quit looking for something you can improve upon
and paying full value for, and look for something that
has enough margin that you have a learning room. You
have room to learn. Right. That's why I like online stuff,
remote manning stuff and stuff with like newsletters and stuff.

(19:36):
I look for it because they usually have seventy eighty
percent profit margins. I have room to make some mistakes, right,
I have some room to learn. You go out and
buy a company that's got a five percent profit margin
and you're the new CEO. You matter some deep pockets
to cover the months you grew up, and.

Speaker 1 (19:52):
Yeah, exactly, you have to assume it's gonna like just
in the turmoil of the transition. You have to assume
you're going to drop profitability ten to fifteen percent. That's
of life. And you're right. I mean, I think every
first time buyer, and again it goes back to what
you said earlier about having that ego, which I obviously
did as well, like we all do, I think, but
we all look at these companies and we're like, look,
it's thirty plus years old. Look at all the things

(20:14):
I could do. Their website sucks, their email marketing sucks
or doesn't exist. They have no Google ads, they have
no Facebook ads. Their customers are paying via check like
physical check in the mail, like we can turn that
into stripe and CRM and voicing and there's all these
you know, we'll call it low hanging fruit, and man,
look at how I can improve the profit margins, like
within the first six months. And the truth is is that, yeah,

(20:37):
it is, it is. Those are things that you can change,
you know, and it can drive value. But like you said,
there is a lot of value already there in the
fact that the owner's been doing this for thirty years
and they have a lot of insight knowledge into how
the industry actually works and how they position their business.
And if you think that you're just going to get
in there and turn on some Facebook ads and all

(20:57):
of a sudden blow up the business, you obviously don't
what you're doing. But then the second piece of that is, uh,
change management is a whole you know, professional space in
of itself.

Speaker 2 (21:07):
I was just gonna say, there are entire sections of
libraries and exactly dedicated to the resistance to change, the
psychological impact of change. Whoo my cheese, right.

Speaker 1 (21:19):
To your employees, to your customers, like you know that
that uh, that physical check thing, that that's something I
actually encountered myself, Like ninety percent of our employees would
mail in a check every month. And so I'm like, hey, guys,
we're gonna start doing digital invoicing, and I kid you
not the vast majority of the customers like, no, we
don't want to do that. We don't want to do that.
That that that feels like is this real? Is that scamming?
I'm like, you buy stuff on Amazon? What are we

(21:41):
talking about? Like the digital invoice, you just click the button,
put in your credit card, You're done, set up auto payments,
attached to your bank whatever. And these weren't. These weren't
residential customers. They are hoas like why am I having
this conversation? And it's exactly what you said. It's that
that inertia that you know, resistance to change, Like, no,
we just write a check. It's fine, was to send
it to you because you know, for them it's like, yeah,

(22:03):
sure I wrote a check, but at least my money's
not clearing today. It's gonna take you, you know, a day
in the mail, a week for it to clear the bank.
You know, that's your problem, not mine, And I like, yeah,
that is my problem. That's exactly why I want this
to change.

Speaker 2 (22:14):
That said, if you have a landscaping or something that
you got to learn the cycles of it. If you're
a I looked at a company where the where like
they got ninety percent of their income between Thanksgiving and
Christmas because their product is mostly given out it, you know,
given out as gifts, right, and they're trying to sell
it in January and going, look how good we are running? Yeah,
look at our last three looks at our last three months.

(22:34):
Look how did that?

Speaker 1 (22:35):
We evened out cash list for the full twelve months,
so you can see what it looks like.

Speaker 2 (22:38):
Yeah, yeah, you're thinking great and you're wanting to leave
this with zero cash. I got them play employees for
seven months before we get our first like real, you know,
real good month. You know you got to plan for
that stuff. And all businesses, I don't care what they are.
I don't care if you're a bakery, or you're a
landscaping company or our pest control company.

Speaker 1 (22:56):
So you know that actually speaks to one of the
one of the number one questions I gets from searchers,
which is, you know, what industries do you recommend that
are safer? You know? You know, And I tell people,
I'm like, there's really no such thing as like safer industries.
They all just have their own set of pros and cons,
you know, and overall some can be a little bit healthier,
but they all just have pros and cons, you know,
Like right now, you know, HVAC has been really popular

(23:18):
for the last several years. One of the big cons
right now is because it's so popular, there's multiples are
incredibly high, So what are you really getting. You're not
getting the return that you thought you were getting, and
so that's one of the big cons. But I encourage
people to look across industries and you know, if possible,
find something that's at least tangentially related to something you've
already done, some sort of experience you have, because it's

(23:38):
really hard, like you do see stories of people being
successful going like completely industry shifting, but it really does
make a difference if you can buy something that you
have some experience in. So, for instance, a few weeks ago,
I spoke with someone who just bought a company, and
he used to be an employee at Amazon, you know,
a technical employee, but not like a software engineer, but

(24:00):
knew his weight around some technology. But he was originally
looking at roofing companies and he told me, he was like, yeah,
I'm looking at roofing companies. I have no experience in
that space, but my father in law is a roofer,
and so there's a little bit connection. And I'm like, okay,
I get that. I'm like, at least you have a
trusted person who can help guide you along. I'm not
opposed to that. But then he was like, I just
didn't really feel comfortable with it. I didn't really understand it.

(24:22):
And then later on he found an MSP provider, an
IT provider for local businesses, and he was like, this
made a lot more sense. He was like, you know,
I've never been an IT person. I've never done you know,
administrative services. But at least I understood what was happening
and I got into it. I was able to learn
relatively fast. And so that's a great example of something
where you don't have direct experience, but you have tangential experience,

(24:44):
which can really help you feel comfortable in the business
a lot faster.

Speaker 2 (24:49):
If you think you're going to buy it, sell it
to PE firm, and exit it in three to four years,
it has to be bought that way. You have to
buy something in an industry, you have to forecast what
they're going to be buying three or four years from now.
They might be out of heating their companies by then,
or they might be because they move, they move around,
and there's hundreds and hundreds of them. There's always gonna
be somebody doing something right. That said, it has to

(25:11):
be done by size, by design. And if you buy
a company that's mostly operated by a couple of operators
and it's not already well documented well financeid you all
the financials are perfect. If if they're not all perfect,
then there's not standard operating procedures, not systems and systems
in place. You have to be that guy because that's

(25:33):
what the PE firm likes. And most people aren't that person.
They're not somebody can go in and say, Okay, here's
a good running company that's just know all the employees
know what to do, and they know how to train
other in place how to do it, and take that
something and Okay, we can put that into documents, into
loom videos and other stuff, and we can bring anybody
off the street and within two months they can be

(25:54):
doing this right.

Speaker 1 (25:56):
And even beyond that, they're not. Like you said, they're
not planning on it from the beginning. And planning on
from the beginning means you know what right looks like
when you go to market, when you go to sell.
So your first conversation should probably be with pe groups
who are actively buying in that space, but more importantly
probably investment bankers in the lower middle market who to
handle these transactions regularly, and they can tell you, look,

(26:17):
if you're buying a plumbing company, and this is what
it needs to look like, if it's going to be
marketable and it's actually going to sell that way, you
actually have a scorecard to measure against. Otherwise you're flying blind.
And I guarantee the vast majority of buyers the one
they haven't even thought about, that they haven't eve thought
about that kind of exit. But even if they have
and they're kind of dreaming of it, guarantee that they

(26:37):
don't have a scorecard. They're not actually looking at it
and saying all right, well, within the next three to
five years. These are the boxes I have to be
able to check, and what's my plan for checking those boxes?
Understanding that even even if I check all those boxes,
five years from now, the industry may have shifted and
now no one's buying, or the market may fall out
from under me, and now like no one's buying. There's

(26:59):
so many things. Those are the inherent risks. But if
you don't at least have a scorecard, then you can't.
You don't even have to worry about the inherent risk.
You're not even building for the actual sale.

Speaker 2 (27:08):
And you're not even just building an initial scorecard. The
real way to get this done and I know people
doing it, and I know people have done it. The
real way that has to be done is you build
those relationships with investment bankers, you pe firms and stuff.
In the early phrase, you build mentoring almost mentoring relationships
where to look, I'm buying these companies, I'm my goal
is eventually sell it to a guy like you. And

(27:28):
this should be even tech companies. You know, if you're
building a company you think Google might work, you should
work at the product you know, you should call around
and find product managers and stuff. Over at those companies
you think might buy and have those conversations, Hey, I'm
building this, I'm gonna run it for three or four years.
I eventually love to sell it to you. What would
that take? What would you have to see inside of us?
And no, they their job is to acquire companies. They don't.

(27:51):
They lose their job if they can't. So they're gonna
they have a vested interest in seeing you grow into
something they can acquire. So they're gonna give you some information.
They're not don't expect them to spend hundreds of hours
with you, but they're going to lead you in the
right way and point you in the right direction. But
it's an ongoing relationship. Like you said, the market changes,
things shift. You got an investment marker that told you
how to buy plumbing companies and sell it to pe firms.

(28:14):
When it hits two million dollars in Ebita, you better
have that conversation at five hundred k e but a
at a million dollars? Ay, but at one point five million?
You know, and just like, what's changing? What do I
need to do? Now here's what I've got? What do
you what do you recommend? Right? You know, What's what's
the red flags that these these investors are looking for now? Right?
Is it customer concentration? Is it, you know, tariffs? You know,

(28:37):
you know, am I not going to be able to
sell for the next couple of years until this tariff
tariff stuff, you know evens out?

Speaker 1 (28:41):
What is it?

Speaker 2 (28:42):
Right?

Speaker 1 (28:43):
And who's the buyer is it? Is it really a
financial buyer or is it a strategic buyer? Like those
types of buyers like to see different things, you know,
is this something that can be easily bolted onto the
platform I'm already operating, or is it something that is
going to be my new platform? Yeah, those two businesses
look fundamentally different.

Speaker 2 (28:59):
I mean, it's tech company and I was looking at it.
I was interested, and he's like, you know what, I'm not.
You know, I'll talk to you, but I'm not going
to sell it to You'm gonna sell this thing to Microsoft?
And I was like, no, you're not, I said, well,
I said, because you don't use any of their tech stack.
You're not even You're not even close. You have such
a custom tech stack, you're going to be a pain
in their butt to acquire. They might want your customers,
but your customers are used to, you know, the output

(29:21):
from your tech stack. So if you really want, if
you think you're gonna sell it to somebody in the
Microsoft world, you probably ought to switch your tech stack
up right if you know they're running on you know,
Linux and Unix because it was cheaper, right, or Linux
and FreeBSD or whatever is out there these days. But
they were not you know, a Microsoft tech stack at all.
They're They're like me, I'm anti Microsoft. I've got to

(29:42):
I'm run Mac equipment. If I have to touch a PC,
I put Linux on it. Right, you know, you bunt
to you, I don't touch I don't touch it. It's
just not interested to whereas on you're you're on the
other side of the fence, right, you really know the
Microsoft world. You're comfortable in that world, right. I would
never buy a tech company that I had expectations to
sell it to some who runs on Microsoft platforms because
I don't know how to build what they need.

Speaker 1 (30:03):
And not just that, you also think of, like what
is the value that this company is bringing, because I like,
for instance, if you're going to sell the Microsoft it's
probably a lot easier for them just to basically rebuild
what you have in their in their stack and add
it to the office suite if that is something that
they actually wanted to do. See Microsoft buying Slack. They
built teams whereas Amazon but Slack.

Speaker 2 (30:25):
Right. You know the other side of that is too
is your team has a lot to do with that, right.
A lot of times they do what's called aquahire. Right,
they acquire because they want the the human intelligence you have.
So if you can attract some really high level players, right,
then that becomes part of your strategic you know edge.

(30:49):
I remember even when it was in defense contracting, we
all had to do profiles and work ups and stuff
because part of our bidding on defense contracts in particular,
especially very classified contract was who is on our team? Right,
had we had a couple of like really high end
MIT level geniuses on our team that the government would
contract their time, they would literally write a contract, say

(31:10):
we need I'll give he's passed on now. But there's
a guy named Peter. I won't give you his last name,
but he ended up with brain cancer and passed away.
A brilliant computer security guy. The government used to reach
out on a regular basis, and so we need to
contract out thirty hours of Peter's time and like you know,
and locked to be like fine, it's at this rate,
and they're like okay, right that there's a strategic advantage

(31:31):
to individuals too. So part of what does come like
Microsoft and Google and stuff are buying, is they're buying
the team and will the team stay right? And then
the other side is if you either have to have
one of three things to be a strategic you have
to have a team they can't recruit themselves, and that
they think well to stay once they're in. That's the
other side of that one, right, you have to have

(31:51):
a market segment they're having a hard time breaking into
where you have to have solved the tech problem that
they don't want to invest the money to solve. It
is cheaper for them buy you instead of doing it themselves.
So if you don't have one of those, you're in
the tech space and the same thing goes are strategic
purchases at almost every other realm. You either are either
in a market that they're having a hard time breaking into.

(32:12):
Maybe you've dominated the Tulson market for pest control, all right,
and a pufirm wants you because they want you know,
they've already got Oklahoma City and they want Tulsa, but
they don't want to go against you. It's just cheaper
to buy you. Right that said, there's got to be
some reason there, and it isn't because I've got two
million dollars in you, but a right, you know, they
can throw it aough marketing and you know, money AdSpend

(32:34):
to do that fast enough if you don't have one
of the strategic blockers either technology, staff or market share.
So yeah, and.

Speaker 1 (32:43):
With these types of businesses, you know, the home services
type businesses, your strategic leverage is going to be in
your staff, you know, the culture and staff that you've
built over a certain amount of time, as well as
the market. So and how dominant are you are in
your local market, because you're right, you want somebody to
want to buy you because you've got the best team
and you dominate a certain market. That's it. Beyond that,

(33:03):
it's it's really hard. It's really hard to you know,
get an advantage on the software side, especially in this
kind of industy, because we're all we're all using the.

Speaker 2 (33:11):
Same stuff, using the same time.

Speaker 1 (33:14):
No one has an in house developer team building custom software.

Speaker 2 (33:17):
And were and we're all leaning on chat, TPT and
all these other AI tools to speed it up. Now, Right,
I've talked to a guy who he sold his software.
He did custom software to high level Fortune one hundred,
Fortune five hundred companies, enterprise software like making salesforce talk
to this integration glue is what I would refer to it.

(33:38):
As he had eighty something employees in the Philippines and
that's what they did. They spent sixty hours. His average
employee time was fifty to sixty hour weeks and they
would write code for these big companies to make software
talk to each other. Right, he couldn't get the big
guys to move into the AI world fast enough, so
he sold his business to his business partner. And now
he says he does a little bit smaller market to

(34:00):
you know, say the Fortune one thousands instead of the
Fortune one hundreds and five hundreds. And he has eight
people writing the same number of lines at code per
week as it took eighty people to write. And they're
doing thirty hour weeks instead of sixty and that's because
they're you know, he's only hiring people that are AI augumented.
There's still there's still staff level software engineers, but they

(34:22):
know how to use AI to speed up their work.

Speaker 1 (34:25):
And can you imagine what that did to his profitability?

Speaker 2 (34:27):
Oh my god? Right, so he said he's already doing
more revenue, no sorry, more profit than the company's sold
to his business partner. And you know, now the other
guys seeing the light and trying to figure out. But
he said, the problem with the bigger one is getting
this fortune one hundred and five hundred to change their ways.
The resistance to change, right, you know, a lot of

(34:48):
them are concerned about l Latin AI that's not in
house that they control see any of their data.

Speaker 1 (34:54):
So yeah, and that's actually a really good learning, you know,
whether you're a Fortune one hundred comp or you're you know,
Joe's plumbing shop, you know, is that that resistance to
change is very real. And so you know a lot
of times, you know, first time buyers, we get you
get really sucked into this idea of like do I
want to buy or build? Like, well, you know it

(35:14):
sounds so easy. Of course I want to buy. I'm
buying customers, I'm buying revenue. I'm skipping the zero to
one phase. You know, why would I not do that?
And The one big reason why you may not want
to do that is because you're you're buying more than
just customers revenue. You're buying culture. Like you, when you
buy something that's already built, you can't just turn that
ship in like two three months. It takes time. It

(35:36):
takes time for you to actually get a really good
understanding of what you actually bought and so you can
get your arms around the full problem, which could take
quite a while. And then from there, all right, well,
then now how do I build the culture within the
team that reflects how I want to run the business,
and then how do I actually start making those changes?
And this takes it takes a long time. It's certainly
not the the nimbleness of a startup where you get

(35:58):
to dictate terms from the very beginning. And so that's
the trade off. That's the big trade off that you're missing.
And a lot of people really discount that because they
look at the financials and they're like, oh, well, culture
is just whatever, And I would I would argue vehemently
that culture is far more important. Financial simply gets you
in the door, like that's that's table stakes to play.
But the culture determines like what you can do with

(36:20):
it if you're going to survive. Like everything else is.

Speaker 2 (36:23):
On culture, I've turned away more than one because of culture.
This story has been on the show quite a few times.
There was an engineering firm in Dallas and the guy
we're on the phone and on zoom call. Somebody comes
in and says something to him and he just lose it,
kicks the cat trash can across the room. It looks
like the extorsist got a hold of him. He's cuts
in his head, spin and he's throwing shit. He was

(36:45):
just he's just lost it. And I was like, okay,
that was awkward. So when he got back there, he's like, okay,
I think we got that under control. And where were we?
And we had the meeting. The second meeting, something similar happened.
He did the same thing, and I just told him say, look,
I'm not arrested in your company, and I don't know
anybody can be. And he says, well, you seem pretty interested.
Our numbers are right. What's going on? I said, I
can't manage the way you manage. You've built a culture

(37:06):
around there that anybody would tall and he got mad
at me and then start cutting at me. It's like, look,
you're gonna listen to me or you can hang out.
That's that's what we're gonna do right here. But I'm
gonna I'm gonna say what I've got to say. And
I said, anybody who could deal with the way you
manage has to be managed the way you manage. That's
the that's why they're still there, right. They can't work
anywhere else. They need to be yelled at. They need

(37:27):
stuff throwing at them, otherwise they wouldn't tolerate you. And
I said, and unfortunately, I have stepped into a position
where I got brought in as a senior director where
the previous manager was kind of like that, and people
would come in with their head all down, sepest and go,
I think we've got an outage. You know, I'm like,
what speak up? You know, like they're waiting for something
to fly at them. And it's just really hard to

(37:47):
change that culture. And so I already know that, and
I had to let go. I had like nine people
that there's a small company, and like nine people, I
had three of them I had to swap out because
they couldn't be managed that and they didn't do anyth
unless they were yelled at. And I don't yell, right,
I anger management issues. I don't want to yell at
you because then I just like become a really ugly
person and I'll be that guy. And I don't want
to be that guy. I do have a dark side.
We all have a dark side, and I don't want

(38:08):
to see mine very often, right, I reserve that. And
when somebody's messing with my kids. That said, the uh,
you know, other than that, there's this side of businesses
that people don't get. That is the culture has to
be there, and there's the environment that I don't even

(38:29):
know how to put it there. You're going to come
in and make change that. Everybody there's so resistant to changes.
One of the biggest things I tell people in the
time is you walk in the door, the first thing
you can you really should do is been thirty sixty
maybe even ninety days, just watching how things operate, not
making a damn chain one not one change right, and
then pull every single one point and said, if you
could change anything, what would you change? And then your mind,

(38:52):
you already have your list of things you think should
be changed, start lining them up with the things they
think should be changed. And do those things first, because
they when you build a trust and report, because these
people don't know you, for madam at this stage. Right
in that first thirty sixty days, they're getting to know
you right and to make to make changes right away.
It's just so disruptive. But if you if you, if
the changes you start with are ones they've been wanting

(39:14):
to do for a long time. Now you build a
little trust and report, they see those things work and
you can make some of the other changes you know
need to happen when you got everybody on board. And
I see people doing this thing where they just come
in gung ho, wanting to change everything. And you know,
talked to a guy who bought a software company in
South Africa, had twenty one employees. Within three weeks to
be in there, every single one of them quit. He's

(39:34):
doing six seven million dollars a year, right and went
to zero because twenty one employees quit on him. Right. Well,
the last manager owner was sick for years. Uh, never
came to the office, let them do what they wanted
to and they just they just chugged along. And he
came in and wanted to, Oh, we got to have
change management and strict protocols are when like all this

(39:54):
stuff and these guys are just really senior engineers and
just knew what to do and kept their job was
to keep all these little companies that were they had
his clients up and running, but they didn't have any
other rules than that, right, And he's trying to, you know,
implement all these tools and change manage it and quality
control and brought a quality control engineer in and just
all this stuff, and they're like, I'm out of here, right.

Speaker 1 (40:15):
I think you're speaking to one of the other big differences,
you know, when it comes to business acquisition, which is
a lot of times I hear people talk about businesses
in relation to real estate, and like, well, first and foremost,
that's that's a bad analogy because with real estate, there's
a hard asset behind it, right, it actually has a
tangible value in some way. So with a business, there's
no real tangible value there. Like even if you take

(40:37):
the most high CAPEX businesses out there, manufacturing, you know,
commercial landscaping, lots of machinery, lots of trucks, all of
that stuff together is usually less than five percent the
actual value of the company. Like it's the salvage value.
And so when the business when it goes under, it's
because you know, there's nothing left to get you know,
it's all gone. And so when you really think about

(40:58):
a business, it's not about the herd assets, about the
you know, the book value. It's about what is the
value that's being created by this group of people who
are working together to solve a problem. And that's that's
the crux. It's the group of people. It's what exactly
what you're talking about. It's like those those interpersonal dynamics
are incredibly important, and that culture that already exists is
what you're actually buying. And so you have to be

(41:19):
able to step in that culture and adapt to it
while also leading it, or you know, or the whole
thing's just going to collapse.

Speaker 2 (41:28):
You know, we all grew up watching I'm a little
older than you. I grew up watching like Wall Street, right,
And you know, when I first got out of the space,
it was a joke. As one of the guys I
used to watch in the military with his name's Kyle.
I sent a message and I couldn't get ahold of him,
so I told his wife. I got ahold of his wife.
I said you know, hate Tail Kyle the blue Horse
who loves Antigon to the steel And he's like, what
I think that was the same. I probably butchered it

(41:48):
just then, but anyway, he texted me, he's like, what
the hell what you're watching Wall Street again? It's been
a long time. I was like, no, I'm going to
get into this space. And I thought that's what it was.
It's like, you know, I'm going to get into the space,
but I'm not gonna be one of those corporate raiders.
I'm gonna buy these businesses for zero down or low
down and you know, and maybe an spa alone here
and there. And I have yet to see. Maybe they're

(42:11):
out there, but I have yet to see any company
where their assets are worth more than they're asking for
the company right where they're you can where you can
go out and part it out and sell it for
five different people and you make ten times what you're
what you paid for it. That is rarer than the
Unicorn and zero zero down deal.

Speaker 1 (42:27):
So yeah, that right there. I mean, you see that
in distressed situations, and usually have larger companies that are
they're experiencing massive amounts of distress where you're like Okay, well,
how can I break this apart and sell the pieces
for more than what the whole is worth. But again,
we're not like at this at this side of the market.
We're not looking at businesses like that. And even if
you find the one that's distressed, well that's ten times worse.

(42:47):
There's nothing there that's that's going to be valuable to
break apart.

Speaker 2 (42:50):
Yeah, I've met some guys out there, you know, the
John Kettley's of the world and some other people out
there that are really good at doing turn around. He
doesn't even do turnarounds anymore, but I know some people
out there that they are good at buying turnarounds. They
know how to. And for him, it's lucky because he's
in Europe and you know, he gets to look at
company's house. I don't if you have to play with
that at all. But yeah, in other countries, at least Europe,

(43:11):
everybody has to. Every company has to report their financials
into the centralized database on a regular basis, so you
get to see what they're really doing. There's not as less.
There's a lot less of this, you know, wild wild
West things are going on here. That said, which I
kind of there's part of me says I wish we
had that, and there's other parties I wish I don't
because they also you can't. You can't bootstrap things there,

(43:33):
Like you can't hear if you're insolvent, If you can't
pay your bills that month, there's an insolvency court that
can be called and they'll pull the we'll pull the
rug right underneath your your idea. And I don't know
how many businesses I've started where like I'm begging and
borrowing and like, you know, it doesn't make sense until yeah,
it doesn't make sense, like why am I even doing this?
Like I'm side hustling selling things off and selling tools

(43:54):
and special equipment to pay payroll that week or whatever,
you know, just to get by until it's up and run.
And you can't do that in a lot of countries
because they really watch your solvency. Are you insolvent or solvent?
And that said, the space we're in now is I
don't want to discouraging, but we've talked a lot about
the buyer beware type of stuff here. There's real opportunity here,

(44:16):
but you better work with right people. You better bring
people onto your team that know this space, you better
buy something that has some room for mistakes.

Speaker 1 (44:24):
Yeah. One of the most valuable things you can do
is is by the time and the expertise of a
coach who's done it before, and not just done it before,
I mean done exactly what you're trying to do. It
was exactly the path you're going down, has been down
that path before. One of the things I always recommend
is Jeff Sands. He's one of the top turnaround artists
in the world, in the country at least, and he

(44:45):
wrote Corporate Turnaround Artistry a couple of years.

Speaker 2 (44:47):
Yeah.

Speaker 1 (44:47):
Yeah, and I recommend that book every single business owner.
I mean because I mean, I hope you're not going
through distress, but if you want to learn how to
really dive deep in your business and you know, at
a functional level, it's a fantastic guide for that.

Speaker 2 (45:01):
Is he still around as was an older book, No,
it's the.

Speaker 1 (45:04):
Book just came out and I think it's twenty twenty
or twenty twenty one. He's still around. Runs a firm
based in Boston.

Speaker 2 (45:10):
I believe I'm not hunting down and see if I
can get him on here. I love talking to people
like that, right, that's a specialized skill set too, and
I have a lot of respect for this. Yeah, I
have a lot of respect for guys who can do
turn arounds and stuff. It's not everybody, right, and there's
so much risk involved in side of that, but the
guys that can do it, there's you know, where there's

(45:30):
great risk, there's great reward. A lot of times she said,
Jeff Sands, Right, I'm gonna look that up and hunt
him down. It's so cool. How do people get ahold
of you? We're running out of time here, We're gonna
at the top of the hour if somebody wants to
work with you and have you like get them into
the right business or what? First of all, what services
do you provide to these guys? And because I think
we covered everything, all your history and everything else, but

(45:51):
we really haven't. I told everybody what it is you
do on a day to day basis.

Speaker 1 (45:56):
Yeah. Yeah, So what I do is I manage Sunset
Coast Partners. It's an independent sponsor firm targeting a defense
acquisition businesses in the United States, and so I'm actively searching.
I've got a couple of family offices and some high
network professionals behind US, and we're looking to buy defense contractors.
So if you are someone you know owns a business
that does at least forty percent revenue with the government,

(46:17):
specifically in the Defense Department, I'd love to talk to you.
But other than that, if you're a first time searcher,
this is a passion of mine. You see on LinkedIn
all the time, but reach out on LinkedIn, send me
a DM. I try to respond everybody within twenty four hours.
I do my best. And then beyond that, if you're
looking for some guidance. I recently launched the Start Searching Challenge,
and so I don't I try not to do one

(46:38):
on one because I simply don't have time for it.
But I do a challenge once a month. I've only
done it twice so far, but I do it once
a month. It's one to two hours an evening for
five days, and we walk through the one oh one
basics of how to actually search for a business to
buy like a professional.

Speaker 2 (46:55):
Okay, cool? So, and then what's the best way for them?
Maybe said it and I just missed it. What's the
best way for them to get a hold of the information?
Where do they find it?

Speaker 1 (47:04):
Yeah?

Speaker 2 (47:04):
M on LinkedIn, okay on LinkedIn. All right, so I
do know one person and we interviewed one person who
bought a defense contracting company, and it was I'm like,
I said, you know, I'm insanely curious. I think I
spent more time on her on that show with her
understanding her tech. They built GPS list navigation devices that

(47:24):
use fiber optics in the gyroscope type of thing, and
it measures they sends pulse of light and by how
it's you know, the g forces applied to it. It
stretches that microsoftic fiber a certain way and they can
measure how long it takes that light to travel. And
that's how it determined it was the most curious thing. Yeah,
so they make these things by hand. It's a computer

(47:46):
chip type of thing, but they have engineers and labs
and they pretty much make this thing unspiral. A little
piece of fireburn side of this thing, you know, And
it's a defense contracting business. You can't have like a
you know, a guided miss reaching up to GPSA and
hey where am I? Because it tells the world that
where it's at. Right, So this thing can once you
give it a you know, a starting point and where

(48:08):
you want it to go. It can keep it on track.
But you know, she bought that, and she's she's growing
it now. I've had her on the show. She shows
up once or twice. She showed up to our meetups
and stuff. But I don't think i've actually I think
maybe that might be the only defense contractor that you know,
I've actually had. Most of them are too big, So
what's the.

Speaker 1 (48:28):
They tend to either be very small or very big.

Speaker 2 (48:30):
Yeah, what's the price range you're looking? That's the reason
I told the whole story is to ask you what
the price range was.

Speaker 1 (48:36):
Yeah, typically one and a half to ten million even, Okay.
So I'm trying to find those businesses where you've grown
it just enough to kind of get out of the
small business space, but usually bump up against like the
NAKES code in your industry, and you're like, all right, well,
can I even go this any higher? Or you need
more investment capital something like that.

Speaker 2 (48:52):
Okay. And then the other question is do you have
any concerns right now with all the government funding clean
up and contracts and stuff. I've been telling a few
of my friends that are looking for defense contracting jobs
and things that even buy stuff what do they call it,
GSA or whatever that they supply stuff through that if
more than twenty or thirty percent of your income comes
from the government right now, beware right because they're cut

(49:14):
and spending, cut and costs, and a lot of these
big fluffy contracts. You think your mind might get a
haircut on them.

Speaker 1 (49:20):
So yeah, they certainly might. There's a couple of things
I touch on with defence is well. One, the DoD
is one of the only organizations, probably the only one
at this point that hasn't been impacted by budget cuts.
I think I think there might have been like a
services or consulting contract with the LIGHT that was canceled,
but beyond that, they're not experiencing the same impact, including
with employees and so. And I also have a lot

(49:42):
of faith in the fact that ten years from now
we're not going to noticeably have any real difference in
defense spending, at least to the downside. So that's one.
The second thing is I think now is a good
time to buy. There's a lot of fear in the market,
especially if you're doing business with the government. You can
imagine if you're a defense contractor who a family owned
business and you've grown it for several years, it's already

(50:03):
harder to exit than it would be in the normal market.
A lot of pees don't like to get involved in
defensive work, so your list of buyers is already smaller.
But now there's so much uncertainty that you're like, you're
wondering if you're ever going to hit that exit, and
so you might be more willing to bring on a
liquid de partner at this point take some chips off
the table. So I think that's definitely an option. But

(50:24):
there's a lot of uncertainty out there, that's for sure.

Speaker 2 (50:26):
I did talk to one lady who some of the
stuff that you can get like you can will run out,
meaning that she did wellb development for like the UH
for the government. She would do the websites for the
Food and Drug Administration and all these other places and
stuff like that. She had those big contracts you see
them canceling now. But her problem was is she was

(50:47):
just she was a disabled veteran and a female, so
she got preferential treatment on bids. But a lot of
these special preferential treatments only last for a certain period
of time. So for her particular one, I think she
had three or five years and that had been gone,
and how she's struggling to get by because she's competitively
bidding against everybody else and there's not enough room. Right,
So just understand, like if you're out there and you know,

(51:10):
and you're thinking about jumping in the space, you can
you know, work here with JED and having them help
you buy a company. There's some things you need to
know about this industry. Right. Some of these businesses they
can only sell to another veteran because they have so
many preferred statuses because the veteran owned that that's how
they get a lot of their contracts and stuff.

Speaker 1 (51:30):
So that's one of the most classic barriers that keeps
people out of the government space is because you do
get special treatment if you if you're service disabled veteran,
or you're a minority owned or a woman owned, or
you have a a classifications, Like there's a lot of
things and we're not even talking about if you have
a parents and so there's a lot of things that
can impact your ability to qualify for an contract. And

(51:51):
so those are natural barriers that tend to keep people
out of the space, which for me, I mean that's
a great mote keeps the competitors out awesome.

Speaker 2 (52:00):
Well, thank you for your time today. Well, I think
we'll wrap this up. We'll call this a show and
hang out for a few minutes afterwards, all right, Thanks Ron,

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