Luis agilar welcome to acquiring minds thank you for having me Lis what a story we have for today you bought a commercial laundry business then a second one and the punchline is that you now preside over a business doing north of 5 million in iida and this all happened in about one year's time now so very quick but a whole lot happened in in in that 12 14 15 months so we have a lot to cover let's get into it Louise start us off with some background on you please awesome yeah thanks when you say it like that it's like uh be careful what you wish for because it happens so quickly and you kind of forget uh where you started but yeah my background I'm originally from Guatemala I grew up there I came to University uh I went to Virginia Tech studied industrial engineering then I went over to work for General Electric did about about five years there in a couple of leadership rotational programs and then I moved over to U private Equity Middle Market private equity in um New York City in the operations uh portfolio team so basically partnering with Middle Market companies after we've acquired them um and then you know after 10 years of of doing that you know I really um had a an ambition to one day buy a business my myself um so you know those experiences led me to have the the capabilities and the and the desire to explore doing an acquisition myself and that's when I started learning about search and uh uh that's how how I got here and exactly how did you learn about search Lis was it from being in private Equity or in school or or what or Googling I think my first real deep dive into into search I read the the Harvard search search fund book right like um you know I I I found the book read the whole thing and learned about you know what kind of business you need to look for what what industries what profile how to structure it and this was while I was still working in private Equity maybe like two years into my five-year uh stint into private Equity so that allowed me to kind of you know connect the dots and use my job to you know learn what I would do if I was going to run a business right kind of learn with somebody else's money knowing that one day I wanted to do it myself but really you know I was still learning after four four years and then on the fifth year I'm like okay I think I've I've learned enough so that was my my first real exposure to it then I would say um I had a couple of friends that did a traditional search and you know heard some stories from them of their experience um they were still um engaged in in in their search that they had that done um so that's really how I got some exposure to it and then you know as I got into it I learned more and more about it through you know the Stanford study search Investment Group um and it's a community in itself we're going to also Circle back around to your private Equity experience and how it informed the deal that you did but just to before we we we move ahead you were working on the operations side in private equity correct you were not doing the deals I had exposure to how deals were structured and the whole process but really we got engaged in the Ops due diligence part right so when it was time to really assess the company we would get more exposure to it you know is this a good company what does the commercial profile look like so we would start working with the merger acquisition team when a deal is going to go through and then I was more post close partner with a CEO partner with the team develop a vision a strategy recircle back with the m& team to determine you know what other Acquisitions we we can do um so that that was kind of my my role at the firm and doing that kind of seeing up close an acquisition and then actually being part of the transition did that did you take anything away from that in terms of like oh doing this yourself um and let me let me maybe give a little bit more context to the question so many of my guests who who have worked in private equity and then decide to go buy a business they um see deals being done in the private Equity you know priv at their private Equity Firm and they and they well two things first of all they notice who's really getting paid in at the moment of of signing on the dotted line and it's that operator who's having having their liquidity event uh and so that is appealing but then they also kind of um just see a lot of operators come through and have these amazing exits and kind of learn something about their stories and say to themselves I can see myself in that person or at least I can see doing what that person has done uh let me let me go out and try try my hand at this so does it did did you have any of that kind of channeling you know what you were seeing into like huh let me try my hand at this yeah I mean absolutely I mean it wasn't like top of mind all the time but at the end of my you know fiveyear stint you know I saw four different companies did a bunch of Acquisitions saw the work that I did create tremendous amount of value for these different companies so I'm like well if I was able to do it with somebody else's money why why shouldn't I be able to give it a shot by structuring it myself and create that kind of value you know for for me and investors that I choose um so yeah it was definitely you know like okay I know I can do it I know I can work with these companies doesn't seem that hard but it is harder when you do it on your own right because when you're not responsible for the recommendations and decisions and the financial outcome it's it's easy to make a PowerPoint and tell a CEO yeah you need to grow 10% and go buy these businesses it's hard to do it and when I was working in private Equity I acknowledged that right I wasn't the guy who just made you a powerpoint I would fly out to the companies and be very Hands-On and that was of the differentiators for me in that space was because of my background in G I know that you know a PowerPoint is just a PowerPoint the recommendation is just a recommendation and to actually make things happen you got to go there sit with people train people talk with people and given that that that was my Approach I think it it gave me even more exposure to what actually needs needs to get done right to to buy a company just to buy it it's hard but it's the easy part to row it to to to run it and grow it and you know have all these employees on your shoulders that that's kind of the the harder part which I'm just learning well and I think that that may be uh the theme of this conversation at least it was the theme of our pre-call so so Lis okay so you you get the notion to buy business you start kind of down the search Rabbit Hole you read the books the Stanford study Etc I guess you start kind of plugging yourself into the ecosystem you have you have a couple of friends who did a traditional SE fund then what what is it what is it pick us back up so then it was like okay I think I've I've learned as much as I'm going to learn in my current job do I want to do a traditional search or a self-funded search when do I start it how do I start it so really the the hard thing about this is to just get started right because many so I I try to take it as far as I could before I quit my job um so you have you know the the stability of of your income and you know just explore it as far as you can and once you're like okay this this other branch is close enough for me to let go of this one that's to the point where I got right so I had you know read all the books I actually developed the PowerPoint creating my framework right like what industries do I want to look at and I used you know information from these books right industries that are you know growing highly recession resilient High barrier to entry um so I narrowed down on five Industries and from there you know I I narrowed down on on you know types of business um I can go into what those businesses were they were all five very different businesses yeah and then once I had that framework I'm like okay let me go search for these businesses so I had narrowed down on pet food manufacturing um there was this trend where during covid a lot of people got dogs and I saw saw like some Tailwinds on the pet food manufacturing that coupled with my manufacturing experience I worked from a gummy manufacturing uh company when I was in private Equity so I was trying to kind of connect dots like what am I good at what industries have Tailwinds dog manufacturing um I also had Outsource IT services I I saw a trend that you know Outsourcing it um not only in the US but to Latin America was a upand cominging trend given my background I'm like okay let me look at the if there's some near shuring it Outsourcing companies based on the trends I'm seeing and I'm also you know sort of techsavvy and and enjoy technology and then I so so American clients Latin yeah developers yeah yeah yeah continue please then I also narrowed down on the linen rental business one time I was interviewing for a private Equity Fund and the case study was a linen a healthcare linen rental business this was back in 2015 and I remember you know getting into the Sim learning about the industry preparing this presentation and what struck about me was five-year contracts rental business cool operations um so when I started doing this I remembered that that case and I actually went back to it and I said H the linen rental in the healthc care space is seems like a very interesting business 95% recurring Revenue you know 95% of Revenue under contract it's a rental business it has operations which I'm good at and then I looked at the industry Trends you know it's huge Market recession resilient uh and um High barriers to entry right so that was another industry I'm like okay let me let me look into that um what were the other ones oh I looked at uh last last mile 3pl delivery uh seemed like a big Trend like uh last mile Logistics 3pl businesses like an Amazon delivery route sort of thing yeah it was it was more like a a third part it's not Amazon but yeah sort of like that you know there's a bunch of warehouses um that you know Bed Bath and Beyond or peleton use to store their products and then these companies deliver the last mile to to the End customer highly fragmented I also wanted to look at fragmented industries that had a potential for you know rollup strategy this was one of the strategies I got exposed to in private Equity is like find a fragmented Market build a platform and then find smaller targets and all of these kind of Industries met that that criteria um I can't remember the fifth industry I'm sure it was something something similar uh but those were the the four that that hit my my my Matrix I made a matrix and evaluated and then just like okay these meet all the criteria um and then I started searching for business businesses um you know on my weekend on my spare time um mostly on buy Biz sell uh I know many people you know think there there aren't quality assets there but what I found is when you find a business on there half the battle is done because you know they want to sell you know the price they want and you're the buyer right so real quick you you you're like onethird of the way right yeah yeah that's well put so I I found all these kinds of businesses I mentioned I found like two or three right and I started practicing you know I knew the first business I'm I'm I'm going to go and talk to I won't even know what to say right so just you know on a weekend on the time I would you know fill out the form call these sellers chat you know and maybe I called like 20 people I met like two or three and and nothing really um came of it uh this was you know maybe June July um of of 2022 then uh you know I I started getting some traction and I actually got like you know started talking to investors right first part was just talking to businesses I don't have anything second part is like okay how do I actually do one of these deals what do I need to get you know I need investors I need debt you know so um I started I started talking to to some investors uh like family and friends stuff like that and just to feel them out like if I were to do this would you would you invest in me and and you know a lot of the people I talk to yeah definitely do it you have the right profile to do it um so originally I started thinking about doing a traditional search the people I talk to they're like yeah we'll we'll do it traditional search just let us know when you're ready to get started was your search geographically focused where where are you based what how does that play the geography yeah it was geographically focused I I decided very early on I wanted to buy a business in Florida specifically Miami I had moved down to to Miami uh I was working in New York flying back and forth uh but you know I had I have two young kids so I wanted to provide stability you know and the way I thought about it is if Florida was a country it would be like the the 15th largest country in the world right or something like that so I'm like this is a big enough market where I should be able to find a business right uh so I decided to wasn't limited to like only in Florida uh but I I initially got focused there because I thought you know it's it's a big enough market it's under represented on the private Equity space you don't hear too much about you know m&a deals and activity um so it was it was focused on Florida for sure now I'm thinking of Sam Rosati's uh three big little two the model where if you have two CR if you have three the three criteria geography industry and size and you're strong on two of them you got to let one you got to be kind of weaker on the other uh you're strong on geography you've put a lot of thought into industry so you're basically strong on industry were you therefore much more agnostic on size or did you also have size criteria I would say I I my size criteria was like 200 K to 2 million was my my size criteria I I so you were you were very flexible on size 200 200 SD is pretty pretty small you were prepared to buy pretty small I I saw a couple of businesses doing doing that and yeah I mean my my thought will was like I'm not gonna be too selective in the business I'm going to buy there's people who spend many years looking for the perfect business I knew out of the gate I I want to buy a normal business an okay business but I want to be a great operator right so doesn't matter you know if it's like the best business with the best Tail wins and all the St aligned you know I'm more focused on like something good enough that if I jump in you know I'm confident I can grow it and run it and and kind of be on the quicker side I'm kind of biased towards action is kind of the way so I'm like you know I'll look at anything and whatever whatever comes if if if I can get it done I'll do it um I got lucky that the one I ended up doing which was relatively quickly ended up being a good company as well right and so much bigger than 200k in SD so and now uh you're you're 20 times bigger more than 20 times larger than that so that's that's pretty remarkable okay get we're getting ahead oh and then I wanted to ask about your kind of personal financial situation were you going to need to raise I mean of course it depended on the size of the business but were you going to need to raise Equity did you anticipate or did you have some of your own or what I I had some Equity definitely not enough to to get a a big de deal done right so I definitely thought I need to raise some money I had figured out all the math you know like okay if I'm going to buy a million doll eida business maybe I can get it for three times I can get two and a half millions of of debt on that I need 500k right right I had like maybe 300K if you count the the 401K uh so I was willing to put it all in and in fact I did so I knew I had to raise you know my myate was like okay I just got to get one guy to give me 200k and maybe I can get this done um in in in the lower end of of of a deal right so I'm interested then so yes of course you were going to need to raise some Equity you've already said that you were talking to friends and family but how did these conversations with friends and family especially if you thought maybe you'll just need you know an additional two or 300 depending on the size of the deal how did that evolve into traditional you know considering a traditional search fund fund which is typically you're looking you know you're looking to do a much bigger business I mean that really Narrows your options of what you can buy and it's often for I don't want to say exclusively but for the most part people who are already kind of plugged into you know MBA programs where where the kind of the the traditional search fund investors you know are are kind of buzzing around uh and you my impression is were kind of just an outsider you you were kind of mid-career type guy coming in and doing this so bridge that gap for me how did you consider doing a traditional search fund so basically by you know August I'm like okay I I got some targets I got some people that are going to invest I got some practice I'm ready to kind of quit my job and go and do this full-time you know I got some promising leads whatnot right so I had enough money where I didn't have to have the the traditional search structured already and and have that income coming you know I had enough savings to you know give me a few months to figure it out yeah um so you know very quickly after after I quit um I had this this deal that I found in bis Buy sell like you know early September right it was 1.5 million in ibida uh it was in the linen rental and it was 20 minutes away from my house right so I'm like okay this might be the one you so I jump on my car and I go see this guy and you know I I told you I had learned about linen rental but I had never been in a plant that did that I just saw it in a in a in a Sim right um and I'm like okay so I talked to the guy we we hit it off he's like a nice nice gentleman in his 65s and you know when you show up to these meetings you don't have anything you don't have money you don't have debt you just have a poker face right so I'm like yeah I I saw your ad I'm interested in in buying your business um you know I got I got some investors behind me and you know I got it all lined up um and you know we talked a little bit about the deal and he's like yeah let let's let's keep talking so I left that day and I'm like okay 1.5 million he wants five times that 7.5 and he wants to sell the real estate as well for I think he wanted like five million for the real estate so he he wanted 12.5 um so then I then the the search that's quite a poker face Louise yeah I know yeah it no problem go go ahead so so then um I go back to to these to the drawing board right okay 7.5 million um let me go ask investors and let me see what kind of debt I can get and you know within a week I'm like okay um I could probably get four to 5 million from an SBA loan I actually you know getting pre-approved for a loan on the SBA is like like getting candy right like you fill out a form online and you're GNA get a term sheet um so I got a term sheet for for $5 million you know there's a little bit of process you know this is the type of business you know very quickly I could put together a little a little teaser for a few bankers and uh you know got a a $5 million term sheet so then I'm like okay I need to come up with two two 2.5 million more of which maybe I have 300K um so I went to these friends and and family and and known investors that I had learned and they're like yeah we'll put 500k each it was four there's your race but we keep 80% of the business right and and you keep 20% uh over time I'm like yeah I mean 20% of of something is better than than nothing so I I I we kind of Shook on it really quickly um these these guys believed in me and you know I brought him along through the process a little bit sharing like my narrowing of my search Etc but they didn't really give me money until you know here here's the deal this is what we have to do and Lis were these at this point are these actual traditional search fund investors investors who have done traditional style search fund deals before one one one of them did a deal in one search fund and he was very successful and the other people were people in his Network that believe that that have done business before right so he said I like it I believe in you I'll do 500 I have three other buddies that that will do 500 each we'll do it um like that right and were they they modeling what your your percentage your 20% your 20% of the business and only over time that vests or you have to earn it uh the uh based on the traditional search fund model or did they kind of come up with that on their own okay no based on the on the traditional search that the one one gen had had been familiar with right okay so basically it was a game the more leverage I get and the more money I put in the more Equity I'm going to get to an extent and then I'm GNA have you know I think 20% was like the carry and they were pushing back to like how about just 10 so you know at this point I don't have anything I want to get the deal done so I'm like sure but then along the way very quickly while I was getting into it I got introduced to to Sig search Investment Group um and you know a friend of mine said why don't you talk to these guys I think there's a you're giving away too much this is a great deal why don't you talk to these guys I think there's a way where you can put in like the 200k and get like 80% of the company like well well that sounds interesting that sounds a little bit better because at this point you know I knew about self-funded search but you know for smaller deals right so for something like 200k maybe but this was a little bigger so I'm like okay I'm curious so this this friend of mine introduced me to Sig and I had a a meeting with the Sig team and shared with them the deal where I had it at this point like I had already an an Loi with the guy and they're like we love this deal this is a closable deal we'll we'll we'll we'll make you an offer for you to partner with us and we'll help you get this deal done and you'll get to keep like 80% 70% of this company we're pretty confident we've closed many deals like this so then that was my first decision hurdle I had to make right like you know at one point I have guys that already believed in me and committed Capital but I'm gonna end up with a a smaller piece of the pie um so you know I ended up the decision to you know go with Sig right I told my investors Hey listen guys I'm going to try and do this one uh a different way I appreciate your your investment but we're going to try to structure it a different way I'll pitch it to you guys afterwards to see if you still want to invest and they were like uh we good luck Louise and why you said this was a decision hurdle why was it just not a no-brainer to go with Sig given that the economics were so much more favorable because it was there was uncertainty there yeah it's the famous thing a burden hand they're a bird in the bush right these guys already told me they're going to put in the money and I'm I already have a sure thing I already have the deal s you know I had one meeting with them they they looked pretty legit uh but you know they they Robert and Jordan look legit those guys those guys look legit to actually you know how I I knew they were legit is I saw Roberts uh acquiring minds debate uh against traditional search when when I learned about Sega I searched them and I saw the debate I'm like okay this guy's got passion for this concept so um you know I I felt uh some altruism to to to going to to that model you know great that I love that L he's probably smirking right now and by the way you we keep talking about the the 7 and A5 million for the business um so in case the audience missed it 1.5 million of call it SD he wanted five times 7.5 million so that's the business price but he also wanted to sell the real estate for another 5 million so I also have this 12 12 a half million number kicking around in my head what were you going to do about the real estate yeah that's a great question so I I was negotiating with him I'm like listen I can come up with the 7.5 I can't come up with with the the real estate I can but it'll take longer to do the deal he wanted to move quick so I said like sell me the business and then give me a couple more months to find investors for the real estate and rent it to me for a while give me a a a a right to to purchase it and give me a long-term lease and you know I give you my word I'll try to take it off of you or mortgage it but it's going to be too hard to try to get both deals done at the same time he didn't really want it but he's like fine to to get this done I can be a little flexible but he did not want to retain the real estate right so he said fine and this is actually why the deal fell apart later on in the story um so we'll get into that right so I was able to convince him to to lease real estate for me and and we we went about our our deal just to buy the the business at this point okay and why do you think a business that has so many favorable characteristics I mean of the universe of businesses out there this is this this vertical this industry linen rental is one of five that you identified and here this business is available for all to see right on bis by sell first of all it's an amazing coincidence but also if you know as I'm like linen rental as you'd already demonstrated to yourself has these incredible characteristics B2B recurring Revenue contracts Etc uh why is it on bis by cell why has haven't people you know the competitor snatched it up or some other Searchers or the broker why couldn't the broker just like you know email his Network before putting on bis by sell and get this thing sold like that that's a great question I I don't really have the answer to it I mean uh I think many of the players who are acquisitive in this space are are larger and they wanted to buy his routes only and not his plant and his legacy would go away so he told me I I have like these large players they've made me offers they want to pay less and they want me to keep my real estate and they just take the the routes as so to speak and I don't want to do that so he said and then he actually had other offers like when we were negotiating he said he had this hedge fund from from New York interested and and he he also had a competing party at the same time with me that I later found out who it was and it it was true so there were other people in in the running um I I think you know we got a little lucky we gave him what he wanted we we presented you know certainty of clothes even though I didn't have anything at the time but you know I I was like yeah I can I can get this done and uh we had a good report right sometimes you also got to build a relationship this guy his grandfather founded this business he's been running it for 35 years so he's emotional about it and you know we spent a lot of time talking he also saw you know when we walked the the factory or or or or the laundry or the plant whatever you want to call it you know I was asking very thoughtful smart questions about operations so he's like okay this guy is's not not a joke he's he's remembering everything he's asking everything he he can run this place right so I think combination of those things gave him confidence you know this guy might actually be able to to pull it off okay thank you uh carry on please um so where where you're talking to Sig and you got to decide between Sig and and your previous investors sounds like you have decided you let them know guys I'm going to go with this group Sig I'll I'll I'll bring the deal back to you at the terms that that I me and Sig that we work out and then get you'll get another chance to to invest but they're going to be dramatically different terms yeah I'm going with Sig yeah so I I went with Sig and then immediately they introduced me to like they they partner with me right I have to sign a contract with them that if I do this deal they're going to get get a a an interest in in the deal um so you kind of choose that that path and go there right so we we have a meeting we we talk about where the deal is at they help me figure out when we can close this and how we're going to do it right so they partner with me to prepare like collateral and and the Sim and make introductions to all this SBA lenders that will that are are cash flow-based lenders and not asset lenders so we can get this larger deal done um with a little extra extra leverage they're like we're going to send an email with our marketing material to our network of you know 400 500 investors and then you're going to pitch all of them and they help me structure the deal right uh based on the projections that we think and the hurdle that we want to give our investors using conservative assumptions we think you can keep 70% of this business and raise you know 1.8 million million do um and get debt for the rest right so they were they were more aggressive on the they they thought I could get like 6.5 million in debt from the SBA plus some mes debt um so the raise would have to be lower and I could keep more more Equity right so and and Louise tell us what mesad is what what is that additional we all know $5 million for the SBA loan so you're saying now six and a half so a million and a half of this is quote unquote Mez debt what is Mees debt it's like a a secondary unsecured debt probably at a higher interest rate that is unsecured but people are willing to take the risk um and and it wasn't necessarily going to be mes de like the way s um told me is we know some SBA lenders that can get creative and they will take the risk on the incremental it's still the same bank but they get some exposure on the incremental 1 million 1.5 million through lines of credits Etc um so you know they just said there there's options to get to 6.5 like okay don't worry about the cap of the five million but but the five million was the is the cap on the traditional SBA and so are when you're hearing all of this are you pretty psyched that you know because one of Sig's Big Value props is that they're going to help you self-funded Searcher retain a really large piece of a really large business really large meaning large for a self-funded Searcher uh so in you're you know this is kind of all becoming clear to you or at least this this this this possibility are you how do you react I mean obviously it's better than the offer you had before are you psyched are you amazed are you like are you still just so kind of naive in this world you're like okay I guess this is another option and I'll just go this way I mean at this point my my thought process a deal isn't done until it's done I'm I'm like hesitant until there is ink on a contract it's not done right so y yeah I got SI I'm excited but you know at the same point I still got you know negotiations with the seller negotiations with Sig I gotta go get $6.5 million of debt you know I still got to go talk to 400 investors to raise the equity so at this point I I don't got anything right I I got all the right the right things you know coming about about but I still got nothing right so a long way to go I'm I'm focused on okay one step at a time like it it's very tough to get a deal done you know like you got all these things you got to figure out and I think that's one thing that the traditional search fund is is better at right like once you got a deal everything is lined up you just focus on closing the deal at this point I'm I I gotta focus on many things to actually get it done wait sorry why is it easier to get a deal done with traditional because you're capital is committed already basically yeah okay okay um and and you're okay great okay Carry On then Lis please so okay at this point all right I got it my deal under Loi uh everything is good now sik prepares their material and you know they send an email to 400 investors right and now it's like okay Luis you gotta raise $1.8 million from a pool of 400 people shouldn't be that hard so we send an email and you know like I've never been rejected so many times like out of 400 people you know maybe 200 pass like no not interested don't like the business too small I'm used to investing in traditional search funds but nice try so a lot of rejection right like I I I'm not used to to to that right like um but you know like 100 reply yeah and they they want to engage and uh they like the deal and um you know give me a meeting right so I got a 100 that that actually bit and and signed an NDA then you you start scheduling all these meetings back to back refining your pitch you got the presentation you're really selling right yeah um out of out of a hundred that I got a meeting 50 like okay we want to we want to go to the next level we want to see the presentation let's set up an hour and you know at this point we're fundraising for like the goal was to raise the 1.8 million in four weeks weeks at this point it's like a week and a half and I haven't raised anything so I'm starting to get nervous you know and and the sck guys this is where they were great it's like don't worry like it's always slow to begin once the first one comes in they all jump in so then I remember like maybe eight days into it uh a guy who did a self-funded search he committed a 100 100K on the spot after 15 minutes of talking I was so happy I'm like wow you know 100K only 1.7 to go and then after that it started going you know a little quicker but smaller Investments right like all these guys say oh I'll do 50k and you you do what is called like soft commits you know you get soft commitments like they give you your word but they haven't signed anything so you know by the end of two and a half weeks I had like 500k of soft commits and then I had L Lis after you got that first 100,000 a yes to the first 100,000 did you find that those that yeses started coming more easily even if they were soft yeses yeah yeah for sure you know like you can say you exaggerated a little bit yeah I got a lot of commitment but you at least have some commitments you can name drop a little bit everybody knows in the industry so at this point I'm like man the other deal looked a lot better I had raised the two million already right but now it's too late to you know the other guys were going to keep 80% I can't come back and say hey same deal but you get to keep 30% you know so I was keeping the old investors in my back pocket at some point um but I kept fundraising you know and then my lucky break was uh this this guy who was like the the CEO of a big big fund here in Miami he gave me a meeting I came to his office and he was like this is a little small for our fund but I might invest um you know at the personal level I'm like how how much would that be it's like I would probably do like 500k so I had 500k and this guy's saying I he might do 500k but he's like I'm going to need some time to think about it and so you know the weekend goes by and then Sunday he he sends me a text of a picture of my truck while he's driving back from you know vacation here in Miami he's like did you plant this truck because it's my trucks the trucks I'm trying to buy say size linen and he it's like right in front of him at a stoplight and he takes a picture sends it to me and and he's like did you plant this truck I'm like no that must be a a sign and he's like if you didn't plant it it's a sign and if you planted it I admire you for the for the the hustle I'm gonna do 500k right so so that really got the ball rolling right 1.5 and then you know the people who are a little slow to reply and give me the meeting after two three weeks we keep nudging them then they give me the meeting and it's like okay I've raised 1 million now we only got like a little left do you want to get in and then like a bunch of like 200k checks came in so we raised the the whole money after the the the four weeks pretty much right great so so it did all kind of play out the way Sig predicted that it would and and just a little bit Louise to more on all of this pitching so you really you just your calendar is full you just have 30 minute or 60 Minute calls back to back to back to back for weeks all day every day not all day right but like two three meetings every day and you know if following up with a lot of emails right like hey following up on this and you know like you you gotta keep that momentum going and at the same time I'm still negotiating the deal with the guy right because in parallel he's saying hey I'm kind of changing my mind we need to sell the real estate um and he's so he calls me 30 days I in the middle of this he's like I changed my mind and you got to take the real estate or there's no no deal I'm like I I can't do the real estate so he's like then there's no deal I'm like come on like I I showed you the debt I've ra I have the money here's the term sheets I've done all this work and now you pull it under me he's like well the other guy is offering to buy the the the deal the the real estate um so I'm gonna go with him unless you you take on the real estate so I thought he was bluffing I didn't think he had another offer and I say okay and then he affected sends me like a termination of the LOI like uh no no deal he sends me a letter and then um I call him up and we and I'm like you know this other party was like a competitor so I'm like he's gonna take your legacy and and your father's name of your company away and you know let me give me a date to see if I can pull off the real estate and so he's like okay I'll hold off in signing the LOI with the other guy I'll give you a day so then you know I went back to the drawing board and I talked to the sick guys and they're like yeah tell him we'll take the real estate we'll help you raise debt there's like other avenues Etc and see if you can get a seller note on the real estate because the seller didn't want to give a seller note on the business he so so I went back to him I said I'll take the real estate but you got to give me a big seller note on the real estate that is secured by the real estate and uh he he said I have already signed the other offer I haven't send it to my attorney I like you I'll go back to doing the deal with you if you take the real estate and I'll give you a big seller not on the real estate so at this point deal is back on money is raised and uh now I gotta go get the debt right because I at this point I only had like uh um preliminary term sheet from the SBA bank so okay we're in business now now we got we got we got the equity we're ready to go to the SBA and this this might also be a learning opportunity for the Searchers like what what what steps do you go in to get it done the SBA usually wants to see that you have the equity lined up before they give you a commitment letter right and you also have to have an Loi signed before you get Equity or a commitment letter and that's where you know you gotta be doing all these things and sequence and have that poker phase that all along you had it you had it um lined up and Lis one other question about this process so you talked about how your your pitch to investors is being refined with every time you do it and I'm sure it's very particular to your your pitch um but was there anything generalizable about how you improved your pitch to investors or learned how to better communicate this this opportunity um over that o o over those many many pitches I think a combination of of confidence and knowing the story and knowing the types of questions that investors are going to ask right so a lot of them ask similar questions after answering the same question 20 times it's like top of mind and some questions that at first I didn't have the answer to I would go back meet the seller ask the questions and along this process I'm also visiting the seller like once a week talking negotiating asking questions doing my diligence so I think you're just more knowledgeable about you know the business at this point right like how many under contract why was there so much growth this year why did margins compress so you just get more familiar with the with the story so that that helped a lot great um so at this point moving on to the debt we starting to talk to the SBA um we have like three term sheets and then you know we start getting commitment letters right but they're coming short of the of the 6.5 million you know like five million and we can do 500k and a 300K you know uh credit line at close and we want to see you close with more um debt with more cash on the balance sheet so then you start playing with with like numbers you know like okay maybe I can close with less capital on on the on the balance sheet and and the long story was we were coming up short right anyway you slice it I got to raise more Equity um or or I gotta give up more more debt right so at this point I'm like okay I'm short 700k of equity 500k of equity and you know we're getting creative saying okay instead of closing with 500k on the balance sheet let's close with 200 which is getting too close to comfort for me right I got 15 people I owe money to and I got to start paying and I got that and I'm going to close with 200k so you know we we decided to look for other lenders that would you know write a bigger debt check and we got introduced to a fund named Stonehenge Capital through some common contacts and and Sig had a a connection there as well and um you know I talked to them about the deal they really liked it and this was an impact fund they had like a $250 million debt impact fund this deal qualified because it was in an opportunity Zone in in in Florida and because I was a minority U Latino um you know they they they like the deal and they gave me a term sheet as well for the 6.5 million um SBA was at 5.5 and with less cash Etc but it was more expensive debt at the time right it was more more expensive interest rate and and certain things um the only good the no not the only good thing but some positives of this uh lender was that they could provide more capital for add-on Acquisitions they weren't limited by the five million and I didn't have to provide a personal guarantee I did have to provide a guarantee of all my assets pretty much uh but it wasn't like a unlimited personal guarantee so at this point you know I I gota make a decision now should I go with the traditional lender and and and the small investors or with the SBA but I gotta go and raise more more Equity right so even though the debt from the traditional lender is more expensive I don't have to raise the additional Equity so it ends up being about the same right um so you're calling Stonehenge a traditional lender but to be clear with everybody so they're they're a kind of a A lender they have this $250 million to deploy as Loan in loans in in an imp fund that meet these certain criteria which you meet your deal meets um but they're not a bank as it were totally out outside of SBA okay they're a private Equity lending fund they're larger than that fund I mentioned is just one of their funds so they're a little larger a lot um okay so at this point you know I I haven't made a decision I want to get a commitment letter from both uh and I'm negotiating with the SBA getting a little more and with the lender you know getting more favorable terms so at this Point s is like you better keep calling investors if you need the 500 extra 500k get some other investors to to to commit right so I start following up with some people that hadn't replied to my emails and one of one of these uh family offices replies uh yeah sorry we I read this deal I liked it but you know life got in the way and I never replied I'm ready to like listen to your pitch and and sik tells me yeah this is a very big family office like they they they would be a great partner they could potentially take your whole check so I go and meet with them I meet with with George who's maybe like the managing partner of the family office of of the capital provider and and we really kicked it off you know he he they they they are operators that have experience with like lean manufacturing because I was a general electric I learned a lot about lean manufacturing so we we we had a good presentation and and he really liked the the business that deal so at this point I'm like we're raising like 200k because we got most of the commitments and he's like let me let me get back to you and the next day you know we jump in a meeting and he's like uh we really like you we like the business we like Florida we want to take the whole check we want to take the whole investment I'm like wow that's that's that's pretty pretty cool what does that look like they're like we're not a traditional you know self-funded search investor we'd be looking for more Equity we want to be Partners we have an infrastructure we have like more team members we're backing four other strategies similar to yours and you know they basically put me in touch with the guys that they've already backed and it was definitely more expensive Equity um so you know at this point the clock is sticking and I got four ways I can do this deal right the small investors and the SBA the small investors and the traditional ston hedge fund the large investor and the SBA the large investor are Stonehenge right and I don't know what to do at this point right they all you know from not having anything now I have too many decisions and I don't know what what decision to make um and you know you start asking your mentors your friends and of course all of them have a different view a different opinion um and long story short in the end I decided to go with um the family office and Stonehenge for you know I saw an opportunity to take this company into a platform and then do more Acquisitions right based on my my experience I'm like okay there's something to be thought about starting with one buying more putting them together what am I going to need for that I'm going to need a partner with with more money um who's not scared of taking risks and I'm going to need a lender who can provide add-on Capital maybe I'm gonna have a smaller piece of a larger pie um and then to be honest uh then I had to go to all the individual investors this decision by the way I made it like a week before close uh because sik advised me you know like don't don't say no to the to anybody until you know what you're gonna do um so at this point you know I I make the decision to to go that route and I gotta go and and tell the individual investors at the end they believed in me and they were going to trust me with their Capital so it's tough conversations to go and like hey sorry but you know I'm going with somebody how do they react to that I mean everybody understood it at the end of the day you know they're all deal makers and and and stuff like that they some were definitely disappointed you know like can we get in on this secondary deal etc but the large investors was like no we we don't really need more more Partners right so let's be super clear with the audience I mean you've said it but um The Learning here or or the the what was the ultimate uh kind of what made the decision for you was you are thinking bigger about AC subsequent Acquisitions to this one that this becomes a platform and that you might do some kind of rollup or multiple acquisition strategy and so to do that that really favors sources of capital both A lender and Equity that can write you subsequent checks so so when if you're looking at you know raising a lot of money from a lot of little like little checks from smaller investors well when the time comes for acquisition number two or three you got go back to all of them and you know it's just going to be much harder to continue raising money for future deals so so so the learning here or the the thing for the audience is depend you know maybe don't just think about this first deal think about what you really want to do with the business that you buy and if you're thinking about that you might want to do multiple Acquisitions later then think about that strategy right now in in the capital partners that you choose um maybe you know you might prioritize the Deep pocketed ones as opposed to others so 100% And and there's no right answer because I I think I could be in the same spot had I gone with the small investors had I gone with the SBA I could have still ended up in the same spot right the the path might look a little different so there's no right answer I just felt this was a you know I I it was hard for me to think oh o owing like 100k to 15 people and having to repay that because that deal structure it was like preferred Equity with an interest and I felt like based on the condition of the business like I could see it needed a lot of not a lot but some investment in infrastructure maintenance and capex so the path with the the smaller investors was going to suck more cash out of the business not allow me to focus on investing and growing versus the path with the large invest or he's like we don't need to get paid back we want you to invest we'll put more money if you need it so with you know basically it I felt I would have a a a funner time in that situation yeah wait sorry so you weren't gonna have to pay preferred a preferred rate to the big investor no I I it's still a preferred investment but with no interest on it so I'm not incentivized to pay it as quickly as possible and right so just to be clear with the audience typically in self-funded deals like the kind of typical structure that you see with self-funded investors is they the money they give you is kind of this hybrid loan Equity so if they give you say $100 so one self-funded search investor gives you1 strikes you a $100,000 check you're you pay interest on that $100,000 uh you know it used to be kind of 8 to 12 now people talk about it being 10 to 14% as rates have gone up uh and you pay them you're paying the interest on that $100,000 until you pay all the $100,000 back and then they they then they also have a piece of equity in the business based on whatever you negotiated whatever that $100,000 should be worth um and so then they have then they they they keep you know piece of your business forever um but what that means is that you're paying you know this heavy interest that there there there's a lot of interest that's just going out the door every month uh because it's basically you know a debt instrument as well and so leaving you with less cash to invest in your business and you wanted to avoid that Y and this was and this was pretty unusual I guess well I don't know the whole universe of self-funded deals but this was a pretty unusual opportunity to be able to you know have this have this debt and not or in equity and not have to pay uh kind of really pretty heavy you know 8 10 12 14% um interest on it all right carry on please Luis this is fantastic so at this point we're we're getting close to to to the end of the the deal right like I I got the the lenders I got the investor I I made my decision I was able to structure the real estate acquisition uh with the seller note that the guy gave me and he reduced the asking price from 5 million to 3.8 so I basically raised the 8800k from from friends and family let's call it and it was like an arms length transaction right like I bought the the real estate separately cu the investors didn't want the real estate and the we just rented the the business to to to the real estate um so that's what ended up happening on on the real estate side and he gave me knocked down the price he knocked down the price that much yeah nice guy I mean was was the original $5 million price not really Market was that like well above market and why why was he so why Luis why was he so eager to get rid of the real estate when assuming you know $5 million for this piece of real estate was Market I I don't know commercial real estate very well at all I've really know nothing about commercial real estate but I assume if you have an asset a real estate asset that's priced at Market it shouldn't be that hard to find a buyer so why did he have to sell it to you yeah so I I think he was like a conservative gentleman and there are some risks in this type of business with environmental concerns right uh you know dry cleaners in the past use different like chemicals so he's like I don't know what you're GNA do with the property I don't know what you're gonna dump and in the end I'm GNA be responsible for that I don't want to keep their the real estate so I actually had to do a bunch of environmental tests cuz you know know I also don't want to be exposed to that so I had to do what is called a phase one environmental test a phase two and kind of cover all my my bases but that was basically his hesitation he's like I don't want to be a landlord I don't want to you know have to worry about what you're doing here so so he's like in order to get this done I'll lower the price I'll give you a huge seller note and and let's get it done right so he wanted to get the deal done and yeah I would say market for that property is is and was 5 million it's even a little higher now so you know we we got a good deal there and it's $3 million of seller note at 7% interest only for 5 years but his whole point is my debt is secured by the real estate if you want me to give you a seller note on the on the business um you know it's not secured so I so he gave me 100k seller note on the business cuz lenders still want to see a seller note on the business we actually flipped a coin on it he's like I'm like I need a a small seller note on the business this was when I was trying to bridge that 500k Gap because the SBA wouldn't give me more so I I'm like I need 500k seller node he's like I'll do 100K let's flip a coin if you win you got 100K I'm like okay 100K I'll I'll take it let's do it heads or tails he flips it out throws it and I actually get it and he's like okay congrats you got a 100K seller note and and he ended up did giving the seller not okay like said nice guy uh all right Louis okay so does that get the is that the end of the deal does that get us across the Finish Line yeah I mean we circling back uh I chose the family office Stonehenge and then we get to the closing which is way more on pivotal than I had imagined you know it's like uh you know you just get on a call and like the lawyers release signatures um the problem was we we go to his office on closing day everything is lined up at this point the guy's air conditioner is broken the day of closing so we're in his office the whole day sweating and you know getting with the lawyers and this and that finalizing everything the AC is not working it's 4M and like okay W wires are ready right and you know we we receive all the wires uh from from you know uh myself and and that but the main wire the main Investor's wire it's 4 P.M and the wire never came right and at this point like I'm getting nervous the the the the the family office like yeah we sent the money but today is like the final day of tax closing or something like that so Morgan Stanley had a delay and you know it should be there shortly so basically we go it's like okay it's 5:00 P p.m. money never came we're all worried at this point and we go home and like okay let's come back back tomorrow and evidently like 8:00 a.m. the next day the wire came and we had the closing the the following day so uh you know sweat it all the way to the last last minute the the deal literally and figuratively okay and then and then Lise one of the things that we had talked about in the preall is like what you would have done differently or reflecting back on your search how could you have done things better so share that with us please I wouldn't change much because obviously it all worked out I would say I underestimated how complex it would be to run this business uh the first one at least um and you know you don't see the whole picture when you're going there for one hour once a week you don't see how how complex it actually is and I think the seller not to his fault he'd been running for the last six months to optimize for profit right keeping the wheels on this thing charging as much as possible investing as least as possible taking as much money knowing that he's going to sell and then I acquir the business you know sometime in November when the busy season for this industry starts all the snowbirds from North are coming Miami is booming so I acquired this business you know with a lot of deferred gapex the busiest time of the year and one thing I didn't mention as one of the conditions of of this guy doing a deal was he would give me a 30-day transition period 30 days that's all I would get he said this pretty early on that you know he was GNA give me 30 days he was GNA be here from 4:30 a.m to 1M every day for 30 days and that was it so 4:30 a.m. is that when the day starts in the linen cleaning business the shift starts at 6:00 am but the crew starts coming in at 4:30 a.m. to turn on all the infrastructure like that's that's the point I'm I'm I'm making like there's a lot to run in this business you got boilers blowing steam across the whole building burning natural gas you got water systems you got huge industrial irons that need to be fired up you have a compressor that fires air throughout the the plant you got you know 10 washers 70 employees eight trucks 500 customers so it's it's a lot um you know and this guy was doing a lot you know he's running payroll every day depositing checks fixing machines fixing washers turning on the plant so you know that's that's when I'm like okay running a business especially this business is no walk in the in the park um so you know in hindsight I wouldn't have done anything differently but I do think I paid a little bit more because I ended up having to spend like maybe 500K on maintenance GIC that he should have done probably you know how could you have diligen that better I mean what do you do get a third party to come in and look at all the equipment and and and give you an expert an opinion on what needs to be I I had that done yeah I had I would say I did a very thorough diligence I had experience in my private Equity days doing thorough diligence you know so I I had a pretty thorough diligence I think it's just the reality of running a business is like he never he never not told me anything you know he was very upfront you know the plant is old stuff is old you got to fix it it breaks all the time so he never hit it that's just how he ran it right so I think there there wasn't much I could have done done differently to be honest just maybe be a little more prepared I certainly think if I had gone with the smaller investors I would have run out of money uh if I had closed with 200k of cash and having to pay and the their preferred return and and having to invest more than I expected I would have probably run out of money and so sorry to be clear the 500 Grand that you put in to the business uh came from where that you put into the business in these first months to for the the capex right did I hear that correctly yeah yeah it was it was uh you know the business is Cash positive after that service so I generated some but I also closed the deal with 500k on the balance sheet great and and so let's talk a little bit about more about this the the the operations and what you found um first of all to this question about the capex so you put in the 500 did that once you kind of so it was disappointing to see that there was actually there was actually going to be more capex than you thought but you do it and then do you feel like things from from that perspective the capex perspective kind of stabilize and you kind of like swallowed the bitter pill but it's behind you and now things are you're comfortable sort of thing absolutely but it wasn't like 500k right out of the gate you know it was like a bunch of little things you know like okay the belts on this iron hadn't been changed that's 15 grand the air compressor you know it's all it hasn't been maintained that's like 70 grand and it's not quick projects you know what I mean like these are Big Stuff you got to haul it out procure the new one so it's over a year I've invested in the infrastructure to create a better business so I'm a little less profitable in my first division because I've invested in people in machines and everything but I'm coming after one year into the same busy season in a much better spot right yeah there last year I just remember it was like problem after problem right like water flooding machines down trucks breaking and and to this guy that was normal that's how he ran it right like not spending but you know firefighting all day so you know that was my first three months was just root causing why is this problem happening how do we fix it at its core and get everything to a much better spot so our our our first company is now much more stable and ready to like grow by 20 30% and not be scared that you know the wheels are going to come off this thing at at any moment which it was what it felt like when I had just closed and so when you were dealing with that the operation you know you're basically firefighting you're picking up the firefighting that he was doing and now you're doing it do you think that you were really leveraging your operational experience there I mean was that a real was that real experience that you were bringing to the table or could anybody have any Searcher kind of come in and done the same root cause fixing no definitely my my experience working at G came very handly because at G I would rotate across R cross factories every 6 months working on the shop floor with machines people utilities so I I would tell you your average person who worked in finance or something like that would have had a tough time like I was you know troubleshooting machines you know hauling waste like it it was a lot of Hands-On stuff that you know it was hard and I think the way the seller ran the business he liked to do everything self he he fixed the machines himself I I took a different approach and empowered my employees to learn it I said you learn from Mark before he leaves in 30 days how to fix that machine because I don't want to be fixing machines and they learned they learned like everybody bloomed and I think it was just you know this old school mentality when uh this generation you know he felt like he needed to do everything and he didn't trust the the team too much I was a little different I'm like I I want my team to be empowered to do it because I I shouldn't be doing these things so but I also needed to learn how to do these things before I could Outsource them you know like you need to know how to do everybody's job so that you're never at the mercy of one single person and I did over the first three months I went on a truck I loaded washers I ran dryers I put napkins through I packaged them I visited customers I did payroll I received checks so at this point I can do anybody's job but I don't I shouldn't be doing anybody's job right yeah well that that's I love that uh Lu because because I think a lot of Searchers get in there and they learn as much as they can and they they with the idea that they're going to be the primary operator now you you clearly are the operator but you've just got this orientation to be working on rather than in uh as quickly as possible I mean you're very delegation delegation oriented um you know the so so you're you're got this learning curve you're learning as much as you can you're um you know fixing machines putting out fires what about the just psychologically how you doing so it's you've said it's hard work but what does it feel like first of all you've consummated a deal you you know you're living the dream right Louis I mean this is what you had been trying to do and now you're doing it how does it what's your emotional state like during this transition I would say stressed stressed like stressed working long hours I never woking up at 4:00 am in my life much less to like go to work right at this point I'm waking up at 400 am every day to show up at work at 4:30 a.m. and you know I kind of learned a lot about waking up early you know many people say it and but until you do it basically it's it's 9:00 am. in the morning and I've got like six hours worth of work in and I still got the whole day ahead of me so that was that was cool to learn you know waking up early before everybody before the sun comes and and you like waking up with the sun working with everybody it was a cool experience but it takes a toll I was working 4:00 a. to like 6:00 pm you you got adrenaline like kind of moving you forward and and learning um so I'm I'm tired I'm stressed I'm scared like you know because I got a lot of debt too that's another added pressure you know I got covenants and a lot of debt I gotta make debt payments I gotta maintain this company being profitable I got employees who you know I I don't know what what I don't know them for long right so I would say stressed and worried um is is a good word to describe it and uh at some point I'm like what did I do like I miss my job but you know you gota yeah some days Still Still Still I I this is 247 like I I don't you can't turn it off right like sprs all all the time customers all the time when when I had my job you know you clock in you clock out you still give it your all but at the end of the day it's it's not really your problem here you you got 10 10 people's livelihood on you you you owe a lot of people money you got 500 customers that are depending on your service you got all these machines you got your family that you need to prioritize so it it's hard I mean it's it's not it's not easy right um it's fulfilling it's worth it I wouldn't change it but it's it's not it's not it's not easy for sure well in those moments when you fantasize about just being back in your W2 what do you then kind of snap out of it uh how does that not how does that feeling not become bigger and bigger and bigger or does it maybe it does become bigger and bigger bigger but you just said you wouldn't change it for the world so so which is it I mean I not to sound shallow but then you just think about the end right if there is an end and then you think about the economic value that I've created and then you come back to reality right like I would have never been able to do this sure I have all these problems but even though the the reward of it is not real yet it's certainly well it's not in my pocket you know the value we have created and the reward economically that that I'm going to come out of it kind of snaps me back out of it you know like uh and that's not why I do it but that's what you know when I'm having these second thoughts it's like okay it's harder but there's going to be a reward someday there's already a reward because now you know like you're you're empowered right like you're you're you have all these people depending on you you don't have to ask anybody for permission pretty much you're the decision maker and that's one thing I don't miss about my prior jobs is you were never the decision maker you always had to ask permission you always think you you know more than your manager and you would do things differently but you can't you can't make those decisions yourself you got to play politics here you know The Ledger is all that tells the truth you know like your scorecard is your your p&l your Revenue growth your customer staying there's no there's no s in your way here you know when when you're at work you know you do your work you do you succeed but at the end of the day you still get your paycheck you do good or you do bad you're you're gonna get a paycheck how much management experience did you have working for in your career before this I would say quite a decent amount because at at at G I would be in charge of like production team on the shop floor I had a couple of Associates working for me um you know so a bit I was never like the the boss of 100 people but I did learn you know how to be a a a a good leader how to motivate people how to treat people and I think that's very important right like knowing how to deal with people because at the end you know they I'm just one guy they're the ones who run the business and and you know you got to take care of them and it's it's competing priorities well how is it different being a boss of a 100 people and also in kind of a blueco collar environment versus you know a smaller handful of people I guess I guess maybe in in you also had teams on the production floor as you said that you were in charge of but also that you were a manager of Associates so kind of White Collar types anyway this experience of of of running 100 people managing 100 people being the boss of and and the source of a paycheck for a 100 people uh talk talk to us a little bit about the what that's what that's like and how it's different than what you're used to I think you know you you gotta find yourself as a leader like what kind of person are you going to be and what kind of tone are you going to set um and and there's no right answer right like the question I asked myself at the beginning is do I want to be fear or do I want to be loved by my Workforce right do you want to be you know this this hard ass like work and you know pushing people or do you want everybody to just admire you and love you and work because you know they love you right and I wasn't sure you know I wasn't sure what what what angle I want to take because I had I had seen both during my experiences and and I asked a mentor of mine and and he said said uh you want to be respected you don't want to be feared you don't want to be loved you want to be respected you want to treat people with respect and you gotta be tough when you gotta be tough and you gotta be empathetic when you have to be empathetic and it's it's a constant balance because running a business you have so many competing priorities right your customers what do they want they want lower price better service your vendors what do they want they want the higher price and to squeeze you and your employees they want more salary and what are you ultimately trying to do run a more profitable business right so you you constantly have to be saying no and know how to say no right you want to raise you know I would love to give all these employees raise uh because they're working hard they're doing all the work but at the end if I do that I can't pay my debt and we'll all be out of a job same with the customers I'd love to lower the price but I gotta increase my wages for my employees and so you know I've learned a lot how to say no but still you know find a solution to to problems right find a common ground um but I think that's that's one of the the the things I I struggle with with all these employees is you know of course I want to to to give them more money but I can't uh but if the business does well probably more money will come and it's kind of like the Chicken and the Egg problem right uh so you know I think I've I've learned to to balance it and you know one mistake I made is I gave everybody a raise too early on I gave like within two three months of starting I gave everybody like an 8 to 10% rise I I did my calculations and you know because these are folks that are making you know low low wages right it's it's the lower end of of you know of of the the wage Spectrum so I did some some quick math I said I can I can probably stomach a w a wage increase especially to the people who make lower money pass on customer increases but I underestimated you know when you increase wages say your workers comp increases your payroll tax increases when there's overtime it's exponential because you're paying time and a half double time so I was a little too early to to increase wages um and and I got a lot of pressure on the financials and I couldn't pass along as many price increases to the customers as I thought I could um but in hindsight you know I I I think it was the right thing to do um but maybe it was a little too early right because now everybody's expecting a a wage increase again and and this year I probably won't be able to do it so so it was it was early for the reason that you just explained but it also sounds like you under calculated a little bit yeah you did yeah okay you didn't see that if you you know there's all these other costs tied that are that are proportional and tied to the wages of your employees you increase the wages and and it second order effects is that it increases these other costs as well like taxes like over I would say you know when you jump in you think you're going to be able to accomplish more than you actually can right so I'm like oh I'm gonna optimize routes I'm gonna implement this system I'm gonna negotiate all these things and I'm gonna you know get so much more profitable I would say I overestimated how much you know I thought I could do and in reality just running the business was like hard right let alone you know optimizing it for for profit in the first year so I would say you know it it's common when you buy a business don't expect you know some are really great and they grow Revenue by 30% and EB and it's really quick but I will tell you that you know it's more realistic when you buy a business the first year to expect and don't be scared of some some margin erosion some small Revenue decrease reason I would say if if you're going to be highly levered to take that into account don't just think you know year one I'm going to be up 5% and my ebit is going to increase because if I go back to my models that that's that's what they said and it's it's not a reality right you you got to take a dip before you can go up when you're buying these small businesses right right the J curve well the thing is is I I you know if if we were just talking about size linen the name the name of their business we we haven't said that very clearly size Cy apostrophe s linen um that would be true but the thing is you bought a second deal now we're not going to have another hour to tell that whole story you're going to have to compress it into about five or 10 minutes here uh but but but we got to hear this Louise because it's an incredible you know second deal to have done within the first 12 months of of the business and it really changes the trajectory of of your business now I mean with this platform if you kind of consider these both as the platform you've got quite a platform now so so let's hear the abbreviated version of the second deal so basically three months into it um the the seller of the first business gives me a call he'd been visiting from time to time he says you know you're doing a great job I think you're ready I got another deal for you because I struck a deal with him if you bring me any add-on deals you know I'll give you some some sort of like finders fee so he brings me this deal he's like it's a a commercial laundry down in Key West it's a buddy of mine you interested um I'll set up a meeting so I met met with the gentleman he came to Miami again we we built good report we told him what we had done we basically said we can we can get this deal done it was uh three million in iida uh so it was quite big right it would more than double Us in size and of course you know we we excited to to explore it uh but some questions you know I'm barely just getting to learn how to turn the lights on in this first one at this point I'm a little more confident right like okay we after three months no no no nothing has gone terribly wrong we're still here why not right so met with the gentleman um we agreed pretty quickly on on a price for both his real estate and his business then I went to Stonehenge um you know hey you said he would double down and you had deeper Pockets here's an opportunity they were hesitant uh uh they were hesitant because they're like are you sure you're ready for it I mean you're you're just getting into it this is a big deal and you know this is where where you kind of have to play a little tough and it's either with you guys or we're going to refinance you and do it with somebody else Dallas is all over it because they this is what they want to do this is the family office that that is uh backing us so we decide to go down this route and and go into diligence this is December 25th we're starting diligence so um um I flew with my family to Switzerland skied one day down the mountain spent Christmas with my family and jumped on the plane on the 26th to keep running this business and um you know didn't uh spend New Years with them so you got to make sacrifices right so we engaged in in um diligence this was a much newer business he had just made a big capital investment in re um investing in machines so new new machines the End Market was hotels so now we had restaurants and hotels with this operation and a lot of of synergies so we got into the deal um long story short March middle of March we closed on the second acquisition um and we were able to leverage the value of the real estate to do a sale leaseback transaction and minimize the the cost of the business itself because we we agreed on a certain amount for business in real estate and then you know we we we used the real estate to to maximize um the value that we we we sold the real estate in the in the sale Leb transaction and um wait wait wait so you agreed with the seller to have a blanket sum a blanket sum and and the the goal was to increase the ratio that the real estate represented under that blanket sum and and reduce the business price correct by by being able to afford a higher rent in the real estate because it's a very high margin business you know we go we say okay this business could afford call it 350k rent right right now he owns the building in in the real estate so it's it's it's free but if I go to an investor and sell this real estate with a 350k lease that implies a value at a you know a 7% cap rate of $5 million right so we think we can go and sell this real estate simultaneously at close for $5 million reducing the price of the business by a by a great amount and that allowed us to be able to fund the entire transaction of the business with debt and a little Equity right so we we basically didn't have to put much Equity of our own or our investors to to get it done so fast forward at at close you know our first business was doing a little better than than we thought even with all the cost pressures we were doing about two 2.2 million in ibida and this business at the time of close was doing like three 3.3 million in IA so you know very quickly after six months we were you know five and a half million in in iida so a scalable operation at at at this point and uh you know my focus right after close was on integrating both businesses as much as possible to the extent that we can do it because it's two separate factories but for example I merged all the financial systems all into one I merged all the payrolls into one all the invoicing basically all the back off as I took away from from the keys operation and brought down to Miami to let this business focus on on operating and you know build out my my back office team in in Miami and then now we're getting to the point where we gota um re refocus on growth finding more customers and um we always actively looking for add-on deals we have you know a a pretty healthy pipeline like five other Acquisitions in the pipeline anywhere from 200k in eida to 8 million in eida um so you know to do a large one like 8 million maybe is a a little little bit of a stretch but you know um we we just see what what makes sense at this point and uh well your first deal was a stretch your second deal was a stretch so you you you're you're two for two on on on doing deals that were a stretch um and so just to return to the number so people are to totally clear your first business the one we spent the most time on outside Miami was 1.5 million IA it has since grown to 2.2 the other business when you when you first when your first seller brought you the deal the Key West deal it was doing about 3 million in IA it's now at 3.3 so 2.2 + 3.3 equals 5.5 so in about 13 or 14 months you went from an aspiring Searcher to a guy who has a business generating.5 million in IA obviously you have uh you have a debt and Equity so it's not 100% yours and you know there there are a lot of things in your shoulders but this is a substantial business and and then you got this pipeline of of uh opportunities to to continue building this I mean you could get this to I mean I don't know I mean if you buy an 8 million EA business so you'd be at $ 13.5 million of EA if you did that deal which I recognize as a stretch I mean what are multiples in this space I mean if you got to 13.5 Million Ne what would the multiple on that be don't be shy probably around 10 10 times on like 10 10 times because you got to remember it's recurring Revenue it's almost like a subscription model right at 13 times there's a lot of comps between 10 and and 15 times in this space uh some in the healthcare which commands a little higher multiple but yeah that's that's the angle we're playing right the bigger you get the higher multiple you command and this is a a a 100% contracted highly recurring Revenue business so the the multiples are are are quite attractive when you get to scale right so that's that's the idea here is that five six times multiples aren't 10 times for sure but but higher than you know two three four times which is the multiple you could get for anything between 200k and a million million and a half in iida so you start creating some multiple Arbitrage um when when you acquire these smaller targets I think the the problem is this this is a tough business to run right it's not you know you just scoop up a couple of plants right they're they're all they're all a business in itself um so really the angle that we're looking at is acquiring routes from smaller plants like we don't want your your plant but we'll buy your route and put it in my plant uh and then there's a lot of organic organic growth um and right now we're only in South Florida we've been you know looking at deals outside of South Florida um but you know we we got to take it one step at a time right there's days where I'm confident there's days where you know uh I have so many issues I don't even want to hear about this business and want to sell it tomorrow right so it's I think it's just taking one step at a time not losing uh vision of where you want to go and the big picture but not living in a dream of what it could be you know like I I gotta protect what we've built here think about the future but not get too ahead of myself thinking you know I can I can do all these things in order for us to continue to scale I think I have to hire more more people I've been a little shy about you know really investing in in middle management cuz right now I've been kind of like I bought this I want to maintain these margins and this profit and you got to invest a little bit more in in your upper middle talent to be able to to go all out so I think that's the natural next step for us is to kind of hire hire some more more folks that can you know help me keep running this business it's interesting to hear you struggle with that decision Lis because when you were doing your deal you were able to recognize that it was in that it was in your interest to give up a little bit of equity in other words more expensive it was more expensive to you to do the deal with with the partners that would longterm you know it would be worth it um but it seems like when it comes now that you're in the business as operator you're struggling with separating yourself uh from the some of that profit to to again make a longer term investment in people um and just to be clear for your plan as I you know you just said one step at a time don't get too far ahead of yourself but the idea here is kind of roll up at this point where you would think you know after you got scale you don't know when exactly but let's say you get scale let's get say you get to ebat a certain Le level you've got a management layer then sell or then or hold forever or what you don't know I mean yeah that's the the question of the million dollars I I I don't know right like the the core investment thesis is you know fiveyear hold right let's do this for five years see how far we can get it and then exit that's that's the the dream so so to speak right like and then you know do it again or or become an investor um or you know take some time off I don't know but I I don't discard you know if we built a great business why not keep it forever right once you know if you can build a business that constantly produces why why not keep it forever um and then there's also if somebody comes tomorrow and offers me like a great offer you know we've created a lot of value real quick why not sell it real quick and then go go do something similar in a different space right so I don't like to to limit myself to to One path I think the the main path or our initial thought was you know let's do this for for five years um and you know we'll we'll look at what we need to look at as it as opportunities present themselves I'll say it's it's harder than I thought uh to to do it like to do a deal was harder than I thought to raise the Capital was harder than I thought to run a business was harder than I thought so I I think you know the message is not nothing and in life is easy right uh anything worthwhile is g to be hard and and you're going to have to to do a lot of sacrifices right so I would say like I wouldn't have been able to do this without my family my my brothers my sister my parents my wife like they all instilled the confidence in me I needed to get to this point right like they were always you Can Do It Go like what's the worst that could happen so everything I do is kind of to to try and make them proud one day and say this is this is what I did um and then I think the path has been a lot easier also with the partners that I ended up choosing right like Stonehedge has ended up being a great lender a great partner and Talis has been a great partner as well you know I've had a lot of offsites with them and their offices in New York I've visited all the other Searchers that that they've backed and um they've even come down to my business multiple times to help me with with some projects um so I think you know it it's all turned out great um and you know now we just we just got to keep going well when I hear you talk about how hard all these things are so much harder than you thought um you know it's hard for me to square that with the incredible progress that you've made so yes hard but still very fast you know I know I've said this now probably twice I'll say it a third time $5.5 million ebit do business in about 14 months of hard work that's uh I take that I take that 14 months of you know anybody can suffer for 14 months if that if that's what's at the end of that that particular rainbow and you're only getting started I mean you got you got all this pipeline now of other deals you can do let's close out I want to um just ask you a personal question you touched on your family your extended family but let's just hear a little bit about you you said at the beginning you got two kids and a wife you said you had to cut your your um Christmas trip to Switzerland short um I know from the preall that you were back and forth from to back and forth to Key West from Miami in the early days of the second acquisition uh what can you say about how this has affected or not your family life I mean I I would say I've had to sacrifice many many moments that I I wish I could be therefore you know um I wouldn't say like I'm missing out on life you know but um you know that that example when I I had to fly back for for you know New Years you know because all my employees are working our our busiest time is New Year's so you know what what kind of leader would you be if like all your workers are working and you're off you know in a hot tub skiing right so one I felt like you know after three months of buying this business I need to to show you know my team that that I'm there in the trenches even when when you know I wish I wasn't um and I had this deal uh that it was like you know we got to close it so I gotta focus on diligence Etc so yeah I I mean that that's the sacrifices you have to make today I'm I'm in in the keys right um come you know two days every week to to to check the plant out here that's time I don't spend with with my wife and my kids uh but I try to make up for it in the moments that we are together being present you know like doing fun stuff when we take a vacation being being there 100% and uh having them be a part of the process right i' I brought my daughters to to the plant and you know they they don't really understand but you know you want to make 25 cents fold those napkins there put them on the chair literally that's what I did with my older daughter and she's like I want to fold more I want to fold more so um yeah it's it's tough but I I I think you know it's part of of the process right uh my dad always said like life you have to do it like an ex right it's a balance you have friends you have family you have work and you have sports there are certain periods in in your life that you're going to be more towards friends more towards Sports more towards family and more towards work I would say right now my shift is a little more towards work but hopefully you know after a couple of years I'll be able to go more towards um fames so yeah it's it's what it is but Louise sports that's that's one of the quadrants exercise exercise you know exercise being healthy exercise Health yeah not not sports but exercis I I was like watching football or something I was that's also important but no I would say staying active and taking care of your health is very important right sometimes you're like busy but going for a run going to the gym you'd be surprised like that's just as important as putting in the hours because it gives you like mental Clarity like I'm not a gym jockey you know but um you gotta try to stay active I would say is important and I don't do it as much as I I should but you know it's one thing you you got to think about this isn't that season you you'll return to it when it becomes That season again exactly Louis what is there anything that I didn't ask you that we didn't touch on that you wanted to no I mean I think we had a a pretty holistic conversation I um you know I I think I'm I'm lucky to get to this point and uh you know I I don't want people to think this is easy or this is the norm like you gotta work really hard you gotta be a little lucky but it's it's a lot of persistence I remember when I was in my search you know I you almost think you can't do it and and you just you got to keep keep going right it's it's it's not easy and and uh you know I want to encourage everybody to try it because it's a big opportunity and just how I got lucky if if people take that leap I think many people can get lucky and I think we're in a phase where it's an interesting period where there's a lot of baby boomers transitioning out um and you know there's not a lot of uh Young Generation who want to enter the the linen business right so there's a lot of these um you know old robust industries that need to stay and there's an opportunity for you know young young aspiring operators to to take a leap and and take a chance but it's not easy right like sometimes I miss my job how can people reach out to you how do you prefer they reach out to you Louis if if they want to ask you a question yeah they can shoot me a message on LinkedIn happy to you know exchange contact information and and and chat from there um afterwards Lis agilar what a uh I I I'm hearing you that this is really hard so um so I'm not diminishing that but it's still eye popping uh what you what you've been able to accomplish in 14 14 months so uh I want to congratulate you for that and this will really excite people um so thank you very much for coming and sharing and being transparent thank you will thanks for having me it's been great I hope you enjoyed that interview make sure you subscribe to the acquiring minds Channel below we are now publishing twice a week so tons of new interviews and stories to come stories that will help you along your own path to acquiring a business