Ryan Sullivan welcome to acquiring mins thanks thanks for having me well Ryan you are buying manufacturing businesses here in the US you are working with investors to do so but you haven't raised a fund so this is deal by deal correct you're leveraging SBA Loans and personal guarantees and operating Partners to assemble this portfolio so there's a lot to your model and we're going to get in the weeds but first we're going to hear your story how you got here and the story of a couple of those Acquisitions sure so start us off please with some background on you Ryan yeah sure so I guess I was I tell everybody I was born an engineer went to school for engineering spent my whole career in uh manufacturing businesses lots of different Industries uh nuclear power plants for the Navy telecoms Building Products Industrial Products but the common theme for my whole career was basically manufacturing businesses got into to uh buying businesses when I took a role running a portfolio company that started out as a as a public company had about five companies in it uh I was there for about four years and we did great we acquired six small us-based manufacturing businesses divested one that the company had held for a long time was very successful there and then decided to kind of spin out of there and keep the strategy going but this time kind of do it for myself and uh my my friends and uh my network instead of uh doing it for somebody else so we formed North Park group in December of 2021 and since then we've uh acquired four businesses and we should close on our fifth here uh the first week of August so so far so good over the last uh two plus years beautiful Ryan thanks a couple follow-ups so you were working for a larger business that you helped take private and that business was something of a holding company or it just did acquis is a holding company yeah it was it was it was a holding company uh majority owned by a family they had owned it for 60 70 years and hadn't done much with the portfolio um brought me in to kind of bring the portfolio back to life and um that's kind of what kicked off the acquisition strategy at that point so up until that point they hadn't really bought many businesses and just give us a sense of the size of of that either the portfolio and and also the Acquisitions that you did you called them small but maybe small for them is different than small for us so give us a sense of of scale here yeah it was about uh 150 million in Revenue uh when I joined uh and the Acquisitions were very similar to the ones I was doing now typically between 500,000 2 million of IA so kind of lower lower Middle Market so very similar strategy uh when I joined the portfolio it was not in the best Financial Health so we had to go find Acquisitions that we could uh put cash into and get kind of an immediate return so we weren't in a position where we could pay high multiples or uh wait four to five years to get a good return on our cash we were the portfolio was in a position where it needed to get a good cash return right away so that's kind of what led me to the strategy of buying you know I don't know what the right term is lower lower Middle Market uh businesses you know 500,000 2 million of IA you can typically buy those pretty well but a lot of them are kind of too large for a lot of solo operators to buy um so that strategy worked very well for that holding company and that's kind of the strategy we deploy now inside of North Park Group Well listeners who are many of them solo Searchers and business buyers are going to disagree with your comment that those are those are too big too big for an individual to buy um also your characterization of needing to you know make investments by businesses that generated a return quickly well that's you know that's the Criterion we all have we'd all like to invest our capital and and start seeing start seeing it throw off cash as quickly as possible so um you you'll have to tell us what you learned and how you found those and how you found them now for yourself perfect um okay great and then talk a little bit about the personal emotional intellectual decision to do this for yourself was it just yeah tell us tell us what you can there uh I I Gotta Give the credit to one of our partners Greg toppel uh he's the one that kind of talked me into it I mean I had I had enough uh net worth that I thought I could go out and buy kind of one to two good siiz companies right so I was looking to put two to3 million do to work in acquiring companies as far as an equity position so that plus plus debt I I figured I could buy you know a good siiz company uh I'm a big believer in diversification so I'd rather buy you know six to 10 companies and be Diversified in my private company portfolio instead of putting all my funds into into one business and Greg was really the one that kind of convinced me that we could go out and actually bring in uh partners and investors so that our Capital then could could go further uh and acquiring more businesses so Greg's really the one that that convinced me to do that and to kind of hang our own shingle and do the own strategy it is uh very different I spent my whole career in Corporate America you get a paycheck every two weeks and maybe get an annual bonus maybe you have stock options you know but um it's very different when you go out on your own you hang your own shingle and uh even with outside investors most of those investors are people from my personal Network people I know you know friends family college buddies uh people from my professional network uh so uh taking that investor money is a lot more personal than say investors in a public company uh you know you're going to see these people at Thanksgiving and Christmas and every time you go home so uh you probably lose a lot more sleep uh when you take uh private money than when you take public money sure true especially yeah when it's friends and family of course Ryan what will become clear to the listeners and I already know about you is interesting you're you're you know you're a good example of how entrepreneurs have the reputation for being you know swashbuckling risk-takers but but in fact good entrepreneurs are often risk mitigators and so here you are doing this entrepreneurial thing but you're actually doing it quite conservatively and we're going to as I said we'll get into the model and how how you you know your debt ratios Etc how you're doing this conservatively and you're really attentive to risk and and mitigating it um so while you're doing something entrepreneurial and maybe you have some sleepless nights you're also very very tuned attuned to um to managing risk very very risk averse yeah most people that would know me and know my personality I'm an engineer right so you do a lot of calculations you do a lot of math but we take a very conservative approach but a conservative approach that gives us also very good returns especially for the risk profile that we play in yeah exactly uh well that's what you want right low risk and nice returns yep and also Ryan I mean just you should just take a little bit of credit too um in terms of how your own risk appetite you did choose to do this whereas most people at this stage in their career would not have stepped out at all so you're maybe you're maybe not as risk averse as you as you tell yourself by the way I heard the number two to three million of your own balance sheet wealth that you were prepared to go out buy and buy a company with so giv that you're risk averse I assume that wasn't your entire net worth so your net worth is just and this is always important for context as people hear these stories and imagine themselves in the shoes of the or trying to do what the guest has done your net worth was pretty good at this point probably significantly above two or three million when you started doing this yeah I was not putting to work 90% of my net worth I was putting together putting to work a good chunk of it um but obviously again I'm a little risk risk averse so I would not want to put 90% of it to work uh especially not in uh what to me was a new strategy even though we'd been doing it for for five or six years uh you know at this point I've participated in acquiring over 20 companies just under different investment portfolios so it's we have a good track record um but yeah I was still only putting to work you know less than 50% of my net worth and just to repeat and get clear on what you said your initial thought was was that you would go out as essentially a sole individual business buyer and buy a single maybe two businesses um with two or three million bucks that would get you a eight or10 million business um but this partner of yours who's now in the group with you say his name again please yeah Greg toppel Greg said to you let's let's uh let's accelerate this or compa or amplify this with other people's money and do a diversified strategy so less risk bigger numbers also sounds good thank you Greg it it does sound good thank you Greg and and GRE Greg had fundraised before I mean the the hard part about getting investors is understanding the structure and really just having the the faith that you can someone's willing to give you money for for your what you believe in and your approach to something um you know I I suffer from impostor syndrome and a ton of self-doubt and self-loathing like like most people I think in life and uh so the idea that investors and people in my network were going to give me money because they believed in me was just something I could not wrap my head around uh even with you know a very good career and a very good track record and you know at this point we've put to work I think uh about 14 million in equity across the four businesses so we've taken you know a good bit of investor money uh combined combined with uh the money from you North Park group Partners so it's it's a significant amount of funds at this point and it still kind of makes me shake my head that uh uh people have believed in us that much what did Greg say to convince you that this this isn't weird people do this people raise money yeah he had actually raised money for a startup uh which you know again as as an engineer and a very conservative person the idea of investing money in a in a in a company that doesn't have a product yet and doesn't have a revenue Source yet like you know I know I understand people do it all the time and I have a lot of friends that do VC work all the time um I I understand the model it's just something I would never never do and he raised you know five to 10 million for a startup and I was like well if if you could raise money for a startup we could probably raise money for a good business that's been around for 80 years and has always made money right I mean if people are willing to put money into something that doesn't even exist yet they should be willing to invest in a company that's made it 80 years and through up all the ups and downs and always generated money and it it seemed very logical and it and and it worked out our first one had about a you know 1.8 million of equity in the deal um and uh we raised it in you know about 30 days well not only are the targets uh do the targets feel more sound than just investing into a concept Silicon Valley style also the sponsor namely you as a guy with a track record and doing exactly this so you could point to uh point to a track record yeah I mean we buy businesses that you know we're all operators and I think that's you know when you look at private Equity Funds or you look at a lot of the larger players and private Equity I mean we are business operators everyone inside of North Park group has spent their whole career in manufacturing businesses uh you know doing do doing real work um and and so you know I think that gives us a lot of credibility and that gives us our track record but we also stay in our lane we buy companies that are very similar to the ones that we've all participated in for the last 20 or 30 years which I guess means I'm I'm dating myself but um you know they they all end up looking feeling and and tasting very very similar um even though they're making very different products for very different Industries and very different customers I never buy a business where I don't feel like I could run every machine and make the parts if I had to and so again that's part of me being kind of risk averse I often joke and say at this point I'm too old to learn new things so I just stick at what I apparently am good at well that that has Echoes of Vista the private Equity Group had the famous line software businesses all taste like chicken right so they they may be doing different things but fundamentally uh have the same characteristics you said basically the same about manufacturing and you also said 20 30 years Ryan so tell people how old you were when you started on this path on on the path to do your own step out on your own oh yeah well we formed it in December of uh 2021 so a little over two years ago uh I'm 50 now I turned 51 in uh in August so I was probably 48 49 so take us back to the story then you decide to do this you have a conversation with Greg about that causes your strategy to shift a little bit you're going to raise money and uh and and buy a portfolio of businesses over time as opposed to buying a single business getting there in there as owner operator yep carry on what's it look like as you as you actually set about to do so yeah I mean I guess we were we were lucky Greg had actually been uh working as our buy side broker when I was at my previous portfolio so we understood how to go look for companies and find companies and negotiate deals I mean at that point we had done you know 10 deals say um so we weren't starting from a blank piece of paper um we got our first one under Loi pretty quick which was electron based in witto Kansas we closed that one on May 1st of 2022 so it really only took us five or six months to get the first one closed uh after we actually formed North Park group great called electron yeah electron they make terminal blocks terminal boards so electrical components that are going into HVAC and appliances things like that okay well tell us more tell us tell us why you liked electron numbers about electron age Etc yep uh let's get into the story of this this first acquisition yeah and and all of them end up kind of looking and feeling the the same um you know electron's a great company been around for basically 100 years uh making different products over those hundred years was uh owned by uh two sellers who had previously been employees who had bought it out from the previous owner which again was Private uh had reached a retirement age um didn't have family in the business were looking to transition their business but wanted to do it in a way that was good for employees uh maintain the Legacy uh they wanted to sell to somebody who was going to keep the business there not roll it up into a larger Corporation or a larger strategic entity uh they didn't really want to sell it to somebody who is going to turn around and try to sell it again in 5 years right so that kind of rules out private Equity it rules out uh selling to strategics uh and that's that's where we play We like us-based manufacturing we like you know small to midsize companies we like the hundred-year Legacy uh and so we got they had a sside broker we got introduced um you know went through the work and eventually got it under Loi uh we typically buy the business and the real estate um we tend to view the real estate as a good investment if you're going to own a business for 20 years you might as well own the real estate as well but also it's a big um it's an emotional thing I think in buying the real estate when you tell employees that you've bought the real estate employees know that you're there to stay they know you're not going to move the business they know that you're really planning on owning owning the business for a long time it also helps the sellers the sellers then get a full liquidity event they didn't really want to be you know they're going into retirement they didn't really want be landlords for the next 15 years and try to have to figure out what to do with the property in 15 years so they liked a full clean exit uh and at this point we've bought buildings for all four of the businesses that we have uh in the portfolio so um great business you know I was in witw Kansas so Greg and I traveled a lot Greg spent almost a year uh down at witto Kansas flying back and forth to Chicago we uh rented a nice little two-bedroom apartment uh we had to two mattresses on the ground no real Furniture in the apartments some folding tables to to eat at it was very much kind of bootstrap I mean these are small businesses it was maybe 500,000 in ibita when we bought it um you know you can't spend a lot of money flying down and staying in hotels with a $500,000 Ebu business so we we bootstrapped it um and it was you know it was it was a good solid business it always made money and it live through all the down turns you know 911 housing market crash covid it it survived all of those and we jokingly tell everybody our strategy and year one is just don't mess it up you're taking over what has historically been a good business it's a profitable cash generating business it's been around for 100 years we're not the smartest people in the room don't don't get itchy and mess it up in year one just go in and learn learn from the people that have been running the business for 20 or 30 years um learn the industry learn the manufacturing and then you can start to make changes and um that model is basically what we play out kind of over and over and electron's been very successful it's probably 700,000 in ebat now with a full new management team in place um you know that's a lot more capable than probably the historical resources inside the business um it's growing it's improved its margins it's improved its manufacturing efficiency and you know if you envision a a business that maybe has been underloved for 20 years you know we go in and we're painting walls and painting machines and stripping machines down and rebuilding them and trying to take a business that maybe looks like it's in year 2000 and bring it up to 2020 at least with sure elbow grease and love and care um you know that we bought never leak in Mississippi and um the weekend after we bought it you know we went in and uh you know scrubbed all the bathrooms that honestly looked like they hadn't been cleaned in a while and uh our wives painted the break rooms and painted painted the restrooms and painted the entryway and when employees walked in on you know the Monday after we bought the business they were like you know whoa this this place looks better you know and um and we do that because we love that Ryan let me let me stop you I mean I want to get into that but I have a bunch of follow-up questions just to your electron deal who was the founding Partners five of you or you and Greg no Greg and I the founding Partners Greg ran electron uh I ran Phoenix the second one that we bought in August of 2022 at this point we've hired somebody to run the electron business and he's now a partner uh inside of North Park group and then as we acquire businesses we tend to bring in Partners you it's kind of your typical operating partner model it's you know somebody who's looking to acquire a business maybe take a personal guarantee uh is looking to run a manufacturing business and we partner with them because obviously as we scale I can't and Greg can't day-to-day run four or five businesses we need more Partners to to do it but and I want to get I want to spend some time on that model Ryan so so can we just put a pin in in the operating partner because that's going to be very interesting to people um I just want to make sure we leave some of that kind of the technical workings of the uh of what you're doing to the end or to the second half just to point about real estate uh that also of course gives you better amortization schedules generally so it makes the loans less less heavy yeah we've typically done 504 loans so 7A on the business and 504 we haven't Blended them and so on the real estate we're doing 25 year amortization I know some people have Blended them we just haven't done that yet with our banking Partners so we typically have a 10-year uh 7A line on the business and a uh 504 for the real estate okay and any reason that you haven't Blended them uh no just free cash flows where we thought we could get the interest rates better o over the long term and since we're going to own the business for 20 years I like the idea of uh always having debt or leverage on the business for a longer term so if we Blended them and pulled that in in theory it would just uh speed up the time at which we'd have to kind of recap or put a new debt structure in place to maintain some sort of Leverage in the business okay all right well just to be clear what I said about to the a just now for the audience if you don't blend the real estate and business acquisition together then the EM they're two separate loans as you said a 504 and a 7A and so it actually doesn't help your business loan payments so scratch that if you're not doing a blending approach the preferred so you're a kind of a preferred seller or you were a pref excuse me a preferred buyer from the sellers perspective the sellers at electron and you said a lot of things that are going to be familiar to listeners that they didn't want to sell to a strategic they didn't want to sell to a larger Corporation they didn't want to sell to traditional private Equity who's going to turn the business around in five or seven years they wanted to keep it basic keep things the same keep it local keep it there um Legacy protected so so these are things that this audience will understand and know well and in fact it's often the value their own listeners value proposition as they go into the market trying to buy a business they're typically going to be that sort buyer and so a lot of a lot of sellers that you hear about on acquiring mines we're looking for such a buyer BEC but there's a little bit of survivorship bias I'm talking to the very people who fit that profile and so therefore they buy the businesses where sellers wanted such a person but because you have a a bit of a a bigger aperture there because you you you came from the you know your previous life doing this as well is it hard to find such sellers that want exactly that or most sellers want that or how can you uh give us a sense of a better sense of how sellers of of Legacy businesses like this think in the aggregate because because if you listen to acquiring minds you might think oh they all just want buyers like you know like you Ryan or like like my listeners when in fact the reality is probably that most sellers are perfectly happy to sell to the big the highest bidder meaning you know a strategic or private Equity so respond to that please yeah I think a good way of looking at it is um the the ratios right I think uh the thing that a lot of people don't understand is how many companies you have to look at and talk to to get to that one that actually closes and and works well right and um you know our normal ratio is probably looking at a 100 companies to get to kind of one Loi so just by definition there's a lot of companies we don't want to buy and we don't want to partner with and um the companies I acquire I acquire because there's a relationship with the sellers and we view the world in a similar way I mean buying a business is hard it's emotional it's risky it's uh stressful for the sellers it's stressful for the buyers um there's a lot of drama and you're you're with these people for a year or two whether you like it or not up to getting to Loi and then Loi plus transition you have to like each other you have to be able to have conflict and get through that so I'm too old to do business with people like don't like and who don't view the world kind of the way I do and so we just walk away from those deals you know they're not bad companies they're just not a good partner for us so uh there's definitely a lot of people out there that just want to sell for the highest number uh there's nothing wrong with that um there's a lot of people out there who um you know have very different goals in transitioning their business some people want to transition and stay in right I mean that's kind of your typical private Equity model I want to sell take some chips off the table but I want to keep 20% ownership and we're typically buying from people who want to go into retirement and want a full clean exit so all those models are out there and all those models are good models um they're they're just different there's nothing right or wrong with any of them um and so we gravitate towards those buyers where we're kind of aligned in how we view US manufacturing and what we'd like to do with the company for the next 10 to 20 years okay and then let's talk size so half a million bucks in earning is not a lot we would consider that small and we would consider that below the you know the you know quote unquote ideal threshold of earnings for a for a self-funded Searcher call it 800 and above y the and I won't um listeners regular listeners will will know all about that so how did you think about size and why were you comfortable with something so small I is it because your own balance sheet you could kind of live off savings for a while you and Greg or because you had a bigger Vision so this was just going to be one among many or what yeah I guess a few things I mean not all $500,000 ebab businesses are are the same right so we typically look for businesses that have more than 30 people in them so we're looking for a certain organizational scale that means that the sellers are not doing 80% of the work that Dr risks it for us uh we typically are looking for where we can buy the real estate that Dr risks it for us um we're looking for a business that was always been cash positive so we don't really do distressed assets or turnarounds and even through covid we're looking for people that that generated free cash flow and then our structure in the purchase is pretty conservative we're not you know doing a 1090 SBA loan we're way closer to 5050 that the equity uh and therefore that risk you have at a $500,000 business you know where the the dollars are small and the percentages are big type of thing uh we we just drisk that by the the our cap table basically by the structure that we we the way we structure deals um and so we tend to find you know as long as we like the business and we like the industry and there's no customer concentration and the organization's got enough scale and we understand the assets and the manufacturing you know there's as much opportunity if not more at a $500,000 business and sometimes there is at a $2 million business um you know we're typically looking for a business that you know it looks like it's aged by 20 years and that just tells us that there's a lot that we can bring to the table to help bring that business back to life or re-energize it um and that often is where we kind of generate our returns it's a lot of blocking and tackling um but it enables us to feel comfortable at that dollar value well $500,000 in earnings you know that just that doesn't go very far if you're going to be reinvesting into the business and you've got a bunch of Partners and LPS yeah and it's it's important to say typically for us it's $500,000 of EA not seller discretionary earnings so there there's a big there's a big difference there right I mean a lot of a lot of uh you know search funder individual buyers are looking at SD which is often very very different than iida with a market rate for the operator running the business y included in that right so that really takes on an SD perspective our 500's probably closer to 700 uh from an perspective uh so that is important you got to you got to make sure and then there's enough organization there that you know there's enough sgna spend that there's some real capability in the organization um you know so the revenue amount or the money inside the organization that you have to reallocate or reapply uh is important to us when we look at a a deal of course that that that being said we bought never leak and it has 10 employees so there's there's an exception to every uh filter that we use for our businesses so and never leaks a fantastic fantastic little company so well of course we've heard criteria around having a management layer or not or having an operator or not um but I'm not sure I've heard uh criteria in terms of the number of people at the organization and I and I the 30 people are above and I know that that's probably just a very approximate proxy for management or as you know for processes and so on even operators on the floor right I've looked at businesses where the owner is the one doing machine setups and then somebody else is operating the machine and you're like well okay that's that's that's that's an owner that's really down in the weeds right they're not just kind of running the books and doing sales if you're doing machine setups as an OP as a owner that's a very different organization than if they have somebody else that's doing machine setups that's not that's not the owner right so that that 30 person thing covers an awful lot of the institutional knowledge and you know a lot of these businesses don't have policies and procedures and work instructions right so it's uh you're you're looking for where's all the knowledge in the organization sit and I tend to think when you get over 30 people there's a lot more knowledge in the organization than just with the seller and so that der risks it for us because the sellers going into retirement I mean yeah they might stay with us for six months or a year and they might try to teach us everything but you can't teach 20 years or 30 years in 6 to 12 months right and so the more people in the organization the more true knowledge there is in the organization and not just in the seller yeah yeah it's well well put great great point and then in terms of your strategy when you buy you don't screw it up for a year but it sounds like you are more than willing to very quickly make literal cosmetic changes painting the walls and such so what's your line there between the changes you'll make painting walls and the changes you won't make for a year which is probably you know processes Etc what's the is there a bright red line there because that that's kind of the art of the transition what to change and when it it it is I mean it's uh it's definitely not a bright red line it's more of like uh Shades of Gray um you know we we we love to bring confidence and comfort to employees when we buy business right so we put in a retention bonus for two years for all employees that stick with us for two years after an acquisition that's a way of of acknowledging to employees hey it's it's scary when your the business you work in and maybe You' worked in for 10 or 20 years get sold to someone new right like that that's just as scary for employees as it is for a seller we try to do a lot of things to to bring Comfort to those employees and have that transition be good for them not just be good for the sellers right so sprucing up the facility um you know throwing a party on the day that we close painting the walls I mean all that stuff is is aign to employees that hey wait a minute maybe this transition is actually good for me as as much as it is good for the sellers this is great they get to transition and go into retirement they've worked a long time they've they they provided this business that's provided food and and and you know shelter from for my family that I've you know I've worked in this business for 10 to 15 years they're for the sellers but they also want to know that it's going to be good for them it's not going to be bad for them so we do a lot to try to make sure that employees realize that we want this to be good for them because employers are what makes companies good makes companies great that's what's enabled these companies to be around for 100 years so um that's why we do a lot of that stuff and there's there's no hard red line I mean we've bought a business and taken price increases the next week because we had to uh there's other businesses where we don't touch price for a year until we really feel like we understand the market and understand competitors um you know there's there's always some stuff in business that you just go hey we've we've got to do this um but because we're planning on owning a business for 20 or 30 years because we've taken a very low-risk approach to our uh capital structure how we fund deals uh we can be patient so it's the true definition of kind of patient Capital it's a good business don't mess it up if if we have paid a fair good multiple uh or you know dollar amount for a business and we're buying say a $500,000 EA business what we need to be successful in year one is for it to be a $500,000 ebop business we don't need it to be a million or a million and a half in the first year to generate a good return um so we can take our time and and that enables us to make better decisions when we make a decision I think um we've reinvested Capital into electron we've you know bought a new machine for them we've done a lot of TLC maintenance uh in the equipment we've hired new people um we've you know promoted people right we've done all those things in the first year of a business we just try to do it with with with think softer gloves and a lot of um other groups out there that are acquiring businesses well just one little detail there where you said you know because we're patient with our Capital we don't need it to be get to a million or a million half dollars in earnings uh in the first year actually according to your model which we'll get to you don't really need it to get to for for your numbers to pencil and for you to deliver to the return that you are offering to your investors you don't need to get for it to double earnings or triple earnings ever as long as it's kind of keeping up with GDP the the returns will be there so keep teasing I keep teasing the model of North Park we're and we're going to get there um not yet okay and so so great anything more to say about electron before we move to your second acquisition no it's great Phoenix electric was our second acquisition based in Chicago Illinois again two brothers that had taken it over from their father were ready to retire um had a few offers from a strategic that were probably going to move the business uh didn't really want to do that I had actually talked to them two or three years earlier when I was at a different portfolio and so when they finally decided to sell the business they called me back so sometimes finding these businesses is a very long burn cycle you talk you talked to somebody this year and they might call you back in in three years and say hey now now I'm interested in selling um you know so uh Great Brothers uh really cared about what happened to the business and the people afterwards uh we weren't able to buy the real estate right away on that one it was a manufacturing business located right next to Wrigley Field which is maybe not the best for a small manufacturing bus uh cool very cool yeah nice to walk to a game and all that kind of stuff um but the the best use for the real estate was obviously you know retail and condos and stuff like that and the family the the brothers did own the real estate and I'm like well this manufacturing business doesn't support the purchase price of that real estate so uh we knew when we bought that business we'd have to move it uh We've now bought a building in Chicago moved the business and retained 100% of the employees in that move which is uh exceeded my wildest dreams I mean I think even if you move a business two miles lots of times you risk losing somebody sure we moved about six miles and um you know we had mapped all the employees we put a lot of work into uh giving us the best chance of retaining all the employees but 100% of them came over uh in the move which was which is fantastic so now we own the real estate um gave us a little bit more space uh much newer fresher building uh brand new break rooms and all that kind of good stuff so we again we got that kind of lift for the employees uh very similar business um higher IA we bought it it was probably 1.7 million in IA 30ish employees um very high uh profit margins you know both gross profit and eida margins um but again kind of look like a business that operated in year 2000 lots of paper lots of uh you know manual processes and so we've been doing the work to freshen up that business and you know get Ito and marketing and some Outreach instead of just waiting for the phone to ring and that business has been going well but both of the businesses that that we have run like 20% annualized returns for investors so so far so good in you know two years yeah just on the paper a lot of paper moving around and digitizing a business like that that for the employees while that is the low hanging fruit and that is the pattern that you see over and over and over again in our world that for employees is a major change when you do that very scary very very scary right so I imagine swapping out the paper and in the cloud is something you do delicately very very delicately and a lot of it on the shop floor we haven't changed yet right so like we bought B the business you couldn't get into the Erp unless you were on the site right so now we can get into the Erp remotely but the process out on the shop floor is exactly the same they're still working with Travelers and paper and stuff like that so we've we've enabled our our management and oversight of the business and our ability to participate in the business maybe without being you know on site during the day and uh We've improved a lot of the accounting procedures we've uh in improved purchasing things that impacted a lot less of the employees and we haven't done some of the other stuff that's a lot scarier on the shop floor until we get the infrastructure right and you know we've owned that business since August of 2022 so we're coming up on two years um and you know then again retain and I think we've retained you know all the employees uh over those two years as well which is fantastic okay so those are the first two Acquisitions at this point you are at uh call it 2.2 2.3 in IA so You' got true true IA um and I don't think you said what the revenue of these businesses is so what what is aggregate Revenue at this point in the story or for each of the acquisition oh for electron when we bought it was probably about 8 million in revenue and Phoenix electric when we bought it was 5 million in Revenue so pretty small but high high profit margin on Phoenix wow Phoenix just just keeps looking better and better 1.7 a lot more a lot more IA same number of people and a lot less Revenue so very profitable yeah very very profitable uh less opportunity right I mean um did you tell us what it does sorry did I miss that no sorry I didn't pH Phoenix electric makes uh brush holders that go inside of DC motors to hold the carbon brushes inside of DC motor so very very Niche manufacturing they're probably the only Manufacturing the United States that makes them for for DC motors um so high market share very Niche product uh kind of low production runs a lot of custom runs each each one of these holders is customized for a particular type of motor from a motor manufacturer um but but less opportunity in a business like that when you if you walk through Phoenix electric you wouldn't say oh gez I can double this business uh whereas when you walk through electron you you'd say oh I could double this business in revenue or I could double this business in profitability so Phoenix is a bit different from that perspective still a great business uh great people uh a great purchase but uh a little bit of a different model uh when you look at it and and and why did it have less growth potential because it's already it already dominated its Market better run and yeah very high market share and then when you have that very high eita you think well there's they're already driving an awful lot of efficiency there's not a lot of waste uh inside of that business um so it's just a different model the the brothers that owned it did a very very good job running it Alex who is a general manager president he was there is actually his first job when he came to United States when he was 18 was at Phoenix electric and he now runs the business for us so he's been there for for a long time I won't date Alex I guess but um you know they've done a very good job running that business and um so it's it's just a diff different little bit of a different model okay so El Phoenix by the way nice Brands I like the I like the these these names y uh so take us quickly through just the other two uh and because I want to turn now to to how you're how you're structuring all this it was interesting right we closed electron in May of 22 we closed Phoenix August 1st of 22 uh it seems like we're rolling everything's great and then basically we went a year plus not winning any deals I was bidding on a lot of stuff I was looking hard you know so we kind of came out of the gate and bought two companies back to back and I was like yeah this is great and then we hit the you know the trough and uh you know all the doubt set in and I said oh gez now we're just going to end up with two small companies and what have I gotten ourselves into once you buy them you can't really get out like you know so there was a lot of stress maybe towards the end of uh 2023 when we hadn't bought another business in in over a year uh and the thing I just kept telling myself I kept telling investors was there's nothing more important than buying well like like like you know it's not about buying it's not about just winning a deal it's about buying a good company and the right company with the right fit and the right people and I lost uh a good bit of bids probably by you know $50,000 $100,000 $200,000 I mean not a lot in purchase price when you're determining winning or losing um and uh you know my my wife Nicole actually was the one that probably helped me the most keep my head on my shoulders just saying like just relax it'll come and then in November of 2023 in one week we signed two Lois back to back and uh so then I had the opposite problem I was like what did I just do now I got to close two businesses in 30 days and um that's a whole different level of stress especially going into the holidays now you're trying to do diligence over the holidays on two businesses and so we closed Dicky manufacturing which is located in St Charles Illinois in in March of 2024 they make Security Seals uh that go on shipping containers food Transportation US Postal Service and we bought never leak uh which is a company in Mississippi right across the border from Memphis uh in April of 2024 so 30 days apart and with both of those we bought the business uh and the real estate what's never leak do never leak makes uh flashings that go over pipe penetration on roofs so if you look up at your house and you got a sloped roof and you got pipes coming up they make the flashing that goes over that pipe to make sure that it doesn't leak into your house okay flashing is the name flashings yep yep flashings yep flashings never heard that word in my life thank you uh okay and what rough size of these businesses you've already told us that never leak was a small one but could you give us numbers on both sure uh Dicky is uh you're testing me uh 6 million yeah 6 million in sales uh about 500,000 in ibas so again on the the small side uh never leak is uh probably 8 million in sales and closer to a million and a half in eatop and never leak only has 10 employees so there's there's an exception to every filter you use in searching for a business um great little business you know both of them again were owned by people for 30 years that worked in the business either had purchased the business from the previous sellers or never leaks case had taken over from her her father uh and were looking to go into retirement and transition the business and wanted to do so where the employees were you know probably at the Forefront of their minds in that transition so like to that point not strategics not people who are any group private Equity Group or corporate that's going to move or do what they can to start cost cutting Etc yep yeah okay and you know I I think the thing that helps us a lot is um you know I've I've run manufacturing businesses a lot I've spent a lot of time running machines and working with our hourly operators and and when you sit down with a seller who has understands what it's like to run a small business for 20 years and then you talk to them and they understand that you understand what it's actually going to take to run that small business that helps us a lot when we're buying and what is it going to take what do they see in you yeah you can bullet point your resume but is there say more for the people who are listening who H don't have that experience and are going to need to compensate some way for not having it yeah I think it's a it's a level of credibility that they trust that I understand what I'm getting into which also means that they trust that the transaction will close I mean so we've we've closed every Loi we've ever signed and we've never ret traded on an Loi and I I tell people that all the time we do a lot of work before Loi probably a lot more than other people do before an Loi um but I view you know all the negotiations done when you sign the LOI it's just about doing the work to close the transaction and so our close rate on Lois is 100% we don't retrade we do what we say we're going to do and and that brings people a lot of confidence there's a lot of sellers out there that have had broken transactions or somebody said they wanted to buy it and then they for some reason couldn't buy it right and it's that's scary um and we bring an awful lot of credibility both that we know we're getting into we they trust that we'll be able to take care of the business for the next 10 or 20 years because we've done it before and we understand small businesses it's very different I mean even if you've worked in Corporate America you know in a 10,000 person company it's very different spending your life in a 30 person company day in day out and so that they they understand that we understand that difference and that we'll do what it takes to make sure we take care of the company for decades well certainly as you build out your portfolio that credibility only gets stronger you can point to to all these other businesses where you've you've done it y you said that you have missed out on a number of deals and missed just by 50 or $100,000 so are you bumping up against uh I mean how competitive is it to buy these businesses because they sound like really good businesses and you know this audience is going to have felt that it's really hard to find a good business and yet you seem to be finding them it is it is very very hard um I think uh a lot of the partners in North Park group um you know will who's running Dicky manufacturing fantastic operator uh long history and private Equity did his own search for two years uh looking for companies to buy and and couldn't find one and join North Park group because we've got a model and a track record and a history of being able to find good deals and and get them closed um it is extremely hard I mean most of the people I talk to that say they want to go buy a business I think very few of them actually get it done you know it's uh it's it's hard because they can't find the Target or I guess all the reasons they can't find the Target or if they do find the target they can't get to terms or or or it's just scary or you know just exhaustion from looking I mean if you have to look and talk to a 100 companies and you have a day job and you know you're trying to do it in nights and weekends I mean it it's hard I mean the only reason I think we got off so well in North Park Group is because that's what Greg and I were doing 100% of the time from December 2021 on like that was what we were doing um you know obviously we both have you know board positions and other things we do in our professional career but like that was what we were trying to do we weren't doing a day job for eight hours a day and then looking for companies on nights and weekends um it is a tremendous tremendous amount of work I mean it's like uh when people say you're looking for a job looking for a job is a full-time job well looking for a company to buy is two full-time jobs it's it's a lot and and you got to kiss a lot of frogs you're going to meet a lot of companies you're going to take a lot of trips and be like that was a horrible trip there's no way I'm buying that you know that's that was a waste and it's expensive and um it's it it's hard to get going I we're to the point now where we've got enough scale it makes it a bit easier um but it's definitely not easy to find these companies um you know there was definitely competition in buying them a lot of times we're not the high bid um so that that credibility we bring and our model for what we're going to do with the company going forward you know we've actually won deals where we were actually not the high bid from a dollar perspective we were just a better buyer um or a more uh confident buyer type of thing and and all that factors into our ability to to to do a purchase well the other thing I'll point out Ryan just about your first purchase so as much money as you spent time as you spent and two fulltime people searching you and Greg together the business you bought electron not to not to speak ill of it but for a lot of picky Searchers out there they probably wouldn't have done it why 500 of earnings okay call it 700 of earnings adjusted EA which hopefully most self-funded Searchers would would jump at that but some people might say well it's not a million I'm looking for a million it's not 900 I'm looking for 900 um you were prepared to and it was in wi and we lived in Chicago and yeah you it meant that you were it was remote so so you said Greg was you know living out of a cell entally a very spart lifestyle I've seen prisons that look nicer yeah so so what you were willing to do too is um and and frankly you guys are later in your career so you you might expect you guys to be like well I'm not I'm not gonna kind of lower myself to maybe if I were 25 but but you were willing to um so I just I just emphasize that because um you know that I I do think that there's a bit of a of a pattern here where Searchers can be too picky uh and to get in that first deal um yes yes search and ETA is all about not having to bootstrap something from absolute zero and you know getting into a moving ship that has Revenue that has employees etc etc etc all the positives but you should still treat this like a scrappy adventure and be willing to to you know to that especially that first one really go you know self-sacrifice it is one of those things I mean uh I could make more money going and doing something else in life right I mean uh I could make more money going back into Corporate America so we do this because we actually love it because we like it because uh the the idea that this you know 70 person business down in Witchita Kansas is flourishing and doing well and that we've kept it alive in Witchita and in the United States manufacturing I mean that that makes me sleep good at night I mean there there's a lot to what we're doing doing other than just trying to make money um you know the the place looks better it feels better people are are excited they they have a confidence now that they can continue to work for that company for another 10 years they're not worried about the sellers aging out and what's going to happen to the business I mean there's there's a lot of families and souls that that work in our companies and um yeah that that means a lot to what we're doing and if it's all about you know how much money you're making and uh the nice hotel room you're staying in then this is probably not the probably not the way to go yeah yep let's now kind of that's a Kind of Perfect segue into what you're building at a higher level really is and really what it looks like and indeed the the returns and the money that it could that it could be generating for you and your investors yeah so how to how to attack this maybe maybe the we've already started touching on the operating partner model so maybe let's hear more about that and then we'll we'll continue see where that takes us but there's a lot there's kind of a lot of detail here so let's say let's say you one of your operating partner deals what does it look like or unless did you have a better way to approach this yeah I I'll just start with where Greg and I started right so okay great uh we went to buy the first company wanted to use SBA Loans SBA Loans are great uh longer amortization and you can pay uh distributions while the loans outstanding that's the big thing you can't do with most commercial debt but you can do do with SBA Loans and that was important to our investors so our model to investors was give us money yes it's kind of like a private Equity deal you own a portion of a of a small company investors get an 8% preferred return so we structure our deals just like a traditional private Equity deal the difference is that we told investors hey we'll give you we'll give you money back during the hold period and the SBA Loans enabled us to do that and the 10-year amortization reduces The Debt Service on a business and then we took a very conservative approach which means we're we're close to 50% debt 50% Equity even when you include the buildings which means on the business debt we're probably down closer to 30% business debt 70% equity and the buildings are you know 85% debt uh and so the deals overall are pretty close to 5050 and we did that because then that's very conservative from a debt uh servicing perspective we model our businesses under the idea that if they go backwards 40 or 50% we can still cover our debt service so yes we're taking a personal guarantee but it's a very low-risk personal guarantee you have the building asset you have the Assets in the business and then we've only put enough debt on it so that the the business could still cover its debt service even if it goes backwards by 40 or 50% and I do that because I've just lived through too many downturns in business that have nothing to do with whether you're running a good business or a bad business I was in Building Products during the housing market crash I me poof 60% of the market gone overnight right so uh anyone who bought a business in 2019 and used a ton of debt and Co hit you know depending on what industry they were in they either okay or they were devastated right so so things like that happen so we take a very conservative approach and our investors like that we like that as the people taking personal guarantees but it also leaves a lot of free cash flow we can reinvest into the business we can give money back to to members it it gives us optionality in business so I did the first personal guarantee um Greg actually went and ran it and that's because he needed a daily paycheck so he unfortunately had to fly to witto all the time um on Phoenix electric Greg took the personal guarantee and then I ran the business um and then we kind of get into this model that says well to buy another one we need someone else to take a personal guarantee and so that's where we started partnering with people and the people we partner with are largely people that I've worked with for you know 5 10 15 years so a good example is never leak uh Scott Martin who we work together for four years in a different portfolio uh we're very familiar with each other Scott's a fantastic manufacturing operator been running manufacturing businesses his whole career wanted to go out and buy a business um we searched found one Scott's great because he's very very mobile I think he's lived in 50 different cities over the course of his career he him and his wife get an itch every three years they want to move move so he's like yep I'll go to Memphis no problem found a business bought a business for him he did the personal guarantee and then since I believe in diversification and I believe in everyone in the portfolio being Partners even though they're all their own separate legal entities with different investor bases I write them all into the structure of all the companies so we all share in the management fee of all companies we all share in the carry of all companies um and that kind of truly makes us all Partners in North Park group so Scott while he's running never leak is just as incentivized to help electron uh as he is to to help never leak we we operate as one big happy family and that Dr risks all these companies because the hard part about running a small company is you're a person on an island well now we're not now we're you know five or six little Islands together uh and we can phone a friend you can call somebody who's probably dealt with the problem that you're dealing with that day if if you haven't if we just need a resource you need coverage we have somebody to call and so as we add more companies to the portfolio it actually Dr risks all of our companies or you know look at it another way helps us accelerate the entire portfolio because now we've got more sheared resources that we can put to work in these small companies it's you know a 30 person company there's not there's not a lot of people to tap to go run a project but now across you know our four companies and with the fifth one that we'll acquire in August you know we're pushing 200 plus employees so now if we want to do a project in a business there's a lot of technical expertise and history and knowledge that we can tap into a lot more so than your typical small business fantastic going back to let's use Scott as an example so he has a piece of North Park group so he shares in the carry there the management fee you haven't said about the management fee but before that but obviously he took the personal guarantee in never league so he's got a much bigger piece or piece of the carry of that business he must have more than 25% well maybe not the SBA is going to require somebody to have personal guarantee even if everybody's under 20% that's right um in most of our deals everyone's under 20% so we're just taking the personal guarantee with no one having more than 20% of the equity ah um okay yeah and Scott's an investor and never leak I think he he also invested in dicki so they obviously invest when we buy other companies so he's an holder uh and then we structure our deals like private Equity deals so we charge a 10% of unadjusted Ebon management fee and that again gets split between the partners uh we charge a 25% carry so once investors get their 8% preferred return and their initial equity and the deal back we get into the carry Scott when he took the personal guarantee gets the you know a big chunk of that 25% carry but he also gets carry in each of the other businesses so he's Diversified um and so you know at this point we've got five Partners uh three that haven't take haven't taken personal guarantees yet uh I guess six Partners three of us that haven't taken personal guarantees three of us that have uh so we have you know more SBA debt that we could go take because these people want to find a business that they want to run themselves they're just operating inside of our portfolio today um and and it's a it's a interesting unique good structure you know and Scott has control because that's what the SBA requires for never leak uh he's got control he runs never leak but we share the financials across the portfolio so that we all work together well so you have now brought in operating partners that don't yet operate any business or are are not personal gu are not in one of your businesses yet so they're they're on the bench yeah Will runs Dicky manufacturing he's running it day-to-day he has not taken a personal guarantee yet but he is a partner in North Park group and he invested in dicky he invested in never leak uh we just haven't found an acquisition yet that he could take the personal guarantee on okay and then when you do so he's kind of waiting in the wings in the meantime he's running uh Dicky running Dicky correct but then he'll go when you find an appropriate business for him he'll go in and and that'll be really he'll take the personal guarantee and that'll really be his baby that's right um and when you say that your partners invest in the businesses you mean they invest personal Capital as well into the Acquisitions corre as well as having percentages of the carry and the percentages of North Park groups carry um man there's a lot of lines on the spreadsheet for each of the for each of the partners uh it is where cash comes from the you know the biggest criticism I always get is you know it's it's a lot of work for small deals and I tell people it's a lot of work for big percentages right I mean uh you take a $500,000 ebit do business to 750 it's great on a percentage return perspective but yes it is smaller dollars than if you did a $3 million company that you took to you know four and a half right or something like that but um you know so we play in smaller dollars but big percentages and you know everyone has different Capital that they can invest in the businesses but most of them had you know like will looked for two years to buy a company so he had a certain amount of capital he wanted to put the work uh and he was just looking for that one company to buy himself and then when will and I got introduced he said wait a minute yeah I'd kind of rather take that Capital I'd set aside to invest in that one business and put it in four or five that sounds like a better investment model than putting it all into one and and so that's why he was attracted to North Park group because he was just taking that same Capital pile that he was going to put to work in his own business and investing it with you know almost similar or better returns uh than if he would have gone out and bought his own company the only thing he doesn't get is he doesn't have 100% control of that one company because he's investing in four where somebody else is going to have control um but that that's basically what most of the partners are doing they were all out looking to buy a company uh we've just found a way to increase the success rate by getting together and doing it as as partners well but Ryan that there is also a an emotional shift that they all have to make to participate where they're not going to be you know the onean show the owner the the strict owner of their own business um it's now more of a collective thing even if you know they kind of do have their fief that sounds negative but you know they their fief in in the business that they took the PG on how do you H how do they make that leap from okay I'm not going to be a so business owner out there on my own I'm gonna be part of this yeah what's that progression been like in their own minds I mean so far like all of us were coming from Corporate America into this right so I don't have a partner that say ran their own business for 20 years and then came over and joined North Park group I think that'd be a hard transition if you go from yeah I'm 100% owner you know I run my own shop now I'm going to join this partnership I think it's tough when you come from you know participating in corporations where you're an employee and then you come over into this model of partnership I think it's a much easier transition and honestly it's less scary like going from Corporate America to you know it's me myself and I and I Own 100% of this thing and it's you know 80% of my family's net worth in this one company that's a really scary transition I think that's why a lot of people don't find that company to buy it's it's a lot easier to come over into a partnership you know uh Scott's running a 10-person company uh across the border in Mississippi and Memphis and you know he's run you know thousand person organizations and 100 person organizations I talked to him on the phone and he's like you know I'm really glad I have you to talk to like like doing that on his own in Mississippi with just Him and 10 other employees on an island I think he he'd be just as successful Scott is a fantastic operator but emotionally that is way way harder than now he can call me he can phone a friend if he wants to go on vacation I'll go to Mississippi for a week and watch the business right I mean there's a lot of Lifestyle aspects that come from this partnership and we all got into the small businesses for the lifestyle aspects we want to have control we don't want to have to report to like a board or an investment committee we want to do our own thing and make our own decisions but you know no one wants to be a solo person on an island it it's always better to do that as part of a team in our opinion yeah no it's very it's it's kind of a sweet spot so let's get uh back into kind of numbers a little bit sure you mentioned how much Equity the the debt to equity ratios here are very low um so sometimes kind of 5050 4060 um and of course yes that makes an investment safer with way way less heavy loan payments yep but of but you for every kind of any any deal you structure the more risk the more reward there will be and traditional private Equity is known for taking a lot of debt now traditional private Equity doesn't do 1090 that's something that we crazy Searchers do y um traditional private but traditional private Equity I believe is understand will leverage more than you are doing Y and so with more leverage you get better returns so how are you but it seems like you're having your cake and eat it in eating it too in that you've got very comfortable debt to equity ratios so not a lot of debt and yet still generating good returns lowrisk High return that's what we all want and doesn't exist we're told we're told by financial principles how have you how are you doing it or am I overstating am I overstating your returns maybe no no no I I I I think it's I think the returns are are correct I mean we've we' got about across four companies we have about 20 million in debt and 14 million in equity so we're a little bit below 5050 even uh Equity to debt um which is very very conservative you're right we could get more percentage Returns on our Equity portion uh if we took you know even you know more debt than than we do um but but we're we're just conservative we we buy well right so we're typically buying in a 4X IA kind of multiple uh with with good terms uh in a business that we believe that we can accelerate and can perform well we model it very conservatively 3% growth rate over eight years uh and we make sure we can cover our debt service and there's a lot of free cash flow so it just means that we have to find a business in which that model works and not not every company we look at would get that kind of return even if you were buying it at 3x not all companies are that stable uh I think it goes back to how hard the search is to find those right pairings and those right relationships and the right company uh we've just been very patient in in making sure that we we find them and that uh we don't overextend right so I talked about losing deals by1 or $200,000 well you know if that was a $500,000 EB business you're talking about you know a half turn or a quarter turn on your multiple and you're talking about a good chunk more of debt or more of equity that's in the deal um yeah I mean uh the way and the way we look at returns again I'm I'm relatively simple in a lot of things uh I tell our investors if we bought a business for x and we sell it in 10 years for X how much money did we make uh the money we made was basically the cash that we generated during those 10 that 10 year period and the and the debt that we reduced I don't play the game of I buy for X don't worry I'm going to sell it for 2x or 3x we just literally when I say we're generating 20% annualized returns that's how we're doing the math if I bought a business for $5 million I assume I'm going to sell it for $5 million my my annual returns is Cash generated cash in the balance sheet cash return to members and debt reduction that's it so our real returns are well north of 20% if we've also grown Eaton if we believe we could sell the business and if the the real estate I mean we've got you know $10 million wor the real estate in the portfolio if that's appreciated you know our real returns are are well north of that um again that's just me taking a very conservative approach to and I'm in a lot of private Equity deals and they send me reports that show me my mark to Market and I'm like yeah but there's no money in my bank account so until it's in my bank account I don't count it as a return and and that's that's how we treat it to investors and that's partly because that's how I wanted to put my Capital to work and so those are the investors I brought along that viewed it the same way Ryan this is fascinating and there's a lot there so first thing I want to ask you about is traditionally in private equity which which you kind of just touched on the LPS the investors get their money back at a liquidity event so all that return is is um sometime in the future back back weighted whatever it's at the you know five seven years when that when that acquisition is then re exited by the private Equity Group um which is of course why going back to our sellers why sellers expect private Equity groups to buy and then sell again in five seven eight nine years Y and and even search deals like when I've run webinars and when we were structuring min's Capital our fund the the it really looks like the economics of this are are kind of that that you're going to see your return at a at an exit at a liquidity event at the exit and so that's why you hear private Equity groups talk about what the multiple Arbitrage will be even though you try to be conservative in your in your estimates there but that there's going to be some sort of multiple Arbitrage or some sort of growth so and it it's almost to the point where private Equity groups will AR private Equity will argue that you really can't make the numbers work if you're just paying out dividends in the meantime and that's where the return comes from the return doesn't come from that but somehow you're making that work where and as you pointed out to me on the as you said to me on the on the preall it's almost more like real estate deals where you the rent that's coming out of a real estate deal um is going back to the investors in real time or year by year so they don't have to wait so so H what have you figured out here where your LPS your investors can see cash on a on a kind of gradual basis and not at the end and and and and please address the fact that you don't even need to see growth in the business for this still to generate 20% returns or you need to see growth along with GDP but you know no you don't need to exceed the growth of the economy to see these really really healthy 20% returns for your LPS yeah um like I said some some of it goes straight to purchase price We Buy Low Capital intensity businesses so businesses that don't require a lot of Rec capital investment to continue to fuel the business we're able to do a lot of it with elbow GRE and and hard work we're not buying 20 thou you know $200,000 $800,000 machines to continue to maintain the business so very low maintenance capex uh in the business so if we do capex projects it's truly for Revenue growth returns growth it's not to keep a business running you know and that's because we're buying a business that's been making the same parts for 60 years with the same equipment and a lot of this equipment some of it is you know World War equipment but that equipment will run for another hundred years if you just take care of it I mean the this equipment will last forever right so low Capital intensity businesses where we're we're not forced to put a lot of uh money back into the business to continue to keep it running that's maintenance capex but that's also networking Capital we typically buy businesses where we think we can control networking Capital very very well so the amount of inventory the AR the APAP the amount of cash tied up in the business when you do that we get a very high ratio of cash generated from a business relative to IA so there's a lot of businesses out there that'll say oh we're $2 million ebit business but when you look at the free cash flow coming off the business I mean it could be300 $400,000 right I mean we're typically getting close to an 80% or more free cash flow relative to ebua coming off of a business pre- debt service right but just there's a lot of free cash flow coming off these businesses they're almost like service businesses people tend to look at as like high cash generating businesses but we're doing it with manufacturing assets and Manufacturing Parts but they are high cash generating businesses so so it sounds like the way you're to distill what I'm hearing it sounds like the way you're able to make this pencil is you buy well your criteria and you're buying small so it's not super comp you're not competing you the businesses you're buying are not being bid up of and and you're disciplined so in cases where you you've lost deals it's because you wouldn't you wouldn't budge I I as I understand so you buy you you're a low you're not low Ball but you're a conservative offer you stick to that you're disciplined you buy smaller so even though you have competition in your deals probably not nearly as much competition as if you were buying businesses that you know that all private Equity would be looking at you uh and you buy and of course needless to say you're Competitive Edge and that you all have this incredible operating experience so you know these businesses you can go and make improvements um and then low capex which is not typically associated with manufacturing so uh you're finding that vend diagram of manufacturing and low capex which is means that so you're paying for all of this with a search the search is painful why a year goes by you don't a year may go by you don't find anything but if you can find a low capex manufacturing business it can be it can throw off a lot of cash one of our partners basically called it no you're completely correct and one of our partners called it uh the Moneyball approach to buying businesses right we're not necessarily looking for home runs we just want to get on base if you just get on base every single time you get singles and doubles and singles and doubles you get you get a great return and so it is kind of the Moneyball approach we're just stick in our lane and we look for the companies that fit and um yeah we probably are not going to buy one of these businesses for $5 million that we maybe sell for1 ion dollar right there's not the Grand Slam home runs in here but we can get you know outsized good returns especially relative to the risk profile both personally and the risk profile for our investors right so one thing people always ask me is how how do you convince somebody to take a personal guarantee personal guarantees are scary and I say well personal guarantees are only scary in a scary deal if it's not a scary deal if it's a deal that you believe 120% in and you you see very little risk in the deal then the personal guarantee is not scary and so part of why we've been so successful bringing Partners in is because of the structure of our deals because they go this company can go backwards 50% before I even get into any trouble with Debt Service and then I get to cut my salary and then I get to do all the other things that entrepreneurs do to keep the lights on like well that's not going to happen like that's right and that's because we found the right company under the right structure with the right Partners uh and it it's watching all that come together which by the way like this is all uh fig it till we make it and we just kind of tripped into all this strategy like this was not like we sat down and said this is how it's going to work like we just have kind of been making it up as we go along but watching it all come together has been kind of beautiful I mean it to watch how excited our investors are how happy they are with the returns but how happy they are with what we're doing with the companies and the people in our companies to how excited partners are to come in and and somebody like will who looked for two years and was frustrated and wanted to kind of get out of corpor America and wanted to find his own business and then to get introduced to him and see the excitement in the portfolio of like hey we can keep doing this we've done it four times we can do this 14 more times is really exciting to see all that come together and actually work for like everybody involved it works for sellers it works for employees it works for investors it works for partners it it it just it's turned into a good model and yes there's models out there that will get higher returns and make more money or you know but but this one works for us and I think that's the key is we found the model that works well for us and you know if there was a bit of advice I was going to give to everybody is find the model that works for you doesn't have to be mine doesn't have to be somebody else's find the one that fits with what you really want to do and what's important to you and that's what we found under North Park Group Well the other thing about it is even if you're offering slightly lower returns you know call it 20% they if you can sustain those and deliver those year after year after year those returns over 20 years are pretty good Phenom phenomenal so I'd rather have 20% over 20 years than some enormous percent once and then I got to figure out how to redeploy all that capital and you know so so it's kind of you know this is classic kind of buffet long-term kind of compounding stuff all of our investors say hey if you're north of 15% for love of God don't sell a company cuz all I got to do is figure out how to like where to put that money and the likelihood that I put that money where I get 15% a year every single year is low right yeah they're like if if it's running just keep running and selling's expensive buying is expensive and it's not good for uh employees and it tends not to be great for investors so if you can own one good business for 20 years your returns over 20 years are going to be way better than buying and selling four times over the those 20 years because there's transaction expenses are a lot um and and so if you get the right model and you bought well and and you have a structure and you believe in the company and you actually believe you can run it for 10 to 20 years the returns over that period will be far superior than buying and selling you know and you can recap you can redo the debt you can you can do all that stuff still yeah you don't have to sell to somebody else to do it well I just want to highlight what you've now said a couple times that 50 40 to 50% decline in a business so your business a business that you can acquire can have I mean can have collapse basically um and you and the numbers still work you're still going to make those SBA loan payments that's that's a lot of room to get comfortable investors wouldn't love the returns I wouldn't love the returns anything like that but the business will be solvent the business will be stable we'll be able to support the employees and most times that happens to a company it's the housing market crisis which then comes back it's covid which then comes back these are not things that happen for 10 year periods these are things that happen for one or two year periods and we don't want to be in a position where uh you know we're we're tripping Bank covenants or we got to take out an additional line to keep a business aoat we want to make payroll every year with our eyes closed and make our make our debt payments every year with our eyes closed and then figure out how to have it be a great company for 20 years well again the 20-y year the value of a 20-year time Horizon too is that you uh are you frankly you need that to be able to survive some of these cycles and some of these Black Swan events um because that you know with a a traditional private Equity where that time Horizon is five to 10 years that might just be one economic cycle and you find yourself intentionally or not basically timing the market the macroeconomic market or the industry's market um and that that's a harder game to play 20 years that that the vagaries of the of the economic climate smooth out um but you need a really longtime Horizon for that and speaking of 20 years you've told us that you're 50 so you you basically to realize this Vision you're working till you're 70 you're call it now call it now did you tell your wife did you tell Nicole does she know that yeah no uh well probably not I mean the the nice thing is that's the other nice thing about Partners right is that this portfolio is not 100% me it's not 90% me the companies that were bought are not 100% me there's five Partners in it now I mean Scott's older than than I am and Will's younger than I am uh if we if we have the right partnership structure there's no reason in theory we couldn't hold all these companies for a hundred years and let the partnership ship take care of it right so yeah we're we we think long term and but by no stretch of the imagination is the success of this portfolio all me I mean there's there there are guys in businesses every day doing a lot of hard work uh you know will Caleb Scott Greg um you know Robert who is our finance guy I mean these are the guys that are really getting the results out of the businesses and and and I'm helping so yeah I could do this for another 20 years they don't need me for another 20 years and and um you know that I think is also the strength and I think employees also see that it's not you know what if Ryan gets hit by a bus no employees are going to be fine these companies will keep going there's enough Partners now and there's enough scale uh these companies are are bigger than any one of us which is great well perfect segue to my final uh in the weeds and final final question we're over and we both got a hop but it's important you're you're you're buying these deal by deal you're raising money deal by deal so you so to be clear if it hasn't been clear yet to the audience this is not a fund uh this is deal by deal so again uh more like real estate uh a real estate kind of how a real estate developer cor or investor might raise money project by project so say more about why you've done that in pros and cons if you would as a last as we close out here sure I mean uh I I don't understand funds hugely I've never operated in that in that market so some of it's just stick with what I know uh we like the low overhead our investors like being able to get in or get out uh depending on how many deals we're doing uh now that said we have about 40 investors that basically follow us from deal the deal so we are funded right when we go out and look for a deal we say hey we're fully funded like we didn't raise a fund but we have enough investors that are going to be in every single deal they've committed that we're not a fundless sponsor we're not just a search fund we don't have to figure out where to get the money afterwards but you know we have investors that sometimes will Flex up in a deal or sometimes they'll Flex down just depending what's going on in their their own life situation um and uh and that's nice and and you know we will probably continue to grow our investor base we'll continue to add investors especially as we start to do more and more deals not every can do you know our minimum is 50,000 um you know a lot of people can do 50,000 twice a year people maybe don't want to do 50,000 six times a year right so we we'll end up getting more investors um but I I tell everybody I want our investors Diversified just like we are I don't really want an investor in one deal I want an investor in a lot of North Park deals and that way they're Diversified like we're Diversified and we all view business and Manufacturing kind of the same way one of the benefits of doing it deal by deal is that you don't have to deploy Capital right yeah we don't take money until we close basically exactly but so so you had said your your you had some uncomfortable nights that year where you weren't finding anything and it was like oh gee now I bought these two businesses I'm stuck with is it just going to be these two why would that have been such a terrible outcome because it's not like you'd raised a bunch of money you needed to deploy well that that that's true I guess um you know when you look at our uh our personal income from the portfolio right we wanted to get eitaa to a certain amount to get the management fee to a certain amount uh uh you know being in a business and running it every day is different than having a portfolio of companies so part of it's how I like to work and um how I like to spend my time I'm honestly not the best operator to run a 30 person company day in day out for eight years that's probably not like the best fit for me um and I know that about myself and so that's probably where some of that fear was coming from but you know I think just staying discipline and you're right we didn't have money burning a hole in our pocket we didn't have to put it to work uh so I just tell I tell everybody like we just want to buy a company and and know that it's going to be a base hit doesn't have to be a home run but we're not going to strike out like it it's it's always going to be okay and uh and you know if okay is 20% annualized returns then everyone always uh gives me a hard time that that's way better than okay but that's that's what I view is is okay and and solid and that again it's it's it's just worked for everybody inside the portfolio which is kind of beautiful to watch well it's a it's a really interesting and and compelling model here Ryan North Park group so I would there's probably going to be people listening who may be frustrated in their search or for whatever reason they they may not they may not want to buy business right now uh that was quite a quite a kind of um Pitch for how you explained Scott's how Scott got involved with you guys I'm sure there people listening that can relate to that so you might get some inbound on that front um how do you like people to reach out to you Ryan yeah uh email or uh LinkedIn or through our uh NorthPark group.com website is is fine uh I I I take a lot of meetings I talk to a lot of people that are searching uh companies I guess it's like you know paying it back or paying it forward there was a lot of people that took time talking to Greg and I when when we were starting this off uh so I'm always willing to try to help that's one thing I really like about this kind of industry of of acquiring uh businesses is everyone's really willing to share and talk and talk about their model and some of our investors run their own portfolios where they're out buying manufacturing companies like we don't view them as competitors we view them as kind of part of the family and you we sit down and I look at their models and they look at our models and you know there's Michael Fox is one of our investors out of Ohio he runs his own portfolio where he's buying companies and you know he thinks our model is great and I think his model is great right and so like we we literally trade notes and you know and and he's a bit more of your typical model he's doing more leverage and it's just you know him and a few partners and not outside investors and you know there's there's no right and wrong with it but I love that he's invested in us and he shares information with us we share information with him and e even deals I'm like hey I don't like this for North Park group maybe you like it because it's in Ohio or vice versa and um I like that about the industry the industry is very open and so uh you know will and a lot of people that are joining the portfolio I get introduced to as somebody who is looking to buy a company and heard about what we're doing and wanted to talk about it and we talk about it and maybe they want a partner maybe they don't you know it's it's all okay great well yes it it is very collaborative and we and we hear people say that over and over and it it's it's really nice that aspect of the culture for on its face but also because the more of a reputation the industry that more of that reputation that exists for the industry the more it sort of self- perpetuates you know people come into the industry and and behave accordingly yes so it's great all right I'll let you go Ryan fascinating thanks for coming on being so transparent sharing with us about North Park group I think it's really going to be uh very intriguing to people so um really enjoyed it excellent thanks for time well I appreciate it 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