Juan Aguilar. Welcome to Acquiring Minds. Thanks for having me, Will. Juan, you were a searcher and are now an independent sponsor uh for lack maybe lack of a better term pursuing four to five platform businesses with a long-term hold orientation. So, there's a lot to your story, a lot of evolution. We want to hear about both of those things. So, start us off, please, Juan, with some background on you. Sure. Well, um I um I'm from Guatemala, actually, so Central America, and I was born and raised here, currently living here. Uh went to school in in in in the states, so I I went to school in Virginia. Um an engineer. Um after after studying engineering, I went I went straight into management consulting. Uh worked in Mexico for BCG um for about 4 years. I uh Um I did a stint in private equity in Mexico, as well. Then um went to business school. And right out of business school, uh started a search fund. And um So, so So, that's how I got kind of introduced to the search fund world. Um And why why a search fund? Why not continue on the corporate path? Yeah, so I um I was looking to to to do something that allowed me to go back home. Um so, I was in I was interested in in in in going back to Guatemala. I was going to get married. And um so, you know, thinking about an entrepreneurship in you know, in in Central America, corporate opportunities are are limited and and not so attractive. I I was also thinking about continuing in private equity and uh also had, you know, limited opportunities in Central America for that. So, you know, I started uh learning about the the search fund model in business school and it's saw something interesting there. And you know, found a combination of you know, the the investing part that I loved with the operating part that I felt I, you know, I wanted to develop a bit more. Uh and uh I said, you know, maybe this makes sense and we can give it a shot. Um And Juan, do you were you somebody who was destined to become an entrepreneur or more of an investor? Yeah, I I I do think I have my roots in entrepreneurship. Um you know, I come from a family of entrepreneurs. Um my dad's an entrepreneur. Um and I um I I wanted to run my own ship. I think that's that's the that that's the way I thought of it. Um And and uh if if the search fund route, I mean, if I were have not to done a search fund, I do think I would have started something on my own, maybe not right out of business school, but probably a couple of years out after after, I don't know, probably doing private equity after business school or something like that. Yeah. Okay. All right. Uh but this allowed you to pull that plan forward a little bit and return to Guatemala. All right. So, and this was what year that you This was start 2016. I I started my search in 2016. And did you move back to Guatemala first or did you actually get some of the search going before that? I uh I So, I I started kind of structuring and raising the fund um early 2016 while I was while I was still in business school. Um moved back to Guatemala that summer and started searching, you know, July, August, right right after getting married. So. Okay. Now, tell us about the the raise. This will be interesting to people um even those who are not in Guatemala because you raised from people who were new to the this concept. And so, you had to explain and sell the concept um to them, which you did. So, tell us about how you went about this. Yeah, so I uh I I like to say I have a I did a traditional non-traditional search fund. Uh you know, it's kind of funny. I I did raise funds, um but the majority and the vast majority of my investors were first-time search fund investors. And um although I do I do have a couple of um Yeah, they're and literally two, I guess, uh you know, old-school kind of uh search fund investors, non-non-institutional, high-net-worth individuals. Um and and from the US, but uh those were kind of I guess my anchor investors that, you know, gave me the stamp to go back to Guatemala and uh raise funds from primarily uh you know, I I I like to call them friends, you know, they're definitely my my friends now and and people that I knew prior to going to business school that they and they knew me through, you know, relationships in Guatemala, family and whatnot. Um high-net-worth individuals and, you know, business people, right? Um that's that's the type of investor I have and and I was looking for intentionally. Um and I I I was I was I guess thoughtful of of this because of suggestions I I I received and and conversations I had with uh searchers prior to me in Latin America that they they, you know, fortunately gave me the heads-up and said, you know, be be very thoughtful of the people you select. Not only because they will be extremely useful in the search, you know, searching in in small regions is very network-based, right? So, so in in Guatemala, it was very important to have, you know, investors that that had connections with the business community here. Um And I think that applies, you know, everywhere, but but but but I guess maybe even more so in smaller markets. And um also people that you trust and admire, you know, that's I guess just the Warren Buffett way of thinking about things. And I really went about that seriously and I I I guess I hand-picked a group of people I felt really comfortable developing a relationship with. And it was a it was a limited number of investors, so we had um ended up I think doing uh It was 10 units and uh I think a couple had half a unit, so we we um a very limited number of investors and only two, actually three, non-non-Guatemalan investors. Um so, that's that's how I structured the search, right? Great. And so, to be clear, these these are people who the non-American, the Guatemalan investors are are people from the the the business community in Guatemala, themselves successful uh in the Guatemalan context. Exactly. And um and and I think let's just uh make sure we're clear on the advice that you heard from other folks who'd done searches in Latin America. You want local investors partly because they'll help you with your deal flow. And maybe more so, I mean, we we hope that from investors in general, although you should really be clear about that with investors cuz probably a lot of investors are not going to expect that they'll be providing deal flow to you. But in some cases, yes. But here, it sounds like that was a that was really something that was going to be important because um of the nature of the way the markets operate in smaller markets. Yeah, and I I I I I think I'd add something else that that is you know, in in in in in Central America and and I guess other less transactional regions or you know, countries where capital markets are less developed and M&A activity is is very limited. Um you you you, you know, these these conversations about buying a business are are are extremely rare for business owners, right? So, it's it's it's very different to uh the US where, you know, it's it's, you know, it's it's common conversations, you know, it's uh dinner table conversations, bar conversations about, you know, I sold my business, he sold his business. Um that's very rare in in in Latin America and especially in in smaller markets. And so, you know, the the you know, soft introductions are important, you know, getting getting um introduced to a business owner through somebody that he knows is is going to make a huge difference as as opposed to a cold email. have serious conversations around, you know, acquiring the business, the business owner wants to understand like, you know, who are you and who's behind you, right? Um and and so, having these local investors that could give us that um you know, backing of as of being people that had done business for many years in in in in Guatemala that people knew and respected uh was extremely important. And and and to add to that, you know, also um we were able to get attractive bank debt finance our our acquisition. And it it was very important for for my conversations with banks to to know who was behind who was backing uh the investment and the search. And and um that allowed them to, you know, to to have more trust in in in what we were trying to do. It was new for banks, as well. This was if not the first, probably one of the first, top three, definitely searches in Central America. Um so, banks were unfamiliar unfamiliar with the model. And we we were able to kind of um explain to them what was what was going to happen and how it was going to be attractive to them. And I think they they had a they it was a good deal deal for them, as well. So, it it it still is a good deal for them, as well. And a lot a large part of getting them to open their minds to it uh and and entertain it and ultimately do lend you the necessary capital was because of the credibility of the investors that you had behind you. Yeah. Yeah, it's it's it's a small market as I said, you know, the business community is fallen so relationships matter and and my investors had, you know, decades of relationships with have decades of relationships with the old school banks and what not and so that was extremely helpful. They they they they they introduced me to, you know, high level executives at banks and and once once that got going, you know, trust was there to start the conversation. So. You know, Juan, I'm I'm zooming out on the way you put this all together. I just see kind of a domino effect. So you or or or really that you used the credibility of one group to to then get yeses from the next group. So it was the the the two US invest search fund investors were the anchors to then legitimize you to the investors in Guatemala. Once you had that you had gotten them on your cap table, then it was using their credibility to get you the door with the banks. And once you had them and the banks, you were probably then doors were opening to you with these with these owners. So it's it's it's very like you were parlaying one group's credibility into the into an an entree into the next group. And maybe you know, I'm just kind of as you tell us I'm kind of realizing this maybe this is how it always works, but it it definitely seems like a very linear and logical progression there in your in your how you did this. Yeah. Yeah, definitely was. I also had a my ex-boss from Mexico who's also an an investor and that was that was also you know, the sequence of events there was probably, you know, the US investors then my the the partner from BCG in Mexico and then the local investors, you know, so it was definitely credibility building because as I said, you know, the local investors were all first time search fund investors. They they had they had never heard of the model. So it it it was going to require some, you know, they they trusted me. They they knew they knew me, but they were also, you know, saying, you know, can can somebody else tell us if this makes sense or not. Um Yeah, sure. Well, good on you for having a good outcome. So make it making the you know, the the ecosystem more open to the the search fund entrepreneurs who, you know, come in your follow your footsteps. Juan, and just give us a minute cuz this will be really relevant to people outside as you said kind of more developed M&A markets. Um what do owners in Guatemala think they're going to do with their businesses? If if it's not selling them, is it just always an heir? There's basically they stay in the family and and or what? Yeah, that's that's that's a great question and um So as I said, you know, it's really it's really deep I guess in the culture of of of business owners here that, you know, businesses are family are family businesses, right? And they're like, you know, part of the the family inherent. So so yeah, I think, you know, small business owners just just, you know, know that you know, the the next the next necessary owner of the business has to be somebody from the family. So you typically see it go to like extended family, right? So so if they don't have a direct heir in in their back like a, you know, son or daughter that takes over the business. I've seen, you know, cousins take over the business. So any other, you know, you know, relative kind of kick in and and and take over the business because it has to stay in the family. That's just the mentality. Um And um but then again, you you do see a bunch of businesses just wind down, right? So so small businesses kind of tend to disappear after that first generation owner as as he as he retires, gets older. The energy is not there and and even if the cousin takes over, it's not the same thing, right? So Um it it there there was definitely an opportunity and and that kind of ties into to to the business I I I ended up buying which did have kind of an inherent inheritance problem and another, you know, set of problems between the the owners. But that that was definitely one of them, you know, the the the the transition, the inheritance, who was going to take over the business in the next 10 years and that's where the opportunity part of popped up for for us. Mhm. And in these markets though, would you say that the pattern of like the kids or even cousins, the next generation doesn't want to take it over is less common in the states you hear that you know, the the the guy who started the plumbing business, his son doesn't want to be in that business. He wants to go make his own business career or whatever. I'm generalizing. So in in Guatemala, same thing or in general most of the kids do somebody in the family does in fact want to take over the business. Yeah, my experience Will is that yeah, it's definitely I think it's a cultural cultural issue. You know, the the the the the children, the kids of the business owner, I guess, you know, are brought up thinking this is this is what I'm going to be doing as a professional, right? I will follow in the footsteps of my father or mother with with this business. And um definitely in in the US you see you see that a lot less and I think it's getting even more, you know, or less common for people to think about, you know, inheriting a a family business. But in I'd say I'd I'd comfortably generalize there that I think it's still a Latin American thing. I I see it in Mexico and everything that it's just it's just much more normal, I guess, traditional for people to think about taking over the family business as as their kind of one and only option, right? And and the smaller the business, I think that the more that that that you see that. And it's a combination of opportunities are less, I mean, available, I guess, and that that naturally becomes an attractive opportunity especially economically for for for the for the children. Um But also people live longer with their families in in in in Latin America, right? So you you see in the US that, you know, typically you you know, you get graduate from high school and then you're you're not coming back to your to your parents' house, right? That's not the case in Latin America. You know, most people stay and study in their hometown and they live with their parents until they get married and and sometimes even after they get married. So so it's just, you know, the family, you know, ties are stronger and naturally that that that makes more sense for the opportunity to to be to inherit the business and continue with the family business. Yeah. Well, the picture you're painting Juan is is a of a very difficult market to find a business in. It's a much smaller market and then even as a percentage of the available opportunities or the available businesses that you might want to buy, there's it's a smaller percentage of those that are not going to pass on to the to to the the kids or somebody in the family. So on that with that, tell us about what your search then looked like. How did you find this business? Yeah, um and I think it definitely makes it more difficult, but on the flip side, you're dealing with a lot less demand also. So so supply limited, but demand is also limited. So we we had very few, you know, there's there's not a lot of people buying businesses here. You know, there's no formal private equity. You know, it's it's just uncommon on both sides to sell, but also to buy. So so that, you know, there's limited opportunities, but the the few that there are, you're going to be probably the only one there and and creating this inception to the business owner of about selling their business. So my search was, you know, was also non-traditional in the sense that it was a pretty short search. So I started searching in August and um we we we closed the deal April 2017. So this is August 16th. So it was, you know, eight month search or so. And the business I acquired I I was I met the owners um early November, right? November of 2016. Um And um I I I I I definitely say I was extremely lucky, Will. So I I found a, you know, very early on I found a business that in in a specific niche that I was looking to that I started out with a thesis of acquiring in, which was construction materials. There was there was a thesis that that we believed, you know, low income housing in Central America was was booming and was continuing was going to continue to boom, you know, the demographics here and the housing deficit were, you know, macroeconomic factors that were going to play in favor of specifically low income housing going forward. So we were we were targeting something there, right? And you know, we weren't thinking about, you know, buying a cement company, but we were, you know, considering anything, you know, roofing, flooring, windows, doors, and stuff like that. So, I started, you know, mapping out the players in that industry or in that niche um and came across a door business that that was that was not for sale at all, but that uh you know, had an interesting profile that one of my investors knew the owners well and had interacted with them previously. And he put me in touch and turns out that you know, they they were two two two, you know, two business owners, two two partners um that had started the business 25 years ago and um I think they they were at a point where um they they were tired, you know, over 60 years old, interested in in in thinking about transitioning out of the business. One had more of an operational role in the business, the other was just basically the capital partner. Um I think their I think their relationship was being, you know, had had degraded a bit and and and they were kind of a bit tired of each other um for for reasons I I I wasn't aware of and um and they they were very interested when I mentioned the idea of of of buying their business. Um very curious and and we just started exploring the possibility. Fortunately, as well, they were um they had started working with a financial advisor. Um so, somebody that had started to help them put their, you know, the business in order, not necessarily to sell, but yes, to just have that um you know, just to get, you know, the books in order at least. Mhm. And that was also extremely helpful for the negotiations. So, um let me stop there for a because things were cleaned up for you to understand quickly. Yeah. Yeah. Yeah. I understand like three or four years before I we started these conversations, the business was, you know, not ready to to to be sold. Like the the books were not in order. So, so that was important as well. Yeah. And so, Juan, now now we were talking earlier about generalities about searching for a business to buy in this market. So, take some of those principles and apply it to this case. Did these guys not have air apparents? Did they I guess you had the credibility of your So, your investor was the provided this deal, so perfect example of investor giving you deal flow. Um So, I I guess really just the air question. They didn't have heirs and what and even if they didn't, you know, how did they respond to some young random guy wanting to buy the business? It's still you still had to you still had to explain the search fund concept to them. So, how did all that go? Yeah. Um I you know, so they did not have air I mean they they they they they both had they they they both had kids, but none of them were in, you know, none of the of the the children were potential heirs. Um One of them had had their their their kids participate in the business for several years and then that didn't go well. Um and I think that was one of the factors that generated some sort of conflict between them between the the two business owners. Um so, that that was off the table for them, right? They they they they they did not have the option of having someone from their families take over the business, at least from the direct line or direct families. They they they weren't that like I I feel like they were on the flip side, they weren't like at the point where they had to retire. Like they had some energy in them. I think they still do. One of them is still, you know, running a separate business that he owns. Um but they definitely, you know, were tired of of each other. So, this was more a situation where the reason to sell was solving the conflict that was that had generated from being business partners in a in a clean way and trying to conserve the friendship that that they originally had. Um because, you know, they had considered, you know, one of one of them would buy the other one out and that was that wasn't going well. So, so this was kind of a clean way to say, let's save our relationship and let's let's, you know, you know, take separate paths and and make sure we're we're friendly going forward. Um But also the inheritance problem also played into to the reasons to sell, right? Um And yeah, and and so the business my my investors going to the other factor that was important were were extremely important in these introductions, you know, I was, you know, a 26-year-old guy, you know, had lived had spent the past 10 years of my life almost 10 years living outside of Guatemala doing other stuff. And so, they were like, you know, who who are you and then what does this mean for us? But they definitely knew several of my local investors, had heard about the businesses that they owned, had heard about the reputation and I think the logic was, you know, if those guys trust him, maybe I can trust him. So, it was a bunch of trust building at that at the start, right? So, a bunch of, you know, coffee conversations, just them getting to know me, trying to understand, you know, what I was trying to do, understanding the search fund model. More so than the model, they I think they understood the concept of like, I'm going to take care of your business and I'm going to be all in in in in in making sure that whatever you did transcends and and and is successful going forward. And so, that was that was I think something that they that made a lot of sense to them. Yes, I was young. Yes, they they they probably said, you know, you're you're you're going to have a bunch of things that that you're going to learn along the way and it's not going to be perfect, but I can trust you and uh that got things going for sure, right? 26 years old. Man. That's That's 27, I guess. Yeah, just turning 27. Okay. Okay. Well, now tell us more about this this business. It fit into your thesis, so it was in residential home materials. Tell us more, please. Yeah, so it was not, I guess, again, non-traditional or not textbook search fund, at least what they were teaching back back back then because, you know, it was I remember in business school it was just like, you know, search for a B2B services, you know, recurring revenue business and high margins and I think teaching it that way, Juan, I think. I think it's still that's still the the the boxes that you should check. I'm I'm, you know, I've become a bit a bit more flexible in in terms of things. And I think you when you're searching in in when you're geographically restrained, you definitely have to kind of draw draw outside the lines a bit and and and search outside the box because there are other interesting opportunities. So, this was manufacturing, light manufacturing, so we we manufactured, you know, residential doors, low-income primarily and and this is, you know, this is not artisanal, this is high volume. So, we're we're we're doing a bunch of doors, right? A day and and this is a So, it's a very I guess unsophisticated light manufacturing process. Um There is, you know, it's not services and but it is B2B primarily, so we're not direct to consumer. We primarily sell to distributors and and and retailers and constructors as well. Export, it's high export and that was important for us because the Guatemalan market is limited and small and so we we wanted a business that could export and attend, you know, the rest of the world basically. Um And you know, definitely not recurring revenue, but a bunch of recurring revenue and and very sticky customers. This was a business that had probably when we bought it was probably, you know, 70 to 75% market share in Central America, right? So, we were by far the largest and still are and yeah, top I think we're top three or five door manufacturers in Latin America. So, you know, the in in high volume door manufacturers. So, so it's it's a it's a it was a significant business in terms of size within that niche. Um And and had a very important market share and that was that was, you know, part of the things that I that made me feel comfortable with the business knowing that I wasn't, you know, acquiring a services high margin business. Um That that was So, that was a trade-off I knew I was getting into. Um But your thesis had been that you liked um low-income residential construction in Guatemala. Or did you see that being a trend across all of the whole region? The whole the whole region. So, it was Central America. So, we saw that trend. We we analyzed that trend and you know, we're thinking about that play in Central America, not just Guatemala. Okay. Got you. Yeah. And give us a sense of the size of this business being one of the market leaders. What does that look like in in Central America to be a market leading door manufacturer? Yeah, so that was a that was a business that when we acquired it was doing about $20 million in revenue and we were doing, you know, I think in doors we were producing when we acquired it was probably 35 to 40 40,000 doors a month, right? Right. Um That that that was that was the relative size and and and and EBITDA was doing about a little bit under $3 million in EBITDA. Another kind of interesting uh metric is that, you know, the the head count was larger than what I was expecting to acquire, right? So so think we were like 250 a bit more than that in terms of head count when when we acquired the business and obviously that was a lot of people, you know, in in the factory manufacturing doors. That was primarily the the the operators uh in in in the factory, but um but it was a lot of people, right? Uh And so that's what is what does that tell us that the business was inefficient or that's just the nature of a business in in Guatemala where maybe it's it's more it's more labor than mechanized or what what does that what story did that tell you? I guess I mentioned it because I never expected to like being like, you know, from one day to to the next become in charge of like 250 300 people and then and then families to think about the the the the number of families you impact through through through this model. So it was it was it was frightening for me and intimidating I guess initially. Then I saw it like a very cool opportunity to impact and and you know, to have an impact on a bunch of lives, a bunch of families. And it also yeah, it also I think what you mentioned is also an interesting point that it it speaks to the one of the the the the advantages we have as as a door manufacturer in Central America is that, you know, the cost of labor here is is is, you know, very attractive for these types of manufacturing facilities. So we you know, we've uh we've been evaluating certain processes to automate the door production and stuff like that and things that, you know, other US door manufacturers do a lot more often. It just doesn't make sense for us because, you know, the cost of manufacturing here is is is is very attractive and so we can hire more people to do labor intensive processes and be more efficient than with robots and I think it's a it's a win-win also for the people that that that that participate in the business because they're, you know, we're we're we're generating jobs for a bunch of people that are are in need for them. So yeah, that's that's also a great point as well. Juan, tell us a little bit about the how you structure a deal like this. So you've called your fund a a non-traditional traditional search fund. So the traditional part of that did was your cap table like a tradition structured like a traditional search fund? What can you share on there? Um In in in terms of the terms for for investors is is that yeah? and for the terms for the investors and then for the deal itself. Yeah, so for investors yeah, traditional terms. I I mean, you know, here here there are some variations I guess, but nothing nothing it was pretty much from, you know, the Stanford search fund primer. So so traditional terms. The step up and everything else that the investors had had that as well. In terms of the deal uh we as I said we were able to we we we I think that was that was important in the way we structured it. So we were able to get bank debt. I was not expecting that to happen to be honest. I I thought, you know, local banks were not going to be interested in a deal like that or would not understand the model I guess. And they we we were able to convince them and to get very attractive bank debt. So we structured the deal um it ended up being, you know, I I think 30% of of of the the total value paid was was um equity and we did about I guess 50% of the bank debt and then the rest was a mix of a seller note and an earnout. Um So we we had in total I guess 70% leverage on on that initial transaction. Great. Now tell us about Now again, this is going back to 2017. So this is some years ago now and you ran the business for six or seven years before stepping out of it, which we're going to hear about. But tell us I guess start with what did you do with these the business in these six or seven years? Give us the big picture of your progress there. Yeah, so um the big picture of of the progress. So so we So I started running the business and my first um surprise was I guess a culture. The the my read on the culture was a bit off through due diligence I guess. So once I started running the business I did realize that the the business was run like it was a one-man show in in terms of the business owner, the one that was running that was actually in in the operations. He was a he was a big micromanager. So the the problem with that is that you have um talented individuals in in, you know, at at the executive level that you know, have a bunch of I guess retained talent or encapsulated talent because they were on they were not allowed to express their ideas. It was, you know, the the the business owner was um he he would he he would he would make all decisions, right? And and he would question everything that everybody did and make sure he was involved in everything and made the final decision. So and I was, you know, I don't know if I was, you know, by inception designed differently or I wouldn't say like intentionally I was trying to not do it that way, but I that just didn't fit in with my leadership style. Um So I you know, I I I'd say I made the mistake of trying to fit fit in trying to fit my leadership style into that culture and I quickly found out that that wasn't going to work, right? So uh the first couple of I guess the the first year was a year of understanding that I was not going to be able to work well with the the key management the the the the high-level management team. Um And so I started changing the top line and and hiring new people that I guess I found more connections with. So And Juan, this was because the existing managers basically needed you to tell them what to do. They didn't express a lot of autonomy because they'd never really been given the the room to do that before. Exactly. I was I was trying to inculcate, you know, extreme ownership and accountability and we started working with EOS. Um That that was immediate. That was two years in I guess to to running the business, but especially when we started with EOS I found that, you know, those people that came from the old school management team were not going to be able to to run on EOS just because of the uh lack of responsibility they wanted to take, the lack of accountability and the having someone question everything they did. That was just not going to fit in with the culture we were trying to build. So building the team, getting the right people on the bus was extremely important in the in in the first couple of years and that took time. It it's you know, it's not easy and and and that was a challenge. I'd say two to three years in well I I really started to get comfortable and I I felt like um now I have a grip of this. So some people I remember when I was searching would tell me ah you know, don't worry it's going to take like six months to get a hang of the business and the industry. So don't stress about it. My experience was like, yeah, that's you know, I don't know if it's my industry my business, but it was way more than six months, right? Uh it it it took more time and um and and sometimes it takes more time and and and you have to be patient I guess. And what in retrospect can you can you pinpoint what it was that made understanding this business more difficult? Um Is it is it the actual manufacturing process, let's say, or is it the market dynamics? I mean, is it kind of Yeah. in the weeds stuff or is it how the market functions kind of bigger picture macro stuff? Yeah, I think I think I I, you know, I I definitely it's a combination of all of all the things you mentioned. So one is that, you know, manufacturing adds a level of complexity that that you have to deal with even if it's light manufacturing and this is, you know, we're not, you know, manufacturing rockets, but but we're we're piecing together things and that implies, you know, certain procurement issues that you have to understand, you know, quality of materials, just quality of production, just taking care of of of of the operators and and the manufacturing process, injuries and stuff like that. So, there's a bunch of factors that you have to kind of come to grips with and understand that would I think you don't have to deal with if if you're dealing with the services business. Um Yeah. Then again, you have to kind of There's a bunch of SKUs and the business that we acquired was doing a bunch of stuff outside of the core, right? So, we were also manufacturing back then kitchens and closets and and we were also doing in we had a small like services business that was installing the doors. So, we also offered the the the the installation, which is a whole another business and represents a bunch of challenges. So, trying to come trying to trying to understand like what are we really good at? Like what is that one thing that we do that that we can be the best in in the world at. Um When when you have so many variables is is is is difficult, right? Um and and and so that as I said took some time and I traveled a lot, you know, I went to to to trade shows, I went to visit our suppliers, I went to visit other factories to to try to understand, you know, where where where should we be focused on. And um And that took some time, right? Um Okay. And so so I would be back to like getting the right people on the bus. That was that was that was that was key, right? Um and so it's like I I find this concept really important, which is like finding your your who I I call it like so initially I was like very like how oriented is the way I'd see it I'd say it. It's like how do I do this? How do I How do I How do I solve this? And you know, a business coach kind of introduced me in to this concept of saying, you know, stop thinking about that. Like start thinking about like who, right? So, who can help you solve this and who knows the answer to these questions and and and so I I started working off of this like find your who and became I think um more efficient at least at at at at identifying people that could help me solve problems and and assigning them tasks specifically and being very clear with what we were trying to do. And I think that kind of helped the flywheel start or get going in our business, right? Um And and so once once I felt I had a a better grip of what was going on and I felt I had the right people on the bus, I started, you know, um thinking bigger and thinking about, you know, what what things had to change and what we had to get rid of first to focus on our core. And that was the first step. So, we made a bunch of changes. So, we we stopped manufacturing kitchens and closets and everything and we said we're going to focus on high volume doors and and and that was a that was a tough decision to make because um it was it was uncommon. It was it was not what people were used to to do less instead of doing more and uh and you know, revenue we're sacrificing revenue and it was just like, you know, a bunch of people were staring at me saying like, what are you doing, right? And um uh but I was confident that, you know, we wanted to focus on our core and in the long term that was going to make us more efficient and raise our margins primarily. And give us a better more ability to serve the customer. And you did this in what year? Um So, that was 20 That was early 2019, probably. Uh So, so only 2 years in. 2 years in, yeah. Okay. All right. And and so first was like doing less in order to do more. And then we made some also, I guess, more aggressive decisions and started uh I guess two things. So, one one was a a built out a team to explore new markets was what we called it. So, we we knew we had a high market share in Central America and we we got curious and and started to explore other geographies where we could export our doors to. So, we started think about uh the Caribbean and opportunities we could find in the Caribbean. Um Colombia and Mexico and and and started capturing some some clients there and started doing some sales first in the Caribbean that become that became pretty attractive and then we went into Colombia and started doing well there and uh I was I I was lucky to to So, we we were about to we were about to invest in a new manufacturing plant in Colombia, actually. Um This was uh late 2019 and uh COVID hit and it it it made us kind of stop the process. I was about to sign a lease to to to for the facility where we were going to where we were going to set up the plant there. And um And the the best thing that could happen to me was was COVID and and for us to stop that decision and that investment because the Colombian market struggled the years after COVID during COVID and after COVID and there was a huge devaluation of the currency and that was that would have I think not been a great investment. Um so, that was interesting. And a separate issue we did was to was a project where we um evaluated a a significant price raise and actually executed that. Um so, we raised prices seriously um and I think that was that was a a very um difficult and impactful decision. So, it was one of one of these, you know, uh kind of moon shots and and high high risk high return decisions that you make as a CEO and um and and yeah, we we we started, you know, running numbers on that. That was late 2020 and uh and since we raised prices over 25% in one one um one step, I guess. This wasn't a sequential like 2% to to towards 25%. This was one day to another a 25% price hike in in our products and and there's a there's a whole story behind that uh that and how we thought about that, but that was probably one of the best decisions uh that we made as a team and that uh it changed the profile of not just the business, but I think the the entire industry. I think, you know, doors were undervalued and the willingness to pay for doors was much higher for customers. And so that I don't I think that not only benefited us, I benefited our, you know, the the entire industry, our competition and we know of other players in the rest of Latin America that followed our lead in terms of raising prices. So, it was an interesting kind of change in dynamics that that that we led there. Well, you say there's a a story there and and we won't have time for the entire story, but can you condense it because certainly raising prices 25, 30% all of that falls to the bottom line. I'm sure a lot of searchers and operators listening would like to be able to do the same. So, what are the bullet points of how you got comfortable with such a a big strategic So, the bullet points were I um I you know, this was not my genius to just one day wake up and say we have to raise prices 25% because I feel I feel like that's a good idea. I I I I I'm a big believer in, you know, not reinventing the wheel and just like, you know, learning about concepts that have worked and understanding them and trying to tag along or essentially copy them and so we I I I tend to follow big players in in the industries that we participate in in in other markets and larger markets and read their annual reports and read what they're doing and just be in the know. And so one of the bigger players in the door market uh I I I was following and I I read about a price hike that they were putting forward. And so I started just kind of researching what they were thinking, trying to reach out and and, you know, understand the details and go as much in the weeds of of of what they were thinking and and and what was going on there. So, I I even was able to get, you know, some materials that they had worked with consultants with regards to the logic behind why prices were underval why doors were undervalued and why the willingness to pay for customers was higher. And there were stud there were studies that that were being made about, you know, compare like other construction material products and how margins in those construction material products were way different than the door market and also this concept of like the door will if one fun fact is I guess a a door the the the whole cost of doors in a traditional US home, right? So if if if if you if you do the unit economics of a traditional I think it's a three-bedroom, two-bathroom home in the US uh doors represent less than 1% of the total cost of constructing that house, right? So So what that means is that if you know, the sensitivity to the price uh of the of of of doors is is very low because with regards to the total cost of the door, you know, it's really irrelevant a difference in the price of the door being you know, 5 or 10%, right? So So you can raise prices in in doors 25% and that's not going to impact the door the the the the the cost of the home at all basically, right? Um so there were a bunch of studies being run with regards to why there was an opportunity to change basically the pro the pricing profile of doors. And I read about them, I learned about them and then we started studying if it applied to the the Central American market as well and I think it it it did and I was definitely like not this wasn't one of those things where there was no risk and that I was like 100% uh comfortable um moving forward, but I had a high I think I I had high conviction that this was going to be successful. We ran a bunch of numbers and they made sense and um and then we just you know, went ahead with a very important and and sophisticated communication strategy, which was key and where we our main objective was to not lose trust with our customers. So So you know, this is a hard message message to transmit like we're raising prices significantly but we went through a whole set of you know, communication strategies where we were explaining to them why this was happening, why this was beneficial for all and why this could this could be um an opportunity for us to grow as an industry and and um I think that was a big reason why why this was successful as well. Um So so I that's I guess the high-level summary of the of the story. And and what was the argument to your customer as to why it would be good for them? So essentially we we went ahead and explained what we were not this is not direct to consumers so we're working with retailers, uh distributors around the region. So we were saying, you know, this is not like us taking margin from you. This is you have to translate this to the market, right? So so we had a whole strategy of how they should be able to transmit this to to translate these prices to the market. But then again, you you also have to argue the the the incremental margin that we get is going to be invested in these initiatives that are going to benefit you as my customer, right? So we we we were talking about, you know, um a a better you know, software investments that were going to allow them to have a better communication with us, right? So we had three specific projects that we were going to be investing in that were going to require like additional capex and what we were saying is if we generate whatever we generate from this price increase that's incremental to us, we will reinvest it in being of better service to you, customer, right? And we tracked that and we're able to show it you know, to them as the years went by. So the so the trust continued to be there, right? And just finally one I mean all everything you're saying makes sense, but it's still doesn't address the very obvious concern that a door if all of a sudden your doors are 25 or or 30% more expensive than the competition, then the end customer is just going to buy the competition. Yeah, obviously yeah. The um So so how do you how do you deal with that unfortunate dynamic? Yeah, definitely. So so you have to Yeah, that's that's the that's the fear, right? And that's that's where you know, you really get nervous is with any type like and I've experienced this with price hikes of you know, 1%, right? And and and your sales team is going to say like I'm not raising prices 0.5% because I'm going to lose you know, to my competition. Um You again if if in our case and this may be specific to our industry, but I think it applies to to several other industries is if if if your only if if your only lever and and differentiator is price in a market, then you have other problems, right? So if if you can only protect your your share through price and being the lowest cost producer and the the lowest price on the market that's I think that's not a a a long-term um strategy that holds, right? So you you you you have to strive for for having other differentiators that allow you to to win over customers in the long term, right? So we were comfortable letting go a whole bunch of customers and we we had modeled out, you know, a bunch of lost sales that that we were okay with because we felt that these were customers or clients that were only interested in price. And um if that was if that was their if they were not willing to value the quality, the service, you know, and and the the volume that we could that we could um supply to them as differentiators and the prime the the most important of those three was service for us. So and and and attention to the customer. Um then that was not a customer that was not our target market. That's the way we thought about it, right? So we knew that we would have some sales that would be lost to our competition. We also knew and we experienced this that we would we would be creating uh competition through the strategy, right? So and and that happened so two or three years after this price hike we had new door manufacturers in Central America that were that were selling doors at you know, 10, 15% below our our our price, right? And and we you know, that you know, you you go through the fear of like is this going to be relevant? Is this going to make us lose share? But if you stick to your guns and make sure that your differentiators are strong and and you lay and and you're focused on in our case it's service, quality and volume with that that makes us different to the rest of the market and nobody else can um do those three as well as we can in in the market. Um in the long term I think you survive and I I think the those low low cost competitors are just you know, stints in the road that that you know, make make it difficult for you a couple of months or maybe a year but then they fade out and and and you're able to play the long term here. So that's that's where and we're in this for the long term. So that's that's that's the way we think about it, right? Well, and then you have the other happy possibility that sounds like it's come to pass where if you're the bold one that raises prices and then eventually the market follows suit cuz you've created room for everybody to raise prices, then you don't even look like you're high-priced compared to the competition cuz everyone just catches up with you. And so then then you continue to have all your differentiators, but you're not even positioned as particularly premium cost because everyone has also raised their prices. Um so you I guess you really hope that that happens. Fantastic. And so at the end of six or seven years, what did the business look like after your after your tenure? Where you're still an owner, but your direct tenure as the as the CEO. Yeah, so um the business had grown um and uh we we we were able to we we essentially doubled the business. We we doubled EBITDA and doubled revenue and um and uh we I mean the EBITDA doubled before revenue doubled. So so we we we increased we did increase margins obviously through this price hike. Uh the the the margin profile of the business changed significantly. Um and so this was 2021 and and and end of 2021 we we we were doing over $6 million in EBITDA and and uh uh about 30 in revenue. Um So so Yeah, so so it was it was it was it was primarily due as I said I think it was it was the the the the the change in prices was important to to the the the the growth of the business, right? Um Great. So a $6 million EBITDA business. The Now in in the Guatemalan market uh how many such businesses are there? They're probably well, there's obviously a lot fewer than there than there are in in big countries like the US, but I guess what I'm trying to say is going from three to six million because the population of of companies is smaller, that puts you in a at a different level and and the levels are are far less populated as you go up the chain. Yeah, so we would consider ourselves a mid medium-sized business in in Central America. It's It's so um Yeah, and and medium to to to large, I guess. And and it's it's hard to it's hard to say, you know, uh also um businesses here don't you know, the are are very private in terms of the numbers, so it's hard to it's hard to say how many uh of of what size and but um we definitely fall in the category of medium medium to large business uh in in Central America, right? And um there are, you know, uh a bunch of small businesses in in Central America, you know, a bunch of mom-and-pop shops, but limited number of businesses, I guess, above the $3 million EBITDA hurdle. Right. And so there you are at six. And of course, to really get a sense of how large this business is in a Guatemalan context, you'd have to kind of do the currency conversion. So, $6 million EBITDA is a lot more money in Guatemala than it is in the States. So, it's it's relatively um a much much more kind of cash-generative company than it would be here. And even here, $6 million EBITDA does, you know, there's there's that's a that's a fantastic business. Yeah. Yeah. And the cash profile of this business, which is important for us, is very attractive. So, it's we don't require a lot of CapEx to to to to increase our manufacturing capacity. A- again, this is a very, you know, uh n- non like automized process. It's very labor-intensive. Um so, and and so and and the the machinery we need are, you know, is not complex machinery. Um we're working with wood. We're we're, you know, we're working with unsophisticated materials. So, so um the yeah, to CapEx is very low relative to other manufacturing uh companies, and that allows us to grow the business uh with a high cash flow generation uh characteristics that that are attractive for us in the business. Okay. So, what do you what take us kind of to the end of this chapter of the story of your of your tenure as CEO in the business? What year is it and what decision do you make? So, when it was um five, six years in uh the the business was fortunately doing well. I I've I felt like uh we had stabilized and and we had the flywheel going and the management team was up and running and taking care of things. Also, I felt like, you know, it was a different it was a different business. It was a lot much larger business. We were growing in new markets. There was untapped potential to keep growing the business and um I I started to get a hunch of wanting to to go back to the investment side of things. And I, you know, as as as we talked about earlier, Will, I was always also a very uh I guess finance-y guy interested in investing. I loved the operating part of all of this and and and still do. Uh we can talk about that a bit more of that which is interesting, but I At that point in time, I was I was thinking about like investing, right? And then saying like, I think there are more opportunities like this one, and we should capture them, right? I had a friend, one of my best friends, uh the you know, from childhood, uh who was who was also starting a search back then. Um And and what we did is we essentially partnered uh with the same set of investors back then in his in his search, and he was searching Guatemala as well. And so I was following his search and helping him out and and saying, I I think we saw a bunch of opportunities that were very attractive, but maybe not search fund-like deals because they were minority deals or they were, you know, not they were not checking all the boxes in terms of the search fund deal. But I I I spent a lot of time helping him. Uh you know, long story short, I again, given the trust and friendship I had with my investors, I had open conversations with them about, you know, saying, can we transition c- is there a way I could transition out of out of this role as an operator and keep on doing, you know, investments with you guys backing me and make sure we this this this door business is taken care of. And um And they were very open to those conversations, so I started exploring, you know, what what how this could make sense. Um And so we ended up doing a couple of things. First, um it was important for me to clear the clean the table with my investors, and uh even even even better if we could generate some sort of return. Um and and so make sure we were playing with, you know, house money going forward. So, uh as as I said, the business was doing well. We had generated a lot of cash and paid down debt. And uh so we were able to do a a sort of a dividend recap or special dividend to through recapping the business with debt. And um that allowed us to distribute, you know, back money to investors, generate a return. I was able to invest my my carry. And um and the other thing we did and I worked a a lot on was find a great manager to take over the the CEO role and to to transition me out. And um I think that that also was was important because I also felt like, you know, maybe this next stage, you know, is the I was sure there was somebody out there that could do it better than me, right? So, I I I was I was interested in finding someone that that was a great operator and that would take care of the business going forward. I was going to support him and I was going to continue participating as a board member, but he would be running the show. And I was I was I was fortunate to find the the current CEO of the door business who and and he and and hire him and and he's now running the show there. And we're still business owners. We're still running we're still the owners of the company, and I participate as chairman of the board, but he is fully in charge. I'm no longer in the day-to-day day-to-day operations of the business. And the business has has continued to do incredibly well. Um so, so very happy with that transition and how those things kind of played out, right? Um Anything to say about finding your who in this case, finding the CEO? Oh, yeah, there was, you know, we could do a full the full hour of that. Um and yeah, I I there's a bunch to say there. Generally in hiring, the way I think about it is, you know, again, people I I can really trust. Um but for this role, it's by far the I now have some experience hiring CEOs because I think we'll get to that, but we're now doing more investments and and assigning CEOs to run the businesses. But um I think fi- finding a CEO is is is is is difficult and different than hiring a someone from the management team, so someone for a specific role. Uh the CEO has that particularity that it's, you know, it's it's somebody that's, you know, has to be good at everything and, you know, not specific on something. So, it's it's it's it's it's complicated, but um I I I was looking for somebody first of all first of all that had this kind of entrepreneurial rigor. So, you know, you you you want somebody that that or we wanted somebody that was just scrappy, um a doer, uh you know, owner mentality, but at the same time analytical and rigorous, right? Um so, finding that combination is is tough. I wanted somebody that I could, you know, trust from the get-go and that was very candid and open from the get-go and had demonstrated that in the past. And I was looking for somebody that was coachable as well. I think that those were three traits that were very important to me. Um and that had demonstrated an ability to to, you know, a growth mindset. Uh somebody that was willing to learn and and I'm more of a I prefer to hire uh people that are, you know, uh that that may not have the title that might may not have previously had the title of a CEO or general manager, but are that that are right there and have all that hunger and drive to get to that position. And, you know, you know, go through that kind of phase where they're they're they're they're going to learn a lot and make a lot of mistakes, but that they're going to be hungry and driven. Um as opposed to somebody that has proven out his, you know, all his skills as a CEO and has, you know, you know, that that title for 10 to 15 years, but doesn't have that drive anymore, right? Um So, the the the CEO that that we hired for the door business was exactly that. He was he was just ready to become a CEO. He was extraordinary at at at what he was doing in in a in a large corporate where he was previously. And um was was very interested in this model of small to medium business, uh full ownership, participating in the equity as well. And uh and somebody that I knew I had known previously as well. So, he was he was trustable and and we had a great relationship and and and yeah, so I I was I was um it's it's it's it was an easy transition for me actually and and I'm really happy to have him on on on the team. Fantastic. And Juan, tell us more about the dividend recap. So, I'll just take a stab at big picture. You had built uh paid down a lot of the the debt that existed. You were generating a lot more cash at this point. So, you could get more debt back onto the business. The business could support a bigger debt payment um cuz it was generating so much more cash. And then with that loan, pay yourselves back. So, pay your investors back plus a return. Pay yourself. Have a big liquidity event for yourself. The business then carries forward with a new loan. And it uh but it you know, everyone, the lenders and you all are very comfortable that it can support that loan. Um you've now been in the business for 6 years and gotten it to $6 million in EBITDA. Uh and retain all of your equity. Right? Is that is that essentially it? Anything more to say about that? I mean that that that must have felt good. You basically had an exit without exiting the business. Yeah. Yeah. You had a liquidity event without exiting the business, I should say. Exactly. Yes. Um but yeah, that that that's pretty much it, Will. So, so you're you're you're you're relevering the business. Uh so, in our case, we relevered the business to the levels that uh even below the levels that we had levered it at acquisition, right? So, so it was not it was not something that it wasn't taking leverage to a new extreme. It was just relevering up to where banks had originally lent us, right? And and that's because again, the cash generation and and the the growth had allowed us to to pay down debt significantly, right? Um And with that, you know, influx of money, you you you declare a special dividend that you pay out to to to investors. And um we also given that I was transitioning out of the CEO role, where you know, the we had to kind of restructure the our shareholders agreement because or make amends to it because you know, investors were now going to participate in a in a different thing that from what they had originally signed up to. Another interesting fact here is that what was once you do this, like you're now really playing the long term, right? So, now you can really think about okay, they you know, you you've you've cleared the hurdles, you've vested, you you there's no like IRR to be thinking about, right? So, so as as as you know, as a searcher and as the original investors, you're now saying, okay, cool. The you know, we've cleared the hurdles, we've made the money we want to make here and now we really want to play the long long game. And so, we're now thinking about, you know, MOIC, uh just kind of permanent capital compounding the cash we generate from this business and and trying to make this as big as we can um for over the long term, right? Um And Juan, if if if I mean if you can a business that's doing well, you can dividend recap it and pay the investors back plus the return they were looking for. Uh and then continue to retain equity and think about it for the long term. Why don't you see this as uh a more common liquidity event in the search fund space? The default is sell the business outright. Yeah, that's um I mean, this sounds so much more attractive. You had a payday and by the way, you still own the company. Forever. Yeah. Yeah, that's a that that I mean, that's a great question, I guess. Um you're probably So, first, you I mean, you have to have the financial conditions to to be able to do this, right? So, so uh that I I guess that's the the first question is you're not I mean, not all businesses are in are in the financial capacity to go through an event like this, right? And I I do see an argument from investors if if this wasn't a significant special dividend where like you know, you're you're generating a significant return and you're just returning capital, I do see the investor saying, let's not use this money to to pay us back our capital. I mean, let's look for other investment opportunities, right? One conversation we we did have the conversation with investors of like, should we just sell the business now, right? So, maybe let's let's explore this. And we did have some conversations with bankers and started exploring the idea, but quickly we we we found, you know, that a couple of things. One, as I said, the financial conditions were there. Interest rates were very attractive. So, this was 2021. So, you you got, you know, I think we all recall what what interest rates were back then. It was it was, you know, just in time to do this, right? Good timing. Wow. Good debt, right? And also, there weren't clear avenues to deploy that capital for the business at that point in time, right? So, why don't other people do this even if they can check all these boxes of like being in the in the financial capacity to declare to relever and declare a dividend like that, I can think about, you know, maybe because there's other uses of capital allocation. So, great investment opportunities, you know, in our case, it could have been another manufacturing plant. Um it could have been, you know, buying a bunch of robots to automate the production process and everything. But none of that really made sense for us. Or acquiring another business within the door manufacturing industry. Nothing made sense for us at that point. And at the same time, we saw a great potential in the business to continue generating cash over the long term. So, we said, you know, and that has happened. We we did this back in 2021 end of 2022. And we're now we we we've we've basically reduced our debt back to the levels where we were prior to that dividend recap in just a couple of years, right? Because the cash business has continued to grow and the cash generation is has that same profile. So, I think Will, I think we you know, uh the you you as a searcher, ideally you want to find a business and then we're, you know, when we talk to searchers, we're constantly drilling them on find businesses that have other liquidity avenues that are not necessarily selling the business. So, focus a lot of on the cash generation of your business. Understand the cash profile. Understand the needs for capex um because you always want to have some sort of flexibility to do something like this um in case, you know, the market is not there for selling or in case you want to play the long-term game and have these conversations with your investors. So, and So, I think one, you know, people don't buy these types of businesses, right? So, you you have high growth businesses but that are not necessarily generating a a bunch of cash, right? And two, I do think people don't stop and think about other opportunities of capital allocation once they have a bunch of cash, right? They they they just think about like now I have to invest this here or there. Now I have to acquire this other business because I want to grow grow grow grow. But I, you know, I would invite everybody to stay and and and just like stop and think and for example, if you haven't read the the Outsiders by William Thorndike, I think that's a great great book to every searcher should read. And just like think about the other avenues of capital allocation, right? And whether what other options are out there for you to use the cash that you've generated. And this being one of them, I think is a is a great way uh and use of cash. Well, it sounds like frankly just a a stellar outcome, Juan. I mean, to say what I said before, you had everyone had their payday, investors got paid back plus return, and you still own the business, and then it's continued to grow. So, you've able to you can do the same thing again. I mean, it's really serving as as uh you know, an ATM machine that spits out more and more money. What you said about as you as you now invest in searchers yourself, uh drilling them on making on on evaluating businesses with an eye toward being able to have optionality in the future. Did you just by that did you just mean, you know, basically profitable businesses that don't that aren't super growth dependent, that they have attractive fundamentals, that if they don't grow grow grow, they can be very attractive cash generation machines. Is that what you meant? Yeah. Yeah, so I I ask them to think a a lot about like the just just just really understand the cash flow yield, right? So, free cash flow yield of the business, you know, year after year. I we don't like put a necessarily like a a hurdle or make them think about a specific number, but just like you want you want that to be high. You you want to understand how it works. You want to understand the working capital like profile and needs of the business, right? You want to understand capex. Those are all like variables towards free cash flow. Uh so um but I guess our experience now as investors because, you know, that's another conversation but we we we you know, we're also investing in in in search funds uh um in in the US and in Latin America. Our our impression is that you know, there there's a tendency to think a lot about growth and and that's that that's good. I mean, we we we we we we all we everybody wants the businesses to grow and everything. Um but sometimes sacrificing the at least the understanding the free the the cash flow profile of the business, right? And uh you know, we've all heard the the you know, the the saying that cash is king and um uh we're we're more interested in this fact free cash flow yield than than growth. I I'd say that out right out right like we don't really care that much about growth in businesses. We're we're really interested in the free cash flow yield. Um because of this experience that we've had, right? So Not sure if that answered your question though. Well, I'm trying to get It did. Well, and it also it may come back around again with my kind of um closing questions here. We haven't left a lot of time for it but let's hear now about how what you're doing. You've you've pivoted into let's call it an independent sponsor. Um that that may not be that may be kind of shoehorning that label onto you. What did you do when you stepped out of the door business? So I I partnered with um my my the friend I mentioned previously that was also doing a search fund. Uh he searched without acquiring but we created this pipeline of deals in in Central America that was extremely attractive and since we've been patient because that pipeline has been maturing over 5 years now. Some of the deals that he started like some of the conversations he started 5 years back with business owners are now maturing into possible acquisitions. Uh hold on. So you're telling the audience it takes 5 years from that first conversation to actually for an owner to be willing to transact? So yeah, like I mean in in these at least in Central America we have like our experience has been that yeah, it's you have to be much more patient in maybe that 2-year time window that that you have as as a searcher is tight because uh you might get lucky like I did but if not like more more common scenario is that business owners just take a lot of time to come to terms with the idea of selling their business because of this like you know, the whole family legacy and you know, how important it is for the family inheritance as as we mentioned earlier. But um so I I would say like more than an like an independent sponsor figure we're we're trying to because we're still working with our original investors, which is great and we we love that. Um We've acquired uh another business in the same sector like construction materials um and and we we also own 100% of that business. We've assigned an extraordinary CEO to run that business as well. Um so very very uh um similar model to the door business. It's light manufacturing as well. Um we we currently have another business under LOI in the same space, same characteristics. So we're trying to close that third acquisition soon. Um and our idea is to is to you know, own these businesses under a holdco model. We we like to call it more a platform model because we're thinking about being specific to an industry for now and then venturing out to try to platform number two in another industry but we're we're trying to leverage our expertise in this light manufacturing construction materials sector as much as we can and also ride kind of the tailwinds that that this industry has because we we do see Central America continuing to boom in the in this segment and um and so we're trying to ride that wave uh through a vehicle that that allows us to own these businesses for the long term, right? Um backed by our original investors. That's that's that's the that's the whole plan. Separately as I mentioned, we've also with with my same business partner we we we've raised a fund um with primarily local Central American investors that the original ones and others that have found the search fund model interesting and we're investing in search funds um globally primarily in the US but but but globally and backing searchers in in a very this is a small fund so we're we're not like large institutional investors but we we want to back you know, uh you know, a set of five to 10 searchers every year and and be as helpful as we can to them. It's a way to give back to the ecosystem. We received you know, a bunch of help and all of these ideas that I've mentioned will were backed by searchers who had done this previous to me and and done it well and so I'm very grateful to the search fund community um and grateful to to folks like you that that put out all this material to to make us to make the adventure more like I guess more palatable for for us as searchers and I'm just trying to give back, right? So that's the way we think about investing in search funds as well. And you said um investing in searchers in the US but also globally given your being situated in Central America do does a more a global searcher or non-US searcher should they feel more like they should reach out to you? I mean, what I guess maybe is that a differentiator? Do you think compared to other search investors? Yeah, so we're we're I I think we I mean, we're happy to to to talk to searchers anywhere to be honest. Um we we we we do have a mandate to so the majority of our fund is is going to be invested in the US, right? That that's just because of appetite from from our investors and LPs and the way we structured it but um but we do have a bunch of conversations with uh non-US searchers and we have a bunch of experience to share with them. So and even if we're not investing at that we we have conversations with searchers all the time to to help them out and and and just just be helpful in terms of how they're thinking about structuring their fund or or the deal. Um so happy to talk to anybody that that um is thinking about a search fund. Um Right. Okay, well, I want to go back to the holdco or the the platform Mhm. investment uh firm. You're closing the third you're you've got the third acquisition under LOI and so are you then looking those three will become the platform or the door company is the platform and these are bolt-ons? And and and this is all just kind of sounds like it's in what year one-ish? You exited in year or or you did the dividend recap in 2022? So I guess we're 2 years later. Um are you going to continue at the I guess what are some of the goals in terms of acquisitions or revenue numbers and size um in I guess year five call it. Yeah, so we're we're looking to acquire on so the the these are not bolt-ons to the to to any of the operating business. So the idea is is to to structure in that's what we're currently doing structuring a newco that will own so it would be like an app. The newco would would acquire each of the operating business but that would just be kind of a share swap from investors um and um from the this this newco holdco whatever we call it, we would acquire uh we're we're targeting three owning five to seven businesses in total, right? Um within this this this um this segment this construction materials niche, right? Um but again, we're we're very scrappy will. I I even struggle to say like five to seven. Obviously, we have to put some numbers on the document that we share with investors to give them a sense of what we're thinking but I always say you know, could it could be could it could we keep it with three and and just do three or do five or do 10? Yeah, I mean, we we we want to be flexible. Uh but the idea is to use the cash flows that that are generated from these operating companies to acquire more companies, right? And get that get to that flywheel where you know, we're we're using the cash that the businesses generate to grow inorganically within the same niche and um compound you know, and and you know, hold these for the long term, right? And um and um so And what when when when you say hold for the long term therefore the returns to investors are happening on a on a on a regular basis as dividends as opposed to some big liquidity event because long term means that liquidity event is too far away. So you're going to be using using the cash to not only make new acquisitions but also pay dividends in the meantime? Yeah, we're we're we're going to you know, we're going to use the cash the we're going to make the best capital allocation decision we can at each point in time, right? So if there is nothing interesting to to to to invest in at that point we will we will we will dividend out, right? And or we will buy back shares or we will do something that gives liquidity to investors. But if we find other attractive opportunities, acquisitions specifically, we will we will acquire other companies. And and and and keep growing the the holdco. Uh So that that's the way we think about it and we're we're our investors are clear that you know this is a different model. Like this is not the search fund model, right? This is a a long-term uh a whole vehicle and so we're no longer thinking about IRRs. We're thinking about money on invested capital and trying to grow this as much as we can and and and as I said compound the the returns. One for for the listener who might not understand this shift in mentality from IRR to MOIC, MOYC, what does that mean? What Say say more about that. Say more about that, please. Yeah, that's an important concept and and one that maybe not a lot of people or not everybody listening are going to really understand even if they understand the definitions of those two things. Yeah, so typically you know I I guess the majority of investments, financial products and everything are thought of through IRR and just returns over a period of time. So it's not just how how how much money you make on an investment, it's how in how much time you make that money, right? And so you're trying to clear these these return hurdles that have a time variable that's important and that as as you as you you know, take more time to generate returns that your IRR is going to blow be uh fall fall, right? But here we're playing as I said that that that this this this game of of compounding, right? So so and this comes from you know, the you know, the the Berkshire model, you know, Warren Buffett and and and and this philosophy of of the magic the magic of compounding. So once you're in in these investment vehicles that are that are long-term permanent capital vehicles, right? You're no longer thinking about time as as a as a variable to optimize for, right? So the IRR hurdle starts to you're you're you're I guess I wouldn't say it it it no longer matters because you're obviously trying to maximize returns in any sense, right? But what you're really striving for is money on invested capital and as opposed to like thinking about you know, doubling your money or three times your money, you're now thinking about like we're going to a 100x your money, right? So so we're we're we're really thinking about you know, in 20 years, in 30 years, this is going to be a 100x, right? And the IRR IRR in that is going to be extremely attractive, but we're not really thinking about that. We're thinking about compounding this your your money for the very long-term, right? Um and um And so I I guess the search fund model is designed to to also think about time and and and most search funds are structured through IRR. At least that's what I still understand how how how things work with IRR hurdles. We've we've been you know, we've we've argued that that that that a good model for search fund investing should be MOIC hurdles and IRR hurdles. So you're you should be trying to clear a MOIC hurdle and an IRR hurdle if if you're doing a traditional search fund. But once you migrate into this kind of especially for for example in our door company, when we we've cleared IRR hurdles, we've returned capital to investors and generated the return that they were expecting. As I said, we're we're playing with house money now and so what we're trying to do is really just uh you know, make that money as big as possible over a a time horizon that that that we're not sure how how many years that might be, but we're just really thinking about compounding that that capital. Well, I I still I struggle with this one. I have to I have to admit because the uh I'll call it MOIC, the money on invested capital or or multiple on invested capital, you know, if you if you 10x my money in 10 years or 10x my money in 20 years, those are both long-term, but those are both very different outcomes. Yeah. So it still ultimately always comes down to time of investment. This is what I don't I I don't understand how returns can ever be decoupled from time frame. Yep. Is it is it just that like when you start thinking in in 15 and 20 and 25 years, it's just too hard to predict, so you're just kind of you allow yourself to be a little vaguer? Is that what it is? And and just to go back to the Berkshire the Berkshire Warren Buffett example, you'll often hear about like what is what is Warren Buffett's performance? Well, it's basically low 20s IRR year after year over whatever it's been, 60 years. So so you know, when when people are really studying Warren Buffett, they still kind of tie it back to what his internal rate of return has been over this amount of time. Yeah. Yeah, that I think that's a great question. Well, so the way I think we we you have to think about it is what what So why does it matter, right? So um One one reason why as an investor this should matter is like so how are you how are you paying promote on uh on the investment to to the manager, to the GP or to to to the searcher or whatever, right? So So that's that's that's one reason why it matters, right? Because it's you know, as as you said, it's not the same to double your money in in in two years or in six years, right? So One one thing we that So to to be clear, it's like we're not ignoring the IRR. So for example, in the way we think about structuring promote for this long-term hold vehicle is you're you're going to get paid as a as as the as the founder of this model for doubling the money on for doubling Each time you double MOIC for investors, you're going to get paid, we're going to get paid. But we have to clear a a preferred hurdle, right? Which is IRR. So we're we're When we look back when we double the the the the the net asset value of the investments, we look back and we have to make sure we cleared an 8% hurdle, right? So if if you're if if you doubled over 20 years, you're not going to have cleared the the 8% hurdle. So we're also I guess we're not ignoring the the the IRR. We we're we're definitely making sure it clears a hurdle, but we're not using IRR as a primary benchmark because then you're incentivized to generate as much liquidity in the short-term as possible to maximize IRR, right? So so decision-making is another reason why it matters, right? And that's why you know, traditional private equity you're going to you know, you're you're seeing all these you know, flips and and businesses being sold in three to four years, right? Because obviously that maximizes IRR. Another interesting reason why it matters is it uses debt, right? So so debt debt becomes an interesting thing to think about once you structure these long-term hold vehicles because you know, debt is very attractive in in private equity deals that because it it that really bumps returns, right? So it's going to really help help you juice up your IRR especially if you're doing this for three or four years. Once you're going for really long-term, right? 20, 30 years, yeah yeah, it's going to help you bump returns, but not in the same way, right? And so you you you you you think twice about using debt especially if interest rates are high because it doesn't have that same effect as as if you were playing the three to four year game, right? It's just different, right? And and so I guess to to answer specifically your question, the way you have to think about it is we're not ignoring IRR in these in these games or in this model. We're just making sure it's not our primary driver, right? Our primary driver is multiplying your money, MOIC, right? Well, thank you for that. Thank you for that one. It was great. Well, I want to close this out here with um basically just kind of have you reflect on the difference in what you're doing now versus being an operator. You said uh earlier in our interview that you you really loved operations and but you have you're now obviously mostly a capital allocator, you're an investor. So it's a very different profile of day-to-day life and and trajectory of career. So maybe compare and contrast and and um in a way that might be relevant and helpful for the audience. Yeah, and I um I turns out that the grass is always greener on the other side, I guess because I I was I was I was um I was running the business and I was I I guess 2021, I was like I'm ready to I'm ready to go back to the investing side and you use my investor hat and you know, start running analysis and and doing deals and stuff. Um then you know, I was after a couple of years of doing that, you know, I started saying, ah I want to be in the trenches again. I want to start running the I want to I want to be uh in the operations again." And I did spend some time uh in in the day-to-day operations. I was a temporary CEO, I guess, of the of the second business we acquired. Um Mhm. And I I really enjoyed that. Um I I don't know if that's a if that's even possible, but I I I I see myself like going forward switching hats constantly. And and if I if I can buy myself that that flexibility of of being able to participate in both um uh temporarily, I guess, and and, you know, not not losing the ability to to spend some time in the trea- in the trenches with the operators, with the management team, doing EOS and all that. I love that. Um But I also feel very comfortable and enjoy participating in deal making and deal structuring and negotiating acquisitions. Um And so, maybe I'm just somebody that's very dynamic and and gets bored of doing the same thing uh for long periods. So, uh uh I I want to be uh I I And I I think another interesting thing is that this model that we're building out, this HoldCo, I guess, allows for that. And that's something that I that I find very attractive as a professional uh development opportunity, I guess. Mhm. Well, it's probably a good thing, Juan. I mean, at least a good thing given that you've built something for yourself where you have the flexibility. If you If you didn't have the flexibility, then you'd always be chafing and wanting to get back to the other thing. But given that you have this this freedom to go back and forth, it's the it's again, to use Warren Buffett, I think it you know, he he says his quote is, "I'm a better investor cuz I was a businessman and I was a better in businessman cuz I was an investor" or whatever. I mean, the these are highly complementary, needless to say. And yet, most people probably just prefer one or the other. Operations and being in the business versus being capital allocator. So, um if you are a personality that can enjoy and does enjoy both and actually gets an itch to do both, um you'll be able to travel back and forth and bring the learnings from one into the other and vice versa. So, that seems like a a a really happy characteristic of yours. Yep, definitely, for sure. I really believe in that quote by by Warren Buffett, for sure. Yeah. What haven't we talked about, Juan? Did we get to everything? What haven't we talked about? Um Yeah, I I know, I I think I think we covered uh a bunch of ground and I I um I um Yeah, not not nothing uh like uh big comes to mind. So, um Okay. Um If people want to reach out, Juan, what's your preferred method? Um I think Link- LinkedIn is is is is probably the the preferred method method for me. Um I check that often. So, uh people can find me through LinkedIn. And um and yeah, through we we can like if if if you're a searcher, um we have a website that that that has a good communication tool and and you can reach out there and uh happy to get in touch. So, uh What's the URL? Uh it's paltuscapital.com. So, um Paltus, p a l t u s. Yes, uh capital.com. Mhm. Great. Juan Aguilar, thanks for so much time. Thanks for walking us through your journey, really a fascinating one. And um seems like you're What are you now? 34? 33? 34. Yeah. 34. All right. Well, lots to come in your career. So, it'll be fun to watch. Thanks, Juan. Thank you, Will. This was great. Really 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.