Ben Brier welcome to acquiring minds great to be here thanks well Ben you bought a 65-year-old manufacturing business a manufacturer of gauges I didn't know what gauges were you had to explain it to me we'll have you explain it to the audience here in a little bit but it's a really neat business and well earned your search was long and expensive and we're going to hear the whole Saga today start us off Ben please with some background on you sure sure um appreciate the the intro I can't wait to jump into some of the uh some of the topics there um so I grew up a finance guy sort of true and true Finance guy um got uh my career just sort of you know started at at Vanguard and I sort of grew up at Vanguard I thought you know that I would um you know be there um you know for a long time and I was um you grew up in credit research there um you know picking bonds for vanguard's bond funds um so I got exposure to you know investment great corporate bonds and um over the course of my time there I got into Structured Products um you know asset back Securities and commercial mortgage back Securities and so I was doing some like really cool you know funky analysis you know looked at deals that were uh backed by the fleet of tugboats for example um so we did some really cool things and um as you know my career there went on I sort of got more interested in uh getting away from a computer you know information is you know for the public markets information is getting priced in at an increasingly rapid rate uh with AI and um you know the pace of technological you know uh advancement is it's it's price allows people to price in information really quickly and so I was like man like if I'm an analyst and I'm you know a research Guy where can I go to get as far away from a computer as possible where can I go where like the information is like dirty like not accessible like you know where can I go and so in Ben this means to because you're trying to this is kind of like a where to where can you still find Alpha where can you still get an edge that's correct I mean yeah that's a great thank you for clarifying yes it's like my like sort of personal search for Alpha um you know in terms of not only just like my financial you know uh you know situation but also just like my career like where can I go to have a career uh uh of you know searching for Alpha which is what I love and Ben H how did you learn about search itself because um it's there's still usually kind of a discovery moment that this is a thing people do that there's SBA Loans that there's a way to do this and a path how how what was your your first exposure yeah great question um great question so um from Vanguard I I went to a small independent sponsor um called called Mainline Equity uh in uh you know outside of Philadelphia where I'm from and I got exposed to like the independent sponsor model um and you know I liked that I was working you know working in that learned a lot which was which was uh helped to sort of you know help me sort of to develop my own perspective on the market um and at that time I was also going back to business school at NYU and one day uh a guy uh friend of mine said hey like do you know what like search funds are and I said I have no idea man like never you know I have no clue he's like well it's totally your your thing uh this is totally you you should go to Harvard's um search fund conference they have it every year you should go to it it's in two weeks um on a Sunday morning and so I was like great um so that just happened to be a weekend uh when I had class at NYU class ended on a late on a Saturday took the train up to Boston um the conference was on a Sunday and so it's you know in December in Boston so it's freezing cold Sunday morning um you know you know trying to find my way around Harvard you finally you know find the auditorium get in there um and there was probably I mean that year there were probably I don't know 50 or 100 people there which didn't seem like a lot because their Auditorium is pretty big um and I sat in the back and and I started to listen to people talk about search and SMB and I immediately was like very intrigued and I was like my friend was right this is right and I was like oh my God move to the front of you know I moved to the front you know uh took out you know my notebook was laser became laser focused on this and um that was my that was that moment where I was like wow like if those people can do it like anybody can do it like I I it never really occurred to me that anybody can do this like literally anybody um you just need certain tools in your toolbox and you have to have a certain sort of risk appetite um and some you know some uh some courage and that's the formula and I was like Wow and Ben you so on the one hand you were looking for some differentiator for yourself in your career some sort of alpha but I I suspect what you what you were hearing up there on stage that day in Cambridge was not just kind of some Financial argument for that there was there was a more a holistic something something broader was resonating with you what was it yes yes yes yes um definitely so the the financial piece I didn't even like that's just teeny small piece um uh it was an opportunity to sort of uh get the keys to the bus I say um where where um you have more um more autonomy in your career and your life um and you have an opportunity to like you know get to the Sea suite at a relatively early age um so you take on more responsibility um and you basically sort of have a chance to live and die by your sword so to speak you know um and I liked that I was at a point sort of in my life where I had learned from you know people throughout my career and I was like man kind of now I'm in business school I'm learning new ideas and I'm you know interacting with my classmates and I just was like man I want to go like you know I want to go swing my bat I want to go you know I want to go try this out great so you uh walk out of the the auditorium on Harvard Yard that day feeling inspired like this is this is for you so then what um and so uh one day I'm in uh in business school I'm in in my marketing class uh Professor Carr so one day he brought in a guy um named Steve G and uh Steve G started to speak uh about his background and what he does and uh it was REM it was remote so this was like during Co you know height of height of Co and I'm standing there in my kitchen you know watching this guy talk about himself and what he's doing and I'm like man if I could close my eyes and picture myself in 20 years like I'd be that guy like I'd be you know that's me um you know he's talking about you know being a college athlete being an English major you know being a finance guy like I was like all these you know it was all the same you know very similar um and so of course you know I like raised my hand virtually and I was like hey like can I talk to you like I'm you know I'm Ben and I'd like to talk to you uh cuz what you're saying is really interesting and and Ben what was he saying what does Steve goo do yeah yeah so he was just talking about ETA but he wasn't he didn't use that term um but he was talking about buying businesses running businesses selling businesses you know working with you know uh family and founder own businesses and um he uh he has his hands in a lot of different things but um uh they were all sort of like you know some of it is like sort of what you know true entrepreneurs you know or you know in a in a traditional sense yeah 0 to one um but it was also like ETA stuff and so um you know he was involved in a lot of different like cool like weird deals like um uh you know casinos and you know Montana and like you know uh you you know gaming company and Esports and all these like weird things I'm like wow like he's totally you know he's open to these opportunities and he talked about learning and I think um this is like a big theme uh in search in my opinion and in ETA uh in general is just like you have you have to to be successful in my opinion you have to love learning this is about learning the entire process is about learning um about everything you know you're during due diligence you're learning about Industries you're learning about the company you're learning about yourself um then when you post cloes you're learning about how to run the business you're learning from the employee so you have to love learning and he sort of talked about that he's like I'm a professional like learner and I was like I love learning like I really love like you know I love learning uh and so he's like okay like yeah sure dude like you know this million people you know say the same like okay like whatever um and so I was like can we like keep in touch he's like yeah sure um and so like we kept in touch and um he you know he started off like you know he had a little project for me at first um you know something basic you know little research project and he's like hey can you help me with like XYZ um and uh I was like sure like totally like yes I will yes I can help you with this and so you know I did what he asked returned the you know my analysis to him he's like okay like this is really good like awesome like how about this can you help me with this and so like throughout you know over the course of probably a year and a half um uh yeah about a year and a half like he and I had we were working together on these different projects um random an you know random analyses on all sorts of things um and so we had built up this Rapport and it came down to uh you know the end of Business School uh and I was you know about to you know graduate and stuff and at that time i' had been you know working at Mainline Equity while I was in school and I was like Hey like I kind of want to go do my own thing like would you I want to pursue ETA like full-time um I want to do a self-funded search where you know it gives me a lot of optionality which that's another big theme um and I was like I I I want to know will you will you back me if I find a company like will you write the equity check and he was like yes and so I was like awesome green light so um uh that's sort of how we got started and that's sort of how the how I got sort of started in search um it was just you know just by chance that he came to talk and um it just was by chance that you know I had a chance to work with him before we actually started searching which I think is really important and did you guys work out any kind of terms at this point were you thinking 10180 kind of SBA deal or was it more of just kind of like a directionally find a good business and we'll figure it out yeah Wild West um no nothing in writing um it's just a handshake deal um just a handshake deal I want to hear about the of course the your search and business that you did buy and you've had a lot go on since you closed on that business so we just need to be paying attention to time but I want to give time um for you to tell the story of the business you didn't buy because it was such a long time so can you give us can you give us like a few minutes on the Precision metal business yeah I mean this is and this and this is when we first talked you were you were you were dealing with that deal so let's hear this in brief it's pretty pretty a pretty hard one to condense because it's a really long story but I think that that deal was dealing with me so we looked at you know a lot of deals found a Precision sheet metal uh manufacturer um in uh in the Northeast um and uh it seemed to sort of initially check off a lot of the boxes that were hard to check off you know you know typically you know you don't you're not going to check off a lot of the big boxes right away um or at all right and then you pass on the deal and you move on but you started to PE peel back the layers of the onion here and I was liking what I was seeing you know it was close by and you seemed to sort of fit this thesis that we started to um that's started to formulate as the search went on and um and so at that point like I had you have a really as like a self-funded Searcher you have a really important choice to make and this I think about this a lot like um like conventional search fund and ETA wisdom tells you hey you found a deal you're doing preliminary due diligence that's great the odds of you closing are very small so you want to keep keep putting deals in the top of the funnel you always want deals in your funnel you want to maintain your pipeline you want to do you know keep and so that sounds great right like theoretically yes that sounds awesome in practice that's like for you know a self-funded Searcher or you without you know full research team like you're not going to be able to do that and so Choice was okay go all in you know on this this deal or sort of stick my toe in but try to you know and so I was like all right like based on my initial research so far like I'm all in like I'm closing this deal like I am I'm all in um and so uh yeah if I'm all in on something it means like I'm really all in and so uh what happened over the course of however many years I guess uh uh I guess it was probably about a year a little over maybe um uh it was a I guess a years long like du uh due diligence dance uh that we did Why didn't it work out well and yeah why didn't work out great question so I think we I think initially and this is a good lesson I think for other um people pursuing these sorts of deals I think there's a couple mistakes not mistakes but a couple choices that that we made and I I made is you know my choices that uh probably wish I didn't do so I think trying to buy a business and the real estate you a lot of times these you know baby boomers you know they own the business and the real estate very common theme um and typically they want to sell both right to monetize their assets to you know retire move on um trying to buy real estate and a business at the same time is really hard you know really hard trying to buy uh real estate in this you know that's s manufacturing activities on it for a long time in this particular state that has you know very you know tight environmental regulations and laws that's like a full project and in of it's like that's just like a big that's a lot to take on so I wish that we had focused on like just the business first you know buying a business is really hard and of itself right especially when you're dealing with a seller that um super emotional really hard to work with um uh had a very you know very rigid view of the world and the process and um uh so you know I wish that we had just focused on just the business first and done the real estate second so we pursued both and um we got into uh you know the environmental stuff and in this particular State um there are these certain rules where you sort of have to do you know a phase one um you know environmental you know site assessment and depending on what comes up with on the phase one which is basically just like a book report you have to do a phase two which then you start spending money you know drilling through concrete and setting up you know monitoring Wells to you get it just and so we got caught I got caught on uh on an environmental uh due diligence roller coaster um and racked up you know these of you know north of 100 Grand on doing phase one phase two phase three um uh all all the while like there were you know there were issues with the business that I probably that's where I should have been spending my time right that's you know and with the seller my relationship with the seller which is really important like that sort of took a backseat to like these big environmental things since those are you know I call this like showstoppers or deal Killers like it it it just was too much and the seller just you know momentum's really important in this space obviously people have talked about that here before it's very true you got to keep up momentum to get across the finish line and momentum just stalled out and do the due diligence process just you know it took too long and um we just lost momentum um and uh so finally you know it just you know after racking up you 150 Grand of uh the deal fees like it just was too expensive like um and so so did you walk or did the seller walk yeah the seller walked and I'm glad he did um because I again I was all in I'm literally all in I did not look at another deal during that time all I cared about was closing this business it's all I talked about it's just I was all in and you're glad that the seller walked because you realize in retrospect it wasn't a great business and you uh honey badger that you are never would have let go I would have never let so you needed him to let go it still is a great I mean it is I do think it's a really interesting opportunity I I really do um but uh I am glad that I am glad that he walked uh would not have let go as easily to crystallize like some of this stuff that you learned it was you feel like you got too fixated on kind things related to the real estate and the environmental tests and so on which were really expensive both in both monetarily but also in your attention and so to to the neglect of dilen in the business itself nurturing your relationship with the seller nurturing the your relationship with his deal team is that that's one of of the main lessons um that's one definitely give us one more yeah the other one and I would say the probably the top one your relationship with the seller is super important so as you know Searcher investor you're looking at the seller right um and understanding his or her capabilities how are they involved in the business is this someone that is going to work with us through the diligence process like all you know you're asking yourself all these questions you also want to put the same uh level of of scrutiny on the the members of the sellers team the accountant the lawyer you want to make sure that they've done deals before um in this space if they're also inexperienced in the SMB space and you know buying and selling you know small businesses you not only will be educating the seller or trying to educate the seller but you'll also be trying to educate the accountant and the lawyer as to like what the Norms are in you know I call it SMB land that's very expensive you know every time you're going back and forth like that's more expensive for the seller that's more expensive you know for us cuz a lot of times it's you know lawyer to lawyer um and so you you want to really pay attention to that um you want to pay attention to that to who's on the sell's team and do they understand what is normal that all affects momentum right and cost because you know you can't run up you have to be mindful of the sellers to diligence costs as well like if they start racking up a Big Bill and they don't really see the process is going anywhere they're going to walk and you're going to be you know left with dead deal fees which can kill you you know they're deadly this whole process was what 13 months about a year and a half um and is was there a is was there actually a particular moment that you look back on now that you can identify and be and and say to yourself that was the moment I should have vacated this process on that deal yeah when when the seller and I I'm a bigger guy and you know over six feet tall you know former college football player this this seller happened to be a big big guy bigger than me taller than me um and when he uh you know when the seller sort of gets in your face and sort of you know cusses you out um you know inches away from your face you know just weeks before you're supposed to give that man you know a couple million dollars like that's usually a good indicator like something's wrong here like that's not like you don't normally treat someone like that like m maybe should have walked there um yeah but yeah I mean so that I mean that's just not a good one it's not normal right I mean that's that's weird um but yeah I learned okay all right Ben well you're 18 months in you are 150 Grand in what what is life looking like and feeling like now how and how what are your emotions like yeah finally having this deal kind of collapse you being this incredible persistent person that you are yeah yeah um I mean I'm also lucky me Steve supporting me throughout the whole time too so he you know he believed in me and like he bet on me and so you I'm very fortunate that I even had the ability to even and so did like you know my parents and I had you know I had save I had saved up some money to fund this um so at that point I had run out of money completely uh and so I'm you know however old I was you know over 30 valorian of my class at NYU you know with no job um no money and sitting at home uh and I'm like man uh this is pretty bad like this is pretty bad uh should probably turn off the heat because like I need to start you know saving money so you know turn you know turn off the heat you wear sweatshirts like I'm like man this is pretty brutal like is this like do I want to continue to pursue this and if I do like how exactly am I going to do that um and so like when that sort of fell through and and I'm like man like how am I going to pay back this money um uh how are you going to pay back money so you started the the 150 Grand because I mean those like I mean I ended up borrowing some of it from my parents um so you had depleted your own savings and and borrowed money yes so you're now in debt now I'm Levering my personal balance sheet yep um y and so I had completely cuz it took so long I completely ran out of savings cuz it's not normal for the search to take this long um completely ran out of savings you know was totally all in on this business um and I'm you know also very fortunate like that I have the parents and family that I do um you know incredibly incredibly incredibly fortunate and grateful um but I'm like man like you know my parents are retired like they don't have you know millions of dollars so like they're like you know they need that money like you know and so uh I'm like man like I screwed myself I screwed my parents like this is like totally not a good situation um uh and I was really depressing I mean I think like mental health and you know I know that people have talked about it here but um just in the space in general but like that's a real thing like it's an emotional roller coaster and you have to have a really good support team but yeah I was super depressed um uh it's it's it's an emotional roller coaster um and so I ended up um doing a lot of freelance work on uh on upw work and some of these other freelance sites um there's a big need out there for due diligence uh consultants and um so I I turned on another Revenue stream because you know I still have a mortgage payment to make and I'm like like I don't have any money like like this is not good but I don't want to go back to Corporate America and give up on the search completely like what can I sell like I need to sell something to get like oh I can sell like Services my skills yeah um and so I started doing that and that was like super lucrative um super lucrative and so I was like okay like I think that I can get out of here like out of this hole like um I you know I think I can get out of this hole um which is it was pretty depressing I mean being in your 30s like you know it's hard to date you know girls don't want to date a guy who's 30 and doesn't have a job and doesn't have a together like you know they're you it's you're supposed to have already had all those things together by this point right like I mean so it's like how do I tell that story like that's a tough pitch right like nobody's going to and you're like no I'm buying a business and they're like what yeah yeah like show show me you're right like until until you got the keys to that business like that's the most fanciful notion in the world like who's going to believe that no tough to get girls uh in that situation pretty tough yeah um pretty tough so I was like okay like I can't dat like and so you have to really look at this is one of those moments where I'm like man you know I'd go to bed you know cry myself to sleep every every night probably for a couple months there and you know I'm like man is this really what like what did I get myself into like what like I just you know what did I get myself into um and is this something that I really think I can be successful at is this something that I really think is a good investment of time money like is this really what I want to go do um and so I I questioned myself a lot and I was like okay like let's start at the beginning like why did I even get into this in the beginning like let me go back and refresh my analysis and so I read um some of the first chapters in The Harvard Business Review Book um and it was about sort of doing that internal assessment and like every time I went back to you know this internal assessment like you know framework I was like man yes this is me yes this is me you know I just check and I'm like all right I'm doing this and um so you know throughout that whole time when I'm focused on you know this particular business my partner Steve uh was uh talking about another business uh that was also in manufacturing um and his friend uh his close friend was actually the the adviser the m&a adviser that um that the sellers had hired to sell this business and so you know this you know our first you know uh D diligence process like lasted forever but I kept hearing about this business like and Steve you know would talk about it and I'm like okay Steve like that sounds cool like but like I'm trying to focus on this one right now like like you know I want to do close this one and it it just kept coming up um and so finally um after the first deal sort of fell through um you know Steve brought it up again he's like hey like my friend's still trying to sell this like it's been a couple years like I think they're he's having hard a hard time selling this business I'm like well like what is it what what did they do again like and Steve was like well like they manufacture something like with metal and like I think it's used to like you know these pieces are used to like measure things things and I'm like okay let's take a look like let's let me see it you know after all these years of hearing this you know I'm like let me let me see it um and I was like wow this is like the you know your first look at this you're like wow like why are they having trouble selling this like something's what's wrong like something's wrong here what did you what was the business and what did you what was so clearly attractive about it yeah so the business was the one that we ended up buying um uh you know meer Gage Meer Gage company Meer Gage yep it is just a coin name for the founder Al Meyer yes named after Al Meyer yep who founded the business and I can talk to you about that because I think that um I call him the Steve Jobs of the uh the fixed limit gauge World fixed limit you know gauges are I'm talking about cylindrical pin gauges specifically um you know 2 in long cylindrical pieces of Steel that are ground down to Super um tight tolerances and they're just used to not measure but they're used to inspect um holes that are machined into any and everything and it's just used for a pass fail test that's it um so you're not measuring anything you're just testing whether a machined hole is was machined to spec pass fail that's it um and so it's a super cheap way to maintain super tight know quality standards so Ben you I'm I run a factory manufacturing something during the manufacturing process holes are punched or drilled into whatever material some let's say steel and to make sure those holes are the right diameter yep diameter yep I take these these I'll have like a a box of pins of varying sizes just like you would have like a you know screwdrivers of varying the heads of various sizes these are these are your product and I and I open it up and there and I pull out a cylinder of what this hole is is supposed to be and I slide in uh I slide in your cylinder and if it fits snugly or as it's supposed to or doesn't fit or whatever that tells me pass like you said pass fail if the hole is correct if the hole is correct or not and these tolerances can be incredibly precise yep we're talking like millions of an inch um millions of an inch millions of microns yeah yeah I mean um so yeah they these these you know again we're talking about pin gauges specifically pin gauges are just a one of many types of fixed limit gauges which that's a conversation for another day um but we're talking about just good oldfashioned plain pin gauges um and that just means there's no threads on them like a like a screw so these are just you know plain uh you know uh plain cylindrical pieces of Steel um uh anytime in you know in manufacturing when you're um you know Machining these holes like um and when you are um producing these parts like there's a tolerance limit of what you know what's acceptable um there's range um because it's impossible to produce in identically you know identical pieces you know you're never going to be able to do that so um there's a tolerance limit um and so you use pin gauges are typically used for what's called go noo gauging um so like you take you know your uh you know your lower limit of what's acceptable you take a the the the appropriate size gauge for that you know test that if that you know the go gauge you know if that goes through like that's good you look at the upper limit of what's acceptable you know take that you pick the right size pin um uh test that okay the pin goes through okay that's good then you take your nogo pin and you typically want to size that just so it's like just a little bit over the outside limits of what's acceptable um and if that can't go through um then the part is machined uh to spec and you're in tolerance and you're good to go so it's quick easy and relatively cheap compared to other um methods of of quality control these are used in you know quality control um uh you know efforts throughout the manufacturing process I mean you know typically you know uh they're used in yeah any industry really anything that has a hole that's machined into it so I mean that's Auto that's Aerospace that's literally you know it's so anybody listening to this who knows manufacturing would probably have heard of this a piece like this uh or or if they if they if they have their hands on the manufacturing line yes correct yes um and and when I started to you know peel back the layers of the onion like when I started to talk about this with people that had experience in manufacturing they were like oh yeah I know Myer Gage like oh yeah like and I'm like wow like that's weird like how do you know that like that's um but I also liked it that like I you know you walk up to somebody you know walking down the street and you say hey do you know what like a pin gauge is nine times out of 10 they're going to say I have no idea what that is just like I never heard of it in my life um and I liked that like that's I was like okay cool like this is a weird like this is weird like and that's I loved it and so Ben so you you like the weirdness of it you like that it's so nichy you like that it's seemingly enduringly profitable anything else that you liked about it and when when you saw that Sim and you were like wait why has why is this having a hard time selling the first thing that um I sort of think about is like industry industry structure CU that's what determines your success your financial success or I should say that's what determines your the financial characteristics of your of your business is the industry structure um businesses don't function by themselves they function within an industry so if you don't understand the structure of that industry like you know if that industry isn't attractive for various reasons like it doesn't matter how good the business is like I don't care if it's the best business in the world if it functions in unattractive industry like I'm out what's the industry structure here and why is it so attractive yeah yeah so I started to dig into this um more and more and like there was no 800 pound gorilla in the space um uh so it was it's an oligopoly so there's only a handful you know maybe five or six or seven companies um you know in the country that make fixed limit gauges at all and it's that can include pin gauges that includes ring gauges other types of um uh other typ of of fix limit gauging but there's only a few players in the space and they all seemed to be sort of the same sort of these familyowned family founder owned businesses been around for a long time and I learned that like it was sort of like very incestuous like our biggest competitors were also our customers and they were also our suppliers and we all sort of we all sort of worked together and know each other and I'm like wow like that's really cool like that's like you know the you pick up your economics textbook and you read the characteristics of an alop like this checks off all these boxes and like that's attractive right like you're not competing on price in an alop like that's really cool like I wanted to find a business where it doesn't compete on price because you get into that situation um it's just not ATT it's not attractive and so um Myer Gage is currently the only company in the world um that that we know of that I can find that produces class Z and class X full pin gauge sets um uh there's you know there are other companies in the in the world that do produce um pin gauge sets of you know class double z for example um but we are the only company in the world that does you know full pin gauge sets at class C and class X which is really cool um and that that I liked that um it gives us that margin of safety where you know if we make a mistake um and we've made a lot but you know things don't go our way for various reasons like it it it doesn't sync our ship um yeah it doesn't syn and that's really really important but um yeah so that's sort of the the space great give us a sense of of the size of the business in terms of uh dollars and headcount yep yep um so um the in terms of like you know Revenue you're you're looking at you know north of you know 3.5 to you know 3.5 million to 4 million you're in that range you know every year you know in that range um uh head count I guess we have 17 total employees uh a few probably uh probably two or three are part-time um and the rest are full-time uh and so and you know you're looking at eah adjusted IAH margins of you know you're in the mid 20s there um consistently and uh you know year after year you see the sort of the same Financial results and like that's one of the things that you look for is like you look for stability right when you're like going to put leverage on a business um you know you're Levering cash flows like one of the key things right is you know you want them to be staple right you know you're not looking for something that's cyclical or seasonal like you know ideally you want it to be you know nice and steady um yep and that's you know that's another thing that we found with this business I was like man like that's really like cool and you know you talk about um you know churn right um you know customer attrition whatever you know there's like none you know but is it are they recurring is contracts because I imagine that the G set of gauges is something you just buy sporadically yeah great question there are no contracts um we don't have any contracts um uh we uh it is the same you know I'm talking about the top uh probably the top 25 customers like they've been the top 25 customers for you know decades um decades um like people you we have two people in the office specifically um uh you know I won't name their names but you know one has been here for 19 years one has been there for for 20 years they like they've seen these customers that they've seen the uh uh the ownership change hands like uh at our you know various customers they knew you know the current owner's father and now they you know so now they know that um you know that person's son or daughter is you now running the business okay so let's get into the weeds of the deal itself a little bit and return to your relationship with Steve Steve's been supporting you believes in you this whole time uh tell us about how you're going to structure this deal you know you're not you're not a traditional Searcher you're self-funded yeah um so are you going to go after this with kind of a 10 1080 style or 20 80 80 SBA loan what's it what are you envisioning and what happens what we went with was a conventional loan um so I had you know during the search process I had developed relationship with just a few really good you know commercial lenders each has it you know their own sort of underwriting box right or lending appetite um and um this deal just happened to be a really good fit for this person's um you know underrating box his name is Adam regnery um First Bank of New Jersey um you know they are um you know first at that when we closed a couple months ago you know the banking space has definitely changed since then with you know a lot of bank failures uh since then but at the time uh they had you know anap to grow in sort of theb and UTA space um and so uh he you know like he also trusted me which is something I you know very grateful uh for and and so we structured out a conventional loan that was um sort of atypical for them um you know which again I appreciate the the freedom and flexibility but um you know I won't go into you know the specifics but you know just in you know things that we looked at um where like you know they amortization structure um versus you know the term of the loan um you know timing of payments you know quarterly versus monthly um and you know these were all different levers that you know I I I love this stuff right and Ben why didn't you go SBA yeah I didn't go SBA cuz like I um I didn't like the it's sort of a cookie cutter uh type of structure at least I found the 7A loan specifically I'm talking about the 504 program I I don't know a ton about so I won't even talk about that here but uh 7-a loan specifically 10-year term like obviously that's normal than a conventional uh you know Term Loan right so that that part was interesting but um I I didn't like the um I didn't like the the different like personal guarantee stuff with that and depending on the bank um you know the seller we you know wanted to use a seller note and did use a seller note like the seller may um have to take a back seat like um uh on like their you know principal and interest payments again depends on the bank um but like yeah no seller's going to go for seller financing if like their cash flows don't start until year five like it's just not that's a tough like that's a tough sell right um so I was like I don't even want to get into all that like I want to work with someone like who I have a personal relationship with who has like freedom to structure um uh you know the debt package based on what we need now but also has the freedom to like you know structure it you know change it going forward without having to like do a complete refi and that sounds good for sure but there's got to be a catch why why don't more people that I talk to use conventional financing I think the answer is probably that they can't like the SBA the SBA loan is M makes makes deals like this attractive to banks in a way that maybe they wouldn't otherwise be there's that piece I mean I think and this is sort of a conceptual thing I mean I think it comes down to like uh something that has nothing to do with the debt at all it has to do with the equity uh you know your Equity check I think you can I think people sort of what's attractive about the SBA program at least in my opinion in this space is like um you can you know you can I don't say that this is normal which is I don't it's not but like it's as advertised you know you can get up to like 90% like LTV on like you know and so it's like wow I only have to come up with 10% and if you know the seller note can you know now it's I only need 5% in some situations like that's that's attractive right like that's the goal with like these are all leverage buyouts right so like the goal is put as little equity in as you can and you lever up the cash flows you as much as you can and you know try to survive like that that's how you maximize your your irr but um yeah so I think it's the equity contribution and those requirements and obviously that you know the required Equity check like size of that you know is uh dictated by like you know the credit cycle and you know different you know lending appetites and stuff so um that's a big I think that that's a big reason why people go that route and and kind of with based on your relationship with Steve you felt like you were going to be able to put more Equity into this deal I mean via or I should say Steve your investor whatever however your access to Capital was maybe a little bit Fuller than somebody who's doing the SBA loan yeah I I I wasn't and like and this is what I'm you know super grateful for is like it wasn't just you know the Ben Brier show it wasn't me doing it by myself it was like Ben and Steve and so you know Steve gave me you know a ton of freedom to you know go run go find a business go you know anything um and you know he and I were very much on the same page with what we were looking for obviously I'm not going to put us in a you know shitty situation um but um I believe that like you know based on my experience like if you can find an attractive deal like and by deal I mean attractive business attractive you know uh valuation attractive situation from an operational perspective and a human capital perspective like you can find something that is attractive money like is not a problem um right and um so Steve you know was responsible for all I guess I'll call it all the junior Capital um we ended up going with like sort of a MZ type of uh junior Capital piece um but we did you know uh a um uh term loone I should say just I should back up for a second we did a Term Loan we did a seller note and then uh and then we did a a mes piece um as sort of our Junior Capital um and and Ben for for the uninitiated what is MZ what is mezanine debt there's not really one definition of it other than to say it's you know Junior debt um you know it's subordinate to you know your senior debt your Bank debt Term Loan um if you have that or a revolver you have that um so it's it's uh it's typically your your junior junior Capital um piece um has some Equity participation so you know in exchange for being subordinated like investors are probably going to want some upside right so uh there's a you know conversion piece you know um or you know which can come in many different forms warrants conversion rights you know whatever um but yeah so I would just say if I had to Define it I would say it's a you know subordinated um piece of uh of of capital that's kind of like debt but also has upside so and and why does it make its way into some deals and not others is it kind of is it kind of like a when there when there's kind of a gap that needs to be filled cuz it's always like a smaller piece of the overall deal yeah I mean it can be I mean um uh it can be sometimes you know you I guess Mez can be used as as a bridge or Bridge financing you know to you know sort of fill in a gap that that needs to be filled in the Gap structure because conventional loans are so underused in self-funded search where the SBA 7A loan rules is there any other information that you you want to leave the audience with about that I mean is this would you say everybody should look look at conventional loans and they just they don't don't do it enough or what any other takeaways or have we hit it all yeah no I mean I think I mean if I had to just say it succinctly I mean uh you want to consider all of your options and um you and again like you will never get something that you don't ask for so um I think with conventional loans like you know you can be creative and so but you're only going to be creative as the you know your Banker allows you so having that relationship um with um you know with your lending partner um is really really important um and so I mean I think it definitely takes more work and you definitely have to sort of love you know capital structure and you know debt modeling and all that stuff like um the better you are at that the more familiar you are with that um the easier those conversations can can become but um I mean I think you know just from you know just IR R math from an IR math perspective I mean the 7-Day loan can make sense if you're really trying to you know minimize your your Equity check um uh so I mean it's it's there's you know a lot of ways of skin the cat there but I definitely think it's it's people should not just default to thinking sba7a loan um it's you want to explore uh because it's it it can be depending on the credit environment can be flexible U you can get creative Ben the $150,000 in expenses that you'd accumulated mostly attribut attributable to your broken deal uh from the uh the Precision metal um fabrication business what of those $150,000 I can say that um the those dead deal fees like we we were able to sort of roll into um our you know our deal with Meer Gage which happened you know probably about a year little over a year later um uh and so we were able to um like I was able to you know pay back my parents and you know make some of the people hold that they had money to um with um you know with you know based on our agreement that I had with Steve and our lending partners and stuff you know based on the cash flows of Meer Gage um is that is you know those were costs that were incurred as part of our search um and we did use a lot of lessons learned during that process to make our um due diligence process with my Gage much more efficient and um so that was just all part of like sort of our search so right so it's so everybody is going to come to the closing table when they do find a business with some accumulated expenses related to their search Y and and and that's often just kind of rolled into to the transaction and then if there's and then you can kind of take that money back part of your lbo analysis right like that's one of the main inputs is like you know your transaction expenses like what are you what's normal but and so in your case yours wasn't really probably any different than most people listening other than probably being bigger I mean probably most people don't get up to 150 but they're going to have some they're going to have some number between zero and 100,000 probably and and so yeah I mean typically I mean uh depends on who you talk to but I mean any you're typically it's somewhere between like three and five% of Enterprise Value so um for transaction cost yeah yeah yeah you're probably and you know talking legal in accounting typically but you're probably somewhere in there if it's just legal in accounting um you layer in environmental that's can be a whole different ball game but um yeah from a transaction but that's transaction costs yep a lot of people in this world are going to also have had a broken deal or two which will have accumulated other other expenses that go to nothing basically in a way I mean and you can like you're 150 right right and it's all sort of how you treat that with like your your investors right um it's really a function of how long your your sort of horizon is I I won't say investment Horizon but maybe it is investment Horizon because you are investing time and money like what's your like your search Horizon like is it like you know is it 18 months and you know after that we're out or is it like hey man like I'm backing you up for the long term like whatever it takes and so that just is you you got to have a good team uh and I really recommend building focusing on your team first and getting people to sort of buy into what you're looking to do um over the long term um because this is a like this can be a marathon um it can be interesting Ben because you were you're kind of on paper a self-funded Searcher but and because you did self-fund your search but then you ran out of money and you and Steve helped helped you continue to search help continue Finance your search and you borrowed money from your personal friends and family and so in some ways but he's also your investor so in some ways you know that that starts to move a little bit in the direction of like a a traditional resarch fund where you where you've established relationships with investors who fund your search so so you know and and I'm not trying to be too strict on labels here but com interesting as it yeah exactly it's a combination I mean and the other thing is like I during that this time I also like I discovered freelancing um which I love and I think is really cool and I think more people should think about that um uh so I I disc I started with upwork and moved on to a couple different other platforms but like freelancing was definitely a big source of income and sort of helped me get through that time um and so if there are other self-funded Searchers out there like there are other people who are searching for businesses and some of them go to upw workk for help it's a really interesting way to connect with people um and who knows may may be people you meet on upwork and be you know your advisers or your investors like there's a lot of people on upwork for example that's just one of many but like that's something to think about yeah yeah um one of the things that we had talked about in our pre-call Ben is it was the it the the tech debt as they would say in Silicon Valley uh that you encountered when you got there and you you thought that this was something that doesn't get enough attention like it due diligence um and I just jumping ahead a little bit like I was struck that you said that because one of the kind of patterns that you you hear talked about in our world is that we expect the tech stack of the business that we're acquiring to be retrograde and that and that's one of the opportunities is to bring Tech where there isn't Tech or to upgrade the tech but your take is a little bit different your take is that it's really this liability that you should kind of know about in model in your lbo model I guess in in advance so elaborate please I mean like just ETA diligence I mean your goal like one of the main your main task really is I guess you have two is to maintain your relationship with the seller and to close right and so typically again I hate making broad big broad sweeping statements but um uh with you know typically with some of the Baby Boomers who own some of the businesses that we were looking at uh for example like they're not the most technically Savvy people of all time like it just they didn't need that to have success in the business World there was no like it just you know they didn't need to have those skills um and so when you're doing when you're doing diligence um understanding of what tech debt really is and how big that liability really is is something that probably doesn't get enough attention most likely because if you bring it up with the seller um um again you have to think about when you bring it up in the diligence process but um most likely I mean again this is just my experience um typically some they're not going to really want to talk about it that much right like like if you're in your 30s like you have a very different typically of a very different level of comfort and sophistication than someone in their 60s with when it comes to it and like you know systems and so like they're probably not going to want to talk about that very much because it's something that they not typically not super familiar with or they don't care about because they don't need to care about that and um so it's a fine line you have to balance that but um like the business or businesses run on that stuff like businesses run on an Erp system for example and so um it's it's hard to because you want to again maintain relationship with the seller you don't want to piss them off you don't want to annoy them um uh it's hard to it's an area of diligence that is I think really really important and should probably be talked about sort of sooner in the process than than later um when it comes to sort of staging your diligence process um it's if the company uses an Erp system for example like really you really want to dig into that um and understand like okay like does this meet our needs because like the seller's needs uh most likely are going to be very different from what your needs are from an IT perspective and also from a financial reporting perspective which your financial reporting capabilities are going to be a function of your it systems um so like you have to think like okay this business worked really well for the sellers like you know this setup you know will this work for us and if and if not um what's the plan for addressing that like is this something that we can address before we close is this something that we should address post close and if so how long will that take um candidly we we like sort of I underestimated this um how important this is I wish I had spent more time in diligence on our accounting system and which is you know our Erp system um I I I wish I spent more time understanding that because uh and sort of thinking through that because when you close like from again from a financial reporting perspective like you're on the clock right now like you're you know you are owning and running a business you are producing Financial results that you're going to have to show to lenders and investors like are you prepared to collect the information you need to produce those reports um and so that's definitely something you want to think through um before closing um because more and more as you know we go forward here like I believe that every business is going to be a tech business right like it is going to just become more and more uh important it's going to be you know play a bigger role in any business um yeah so it's something to really really think about and understand like you know what changes need to be made uh if any to the uh the tech stack and when does it make sense to do that how does it make sense you know to talk how does it you know how do you talk about that with the seller if at all and when um so it's it's something that should definitely be a super high priority one of the features of your um deal Ben is that you were going to you you brought in a CEO as you bought the business and your actual official title even though you're you're kind of the the principal here um was going to be CFO how has that gone Steve and I were started to focus on manufacturing and obviously I've never worked a day in manufacturing in my life like I literally can't even turn the lights on in here like I mean uh like I have no experience in manufacturing zero and So like um Steve has some but like you know it would be really nice we both thought to like have someone that you know we I can learn from someone who has more experience with this like someone who could help helped me get up the learning curve um someone who could you know run the operations while I sort of worked on the finance stuff um and so we we found a guy came in part of the management team um and you know just post close um we just realized it it uh it just wasn't a great fit um for um for a few reasons so now uh currently um I've taken on some of U the you know typical CEO responsibilities uh and uh it's been interesting it's been an interesting time um uh I have learned that um like time allocation is critically important um and when you know in SNB as a a leader of a a firm like it's there's only you only have so much capacity and bandwidth and so like being able to like delegate is super important being able to have the people who you trust to be able to delegate to is really important but it's definitely been pretty Rocky um uh definitely been pretty Rocky as you know I'm sort of learning and getting off the learning curve but um it's it this you know again because things that you don't expect will definitely happen um it it makes it really important that you understand um the resources that you have so it obviously is one but like the more important one and this is a great place to even talk about this is like the employees um Steve and I got so lucky with the employees that we have in this building and I will get uh I will get choked up if I talk about it too much but uh we do have we do have um you know we have a lady who's worked here for 33 years a person who's worked here for 28 years uh probably three or four people that have worked here for 20 years and so just the resources that we have in the support system that like I have here and them is like invaluable and um we've like bonded you know um together as we' sort of gone through these different experiences and it's been a really fun ride but um uh I would say like it's also important to understand like if you're thinking about buying a business you have to think through like who's going to be on my team like and so if you can not every business owner allows this but if you can spend some time in the business uh before the deal closes is just so important and we're lucky you know Jamie and John uh who we bought the business from you know their Al Meers uh Sons like Jamie and John um at that point had been you know had sort of danced the dance with a couple different potential buyers and they just candidly they were just sort of tired of the whole process um and which I can appreciate and I get and they were just you know gracious enough to allow us to sort of spend time in the business post or pre-close and so we got to really understand who we had on our team and I think that that was really important and that sort of has helped us at least has helped me um navigate some of these sort of unexpected um twists and turns in the road um because we have built Rapport and we trust each other and it's just super important Ben what about if you brought in you like had the management team was you Steve and this third person who is going to be the kind of the oper head of operations the CEO of this small business and then that doesn't work out and you're left as the sole person I mean doesn't that that double your work now you are the leader of a manufacturing business and and you know you're very very very new to manufacturing are you trying to refill this now empty position or are you just going to carry on as the now sole leader on the management team what has happened here in the first few months is um uh a lot of the people who have worked here for a lot long time um they have stepped up and um you know they have grown into more you know more management type positions um they've you know taken on more responsibility they've helped advise me um on different situations and so uh we have you know three or four people in this company specifically who have like really stepped up um and just taken on a lot more responsibility and have helped me uh sort of go through um you know this process and I mean it sucks but like when any time with any group of people if you face you know adversity or some you know major unexpected changes like you're going to find out who's on your team real quick and you're going to find out like who can play ball and like who can't right um and but it takes that adversity to even to be able to find that you know to see people's true colors and to understand like the true makeup of like your team um like you you know like Mike Tyson said Everybody's Got A Plan till you get punched in the mouth right like so when you get punched in the mouth like you got to see you know who who how are we going to respond how are people going to react what's and um it's been really cool to to see um how people have responded to everything I mean people at this company really care about this company they're you totally invested and like I'm just so grateful to be a part of like that team so it doesn't sound like you're racing to fill the not at all um yeah I mean like as we grow and change and you know we go forward like you know obviously like you know constants change right and so like our HR needs will change and grow as we you know change and uh you know as our sort of needs change CU I mean we people here have worked here for a long time right and So eventually you know they're going to people are going to retire and we're going to have new people our needs will change but I mean right now uh I love our team man um we um we're good great so you are a Searcher and now owner with investors operator of the business and what you were really inspired by was was Steve G back going back to when you're when you're in class remotely via zoom and he's speaking to the class and it just really resonates what his career is with you H how do you like what you're doing now as an operator very very in the business versus what my impression is that Steve does which is more he's like you said he's got his hands in a lot of different things and I I assume not an an operator in any in any one thing more of an independent sponsor I think you you you've characterized him to me uh before as um so does that how do you kind of compare and contrast the models of Entrepreneurship that the two of you have chosen yeah it's um Steve has I should say I mean he has operate owned an he's he has been in the operator seat before um so it's he brings he's just a helpful resource from that perspective as well but um uh obviously this it's very different I mean like yes I used to be like you know a guy you know the finance guy right take your feet up on the desk whip around Excel stuff go home but like you know and you're like man like this business you know isn't doing well or this business is doing really well like I mean being the guy that's actually pulling those levers on the ground is very different um which is the you know nature of your question um I love it it's definitely been um something I've I've grown into um and have gotten better at over time um this is I mean it's a learning experience right you got to love learning like um uh but it's been it's been totally liberating for me um to be able to you know make decisions you know have autonomy in like my life and my career um and to really just have the Buy in from people um Everybody investors Steve employees like it's been awesome um it's but you're still learning at the end of the day like that's what this is all about um you're learning about the people you have on your team you're learning about um different business opportunities you're learning about the industry you're learning I'm learning manufacturing you know it's you have to love that um so I mean I would say it's yes it's very different in terms of like your responsibilities and the impact of some of the the decisions that you make but I I think that if you really have an appreciation and love for just like the learning process right like it's a it's you know just I love the process man like I love the deal process I love the operating process few just love that and you love learning about it like making that transition is uh not you know it's going to be a lot easier it won't be as daunting um what about the going all the way back to where you were in in finance but thinking to yourself that any Alpha was going to be kind of technologi away and so you wanted to get away from the computer screen and and kind of you learn about the businesses the lower the opportunities in lower Middle Market business sales and operation ations which is where we all are now do you feel like that thesis or hunch that you had that there that there was Alpha hiding hiding out in this space has borne out um I do I do um I mean obviously like you know we haven't had a big exit or whatever and you know the question of like when and how you exit or if you exit at all it's a completely separate topic but um and sorry Ben when did you close I don't think I got that oh sorry apologize February of 2023 okay so we're six months in six seven months in yep yep seven months in time flies um I would say yes I mean I would say yes I mean um you know Alpha sort of in air quotes is a function of you know information flow and how information flows in a market um and um what I like about this space is that like there is no standard there is no SEC reporting right there is no regulatory body that's governing you know you know reporting other than tax returns which which is a little bit different but um in this space like you're only going to get the information that you ask for so if you don't know questions to ask then you don't know the questions to ask and also like just because you ask a question and request a piece of information doesn't mean that the seller wants to give it to you like seller doesn't have to give you anything so um it's it's that Dynamic is I love U because you you have to build rapport with the sellers they have to trust you you have to trust them and then they have to be willing to give you the information that you ask for so it's just the whole it's an art like d diligence is an art and just obtaining that information is is fun and I think that there's because it's so nuanced um I think that I hope that like there is you know that Alpha um in this part of I'll say the broader market right um and I don't see that really going away anytime soon um uh so um that's I'm happy in this part of this the market then anything that I didn't ask you or that you wanted to make sure that you had a chance to share with the audience um we did Cover a lot um um no I mean the only thing that I would I would say um because I've talked to a lot of people that you know are thinking about doing this and um you know are you know across you know their interest is sort of spans the whole sort of spectrum but I will say I mean it's I'm just a normal guy like anybody can do this I really believe that like um you really can do anything you set your mind to and if you really set your mind to um to this to S&P and ETA and the growing and acquiring growing a small business like I believe that anybody can do it it's just a function of um you know how well you build your team how about you tell your story but like I really I guess the message I want to send is like you don't have to go to a super fancy business school like you don't like anybody can do this um just a function of networking and uh learning and but yeah I mean it doesn't you don't have to be a superhero here like you totally do not um so um it's it's an interesting opportunity uh for people that um have that you know right risk tolerance and uh willingness to uh to go learn and try it out Ben Brier how can uh people reach out to you yeah um people can reach out to me um um via uh via email is probably the best um um it's just my first initial be as and boy and then my last name B is and boy r y r um I would say at Highspire Holdings um High Spire Holdings yep and you can just go to Highspire holdings.com um and uh you can contact me through the website there as well um but yeah I mean that's I would say that that's by the best best way to get in contact with me awesome Ben well thank you very much for giving me so much time and uh and sharing the arduous ups and downs of a very long search but uh Meer Gage seems like a really uh a really neat manufacturing business so like I said at the top uh you you've earned where you now are so congratulations thanks for having me it's been awesome hopefully people can uh uh learn from some of the stakes I made and hopefully it gives people some motivation and inspiration to go get hop into ETA great thanks thank you 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