jason andrews welcome to acquiring minds thank you for joining me today thank you will good to good to be on thanks for the invite jason we met in orlando at sm bash we were um sitting seated next to each other at one of the panels and got to talking and learned that you were an acquisition entrepreneur then connected again and your story is interesting on a lot of fronts the size of the business that you acquired quite large the fact that you used a buy side advisory you're my first guest to have used one of those so we'll want to get into that the age that you acquired at 42 which is how old i am right now so lots of um lots of particular topics i'm going to want to dive into but every story of acquisition entrepreneurship is inherently interesting to me so you got that in spades here so let us kick it off uh with your uh a quick bio on you jason so give us two or three minutes on your life as it led up to the decision to go out and buy a business sure so i'm midwest based i'm here in kansas city and always kind of have been and uh so so my career has almost always been in sales and sales uh leadership management that sort of thing pretty early on in my career went moved to the medical device side so had kind of had some long stents uh with the division of johnson johnson called ethicon endosurgery and then another long stint uh with the company called intuitive surgical medical robotics uh the the da vinci robot and so kind of building and scaling sales organizations was really what my background is in uh degree in finance but that's mostly my professional experience has been in building and scaling sales teams and so when you do that and you live in the midwest you travel a lot and as you gain responsibility you know you have more territory and more travel and things like that and so with a small family that was uh that was a lot of time on the road and so at the end of 2015 14 the end of 2014 i was a vp at intuitive my position was eliminated and so i was kind of at a midpoint in my career i'd been working for about 20 years i figured i'd be working for about 20 more and so this idea of maybe buying a business was interesting to me if i was going to continue on my same professional path that was just going to be probably more travel and a lot of new stuff and things outside of my what i felt like was my control and so um so that's when i started my search and um and and then all the things you mentioned so that's kind of what what i have done in my past and that sort of thing kind of what got me to uh to the point of a search and how did you discover search this concept of buying a business is not obvious to a lot of people so how did it get on your radar so i would tell you i had a file in a file cabinet for this group that i used and i had met someone there uh years before uh so i'll say you know maybe as much as 10 years before i actually went on search met with them and i just had an introductory meeting learned what they did thought it was interesting went on about my business filed it away and then uh dusted it off and started making some calls and so it was one of those things the way i always look at it is like i don't know anybody who doesn't think about it right a lot of people think would really be nice to do my own thing more fewer people than that but some talk about it you know with their friends or hey wouldn't it be great if we did it and then you get a much smaller group that actually do something about it so i'd done the thinking about it part and the talking about it part and i was ready to move on to the doing something about it part and that's when i that's when i reached out so how i came in contact i wasn't sure but but i knew who they were and what they did and and and thought i'd explore it man that that firm um must have a just a really really wide funnel because they they have a conversation and then 10 years later uh that might turn into a client relationship okay so so you're at this midpoint in your career and you decide that now is the time to do something entrepreneurial in large part because your family life you didn't you didn't want to you didn't want to do the continue doing the the intense travel it was maybe only going to get worse um and you had always had this kind of notion that as you said that many people do that would be nice to work for yourself um so and at this point you have some money in savings like you you've done well in your career and so you have some capital to work with so you call this buy side advisory firm and and what do you learn yeah so back in those days i mean it seems like the stone age is 2015 um they were still doing i mean they were doing mailings out and so it was kind of like here's my criteria uh i want to find a business within 45 miles of kansas city and uh they walk through the process like they do what essentially is drip emailing now only with real mailings and uh with a very personalized message so it isn't hey would you be interested in selling your business it's you know really a bio on me so here's jason he's married he's got three kids he lives in you know this part of the city here's his cell phone number here's what he's done and and all of those things and so it's personalized message uh to you know really what we could find we either in dnb or you know through the um through the searches of industries that i might be interested in so we kind of took some out put a lot in mostly business services types of things it's limited on what you could find on private companies both in you know size of the company revenue ebitda those sorts of things so you know went out to a wide swath and really just trying to get conversations and then there went down from there and so that was the process and it was a monthly fee to do the process most of that was just to make sure you're serious i mean when i was sitting with these guys i felt like i was pretty serious and they said well 85 percent of the people that sit here um won't go through with it you know it's really we're still even though you're sitting here you're still in our view really in the tire kicking phase not their words those were mine but um so it was sort of making sure you were uh serious and and um i don't know over that was probably a 10-month process uh maybe got 30 responses of people that i met with i met with just about everybody uh that i could and uh found group source maybe in early mid-fall put in an offer and a hundred day 110 days later we closed and and just a little bit more on this buy side advisory so so is the name the the way this firm positions itself is it called buy side advisory or do they call themselves like a boutique bank or how do they position themselves in the market yeah they're a middle there are mergers and acquisitions firm so they do buy side advice they do sell side i mean they're they're basically business brokers but they're i'll say i i describe them as business brokers that don't do bars and restaurants and coin laundries um you know they're more higher end and they serve a niche for you know manufacturing that's looking to fill a spot in the country and things like that so they'll do searches for businesses as well where businesses are the buyers um so but they're that their emergency acquisitions firm just in the lower to middle market i don't know how many of those there are really but they don't just search in the midwest they do nationwide searches they're actually begging me to not look in kansas city they're like we've we've plowed this ground a lot so if we could look in or broaden our search and look in other cities we can find a lot more success but you know the thing that i found out then that everybody sort of knows now intuitively is that small businesses aren't really for sale no one puts a sign out if you want to sell your house you want everybody in the world to know if you're trying to sell your business that's not something that you want out there your people don't necessarily want to hear that your competitors would love to hear that and use it against you in a lot of industries and instances and so there are a lot of people that are thinking about it uh maybe selling their business that are unknown and so for somebody like me who didn't have a network in the small medium business space i needed to find uh some way to source opportunities and and this was a great one for me can you share it all what the costs were like that monthly cost the retainer for example yes and so i would tell you and this i'll say this is part of the lesson that i learned i'll tell you what i think it was i think it was a couple thousand dollars a month and and i and there was a sliding scale on what it cost uh to ultimately get the deal closed and it's you know the larger the deal the smaller the percentage and that sort of thing what i will tell you is it was an absolutely significant fee and one that i can't remember because it was really immaterial in the grand scheme of things um so it was like yeah it was seemed pretty painful at the time but it wouldn't have happened otherwise but it was i mean it was north of i know it was north of 200 000 i think it was north of 250 what i ultimately paid for them not just to source it but to i mean they ran the due diligence room um you know they helped me find an sba lender i mean they were truly held my hand through the process and without them doing that i wouldn't have gotten it across the finish line no doubt in my mind well i wouldn't have found it number one and then number two even if i would have somehow stumbled onto it i would have never been able to uh to get it across the finish line with my limited ability capability you know it's interesting because so so few people in the search world use buy side advisories and maybe just because i'm talking to you know acquisition entrepreneurs and by side advisories are typically i don't know maybe not target maybe that's not their sweet spot maybe like you said they target firms looking to acquire other firms i i don't know but um it worked out so well for you i'm just interested that i you're my first guest who's done it i also think that maybe you had more capital available um and we're gonna get into that a little bit you could you could afford to spend the two or three grand a month on that and then whatever their final fee was going to be if the if the size of the business was justified at which which it did which we're also going to get to um but but it's intere yeah so it's all an interesting process to me and and um were you what were you doing while they were searching because you were no longer employed so i had to work with with i'll say a friend of my colleague of mine friend of mine that i've worked with for a long time um he had left the same organization a while before uh before i did and he was building out a sales team and he called me up said hey would you be interested in doing in doing this i need somebody to help me build out the western half of the u.s uh sales team and i said well yeah i'd be interested but i'm doing this other thing too it's not full-time but i've got this thing going on and if it works out and i find something then that's the direction i'm going to go so i just want to be upfront with what that is and he said that's fine you know if it works out great i don't know if you didn't think it was going to work out or if it was whatever the timing was and so it was almost a year but so i was working full-time uh during the search okay okay which also helps offset the the burden of the this monthly outlay for sure and i assume there's no guarantee or anything it's they're they're not making some sort of guarantee they're they're going to find a business because a lot of that is up to you whether or not you like what they bring you yeah i mean but but it was basically like you you're going you know if you don't find something in 12 to 15 months um either you know it's like you're you're probably this is probably isn't for you so it's like you're gonna we're gonna we're gonna hunt this field and then we don't need to hunt it again it's like either whatever it is you're looking for isn't there or whatever i mean we'll just you'll probably be tired of us and we'll probably be tired of you and they didn't say as much but it's sort of like that you know we'll run this process and and there'll be something at the end of the tunnel if it doesn't look like at the end of this rainbow if it doesn't look like gold to you then then that's probably um your answer but but it sounds like they did feel confident that they would be able to bring you a number of opportunities they don't do this i mean they do it i don't know 10 to 15 times a year um and so you know they have a lot of um of successful um successful options and that's the so what i was looking for it's like i've done a lot of interviewing in my life never looked for a business but it's like the danger was if you if you interview eight people in a day okay let's say there might be one person or two people that seem better in a relative sense right um they might all be terrible though and that's the thing that but it's like there's still one or two that's that are better than the others and so that's the concern is that i'm am i gonna buy a terrible business because i looked at four and this one was better than the other three and so i felt pretty comfortable that i would be able to identify a good business if i found a good business but if i only looked at four i wasn't and i you know and i don't ever did see a good one i wasn't as confident so i'm like i need a lot of views and if i see a lot of views then i feel like i'll i can find something that that's good um if i don't see very many and have very limited i'm not as i don't trust myself as much yeah yeah no that's great and that that that squares with what i've heard a lot of other guests say who are conducting their own searches but it's like this concept of getting reps looking at deals and um you know the more deals you look at eventually you sort of just develop a nose and you can really tell when something is strong has come across your desk but only after you've had you know quite a bit of um quite done quite a bit of reps looking at other looking at other opportunities and so they brought you 30 and even though they had tried to dissuade you from doing just the kansas city metro market turns out they actually could bring you 30 deals in this you know medium-sized market so of the 30 i would tell you there'd be there were probably a number even when i was going to the meeting i'm like i can't really see myself i mean some people who make pallets like in pallet manufacture i'm like i don't know if i could see myself in a pallet manufacturer or you know i can't even remember some of them uh of what they were so there were some of them but i was committed to taking every meeting for a couple of reasons i wanted to i wanted to meet all these owners i wanted to understand them and then some people because when they get a letter like that and you're dealing with an entrepreneur and somebody says they want to buy your business they're like they think their business is always for sale right well how much well i wasn't looking to pay any price for a business i wanted a reasonable price for a reasonable business and so there were some that were more intrigued by you know it was sort of like the knock on your door and i want to buy your house it's like well how much you know i guess anything's for sale type of thing so there were some that i would say weren't fully serious uh sellers in that 30 as well some that i wasn't necessarily interested in and so it was a much smaller number than that that was viable and the range that i was looking and those sort of things and and what was but you went in and met with these 30 folks and so what was that like i mean um were there any i mean you just gave gave one take away from that that some of these people were just were just kind of like you know offer me you know 100 million dollars and sure you can buy my business sort of thing so you can just dismiss them dismiss that out of hand but i feel like most of my guests i mean they start talking to an owner when a deal gets pretty serious and they so therefore they don't have experience talking to 30 different owners any particular other things jump at you from that experience of going around and talking to so many prospective sellers well i'll say two things one is and you'll you find this in the small bit i saw i was only coming from big companies right and the thing that i was worried about is big companies are are really resourced right i mean they have a market they have a person for everything and so you get really worried about how you're going to fill in those gaps because you're usually just calling a phone number or a department or sending an email and somebody else takes care of that problem and what you find in the small business community very quickly i will say this about any market because almost anybody i've talked to says the same thing there are lots of resources to help you out now you have to ask right so the nano you may not be know exactly what phone number to call but if you say hey listen i need some help with this with payroll i've got this with hr whatever the problem is there are people in the small business community that will point you in the right direction that will find you resources very quickly they're very nice and really want to help so that's the first thing and then just kind of learning about what their experience was with small businesses and so one thing a person told me uh in the business like you come from a you know this this background you've done a lot of things but he said here's the issue you work with a lot of really um i'll say smart people that do what you do and so you work with a lot of people that will tell you you're full of and he's like when you go buy a small business you may not have anybody that will tell you that they may think it but they won't tell you necessarily and so you better have some people around you because you there are no other like you make a decision that decision goes and so you want to make sure that you've pressure tested that with people whether they're inside your organization or out um that always stuck with me as well so um you've always got a lot of um interesting nuggets from people who've done it for a number of a number of years regardless of whether it was a business that was right for you and so when you were when you were rolling into these businesses and kind of looking around it sounds like you were just getting comfortable with the uh cultural difference or the the the lifestyle difference that this was going to represent being in small business but versus being in corporate america um but it didn't spook you you you obviously you you were it didn't you signed up for that i mean it's different i mean that's the thing i mean i went from you know i mean it's like surgical robotics i mean i was the person people want to sit next to at dinner parties to you know group purchasing organization i mean by the time i and even in 30 seconds explain what it is i do people are looking for somebody else to talk to they're like i can't imagine um anything uh less interesting so but it's the problem solving component of it in the building the business is is super fascinating to me and always has been and so um so that i really didn't have any trouble wrapping my uh head around that although it was it was different okay well now let's get into to a group source so they identify the business so among these 30 were there others that you were were close that you went you know you went further down the path with like how did how did group source shake out compared to these other the other 29 so so some that i was you know had second meetings with and different things where we really exchanged a lot more information none that got to an loi phase uh so you know so they've some got past a first date but then to uh um to a marriage proposal so to speak so so a little bit of dating but uh this was the only one that was um wasn't a lie and i don't say it's a little bit i think i told you this before but you know you if you i was like when my wife and i bought our house you know we would look at different houses and then you'd sort of ben franklin this thing pluses and minuses and all this stuff and oh i really like this and not so much that and then when i met um the guys i bought group source from it's like oh this is it i mean there was no i'm like you throw that sheet of paper away it's like i already know this is the one now that's the easy part knowing that i wanted it was the easy part uh getting across the finish line is that is a whole nother thing but um when you i sort of say i don't know if this is for everybody but when i knew i knew and and and what this one i knew and okay so elaborate please what what was it that grabbed you so one thing that that dbs group which is a group i use the emergency acquisition firm they're like listen you got to find out dvs group jason's for people to so i can link to a dvs group yeah based out of kansas city sam yeah dbs group they've got they're in kansas city and and also st louis i think they've got an office there but great um they said you need to understand like what what what do you do number one that you do really well and number two that you enjoy doing and so you got to look for a business that needs those things um you know because that's what you're going to want to do that's where you're going to and so i had kind of figured that part out written that out and and so that's what i was looking for and so then when i met with groupsource i mean it's a sales and service organization and so um it really i understood it because it's in medical and and that's where my experience had been even though i didn't i knew what gps were um i had never worked for one or anything like that but i understood uh what they did i understood the value propositions and i felt like it was something that i could continue to grow and scale so um it just made sense to me clicked so it had it had the sales aspect which which was what you'd spent your career doing and it was in healthcare not not in your your corner of healthcare but close enough i mean within the same umbrella industry to to to feel comfortable to feel familiar great uh what can you tell us about the size of the business and and and what you paid and i know we don't want to be super specific here but what can you tell us so i mean it was started by a couple brothers it had been going for 20 years and it's in its uh the in the non-acute side of healthcare this is still still growing so there were tailwinds in the business so if you think about what non-acute health care is it's everything that's not done at a hospital so everything's not acute care and so when you think about that so many things are getting pushed out of the acute care environment into a lower acuity environment maybe that's surgery centers or freestanding imaging centers or endoscopy suites or things that get done in a physician office so there are a few things in healthcare where everyone's aligned but the payer and the patient and the provider are all aligned with doing as few things in the hospital as possible um it's more efficient it's cheaper and all those sorts of things so this is like a big trend happening in healthcare over the last number of years that pushing everything out of the hospital that's possible that's right and so and so that that part was what had been going on and so i saw that so um i was when i was doing my search i was very certain i was going to buy a quote-unquote smaller business and i was going to have to supplement my income of savings for a long time and build it up and group source ended up being the exact opposite and so it was a full sba note a large seller node it was pretty much every dollar i had that wasn't in a 401k all in uh to to uh to acquire it and so uh the multiples weren't what they are today for for these types of businesses but it was still uh well over four um it was probably i mean it's probably five maybe five and a quarter um of an ebitda multiple which was significant for a business where there's really no assets i mean it's a it's a you know it's a recurring revenue cash flow type business yeah well i i i want to get into that in a second so if you five five and a quarter multiple on ebitda and your acquisition price wasn't at eight figures but it was kind of in in that direction is that fair characterization fair to say so so fully maxed out the the sba loan which we all know is five million dollars um so you know closer to ten than five within five million dollars so a big acquisition for a a first-timer i'm impressed i want to i want to applaud you so it this strikes me as is a really risky acquisition or it's just that you're putting a lot on the table i don't mean to suggest that the business itself was was risky seems like you're going to tell us more about gpo and and the stability of it and so on but just in terms of your cash position it seems like you really went all in um am i right about that and what was your psychology on that and and you had you know you had kids you were you know you had you had something to lose here for sure i mean i would tell you i mean i don't really know i mean when i think back about it it seems a little odd i mean so it's sort of like oh yeah 100 cash at close oh yeah there's that i mean you have the seller note right but it was like um yeah i mean it was uh it was an all-in type of thing i mean i'd done all the the resources buy then build and the hbr stuff and so i felt i felt comfortable around the the the business that had been around for 20 years that i could keep it around uh so i felt i guess good about that the other part was i mean i'm probably more i'm probably a lot more risky let me tell you it's pretty risk-averse lenders even with the sba safe set the safety net they're pretty risk-averse and so they're doing a lot of pressure testing obviously um you know my advisors were doing some pressure testing and so i felt like i had some uh professionals that said oh yes this is you know this is a good thing it's steady we looked at this so i felt good about all those things but yeah i mean it was a it's a very risky thing i'll say you know when you you know that the old saying you know if you got a very clear why you'll do almost any how and i think that was it i was it was sort of like i never had any trouble working hard or getting out of bed or doing all those things but um i certainly wasn't lacking in motivation from day one of the close because it was a i went from having very little i don't even know if i had any debt in this world to uh having a significant amount and i was not interested in having my uh house sold on the courthouse steps um that was not um that was not a reality i wanted to live for sure yeah yeah uh and your family was was on board did it take any convincing there were they were they if as long as you were comfortable they were comfortable sort of thing well they were i mean they were certainly in on the on the why right i mean it was like we were all on board with me traveling a lot less and my wife is um a serial encourager and so um she is which is important i mean you've got to have a spouse that is completely on board if you're going to do something like this because it's not a it's never just you right and it's never just you and your team it's an all family uh thing uh and that's true of entrepreneurship even if you know we didn't start it right i mean i didn't i didn't birth this baby but um but when you acquire it it becomes in the weaved in the fabric of your family very quickly and so uh you definitely need every everybody on board which which i had and we were we were all in the rowing in the same direction for sure but that's uh that's an important point the amount that this business that you acquired it for so you know millions of dollars uh single-digit millions of dollars but still for a long individual we're talking we're talking a significant amount of money and uh it had 20 000 of capital assets right i think i think that's the number i remember so you you might you know and this is the thing about buy i mean it's it's magical that the sba loan now allows us to buy cash flowing businesses that's really the enabler of this whole acquisition entrepreneurship thing at least at least kind of the modern version of it um that so many of my my guests are participating in but um but at the same time it's like man you just spent a lot of money and and the only physical thing you got to show for it is twenty thousand you know twenty thousand dollars of capital uh of capital assets it reminds me of another guest who hasn't aired yet and when he did his first acquisition you know he he wired the money and it was it was a much smaller deal than yours and he's just like i just sent all this money into the into the you know into into the air and i don't have anything in my hands or you know i just really don't have much to show for it so it's a it's a funny uh it's a funny psychological um aspect of of this that you're buying cash flow and you're buying you're buying employees that that you hope aren't going to quit when you roll in as the new boss talk to me about how you felt on that sure there's there's a couple things one is the sba is is a is a magical thing i would tell you um you know i you're on smb twitter and you'll kind of hear some things see some things where people are um anybody who's has a bad experience with the sba one is maybe that did wasn't even required to acquire their business or two it was really the lender the sba program is what the sba program is and every bank in the country says they can do sba lending and they can just like there's the best you know physician in the country and there's the worst and everything in between right so you want people who have get a lot of reps and do a lot of it if you work with a good sba lender you will have a good sba experience and it will allow you to buy a business that you could not buy otherwise it's magic it's fantastic it's great and i'm no sba expert but there are a lot of people who are you can find them they're great so the sba program is fantastic um and yeah the the you know i would tell you this pretty much about any small business um the entire value of your business goes home every night you just hope they come back the next day and so whether it's a cash flowing business or even if it has a lot of assets that that part is true and if you don't believe that then you're wrong it is really the people uh that are the value in the business mind that was obvious because there was no other thing to place value on but the equipment that you might place value on the only people that make that valuable are the people working on it and so mine was pretty clear to me that that was uh that was the case and so um that's that's really i don't know how to say it uh other than that the other thing i would say that that you learn pretty quickly so the difference between i'll use an accounting term that maybe i don't fully understand but they're between the tangible assets and the purchase price that call that goodwill let me tell you what it really is in a small business it's the reputation of the people you're buying it from that's what it is and so when i worked with an intermediary what that allowed them to do is have difficult conversations what that allowed me to do is get to know the two brothers that i bought from so i got to know them really well and so part of how that how the business gets de-risked on the buy side is understanding the people that you're buying it from because if you're buying it from good people who have treated people the right way their employees their customers their their suppliers their vendors if they did things the right way maybe it's not exactly the way you're going to do them or whatever but if they're good people and they have a good reputation that goes a long way and if they don't that is a that's not a yellow flag that is a red flag if you're buying a high goodwill business that are from people that you're not really sure about that's that should be hugely concerning to you because that's what you're buying in my opinion in my in my experience in mind that's great and just to to drill down on that and actually step back a bit or step back in your story here a little bit the due diligence so you your buy side advisory dvs was doing the due diligence as well they were diligencing the whole deal yeah so i had i had an accountant i had an attorney and then they ran the data room um because you know these guys hadn't sold a business before i hadn't bought a business and so all the things that um needed to happen and the timeline with which they needed to happen and all the things that i needed to do for the sba yeah they knew all that i mean they'd done that process before and so they've got the long checklist and they're you know running the data requests and and and sort of quarterbacking that process uh through and so both from a making sure all of it gets done helping to review it and then you know the timeline and so i do believe time kills all deals and there were certainly parts uh in in my hundred and ten days from loi to close where things got a little sideways and so if that would have been 250 days it wouldn't happened and so um you know having an expert help walk that through is big but how active are you involved in this i mean they're they're asking you to provide this documentation and and that but in terms of like the negotiation for example or you said that sometimes you know how they they were your the bad cop to your good cop sort of thing and you're and you're getting in and you're getting to know the the sellers i'm just curious so using this by side advisory who's running the deal room how how involved are you the searcher as this deal comes together um i'll say involved they're they're sort of quarterbacking and communicating on the so it's like the you can want these things as a seller but they have to be bankable and so here's what the sba looks like so this means you're gonna have to carry this much and here's what it is and so you know it's sort of like you can have your price you can have your terms but you can't have both and so let's talk about what's most important to you let's find a structure that works for both parties and so you know just having some expertise on deal structure and what could be creative ways that you can do these different things makes a big difference uh in in coming to something that that works and then really i'll say the only other piece that um at least in the negotiations what was the networking capital discussion and so you know what does that look like and what's included and all of that i would say they they mostly ran that i mean i knew that was going on and i knew that wasn't like everybody was in vehement agreement the whole time but they you know worked that through to uh to an amiable uh resolution and when you then took ownership of the business did you feel like you i guess one of the things that i would feel like if i didn't have my hands all over the the negotiation and and the due diligence is that maybe i wouldn't feel be as familiar with the business once i you know took ownership of it as i would as a as i would otherwise did you any any thoughts on that or am i am i um am i overstating really how familiar you get with the business in the traditional search case well i mean you it's like you there's there's two things i in my opinion you sort of there's two there's two things you know about the business one is what the numbers tell you and then the other is what the people tell you and then they answer somewhere probably in the middle somewhere and so what you get in the due diligence side is you get very much what the numbers tell you and then you don't necessarily get all of the people side until you get the keys and so similar to what you've you know heard and really best practices you really just want to understand what's made this business successful for the period of time and so it was a steady growing business over a number of years so it wasn't broken in any way so it's like i i feel like i'm going to be able to add some things to this but first i want to understand all the things they're doing why they're doing them and learn and just learn as much as i can about it for some period of time and then iterate from there but just know get to learn the people get to learn how it is that they uh make money and how it is that these things work and the better you understand that um you build trust along the way but then it also makes a big difference with because a lot of things you think you might want to do if you just shut your mouth for 90 days those things go away and you're like oh i get why they're doing that now that makes sense yeah i've heard other guys say exactly that's interesting the in these owners sellers were they thinking about selling when you came along or when when when your uh buy side advisory uh pinged them or or what how did that work so funny story always um so it was it was really truly started by these two brothers but they got um so come to find out right that they were thinking about they had they had a number of partners all silent partners but they were either going to borrow money themselves and buy out the remaining portion the remaining partners or they were maybe looking to sell they just had some internal discussions between the two of them my letter hit them at the right time they said let's meet this guy and they're like me they like my background they thought i was the person that could take the company forward and so we moved forward from there but so it's an sba deal right and so at the time of closing so so we work mostly in independent physician arena and so there some of their initial seed capital were accounting firms that specialized in physician group tax preparation okay so imagine a group of 10 accountants and they all throw in a little bit of money create their own llc and invest in this company and then 10 15 almost 20 years later for some of them right now it's looking they're looking to sell well so at the time my deal closed 77 signatures were required that's how many that's how many individual investors there were some on such a small piece some had passed away and they're trying to track down widows some were off the grid i mean it was insane because 20 years had passed it was a small little investment that a lot of these guys weren't thinking anything of yeah they get a check once a year whatever and so yeah so that was that was stressful to work through that but um but we did it and um anyway so yeah so that so the long and short of it was that that was an internal discussion for them was do we take this all you know 50 that we own and buy out these other 75 people that all own a small piece or do we just sell and go do something else we've been doing this for a long time um i'll say my letter probably pushed him one way versus the other and um and so you were you you they were already thinking they were already kind of approaching a fork in the road they recognized either buy out the investors or whatever great so there was happy timing there and of those 30 folks that that you met with um were a lot of them kind of like already thinking about selling or were some of them not at all or it was a little of it was just totally mixed it's totally mixed it's it's all i mean it truly is all over the port some you know you i've heard some folks on some of your previous episodes where it's like some people never even think their business is sellable right so they can't believe they even got a letter like this like what do you mean somebody might want to buy my business you know they it's like versus their they you know i get some people it's like oh this person they'll answer every letter like they meet with everybody that they can and they have no intention of selling their business so you know they just it's sort of flattery to meet with people who might be interested you know so it runs the the gamut uh truly you know but it's but it's i found every one of them to be worth the time spent because you just learn uh something about how they view it how they approach it what they've done their experience so if you ask a lot of questions you can uh you can glean some insights even if it's not a real opportunity jason we're we're getting toward the end here but i want to make sure we we have time to just talk about the business itself and gpo so you've touched on what it is but give me a a a strict definition for those who don't know what a group purchasing organization is please sure so essentially what we do is we're a sourcing and contracting companies so we negotiate based on the spend of all of our members we negotiate discounts with manufacturers uh suppliers distributors that sort of thing and so if you think about uh vaccines that's that's one that's out there so for vaccines so for all all of our primary care pediatricians they buy millions of dollars of vaccines so we negotiate discounts with santa fe gsk merck the main the main suppliers of those vaccines and then offer those discounted purchases those discount pricing to all of our members a lot of those they buy them directly but if they're buying medical supplies from table paper to um you know it blood draw uh anything that they're doing there um any any interaction that you have in a physician office any of those supplies and the people that supply them we negotiate the uh the discounts on behalf of our members for those and and that's because you basically your your clients these offices you've pooled all of this demand effectively by by you know getting 100 or a thousand or whatever it is number of offices you can then negotiate discounts with the actual manufacturers and and sellers of whatever it is vaccines correct and then just to um finish out here on the on the business model how do you guys make money is it a is it a percentage of of purchase from across all of your offices it is and so um so we we negotiate the price right and we link that price at the manufacturer and at the customer and at the distributor so all three sizes we do that so they don't buy it from us they don't buy it through our uh through any sort of a portal they'll buy it directly from there either directly from the manufacturer or from the distributor and we make a small percentage uh under three percent always uh sometimes at one percent or something along those lines so it's a small small fee that we get paid uh and that's uh that's how we make our revenue so most of our members we don't make very much money on them individually and so ours is really a i'll say it takes a lot of crumbs to make our loaf so to speak and so we get uh a very little bit from a lot of different practices across the country uh and that's um that's where our revenue is derived and and this so as we talked about at the top you you had an um a career in healthcare but in really in health tech totally different different corner of the industry how hard was it for you to learn gpo once you had acquired group source um not not really i mean i would tell you the um so we've been we've continued to grow and it's really just through through refining our value propositions and so here our biggest challenge is we sell an unbelievably unsexy thing saving money so most people are interested in making more money they are not interested in saving money and so you know we don't i would tell you we spent a lot of time trying to make that important to people um and i would suggest we've really given up on that so we just tell people what it is that we do and if they get it um then then they move forward pretty quickly if they don't then then they're probably not a good fit for us so it's like the good news is we can save almost anybody money the bad news is some most of them don't care and so a lot of times you got to get to the person who cares and maybe that's the physician or you know if it's a long-term care it's the it's the person that owns the facilities and those sort of things and so you've got to get to somebody who cares and not not just because it's not they don't own it doesn't mean they don't care there are a lot of practice managers that's very important too but you know it's like ours is more informing them of what we do and if they get it then we move forward pretty quickly if they don't we don't do a lot of overcoming objections because you know ours is pretty easy to understand and if it's not of interest to you we tend to just kind of move on to the next one that's where we found our time is better spent i guess well interesting to hear that from a salesman who was going to bring in uh sales experts i know i don't doesn't i don't i don't love saying that out loud it pains me at times so i mean i love uh the challenge but it just was uh um it just you know that's the uh you know that that's through iterating and trying to figure out where our time is best spent how we grow and how we find more people that are aligned with us that's just where we've seen the the most impact one of the things that uh struck me in our pre-call was with the cash flow per employee for in this in this business in this industry um if you if you are comfortable sharing those numbers and and how you know what you compared that to with other small business owners that you know and what they were what they see um inter you know comparably um and that's a real and a really attractive uh aspect of of group source and gpo in general so talk about that if you could and what other things that are are good about this business and what things do you not like about the business sure pros and cons pro and con it for me so so so what i bought was a sales and service company and so we we have really refined what it is we're excellent at so we've got a sales team and then we've got a group that that does this implementation and a lot of these back office types of things to make sure that value is realized and then we outsource almost everything else we outsource our hr which we didn't used to do we outsource uh our payroll all of our benefits all those things which we used to do in house we outsource uh we also have a team that's not employed by group source exclusively but with team that we work with in india which helps us with all of our you know when we tell people we're gonna save the money they're like well they don't just take our word for we gotta show it and so we are doing you know several hundred maybe nearly a thousand what we call market baskets or cost comparisons each year so we're running 20 of those a week we can turn those around very quickly using our team in india doing a lot of the data entry and so we have outsourced almost every function we're not excellent at which has really helped um and it's helped make us so much more efficient and that's where so we do have a small and lean team that is i'll say group source employed but we have a big group of people that we access that aren't group source employed uh that are that are experts in their own uh niche i guess and the but the the cash flow you generate per employee was was really eye-popping compared to other small businesses so so it's a it's a a really strong business model do i have that right yeah absolutely i mean it's um you know i mean it's probably what what uh what most people get in revenue per employee we probably do better than that in in in cash flow for employee yeah it's phenomenal one of the things that i think you said was not what you'd like it to be is that it's not a high growth uh industry or business correct correct i mean so we you know i'll say we don't we don't hit a lot of home runs we slap a lot of singles and we you know so our our growth is not in you know it's not each customer being really um really large individually i mean our growth is in really um bringing a lot of value to everybody who's currently a customer so that our retention rates 99 or above which it has been uh since i took over and then adding as many as we can and so so you know we can very steadily grow in the you know mid teens every year um but it's very difficult so if somebody said hey listen we want to we want you to buy you know to go hire 10 more sales people and we want you to grow it right you know 60 a year i'd say keep your money if that won't work um you know it which is very odd to say particularly coming from a sales standpoint but um our business is more slow and steady uh from that standpoint and um but we're able to do it without you know adding a lot more people we just kind of outsource some things do some things on the back end that allow us to uh to keep that growth rate uh and and stay as a you know pretty intimate group and what about growth through acquisition is there is there a an acquisition possibility in the offing as a way of growth that's a good question not one that i've necessarily uh explored there are some there obviously are some other folks i mean artists pretty much industry there are some folks that do uh what it is that we do um i i haven't really seriously considered that i just i'm pretty happy with how we're growing from an organic standpoint but um but you know maybe that that's not a it's a fair question i don't know there are there are an infinite number but it's not like hvac where you can kind of trip over them and tuck in and things like that it's not really what what it is that ours is is our reality um but it's not an impossibility either jason you said that your multiple was uh five a little bit north of five and on our pre-call you said and i i think actually you said it also in this conversation that maybe you didn't get the best deal in the world like you you maybe you know that that was that multiple represented a little bit of a premium um but in our pre-call you did say that you haven't thought about that since i mean it's been it's been it's been a phenomenal acquisition even if you overpaid a little bit as i recall repeat that for for the audience i i found that really interesting yeah i mean i um and i'll say the same thing about the group that i used i mean did i i mean i paid a lot to get it across the finish line i paid you know i paid a lot so i i feel like i got a really good business for a really good price but i i don't feel like um you know it's a situation where um oh you make all your money out on the on when you buy it you know like a rental house or something like that some people say well you make all the money up when you buy it yep um if when you're looking at a it's like you've got to find a good opportunity for a good price and i feel like i got a good opportunity for a good price um but there are people i am certain that would have walked away because they're like listen for a business like that there's no way you should ever pay over four they might be right generally but specifically for me um that certainly wasn't the case and so i was not uh i didn't think like to your point i don't think anything about it now um like i the only thing i think about is i wish i would have done something like this 15 years sooner not man was i should i have waited another year to see what was around the next corner of the next corner it's like you kind of find a a good enough and something that you feel like you can wrap your head around and grow and the people are right and that and and and go and uh that's what i did and that was the best decision that i made uh really and so did i overpay a little probably did i pay a lot to have an advisor absolutely would i do it again without question well and part of it is is it just gone really well i mean obviously when things go well it's easy it's easy not to push push against some of the decisions we made in the past but can you put add a little color to how well it's gone i mean i think you're you're gonna pay down your sba uh your sba loan in advance of the of the ten year term and put a little color on that for me certainly yeah so i um i would put a pretty big premium on on paying down the debt and so we very aggressively paid that down we've refund bring finance out of our sba note um and making really double payments and have been for you know 12 or 18 months and very aggressively uh continuing to pay that down and now like i said and we continue to grow so i mean covet hit us it didn't hit us uh probably to the extent that it did everybody else but we had you know so i bought it in 16 16 was the best year the company ever had 17 was better than that 18 was a little better than that not much but bit a little um um you know we had it went into covid and then took a little bit of a hit but last year was as good as any year we'd ever had and we'll we'll we're trending well above that in uh in 22 so um yes i mean it's been it's been a great thing and there i get the survivor bias piece a little bit but what i also know is if you know you do de-risk things uh when you buy good businesses and they've been around a while and you've got good reputational owners and you've got a good feeling around it uh the chances of that continuing on is high it's not without turbulence uh certainly but uh but all things that can be managed through um so uh i i feel like some of these things get uh are maybe not as risky as they think but maybe that is just from my uh where i sit i guess jason one tactical thing i wanted to make sure i asked was the the fee that went to the buy side firm which was you know uh quarter million bucks or or maybe a little even a little bit more than that could that be rolled into the loan or are par part of your overall financing or was that just cash out of pocket that you had to basically come to this whole process with how did that work that's a great point that is not inc it cannot be included in the sba note um and so that needs to come uh cash at closing for that actually i i got a separate kind of separate note uh from the bank to kind of cover that but it was outside of the sba note uh that was interest only for a period of time and i paid that off but um but no that is not something that can be rolled into the uh to the financing at least not the sba side um and so uh um you know the other thing i want to mention that i didn't mention before was when you do an sba note the sellers have to be out of the business they cannot be employed in the business uh anymore at least that was the way it was with mine i think that's still a rule and so the way i worked that part was i did consulting agreements with each of the two brothers and they were for a thousand hours a piece and it was sprouted over a year and if it was full-time for 90 days so it's five days a week uh for 90 days three days a week for 90 days and then sort of an as needed so i got 80 of the work in the first six months and i spread the payment out over 12 months but so how long were they involved in the business they were intimately involved for 90 still very involved for uh the first six months and then it was um pretty much you know call us if you need anything and and it was pretty light over the back half of that first year and so for those after that first six months you felt like you were you know what you were doing and you could you could be work pretty autonomous yeah i mean even if you don't you're ready you're ready right i mean so there isn't anybody where it's like oh it was it was it was too short unless somebody had like a week you know but most of the time people think they need more than they actually need um you aren't going to learn it all but at some point somebody has to let go of the bike you know the back of the bike and you guys got to pedal and if you fall down you fall down but um that you know that that was the way it was and so i certainly didn't know everything or anything like that i don't want to imply that but i'd learned as much as i was going to learn as with them still in the business and on this point about about learning and and training wheels and falling on your face or not you know a number of my guests have talked about just the intimidation of the size of business that they go looking at go out looking for so there's there's a bit of a like every researcher needs to decide how big a business they want to acquire obviously finances will will dictate a lot of that but some folks will will kind of trend a little bit lower buying a million dollar business let's say as their first acquisition because they've never done this before and and it's daunting to to buy something significantly larger a three a five a seven million dollar business um you you bought uh again as we as we know um a pretty significantly sized business compar comparatively so what do you have any thoughts about what you would say to them do you do you agree for example with the the advice buy as big as you can i don't know i mean that's the thing that was certainly my experience but i didn't go out i mean that's the thing i i didn't go out looking for that right i went out looking for the right business for me and if it would have been half this size or less i wouldn't have been less excited about it now i wouldn't have known what i didn't know but i wouldn't have i wouldn't have turned it down because it wasn't you know at least x amount like oh it has to be a max sba plus or i'm not interested um you know i mean i do think you know if you've got your options if you if you're looking at two or three different options yeah i think tending towards a larger one i mean so it's like there's there's two things that help de-risk the business maybe not you personally but the business how long's it been around and how big is it bigger businesses are more likely to last than smaller ones and ones that have been around more than the newer ones um but but obviously your risk on those is sometimes larger because you're taking out a bigger note but but yeah i think there is something to that but i don't know if i would turn down a bird in hand to go look for a bigger version if you find the right one you know taking it running it growing it and figuring it out and doing bolt-ons tuck-ins all that stuff is another way to get there i think you gotta gotta look for what feels right yeah and then and let that be the bigger guide more more important guide than than size yeah yeah yeah it really it really seems like you took that to heart jason what this with this firm told you that like look for a business that um gives you energy that uh plays to your strengths that you can really add something to uh and have that be criteria criteria number one versus some sort of financial criteria um and and and that's and happily uh that business ended up being a really big one for you so uh the business that fit with what you were looking for ended up being big too so that's great um uh last question jason so uh you're on the other side of this now you're 46 now so you you well wait do i have that right you bought it in 2016. 48. you're 48 now so this was six years ago yeah there that math works um i i i think goes goes without saying that you thought that this was a that you made a good choice that this has been um what you hoped it would be if not if not better what does your life look like today and how do you envision spending you know the last couple of years of your 40s and into your 50s sure so i i recoil at the idea of people like oh you bought yourself a job because i i did i mean i bought a company and i i've run that company every day since and so in theory i guess i've bought a job but but i've also bought something that you know i feel like i've been able to invest in the people here and grow and and scale it a little bit and so so a lot of the things that i used to do some people on the team have taken over and so i don't necessarily uh spend i i feel like i'd like to get to the point where i could spend 15 hours a week here and do the things that i'm really really really good at and uh and and other people handle the rest of it and i think i can get there this year and so when i met you in orlando sort of like okay well what else you know because i don't i haven't really thought that this has you know really roll up in the industry so it's like maybe maybe there's a new challenge for me not to do instead of but in addition to so it's sort of like you know hey now instead of you know 90 days in bring somebody in to run it it's like okay now i feel like i scaled the org it's taken six years that's longer than most people i get but how can this mostly run itself with some interaction um on a part-time basis for me and then what could i spend that other time doing so i'm really fully gotten that figured out but i would like to maybe find a an additional challenge to uh um to take on but i would tell you i've been through all this and i sat next to you and i'm like i don't know anything more than anybody that is in that room i mean like i don't think about buying a business i bought one and i can't even remember how it went right so um so i'm as new as anybody in in the small small business game well let that be encouraging to you audience here we have jason andrews who acquired a uh you know a significant business for a solo searcher it's gone so well that he can see a a a near future where he's spending 15 hours a week and is going to go out and buy another business and still feels like he doesn't even know what he's doing but but but it's gone that well uh that he's he's comfortable with with kind of a path like that in the next few years pretty uh pretty encouraging case study i'd say you are jason for for acquisition entrepreneurship well i appreciate you saying that and i would tell you i i get a lot of energy from uh hearing people's stories on your podcast like i say it there are times where it can be uh you know a lonely business because you're you know not a lot of people are thinking about things the way you're thinking about things um as a small business owner and so hearing other people's stories and you know not everything not everything is the same certainly but they they're they do rhyme a lot yeah and uh and so you get reinforced a lot you you know you get encouraged a lot uh from hearing things from people in completely different industries and completely different phases of life so i appreciate what you're doing i uh spend a lot of my car time catching up with folks and their stories it's fun well that's that's awesome jason and i and i appreciate you saying that and i do have one last question i didn't get in you know you have said um that you have friends who you know are impressed with what you've done and they reach out to you and they ask about buying a business and and then they they they just don't take it any they don't take they don't do anything they don't take action you talked about the buy side advisory firm that you use dvs and how part of the reason that they require that that monthly retainer is because so many of the individuals that they work with don't actually end up getting across the finish line so this is all to just to say that um you know how important taking action is care to elaborate on that yeah i think so i mean because it's like the idea sounds good to a lot of people but a lot of times it sounds good when they're when they're unhappy in their current job right or something like that and owning a small business is not something that you do when you're running from something else so if you're running from an unhappy work situation and you're running from something that you're not happy with i don't like my boss and so maybe i'll go buy a business probably not going to work for you right it needs to be something that you're running to and so that that you know it's like that either and it doesn't mine wasn't financial i have to be honest with you mine was a lifestyle thing my my main why was i wanted to get off the road and i felt like i could provide for my family i could do what i was doing and i could do lots of things and sleep at home every night i thought that was possible and it was it wasn't possible doing what i was doing i needed to do something else and so but i ran towards that um and that was very clear for me so if you're running towards something um then it's probably but you do have to you know the do something is like subscribe to the biz by cell get sims talk to people and it's probably more than you think it is uh from an activity standpoint but if you you know write down every friday what did i do this week what am i going to do next week and it's like did i get what i was going to do and you keep making steps good things are going to happen but that's what it takes i mean the thinking about it and talking about it's great the doing something about it's where you'll get it perfect point to to end on jason if people want to get in touch with you personally how's the best way to do that so um i'm on linkedin hit me there or i'm on i probably twitter i'm i'm a very active uh consumer of twitter not a big active poster uh it's at january 707 is my uh twitter handle so i'm not much of a follow but if anybody wants to connect i'm happy to uh um i'm happy to jump on a call anytime and share what i've done or or talk to people through anything i'm happy to help in any way great i encourage you to take advantage of that listeners jason thanks so much for the time really enjoyed our conversation today thank you will appreciate it