August Felker welcome to acquiring minds thank you will it's great to be here August I feel like you need no introduction because regular listeners will have heard Your sponsorship copy a two-time successful Searcher first with a traditional search fund the second time around you did a self-funded search and today you run overly risk strategies people will recognize those words but really August you do have two successful searches under your belt you've been in this community for over a decade I believe today you work with Searchers who are close to closing a deal on all things Insurance You've Got Deep expertise in the insurance business we're going to get into all of it so please start us off with some background on you August awesome well I'm I'm uh pumped to be joined the podcast I also am so happy to be kind of in partnership with you it's been a great ride and uh it's just amazing how the community's grown so much over the last 10 years and uh thank you for for all you've done to help that um so so my quick background I grew up in St Louis Missouri very proud St Louis Cardinals Fan uh went to went to college at a small school in Maine called Bowden College um after after graduating from college I was I was excited to go and try to live out on the west coast and move to San Fran um worked in in the insurance business out there right after call I'd met my wife out there um you know love love living in the Bay Area ended up living there for seven years um but towards the end of my stay in the Bay Area I linked up with a couple guys who uh became very very close mentors and got excited about the search funnel space and this was like 2008 2009 um and was very very excited to try my hand at doing a search out of the Bay Area my wife and I had one kid um and and we were sort of at that point we were flexible and um and so that's sort of where the where the search story starts were you associated with a business school out there I wasn't so I uh I you know when I was out in the Bay Area I linked up with two guys who were Stanford GS beers who had used a search fund to buy a logistics business in South San Francisco and I joined them as sort of one of their first sales hires and uh just love the experience love working for them love the model um so when they ended up selling that business I I really sort of partner with them and said hey let's let's go out and do a search fund and and do it together and so that that's how I got you know into the world uh of searching I did not did not end up going to business school and and had you expected that at some point in your life in your career you'd be an entrepreneur or did this come out of left field the idea of this and and therefore being an entrepreneur I didn't I didn't know you know 100 that I that I wanted to be an entrepreneur I I I sort of in my mind knew as I as I got older I wanted to have some freedom and um you know I wanted to have a great career and it really was something I wanted to do but I had no idea about the search fund world uh until I was sort of exposed to it and that totally changed everything once I got you know heard about it and learned about it I almost became kind of unemployable I was just an entrepreneur and I'll probably be an entrepreneurial entrepreneur for Life cool yeah yeah I think a lot of entrepreneurs have that moment yeah uh and so these two guys that you'd worked for before you they buy a business they grow it presumably they sell it at which point and you've been working for them through that exit at which point you say to them let's go do a search fund together be my partners yeah yeah exactly so so the model with them was they had already done a search I I was 29 I didn't really know how to do it didn't know how to go about it didn't know how to raise funds and so they were sort of um they kind of vouched for me and they sort of said to the investor Community hey it was it was a traditional search I was going to do uh at that time there weren't a lot of them um so they sort of vouched for me and they also said hey we'll sort of sit on your board we'll Mentor you we'll coach you through the whole process but but we're not going to move out to wherever you end up buying a business that was sort of my my my part so you were gonna run it it really was going to be the August Felker show yeah but they were kind of mentors First Investors vouching for the investor Community yeah okay exactly so I wasn't active in this world at that time but um from my understanding to do a traditional search fund at that time to not have come out of an MBA program which is really as I understand it the only place it was being talked about you must have been pretty unusual to kind of be a self-starter to go do it I was I mean it was it was I got a lot of sort of I didn't really get a lot of pushback but I got a lot of questions about it and I think the the thing that kind of gave me Comfort and sort of you know moving across the country and wanting to buy a business was my experience working for these two guys in in an environment really operating I I really got a lot of sort of um on the ground experience running and managing a small business with these two and so I felt like even though I didn't have an MBA I still like hey you know I think I can do this um and it gave me confidence so um and then having them behind me sort of pushing me on saying you can do this you can do this um was a huge part of it cool really really cool yeah that kind of hey I think I can do this um feeling Epiphany is one I've heard from from a lot of my guests where they they kind of appear into an operating business and they say and they realize that you know I I could do this too yeah you've partnered with them in the Bay Area but you say you're gonna do uh a geographically agnostic search or you're trying to get yourself back to the Midwest because I know that's where you end up so what I did is is when I when I talked to my wife about this I say you know here's what I'm going to do here's this model uh she she was you know in the middle of just a thriving career um and so I I said hey let's it's so we we sort of agreed to pick 10 cities that was our compromise uh and we went through a list and most of them were actually on the west coast there were a few on in the midwest that I was I was looking at Chicago was one St Louis was one but most of them were in the west coast so I really focused my search just on those 10 cities um and I also you know focused on on insurance so I I I I mentioned earlier that I worked in insurance right out of school um you know one of the sort of my my theories was hey I could really buy an insurance brokerage uh and and that would be a great search business I know the industry uh my dad used to be in the industry so I had this experience where I was like you know I think I can buy an insurance brokerage I had 10 cities picked out um I didn't know what I didn't know and uh my wife was on board so so we sort of launched in in in 2008 and so she was she was willing to go to one of these 10 cities she was game now I didn't hear you mention the city that you ultimately ended up in the outskirts of so so how did you find this business outside uh Madison and I don't know how far outside Madison it was so tell us how you found this business I had a search where my strategy was heavy on cold calls I was I was in the sales I was in sales before so I was very comfortable getting on the phone and calling sellers um got hung up on that was I was just you know sort of um totally okay with that process and I also wrote a lot of handwritten letters um I didn't send a lot of emails and sort of the third part of my my strategy was to try to find a river guide where you find someone that's going to hopefully give you a warm intro into into a business or a seller so one of my ideas was to call insurance magazines you know there's this insurance magazine called the insurance Journal and I called the editors there because I was thinking you know these these people probably know a lot of people that own insurance agencies they probably are pretty well connected they've got their sort of viewers out there um and so I I called them and the editor called me back and said you know I I like your story I I know this this gentleman who's got an agency an insurance brokerage for sale in Madison and I'll make an intro and so that was that was how I got connected to what what ended up being my first deal um I I should note that I really felt strongly going into my search that it was going to be really hard to do a brokered search in the insurance space um there's a handful of insurance investment bankers and and Brokers and I I felt like every time I reached out to him they they could kind of get a sense that I'm only going to do one deal they're probably going to send their best deals to you know the Roll-Ups or the larger private Equity firms that were getting in the space I was at the very very bottom of the list and then even if I got invited to participate in some type of bid I knew the investor group I had in the search in the traditional World multiples are already starting to kind of go crazy uh that it was gonna be very hard to win those win those deals so I sort of like I've got to find a a seller that just directly and I also need to find a seller that kind of gets it what I'm trying to do I really felt like hey I could be sort of the the Sun that the seller never had to kind of take over the business and and come in and learn the business and um you know ask questions and keep the culture going and stay independent so I was really trying to um I knew that was my my only shot uh and so when I got this intro to this person in Madison uh I I felt like really lucky and that was very early on in my search it was like the first second or first or second month wow um and August all that all that stuff that you just said about the the Sun that the owner never had and continuing the Legacy um though those are all kind of catchphrases that are well known in the search Community today um but I suspect they weren't at the time and this is really from kind of your own strategizing but but you know you meant it but but at the same time like you were trying to position yourself in a way that would be appealing but you didn't have a Playbook you were figuring this out as you went 100 and I knew I knew I didn't know a lot I mean I knew even though I was in insurance I really needed someone a seller to also teach me the business so it's very very genuine I needed to come in and learn the business and actually try to you know walk in their shoes for a year or two before I could uh you know make changes or do anything so so yeah um yeah it was you know in many ways I got lucky well as we're gonna find out I I as I recall from our pre-call actually there's a mandated pretty much three years that you need to be working with sellers I know in the industry I know um and were you looking for traditional search funds typically targeting bigger businesses than a self-funded uh Searcher would be was that I assume that was the case then how big a business were you looking for yeah I I was trying to so this was 2008 and 2009 and this was you know the economy this was sort of a crisis time a little bit and um I started out right kind of before all that happened in my search and then I found the deal as that was sort of all blowing up um and so I was I started once I sort of got to the point where I got a deal I started getting worried oh man this is too big this is gonna this is gonna be too tough to um to raise capital for it's hard calling your investors and asking for money when when sort of they feel like the world's world's on fire so um I uh I I was trying to think the business end up was like a million seven in ebitda had about 50 employees um and it it uh you know it was sort of right in range what what at traditional Searchers at the time at the time we're doing we don't have time for all the ins and outs of it uh because we have another search story to get to and then so much more after that so um I guess jump Us in to you know either the transition anything you you think would be most relevant to the audience in terms of of the deal itself negotiating the actual acquisition or the transition or the Handover and working whatever you think is is most relevant for folks from that whole experience one thing that that you know a lot of Searchers not a lot of folks have done bought an insurance broker and it might be worth mentioning kind of what what that is and perfect what they do and so um an insurance broker it's also called an insurance agent agency um really we're sort of a we function as a middle person uh where businesses come they hire us and say hey help me buy insurance and then we go out and we uh we talk to different insurance companies and get quotes from those different insurance companies and present them back to our client and connect them and hopefully they you know they they buy insurance through like a Travelers or chub or someone like that and in exchange for that service it with an insurance broker provides you make a commission and usually it's like a 10 or 15 percent commission on the on the premium so that's that's kind of what what we do there's two kinds there's a commercial insurance broker which you know they do like property and casually which is sort of a workers comp general liability auto insurance and there's a whole separate uh service or broker type that does employee benefits my background was on the commercial side so that that's kind of where I where I came in um I I felt like and I I love the insurance business it's it's uh it's a highly recurring Revenue business so usually Insurance brokerages keep about 90 percent of their clients every year so you know I look forward to the next year I think we about we've got a very good chance of keeping nine out of our 10 clients that we have on the books and so so to be clear that commission is a recurring commission 10 or 15 18 for the duration of that insurance policy that's great yes yeah and so um and you know I think it's it's it's people don't want to change insurance it's it's change Brokers it could be kind of a hassle um and so that that and you know if you give them great service and take care of them and if they need to add a vehicle to their program we do all that when I bought uh the first business multiples for insurance brokerages were like six six times ebitda wow um because the quality of Revenue is so attractive it was and it uh it it really was um you know sort of what the market was then uh but a lot of since then a lot of private Equity firms have gotten into the space I think there's like 30 Roll-Ups going on right now in the insurance brokerage world and they've they've bid up the the multiples and so now it's like 10 to 12 times ebitda what insurance brokerages go for um so so you know that that's sort of and I so I got in at a really fortuitous good time um and the uh the things that I worried about the most when I when I moved out to Madison and moved my family out there was um we call it it's an elevator asset business so there's no hard assets that you buy in this business all of your assets go up and down the elevator every day they're the team uh and so you have this fear all you really are doing is buying a Client List and and all the people that are the that work with the agency or Brokers they usually have non-solicit agreements so you kind of know hey they can't steal the business um the sellers typically have like a non-compete which is like one step uh more formal where they can't you know compete at all um so I had that but I was I was very panicked and worried about this elevator asset situation so you know if if I got in there and it didn't go well technically all the employees could just leave and it could be it could go to zero you know immediately um and so that that is the major worry about buying a business like an insurance brokerage and it's a very relationship driven so a lot of these clients know the people in Madison they don't know me uh so it was very I was really worried about that um and I think that um for for that reason the deal structure and insurance agencies is such that's very common almost 100 of the time we have an earn out we have like a three year earn out uh and the seller needs to stick around for three years and usually like 25 to 30 percent of the purchase price is allocated towards towards the earn out uh so so that's some there's ways to solve that elevator asset issue but it freaked me out uh it's it's still something I think about all the time because because you realize it's it's all we really have as a client list well August I mean hearing you say that it it's I mean so many of the businesses that my guests buy are are similar or frankly worse because an insurance policy is tighter the the the recurring nature of the revenue um is you know more contractual and higher higher quality so you know a commercial janitorial business or a commercial landscaping business same thing I mean there's no elevator involved because those are going to be blue collar businesses but but but you know it's just the relationships in in your team that you're buying and those contracts are are probably way less secure than an insurance business so um so I don't mean to minimize your fear it just it's just it just makes the the landscaping and janitorial of the businesses of the world seem you know even even more vulnerable frankly yeah yeah yeah um and I I uh so so I mean I think that was the big deal Dynamic is trying to figure out people there are they going to stick around yeah you know are they are they going to be uh are they going to help the business grow all that stuff um so that that was my main main concern um you know also my wife is a West coaster she's from Portland Oregon and and I'm from St Louis so I'm kind of used to Winters but we moved to Madison in February uh and she was like what the yeah what did you get me into it's so cold there that time of year so so those were the two areas where I was working well I guess it's funny I I moved my family and wife from the Bay Area to Arlington Virginia uh which is a suburb right outside DC uh last year and I and I timed it to avoid August which is just that you know the swampiest hottest nastiest Hume most humid time of the year yeah so that you know on day one she wasn't like what what have you done um but by the way given that Madison wasn't on the list of 10 cities also she's already making an exception to the rules uh how did you see it what did you say to say you know make an exception you know I think I think uh you know what she had it's really hard being a spout I'm sure I know you guys have talked about this before in your podcast but um especially when you're moving um every day I'd come home and maybe we're on a move here maybe we're gonna move there and so I started getting excited about Madison um and I I remember the deal you know deals fall apart like four times I remember I came home from work one time my eyes off it's it's not happening don't worry let's let's focus on some other city and she was genuinely bumped and she hadn't ex she hadn't expressed that she was excited about Madison but I could tell she was like genuinely bummed like well I looked at some houses and I looked at the schools and I was sort of starting to think about it yeah so I I sort of I woke up that time like I gotta figure out how to get this deal back on track that's cool and I did well Madison um is renowned for being family friendly isn't it it's a great town for for um yeah and my it is my parents actually met there too so I have a soft spot for medicine cool it's it's the best cool all right right so so you're you're feeling a lot of anxiety about um the elevator asset nature of this business and as you've explained to us because of this it's what are kind of typical terms in the insurance business when there's an acquisition is that the seller is working you're working alongside the seller for three years and there's an earn out structure so how did all of that go this was a hard part for me is it was a seller Dynamic um and I was thinking about it uh the seller rolled 10 percent uh the seller had a seller note the seller had an earn out and the seller was our landlord uh so I was I was I I had to kill this person uh and and you know I think in many ways he uh he was very much still kind of my boss um and and so it was um but yet I was a CEO um and I was in charge of like driving the direction of the company um and I think you know ultimately what what ended up happening is is we we sort of went through this first year or two where it's kind of the honeymoon period And I was learning the business and things were going pretty well but then towards the second or third year I think just naturally I mean we're both sitting right next to each other in offices he's super worried about his earn out and stressed about it he's counting on it for retirement I'm thinking about other things and growing and trying to learn the business and so naturally like tension and friction develops uh is is and I and I tried so hard I think we both did is tried so hard to get along and make it work but it just felt like there were two Cooks in the kitchen and um when that third year came up I was like you know it's time we we sort of he he moves on he retires and I sort of uh move forward and drive the growth of the business but that was another big area I was very worried about I I really had to make sure that that this relationship ship was going well um he you know and and I had to transition all those clients and get to know them and all the employees and so it was it was tricky and I think one thing that I've sort of learned through this whole process is there's there's two ways I would probably do it if I could do it again one is you know try to give the seller if I ended up buying a you know another Insurance business really give the seller autonomy to to run the business and control their owner and out and not metal or um have an agreement with the seller they're going to leave right away uh but in the Middle where I'm really meddling and we're working close together and we don't we're not totally have our incentives aligned it's just sort of inevitable that there's going to be friction uh and so that was that was a big big Challenge and a big part of the the Madison story was working through that relationship well the the something you'll hear a lot is is kind of buyers Searchers want that seller kind of want them leashed to the business so that they can't run away with all of the business still locked up in their heads or not support you if there's a problem or what have you um which is valid and sometimes that really is needed but then on the other side like once you kind of got your arms around the business many Searchers find that they just want the seller out of there is Asap like once they've done this you know you used the seller for what they've needed them for better that they not be there in the room anymore sort of yeah yeah I agree well I was going to say one thing that that on that I was afraid of clients leaving uh because I didn't have that relationship and early on we had a sales produce relief uh and and so I was worried oh boy all their clients are gonna leave and and this person had a big chunk of our business so I got in a car and went out to see all these clients and said hey my name's August and I'm from St Louis and new here would you stick would you stick with us I know the producers I know the sales person just would just would just stick with me for a year or two and and uh maybe it's because people in Wisconsin you know you've heard that trust in Wisconsin nice uh they were too too nice to to to but they stuck with me which which was amazing uh and um I sort of started to get confidence hey I could I could keep these clients if the seller left or if a key salesperson left and um I think that sort of rings true with a lot of Searchers as you start to go through I can I can do this I can I can make this work so well but yeah but do you think it was also to your credit that you were so proactive about it that you literally knocked on doors and hat in hand and said let give me a chance yeah like is it like is that is that the takeaway that you should do you should you should really lay it on um if yes if these relationships yeah yes I think you got to show up in person you know be genuine say hey here's what happens but don't worry I'm gonna take care of you and uh and and deliver uh and so that you know people gave me a chance that really worked out through that whole transition what's the name of this business August it was called Murphy's Insurance Group okay and what about um becoming leader for the first time uh I I you know that was also something so I think going into it you feel like you got it all figured out and and you're you know you're going to be a great leader and then um I feel like being a leader there's like a huge uh magnifying glass on all of your strengths and all your weaknesses uh and and it's just magnified enormously when you step into a leadership position uh and so one of the things that I think I felt like I really struggled with early on um as a leader I felt very scripted I felt like I was sort of running a Playbook that wasn't really me I was saying things that I'd read in a book or heard before um I felt like I didn't listen very well you know I felt like I was sort of just ready to try to you know not listen I was listening with an intent to respond you know you listen to someone you're just all of a sudden while they're talking you're thinking about what you're gonna say without actually listening um and so I I think those two things um you know I I really struggle with and I think people felt like they couldn't um I wasn't genuine um I I wasn't sort of real and I think um learning to be that way and be comfortable yourself as a leader is really hard um but once I sort of started doing that and and being more me things started to work a lot better as opposed to sort of like hey I'm following the script this is what you say this is how you do it uh it just comes off scripted and people know yeah and people just don't like it yeah and I think it's it's just it's really important to be be you well it is and and I feel like that error for lack of a better word is is just so common in all an experience you you overcompensate because you're insecure and you try to you know put on the hat of whatever role you're trying to fill and people can see it from a mile away and you know with time we all learn to to be ourselves and that's why old people are so refreshingly direct yeah they just don't care anymore um but August curious how did you kind of get the message that you were coming off as fake and not a good listener so I had these two guys who I I told you about at the beginning um they were on my board and I almost talked to him almost daily and I think I've got this this was the beauty of of the traditional search model is you have this built-in group of investors of very smart capable experienced people to guide you through this that part uh and so I've really counted on him to give me advice give me coaching uh and they were great at giving me honest candid feedback um so I I I I I was totally indebted to their their feedback as things were going about how to tweak and become a sort of a better leader and be more comfortable uh in that position so I had a great board we had we had a really great it wasn't like a you know report out session it was they were all strategy meetings they were really fun people gave me great ideas great coaching and feedback and uh it was almost like that period at traditional search was sort of like just a super my learning curve was just just straight up uh and I really benefited from from that sort of traditional model uh you know that way I've heard Searchers talk about this should you do traditional research that's the main thing that I just loved about that traditional model was that was that coaching the the coaching of your investors your investors on in a traditional search fund at least when you did it were very involved with you as coaches as as a board um okay that's great well we're going to get to the contrast uh here in a minute because you also then did a self-added search um well one other thing before we well I also want to hear about the exit of Murphy um your exit but also the cultural was it there wasn't kind of going into it wasn't in Madison proper was it it was a little outside Madison yeah yeah it was it was about uh 10 minutes nor 20 minutes north of Madison this time called Waunakee uh famous as being the only Waunakee in the world um loved it um uh and um you know it it it culturally um you know it was a very sort of uh informal everyone knew each other in this little town um and and you know that was sort of an adjustment to learn how to fit into that uh you know it wasn't something where I really you know said hey I'm from California I moved out here from the bay area that didn't that wasn't like the best I think people wanted someone uh from the Midwest uh so I really played up my my seamless uh background and um yeah so so that was hard too is getting getting into that culture but everyone in Wisconsin I mean everyone was just so nice that was a huge part of it hard workers uh just just a great team well and because fitting into the culture of the of the business you buy and and so one of the themes comes up over and over is White Collar people buying Blue Collar businesses in the cultural Gap they're bridging that Gap where you're the outsider you're typically going to be the the white collar one um was there any was there any learnings there was it was it kind of more of just learning to leave this organization be authentic and and yeah I think so so my dad was an insurance and I grew up watching him go to work in a in a suit and tie uh and and I look up to him and I really it was like that's I bought an insurance business I'm gonna all work with it with a tie on and like the first week I was like this is not gonna work okay so I mean lose the time lose the top okay uh so those kind of things um they really people see that um so I think I I learned quickly great yeah so what how does this this adventure your first traditional your first search a traditional search come to a close so so you know with with many times in a traditional World sort of the finish line is an exit um in in many times that's like five to ten years after after you buy the business uh and so we got to that point five five or six years in uh multiples have have gone up a lot I I we had a a good ride in terms of growth but not incredible uh we'd sort of struggle with some you know getting the right sales people on board and working through the seller transition um but we felt like hey you know this is this the multiples are going up this is 2015. um it it uh it might be a good time to to talk to a broker or banker and see see what kind of multiples we could get so we went out uh hired an investment banker who specializes in Insurance who knew all the players um we did a very sort of specific process where uh the banker was like Hey we're going to just talk to three or four and we're gonna have very casual informal chats with these folks and tell them the story and we're not going to send you know this deal out to 30 people um and I think that really worked we ended up getting like four very interested parties all larger Insurance Brokers that most of them were backed by like a private Equity roll-up and sort of went through all that process and and sold uh and as part of that just like I had done the the new owner said hey August you're you know you're we need you for a three year earn out uh so I was kind of prepared for that going in that was a big part of it I could it could not be hey you're going to leave on day one I think that would hurt the value of the business um you know and I was I was you know really committed to that three years and making that work and um we ended up selling to this firm called Hub International which is a big you know Insurance uh broker that buys a lot of agencies it's backed by a private Equity Fund and uh so it was exciting it was like uh it was like just a a Mad Dash this five years learned a ton then you go through this this very high of selling your business uh and and uh it it was it was you know quite quite a ride foreign so you had grown it somewhat but you got but not a ton but you got to enjoy multiple expansion if we can call it that simply because the market multiples had gone up correct yeah correct and and uh just two things on the insurance business going back to when you bought it in 2008 nine um and how the world was coming apart then economically did that also would have been a good time to stress test the idea of like how recession resistant a particular business is and intuitively it would seem like insurance is extremely recession resistant it is did it prove to be even even during a crisis like 2008 totally uh it kept growing uh you know everyone has to buy insurance you know no one is it's it's one it's like the last thing you probably have to give up if you're a business is no longer insuring yourself yeah um it it's pressure tested the drama with the seller all those clients ended up being a lot stickier than I thought of the sort of 50 people that were there when I bought it I think that only like 10 or 20 were we totally had refreshed the whole team um we kept a lot of those clients uh you know maybe just being nervous and worrying wasn't really it probably was worth it but um because you're you know you can you stay sharp when you're worried but um but it uh it it all those things sort of played out and it kind of worked out and we got really lucky that you know multiples money up uh and there was it was such an active market for for selling a selling an insurance agency uh got lucky with that and then so were you literally there from 2015 when you sold through 2018 yeah that transition it was I was um and I I they put me sort of in charge of like a region uh which was fun I learned a lot I you know they're a professional buyer of agencies so I learned a ton seeing how they did it and how they managed it they made it seem a lot easier than than when I did it myself uh and uh but I started feeling like during that burnout I like I mentioned you almost it's hard working for a bigger company at least it was for me um after being an entrepreneur and having total control over your destiny and your time and I was sort of plugged into a bigger company it was a great firm is a great firm but for me I started feeling like gosh you know I still have more energy I I I I I I've got I've got another another Adventurer in me uh and so I started in my mind thinking during that period that hey I'd love to I'd love to search again and do it again so I I did do the whole three-year period though great well we're gonna we're just about to get there a couple follow-ups though how old were you at this time I was 35. 35 and 2015. yeah or in 2018. yeah exactly uh when I finished it I was 38. yeah and then we're either on the same age yeah uh in August the so a Searcher contemplating buying an insurance business or agency or brokerage they do need to this this kind of three years at the start three years at the end intrigues me you really if that's the industry Norm you gotta be prepared for a three-year transition with the seller although as we've talked about maybe that'll be cut short because that is a very long time but then if you're if you're expecting to then exit the business at some point you are likely going to be expected to stay in the business for a three-year transition so that that strikes me as kind of a big big deal calculation big deal to to to something to consider before you dive into the insurance world yeah it is and I think if you signal anything but to to a buyer uh that's going to buy your agency that you're not going to do it I think they'd have red flags and I think many buyers of agencies wouldn't do a deal unless the seller was going to stay on for for an internet period uh and and now what they've sort of learned even further is they're really almost insisting that sellers of agencies roll Equity uh a sizable amount of equity so they're totally in it totally incentives aligns um and you sort of help erase that that worry about those elevator assets issue because the seller is going to have equity and they're going to be there for three years and you know that's not a problem so great thank you August okay so you're you're you're 38 and you're getting the entrepreneurial itch again think you might have uh another rodeo in you what what do you look to do are you guys still in Madison at this point still in Madison um we had four kids now wow uh young pretty pretty young kids um and you know if there's anybody listening to this or watching this it's from St Louis although they'll know that a lot of say St Louis's love kind of coming back to St Louis and so that's always kind of been in my Minds uh I don't know why that it's just a it's just it's just such a great place to if you're from there to to raise a family so I uh I'd always been telling my wife it'd be fun to get back to St Louis let's maybe what'd you think about it what do you think so during that earn out period my wife's like okay okay okay okay we'll we'll uh if you could find something or do something in St Louis we'll do it so um I you know as that period sort of wound down I I started really thinking about hey I I love to do another one buy another agency multiples have gone up so I knew that I couldn't buy a bigger it had to be a very small one something that was kind of under the radar of all the uh you know the what the bigger Brokers would buy uh I wanted to be in St Louis so there was like 10 of them or 15 of them it was a very limited You Know sample size um and uh so so I I sort of identified these 10 or 15 you know little agencies in St Louis um and started cold calling just re redid the process started cold calling going down there and uh you know doing breakfast and buying lunch and and uh and and one seller in particular here in town was uh it was a husband wife team like you know we'll we'll sell to you uh we we love the story we love what you you know you've done and and uh you know they they in 2019 uh I closed uh on a uh on another agency here in St Louis and did it totally self-funded this time um I sort of felt like you know one of the things that that there were so many good things about the first first deal but the one thing that um that I thought about is I sold when I felt like I was just getting good as a leader um and you sort of cut that off and uh it's kind of like okay now yeah you could still help out and impact the the bigger company that bought you but um I felt like you know you're definitely going to be a better CEO your second decade than your first decade uh and you can alert you can I I thought hey maybe if I could let it work in an industry too I was starting to get good at the industry you know I knew the players had all the relationships I knew how it worked I knew and I was starting to get better and better and better and so I I thought with the second one I really wanted to set it up where I could I could own it for 40 years 30 years and and hopefully just really get into something where it keeps growing you know I I don't sort of interrupt that period where I'm improving uh and sort of take advantage of all the things I learned so so self fund it worked out perfectly with that you know you can you can buy you can do whatever you want with it there's you don't have to sell it um I think the biggest concern is you know I brought on some debt is making sure your lender is Happy uh but that's it um and so that that the the downside is you kind of when you buy a smaller business many times you use this expression is used you buy a job and that's totally true that's what I did uh very small business uh we had like six employees wow very small but I saw I sort of I I lined it up where I I felt like hey I got a long time to try to try to do this and figure it out uh and and I've learned all this stuff going to the traditional model and and I learned a lot when I was at HUB and seeing that so I thought it was like a perfect yeah I think the right thing to do well when you had bought the first business at Murphy was that not also buying a job we were bigger you know we had like we had 50 we had some you know we had accounting people we haven't had an I.T guy it was incredible yeah uh you know here I had we had nothing uh and uh you know it was I mean you really learn the business when you buy when you do it when you do really small like that yeah it's just a totally different job than when you buy a bigger business um and so that was like a shock uh I wasn't totally prepared for that I figured that out quickly um but you know the benefit is it's sort of like hey this is the time where hopefully you can sort of build it and you'll be you know set your up so set the business up to own it for a longer time yeah yeah well you know what I'm I'm reminded of August uh is uh Amir habushe who has is buying HVAC businesses around the country um talks about what the types of operators or presidents CEOs that he likes to put into the businesses if they need that and basically the idea is you want somebody who was at a larger organization to then come to the smaller one because they know you know what the larger one should look like and so they're the perfect candidate to grow the smaller one into the bigger one and that's essentially what you did for yourself I mean you knew what a 50-person Insurance Agency looked like and so you buy a six person one and and you kind of know what the six person one should look like when it grows up 100 100 and August you know at six employees now I don't know can you share anything about Revenue at that level or no we were tiny I think we were a million in Revenue uh and I think you know ebitda was under half million any but uh so very small very small business at that level and given that you know the business really well already although you there's always more to learn but you as you said you were getting the connections and you were just feeling really like starting to get a taste of kind of Mastery of the insurance business or at least a veteran of the insurance business did you consider starting from scratch at that point if you're going to buy something that's always so so I did I did I think I would have if I wouldn't have gotten locking down this deal um but I I felt like buying something small would give me a two years two or three year jump start you know like you know it's starting out you got to get all the insurance licenses and software and uh you know it really starting from scratch I think it's gonna take a couple years two or three years just doing that stuff uh so I felt like if I could do it I give myself a little bit of a of a of a jump but I was in my back of my mind I was I was ready to start from scratch if this wouldn't have come up yeah that's a great thing and the it just just curious when you were doing your Outreach when you got back to St Louis before you said you didn't even do email back in 2008 nine where you send in emails this time around are you still old school phone ice in person I still did a lot of phones and a lot of handwritten notes um and and the seller who I ended up selling to uh when I came in to see him I I it you know he he had my handwritten note on his desk that I'd sent from like months before uh and I think that sort of resonated with him uh and and so it it uh it takes a lot longer uh but I felt like you know you kind of got to do it and what no one else is doing uh and and just try to be different and uh and so that that worked you know it it was sort of a way to sort of um kind of show him who I am and and and come you know and sort of just you know distinguish myself from other other buyers for sure although although I don't want to leave the audience with the impression go start writing handwritten notes just yeah only to say only to say because you had so much there was so much in that handwritten note I'm sure that was also it was like I I'm I'm a native of St Louis I want to come home I have a family with four kids I just spent you know I just spent I guess 10 years buying an insurance business outside Madison growing it and selling it so I know what I'm doing so there were so many things about you that was like wow this guy is worth talking to yeah yeah yeah I I've talked to Searchers who were friends and the second time around is much easier um and and almost everyone says that I don't know why that is exactly I guess it's just because you have confidence and credibility and you kind of you know Skip what doesn't work um but but that's that's I I found that really true second time is much easier and what about any kind of non-compete uh how can you dive right back into the same industry it's a great question so so I had a non-compete in Wisconsin so I I kind of had to leave yeah um I I like if I was going to work in insurance I had to leave Wisconsin uh and so being able to to work in Missouri and St Louis that that worked uh and so that that sort of fit and and you know you obviously can't go after any of your old clients or any of that stuff and um I I've always felt like you got to really honor those things and and try to you know do it you have clients call you and you gotta say hey I got two years call me in two years uh or whatever the time period was being um you know that that that's how that that kind of went went down okay and so you're returning now to doing self-funded could you yeah bring all the necessary equity in capital for the deal yourself uh I did yeah I did it myself and uh I I found uh I didn't do an SBA deal I found a A lender who was in the insurance business it's like an insurance company but they had a bank attached to it and I reached out to them and they said yes we'll do it it kind of mirrored what an SBA deal was a 10-year deal um but they knew insurance I I think they felt comfortable with my background so that really was they've been just a wonderful partner and they know the industry um they've helped me on various things so that that was how I I financed it myself and and with this uh this Bank senior debt and the so the vision is this will probably be it means something that you I heard you say 40 years I think on the pre-call you said pass it on to your kids if they if they're interested this really is yeah this is a long-term thing and and by not having any investors and doing self-funded versus traditional you have that autonomy that freedom to choose to write chart your own course and however long you want to do it and that's the vision yeah that's my plan I I um because there's so many uh Roll-Ups going on in Insurance we're now sort of unique that we're independent oh uh I love that I think that's cool yeah and I think that helps with recruiting I think it helps with talking to clients uh in St Louis just here alone almost every of the big agencies has been bought um we're one of the few Independents left um I I sort of have this it's it's this this vision of trying to also create a brand and and I think creating a brand takes a lot of time yep I mean you know I really want to have overly be just uh viewed and and and and deliver is just a super high quality great firm uh that's special uh and that's going to take like years uh and so I I want to sort of try to try to build that that's what I'm really that's what gets me out of bed every day uh and that's what gets uh people excited here um is trying to do that and I've got I've got a long time uh to do that which is which is really I think helpful um and that that's really my main driver right now is took one day hopefully people say overweight they're they're just uh you know one they're the best um and that's what we're we're really working for and two follow-ups to that August what what is being the best in Insurance just High touch great basically great customer service essentially for your clients yes yeah I I think uh you know customer service is um is I everything we do and um you know basically if people don't love buying insurance I know people aren't excited about doing it but if we can make it very easy and hassle free that's a huge win if we can have people that totally trust us we're almost like they're Insurance person like they're out there part of their company we got it handled yep um and that if we have their best interests in mind you know we're going to find them the best deal uh and and there there's some great competitors in this space but there's a lot of people that aren't uh that give kind of insurance agents A Bad Name I I like that because because we can we can be the anti that um and I I I think that uh and again it takes years and years and years of work to try to try to earn that from people uh and build that but that's that's a hundred percent what what I'm what I'm focused on I'm not not looking at buying any other add-on Acquisitions um I'm really focused on that I'm really focused on trying to recruit uh find great people which is brutal I'm sure people talk about that um and and and really trying to grow it or organically it's awesome and oberley the brand name what what does it mean where does it come from so the business I bought was called clh Insurance here and uh I I want to have my own you know brand and name and so I I I I was like how do I how do you pick a name for a company so I had someone in Madison that that I knew that was like a marketing person and she said well we're gonna have lunch and we're gonna go through it but before we go lunch email me every street you lived on every maiden name in your family every every possible name in your world I I said I sent her like like a hundred names where I grew up in where you know like my dorm name and call it everything yeah yeah Grandma's middle name I went I pulled out all the stops and she and I I sat down and she she pointed at one name she says oberley that's that's got to be it I'm like I'm like why she said well it's Unique and she looked it up and it it was um it means kind of it's a German an old German name I think that means kind of on a hill it was like my great grandmother's maiden name or something so that was sort of a good visual for me yeah yeah um and it was a family name an old old family name so I was like yeah do it cool cool I love it I love it yeah yeah uh okay you bought it it was six employees and this was 2019 yeah and how many employees are you today fifteen well right and while we're kind of in and out of the world of insurance brokerage uh you touched on the lice like if you had started from scratch it would have meant getting a lot of licenses this is something that um readers will uh tweak me about not asking more which I should do what does for the Searchers out there who might be interested in this space what does it look like to be an outsider without any sort of Insurance licensing what are the requirements there what they what should they be aware of you know it's not it's not getting an insurance license isn't that hard it probably should be harder you know you don't have to go to school I don't have to get a degree um but what we do is it's it's very critical so if you mess it up it's always amazes me how how you know sometimes some people say it's easy to get a license but uh we need to get licensed in every state insurance is regulate on a state-by-state basis there's not like Federal regulatory body so it's more of the administrative hassle going to every single state in signing overly up and getting a license and waiting weeks two three weeks you got to apply for it that was that's the biggest thing the other hard part about sort of starting from scratch is insurance companies are are partners with us like a Travelers for example um and and and they uh they decide who's going to sell travel worth product or who's gonna you know be able to distribute travelers insurance policies so they it's called a pointing so they appoint you and it's hard to get those appointments so I'd have to call if I started from scratch every single insurance company say Travelers we've got this business called oberley and and they would go back and forth for a few months or maybe even a year and then appoint us uh but by buying something smaller that already had all those appointments and all those licenses I kind of just skipped all that stuff um and that that really that was a harsh getting insurance license it it that well it's more of an administrative thing than it is like you know going to school and do you just get there's just a blanket insurance license or do you have to get sub licenses for the various kinds of insurance yep you're you're right it's it's you have to get a like a commercial insurance license and then a life and health license and uh you know I I had to get those myself and then I gotta get over a way to get every single one too and then if a new person starts here and they're not licensed they got to go do a class and a course and and take a test to get a license so so August as we as we touched on at the at the top you are a sponsor and so you're quite involved in the search Community because you have Searchers as clients and it and it's actually been uh a great Niche for you but mutually I mean you've helped a lot of Searchers um and you know so a lot of Searchers have come to you for that help it's kind of compounding well first why do you think it's a kind of a a good Niche because you are a two-time Searcher or is there something specific about Searchers that the that you know that makes it a good niche um I I guess one is I love working in a niche so that's important right if you don't love it you got a problem so I love working with Searchers um you know these are people who are putting their careers and their lives on the line to buy a business and moving there it's just it's inspiring it pumps me up I love trying to help um and I know the feeling of being scared and nervous and and jumping and taking that leap um but but then you know I so this all kind of started when I first bought the first one and I had there was a group of traditional Searchers and we all kind of knew each other and a couple of them called and said hey I'm going to buy this business and I know nothing about insurance can you just walk take an hour call and walk me through everything I need to know about insurance I've never bought Insurance in my life I need to make sure this is right I'm not stepping into a problem here um and that's essentially what we do today is searcher's call and say hey I'm buying a landscaping business for example and I've never purchased Insurance before can you just guide me and tell me what I need to know and make sure I'm not making mistakes and help me get it all organized for closing um Searchers don't unlike private Equity they don't have like a deal team they don't have like four people working on their deal it's just them they have to do the the accounting diligence the legal diligence the lenders the equity the sellers everything uh it's very very hard and so if we can come in and just sort of make the insurance part easy educate them explain what it is from someone that's done it before that that you know they can really trust that's what we do and and it's uh you know it started out just kind of one you know a couple projects here and there and it's just it's grown and grown and grown it's primarily what what main thing what oberley does now and you know we're doing self-funded we work with traditional there's a we've got some accelerator clients um some independent sponsors um all sort of in the Middle Market to small Market small business group um and and it's it's it's so fun to stay connected with it I love it um I feel like we can really help um and it's it's just been it's been really fortunate and we've benefited because the the world has grown so much in searching things to you know people like you will and and and all the conferences and people teaching it at the Business Schools it's just it's it's it's really been just a fun great niche that's awesome August and are there any things that you see over and over that are um you know potential uh potential red flags in the insurance setup of Target Acquisitions like anything that's just a pattern that you would you could just advise folks now about this piece of their acquisition the insurance piece yeah I think you know a small business person who's selling their business they're pretty Scrappy and they're pretty clever uh and they will when it comes to Insurance they'll try to cut areas here or or not buy insurance here or do different things and um I think the biggest surprise we have is is when we look at it we say you know they the seller is really they're not buying two or three important things they should buy now it's totally up to you if you want to end up buying those when you buy the business but we think you should um but I think it's just sort of that realization that things are kind of thin at the when they buy a business and um many times we have clients end up paying just a little bit more than they were than the old business was paying and that's because the searcher's like well I want to make sure if I have a claim for that it's covered um and those are sort of the bigger that's very common and is there a particular type of insurance or types of insurance that sellers will skimp on you know I think they they like like for example they don't have a board sellers won't so they won't have directors and officers Insurance where you know a Searcher might have a board so they'll have to put that in um sometimes they do funny things with the auto insurance uh you know they'll they'll buy it personally or they'll they'll do all kinds of quirky things with that we see um also there's this thing called an umbrella in insurance which is like access insurance in case there's like a really bad claim and many times sellers like oh I'll never have a bad claim I don't I don't need to buy that but we've seen those claims so those are kind of the areas where we see uh we see people's kind of skimp on it you know the the reason to not skimp on insurance is obviously to get the value that insurance provides namely protection from some sort of bad thing happening but it also strikes me as like this is kind of part of the the professionalization process that many so many searches are are intending to to do to their their target acquisition which is you know a big boy company has proper Insurance you know it doesn't it's not cutting corners on some of this on some of this stuff yeah yeah absolutely um is there anything more on the insurance industry that we haven't touched on I think I'm just I'm just looking at my notes here and I think we've we've we've touched on a lot of it are there you well you had said uh that there's been so much consolidation you're actually the only Indie left in St Louis so are there even opportunities for Searchers today you know I get called pretty regularly about Searchers or interested in doing it um I think just that shock about multiples is sort of the big issue is you got to pay eight to ten times ebitda now um and a lot of investors in the traditional space don't want to do that or or Hesston to do that um you know it's tough to grow an insurance agency organically because you think about everybody's got 90 retention everyone so like there's an issue there uh and so that that uh that that is a challenge is is figuring that out um it's tough to find sales people that are you know great that can sell insurance that can do that it's a rare uh rare personality uh there we we do a lot of Personality sort of profiling we're trying to find the right hires and I had a consultant tell me that like a a true salesperson who's really like a true blue like incredible like they're like three or four percent of the population has that type of Personality uh that can go out and do that um so just by that nature it's rare to find that person who can help you bring you into your insurance business and help you grow it so those are all the challenges um but all this the great stuff that's still I always thought is still there with the business it's good recurring Revenue it's good margins it's steady um it's Recession Proof um I think with with interest rates going up you know I've read a lot about that that deal activities slow down like deal activity in the first half of the year is much lower than I guess 20 lower than it was last year um I think that some of these Roll-Ups are have a lot of debt so I think that's going to impact them um so I think that maybe these times are changing a little bit with uh with with the interest rates and all those kind of things and and if it does become more attractive I would love to try to buy one or do something but right now it's just I just can't I can't make the math work just myself and August I I work I feel like in the 90s Insurance Brokers served consumers as well and then I'm going to guess that the internet kind of killed that and we all just go to Progressive or Geico directly or or our health insurance from you know from employers many of them um most folks but um but it hasn't obviously for commercial insurance is that is that a threat or is that threat coming gone in in commercial insurance it's just too complex for somebody to point and click their way through it I think about it I'm not too too I mean it could always happen and I think on the smaller smaller sort of uh really cookie cutter type businesses they might go direct but it's just got it's still very very confusing and it there's so many choices that to have someone out there kind of walk you through it and and I will note on the personal insurance like your own personal or Auto there's a big number of people I don't know what the percentage is it still go through an agent oh huge uh that don't go direct and um and and these are folks you know who are like okay I got a house in Wisconsin and then I got my you know a cabin up north it's I don't know how do I insure that and I got you know I got a teenage driver how does that work and um you know all of that stuff so they end up going through an agent too and that's that stayed pretty consistent um Geico and Progressive kind of picked up some of the more price buyers um but I think folks who need more help and and looking for Value um go through an agent and uh you know I think with Geico one of the things that that those carrier I mean they spend so much money on Advertising it's almost like that that's their commission expense that they would pay to an insurance broker they pay an advertising so one way or the other it made their choice um and so I think that uh the insurance companies we work with you know give us commissions so who are the sales people uh whereas Geico they're just doing it and doing it that way it's a good question though August just a couple more questions for you I want to zoom out now uh and just uh kind of talk about search General in your observations and then ask your personal question so um yeah you'd kind of touched on the fact that the search ecosystem has grown a lot since your time and any other observations to make about now versus 2008 with respect to people buying businesses I think it's I all I could say is I just think it's great um I I think that more and more people have confidence because others are doing it that they can do it and and make that leap uh and I think just that's just been fun to see people who have totally changed their lives by doing a search fund and uh that that is that is a a big one I think there's there's probably always been self-funded but now it's really like a it's more specifically called self-funded searching and that's grown a ton um I think traditional has grown but I feel like self-funded probably has grown even more yeah and and that's um that's a huge Trend that that that we've seen it's just more and more folks are sort of doing that self-funded path um and I think there's more information out there than ever um so I I think it's just been it's been great to see uh and I think I think it's going to keep keep growing because it's a great path we also got some contrast between your first experience buying a business as traditional search fund and then your second is a self-funded is there anything more we can we can say about those two experiences Maybe the difference in in feeling you know one one one contrast is often owner versus CEO you know you're do you feel like that is applicable in your case do you feel more of an owner versus did you feel like more of a CEO and with Murphy I I think that's I think that's right um I've had to really proactively reach out to people in my network to help supplement that coaching and support I got when I was in a traditional world and kind of formalize it a little bit have like sort of a group of people I talk to all the time that that I can commiserate with uh whereas in the traditional world it was sort of baked in um and so that that is something that I sort of had to proactively do um sometimes I found myself getting frustrated that I bought a really small business and I wish it would go faster and I was like oh only if I was back to where I was um I felt I've had that emotion um sometimes it's hard to recruit being really small I mean you can you can sort of be the David and the Goliath and you can use it as a selling point when you're recruiting but it's also be like you know why would I join it like is that is that a risk I'm joining an eight-person company like why would I leave a big firm I got these benefits um it's just tougher uh and so those things are um are real uh in terms of difference um but I have no when I look back on it I I really think it was the right for me it was the right way to kind of go about it um because I learned so much in the traditional world and then I sort of had this confidence to do it do it all with myself on the on the self-funded side it reminds me of something that Derek Turner recent guest said who also like you did a traditional search fund first and then a self-funded and he said that his traditional search he chose to do a traditional search fund first because it felt like a a good on-ramp to search because you have yeah structured terms a structured communities and then and then these investors that you can lean on kind of guard rails and then he stepped out of that business and went on to buy another business as a self-funded Searcher and really had in retrospect felt that that was accurate that he felt kind of much more equipped uh to be a self-funded Searcher having done a traditional search fund the first time around yeah 100 totally agree it's exactly my experience too um I I that's exactly how I felt great uh anything we didn't touch on August foreign no I think that's I I think that's great will I love it I could talk Insurance all day well uh we'll have to I'll have to see if I can find any other Searcher out there who's bought an insurance business and and get their take on it um yeah but uh August what's the best place for uh people to reach out to you other than you know clicking that that link in the show notes that appears every other episode link is great or just you know shoot me note on LinkedIn or our website oberley-risk.com um those are the best ways or call me too yeah August thanks so much for coming on this is a really fun conversation and thanks for being so great to my listeners who who reach out to you for help I hear nothing but good things through the community about overly so um more more where that came from awesome thank you will 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