Will Wright welcome to acquiring minds thank you will it's great to be here great to hear your voice and um you know I've really enjoyed listening to your podcast since it was introduced to me three or four months ago so it's an honor to to be on all right well thank you for for saying that glad to have you on you bought a business directly tied to events and you bought it before the seword before covid uh you emerged from the pandemic in an events business not only having survived but grown and then that led to a successful exit so we're going to hear all about it and specifically how being a traditional search fund was strategically crucial at points along the way to get us started will please give us some background on you yeah happy to um so born and raised in Fort Wayne Indiana um I'm based in Austin today but a midwesterner kind of f heart um grew up in a it's a very middle class family um father was a residential real estate agent my mother was an art teacher um and um you wasn't sure what I wanted to do growing up uh in a small town but went to Indiana University and quickly realized uh while I was in Indiana that the smartest and most successful people in uh in the classes ahead of me seem to be going into Investment Bank that was the competitive uh uh path the most competitive path at the time um and I for for perspective and timing I I graduated college in 2009 um so out of undergrad went into uh yeah got to see good timing very good timing I interned on Wall Street uh in the summer of 2008 when Leman Brothers collapsed which was a oh wow pretty wild thing to see um but great time to yeah start a career at the bottom I guess um um so was one of the very fortunate few to to land a a job in Investment Banking in 2009 um worked in an m&a group uh for two years um then made the very standard path to private Equity um it was a small private Equity Group out of Chicago called Frontenac company which I bring up the name because it it comes up a bit um throughout kind of the fund uh ecosystem but um I worked at front neack for 3 years um focused on um Tech enabled service businesses um but really we were a generalist looking at a variety of things but that was back when um you know that would have been 2013 to 201 or 2011 to 2014 I suppose um and that was my first introduction to search funds um so what's fascinating is uh front and that company actually purchased uh a a business called uh Behavioral Health Group which was Andy loves and as uh you know the founder of aspect um that was his business that he had search funded right out of school um so that was my first intro into search funds was being on the the buying end of a search funded business um and shortly after that my vice president guy by the name of Parker Davis who was very much a mentor to me at the time um he front and act to go do a uh a traditional search um and shortly after that um one of our managing directors left front neck to start search fund accelerator so um it was pretty wild um back then it felt like the peak of search funds um but at that point I was not familiar with all the different models that were out there traditional was the only one that um you know I was I had been introduced to and um I had to go to business school to uh uh to follow that path so so I ended up going to Kellogg um 2014 to 2016 but was uh the only individual in my group of friends who actually went out and did what uh what he or she wrote their essays about so I wrote that I was going to I wanted to do a search fund and uh I stayed the path and interned in a search funded business after my first year and then uh left and you know after graduation and launched my traditional search and just this uh front andac I don't know the name am I it how is that spelled Frac okay Frac yeah Frontenac okay and so your boss and then and then you said one of the firm's Partners ended up your boss went to off to do a search fund and then you said one of the firm's Partners is actually a co-founder of search fund accelerator SFA which is one of the most well-known and probably oldest or original search fund accelerators gu by the name of yeah a guy by the name of Jeremy Silverman uh and he would have launched that I'm guessing probably 2015 so after I had after I had left to go to business school but kind of right around that time and you said that it felt like Peak search fund uh all these people around you doing search funds but in fact as you told me from the preall you get to Kellogg and uh and you I think we should also highlight the point that in your essay uh your application essay to Kellogg you are explicit about what you're there to learn you you go in deciding that you're going to pursue ETA I heard that right yes that's correct yeah and then in your first year at Kellogg as I recall you're telling people about this around the bar your your fellow your fellow NBA Pals and like it's not a thing you're kind of people are like what are you talking about give us more color there it was so fascinating seeing and reflecting on the evolution of search between 2014 and 2016 um when I entered Kellogg no one had heard of it you know everyone what what's a search fund why would anyone want to go do this H why would you want to go run a you know small janitorial business why not go work for BCG um uh so it was a definitely a unique concept at the time um I would say in the first year um by the second year groups like Pacific Lake um large investors were coming to campus and the rooms were packed with people um it it it it it the the idea of search fun totally changed and took off during that during that period And so you credit that to the Pacific Lakes of the world kind of promoting it on campus essentially raising awareness coming to campus talking giving giving presentations Brown Bags whatever they're called it in Business School uh and and just and that that really kind of catalyzed awareness and interest that definitely started it I think in 2014 um 2015 a group called the zel uh ETA Club within Kellogg launched which there's the zel fellows used to be focused purely on startups um but they created a new group in 2015 based on uh acquisition and ownership and that also kind of helped spur that interest and drive and you start hearing people talk around the hallways about being a CEO or being their own boss at a business school and it it becomes very appealing great and So speaking of the appeal what was it that appealed to you I mean you you you didn't le as we've said you already went to Kellogg knowing what you wanted to pursue so it was hearing about it from your boss from Jeremy Silverman's efforts that uh that you learned but what was it that grabbed you yeah I you know I think at that point in my career prior to business school I saw myself as an investor going going down a very traditional um Financial pathway and um I saw there being less and less opportunities on the you know on the backside of business school or exiting business school um to stay in private equity and be differentiated at all as an investor um what I had identified kind of as from talking to mentors and starting to explore different Pathways is if I could be an operator or gain my stripes operating for a period of time that would only make me a better uh a better investor better board member better mentor to um those in the business world around me um so you know early on I guess or or in my later stages as an associate before business school I had identified all right want to get operating experience at a very high level um at a and at a larger scale um uh which could be differentiating for my career but the other thing that I realized um in my second to third year in private Equity was I really wasn't motivated um I was no longer exclusively motivated by paycheck um I started to yearn for ownership and responsibility that um you know I knew my hard work going into it would be building something greater on the back end so as I was entering business school and thinking through the different paths at the time startups were very common and very popular and people were going out and making you know a lot of big stories about successful fundraises and Seed rounds um I realized that having some of that ownership was exactly what I needed to to to um I think find my own true potential but I quickly realized the going from zero to one with a startup and needing a creative idea which I had none um was not as uh uh not as lucrative of a path for me thinking from a risk reward standpoint versus taking it from 1 to 10 1 to 10 was what I had seen successfully accomplished in private equity and that's what I wanted to learn and apply within my career and um you know going forward that's great will and it's interesting to hear that you really kind of came at this your career you saw as a as an investing career you you kind of self-identified as an investor we're going to probably circle around this theme over the course of our conversation but just jumping ahead do you still now that you're on the backside of this really deep operational experience entrepreneurial experience how do you self-identify these days it's tough um having people ask me what do you do for a living I mean right now I'm on sabatical that's I don't I don't know what yeah exactly I don't I still don't know what I want to be when I grow up will um I I I think I certainly know five year two years of searching five years of oper operating has caused me to see things differently and to Value um elements in business differently than I did purely as an investor uh but my with given my background the way I think um I I've always been a very you know calculate um identify the risk figure out what the r how to Value the risk how to mitigate the risk I still think like an investor um and whatever I go do in the future you know I I I hope to successfully apply both lenses to I I think that there's a a benefit to having both sides of the the equation yeah of course well when you decided that you would go down the path of search you and you you were thinking about it from the perspective of like a career as an investor build my operational chops um that'll make me a better investor over the course of my career that will differentiate me um and so and so at least then your thought was that you'd Circle back around to being an investor you get back into private Equity proper after your search Adventure yes that was the original that was the original thought um was you know then I can go join a fund and having successful operating experience will only differentiate me as a candidate um you know that that I think I think that path and that realization quickly changed in my first two years of search um uh but o originally that was The Logical path oh okay uh well can you tell us what changed without us jumping into the story what changed in the first year or two yeah I think well and I tell I tell Searchers that the um the search process itself there are people who find businesses at any stage in the two-year process but I mine fortunately or un unfortunately was it was about a 2 and 1 half year search um but I would say after about the first year it all clicked for me of what I was doing what I was trying to accomplish um suddenly having a a good deal under Loi and getting interest from investors and starting to receive commitments the light bulb went off in my head that I am the private Equity Fund I can do the deal myself I don't need the backing of a large fund because the hard part is getting the sellers to the table getting the lenders to the table capital's easy if you can solve the other pieces the capital is is the easy part so what I went through in my search process was really this beautiful Independence um that I had never felt before um not just Independence in wanting to be a search fund operator but but really you know as I saw my career uh in in you know in a longer duration into the future um I can do things independently I can always go do deals and raise Capital um it was such an exciting Revelation that I um I didn't realize would be the case going in I don't think it had to do with my background either and happy to get into I know a number of Searchers that um think well I can't do this because I didn't work in private Equity I didn't work in finance I I don't think that that skill set is necessarily relevant to be a successful Searcher in fact I think there's many areas or maybe it's it it's it's a hindrance but um but that realization of me and that independent um was a huge surprise in my search process and something that I think will continue to be career defining um for me in the future and and so to be absolutely clear about this what that meant for you was that you looking forward in thinking about doing deals buying other businesses you could do that in in all manner of formats independently independent sponsor maybe becomes the path as opposed to needing to return to a private Equity Fund and become part of a larger team to do deals you you realized hey I can do I've I can do this as a solo in some solo form for the duration of my career should I choose to yeah I in private Equity I would go to um in management presentations and I would be the junior guy in the room and I would maybe be there to ask some of the lingering questions that stuff we didn't cover that the the senior the principal uh hadn't covered in diligence um I I had seen the mechanics of the of the deal process and I understood how a deal worked but I never quarterbacked the deal so suddenly now in search I'm going into management presentations where there's an investment banker and the sellers are represented and I'm just by myself and it's on me to perform and and answer all the diligence questions sell myself uh as a competent buyer someone with the capital to to close the deal um and I was finding that um you know they were they were picking up what I was throwing down and uh it was um uh I was getting I was I was getting interest from from Sellers and um um investors were clamoring to you know learn more about these these opportunities that I was bringing in and it was just it was a very exciting time to realize that yeah the traditional structure of private equity and what I thought I needed to be a part of in order to be an investor or be um you know private Equity professional was actually not the case and um uh it's it's it's only something that you would realize I think going through the search process just you know jumping into at the deep end and and learning how to swim fantastic well this this Revelation and your kind of conf discovery of confidence and really starting to assemble a deal um also feeds into your decision to do a traditional search fund so we haven't talked about that you went the traditional route uh of course let's let's hear it um I always ask traditional search fund guests why they went that way and not self-funded uh so we're kind of think we're already there so tell let's let's address it directly yeah happy to um when I when I graduated business school um I guess it would have been in my second year is when I raised my traditional fund and to be quite honest I think the concept of self-funded in 2015 was very foreign um I don't think uh it had been really demonstrated I know it was a concept out of HBS at the time but um how to get there in my mind at that point in time was very challenging one I I had exhausted all my savings in business school so I was coming out with student debt I wasn't married I I didn't have a situation that I could lean on anyone um so I needed to earn a paycheck really quickly so that was one just reality yeah um but I you know as I think about traditional search and the value of traditional search there were other paths I could have taken at that point there were accelerators um was a kind of newer entrepreneur and residence concept which um Alpine investors Graham Weaver was starting to do and they were interviewing on campus um there were apprenticeship type models that were very common within the the Kellogg ecosystem where you go Apprentice with a CEO and then maybe go out and buy your own business after um but the way that I was thinking about uh about this path and it was a professor of mine at the time had asked me in early 2015 well why do you want to be an entrepreneur you do You Want To Be Your Own Boss or do you want to be a CEO or do you want to be an owner you know how do you value those three things how do you think about the scale of the business do you want to run a giant business do you want to run a small business you do you want to run something um you know thinking about duration Do you want to build something you can pass on to your children or do you want to you know build something that you can exit and look like you know very private Equity like and and finally how do you think about support uh and the value of support through uh through your your journey um and and those are questions that I pose to any prospective Searchers when I talk to them because I think that every path is different and what individuals are after um in their careers are are all very different and I think there's a number of different formats to Eta as we call it um that can accomplish what people are after whether it's traditional or incubator or self-funded for me I would say I had seen the private Equity experience and we had talked about wanting to build on um uh you know wanting to gain the operating experience to become a better investor so a large scale business was enticing being a CEO answering to a board which is something that you know you see in traditional private Equity was very enticing and I had identified that identified that I needed that support uh Network I wanted a strong board I wanted a board of mentors that could help me through and investors that have been through the process um and I had I had I had learned and and started meeting individuals within the search fund traditional search community and very much wanted to be a part of that Community um it's a great group of like-minded individuals that are focused and tend to think very similarly about um value investing um and I had identified that your first acquisition isn't your only acquisition within traditional search um there's a career here and and and that was very much important to me one of the knocks if you will on traditional search is that it can feel or maybe explicitly kind of is elitist in the sense that it's very connected to the business schools to the most prestigious Business Schools it's not the only way in but it's probably the most common path in so if you're uh a mid-career somebody listening to this and you're long since out of out of you know maybe you never went to business school or you didn't go to one of the fancy ones or regardless you're just long since out of that away from that ecosystem you know getting funded as a traditional Searcher is going to be unlikely um whatever is what it is but I and I brought this up to you on our preall and you said something really interesting because the how just goes to show how perspective matters so much you were coming from the traditional PE world and found the community the traditional search fund Community not elitist at all just the opposite please elaborate um well jogging my memory on kind of where those comments came from I think I I find you the community itself is is is a a great group of individuals with a variety of different backgrounds um they don't all have private Equity experience you it may be people who grew their own businesses and then found the search fund community and have become active investors in that space um what I you know what I think on kind of in reflecting a kind of lessons or inspiration for people who may think that they need an elite business school background to do traditional search I don't think that that is necessarily accurate I think there's several things we're seeing take place right now within the traditional search Community one of them though is a real influx in capital coming in so investors have more Capital to uh invest in backing Searchers and trying to put more uh Capital into deals which means that you there's likely going going to be a shortage of traditional Searchers coming from Elite Business Schools I think what invest are seeing is that the most successful Searchers and most successful operators are likely individuals who come from relevant operating experience background um you know I I I don't know that traditional private Equity is the best although I think it works I think really what what investors are looking for it's not having it's not having the elite business goal background I think what they've leaned on for business school is to use that as the filter so that they don't have to you know go through and and you know measure aptitude of of everyone who who would apply but at the end of the day it's really hard to buy a good business um you don't learn anything in I can't say you don't learn anything in business school that helps you but but business school doesn't prepare you for everything that's going to come your way uh when you're searching and when you're operating what it takes is grit I think it takes grit um for an entrepreneur to want to do this and to be persistent and that persistence is what investors would look for what I would look for if I was backing Searchers um is someone who's got you know some sort of relevant interesting industry experience and grit and desire and drive to go out and and acquire a business and and I I I think that um you listeners would be would be selling themelves short if they think that they can't do a traditional search because they don't have um a business school backing um I don't think that that's necessary neily relevant today great okay well encouraging words Also let's just highlight what you said that operational chops in a particular industry May well be more valuable than uh you know a fancy um business school degree or time in private Equity so anybody out there listening who wants to buy a business in their own industry and has kind of deep industry experience context uh but might not have even an MBA you May well be very well positioned to to raise money in a traditional search fund context so uh keep that in mind listener okay you are a year into your search and you you I guess take us through the search process because um it it was it it was kind of a mental trajectory for you as as we've as we've been talking about directly um but also you were doing the whole Outreach uh proprietary out Outreach as expected from traditional search so a lot of that so just kind of give us a picture yeah so you know I think there's no right way to do the search process I think everyone has their own path and and strategy and for me I quickly realized a a focus targeted strategy was something that I was I was losing interest in really quickly um I needed more action I needed more emails coming in I needed um to feel like I guess I was being more productive so um and you mean and by Focus targeted you mean industry thesis industry specific a certain industry specific there's you know 500 targets and I'm going to spend two years trying to nail one of these targets um for me uh I had spent a little time dabbling there quickly found industries that you know didn't have any buyers that were interested in selling timing wasn't right and suddenly I'm twitting my thumbs trying to figure out a new industry the thesis quickly learned that you know obviously time is the most valuable part of your search process how do I get as many at bats uh as I can in as short a period of time as possible well I'm going to reach out to thousands of business owners and I'm going to keep it as broad as I as I as I need to let's call it business services and this certain geography and I'm just going to do blast Outreach and phone calls and um and screen the respones coming in to see all right if is that business you know actually of Interest or is this you know sub industry something that could be of interest now that I know I have a seller that's interested in talking to me so it was just slightly different um again I don't think there's one right or wrong way to do it but I at least it was it was a more enjoyable experience for me um going into work each day knowing I had you know 100 emails to get through and look at who do I you know which sellers do I want to talk to today um to figure out if there's kind of interesting unique thesis to be made here interesting that a 100 I know that was a kind of random number you pulled out of the sky but to even suggest that you were getting a hundred responses to outbound goes to show the difference between doing this back then and doing it today I don't think any anybody doing proprietary Outreach today is seeing that quite that response rate uh even granted you went kind of industry agnostic or or not industry agnostic but very broad with B2B services um but still it sounds like uh you were shaking the trees a lot of trees and it was and it was working well I I reached out to 20,000 businesses over the course of two years I I I tell friends in the you know who own their own businesses down in the Austin Community that if you owned them in between 2014 and 2016 I probably emailed you um uh you know I I don't know that that approach necessarily works today I think it it may have even been waning a bit uh during my search but but today I tell Searchers I get so many email blasts and the same tactics that I use five years ago you're seeing more of today um I think I think it's it's it's the the environment today is such that you really need to get in front of sellers you need to go to the conferences um you need to be more Hands-On and probably more tailored than you needed to be 5 years ago um that said I think in the proprietary Outreach 5 years ago seven years ago um at that point in time the most business owners um it was not a novel concept to sell to value your business and sell the business there were so many business brokers reaching out everyone knew what their thought they knew what their business was worth um and there were also interesting opportunities coming in through Brokers so you there's so much talk about proprietary and that's the only way to go in the search world I found some great deals through Brokers and and the deal I ended up landing on um came through a river guide um you know I would say broker very focused within the the rental Community but um well I spent so much time focused on proprietary uh I I think that keeping uh you know keeping some irons on the fire with Brokers is certainly helpful and um it probably will I I would think probably more and more deals will come through the broker Community going forward just given kind of the Dynamics at play in the market today so you actually found your deal despite the 20,000 emails that's that went out despite the fact that anybody any B2B Services business owner in 2016 would have heard from you will it came from a broker or yeah a river guide as you said and by the way if you'd also Define River guide for the audience so two questions there yeah so uh well I first defining River guide as someone who can guide you through the river of the industry and show you the path to different you know um movers and shakers business owners people that you should meet developing the relationship with the river guide has been a you know traditionally and within the traditional search world has been a um one of the best ways to find deal flow uh and and lead to a good a good deal um within uh or or kind of thinking through I yes I found my business as you know through a broker but what's interesting reflecting on the proprietary Outreach that I had done many of the Brokers or river guides that I would connect with only came from the proprietary Outreach so I would have phone calls with business owners through proprietary Outreach maybe we would find that it wasn't good timing they weren't ready to sell wasn't the right size what have you but they would say you know if you're interested in you know Pest Control you've really got to meet this person or this broker who only does p control and where I found uh Brokers to be so helpful were the ones that you it's not the the the ones that work for you know the giant uh you know show to 50,000 buyer type firms it was the you know Mom and Pop individuals they maybe there was one I remember with still had an AOL email account um like he was going out to his small community of identified buyers and I think finding those types of individuals um they don't have websites you know you're going to find them at industry conferences or you're going to find them through these phone calls conversations you might have with proprietary owners you find that that industry is so Niche and you can start navigating your way through it h great and this concept of a river guide is do people self-identify as that or is that just kind of a search World term for such a person I don't I don't know where it was originally derived but I I'm only Familiar of it familiar with it through search okay so I no they would not identify it with it but I think there's a natural tendency for people um you know as they find success in life and get you know later in life they they want to give back they want to share and in the instance with this River guide in the rental sector to him he saw his friends were all uh older um you know rental CEOs or business owners um who did not have a um a succession plan in place and there was not any young blood coming into the rental industry um and so he was excited by the fact that there's someone like me interested in you know he you he called me a rental man you know seeing a rental man and meeting you know a young rental man it's so rare to meet and you know I want to introduce you to people so um I think you'll find that dynamic in in many Industries um typically kind of an age you know an age thing perhaps well and just to just to highlight the point you made previous to that where I it's a it's a great point because I I often tend to I don't knock proprietary search but I I call out the fact that a lot of this you know multi- these email campaigns even even for those Searchers who who who go that path often the business they find doesn't even come from that um but but there but but to your point there's actually that's not the sole kpi sometimes the proprietary Outreach indirectly leads to Opportunities so it's not just did you email the owner whose business that you you then you then ended up buying but did some kind of this flurry of activity of outbound that that you were creating did it did it maybe indirectly lead to something and then it kind of can can justify itself so um I've never actually gotten that Nuance so thank you in this in this instance I had visited my first event rental business from a from proprietary Outreach like I I I first saw the industry and thought okay there's something interesting here um and then went down that that Wormhole so I I I do think that proprietary is beneficial even if it doesn't lead to the ultimate transaction great well I said you had an events business and you're calling it more of a rental business it's an Events rental business but maybe the Dynamics of it are more uh rental than events anyway we're going to get into it so let's hear about uh the business that you ended up buying yeah so you know like I said when I did my search wasn't solely focused on one industry was looking all over the place but I think I tended to find myself gravitating more towards my investor called investors called it rusty rusty businesses um your equipment repair and maintenance Landscaping Home Services um at that point in time I found IID found that um you could get them at a relatively inexpensive multiple um and there was some interesting characteristics with your local Regional type businesses um so I wasn't exclusively looking in Event Rental but um I had started inis visiting and calling on event rental businesses and there was definitely an interesting Dynamic um with understanding the revenue model of of event rental businesses um where you would think it's probably all B to C um non reoccurring but the reality is many of these businesses depending on how they're established in the community um their clients are corporations nonprofits um uh universities um you know venues coordinators Caterers people that use them week in and week out for events that take place so thought okay this is interesting there's a relationship nature to this um it's actually um significantly more uh challenging to to service the customer successfully than you would think so and and the end product is Mission critical the events happening at you know 700 p.m. on Friday and everything you know the tent needs to be set up before anything else can get done so it's not commod completely commoditized service that the cheapest provider is the best provider and once you have the relationship with those customers they're going to rely on you and and in some instances their careers are on the line with whether or not you Prof you know you can provide successfully serve the client um I also thought what was interesting with Event Rental was um One in Every Market I looked extremely fragmented um in most instances typically mom and pop players um throughout the market um and the other was you walk into the warehouse and there's there's thousands of SKS and things moving all over the place I mean it's an assembly line um and as you as you look at the processes in place in several of the event rental businesses I I visited um it wasn't yet technologically advanced it wasn't yet professionalized many of the things that were being done uh were only being done because that's how we always done them and so I thought well this is interesting there's you know when I walk into the warehouse I just see opportunities for uh data collection and information and uh you know changing systems and driving operational efficiency um bringing in technology to U maybe bring this industry into the 21st century um so I thought that was all interesting um a downside that I had identified with Event Rental is it's Capital intensive and you're you know to scale the business you are buying equipment so trying to wrap my head around Capital intensity was certainly a challenging part of the the diligence process um but there were enough interesting pieces uh to this business and the business model I thought all right I'm going to we'll spend some time poking around this space um now for Pur list itself and giving you kind of a background on how I arrived at that and how I got a deal done um what was it called will what's the name of the business Peerless events intense Peerless events intense go ahead I want to be very clear with with any listeners within the traditional search World um Event Rental is a very challenging business to get done in the traditional search ecosystem um I think it there's certain elements that could be wonderful for a self-funded Searcher um but to hit the returns threshold that traditional investors are expecting it's an incredibly Capital intent of business that's very very difficult to scale the reason we got our business we got our deal done and um this was a successful traditional search Endeavor was we identified um the regional market that we were operating in and the thesis suddenly became all right this is in Texas so Peerless events intense with operations in Dallas Houston Austin San Antonio this is a good not great business model but in a white hot Market and there was also a very interesting element at the time where our largest competitor was a pretty well-known uh um uh private Equity uh roll up that was struggling and was starting to see you know customers turning out and if we could go into this white hot market and capture some of the business from this struggling competitor um that growth is going to capture you know that growth is going to come to us all we need to do is perform um so that certainly made it very interesting there were other elements to you know again B in Texas we were the only player and when I found the business it was the only player with operations in all four Metro markets um which was you again interesting business with a lot of horsepower uh under the hood so um to my investors this became a this is BET on Texas you know uh opportunity right and by the way pre-co we all know postco that Texas is the you know Texas and Florida are crushing it but I'm not sure and Texas of course has been growthy now for 10 years or more but it it it wasn't maybe didn't get the headlines that it did until after covid yeah I think you know the day I closed the business Apple had announced they were moving a massive headquarters to Austin um there was there were there were definitely I think Tesla had already you know stated that they were building their facility there so um I think there was already kind of for those in the know now a number of my investors are from Texas I had like the Cambria group and aspect um there were a handful that were based in Texas and the prospect of investing in a Texas business they they could see the opportunity there yeah well I want to highlight something here will about your thesis about this business about Peerless uh which also really gets at one of the fundamental differences between traditional search funds self-funded you know in in a self-funded business you as long as you you look for kind of enduring not kind of you look for enduringly profitable businesses and with an SBA loan the economics are such The Leverage is so high the economics are such as long as that you don't screw it up if the business doesn't grow or just grows modestly say along with GDP you can have a really strong outcome with traditional you need there there's much more of an expectation of growth it's much more traditional private Equity where where you're buying something to grow and exit it so your filter and your or your lens uh is very much like what is the what is the what is the the growth thesis here um and and I just I just want to highlight that because self-funded folks don't necessarily have this quite the same lens there um anything to add to that um no I think that's important to highlight I think is I would produce you know base case and investment case scenarios for the the opportunities I was bringing in I've got to show greater than 35% irr um typically investors are looking at these opportunities and asking what do we need to believe to get to a 5x you return on this um so many businesses that you would look at under the lens of a self-funded yes you're absolutely correct I don't know that it would work in traditional um unless you were bringing some Playbook to the mix that you thought you could grow um you know you could grow greater than kind of a traditional business might typically grow tell us a little bit just some numbers around Pur lless Revenue employees you've already said it's active in the four the four Big Texas markets what else can you tell us kind of quantitatively around the business yeah you know quantitatively when I bought the business um it was doing 12 million in sales around 100 uh employees um $2 million in eida um and the business itself just to give you an idea um so we did tent rental and then we rented Everything Under the Tent tables chairs linen tabletop items um we would rent to um we had some really respectable Blue Chip customers um including the Dallas Cowboys so everything for the Dallas Cowboys um uh quite a bit for SMU in Austin um if you've been to ACL Music Festival we did the um craft brew tent that you could literally put over a football field so this is large scale structure tening um for large festivals and events rodeos around Texas um it was a number of events that happen year in and year out um despite economic circumstances or you know cyclical economies um these are events that have been happening since in some cases World War II so as we're dilen the uh you know the revenue model in the business um it it seemed to be while it's a very seasonal business a um a pretty regular and predictable business which I would say is also something that's important as you're looking at uh you know I would say even self-funded businesses predictable businesses are important for anything you want to put debt behind um so uh yeah those were the numbers we acquired the business um for it was a little it was right around five times iida um we put two turns of debt of senior debt on the business and a half a turn of seller note great um I'm tring trying to think of what else would be helpful to share there I think that's great uh that's great oh one other element I would say I would add to the business and and another reason why you know helping us getting the deal done um there was an an aspect of the business that was very abnormal for uh traditional event rental businesses where this business provided disaster relief services so uh tenting for uh hurricanes and um tornadoes and you know major disaster events uh this business had a team of I would you know I always called it like the Navy Seals of of of tent uh installers that would dispatch and deploy in the middle of the night and driving into a storm and set up for um the disaster responders to come in and and you know work on or or you know bring uh systems back online um that was an aspect of the business that had always performed pretty well and was a part of the business that we completely removed from that underlying 12 million in Revenue 2 million in iida um but it was a a just the icing on top um as we kind of played out well you know given climate change circumstances is and starting to see frequency of major storms increasing um this could be an interesting upside here that we're not modeling in but um you know could certainly impact the bottom line great and just to Circle back on you know recurring versus repeat there's kind of kind of a hierarchy of desirability with recurring being at the top and then you know reoccurring or repeat below that but in between there I guess is where you set where if you can have repeat Revenue but it's also scheduled so these annual events events that that happen you know even you know regard regardless of any externality these events happen and there are you know big predictable events uh that's kind of not just repeat Revenue but that's kind of like very predictable you know when it's going to happen you know that it's going to happen Revenue so so even within repeat Revenue there's kind of there's kind of a a spectrum of quality there and and yours was sitting at the high end of that Spectrum yeah I mean I think just generally well if you take one customer and you look at the business that that one customer brings in and the timing of it it can be they may do an event every single year but the the the magnitude of that event could vary so it's very hard like is the event Outdoors or is it indoors you know does it require a tent and HVAC and flooring or you know is it just tables and chairs um so on a smaller scale a business on a smaller scale I think it's probably going to be a bit more volatile I think there's also a dynamic within any Regional business where um for the service provided how is that Regional business um situated competitively in the market if it's the number one or the number two player then all customers requiring the service are going to call them first but as those one and two as the one and two player gets capped out on utilization um and has no more capacity the number three and the number four player get phone calls so where you're situ ated within the market can determine you know where you're positioning within competitors can determine your seasonality as well um for how you know the volume of calls that you're getting but generally speaking with the scale of this business they would receive a high volume of phone calls or events and most frequently from repeat customers so we found about 80% of the business was coming from customers that the that the business was serving on a regular basis now I didn't know if we were the number one provider or the number four provider to these customers but we were you know supporting those customers regularly year in and year out um I it's definitely not the same as a um you know contractually reoccurring Revenue um with some instances and some customers we had service agreements in place I think service Agreements are commonly found in businesses serving customers on a repeat regular basis but I think we sometimes maybe miss making the distinction that a service agreement sometimes probably isn't contractually obligated it's more of a you know all right we will provide these services at these prices and we've signed but um there's no guarantee um so there's no true guarantee to the revenue we had coming in but just looking on a historical basis um it was pretty predictable and we thought in this market um you know we we figured in this Market Every Spring and every fall there will be a lot of business um you know to be had in the Texas Market yeah well even at 12 million I mean 12 million is that that's that's a lot of Revenue 100 people that's a that's a good siiz business and that's what you you had wanted you had said at the top of at the top of our uh kind of talking about your your desire to get into search to begin with that operational chops was something that you were Desiring and you know at at a meaningful scale and this certainly check that box I take it it was um yes I think as I was looking at opportunities this one quickly became the most appealing given the scale of the business that was something that I was after um four locations um moving inventory between locations 100 team members um it was certainly a a very operationally intensive business and something um I I don't know that I was even totally prepared for how complex and challenging operationally these businesses are um but yes that that was certainly something defining as I was looking at opportunities as the scale great well well I'm watching the clock and and we don't have time to go through every step of the story but there are some very key moments in in this particular story so let's get let's let's uh kind of learn about this whole experience and what you learned through hearing about those experiences um but before we hear about the fire which I think is the first experience what um when did you acquire when when did you close yeah we we closed December 2018 December 2018 okay you buy it December 2018 your base in Austin in the business's headquartered in Austin or is it headquartered in one of the other locations it was originally headquartered I think technically in Dallas I was searching out of Chicago um I was open to living in probably either Dallas or Austin but quickly realized Austin was a major growth opportunity and being Central to the other cities it was logical for me to live in Austin and be able to um to to travel to other the other three locations easily right right on and Austin's just an awesome City so I was going to say it's Austin yeah all right so I guess tea up kind of what happens in your first year-ish into the business here yeah um you know I I don't know that there's anything you can do to prepare for becoming the CEO of a business of any scale um at a young age and so you know jumping into Peerless um it was one year of just just I think trial by trial by fire um uh you know I I think that um my my hopes and plans for I want to work in every role in the business and I want to spend time to learn and I want to um you know get to know all the people uh that is definitely the right strategy that was not the strategy I was easily able to deploy at Peerless the environment when I came in um was and in a little background on the the uh the sellers and the dynamic when I bought the business was it was two Founders or two owners 50/50 owners who had grown the business to a point where they were ahead of their skis and and needed help um they had built the culture at the time was um it was completely autocratic um had to go through the every every decision had to go through the owners um I would also say the culture at the time was um it was it was not a great culture I think that there was um you know I guess for I would describe it as toxic in many ways where if something happened if an accident you know if if there's a mistake in an order um you know we need to figure out who's responsible and Heads Will Roll um so it was definitely a culture of finger pointing and sweeping things under the rug and so you you can't grow in that kind of environment um so coming in autocratic culture trying to change the culture um I immediately was just so overwhelmed with the work and everything that was on my plate um I am getting calls from general managers that you know issues with jobs that I need to get out and you know go help out because the customer is yelling and screaming at them and I'm out setting up tents until 4 in the morning um it was it was a brutal first year um but incredibly eye openening to see okay like here's what we're working with um it's you know it's it's going to be a a steep hill to climb um but what we have here is a culture uh you know issue and this is going to become a cultural you know transformation that we need to accomplish in order to get to where we want to go um so that was that was really year one and um then I think getting to kind of where you're going next is the the phone call I I got in February and and just before we get to that phone call Will did you feel after the first year the the the drinking from the fire hose year the you actually you know being part of the service delivery at times including in the middle of the night or 4: a.m. did you feel after that year that you'd gotten your arms around things that that you could uh that you successfully transitioned and you were going to be an effective leader um you know I think I I think I I had gotten my arms around the business model and um you know my role and purpose within the business was becoming more specifically defined but I wouldn't say that you know I think one year in I don't know that I had the Buy in and respect from my team yet um I think that I think with most Industries especially Niche Industries where it takes a long time to learn the ins and outs they're very resistant to Outsiders coming in and knowing all the answers to things and that was something that I was uh very aware of and uh you trying not to make too many changes in the business or too many decisions without bringing in others to to to help decide with me okay this phone call yeah it was early February of 2020 so I had been running the business for about a year and a few months um and I received a phone call at it's like 5 or 6 in the morning from my general manager in Dallas um sharing that uh there was a small fire overnight in the Dallas Warehouse um but rest assured everything's okay we're getting the trucks out on time um on that day we had 50 some deliveries for Dallas County elections so it was definitely a um you know a logistically intense day um but totally underplayed it okay well you know my response was just send me some photos of of the damage and um let me uh get our insurance broker on the line so he sent me photos and I'm quickly realizing uh you this is not a small fire the it was an electrical fire that started in the conduit uh I believe somewhere in the building and um uh it got so hot that the roof came in uh and the sprinklers turned on um it melted a block of uh our white resin chairs so hot that it covered the entire room with black soot um once once the sprinklers were going so I get up to Dallas and you know walk in the floor and quickly realize um you this our warehouse is not operational um our inventory which Dallas is our Flagship uh facility about half of our inventory resided in Dallas um I would assume probably 70 to 90% of that inventory was destroyed um and we are you know about five to six weeks away from being into Peak busy season wow so if you'd been waiting for a fetal position moment you got one yeah this is definitely by the way February 2020 little do you know what is waiting days but how are you feeling just at this this pre crisis to the big crisis what's it like you know um what's interesting is there's nothing that can that can really prepare you for a moment like that um but I actually look back at my time as CEO at peer list and I see that as being one of the defining moments where I found my place in my purpose within the organization um and quickly became what I would call probably a wartime General um or wartime president uh you know where this is now the project that we have to overcome and this is how we're going to shift resources we're going to start moving uh inventory from our other three locations and labor from our other three locations to Supply Dallas we're going to set up a tent in the in the W in the warehouse parking lot to start moving usable inventory into and Stage a kind of mock Warehouse there and we're going to communicate clearly to our customers that um you know everything is okay business is us we've had a small fire but you have nothing to be worried about the last thing that I wanted was a bride to be to see some headline that you know her tent provider uh was on fire and you know the the the March wedding that they had scheduled you know do they need to switch providers you know that there was some real value destruction that could come from not providing the top-notch service um from just rumors getting out in the Dallas Market that we were closed for business yeah so suddenly I found this was uh you know and it was certainly not something that I realized at the moment but looking back on you know people rallying behind this Central the central Mission and what we were trying to accomplish um and so you know we hit the ground running in you know trying to think bring things back online and operate while the Dallas Warehouse was essentially having to get completely renovated um and and fixed before we could move back in and operate yeah it's but it's it is so telling how a crisis really kind of trained your attention maybe you weren't sure exactly where you know as you were a new leader where to allocate your time and attention and this certainly gave you gave you an answer and and and a r and a rallying cry it gave me a rallying cry I I think you know something while I was in business school I got really into sailing and I was I I went all down this this this Wormhole of I'm going to become a charter Skipper and I'm going to take Cruise out and I went and got my it's called My Yacht Master Coastal license so I could be a charter Skipper and teach people um you know how to Sail Out on these large vessels and at the time you know it seemed like such a a you know just a random business school hobby but I didn't realize that it's probably the best leadership experience that I was getting when sailing into a storm or under conditions where people were fearful I might have been fearful on the inside but it was very important that I couldn't show that to the crew as soon as I showed any sort of fear or uncertainty or nervousness within the crew then I would lose everybody and what I found in going through the crisis uh with the fire was I think that that learning came to be I I I needed to be steadfast and decisive and calm uh and and we would get through this and demonstrating that through the fire and through other chist IES that may have popped up um while operating the business really helped us uh you know accomplish and and get through get to the other end but I I think it also helped build confidence in me as a leader um for the team to to see that yeah yeah well it sounds like you came in with kind of not realizing it some some leadership experience and training already so that you didn't have to have a freak out in front of everybody for you to learn the hard way that that's not the right way to lead it sounds like you were pretty well prepared to lead properly with the with the characteristics you just described basically namely kind of decisiveness and calmness like you knew you had you had that built that muscle already I I yes I I wouldn't have known that I that I had that but you that's certainly I guess just what came out in the moment and looking back on it was certainly an important important factor that I think led to being a better leader over the next four years of operating the business and then what happens in March 2020 after your I guess after 3 or 4 weeks I assume you feel like the fire situation is at least somewhat under control yeah so um we we were now operational in Dallas but there was a lot of work that needed to be done in the Dallas facility um March 2020 um you know obviously the world comes to an end uh I wish I could have diligence Co back in 2018 for the impact it would have on event businesses um you know no one saw it coming to the magnitude that it did and um over the it was about a day or two I remember it was Friday the 13th of March was really when it feel like it felt like it officially hit um we lost millions of dollars of Revenue reservations over April and May um that we had to refund to customers um and uh uh you know at that point in time I called my my uh Banker um we used Texas Capital Bank which was a great partner for us through this process um and I called them and Drew down our entire revolver uh revolving credit facility so we we had adequate cash to write out the next few weeks um with payroll but it quickly became apparent that um you know the Staffing and headcount that we were scaling up for uh for busy season was not going to be something we could uh endure and we'd have to go through a round of layoffs so it was that following Monday or Tuesday I want to say like March 15th or 16th um that we went through and and ended up terminating um I would I think it was about 30% of our team at that point uh 30 or 40% of our team now A major benefit with the fire up in Dallas was we were putting people to work on restoration um and we needed people to help in cleaning the the the equipment the any stuff that wasn't damaged um so much of Dallas was safe but the other three locations we just we couldn't cover the the um payroll yeah so um so how was that making that decision I mean it's co you know people the world is ending so so maybe given the context that everybody in around the world literally is kind of freaking out maybe it made the decision to take drastic action namely laying off 30 to 40% of your Workforce more easy easier if I can use that word but still you know I firsttime CEOs often one of the hardest things they do is making these really really difficult decisions like that what was it like for you that that it was incredibly difficult uh it was the hardest day of my professional career I think um uh we when we made the decision we were certainly I think the earlier companies to do that I don't think that it was totally obvious yet so when we announced it to the team it was very shocking like they weren't even aware that Co was impacting business it was was still very new um I would assume maybe later that I think coincidentally that day or the next day many of our competitors made layoffs so I think quickly it became well known but at the time going into it and doing it we we were the bad guys and um you know we I don't know that I did it the right way or the wrong way but I could only be in one location at the time and we needed to do layoffs in all four immediately or three immediately but I went to our biggest um location that wasn't Dallas and rounded everyone up in the warehouse and made the announcement and um you know we basically had to send most people home um you know looking back certain things that I'm very um grateful for that we did in the moment one uh everyone who was staying and many of our salary managers uh were staying um everyone took a pay cut so uh salaried managers I had it somehow if you were making more than I want to say 50,000 you were taking a 25% pay cut um myself and um one of the founders of the business stayed involved and and was still involved in the business and was leading the sales team um so myself and and the founder um took I think it was maybe a 35% pay cut um but that was asked in the you know in the meeting like are you how is this impacting you guys and and um I couldn't have slept at night had I not you know also been sacrificing I I I think another uh another important uh takeaway from it is I could not have imagined going through multiple rounds of layoffs I think if you're going to go through a round do it once H you know cut probably deeper than you even think you need so you don't have to do it again and when um uh you know once you've come out the you know we finished the round of layoffs you can tell the team that was our round let's go back to work you're safe the last thing you want is people fearing and losing productivity that um you know fearing a second round of layoffs and questioning um their likelihood so um fortunately we only had to do one and um thankfully the the PPP loan uh for us I mean it it it saved us um you know our Revenue went down um I think it ended up being 40% % uh for the year which there were things that we did and got Scrappy to to um uh you know make it through 2020 and make it successful but um with a 40% Decline and really 90% decline in the spring of 2020 um there's no way we could have gone without another round of layoffs had we not received our PPP loan which we did I think in May of 2020 and referring back to our call preall this is also where having done a traditional SE Arch fund became quite valuable how yeah I think I think two things one the support of my investors was Paramount in my success and and and successfully navigating the this crisis management situation um so I have a terrific board um you know search fund Partners aspect um uh several uh uh Brown Robinson you several known groups um that were providing me resources and help through the process um one other call out I would give was to a group called feudal lofu David Dodson he was providing these great bulletins on like liquidity liquidity liquidity here are the things you need to be focusing on he had hired a consultant to help all of his operating companies navigate the PPP process and at the early days in in March of 2020 or maybe it's probably late March of 2020 I mean as an operator of a business trying to figure out how to get in line for the pp I mean you're losing sleep I I'm sitting up at night reading um you know Senate hearing minutes to figure out what the next step is going to be because it's inexcusable if you miss this window so having a consultant help you know help prepare things go over things analyze your numbers help you process your application it ended up on the back end being you know the PPP process ended up being a lot easier for for owners but um in those early days and very very terrifying moments of running a business that support was was um I mean just totally made I think the outcome what it is um trying to run the business being on my own in the dark and and and I think adding to it I think we had talked about under self-funded and the personal guarantee I I I I saw the moments of you know potentially taking this business to bankruptcy um and was so thankful that I didn't have a personal guarantee on the business that would be you know taking myself into bankruptcy as well um I think also one defining you know difference with traditional search versus self-funded is your risk appetite and um you know at that point my back was against the wall um I still needed to hit an outsize return for my investors and rather than just battening the hatches and writing it out we drew down our revolver so that we could keep the you know most of the institutional knowledge within the business and then we quickly got very aggressive with hiring some of the best talent in our industry um I would say from May until um probably mid 2021 when many of our competitors terminated 90% of their staff we were hiring managers we were hiring tent installers um guys and gals who were the best at what they do um because we started building this platform where we were going to go take over Texas and that I think process and uh angle was only possible through a traditional search if if if if I had done um self-funded and my entire Nest Egg was in this along with my you know Financial stability and and potential bankruptcy I I would I know I would have been significantly more conservative and you know I think there's different you know strategies for different outcomes but the conservative approach here would not have gotten us to the outcome that we ended up getting uh with this investment well it's interesting because it's kind of like you had two incentives pointing you in the same direction both a pull and a push or maybe a carrot and a stick incentive so you didn't have a PG so that allowed you kind of lowered your your risk aversion uh and yet you also had the Stick of your investors as you said investors expecting an outsid outcome so you needed even though it's covid you still needed to grow this business and and really and and really push the push it so that you could ultimately have a a a liquidity vent and a good return for your investors um and so so both of those would be would have been different in a self-funded situation um you know I recall you one of your investors actually telling you like you also I think that really important to to highlight here is your psychology and the and the mental burden of facing potential catastrophe or or bankruptcy you didn't one of your investors say you you may well be a bankruptcy CEO yeah I remember the call I remember exactly where I was sitting and the day and um uh it would have been in sometime in in mid April that he said as one of my board members said you know there's a good chance that we won't be along for this ride um you know when the equity gets taken out and um you know there may be a career for you as a bankruptcy CEO because most likely the bank isn't going to want to take over this business they're going to need someone to run it um so suddenly I've got to get myself excited for the fact that you know I've got a different career path potentially than what I had expected something that's outside totally outside the traditional search search World um not not an exciting path um but in moments like that you're looking for anything to just try to keep you engaged um and get you through the day and you know for for the self-funded Searchers out there if they were in a situation like this or any any kind of crisis situation where they're facing they've got the PG Etc and and they don't have the support system behind all those things you know they might find themselves in the fetal position at 2 a.m. uh on their bathroom floor uh certain nights going through this you're being told by one of your investors that this just may be a bankruptcy um and you know here's a career path that that that could lead to how bad do you do you have fetal position moments how bad does it get psychologically uh in in the the kind of the darkest moments here uh you you know I I I always just called them my sleepless nights I think as I look back at that period in 2020 um it was many nights just pacing the house and sitting at the computer and just getting work done because I you could I couldn't I couldn't sleep um understanding and thinking through the lives that were at stake um the business I think at that point in time I was still very I I was still very I guess focused on trying to return capital my investors and I I felt genuinely terrible for potentially not being able to return that Capital um and so those were the types of things that just were keeping me up so well what I'm also kind of trying to tease out here is how dark it got so so and and not to at all minimize the sleepless nights the pacing they being kept kept up but I I feel like there's there might be a difference between the terror that a self-funded person in this situation might have felt and what you were feeling yeah I mean I think that that's certainly Fair um uh many sleepless nights it was scary but um seeing others uh go through you know others who had done self-funded who had the pgs um completely shut down their business and have to rebuild from scratch um or potentially face you know personal bankruptcy um I you know that's something that you know I never had to consider and and knew that um with the capital backing and at least with the bank I had in place they needed me to run the business um they weren't going to take it over and and kick me out the door um at at some point when covid would go away we had a service that was necessary for so and needed in society um so and and and we were starting to develop the the perspective that it's probably going to come back with a vengeance we just don't know when um so you know seeing the other side of it without a personal guarantee I think probably led to better maybe more restful nights than um you know some self-funded individuals in in my shoes yeah well and and so that's great thank you for that will and also let's use that as a segue to hear more about seeing the other side of this knowing that if you can just hold on it's the Market's going to come back as you said with a Vengeance and so in fact this blood in the streets moment it is a blood in the streets moment which I is it I don't know if it's Warren Buffett but you know th this is if you can hold on and even if you can double down this is an opportunity this is this is an opportunistic moment and and to kind of start buying and going after market share where all of your competitors are are hunkering you've already touched on it a little bit but give us more because because this is really the turning point in the story yeah I mean this this was the turning point I think um we had several Dynamics at play one internally within the culture of the business now having this new team in place um and I can get to that in a minute but then there was the all right hiring and um scaling quickly in that moment of Crisis and going kind of I would say mid mid 2020 was really when again thinking through wartime president kind of mindset my Searcher tactics kicked in and so I start cold emailing every uh director of Health every hospital um administrator every Public Safety individual um trying to uh relay that we have tents and we have staff to put up for outdoor extra capacity covid testing um I'm reaching out to University administrators because I'm reading in the in the journal that schools are trying to figure out how they deal with classroom capacity so I immediately and again there's not a lot of work to be done other than just sitting around thinking about what you could be doing at this point but I start trying to develop different business models and things that we can do um to put our inventory to use and more importantly to put our people to work and and keep you know people coming in and keep paychecks flowing yeah so we end up landing on a few grand slam opportunities throughout 2020 and really throughout 2020 and kind of early 21 that um uh you know ended up being long-term tent rental highly profitable business um things that we were out helping society and helping Community for where we became an essential business and um you know that was the that was the let's survive process then through that and with the funding that we had coming in we were able to start recruiting some of the best people in the industry and we're pulling in managers um operators people from around the country um who wanted to move to Texas which by the way I think is something very important to think about as you find a regional business and recruiting into that market fortunately coming to move to a state with no state income taxes um and a desirable place to live was um certainly critical in trying to bring in Talent so a lot of our talent and our our key you know guys and gals that we brought in were coming from other players in the industry and typically even from other parts of the country um and the goal was look when things do come back online we're looking at our competitive landscape they're not going to be prepared for this they're going to be basically starting out fresh with all new hires we're going to bring in all the talent and Industry experience that we can um to be ready for when events do come back at the same time this is a phenomenal opportunity to focus on building a new culture you know we had gone from this um this autocratic Society you know toxic culture environment um we're going to roll out our new Mission Vision Values um we are going to hire people uh based on those values and we're going to build something completely different than what anyone seen in the in the rental industry previously um including how people are compens ated and incentives for you know continuously improving and growing your career and developing so um it was a very unique and interesting time to kind of rebuild the business in the way that I had envisioned um the business eventually developing we were able to do it faster um and we were motivated to do it faster so that we were ready when things come back wow so you emerge not only as I as I said in the not only having survived but stronger with more stronger internally because you have a new culture new people who are signed on with the new culture uh in New Markets with new customers that you've very scrappily I mean you were you were basically out there doing sales yourself EMA cold emailing people up and down the state to to offer your services so new customers new cohort cohorts of customers um and your competitors meanwhile have been hunkered down so they're all themselves weaker so you're kind of doubly stronger because you're stronger internally but then also stronger with respect to all of your competitors who are weaker um so you pretty good pretty good place to be so put some numbers behind that what is 2020 2021 2022 uh look like um you know I'm just jogging my memory but I I there were very few rental companies in the industry that grew in 21 and grew in 2020 or 22 over what they did in 19 and I was so proud of what we were able to accomplish from a sales standpoint and the growth we were able to achieve um I want to say in 20 21 we maybe did 15 million in sales and in 22 we might have done no I'm sorry we did 188 million in 2021 and in 22 we did 22 million in sales and by 23 um I haven't seen the final numbers yet but when we exited the business I think we were right around 24 million in sales so uh to refresh the listeners memories this was a12 Million business when you bought it and year of exit it's at 24 million so you doubled Revenue in an Events rental business post fire postco pretty pretty wild yeah and to to do that this was you know this is a business that's not the easiest to scale so it required really doubling our warehouse capacity over that period we relocated three of our four Warehouse facilities to much larger facilities um we added a significant volume an inventory and the headcount had grown to 225 uh team members which meant really building out the org chart um we added layers to the org chart we changed incentives along the way um this ended up being a really an operating Journey uh and pure operations because the event rental business when you're multilocation we're really a logistics business moving inventory between locations so to double that Logistics um yeah it was uh a pretty wild Endeavor uh looking back on it certainly more complex than I had ever imagined getting in um but our strategy as we were going through this was realizing all right the demand let's just assume that's going to be there we just need to build and grow to support the demand and how do we do that without affecting the quality of service and execution for our clients um so yeah well you said incentives a couple times um you know this probably pretty basic for HR Savvy people but you know we we hear a lot about aligning incentives and and giving and giving a Workforce proper incentives can you give us two minutes on an incentive structure or two you put in place and really spell out to the naive Among Us like what why it's so powerful well um there was a book that I read early on that one of my board members a guy by the name of Chris Cook had recommended to me um called everybody matters um by I believe the guy's name is Bob Chek and um and this book um it was about his story of taking over a um a manufacturing business and gamifying all the roles within that manufacturing business so I wanted to replicate what he did but how would that look within Event Rental how do we gamify within the hourly or blue collar roles the salary um uh roles how do we make this fun and engaging and make sure that were aligned with the key kpis that we've got of at a high level so from a sales standpoint it's bringing in commission structure which they had never had before um from an operating standpoint um we totally changed how our hourly team members are motivated by paying them based on their capabilities and creating a badge system that um they can earn Badges and at you know and with each badge they can increase their pay so now we suddenly have this isn't just a deadend hourly job this is a career path and here's how you can grow to 24 25 $26 an hour um then within the salaried operation side what are the kpis how do we incentivize them through uh monthly or quarterly bonuses um and we even went as far as taking some of our key uh hourly R players and making them salary and changing their incentive which then to totally motiv you know REM motivated the staff that reported to them um because you you have in every in every blue collar business um and many service businesses or any business where you have hourly and salary employees you really have two buckets of of of Workforce that have opposite incentives the hourly team only get the the more they get paid is is based on how many hours they work right so they want to work and get as many hours as they can which can commonly motivate them to work as INE ineffectively or slowly as possible if not managed closely well suddenly that creates a pretty bad culture can create a bad culture if you're micromanaging them or just you know pushing them to work harder so how do we get them focused on working harder and how do we build a system where we can compensate them for that hard work uh in less amount of time um and so that's what we were focused on and I think what we ended up rolling out was um while maybe not perfect was incredibly powerful for our industry and for un locking of the Holy Grail kpi for us which is labor as a percent of Revenue um you know we're only as profitable as the effectiveness of our labor um so if we can gain that alignment within all ranks of the organization um we can unlock earnings potential that was great thank you will for that okay we're going to start wrapping up here um but so tell us the the end of the story tell us about the exit why it happened and what it looked like yeah so it's funny in year going into year four as an operator I was I was ready to run the business for another three or four years you know I was modeling out what that would look like and present it to the board and then suddenly you know in year four um we start getting unsolicited interest from strategics um within our industry and outside of our Market um strategics being some large competitors in the country um the the writing is kind of on the wall that that Texas is a a very desirable place to operate one of these businesses and our goal all along was to build the logical platform for anyone who wants to operate in Texas it was never to grow outside of Texas but it was to really capture and dominate this local market and so you know hence you know the Strategic started calling but um I realized at some point these large players are going to enter our Market it is going to look the landscape is going to look quite a bit different and maybe it's worth you know getting off the train here and starting to entertain these conversations I had also realized that some of these strategics um have phenomenal experience in things that I don't have and in areas where they could grow and add resources that um could actually really help our team and provide for even greater career opportunities for them so one of the partners that um you know the strategics that approached us was actually um uh a group that I had known for The Last 5 Years and an operator that I had been introduced to early on in my operating um you in my in my operating days um so it was a relationship that was already established and I was confident we had built a great culture and I was confident that this of all the suitors out there this would be the right group to exit to in the culture that would fit best with what we' created um and they had a a uh you know they also had a in place that they had someone selected who could take my role um which I had quickly identified now going down this path I'm probably not going to make a very good employee um I you know the I I joke with with potential Searchers like once you go down this path you're really unemployable um once you get the taste for that independent so finding someone that didn't need me to continue at the helm for another four to five years was also important um so they you know we started discussion um it was a I think four or five month deal process um it was uh uh we ended up closing in early September of 2023 um and uh it ended up being a great outcome uh for our investors um we ended up clo we'll end up doing just over 4X um M moic return and I think that's right around a 30 8 to 39% irr over the 5year period congratulations well it's pretty uh pretty phenomenal story and outcome um 38 39% irr over over the over five years uh you know those are the kind of eye popping numbers uh that attracts all the capital to search I have to ask though here will I heard you say earlier which is you know you were just kind of repeating what is industry knowledge among search fund investors they need to see a path in businesses that they invest in or that they Searchers by to mid-30s irr over over this about this time frame and so you know you move Heaven and Earth through Co through a fire and make this this happen you make these big strategic bets on you know being coming out of Co you know really strong where all your competitors have been weakened Etc everything we covered in this story and transform the culture go through these painful layoffs then transform the culture um put in new incentive structures so and and and then do in fact get this phenomenal return but when I hear what you say they need to see kind of 30s mid-30s irr and you get that plus a few points 38 39 are they thrilled or are they like yeah that's what we need you you know thanks that's what we needed you to do do you see do you see what I'm getting at it's like yeah no I I think so I would say in this in these circumstances the feedback that I've gotten it was they're thrilled um I think many investors had written this off in 2020 um so to get to where we you know where we ended up um was nothing short of amazing and and it and it and it wasn't you it came from the team that we had built um and the culture that we had created and the support that I receive from my board and from my investors along the way um but I think going into this investment this this investment was not middle down the fair middle of the Fairway for traditional search um this was not easy to Envision what a 5x outcome might look like but I think it's important to highlight there is a place in traditional search for businesses that are just steady Edy and very stable and all you have to do is kind of keep doing what you're doing and it's a it's a 2 to 3x and then here are the opportunities and the levers to pull to get bigger and one of the things that I liked about the event rental industry in general is it's kind of tough to kill these businesses I mean they've got inventory in a local market that's needed year in and year out um and all you need to do is continue performing under this capital structure and you know we're going to get at least a 2X return in the market that we're operating in so you I had sold this look very low downside type of investment opportunity in a great Market but there are levers that we can pull to get a much higher return now you know it certainly didn't end up looking and the numbers didn't uh pan out year forear like I had in my investment case but um uh you know I think getting to the for 4ex out come um it thrilled investors who mostly had probably written us off at some point and just to wrap up now will let let's just kind of revisit your personal transformation and kind of put this now in the context of of how you see search how you see being an investor or not how you see um entrepreneurship so maybe to Tee It Up just you you now see that a finance background is not relevant might even be detrimental to somebody getting into to to buying a business um so you had you had said that in passing earlier in our conversation elaborate on that yeah I guess you know where my comments coming from there when I worked in private equity and you you're looking through a Sim the team and the values page was something or culture page is something that you would just like flip over just gloss over um in any labor intensive business and I would argue most businesses I've learned as an operator the culture is so critical and the quality of the people that you can recruit in and motivate is the difference between a good and great outcome or a bad and great outcome um so I learned through the operating experience just the value of creating a strong culture um and I never would have appreciated that when I was in private equity so now as as I've exited Peerless and and um uh you know no longer earning a paycheck um have time to do great podcasts like this uh I I'm reflecting on what I want to do next and where I want to take my career and um I think we've identified within the traditional search World um there is a uh I think a lack of recent you know operators Searchers with operating experience who can step in and Mentor the new Searchers help them see around the corners maybe avoid some of the pitfalls that that I landed into um you know I got to deal with a number of crisises we didn't even get through the cyber security breach that you know I received a phone call from the FBI figuring out all these things you never could have um prepared for um that you know I'm excited to give back I I over the course of my search I would typically take I would say one to two phone calls a week from um interested Searchers prospective Searchers or active Searchers and I always loved those moments I I love kind of helping them out and learning from them as well and um so my desire at this point is to kind of follow the proverbial path I think of um you know exited operators and um start giving back and becoming a more active participant in the ETA Community um my focus right now is in the traditional World um I I believe in the traditional structure uh in the community that it's fostered and the people that operate within it and um and I'm starting to you know talk to and help and support um active or prospective traditional Searchers as they go down that path my belief for the search fund ecosystem as a whole is look there's there's more Searchers out there than there ever has been and the tactics of traditional search may need to change a little bit but the of the day there's hundreds of thousands of small businesses and business owners who may not have a succession plan in place um may not be the right size or the right Dynamic to sell to traditional private equity and I think we have a wonderful system in ETA to put people who desire to be operators at the helm and and learn some of the wonderful things that um you know I've at least tried to learn or face uh over the last seven years great will that was great let's leave it there how can people reach out if they want to ask you a question or otherwise get in touch uh yeah happy to uh to help um I'd say LinkedIn is the easiest way um you can find I'm probably one of the many will WR on LinkedIn um but uh you'll see search Fund in my title and uh that that's the one and we'll link to you in the show notes okay will what a story uh congratulations again on on being in the event world uh during Co with a fire with all the other travails you experienced and and still uh delivering in Spades for your investors and um and and doing right by uh your team and um just really quite a story so congratulations thanks for sharing it with us thank you for having me uh this was fun 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 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