Chandra Rao, welcome to Acquiring Minds. Will, thank you for having me. Chandra, you and your business partner are building a HoldCo. Not at least initially with some grand strategy. In your case, one acquisition led to another. But, here you sit, multiple acquisitions later, with what is essentially a HoldCo. So, before we get into your background, Chandra, let's just get get people a picture of what the HoldCo looks like today. So, current and then we'll and then we'll work uh we'll go all the way back to the beginning and work forwards. Yeah, so today within our organization, we we describe them as divisions. So, we have three main divisions. Our electric uh construction company, or electric construction division. Um then we have underground construction, which does uh construction of fiber networks. And then we have fiber splicing, which is very synergistic to that business, and it just splices uh fiber together once it's in the ground. So, basically, passing light through, uh making sure the data can pass, things along those lines. So, a little bit more of a technical skill set. Okay. Um so, we've got those three divisions. They're made up of multiple acquisitions. How many acquisitions today? So, we have done uh so, what is in that HoldCo is four total acquisitions. We've done five. Uh I actually don't five in that HoldCo. Uh we've done six. We spun one business off. And can you give us a picture of of revenue and projected EBITDA for the year? Yeah, so we should hit uh on the low end, $12 million. Uh somewhere around the $3 million of EBITDA. Okay. Now, let's rewind. Start us wherever you think is relevant to how this uh adventure started unfolding. Yeah, so you know, I uh I'll start back. I went to B school. I graduated in 2012 before I knew what ETA was. I actually didn't know the space at all. Um went to go work for a big tech company. I worked for Oracle. Uh and then a friend of mine was building a small SaaS business. He was my fraternity brother. I thought, well, I don't think I'll get any return on this investment, but he's asked me for some some investment to get his thing off the ground. We'll just go. Comes to, you know, about a year in, he can't live off these dollars. He's asked for a buyout. And his buyout is pretty nominal. It was just uh you know, the amount of credit card debt that he had. So, I said, all right, well, there's enough cash flow from this business. I'll just do some 0% APR uh credit card transfers. I'll take over your debt and then I'll just service the debt with cash flow from the business. And There it is. Yeah, LBO. Exactly. And this was this was 2014. And you know, I I had no idea what did the how big was this business? Or how how I should say, how small was this business? It was I want to say we reached about 150k in revenue. And here's the thing. in total? Uh per year. And here's the thing. If I had known then what I know now, I think I'd be retired uh because that SaaS business had so much potential. I just didn't know what I was doing. Uh What was it? What was it? So, it was inventory management, a company called Intracker. And we plugged into platforms like Square and we would say, "Hey, here's an add-on to your uh point of sale system so you can track inventory." We had a lot of coffee shops who say, "Okay, I need to track my cups, lids, uh you know, what are the beans that go into this, etc." And I think the platform itself was it was really solid. And I look at some of the inventory applications that are available today. I was like, this is this is not as good as what we had in 2014. Really? And they're charging a crazy amount. So, we were we were charging users somewhere between 10 and $100 a month when we should have been much higher on the scale. And like I said, if uh if I had more cloud background at that point, I think that that I'd be retired. You said you worked at Oracle, Chandra. Were you technical at all, or was that in a business capacity? No, I was more on the the sales consulting side. So, I'd go into, you know, a a customer or a prospective customer, look at their business challenges and say, "Hey, here's how some of the software can solve these challenges." Yeah. It was perfect because I got to see a lot of the business challenges, present a solution, but had uh very little to do with implementation. So, it's like, here's the solution. All right, good good luck. Set Set every sales guy ever. Exactly. make the sale and and move on. It's It's everybody else's problem to to figure figure out. Yeah. Yeah. And then uh so so from there, I just let in tracker chug along. It paid off its debt. It paid me well. And I looked at this. I thought, well, I I don't really want to manage tickets. I'm just going to I'm just going to let this thing go. I I think I sold the customer list for uh a few pennies here and there, and then that was it. And it was making 150 grand a year with almost all of that was profit if you weren't reinvesting any of it or really Yeah, I was I was just wanted to let go of that? Yeah, I was I was foolish. Well, there wasn't also acquire.com at the time where you could have where there was an active marketplace people who would have And I didn't know what I had. Right. Um just thought it is like you know what I paid for a bunch of vacations. I had a great time and I outperformed the S&P 500. This is easy. This is what I've got to do. I just have to buy businesses. And that was the how the thought process got going. And was it really like okay so if I can buy this little one man SaaS business I can probably buy a 10 person you know traditional business was that kind of the Yeah, I I think quickly connect those dots sort of thing? I think so and I kept it as open as possible. It was more just I want to buy cash flow. I just want to buy you know SDE at that at that time, right? Yeah. And that was that was the approach. And the other reason why I let it shut down is I I started at a a startup myself. So I started working on the consulting side of a startup Coupa software. It took a lot more of my time in the early days. And I was like you know I don't want to balance both. I just started a relationship with my wife and I was like you know traveling a lot more. I think I should should try to have some balance in my life. Yeah. So that was the other other reason. Yeah. Well cognitive load. Yeah. and I I I I I get it like And there was some there was some overlapping product functionality and I was feeling a little bit of guilty about well I've got this other thing on the side. Does something that Coupa is also trying to develop granted a very small niche inventory management. It just didn't feel right to Mhm. to do both at the same time. And so what year is this now? This was 2015. Okay 2015 and Coupa I actually didn't know Coupa but it it was a screaming success and is a big company. Tell people what Coupa is who who are ignorant like me. Yeah, so Coupa is business spend management. So basically what Salesforce did for CRM, Coupa did for spend management. So think about your non-payroll dollars as a business. They would come in and say, "Hey, use this platform because of such high uh adoption rates, uh we're able to save just a ton of money." So customers were saving somewhere in that 6 to 9% of their spend because historically they were unmanaged dollars. Now they're going against contract, getting on a PO, etc. So it was uh the the ROI for this product was was really quick. Um and And this was a full startup. Startup from scratch, VC style startup. Yeah, I think when I joined, I was I mean, not the super early stages, but uh in the 200 uh of employee counter, under 200. Um and when I left, we were at 3,000. Yeah. So uh And it had gone public, right? So you were there for an IPO. Yep. So I left Oracle, went to went to Coupa, and a lot of my comp was just the shares, and I'm super lucky and thankful that uh that that was the case. So that was you did this was a story of working in a startup that goes public, you have equity, you do well. This is a meaningful This is a meaningful financial event for you. Yep. It was was definitely great. Okay. I I may have skipped ahead a little bit because it's while you're at Coupa that Colin comes along. Catch us back up. Oh, yeah. So Colin is my business partner. Colin and I have known each other for uh you know, since I'll say the 2007-2008 time frame. That's when we met. We actually met through Muay Thai. So both of us were training Muay Thai at the time. And I always like to say that the bonds of friendship are formed when you hit each other in the head a little bit. Uh and so we have that solid friendship, we have the solid trust. And so we just started kicking things around, hey, maybe we should invest in a startup. Maybe we should buy a a small business together. And we've had these conversations going on for for years. Um at that time Colin was in a uh pretty successful uh family business. So they were doing uh low voltage work for hospital networks, um things like that. So they that that family business was doing just under $30 million of revenue a year. And so it was it was pretty successful. And I think there were some some family politics and things like that that he wanted to step away from. So he and I got together and said, well, let's just let's look for something on BizBuySell. Let's look for something that uh has really good return for, you know, what we buy it for. And that's where we came across our first electrical contractor. And so Colin's notion of buying a business, that was your influence because you had this kind of SaaS adventure, so you started you shared your enthusiasm with this wealth-building approach with him. He was into it. He'd come from small business, kind of a big small business. Um cool. Okay. All right. So you turn your attention to BizBuySell and find what? This is a a company Gofer Electrical Construction. Uh and based out of Minnesota. At the time I was living in Chicago, Colin was based in Minnesota. And it just made sense for him to take over operations if we were able to close the close the deal. So we went through this process of and I'm I'm doing air quotes here for the people listening, due diligence. Uh because we didn't we didn't do any due diligence. We didn't know. We looked at a QuickBooks file. Uh and that was that was our due diligence. Wow. So, uh you know, I kind of joke about stumbling forward and this is one of the things we we made a a ton of mistakes in our acquisitions. But, uh you know, we Well, our job here today, Chandra, is to share with everybody all the mistakes you've made so that they can stumble a little less clumsily forward. Exactly. Cuz we we didn't we didn't know about the community that exists today. Uh we didn't have any of these uh other resources. We were just guessing. Yeah. Uh and year are we in now? So, we completed that acquisition in January of 2018. So, uh we go through this process. It's a small electrical contracting uh shop. It's got seven employees, eight employees. Uh the seller said that he was really sick of dealing with uh HR, sick of dealing with people. He was one of the guys who just did everything himself and was kind of a a grumpy person. Uh he wanted to squeeze everything he could out of the business. It was just his his you know, his life source. So, he sold the business to us for $500,000. It, you know, on the P&Ls it was showing, you know, pretty wide ranges across years, but on average uh it was somewhere in that 350 of of SDE. So, we thought, this is not this is not going to be a bad return. We'll just do this all seller debt. So, we came to the table with about $180,000 as a down payment and the remaining was seller financing. Um and the terms, I believe, were it was a 5-year term a 5-year term on uh 10-year am. Now, that's a great deal. Yeah, we thought so, too. So, but just to be clear, if in if in fact it was 350 SDE, we're going to hear how accurate that number was, but if it was averaging 350 SDE and you bought it for 500 Yeah. paid What is that? One and one one and a half times? Yeah. And or less. And um heavy seller financing. Yeah. So So what is that? Yeah, basically 50% seller financing. Yeah. It was It was great. go wrong? What could go wrong? So our first year, I mean, leading up to this, we thought it was going to be a screaming success. Our first year, we posted a loss of $300,000. 300? Yeah. And I think I think one of the things we learned is one, this is different than, you know, the service businesses that, you know, a lot of people talk about. This was electrical construction. So this is hotel builds. It's new uh uh you know, multi-family construction, things along those lines. So there's not only uh you know, different from points of the project that we've got to notice when we enter and buy the business, but also there's a heavy float. There is a lot of working capital that is required in this in this business because yeah, our contracts might say net 30 days or net 60 days, but really it is hey, when your contractor gets paid, wait 10 days, then you get paid. So you're doing the work for 30 days, you submit billing once, then from there, the contractor the GC is going to submit for billing. Once they get paid, which is usually 30 to 60 days later, then they'll pay you. So you're looking at really like net 90 is your uh is your payment terms. So we were not only posting a loss because of where we took projects over, but also our working capital requirements were were significantly higher than what we thought they were going to be. And so what did you do wrong? What what for the audience should everything if they see a deal like this how should they Did you basically need $300,000 in working capital just to be sitting in this sitting in the bank account or what? How would you approach it differently today? So so I think there there are a couple of things. There is a there is a It's really easy to get stuck in the uh analysis phase, right? And just not make a decision. So both to a fault, both Colin and myself, we will just jump in heads first. We'll just say, you know what, we will figure it out. We'll just buy this and we'll we're going to make some changes. Now that got us to where we are today, but we have the lumps to to kind of show for it. So I would say we would still I think we would still go in and buy this business. We'd still go in and and uh try to do as much as we can, but we were given an education on oh, what is the difference in working capital from service work versus construction? What does it really mean for payment terms? And when you're looking at, you know, is it your working capital, is it just your receivables uh minus your your payables or you know, whatever calculation that you want to use? No, it's it's going to be a little bit more of a in-depth look at things. So today I think we're at a foundation where we can go in and we can buy uh different businesses and not have so much strain on us from a working capital standpoint just because we've got the other businesses chugging along. Uh but I do think that often times it is a topic we just say, hey, we've got this. We've got our analysis from the balance sheet and income statement. Let's move on. Uh I think it it takes a little bit more care. So if it's the first one, pay pay bit more attention to it. Well, I actually just Tuesday did a webinar on working capital with Sam Rosati and and so it was I mean the whole thing was about this very topic. So, understanding I understand, you know, that basically you guys kind of under-diligenced the business and and or air quotes diligenced the business and where you really got burned was lack of working capital and then today you just have much more working capital flowing through the entire holdco so you have a lot of buffer there. But what I'm curious is like if you can distill in into one or two tips what you did wrong specifically in that case. So, if I found that business today on on BizBuySell and I don't have the benefit of a big holdco or whatever holdco behind me um what what what would I how would I buy this? Basically $300,000 uh larger enterprise value so that there's that that amount of working capital in the business? Yeah, or I mean it's working capital and also where the projects are that you're taking over. We made a foolish assumption that, you know, a lot of these projects are basically linear. So, hey, you're doing the work, you're getting paid. Uh you know, the profit that you get in each stage of the prof in in the process is going to be similar. Not not correct at all, right? So, a lot of the profit for a project in electrical construction is done in the first 50% and it's called the rough-in. The the part that actually is either a cost or you break even, maybe a smidge of profit is the finishing side. We took over larger scale projects at that finishing uh side. So, what we learned was we've got to really pay attention to the ongoing projects where they are, what they build for. So, in this game you can also forward bill, which is what we learned about, too. So, the seller had forward billed, collect a collected a lot of uh uh income from work that you know, as we were taking over, as we were learning about the business. We're doing work basically for free. So, we came to learn that after the fact. Chandra, this actually for such a small business, the working capital problems that you were experiencing feels like it could have been should have been fatal. Yeah. Really? It was close. Uh it was very close. still you're still working at your W-2. So, you don't need to take anything out of the business. Colin is operating the business, and are you expecting to pay Colin? Yeah, so Colin was taking a a nominal salary. Uh I think he was taking something like 75K a year. Uh I was also taking a small salary. I think I was taking 25K a year just to, you know, for for time. Uh because we were always on the phone. We were kind of brainstorming, things like that. But, the there were times when we were calling each other like, are we going to be able to make payroll? Are we going to be able to do this? The concerns were very real. And I cuz I'm I'm putting myself back in that mindset, it seems years ago. Yeah. But, uh or very long time ago because it was years ago. It it was one of those fetal moments that you've talked about. Right? We were we were really scared about it. You were. So, okay. And I guess the fetal position moments are eased a little bit when you're working with a partner. Yes. Sharing the stress load is is huge. Uh so, what we had done is we had cuz, you know, I I was still working at Coupa. You know, the like I said, the shares that I had were great, but it was still imaginary dollars. They were vesting, or the share price wasn't very high. You know, I just got lucky in in 2021, but the the access to capital was still limited. Um so what we did is we went to Lending Club and took out some personal loans for working capital. And then we met a banker who said, "Well, why don't you take a an express loan out for the SBA?" Uh and so instead of using $80,000 of working capital, we used $350,000 of working capital. And even then, as we were uh taking on bigger projects, trying to grow, we still had working capital constraints. So you did need to then inject money or it working capital into the business. You did it with an SBA Express loan, 350. The 80 that you mentioned, that would have that was the what you were looking at from Lending Club? Yeah, we we did that uh initially. We thought, "That's all we're going to need. We're just going to need about $80,000." Uh we were very wrong. And so and then you so you get 80 plus 350. Uh and okay. So that so then what happens what happens from there? I mean, did that do the trick and uh have you clawed out of it? No, we were still on a downward slope. So I I remember so I got married at the end of 2018. And we had eaten through a lot of that capital already. And we were still waiting for GCs to pay us. I think they were on We had one that was over 120 days. And that was that was a big check that we were waiting for. We can't make payroll this week. So both of us liquidated what we could, threw some money in the business so we can make payroll for the next week. Um so this was September of 2018. The Friday that I'm going to fly out to to Virginia to go get married cuz that was where I was where we were getting married. Deposited money into the account, thought, well, I'll pay the wedding vendors uh a little bit late. Hopefully, we'll get paid uh paid back and uh and go from there. So, it was when I say it's held together by uh duct tape and shoestring, that's that's kind of what it was. And when you say liquidated, you and Colin liquidated what? Your uh savings? we had savings, any any stock that we could sell. So, I didn't have a ton of money at that time. It was I think I had I threw in $25,000. He threw in an additional I think it was $15,000. We're kind of worried that this thing was going to collapse. Wow. And so, you guys really put I mean, you had some paper money, paper wealth Yeah. from your Kopa stock. So, you weren't really facing It was all financial insolvency, personal financial insolvency. But, every piece of every dollar you kind of had immediate access to, you you put in at this point. Correct. And Colin as well. Yep. Wow. Okay. And having already done the $80,000 line of credit with Lending Tree, Lending Club, and 350 SBA Okay. So, all right. Carry on. yeah. I I get married, come back, and open the mailbox, and there was there was a there was a check there, and I think we we breathed a sigh of relief. So, we took the money we we put in back. We paid down our SBA line a little bit. And then that's when we started to gain some traction and and start moving forward. That's when the dollars started to come in. Um but yeah, it was it was definitely a scary scary time uh to to say the least. And I kind of gloss over it sometimes because, like I said, it feels so long ago. But, talking about it now, it's man, the anxiety that we felt was was I'd say something we hadn't felt before. Something I hadn't felt before. The Tell us what happened year two. So so once you kind of things start getting a little bit more of momentum. So year two rapidly or what? Yes. So year year one we had like I said, a net loss of about $300,000. Year two starting new projects, carry things forward. I think we had a profit of uh just about $400,000. So we're net total in the black, which was fantastic. And as we closed out year two, we thought, well, let's let's do this again. Let's buy another electrical contractor. We're getting momentum. So in January of 2020 we found uh Miller Electric uh which was for for sale and we we went through and we purchased Miller Electric. And we rebranded basically our Gofer Electric brand and everything under one Miller Electrical uh company. Let me before we get into the Miller acquisition, let me just close out this the uncomfortable chapter here. Oh, yeah. Two questions. First, so you said you were net profit of $400,000 year two. So did that mean you paid down all of your you paid yourselves back and then paid down all of your lines of credit or those lines of credit just you know, you are fluctuating to this day using kind of uh I think when I talk about profit, I talk about it from an accrual standpoint. Yeah. Um but this is I think in construction it's just so heavy on I mean, we call it the float, but uh just so heavy on working capital that it takes a very long time to to just operate on your profits. So help me then understand when the ostensibly the enterprise value was $500,000 when you bought this business, but given the the working capital lines of credit infusions that you had to put in your own money, but then you paid yourselves back, uh what does that do to the actual enterprise value? Is it I you know, I'm getting a little lost in the numbers. Was it still basically 500? You just needed to get some temporary debt to get you through or was No, it's really more like it was an $800,000 acquisition? Uh you know, I'd say we we pumped a lot into that into that business. So, I'd say our our actual buy price is, you're right, probably closer to 880 uh when we think about total dollars that we committed either via debt or personal loans or you know, what have you. So, absolutely. Okay. Okay. Um 880 kind of real real enterprise value or acquisition price. Yeah. And that's 300 was probably a lot lower. It was just our our fantastic ability to buy buy high. Right. Right. That's I think that's what they tell you to do, right? Just buy high. Yeah. There you go. Uh and then that SDE number, the 350 average SDE number, did that shake out to be about right? I mean, you had 400 year two, you had -300 year one. So, my math is that's 50,000 SD average of SDE a year. Yeah. I I we always joked that, "Hey, mistakes were made." Uh but uh I I think that as we learn and you know, the theme I think of this is going to be we are not good at due diligence. Mhm. But uh uh the I think the SDE numbers were there was a lot of fluff. Um Okay. And we just we took it at face value. Okay. Anything to say about the fact the the relationship between you and Colin, not sure the relationship, but I really what I really mean is um it's always a very interesting topic to people about how there can be an operator in the business if the buyer is maybe not the operator. You guys are slightly different because Colin's your partner, so it's not like he's a hired operator. Right. Um but anything to talk about uh in that time that you're basically working full-time and Colin's doing this uh it is in the business. Um Yeah, anything more to say about that those first 2 years on that point? I think the the benefit is that we have different skill sets. So, Colin having to have that experience in his family business, uh he had a lot more construction background uh than I did. I mean, I I kind of joke that I don't know which end of the hammer to use. I was a you know, a software guy. Yeah. So, he had the skill set. He kind of knew this area. And you know, I kind of had a little bit of the the finance side, a little bit more sales uh background. So, it it really was a good combination for both of us. And because we'd known each other for so long, there is an inherent trust uh along with, you know, just the ability to share stress. I think if either one of us had gone in it alone, uh we either would have aged much worse than we did or uh we we wouldn't have been able to to to stand the pressure. So, it was very helpful. Great. And are you guys 50/50? Can you share what you are there? 50/50. Okay. Okay. And And by the way, so is the plan at this point that you're going to that you Chandra are eventually going to come join at the time GoFor or no? Yes. So, the the long-term vision was that it would be both of us uh running these these companies. It was just the initial start of hey, this can support one person. It's a smaller acquisition. Uh you first, right? Colin first because he's got, like I said, the background. He also wanted to exit the family business uh a little bit quicker. Uh so, it just made a lot of sense. Yeah. Um and so, all So, then already you're thinking HoldCo. Maybe you didn't use that word, but you are thinking that this is going to be something that you both devote your entire time to. You're not going to have other jobs and you're going to buy more. You've already come to that conclusion early on, even though It was more eventually, right? Right. And uh I I kind of uh think about it like, well, was there a strategy or did we just stumble forward? Um uh um I think I think that we were both really excited about working together and we just didn't have an idea of when it would be that hey, the businesses we acquire can can support both of us, but that was part of the plan. Okay. The other thing I want to call out, Chandra, as you said, kind of a a theme here is um Well, I think you maybe you said the theme is that you guys don't do due diligence well, but it's the it's the same theme uh it's a related theme to you kind of dive in. Yes. And I'm I'm reminded of my my interview with Myko Krabi who bought a uh an epoxy um like garage floor ceiling coating business. Right. And a towing business kind of in rapid succession um without doing exhaustive due diligence himself. And his point was like my philosophy is I uh jump in headfirst. I just air on the side of action. And that serves me pretty well, but it also means that there's going to be costs along the way. I'm going to get a I'm going to get burned more than somebody else doing this who's more careful. And that's just the that's that cost-benefit is is one I'm willing to go with. I'm willing to get burned sometimes in the interest of moving much faster and not suffering analysis paralysis. Uh which I thought was a pretty intriguing philosophy. It sounds like yours is exactly the same thing. Absolutely. And I know as we go through this we'll we'll talk more about mistakes were made, right? Or the lumps that we took from jumping in headfirst. Uh but it like I said, it got us to where we are today. And there are so many reasons not to do a deal. You can come up with any number of them. No deal is perfect. So it's easy to get stuck in that well, I I don't want to take this risk. I don't want to expose myself to to the potential downside. We just jump in headfirst. Then you don't then you never buy anything, right? Yep. Okay. Thank you. Tell us about acquisition number two, Miller, which has become the namesake of the company. So this one It is our It is our Berkshire Hathaway. Uh So the the big red M. Um Yeah, that's it. Nice. So Miller Miller Electric, I think was just a a fantastic acquisition in that it came with a lot more systems and infrastructure. So still doing uh electrical construction, but also had some service component. So we, you know, we were able to to uh steady some of the uh working capital requirements, which was fantastic. Payment terms of, you know, 5 days or less versus, you know, net 90. Um and we did get additional support staff uh, who are with us today. Uh, so that was a fantastic acquisition, uh, but like anything, we did make some mistakes. And one of the the challenges, or one of the mistakes that we made was we said, "Well, the seller from the first business, he was working for us. He was the master electrician. We thought, let's let's partner with him. Let's lock up that master electrician's license, and we'll we'll all be 33% ownership. And we'll make him put the the down payment or portion of the down payment in for for this uh, Miller acquisition. And I will say that 33%? So, you were you were that I mean, he was becoming a coequal partner with you guys. were made. Uh, and uh, shh. I I I I joke about it. We'll we'll we'll talk a little bit more about some of those some of the challenges that that brought up, but uh, at the time we were thinking, well, these these master electrician's licenses are somewhat difficult to to have. Let's lock it up and make sure that we can we can focus on growth and and keep moving forward. Mhm. Uh, but I think vetting vetting partners is just a so hugely important, not only just from who they are, but if they're a cultural fit for how you want to manage the business. Well, I would have thought though but at this point you he was a known entity. You'd already gone through a transaction with him, but on the other side of the negotiating table from him, then been on the same side of the table as he continued working for you in acquisition number one. So, you'd think that you would have it kind of implicitly diligence to You you'd think. point. Yeah. But but there were surprises. Yeah, I think that some of the things that we saw as, you know, maybe quirks just working with with people Uh you know, it's the uh, uh we we put it off as, "Hey, he's just an old school construction guy. These are This is how they were they were they were made back then, right?" Um And unfortunately, these small little quirks were were more character flaws than we we realized at the time. And are these flaws around integrity? Yes. So, we we came to find this out, you know, years later, but uh Chandra, actually, let's let me pause you on that cuz there there we're going to spend some time there. But, just before um we get there, can you tell us some numbers uh about the Miller acquisition, how big the business was then what the acquisition looked like? Yeah, so very similar to Gopher. Uh so, that was a $600,000 buy price. It was uh I think just under 300,000 in uh SDE. Uh and then at that time, we're looking at well, there are some things that we wouldn't count as add backs, things like that. So, we I think we settled at 250 uh was the was the real SDE number. But, what we really liked about the business was the structure and the support staff. It seems like you're getting a good deal. Yes. Uh or at least it And that was a good deal. Yes. Okay. B- B- And it was a good deal where the first one wasn't because it was actually a much healthier, sturdier business without these horrible working capital constraints and concerns. Sure. Yep. And there were some there were still some working capital constraints, but not nearly what we faced in acquisition number one. These are small businesses that you bought, both acquisition number one and two, Chandra. So, so the first one, you know, three-ish SDE. This one, three-ish SDE, maybe 250 after you Yep. consider the add backs. So, those are much smaller than the conventional wisdom would tell you to buy. and for two the two of you. So, the the S and D numbers are kind of half if you kind of consider what you both need to um take from the business. Right. The what was your thinking about size there? It sounds like despite the fetal moment of Gofer, the fetal moments of Gofer, you chalked that up to working capital not being too small a business cuz when you went back out, you bought a similarly sized business. So, what were you thinking size-wise? So, our our initial thought was, well, we've got Gofer kind of rolling. So, uh we're not going to face that immediate uh or the uh the as steep a J curve uh with this one because we've got the the Gofer uh receivables. We've got, you know, a lot of this base formed. So, we thought we were not going to feel the same kind of pain with Miller as we felt with the first acquisition. And that was the thought process of, hey, we'll go after another small business. We see that it's got some really long-term employees. Uh all of the the employees at the time, with the exception of one, uh who are uh who were field staff, were journeymen. Which at that time, and still to this day, journeymen are like uh they're like unicorns. They're really hard to hard to find. Um What's a journeyman, Chandra? So, a journeyman electrician is somebody who's gone through uh the the I think it's a 4-year apprenticeship. They can actually run electrical construction jobs. They can uh uh there's there's specific ratios that you have to have of journeymen to apprentices on uh a job site, things along those lines. So, it's it's the experience and the ability to pass a pretty extensive uh state exam uh to to be certified to be a journeyman. So, it's it's a difficult process. And I think the pass rate in Minnesota is actually lower than the bar. So, you were saying, so you just saw a lot of you were saying the the value that you saw in Miller despite the fact that the SDE number and overall revenue number was quite low. Yes. And we thought, you know, we've got we've got a good sales uh, funnel. What we can do is we can start to bring down the the actual cost on jobs by pairing these journeymen with some experienced apprentices. So, the apprentices are going to make a little bit less money, so we can start to average down the cost. Uh, we can ultimately make this slightly more profitable. Uh, that was at least the thought process. So, how does that go? So, tell tell us a little bit about the the transition and how it goes in year one and two. And then, of course, return us to what happens with seller of business number one, the GoFor seller. Yeah, so, you know, the first few months as we brought in this this new partner, you know, things are things are going along, the transition is going going all right. But, within I'll say within six or seven months, we lost three key team members from Miller. So, we lost three journeymen. And And how how many had you had? How many employees had Miller had? So, we had seven field staff. Uh, and then one one office support. Wow, so you lost three and those seven were journeymen and apprentices. Uh, yeah, well, they were all journeymen. So, that was that was the attractive attractiveness of the the business. Oh, sorry. I did I missed that they were all journeymen. Okay, so you lose half of effectively half of them, three of them quit. Yeah. And, you know, it was that the the person we brought on to be a an equal partner, he was butting heads with a lot of the a lot of the guys. Um, just like I said, from a cultural standpoint, he just wasn't uh, uh wasn't there. Um Yeah, if if I can if I can curse, I mean, I think nobody really wants to work for an right? And especially in a in a trade where the demand is so high to go somewhere else and be treated the right way, which is you know, what Colin and I really want to do. We We want to build an organization that is culture first. We want people to really enjoy where they work. And this this person was just kind of the the antithesis to that. Yeah. And we we saw that pop up more and more. Uh which was uh disappointing. Now that you're basically about two businesses, two electrical contractors, you have uh you can compare and contrast them, including culturally. So, he had been the founder, owner, and seller of business number one, Gofer. So, did you then see that that the the culture at Gofer was not great because as you looked at Miller and you saw his influence on Miller, it was kind of starting to bring the culture down? Yeah. It It It was It was pretty clear, I think, that we wanted to take him away from any any HR type of type of role or any type of management of team members. The problem is he also had the master electrician's license. So, he had to go out on job sites. He had to interact with field staff. So, it was hard to keep him siloed. What he was good at was the sales side. And he was good at you know, some administrative tasks. Uh or at least that's what we thought. Well, as you start to see cracks uh here, are you also concerned about the equity that you've given to him? He has not only operational power within the business, but he's actually got he's on the cap table. Yeah. Yeah. So, it it was a concern. We were hoping that and this is this is a hope hope isn't a strategy, right? But we're hoping that we can bring him along and start to start to change his behavior or how he uh was interacting with team members or at least silo him. Uh we were not successful. And on top of that, so this we completed that acquisition in January of 2020. In May of 2020, we completed two additional acquisitions, which were underground construction and fiber splicing. And those are the two businesses that I started running. So, it was not only that he was interacting with the staff and we're getting more complaints, we're also overloaded with work from hey, we've got to transition fully transition the electrical company. We've got to fully transition the underground construction and fiber splicing businesses as well. So, it was a it was a lot at the same time. He's no longer at the business. So, how did you extricate yourself from this? So, you know, Colin and I, we were looking at hey, maybe we should buy businesses outside of this partnership. So, we were looking at, you know, a a manufacturing company. And this is early 2022. Uh and at the same time, he comes and says, "Look, I I'd like a buyout." We thought, "Hey, the stars are aligning. This is fantastic." Uh and we we go through, we negotiate a buy price. We say, "All right, there is a lot of debt on these businesses." We're we're going to we're going to offer you I think we offered him $650,000 is what we settled on to get his third of the the businesses uh that we had acquired and just have him leave. That's you know, at the time we're thinking this is a this is a great deal. We're we're getting a lot, but what we didn't know is all the things that he was doing in the background uh stealing from the businesses, so on and so forth. Okay. Well, I want to hear about that, but um when you say you're getting a great deal, so and you paid him $650,000 for 33 of the 33% of the business, so you basically valued your businesses at this point at $2 million. Yep. Uh equity value, yep. equity value, and you thought that that was a good deal for you. Yes, because we had basically an undervalue. It it was. I I think I think if we looked at what the growth rate was for you know, the company that companies that we had just bought. Um the underground construction company and the fiber splicing company, I think we purchased those well. Um and we had a lot of work in pipeline. I I think if those were all taken into account we'd say, yeah, there was there was a discount, but because he wanted to move fast, we also wanted to move fast, but this this made a ton of sense. And and so so sorry, the the fiber laying business the or the underground um what do you construction business as you called it acquisition three and then the fiber splicing business acquisition four. By the way, were they did they come as a pair together? They were the same seller, they had different cap tables. Um and they were structured a little bit differently, but yeah, they were the same time. to get to those in just a sec, but you bought those as part of the partnership with with the go for seller. Yes. Okay, yeah. So So you had all this So you really wanted to get him out before those things started taking off or whatever was going to happen there. So but just to be clear on the $650,000 that you paid him, you had given him the 33% of the business just in exchange for continuing on and and the having the master license. He hadn't had to buy in any equity. So, he he put the he put a portion of the down payment down for to buy Miller Electric. So, Oh, that's right. So, the structure of that deal was it was, you know, I think it was $600,000. We uh did that through uh I think it was 20% down and then traditional bank debt. Um and then during that process of the Miller acquisition Miller Electric acquisition, we also refinanced his seller note to say, "Okay, well, we'll just have the businesses pay the bank." Um so, we didn't have a seller note with him anymore. He got paid out, uh which in retrospect was also uh foolish. So, he So, he turned what into 650? So, So, we had paid him out all of the seller debt that we had from Gofer Electric uh at the close of the Miller acquisition and also made him a 33% partner to lock up his electrical license. Uh and he came to the table I think with $90,000. So, Wow. Yeah. Okay. Well, to add insult to injury, tell us what you then learned also about what his uh misbegotten gains as he had been running things uh And And I think one of I'll say this. So, Colin and I are are trusting to a fault, right? You were. I think still. Still? Okay. I don't I don't want to look at the world Neither one of us wants to look at the world with so much cynicism and, you know, uh so much doubt with people that that we become the the the grumpy people or the folks that never trust anyone. I know I'm going to get burned. I know this is going to be a fact of life, but I choose to live life thinking that hey, the people I interact with are going to be genuine. I know it's not true, but I'd rather make the assumption first and be proven wrong. Um so with with this gentleman he what would he was doing was he was basically building things for himself and hiding those construction costs in project costs that that go for and Miller were were completing. So an example. He built himself a pool and when he built himself a pool there's cement costs, there's construction costs. Well, he hid that cement cost under a under a Miller electric job that had cement cost. Using the same vendor, right? Using the same POs. Uh so when we're doing job costing we're like, oh this came in a lot higher. You know and then his explanation is, oh well we we needed more more cement or we needed more of this. So Wow. He was just siphoning money off. Yeah. Embezzle. I mean this is embezzlement basically. Yeah, he built himself a barn, you know. Uh this is uh uh you know, our man cave or whatever it is. Uh and everything from lumber and this is you know, we started looking back at the transactions. This is when all building materials are super expensive. Mhm. And just pulling just pulling funds out of the business which uh was just appalling. when I hear stories like this I'm I'm doubly aghast. I'm aghast at the moral failing of this individual. But I'm also aghast at the at the their chutzpah to think that they're not going to get caught. Yeah. Like this isn't, you know, a giant business where $50,000 here or there is a rounding error. Like you you know, these are the the these additional cost you you immediately notice. You Chandra immediately notice. Like why is cement so much more expensive this time? Just um and and you're you know, you're basically intimately partnered with him. Uh it it just blows my mind that he think he'd get away with it basically. Yeah. And I I think the benefit here is that we didn't do $650,000 up front. We did we did do a large portion. So we did $450,000 financed by our bank. And then we did a seller note uh for $200,000. And we had that seller note kick in I I want to say 8 months later. So we had a standby period. And that standby period when he was out of the business allowed us to to dig in and see what what was actually going on here. And that's when we discovered this. So we held back the seller note. Um and we're not we're not going to pay on that. But we've we you know, we're given this idea by our bank and our our attorney say, "Look, you don't have to to pay him after you found the fraud." Um cuz we're still finding fraud here and there. So Still now 20 24? Uh end of 23. So as we closed out the the 23 books, went back and had our accounting firm uh look into 22 as part of uh you know, as we're going through an acquisition process uh that that didn't happen uh that should have happened uh this this week. Um but we found some some additional transactions there as well. Chandra, you you had said on our pre-call how much this really bothers you. This guy the emotions of of being kind of robbed blind by your business partner no less. Right. Uh so this is a different type of a un- unpleasant emotion than a fetal position where you're worried about making payroll. This is the emotion the negative emotion that can happen in small business where there's just more of theft that occurs. I think I think I think it's fair to say. Um I think John Wilson who I who I recently had on the podcast who has a plumbing business in the Akron, Ohio and Cleveland area, big one. Um We were talking about the path of buying a small business and he and he says he says is one of the things that people considering this path should also consider is like are you prepared to be stolen from? Like I'm stolen from every day. I know I didn't get him to elaborate on that. I don't know if he meant by customers or employees or what. But you just have the impression that there's that there's a lot of there's there's a lot more theft here than there would be in corporate America. So take respond to all of that, please. Yeah. So I I would say that the first few months after we found the theft, I was I was really emotional about it. I was really really upset. And you know talking with our our corporate attorney, talking with Well, we had to get a new corporate attorney because there were some conflicts of interest so we couldn't couldn't use the same same group. So we we have another corporate counsel that we're using. And wanting to to say, "Hey, let's let's go after him with everything. Let's let's use you know we know that he we we also found out he cheats on his taxes." Like, "All right. Well, let's let's make the the tips to the IRS. Let's you know just a lot of anger because Yeah. there was there was just trust there right and when you trust somebody and they betray that trust you're going to have a very significant emotional response. Yeah. And what I found is that emotional response was only a net negative to me and it was you know a negative a negative to to people around me. Nobody lives in a vacuum right as you you you kind of wear this stuff on your sleeve other people see it other people know that hey this is something you're struggling with but it also is in every interaction that you have. So I'm grumpy and was permeating your mood. Oh absolutely. you were this anger was following you around like a cloud over a rainy cloud over your head everywhere for weeks and months. Yeah I I'd like to think I can compartmentalize but I can't. Uh and so I mean my wife would would be like you know hey you're you're pretty grumpy all the time what's what's going on you're uh you know I was more frustrated with you know even hanging out with my my son who was uh you know a toddler who's a toddler now and you know all of those things just just make for a negative experience so I I had to to reflect back and think is hanging on to this worth it? Is it and it's it's just not so that was the uh a little bit of the wisdom I I came to. Well easier said than done though Chandra I mean I I feel like I've heard that it's like what is it the yeah anger or resentment like it's um it it basically what you said you're it's really the cost is to you not the person who's the subject of your anger or resentment so just kind of put down the burden but like the easier said than done and I imagine Right. So so I'm not sure the wisdom is so much that, which we all already know. The wisdom is how. How did you let it go? I think you have to look at the impacts to people around you. And if I am making uh you know, an impact uh that is to the negative on the people I love most because I'm grumpy all the time or because I'm carrying this additional anger for somebody who doesn't matter. They just don't matter in in my life, then you know, I've I've got to do the work internally to say, "Hey, let it go." Yeah. Let it go. Well, good for you, Chandra, for for letting it go. struggle with it. Don't don't get me wrong. I'm not uh fully zen yet, but it's a it uh it's progress. Well, I bet it's it's something of a muscle, you know, you got to you got to kind of exercise that muscle to keep it keep keep it strong. Right. Keep the uh the anger at bay Um and also good on you for and your partner for kind of philosophically committing yourselves to not being becoming um losing, you know, misanthropic, losing faith in all all humanity and uh just did being distrustful in all directions. That you you really have kind of a commitment, philosophical commitment to continuing to you know, give people the benefit of the doubt, trusting first. Um trust, but verify. I assume I assume you've probably come gotten a little bit tighter around verification, um but that you don't want to just become this jaded grump. Right. All right. Yep. And it's I mean, that was not the last time we've been burned and uh you know, even the the I think back to the most recent times we've been burned. I know it's not going to be the last. Uh but like I said, you could either look at the world as "Hey, a lot of people are out to get you. You've got to protect everything you have." Uh and you know, go at it with that type of cynicism. Or you can not. And I choose to look at a a much more positive view of the world. Just before we close out this chapter of your story, um watching the time, but what do you think is the takeaway from this terrible experience with seller of business number one? Was it that you didn't verify? You should have been um tighter there. Or I think we've already covered that maybe you were a little too generous in bringing him into the partnership. You offered him too much for too little, the master license basically. What what would you have done differently? What did you learn other than to put down your anger from this experience? Well, I think I think I learned the value of a seller note. Uh you know, initially when uh going through these acquisitions, you know, the I'd say, "Well, the seller note just acts as It's almost like equity for the bank. So, uh we'll we'll just keep a seller note on." Um so, we had a seller note with our underground construction company. We had a seller note with the fiber splicing company along with the the Miller Electric acquisition. We had a small seller note there. Which I just I just didn't really put much towards the the phrase "have skin in the game." Uh but seeing how this paid off of having a holdback, having that seller note to say, "Hey, look, you thought you were getting all this. You are not. You already got paid. Fine. We're we're going to separate." is a huge lesson. And Yeah. we were able to use that tool in another scenario as well. So, the value of a seller note as um not giving too much of too much cash away so that if there's some uncomfortable position you can it's not in that money doesn't have to be clawed back. It's in your hands before being given over and you just don't give it over. Right. Trying to trying to get back what you've already given is so much harder. Looking at our time and still got a few important things to get to. So you've done as you said a total of five acquisitions. We're not going to have time to do all of them. Sure. But I I do want to hear about I want to hear briefly about very briefly about all of them actually. But we're not going to deep dive into all of them. But before we move away from your first two the electrical contractors Gofer and Miller Miller which is now again the brand of the Holtsco. Tell us a little bit about the electrical business. We hear a lot about HVAC. We hear a lot about plumbing. A lot of plumbing businesses offer HVAC and vice versa. Electrical's enormous but it it it's it's somehow a little bit to the side from those those two other giant trades. What can you educate people about this industry business and what to look for? So I I would say this. It's a little bit different because we are so heavy in construction versus service work. So we are trying to pivot into a little bit more of electrical service working with property management companies working with you know, maybe HOAs things along those lines to where we get you know a normal volume of calls to have an electrician go out and and take a look at some some simple problems. Maybe it's an outlet or or what have you. Or smaller jobs. That being said, I think I think this space very similar to HVAC very similar to plumbing is going to get the same kind of attention uh, in the next couple of years. But once again, with a focus on service rather than construction. But, any notion as to why it hasn't happened yet? I think the the licensing requirements, at least in the state of Minnesota, are really, really high. So, to to be a journeyman, to have that service work component, you have to send a journeyman out to to do the work, right? Uh, so, if I have an outlet out at my house, and I've got to get a you know, I've got to call electrical service company to do it, it's a journeyman coming out to to fix it. And the cost for, uh, you know, that journeyman, you know, it's call it $125 an hour plus your travel time. I mean, the margins just aren't as high as with HVAC or plumbing, things along those lines. That's my guess. Uh, but Wait, wait, sorry. So, for you, the owner, the margins on your labor are lower, thinner, because they're so much more expensive and you you don't feel that you can pass on that cost to the consumer. Right. To me to maintain margin. Like, say you wanted 20, 25% margin, you you don't feel like Interesting. And, I mean, like I said, I think this is a new world for us as an organization, too. So, there there are likely other electric service companies that have figured this out. Uh, so, we're we're really dipping our toe into the water from these big, you know, two, three million dollar builds that last a year or eight months to hey, I've got my neighbor who's got, uh, a GFI or, uh, you know, somebody needs a new panel, something like that. So, it's maybe just my experience versus industry as a whole. By the way, I I meant to mention this earlier, the one of the reasons that we like service instead of construction. One of the the I think the most commonly held reason that service is better than construction is because the revenue collection the revenue generation is smoother. It's not as cyclical. It's not as subject to economic trends. So construction surges when the economy's good. Construction gets hammered when the economy pulls back. So very cyclical. Um but also this working capital thing. Yes. I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I Um the way construction jobs are paid is terrible. And the I mean the the terms are basically terrible. It's it's 60 and 90 days before you get paid for for work. Um so we don't like that either. Not mental note or note for the audience and myself. Great. Okay. Um thank you for that. The let So let's quickly hear about the underground construction, fiber laying, and fiber fiber splicing. This pair of businesses. What are these all about? Yeah. So we we bought this in we closed May of 2020. So right as the world has shut down uh from from COVID uh we bought this um underground construction company. We thought, "Well, we'll just continue to branch out from electrical." Our electrical service uh uh construction company essentially had some underground component. We thought, "Well, we'll go out and just buy this." And the multiple seemed fantastic. That I think the total purchase price for both businesses was $2.1 million. Um and On what Give us a picture of revenue, SDE, employees, etc. So revenue at the time was I'd say 1.3, 1.4 million dollars. Um and for the underground construction side, about two to 300,000 dollars for fiber splicing. Um and the SDE total for each was about 400,000 dollars. So, that's a 5x multiple. But, it was all asset-based. So, we ended up buying uh I think it was about 1.8 million dollars of equipment. So, we looked at this and said, well, this is a uh up first, the seller was selling because they had recently had a heart attack and could not continue to operate the business. So, they had 1 year where they were basically saying, all right, I'm going to operate this from my couch. Normally, they're out in the field doing every single thing. So, the numbers had taken a little bit of a downturn. Like historically, they were looking at uh you know, uh close to a million dollars of of SDE. Uh granted, that's got a lot of fluff, but the year that we bought it, the previous year rather had right around that 400,000. So, we were taking a risk seeing, well, the company is on a downward trajectory, but we think we could fix it. And a lot of hard assets that came along, a lot. Correct. So, we saw the risk as fairly minimal because if this thing didn't work, uh and we were doing conventional debt with uh uh a 10% seller note um and some some down payment from us, we thought, well, we could just sell all the equipment Mhm. and take off the the uh the existing debt. Yeah, we'd be out our equity. Great. And has that proven to be a pretty good thesis? Yeah, I mean, that that business Well, the business is doing great. Right. Uh but just was your analysis pretty on point there? Uh of Okay. Yep. We're going to hear about how the business is done, too, cuz that's been a lot of the the growth of the overall HoldCo has come from from the from the laying, the underground construction, right? Yeah. So, we'll we'll get to that in just a sec, but um conventional debt. So, this is I meant to ask earlier when I heard you say that. So, it sounds like you're using Have you used SBA at all? No SBA. Not not outside of that initial uh express line. Uh and we ended up refinancing that to a conventional line after our uh acquisition of Miller Electric. So, everything we have is conventional debt. So, what's the deal there? Why not SBA? So, we were looking at it from the terms, the kind of ease to operate. Um So, when you're operating uh an asset-heavy business with the SBA, it can sometimes be a challenge. So, looking at all of the things that you've got to go through from hey, I've got to maybe I've got to sell a truck. Well, that means you've got to go get permission to to sell the truck. Or, you want to buy a new asset, you've got to go through the process of getting permission. And there are significantly more hoops to jump through to get the SBA loan. Uh yeah, when I when I went through the process of doing conventional, yeah, it was still arduous. It was still uh a challenge, but I would liken the SBA process as more of a financial rectal exam uh than than anything else. So. Okay. Like anyone, I I avoided it. Well, what what do you mean you have to get permission to buy another truck? So, the way our banker explained it to us is before we could buy additional assets or sell existing assets, we'd have to submit in writing our use case uh and get approval. I haven't heard that. Oh, all right. Well, maybe that was just one particular bank. Okay. But So, had you taken an SBA loan to buy a business, one of your businesses Yep. to to buy or sell a significant like a capital expenditure, you were going to have to get approval for to do that. Right. And and this is only these are things that I've learned somewhat recently. So, we were looking at the SBA to complete an acquisition that was, you know, that ultimately fell apart. It was supposed to close this week, but we were looking to utilize the SBA for for this acquisition just as part of an expansion loan. Um but these were some of the terms that we were talking through. And thinking back, I'm like, man, I'm really happy we didn't do that for our initial acquisitions. Yeah. I'll have to look around and see if that is indeed Yeah. It could be that these are requirements maybe not from the SBA, but rather from the bank that we were looking at. Yep. Yeah. So, Chandra, you So, you bought Miller, the electrical company, January 2020, 5 months later you buy five four months later you buy the two under the fiber splicing and the fiber laying businesses, acquisitions three and four. So, that's a busy year for you. This is 2020, COVID. The Now, what is your participation in the businesses? Have you gone full-time yet, you Chandra, or is it Colin doing the do 100% him operationally at this point? So, it was uh uh at this time, it was Colin and then the business partner that we'd brought in. They were managing the electrical side. I still had my W-2, but I had taken over management of the underground construction company and the uh uh fiber splicing business. Um so, I would be driving to job sites, uh, understanding the business, and then hopping back in the truck to do a consulting call for my for my corporate job. Um, so, it was it was a little bit of a challenge, uh, just putting in a lot of time, a lot of effort to to go through that. And I think it's not that I had to do it. There was a little bit of greed from my perspective. I still had shares that were vesting. Um, and uh, since you know, this was COVID era, and I was in consulting, everything was a Zoom call. So, I didn't have to hop on a flight to go anywhere. It just made it a lot easier to juggle both. Um, and if any of, uh, my colleagues from from Coupa listen to this, I was still killing it. I was still focused on that job, but at the same time learning and trying to to better understand underground construction and fiber splicing. And on the geography point, cuz Coupa, you'd been in Chicago. Yep. These two businesses, underground construction and fiber splicing, are in Minnesota? Yes. So, I I had moved back to Minnesota after I got married in the end of 2018. Oh, at the end of 2018. So, you've been working remotely for Coupa anyway. Yeah. Pre-COVID. Yep. Pre-COVID though, I was I was traveling a lot. I was living that You were back and forth from Chicago a lot. I was living that consultant lifestyle of flying to a different city and, you know, having a couple of flights, uh, a week uh, at the minimum. Okay. And so, give us a little bit about these the business of underground construction and fiber splicing. What can we learn about these businesses? Are they attractive businesses for listeners to go look for? Uh, I I would think so. Um, just don't do it in the state of Minnesota because I'm really on the hunt for more. Um, but, uh, so, so essentially what what we're seeing is a massive investment from the federal level, from the state level, and the local level to increase uh you know, broadband access for, you know, different communities. Uh this business was focused on rural uh fiber development. We've gone to expand that you know, building out full tier two, tier three cities so that all of those residents have access to high-speed internet. Uh so, we're working with local and rural ISPs to build out their network. Um I'd like to say it was very strategic that we did this, but uh it was it was a lot of luck because in 2020, these companies were still making these investments. And then in 2020 two uh you know, the the infrastructure bill passed. And the uh I think it was in '21, there was uh the American Rescue Plan. There were a number of different bills that were passed that just poured gasoline on this in uh this infrastructure uh build play. So, we're seeing a lot of that flow through today. Mhm. And so, what had So, this you bought again May 2020 underground construction. And And And by the way, the underground construction and the fiber splicing, I assume there's a lot of overlap there. Do those two businesses feed each other? So, should I talk about them collectively or should I talk about them individually? can talk about them collectively. I I'd say underground construction feeds uh the the splicing side. So, once the fiber's in the ground we then send uh a a technician who is uh you know got that side of the contract to go in, splice the fiber together test it, make sure light data can pass through, uh and then ultimately have the ability to have customer sign up and uh, have that connectivity. And the reason this isn't a single business and a single service where you where you dig and then lay the pipe and then have the technician come and make sure the data is passing through correctly is because those are just two very different skill sets. Yeah. So, digging and laying pipe is construction, as you keep referring to it, whereas fiber fiber splicing is very kind of technical. Yes. Basically? Yeah. Okay. And that's how they were structured when we acquired it and we kept it kind of the same. Okay. And we see that in industry a lot as well. That usually they're they're separate entities. Uh, usually not on the one is so much bigger because because it does it does non-fiber construct underground construction as well. Why wouldn't or or it's just more the the job size is a lot the the ticket size basically is Yeah. bigger. It's it's the latter. And uh, you know, I was focused on building you know, I I I really focused energy on growing the underground construction side. Now, I'm I'm really focused on growing the the splicing side as well to match. So, it's kind of the prioritization. Okay. Uh-huh. And so, what are revenue what does revenue look like for that pair of businesses today almost 4 years later? Sure. So, this year we'll be uh, just shy of $7 million in revenue on construction and uh, about 1 and a quarter million for fiber splicing. The benefit here is that the EBITDA impact for fiber splicing is actually really huge. So, we're going to see close to, you know, 40% EBITDA on that you know, 1 and a quarter million. Oh, fantastic. So, a business that was doing you said 1.3 plus call it two and 250 so about a a million and a half bucks when you bought it. These these pair of businesses a million and a half bucks are now going to be doing uh north of eight eight million. Yep. And the SDE you said 40% on 1.25 is 24 about $500,000. Plus and then how are your margins on the underground construction? The underground construction side is is really good as well. Um especially because what we're doing is we're doing city builds that are really close to our headquarters. So we don't have to have the additional costs that other construction companies have to have like hotel costs for uh team members, per diem, things along those lines, uh excessive fuel costs. So our margins are a little bit better right now. Uh but I I believe we're going to probably be just shy of of $2 million uh of of EBITDA on our underground construction side. Wow, so collectively together the pair is about two and a half million dollars. Yep. Uh earning about two and a half million dollars up from call it 400 SDE. So that's six times six six X growth in four years. Awesome. Yeah. Well, congratulations. Thank you. I I'm I'm really happy with that team. They they've done an absolute absolutely fantastic job. And this um this build-out so in uh the 49 states that are not Minnesota there are you think that similar projects are happening and and similar kind of infrastructure dollars are flowing? Yes. And and and but you had said that the businesses was focused on rural build-out. But then you now just said that in fact you were doing a lot of municipal projects. Oh I guess you said it was it was rural but also second and third tier cities as well. So Yep. Uh initially when we bought the business, they were focused primarily just on the the rural side. We've we've taken it and had uh, not just the rural side, but expanded into more full city builds, which has, you know, slightly different components. We have to have our team members trained a little bit more because they're interacting with uh, uh, homeowners a lot more. So, if you've got a a team out in the rural areas and they're putting in a ton of fiber, but they're along, you know, a just uh, a highway or a county road and there's farmland to the other side, they're really not interacting with a ton of folks. But, on the city side, uh, there's just a an up-level or an up-skill in terms of professionalism, in terms of appearance, things along those lines to give homeowners uh, a little bit more comfort. Okay. And uh, so you still work in Acquia? I am not. Okay. So, when did you go full-time? So, I left in May of 2021. Uh, so my first son was born in March of 2021. And uh, you know, I I thought, you know, I'll just carry on as much as I can and I found myself, while doing both, missing out on some of the important things for his development, for him, just, you know, the the enjoyable parts about being a dad for the first time. So, uh, I decided to leave Acquia and focus on this full-time and just be more present with my family. Good for you. And has that has your family felt the benefits of that? Uh, I'd like to think so. I hope they'd say the same. Uh, my now 3-year-old is very rambunctious and I've got a 7-month-old now, as well. So, if we do a follow-up call in a few months or a year or so, uh, you'll look at me and tell me I've aged like a wartime president. Coming out with a lot lot more gray than you went in. We we're going to have to wrap up here, Chandra. Sure. But there was another acquisition. Why don't you just give us a couple minutes on that? Sure. Um, because you acquired and then divested yourself of it. But give us the the very abbreviated version of that just so we can get a sense of what it looks like when a holds co buys a business that it ultimately decides it doesn't actually want to devote itself to. Yeah. So, we were we were thinking that we were this mini private equity firm and we could utilize the resources of the existing businesses to buy and diversify into other areas. And so, we bought a manufacturing company. This manufacturing company was one that uh, manufactured trailers, equipment trailers. Um, and because we're in the construction space, because we saw there was a shortage of these, thought, "Hey, this makes a ton of sense." We found one that uh, was about 2 hours away the location from our existing businesses. So, it was a separate location. Uh, the the purchase price was $1.85 million, included $1 million of real estate, $850,000 was the operating entity. Uh, we did this mostly with a conventional loan and uh, seller note. Uh, I think we put down 10% uh, equity from ourselves. I believe the total I'm thinking the total seller note was about $250,000. Um, so, we we were operating this business for a total of 18 months. Um, we were really sold on this because the owner said, "Hey, you know, I've had a lot of success with this business in a very short amount of time. I have lung cancer. I'm dying. I want to to spend more time with my family. And being the bleeding hearts that we are, we thought, "Well, this is a good business. Yeah, this guy is a micro manager. He's kind of a jerk to work for, but we can fix it. You know, it's our own hubris. Well, we can fix anything." Um and so we bought this business. Came to find out that the numbers that he provided were not correct cuz we we sped through this in terms of due diligence. We thought this guy was dying uh in very short order. So, we come to find out that all the financials were incorrect. He was looking at showing deposits as actual recognized revenue. So, there were no costs against this. This is a business showing 30% EBITDA. Uh which we thought was, "Hey, this is great. We still have enough room to uh put in a manager and we'll we'll be fine." Uh so, the business immediately is losing losing a ton of money. Uh we're spending parts of our time there while still spending time at our construction business, which is doing well. Um and because this is the same time where we bought out our existing partner, there are some things that he did on that side that were presenting some challenges with the electrical business. So, it seemed like there were just a lot of things going on at the same time. The way we put it is we basically commit completed two acquisitions at the same time, both of which were a little bit on fire. So, we spent a lot of time fixing the manufacturing company. So, we cleaned up the real estate, made sure this was a you know, basically a a healthy place to to work. And we came to the conclusion of, "Look, we have so much growth opportunity on the construction side. We have these huge city built contracts coming up to uh on the underground construction side, on the fiber side. Getting electrical back on its feet. It just does not make sense to try and continue to manage something that is two to three hundred thousand dollars of SDE. Fixed it. The real estate appreciated. We sold that sold that business in September of '23. And because we had a seller note, we renegotiated that seller note down because of some of the fraud that that seller had. And ultimately saved about a hundred fifty thousand dollars on that on that seller note. And so there was fraud, financial fraud, and he never had cancer to begin with? Correct. He did not have cancer. Wow. Yeah. What bad luck you have with sellers. Although Chandra, I'm also just wondering if you're you know your aforementioned philosophy of just diving in and knowing that you'll get burned sometimes is maybe a little a little too loose. Yeah. No, I I I do think that in this in this world of ETA, you're you're going to get kicked in the teeth. Yes, I could have I think we could have done a better job avoiding some of those kicks. But, I still I still don't want to approach the world with that level of cynicism. If somebody says, "Hey look, I've I've got hardship." You know, if it's a team member, an employee, "I've got a lot of hardship coming up. Can you help me?" The answer from us as an ownership team, as an executive team is almost always going to be yes. "We will help you." Uh that's just who who we are. Um And are we going to get burned? Yes. I I think I had a team member from that manufacturing company. He approached us. He was very upset. His truck had been been repossessed. "Can can you help me? I I don't know what to do." So yeah, we we paid to get his truck out of uh the the tow yard and and all these things. He said, "Yes, I'm going to pay you back. I promise." I I don't think we've seen a dime of that. Yeah, I think that was $3,500. But, it it's just something that we we're going to continue to do because I I I think that's just who we are. But, yeah, don't buy businesses from guys who uh fake cancer. That's a that's a good lesson. And also have a have a really good seller note. Right. Right. Um okay, Chandra. The So, ultimately, you sold that business. It sounds like mostly kind of as a capital allocation decision. Or in an energy and attention allocation decision. Yeah, energy and energy decision is probably the the best way to Yeah. to phrase it. Yeah. Okay. And then So, when you and I talked in January, you were looking at this sixth acquisition that was really going to be a needle mover. You've already teased that unhappily last week, it fell apart. Yep. Um I hate to I hate to uh roll around in your pain here, Chandra, but broken deals is such a part of this world. Yes. Uh it may benefit the audience to hear from somebody who is very fresh in a very disappointing broken dealing with a very disappointing broken deal. What can you tell us? So, this business was another underground construction company uh doing the same work that we do today. So, uh putting fiber in uh in the ground. There was zero customer overlap. They were larger in terms of revenue uh in terms of assets, but their EBITDA was a lot lower uh because of how they bid projects. We thought there was an immediate opportunity to have some some gain um just because they were they were working with customers who'd pay the lowest, but had very little admin burden. Uh they just made billing easy. Well, we have a team member that could just take on billing. That would be great. Mhm. Um so, we've been working on this for the last 6 months. Because of how the last acquisitions have gone, we were a little bit more thorough. And this would have been our you know, largest acquisition to date just in terms of of revenue. The The company was doing about $10 million revenue. Um they also shared our same accounting partner. So, we use BWK up here in in Minnesota. So, a very reputable accounting firm. And we were going through all the right steps. Used you know, a a deal attorney that was that's known to get deals done. Uh more than anything else. And getting closer the finish line, the weather is starting to improve here in Minnesota. I think that the the greed glands turned on and they thought what a lot of blue collar owners think, which is well, I could just work more. I could just continue to work. And so, they called the deal off about a week and a half before the the close, which was disappointing. And your So, to be clear, your sense is they called the deal off simply because hey, I'd rather just keep this business that because they're starting to see money come in for because it's high high season's about to hit. Yes. And what did you say that their greed glands turned on? I have I've not heard that one. Yeah, and you know, I So, so do you think is this the sort of thing where the it'll circle back around if you if you hang around the hoop, this deal will come back to you in the winter when when their greed glands are are deactivated again? I think so. I I have no doubt that they cuz they really wanted to close in December. Uh and for us, it doesn't really make sense to buy a seasonal business in December and carry three months of uh you know, there's some support staff still on. There is uh equipment maintenance that needs to be done, etc. It just it for us the perfect time to to close is April, May when things are really going. For them it's 12/31. And they kept pushing for that. I have no doubt they'll come back to us in October and say, "Hey, do you want to do you want to keep going on this deal?" We'll see if I'm still as emotional as I am today because my response today probably is a flat-out no, but I know that I'm still uh emotional about it. Chandra, put down your anger, man. I'll try. Yeah. Words to live by. Well, we're we're rooting for you. That would be a big needle mover in the business. Let's Uh so by the way, we we it's been a minute since we talked about the electrical businesses. How are they doing now? Five and four and six years later respectively, I think of the two. Yeah, they're they're doing well. I think this year we're slotted to to see a little bit of growth again uh because of what the you know, the the other owner had done, it took a little bit to get it right, you know, back on the right path. Uh so what is this? Almost two years later, it's now on the right path. We're going to start seeing growth again. Uh so that part is is doing well. I'm happy where we are there. I guess let's close out with just big picture here. First I'll ask, what is your plan for the next, call it, 10 years? What has the vision evolved um or become more maybe uh concrete about about a number goal or some other kind of quantifiable goal? How do you guys think about that these days? Yeah, so we're we're actually going through a um EOS implementation and we just we just had a kind of do a deep dive and answer some of these questions. But our I would say our B HAG, our our audacious goal is $100 million in revenue. Um it's you know, nine times where we are today. Uh which is it is a big goal. Right? So uh that goal is going to be accomplished by both acquisition as well as growth internally uh or organically. And do you think it'll come from rolling up or is is the strategy now to roll up underground construction or is it to look at that plus in adjacent things to that further build out uh Miller Electric with other electrical contractors or what? Yeah, so the strategy for acquisition is both it's it's looking at fiber splicing companies because the margin is so good. Same thing with underground construction just because we we have a good path for growth in those businesses and we understand them really well. And then if we can find uh an electric electric uh uh service company for sale, then we'd we'd want to go after that. So that's the those are the three areas where we really want to try and acquire. Not necessarily electrical construction. Fantastic. And as you reflect back on what you've built and maybe listening to people out maybe talking now to people out there who kind of aspire to build what you built. It anything that we haven't already talked about that you would advise them? We've talked about the importance of seller notes about this spectrum of uh diligence and action and and where each each person's kind of kind of kind of find their own um place on that spectrum. Uh yours tends to be more toward action than diligence. Um so we've been hitting on a lot of these themes. Any other themes that that we should that you want to be communicating to folks? I think I think sharing the sharing the stress load is is a very big big thing, very big component. So, whether it's a partner or if you have an operations manager or even, you know, just people around you who will help you share that load is going to be really important. Uh you know, I had Colin. We you know, we're now basically neighbors. So, we talk every day whether it's at the office, the drive to the office, the drive home from the office. Uh you know, things things along those lines. So, just having additional support to deal with the stress that comes along with business ownership is huge. Yeah. Great point to end on, Chandra. If people want to reach out, what is your preferred method? Yeah. So, shoot me an email, chandra@millermn.com. Uh or send me a a message on LinkedIn. Uh I've got a number of folks that I try to help out and share the lessons that I've painfully had to learn uh and just taking some some uh advisory roles with other uh other groups in the ETA space. Oh, great. Okay. Also, I've been calling you Chandra this whole time and you just called yourself Chandra. Yeah. Either Either way, I go I go by both. Uh and also, I've got a little bit of a cold. So, hopefully listeners aren't too annoyed with uh my nasally voice. All right. Chandra, great story. Congratulations on what you and uh what you and Colin have built. And yeah, we'll look forward to hearing uh uh an update from you in the years ahead. Well, cheers, my friend. Thank you for everything you do. I hope you enjoyed that interview. Make sure you subscribe to the Acquiring Minds channel below. 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