Adam Markley welcome to acquiring minds great to be here will great to be here Adam you've looked at hundreds maybe more thousands of small business deals both your own and those of others so we're going to hear about your journey down this exciting if treacherous path and what you've learned along the way from peering inside so many transactions start us off with some back ground Adam on you yeah my background is uh I started in public accounting straight out of school uh I actually went to school for engineering and got bard of it insert every bean counter joke you can ever imagine about switching from engineering to accounting if you were bored there uh from one nerdy thing to another from one nerdy thing to another and what's interesting is even before well I guess simultaneous to that switch of major I I had this feeling I wanted to buy businesses and before I ever knew what the term of rollup was or entrepreneurship through acquisition or even just the concept of it I always thought about buying buying the simple business the laundry mat the car wash and then buying a lot of them knowing that economies of scale add lots of margin and things like that and I don't know where that came into my head I came from a very non-entrepreneurial family both my parents worked for the for the government my father the federal my my mom a school system and so certainly not entrepreneurial in the the classic traditional uh rais in a small business or business owner own family or things like that and so I went to school got bored switched to accounting and started down a very traditional path uh instead of going to the big four one of the major accounting firms I went to a small Regional firm based out of Richmond Virginia and I spent most of my time working on small business clients pick and Industry I I touched most of them it felt like at that time especially the hot beds of what we would know as acquisition targets today things like landscaping companies and haac companies and personal training and physical uh physical therapy and chiropractors and ey doctors and Professional Services of all kinds including a law firm that ultimately my older brother ended up working at for a few years later in life uh I I touched so many different businesses uh and and this thought came to me what do I need to do to be successful I'm working on tax returns and accounting work for people who had far more wealth than I had you we didn't have a lot growing up and uh and it was what do I need to do to achieve what they've achieved and it came down to two things basically one was they either own businesses or own real estate and often times the people who own real estate even if they own many properties and I saw people with 50 plus properties in their Holdings it's the business of real estate not the real estate itself that was driving most of the value so it all comes back to business and and that continued to reinforce the desire to to be entrepreneurial to find a way to to Really lean into business ownership at some point fast forward 10 years I ended up bouncing around in my career through a few Industries I left public accounting I touched Hospitality I touched restaurant I touched uh I touched again public accounting and worked on construction clients and Manufacturing clients uh online education you know charter school education and so through this I ended up going through what felt like lateral moves predominantly driven by personal life choices and reloc and things like that uh but I didn't realize at the time what it was doing was it was reinforcing the exposure to a wide variety of Industries a different size of businesses uh I was working at small to large you know the restaurant I worked at was a one of the largest franchisors of Roose Chris the high-end Steakhouse and this was a immigrant from Cuba who worked in the original restaurant under Ruth herself if you will and uh uh uh she gave him his first restaurant and he ultimately owned nine of them plus valet company plus other Concepts and things like that and so you got to experience not just this cross industry exposure to what scale looks like but people who had started from nothing and grown into something this was a guy who was getting his haircuts and Nails trimms in the office and had a driver and things like that coming from a you know an immigration situation and had no money right was a dishwasher uh at 14 in the restaurant and so you got to see these kind of stories really close up in different ways and I saw bad as well worked in worked in automotive and it was an inherited situation the son inherited the business from the father and you know you want to talk about business crash course of what small business ownership can be the Friday before I started working there as the control at 24 years of age um an 8,000 ft building burned to the ground so you're walking into an immense problem on your first day uh I was basically the the number two sitting next to the owner of this used car group Body Shop service center all this stuff and then on Wednesday of the the week I started so not five days later the IRS levied the bank accounts and emptied cash and on Friday payroll was du that's a heck of a first week of any job and in the small business World while it sounds extreme these things can happen and it just shaped my knowledge and shaped my experience as I as I walked through this part of my career at the time it felt awful I was working 80 hours a week and life was terrible long story short I ended up uh through my career I ended up at a very entrepreneurial organization that I know you're familiar with it's a very large digital publishing company based out of Baltimore Maryland that focuses on financial and health newsletters it's a large multinational company and this was where I reinvigorated my entrepreneurial Spirit to say the least it was a it's a company that rewards self-starters and initiative or people who will see a void and F avoid and I ultimately did nothing I was hired to do um and that truly reinvigorated things I ended up overseeing uh from a financial strategy and operations perspective the entire non-published business both internationally and us from a financial perspective and so did that for a few years and then flipped to the revenue generating side of the business ended up starting to do joint ventures and and negotiated deals uh the problem and downside with that is they wanted me to then start my own division which I did um and through that process I had an opportunity to acquire an education company that taught people how to buy businesses um and that is the Launchpad to everything I've accomplished in the last you know a half a decade or more was that opportunity to acquire that education company manage it become a co-ace of it for a number of years coach and educate hundreds of students see as you mentioned tons of deals along the way and ultimately start start start the holding company I have now and start entering into the small business acquisition space uh in a really material way Adam I guess a lot of guests have the notion of Entrepreneurship as the Silicon Valley notion so that you know they've just the Mark Zuckerberg Elon Musk that's what an entrepreneur is they don't identify with Mark Zuckerberg therefore they're not going to be an entrepreneur and then when they learn about ETA it's a light bulb it's like oh this is another path to entrepreneurship um and by the way it's a pretty compelling one there's a turns out there's a lot of money to be made in small business so it sounds like your your recognition of that came gradually as an accountant you were seeing inside the world of small business a lot and seeing really successful stories in people so that was you you already knew by the time you started working directly with business Acquisitions this small business was a really interesting place to make a career absolutely I I'll never forget one moment um a guy had started a baby formula company and as anyone who's had kids understands that's not a cheap cheap investment if you need to to feed a child baby formula so he started a baby formula company and I'll never forget uh his minor kids his kids were like eight and 10 years old they had their own QuickBooks accounts to manage their transactions as children uh I remember his one of his estimated payments for the particular year I was working on at the time and it was you know probably what 2006 or seven or something like that and I'm holding an old school personal check handwritten for seven and half million and there's only a few moments like that that'll you know create an imprint in terms of what is possible um and this is a real company and I think having touched so many businesses so early in life uh in my career you realize everything around you is a business someone had to make it produce it distribute it service it all of those things and and there's no right way to make money there's many ways to make money yeah and and it just created that deep exposure and understanding that there is a really powerful opportunity to really lean into business ownership at some point and I suffered the impostor syndrome that so many people do right feeling like I couldn't do it or I didn't have money or anything like this this was the mid early ODS right I was young I was 22 23 24 years old surely I couldn't afford to do this surely I couldn't you know make something like this happen but the real reality is I probably could have but just didn't have the knowledge or awareness at the time around the components we're all so familiar with what the SBA is how you can actually structure deals and things like that but at the time it was just a pure recognition that there's money to be made everywhere in just about every type of business Adam another thing you'd said in the in the preall was your Expos as the accountant for so many of these small businesses eventually they were also turning to you to help them grow or maybe you were stepping up to point out how they could grow because I guess they would maybe be practitioners of a of a of a skill that they've sold but they weren't necessarily um you know p&l focused or Savvy and you kind of learn the skill of showing them how to grow is there something to say there yeah yeah yeah there's a there's a couple of experiences where I remember one was a physical therapist in between patients he was doing QuickBooks and I would show up at the office and we'd be talking and you know this was a guy who had you know quite a few kids and was trying to figure figure this thing out and it's like how do I not do this right he was in the classic I'm operating the business and I I need to be not doing this and so you know as a 22-year-old at the time or 21y old whichever it was it was it was this fascinating story of oh that's a great question I should probably go figure out the answer to this because that's real value being unlocked and so over the next few years he ended up opening multiple locations ended up treating only his VIP patients and no longer doing his books and things like that and it came through the course of you know candidly predominantly his hard work obviously but being able to have a sound be a sounding board and have some level of input no matter big or small um at the time it felt really big to me um but the reality is it was an entry point into understanding that with growth comes even further opportunity both financially from a lifestyle perspective and the freedom of time and the capacity to execute on what you want to execute great well thinking big um will return to that theme or maybe it'll just be self-evident when we hear about what you've built so take us back now to the story you're at this publishing company and your Entre entrepreneurial fire in the belly has really been lit this company's culture encourages that and you acquire into that larger business an education business about buying businesses and when your own education about buying businesses therefore gets really really serious sock us up there exactly yes so so during that period of time I'd already again started doing join Ventures and other acquisition styled things advising on deals uh predominantly for the the company um at the same time I started looking and dabbling a little bit with what it would look like to acquire something myself but this opportunity became a mutual connection ended up introducing me to the founder of this education company and over the first two to three months we ended up having great conversations and connection and uh he came back to Baltimore uh for a visit and I offered him a 100% earnout deal to acquire his education company and uh he accepted uh little did I know at the time he was actually coming to offer me to give me half the company if I would leave the big p company to come run it uh that that came came in in retrospect but at the time yeah he agreed to that fast forward six seven months uh we ended up having to make a closing payment because the uh the legal team at the big Publishing Company needed to make changes and had to give cash as a result but yeah I successfully bought that into the education company and into the division I had started and was immediately thrown into not just an advisory position for students of the business but very much headlong into an accelerated path of oh we're not just building an education company we're going to build a holding company we're going to build a business that not only teaches people to acquire businesses both in the UK and the us but also teaches people or allows us partnership opportunities through that education uh and and gives us the opportunity to see opportunities evaluate opportunities and then ideally get involved from an equity perspective um and so to be clear you're educating students the students are then going to go out buying businesses go out into the world buying businesses and you may participate in the equity in some of those deals yeah we had like any education company you'll see this is no different than uh some of the bigger names you'll see in today's world the Cody Sanchez's the RO Roland frasers uh even with some people in the ETA Community are doing as some boot camp and aquira and and others like that um where they have an Ascension model people are going to come in on some kind of coaching or course and then Ascend up and that Ascension is getting you closer to the expertise in an exchange for that higher value service knowledge and you know say Deal review and things like that you're getting a really up close opportunity to potentially invest and we actually created a pro program we called it the partner program where people would pay us a subscription annually for uh to bring us deals that we would review and take equity in if we helped facilitate it close uh and at the time at the time we were trying to do it with basically no investor dollars we were trying to just negotiate these hyper aggressive predominantly seller note funded minimal Equity injection kind of deals and the SBA actually wasn't a huge a huge component of most of them uh because a lot of the education stemmed around uh my my partner at the time was uh was someone who came from the UK someone who who didn't have you know personal guarantees don't exist over there in quite the same way when acquiring companies as they do in the states and so there's this mindset of bringing that over to the states to try to avoid personal guarantees and things like that as you well know from couple hundred interviews the reality is personal guarantees are a must here and it led to a a huge amount of volume of Deal review and a huge amount of trying to support Acquisitions even ones we weren't necessarily going to acquire but trying to navigate this tiny thread through a needle scenario of closing deals uh in a classic lbo style with some kind of non-traditional financing and you get out a lot of reps in talking to Sellers and and Brokers and trying to navigate that process and It ultimately at again you don't realize until later at the time the ability to communicate with intermediaries and everyone in the entire acquisition process was honed I'm trying to sell them something impossible uh you know this isn't selling them something they need it's trying to sell them something that's really difficult to sell most people who have a good business aren't willing to accept a 90% note for their business uh they're going to get good value for it they they want cash at closed they want material Assets in exchange for what they've built and so to to go through reps of getting people to try to agree to something like that uh man you you learn a persuasion of a different kind um and we saw people close deals um you know ultimately in my own portfolio we've closed a deal that was fully seller financed with a small Equity injection from us so I've seen it and I've seen it happen and it can happen but in a relevance to the vast majority of people who are going to acquire a meaningful small business so we're not talking about something making 50 to 200,000 a year of earnings talking about something a bit more meaningful you're going to you're going to have a personal guarantee and the likelihood of seller is going to hold a the vast majority of of the deal transaction is just unlikely and I know I've seen hundreds and hundreds of reps at that doesn't mean it's not possible but the likelihood is small and the more you put in either investor dollars your dollars Etc the more skin in the game the more likely a successful outcome and it's it's it's not preaching to the choir everyone most people will already recognize that but I've seen an entire world where people don't necessarily have assets and they don't necessarily have the understanding of what we collectively know is say self-funded search where you can get an investor to back Phil you know this was people who just thought they had to scrap it together this is the Nona business buying space where people are just trying to figure it out uh it's a it's such a fascinating dichotomy versus the higher education the search fund model uh the self-funded let me get a question in here the because I do want to hear about your thoughts on the kind of that world and how it operates in parallel to kind of our ETA world but now that you migrated from started and migrated from that world to kind of quote unquote ETA um do you reflect back on the kind of seller financing 100% seller financing or majority seller financing that was taught in that world differently um in that you know maybe it's only for people who don't have better options or it's only for for quite small businesses like you just finished saying like you're or it's for a European audience where there isn't the SBA I mean any any anything um that you now see with different through a different lens because you've been exposed to this ETA world yeah I would say one of the biggest things is it's a forced recognition of risk even without a personal guarantee the math has to math uh what most people don't realize or don't recognize or think about is seller financing is typically not as advantageous as the SBA the SBA even at the higher interest rates today uh back when I was living this world you'd get a five and a half or six% loan versus you know the the 11% right and so you were typically in a in an upside down position seller notes at that time would still be 5 six s% but instead of a 10-year term they would be 5year sellers might want threeyear and the reality is that all the risk factors that you see in the ETA World in many ways are magnified because it's a less advantageous style of acquisition debt and how you evaluate cash flow debt cover ratios and things like that were so critical so even though you might not have that classic bank-backed personal guarantee the emphasis and the importance on the stabilization of cash flows postacquisition in many ways was even more severe given the aggressive nature of the expectations around seller financing and it forces it forced to evaluate you to evaluate dependencies in a business in just a different way I think having looked at you know hundreds and hundreds of more traditional ETA styled Acquisitions and things like that people have the tendency to gloss over some of those elements because there's Security in a 10-year Term Loan that creates a consistent expectation now that rates are as high as they are realistically rates aren't going to go up another 5% in a 24mon period of time and so there is a there's a potentially a false sense of security I sense sometimes when working with Searchers that to it's a nice big loan and it's got friendly friendly payment terms and realistic interest rates still in comparison to the overall risk of uh of what what's happening um and there's this potential lack ofical nature that can still come to the most critical elements of a business acquisition which is the core fundamentals of cash flow working capital debt cover ratios and and the people risk to a business um and those were almost emphasized a bit more when you had a more restrictive means of acquiring yeah yeah that's really interesting um I hadn't I hadn't realized that and okay returning now to I think where where you were going and something I really wanted to hear you Riff on is again this this contrast between what we're you and I are calling the ETA world so maybe I should just Define that it's just kind of the you know the acquiring minds guest pool of people mostly American doing this with SBA but not necessarily American and typically buying larger businesses although of course I have had plenty of guests who bought quite quite small businesses and have done phenomenally well anyway um versus and many of them coming from MBA programs although as people have heard me say many times I try to not have it just be the MBA crowd um so I really really don't try to get um have it be too much of that but of course the NBA um that c is very represented maybe over represented on the Pod and in ETA in general so that's what we're we're calling the ETA World versus the kind of coarse World well you define it what is the other world and how would you define it yeah I call it just the the buy a business crowd right okay the buy a business crowd the just buy a business crowd ETA is a funny thing right um they they took buying a company and needed a better name for it to Market at higher ed I don't know maybe that's that's that's uh a little cheeky but the reality is is that all they did is defined buying a company and just create another name you're you're becoming an entrepreneur through acquisition and and there's no no harm in that right I want to be clear there's no harm in that um branding sells and is makes things easier to Define uh when it's when it's clear um and ETA and in of itself represents rightly so a much more sophisticated audience right we'll use the acquiring minds audience just look at the guests you have look the people who listen the people who engage the people who follow while yes there's a lot of NBAs and those NBAs are coming off the back of maybe you speaking at some of these higher educations plus you know plus the the podcast itself right the doors are opening to a broader midlevel career fairly well established typically higher earner individual pretty consistently comfortably making into the six figures or Beyond uh have a higher level of Education typically that is the ETA crowd and you define that pretty well this and and it's as you rightly said it's not all NBAs there's plenty who don't have it they again there the broader is that midcareer typically a little bit more white collar professional yep the buy business crowd is basically the bottoms up approach right these are people who are are seeing advertising they're seeing direct marketing for courses teaching people you can buy business with relatively little of your own money or none as some of them pitch uh the boring business concept you're going to go buy car washes or ATM routs or all the way up to what we more typically would understand a typical ETA acquisition Target but it's direct training there's no MBA they're paying three five eight $15,000 you know for a course or coaching or training and education and and during that they're getting exposed to a whole bunch of knowledge based including how to do SBA Loans including how to structure deals and evaluate companies and these are crash courses and what a transaction looks like uh and I remember we did something that I I loved from a coaching it was my favorite thing to do and it was to review deals live every week we'd review two live on a on a coaching call and it not only stress test and and exercises that muscle when you're doing it in front of an audience but it's the most transferable skill any Searcher can have and that it's to how to evaluate a company off relatively little information and understand whether you want to move forward or walk away what the major risk or not risk are within the limited scope most people who are looking at broker deal are getting a Sim right and so your ability to educate people aggressively and consistently with what it looks like to evaluate and they were live I wouldn't have reviewed a deal before I'm seeing everything for the first time on the call and so would my my partner and and and at the at the time what it creates is this live fire exercise in a in a given year someone can watch a hundred deal reviews and see the Reps of how someone more experienced would have evaluate a company break down some risk break down some concerns and and I think that is something that the buy a business crowd gets access to in a significantly higher level than the ETA crowd right you might do a case study or two in your higher education course but the vast majority of your knowledge is coming from doing it going out there and talking to Brokers and looking at deals and you don't know what you don't know in that space and I think there's an interesting Gap on the ETA side that the education providers actually facilitate very typically um and I think um I think what's interesting is if we're looking at the vast volume of individuals who will buy a company ETA will be outnumbered uh there's only 30 schools teaching it let's say right now and if they're all turning out 15 kids a year it's 450 people that will go in the search and certainly we both know the ETA side is much bigger than that but there's a constraint due to exposure um and it's the reach into grabbing people from actual lower Middle Market private Equity firms analysts and other people who are working or Associates it's it's people from tech companies it's people from you know who are typically going to search out and find and come across a podcast like yours for example uh that market is growing but the amount of dollars that are being invested in the online education de side rapidly dwarf on a one:1 ratio anything that's happening in ETA these are eight figure Revenue businesses these are businesses that have significant profit margins to reinvest into their own Acquisitions um their own portfolios and then more importantly to new customers they are spending millions of dollars a year on acquiring students and acquiring customers and bringing them into this buy a business fold and there's tons of these people often times they are looking at somewhat smaller companies because they feel bite sizable they feel more manageable given the background people are typically coming from but you know as an quick example we had a student who will go public in Australia for a roll up he did and he came through this education program what kind of business did he buy it was in the medical space he was rolling up uh medical practices um predominantly in Australia and in the span of three years between raising some investor capital and otherwise already was a nine figure business um amazing wow yeah um uh was a unique guy super shy right you know hated to be public for anything for you know obvious reasons was focused on what he was doing but like there are people like that have come through I mean we've we had exposure s in the UK right who in 18 months acquired like 23 hair salons um and it all started because he bought one from his for his daughter to run and uh ended up building a you know significantly sized set of businesses off the back of it so I I I say all that simply to say that there can be tremendous success no matter what entry point you have into the world of Acquisitions whether it's coming from the more traditional search in ETA and the in the lingo we typically speak on that side versus just the bootstrap people trying to figure it out the guy who's who's been managing operations at a landscaping company for 15 years and is just ready to figure out how he can own it um or or something like that that was great Adam thank you for that Adam let's now hear about your own Acquisitions so you have done I think six five in the portfolio today you may correct me me the headline number and then let's go through let's let's hear the quick version of these Acquisitions and and really what you've what you've built now personally after having been an educator and exposed to it so much um going back to your previous job yeah absolutely so um the holding company itself and I've done transactions outside of the hold company small minor they're less important to the to what's really being built um and there's just a couple there uh so the hold company prox Capital group is is our business uh and pro yeah Pro PX and um and procs is currently have six positions five acquired one actually started uh but we we we had acquired two other businesses and have since uh exited those positions the first two businesses we bought actually inside the holding company were in the UK uh and the structure and style of those deals is wildly different to how you acquire a company here in the US um and I actually have to say it's it's one of the coolest things to I would to realize how different deals get done in different countries now you've had guests who have done things outside the US as well but um you know on a very simple transaction the tax laws the debt structures influence how business owners think when they're preparing for an exit yeah um for example the vast majority of a closing payment in the UK will come from the business's own cash versus is what we traditionally think is coming from A bank's money um they have tax rules that incentivize them to leave cash you'll see a business with 3 million of year of Revenue that has two to three million of cash on the books um just sitting there um and so the style of deals is very different it is far more likely to do a no money in deal in the UK as a result of this uh the very first deal we did required zero dollars from us um the entire closing payment was fun out of the business and then the seller held a note for the remainder of the purchase price over 5 years those deals are far more common and far more likely in the UK uh so as an IT security consulting company we also bought uh we call a pub in a box company over there so if you walk into a restaurant uh things that might hold napkins and silverware on a table the little Chach Keys you see an aboard that sits outside advertising their specials or things like that it was a distributor for all of these things worked with basically every major Pub chain and certainly some hotel chains and things like that over over there um uh and yeah so so bought those two and then we've also acquired in the US uh so the five companies we have in the portfolio currently are all in the US they've all been acquired uh three of them were acquired VI SBA loan uh two of them were completely independent of any Bank financing uh um and sove seen it at all levels in terms of structuring and how to close uh We've acquired broker deals we've acquired off-market deals Adam when you say we is it is there do you have Partners or is it you or what does that look what does the ownership look like yeah so I'm I'm effectively nearly 100% of the holding company um I've got a couple minority Partners in that including my my number two uh in the business um but we also are big Partners when it comes to acquiring a business uh whether it's an operating partner who's going to be in it every day or someone else to co-invest alongside that either has some strategic or operational value in some capacity I'm a big believer in Partnerships 1 plus one equals three five or seven caveat if done correctly and done well um and I've certainly had experiences where it hasn't gone well um and and know what that looks like one of our UK businesses for example we had aner in partner who emptied the bank accounts um and ultimately after fighting for a year ended up us having to shut down the business I mean that was a expensive failure to say the least between fighting to keep it open fighting to recover from such a traumatizing event the staff knew what happened people knew and in a small business that's a a wrecking ball culturally and operationally and financially at every level so you have seen what bad Partnerships look like and uh understand how to you know better work through those as a result of that but I'm a big partnership guy and even with the negative experiences and having having split from Partners previously having had that other experience I would still always recommend Partners where it makes sense and to consider it simply because we will always be our own limiter when it comes to the growth of a company we will only ever grow to what we're capable of individ ually there's a reason small businesses are small when you're buying them there's a reason that company isn't a100 million there a reason it's 2 million or three million or five million and we as buyers going into that that is one of the first things we should be evaluating with any companies why is it small and then recognizing that we will have our own limitations that create a ceiling and so the benefit of partnering in my mind is to help create an even higher ceiling for what that individual business or opportunity looks like so different businesses of ours have different structures and different ownership percentages and things like that um we are either majority or co- controlling partner on the existing portfolio even if our ownership might not be a majority on on one of them um um that's our Med Staffing business we partnered with the original founder on that um but take take us through what the five businesses are Adam yeah perfect um so I I always say we have uh a couple uh Logistics adjacent businesses uh okay one is a heavy truck transmission uh and differential rebuild facility based on the East Coast uh the prior owner had been in the industry for 40 years started his own business basically 20 25 years into his career and we bought it um thereafter that was an SBA deal we have an operating partner who's in the business every day uh then we have a truck driver recruiting data platform job board business um similar story that the business was started in the early 90s evolves through uh the digital age huge amount of organic flow and traffic it serves a very specific niche of the trucking industry um we have a medical staff is that kind of a Leen business somewhat of a Le gen right uh you're driving yeah you're driving applicants to various carriers and fleets um and again it's it's somewhat of a hub for the industry the subset of the industry it's in it's a little bit of the watering hole from a Content perspective uh it it it really took advantage of the the the 2000s when forums uh late 90s and 2000s when forums were the place where people congregated and built a incredible content load and and authoritative position on the internet uh because of how much traffic so it's a big forum for truck drivers who are interested in this Niche where they congregate and talk yep in addition you know it's there's ad platform behind it driving traffic through paid paid acquisition and and funing those through technology and and creating you're a Matchmaker to available opportunities for carriers to uh people who are actually applying and and trying to create opportunities there um so then we you know jump into the medical staffing business uh so that's that's more of a joint venture than a full acquisition in today's world we'll call it a partial acquisition uh we acquired half of that company with a partner from the original founder um she had 10x the business in covid uh ran her entire business out of a pen and paper notebook uh and it was you know doing doing more than a million a month of Revenue uh there's no no other no other staff but her uh in terms of managing these acute care contracts with hospitals and so fortunately for us we came in at the right time uh my my number two at procs he's our CFO and coo in his prior life he had 15 years of medical staffing agency experience help build one from a few million of Revenue to to into the eight figures and help facilitate an exit so we were the right people at the right time and not only that she received a physical letter in the mail she was a proprietary approach got a letter custom to her and uh we ultimately were able to negotiate and close that deal another so she was a one-woman shop she was a one-woman shop running an 8 figure Revenue business um wow you know the this I mean that's if we're discounting the W2 contract labor right so where it's contracted with hospitals I mean the actual staff was you know up up closer to 7080 uh depending on timing so but from an administrative perspective it was her and only her um and and so it was a unique scenario for an acquisition where we negotiated the terms and within a week of the terms being negotiated so there's no legals done there's no nothing done we were already working in the business to stabilize it so um and we're getting paid to do so um so for the entire closing period we were paid weekly to support and help manage and facilitate stabilization in the business based on the growth that it had and by the time we closed yeah we were 10 10 12 weeks into already working in the business no better way to due diligence than actually work in the business um so she she fortunately left the the pen and paper behind there's the CRM there's all kinds of infrastructure around the operations of the business that our expertise was able to provide and stabilize things um okay so that's that business um uh certainly the most attractive multiple we've ever acquired off of um it was about about a three on a trailing 12 months of earnings um we bought in at and um you know with any any kind of upside for her contingent on a future sale so she was three yeah so how does that how does that work what was the can you share what the earnings were and then what I mean can you put some numbers around it yeah so earnings were earnings were above seven figures uh on the trailing 12 month uh um uh we we bought in most of the cash that we put in um we you know we put a quarter million in uh 200k of that cash had to stay in the business as working capital so not really now that we own half half of that's still ours um and you just based on the actual value we paid for the for the ownership there and and retention very small very small multiple um now wow she she does have an opportunity if you know at some point we sell the business for her to to pick up preferential on on a future exit but in terms of cashing and walking in uh super attractive to us um and it is it is about as extreme of an example of right time right place right person right everything we had the right experience we had the right just everything she wouldn't have ever you know thought to talk to a broker she wouldn't have ever thought to ever enter the acquisition position or S Sales Market at all it's because she got a letter um and it was customized to her and when we got on calls we were able to convey some trust and and experience and knowledge and support I mean I was I was living in Mexico at the time the business is based out of Utah um and and this writing a letter um Adam is I mean occasionally you'll hear a guest on ing Minds talk about having having written a letter but I think you're talking about writing a letter kind of from kind of the tactic of the buy business crowd or looking for real estate deals crowd where you're kind of yeah where you're kind of sending it's more of a tactic than correct well I don't know why don't you why don't you say more about that yeah so um so it is more of a tactic right the idea is when you're looking proprietary Searchers can look all different levels I think yeah certainly certainly your listeners are going to be familiar with go scrape a list or get a list and cold Outreach via email or or LinkedIn or things like that the reality is there's so many ways to outreach on anything um uh there's so many more channels or mediums than LinkedIn or email and different Industries you're going to be far more likely to get a response for different channels it's just like any advertising um some businesses their entire Business Development strategy is door knocking right you look at say a pest control business they might send guys in the field and they're just hammering the doors 10 12 hours a day and that's how they're building that business anything that can apply to an actual operating companies Business Development strategy can apply to a proprietary search so every manner of filtering every manner of targeting every manner of communication well can all be leveraged in a proprietary search but typically speaking people are only thinking from a scale perspective in ETA I got to hit as many businesses as possible that meet my criteria and I would argue that it's sometimes better to potentially balance and instead of being a giant list and getting a fractional teeny fractional response rate what if you actually show yourself differently and have a little bit more customization a little bit personalization to who you're talking to again remember the small businesses are small for a reason these are individuals who are running them and they have their own feelings thoughts emotions even if they're making a million a year right they still have that and and it's such an easy way to potentially differentiate yourself from the noise because basically every company that's making a million and a half a year is getting some kind of doors kicked in or knocked right now and so how do you stand out in a way where they're not actively looking to sell but you're a different voice you're a different message um and I've seen work I I've seen people get response rate on letter writing that are 20 30 40% um you'll never see that for anyone else doing proprietary search but they're able to do it uh simply because they're putting a little bit more specificity into what their their Outreach looks like if people want to hear more about a letter writing strategy that went well they should check out tato corran's interview T and Milwaukee who sent out uh letters to business owners around around Wisconsin and she would say she put her photo there uh in the letter and so she would she got a huge uh number of business owners to pick up the phone and caller now she would say it was because they were more curious about who this you know young woman sending them a letter to buy her business was than than they were actually good leads and she ultimately bought a business not based on any of those but it is a good um and she came from the real estate world so she also letter writing is is much more commonly seen uh among kind of real estate people looking for deals than it is in our world it is and just yeah but just to add but just to add to that right it's um people ask me all the time should I should I only look at on Market or should I do off Market what should I do it's the the analogy I always make is why run a race with one leg you're not guaranteed success in any any path give yourself an opportunity on both sides and know the industry know the kind of sellers you're looking at and figure out what channel is going to be best to have a a reasonably successful response rate yes it doesn't mean you'll actually end up closing something from proprietary but it also doesn't mean you're going to guaranteed close something on Market buyer interest has never been HED these days and so why not give yourself every opportunity I mean we both know people who have spent years searching before they they found something or gave up and fell out and went back to the old grind of of a W2 and and if you're going into that as a full-time Searcher especially there's literally not enough deals that you should be looking at if you're working 40 hours a week on your search that are on Market if you've got good specificity around geography industry and all that there's just literally not coming enough coming to the market in a day or a week yeah so what are you filling your time with will it better be some some other activities that will help generate success for what you're ultimately pursuing otherwise the likelihood of you having a successful result will be slim uh or certainly marginalized in some capacity so I'm always an advocate to say like it doesn't guarantee any additional success but it just increases your likelihood of coming across something that that that can enhance what you're ultimately trying to do Adam tell us about the the other two businesses in the portfolio we haven't heard about yeah so uh so the two other ones we've acquired um one is a digital marketing agency it's actually here in Denver where I live uh now uh so small agency SBA loan predominantly organic and paid social um and we're actively trying to expand that PO through acquisition and and just organic growth uh and then the last business in the portfolio that we've acquired is a 89-year-old flag pole and banner company uh it's whenever I talk about portfolio it's always a really fun one and it was started in 1935 we bought it from the third generation um at one point back in the 80s 90s it was a significantly larger business with multiple locations and they did a whole bunch of services from awnings to wrapping cars to uh making banners and installing flag poles and and all that they have such a cool colored history for anyone um who who since we been around regionally in the Mid-Atlantic where it's based um the flag pull on top of the White House that company put it on there um oh how great um its clientele is universities and professional sports teams the Ravens the Orioles and uh predominant areas not too far from from where you're based will like National Harbor if you go there and look at the banners we maintain and do th those polls and do those banners often um oh that's great and so and when you say banners what do you mean exactly Adam yeah great great question so predominantly it's you're driving down a road and you see Road and you see light poles in a city and you see a little Banner sticking off the side right yeah we we help design we print those and then we do the installation so this is a company that's predominant B2B it's got bucket trucks and install CWS and and and the the vast majority of the work is designing and installing flag pole setups Banner job so the convention center in Baltimore for example has a giant basketball tournament Every Spring we do all the banners for that um every year um uh in DC there's uh I'm trying to remember which neighborhood they have giant snowflakes I mean these are 4 foot tall lit snowflakes that they hang off light poles in the winter we install those every year and replace the bulbs and do all that Stu um so it's a really cool business uh still do awning work so we just redid All of the Ravens awnings before this past season um when they won the AFC North uh last year uh we hung in their practice facility the AFC North uh Championship uh Banner um that's really cool it just creates really cool things talson University we did this vinyl graphic both outside on brick and then a different one inside we have a really cool time lapse of the installation and it's this kind of geometric looking tiger which is their mascot and so we we can do all of those things it's just it's just a really it's a cool business I tell people might not be the one that that ever makes me enough or makes me a ton of money but um whenever anyone ask how long I'm going to own a company I got 11 years till we hit the Centennial and darn if I'm I'm getting out of that one before then so well it's and it's one of those where you can point to a a a dollar bill the White House must be on one of our one of our bills um You probably probably don't make out the the flag pole but you can pretend like you're you're business is on every every $5 bill or whatever it's just it's just so cool right um we've also put the one in the Rose Garden so right outside the White House as well um I mean those are it's it's not just an installation job at that point right 's a ceremonial element that goes to it so when we were doing the Rose Garden um uh there is there is US military there to actually raise the flag once the installation is done and it's a it's a bit of a ceremony and um that's that's just really cool it's cool to see it's it's it's cool for the team to have experienced some of those things um and just just makes for a really powerful uh connectivity to so many events uh last one and then we'll stop talking flag pole business but back in the 90s Cal Ripken broke luk Garrick's consecutive game strength right I remember it well yeah the Iron Man right and um um in the Outfield of Camden Yards uh there's a just past the Outfield there's the warehouse it's it's very well known on Utah Street and on the side of the warehouse was giant numbers 2131 and that was the number of games uh to be broken and when Cal broke it and you dro the two to go 2132 the PRI PRI one of the prior owners was hanging out of the window on the warehouse dropping the two um you know he was featured on the news back in the90s and like it's just you know those are really cool moments in history and lore that only a small business you feel like the only one that's been around for a long time can have that kind of Gravitas and can have that kind of history and what was attractive to us was um they did zero marketing when we bought them um it was 100% inbound Revenue 100% inbound sales they still get they sold a division of the company in 1985 and they still get calls in 2024 to provide that service right I mean that's not I don't even know how many ages have we gone through life cycles for 39 years basically to to have some kind of established value of that that scale and and anyways it's it's a cool deal um that one was also a non-bank transaction the seller hold held the vast majority of the the deal in paper over 80% um and uh and we were able to close it so that's a great it's a really neat business Adam and so I have to ask since you it was the the classic case of outbound all just taking orders under your ownership is it was it as simple as it seemed from the outside to just turn on digital marketing or whatever your marketing tactics were and and Goose sales or not so easy um not so easy for a couple reasons one uh going into a business like that you have to spend so much time learning the business um so we have an operating partner in that business he relocated to Baltimore he runs it he's there every day it's it's a lot to learn there's some technical aspects to installing these things and selling selling some of this work and so for us the main focus for year one was stabilizing as you do Post acquisition get some growth if we can but predominantly because of the nature of the business really stabilizing um and we're still able to grow I think we we put an extra 10% on Revenue uh in the first year even in that but but here in year two now it's that one's Prime to really start moving things forward um it's weird to say for what sounds like a simple business there are some complexities to it there are right when you have people going 50 feet into the air to install things there's liability and there's things you want to know whether you're capable of doing or not and for us we took an approach very specifically to go much much slower into any kind of growth because you you don't want to get over your ski and jeopardize you know the health or well-being of any of the staff or anything like that we had a job come to us that would have been you know well over $100,000 dollar just for a single poll do some complexities and we we turned it down simply because it would have put us just outside of what we knew as our capacity would have been yeah um because the liability isn't isn't worth it so that was year one still had some growth but predominantly was was learning on a very intentional level so this was your most recent acquisition so Jan 2023 so you're in it for about 16 or so months Y and but is your inkling now that you once your operating partner gets his arms around the business that your instincts for yeah growing sales for marketing are that that thesis holds yeah absolutely there's there's things they don't do right for example they're slow in the winter as you would expect some some businesses like this would be um they don't do anything for example with or they do very little with commercial holiday lighting and things like that we're not talking about hanging on houses we're talking about uh shopping centers and malls and and things like that they don't do much of that so we'll look to to to push into that area um geographically we'll work pretty much anywhere within a three 3 to four hour drive of Baltimore um and so there's just so much territory there that hasn't been been leveraged for example we basically do nothing in Philadelphia and the business is based just north of Baltimore so it's not even a two-hour Drive our operating Partners spent a lot of time in Philly so we're looking forward to starting to work more on those Outreach items um and so now that he's learned things we're actively hiring to backfill some of what he stepped into dayto day so that he can he can actually spend more on that business Outreach his background is B2B sales uh and it it will be something we'll be able to leverage for sure so great now Adam give us uh if you can share the numbers of the total portfolio of your hold CO as it exists today yeah so um yeah so as it stands today we're uh we're we're just under 20 mil of aggregate Revenue um again we we don't own 100% of the five companies I've just mentioned we do also have a six business that we started um is the our fractional CFO and accounting business um but collectively that's where we're at uh we're actively acquiring right now we uh we're we're under Loi for two different companies one is a minority investor where we're we're now back in Searchers and the other is a is an add-on to our marketing agency um and those will continue to expand both the the the revenue and the the profits of the business and I I wanna so we're starting to wrap up here Adam but I want to make sure I understand with the hold Co are you like how did these businesses come to be the components of the hold Co the and and just looking forward as you continue to build this thing is there a strategy there do the deals come to you because you you're kind of so networked and you have and yeah essentially because you're so networked and so you just look at deals kind you have the great luxury of kind of just Perpetual deal flow and you can just when you see a deal that you like you strike or what I mean what is how does one build this hold Co and by the way your first acquisition was April 2021 so basically three years um H how do you choose the deals that you buy it's super interesting so so stepping back just real quick is you know so we started procs in September of 2019 we immediately went under uh an Loi with a business in Texas an education company uh Visual and audio education company working with big Brands like American Airlines and Burger King and and Tim Hortons and things like that um and that was a story of itself uh we got SBA approval did all that and we walked away the day before closing um so we've been in this all the way back to that time frame and subsequent to that we bought our first company in the UK at the end of January of 2020 uh Clos on the the next one in November of 2020 in the UK and then our first US acquisition was as you mentioned April of 21 so these five companies we have in the US today we actually bought all five of those in a 21 month period of time um which is is that's you're you're moving through a lot of stuff in that period of time yeah I mean um to the point where after we closed on the flag pole company in January of last year I I said to to Ryan my number two I was like listen we're just taking 23 off yeah we got a lot we you know we just finished three in eight months basically um we just we need to breathe we need to stabilize we need to even capitalize to some some perspective we just need uh to normalize a little bit so we did that last year but to come back to your question about deal flow originally it started off the back of the education company right know known personality coaching people the partner program things like that brought operators brought people interested brought opportunity I mean um I want to say for example uh in one year we received inbound over a thousand opportunities right from people actively out there looking so when we talk about reps at evaluating companies and looking at companies at this point you know I'm I'm thousands and thousands and I'm not talking about reps of like you saw the listing on Biz Buy sell I'm talking about you vandalized at some level that business um if it's from you know from some of a more comprehensive Sim or info pack versus actual finan to negotiating and all those things right so the Reps game was deep in that and it brought a lot of deals both from connections and then by extension the network right PE Brokers have a smell test right they know someone who's legitimate or not um and as an aside I think there's things Searchers should be doing to ensure they come across as as legitimate but um there is there is a there is a smell test they they come under I couldn't tell you the last time I've had to provide my financial statement to a broker um they just don't even ask they they understand there's a competency and an awareness of and a seriousness to the inqu inquiries and things like that and what happens is good relationships on that level then bring deals back so for example the flag pole business was brought by the a broker I'd worked on for the transmission company and he he called me and was like listen this is a weird one um this is an unusual one would you be interested and ultimately we ended up buying that company of uh a business that was never publicly listed and one that wouldn't have done well on the open market and it required the right kind of ownership and the right kind of people to be able to make it happen um and so so yeah it's it's being in the game a while has brought opportunities uh I just spoke conference this past weekend uh overseas and I'm on my way to the airport to to go on this trip and earlier or the day before I got an email from someone introducing me to a broker I already knew to talk about a listing they didn't represent um it's not actually listed it's a company that that the broker's got a great relationship with the owners is in a listing of his but he's just trying to do right by them is they're one you know one of them's upper 80s right and so he's like do you know anyone who'd be interested in this right so these kind of opportunities come from just being networked and building a reputation over time um but then I'm also like anyone else I mean when we know we're actively looking to add on to any of our core portfolio we're going to we're going to we're going to do our own outbound and we're going to also look at on Market um and then second secondarily just through the network I have with Searchers here in Denver in the east coast um and it you know we'll we'll start looking for opportunities to invest in in things other people are doing and and that kind of leads to your second question that you asked which was what is the future here for the holding company what are we looking to build what are we looking to accomplish um we are looking to continue to grow our core portfolio which is what we have right now both the five acquired compan and then our fractional accounting and CFO business um by the way plug the name of that that business yeah so that's yeah that's verocity CFO uh we started that to serve our own portfolio um we do our own Financial due diligence we do qvs Financial projections for Bank deals and then most importantly is the fractional accounting support you need as an acquirer free and postacquisition and just a the quick 30 seconds on that is when you're buying a company as the person who's going to be signing a PG and stepping in to run it there is a priority list when you buy that company of things you need to focus on it's the operations and it's the people you need to make sure that business keeps making money and that you don't have unneeded turnover uh of your staff post acquisition anything that's not those two priorities you probably shouldn't be spending much time on Adam question I want to close with is so your operating Partners this is a we've heard you say that now a number of times it sounds like you have an operating partner in basically every business um so that seems like a way that kind of a lone hold Co guy can do this have five Acquisitions with more to come um and you know it's a maybe higher level version of buy a business put on an operator which as we all know is is is a dangerous promise but also doable and um there is a path and model there anyway so share with us how how you do this anything that's relevant how you know the division of labor the equity or ownership share whatever whatever people who like the sound of your model should know about what it looks like under the hood yeah so so two things one is historically the existing portfolio looks a little bit different um than the minority stake moving forward so historically um these are people who we are actively supporting through the acquisition process up toe including for example the flag pole company that deal comes came to me and I reached out to our operating partner and said hey I think this is a good fit he ultimately relocated and moved um so we're we're more progressively involved in the actual sourcing and things like that um of the the five acquired businesses um the the breakdowns as follows uh one does not have an operating partner it's collectively managed one is the med Staffing where it's a joint venture so there's multiple hands the original founder is still active day-to-day in that business uh two others are have actual operating Partners who own Equity who are in the business every day and and then the fifth is the marketing agency my part of my executive crew at the holdco uh includes her name's Natalie she's our marketing director for the holdco I hired her in advance of ever buying the agency I hired her over a year in advance knowing that I would ultimately buy a marketing agency for her to run and we did um she had the right experience knowledge someone I worked for back of the big or worked with at back of the big Publishing Company um she lives in the UK and manages a business in Denver um and so uh it's not often your boss will buy you a company uh to go run um but it's very much very much was the intention not only can she support the other portfolio companies from a marketing strategy um she's got the capabilities and experience to help manage and grow the the agency so so that's how we manage all of them and then Ryan who's the the CFO of procs he oversees veracity in that business on a day-to-day basis so everything's got a a leader of some kind that isn't me um and that's so and it also sounds like it's Case by case that there's not a strict Playbook here correct and that's historically so on a moving forward basis we're relatively happy with where the core is um on a moving forward basis most of the growth will happen either tangental or touching the existing portfolio or uh our big emphasis is on supporting Searchers and moving into that Minority Stak space and how that model works just to to to to answer the question for people's expectations is is I know there's preferential payouts and step ups and all that other stuff we don't do any of that uh I don't want to create any incentive for SE postacquisition uh for short-term thinking we we think long-term so it's common ownership only um however because we're far more involved earlier in the process uh we're looking at a higher level of equity as a result typically we're looking to 25% um as just as just the the walk in the door um that'll drop to 20 or rarely it will go up but the idea is that we're going in and everyone understands the expectation um you're not incentivized to make decisions based on some preferential or some need to change things for me let's let's run the company as effectively as possible and again you you've got that handhold all the way through the only contingencies we have otherwise uh and we don't collect board fees or anything like that is you have to use our fractional Foo business for all the reasons I've talked about right I want you focus on the people in the operations we'll handle the back office and that's just charged at whatever market rate is for for for that size of business transaction volumes and things like that we don't make enough money on that in comparison to what we hope to make on the equity side so for us it's less about that being a profit center it's more about the stabilization it has for the business pre- and postacquisition and making sure it's increasing the likelihood of success for whomever is involved um and so that that to us is is the main focus right again um we're going to be common ownership typically 75 25 or 802s where we end up um will be the bridge Capital we do expect a Searcher to bring cash to the table uh I think if you don't have skin in the game uh there's something viseral visceral will about writing a check um and I think uh you know it's not unre reasonable it'll be either you know starting at about 50k all the way up to 100 150 depending on the size of the deal um and then whatever is required to get that deal closed above that we we've got the capability of of helping Bridge either directly ourselves or through our own network of investors and yeah so that's to answer the question that's it Adam how did you decide that you wanted to pursue this searching in investing in search deals as opposed to just all of your energy and capital going into your own direct holdco Holdings yeah I mean great question number one is scalability of my own personal guarantee um um if we're continuing to acquire directly uh there will be just limits to it you know even fortunately that the SBA has clarified that you can get to five million for each mace code is super attractive that means technically I got six Industries I can go get 30 million um but just because you can doesn't mean it'll be underwritten right and that's a really important thing to note is uh there's still underr writing around it and and I've guaranteed millions of dollars across multiple SBA Loans or actively you know put putting another guarantee on the books hopefully by the end of July and and other things like that so there's just a scalability element to that uh from a from a hold code perspective if if I've got to be a guarantor on things um and so what we're looking at is how do we takes all of our lessons all of our knowledge all of our experience in this space managing transitions negotiating deals uh understanding growth capacity and limitations and everything that it feels like we've learned over kicking the door the wrong way uh in the middle of the dark for for the last number of years is how can we take that and pour that value into someone else increase their likelihood of success while also still achieving a high level of return for us right um so it allows us to still deploy capital and pick up benefit from that business ownership increase likelihood and create a more scalable path in addition to what we're doing still with the core portfolio so still look to acquire and guarantee but that'll be predominantly reserved for what we're the core portfolio is and then but but that's the big reason we have more cash to deploy and available resources to deploy then I can just pour into um scaling Acquisitions in the existing operating companies um anyone who knows me around this acquisition space knows one of my favorite Expressions is just because you can buy something doesn't mean you should and we view that for our portfolio and for Searchers we work with just because we have a portfolio and can acquire bolt-ons to it doesn't mean we should each company has to be respected for what they're capable of and there's timing when Acquisitions make sense and there's timing when it doesn't so this allows us to stay active in the game uh from an acquisition standpoint my skill set like if I could if I could will just be paid a really embarrassingly high salary to just negotiate and structure deals and help them close deals um I would I would that would be so much fun for me and so it allows me to basically do that uh and instead of someone paying me a salary we we get to take own ship and get the upside so the quintessential deal deal guy yeah it's um it's not that I'm bad at the strategy postacquisition but the thing I really enjoy and I think the thing that uh I can do at a level that is is super high for this space is um is that so um you know have a big ETA group here in Denver and I'm probably reviewing deals 10 10 15 deals a month for people just trying to help them figure things out whether we partner with them or not it's just a big thing to try to help people with so great well Adam how can people reach out to you if they want your help on a deal or maybe to partner or some other reason yeah so linkedin's always great uh you can find me at LinkedIn Adam Markley um and certainly by email as well uh my email is a Markley BR PRX capitalgroup.com and uh feel free to reach out when is the next Denver area Meetup oh yeah great question so we host them monthly I mean it's crazy will we started this in October of last year uh there's as of this morning 415 people who have either signed up or expressed interest in the group every month it's the first Wednesday of the month we'll we'll make a change in July just given the fourth um but uh yeah first Wednesday of every month six o'clock and um yeah we get 80 plus a night uh we host a panel where are they in downtown Denver or downtown Denver it's it's at Red tops Rendevous if you Google Denver ETA Meetup uh it will be the first result when it shows up we also host one on your side of the uh town uh or the country I should say we host one in Baltimore as well Ryan runs that um and that's also monthly third Thursday of every every month it's downtown Baltimore uh so anyone interested on either either Coast feel free to to show up um and it's it's about networking uh the Denver one's a little bit larger at this point so we do the panels uh and it's just search is lonely being around a community of people who are Searchers operators hold Coes investors Bankers lenders uh attorneys all that everyone comes we operate very much a mindset of abundance um so yeah first first Wednesday of every month um So based on when this errors we're probably talking about July or August uh and so we we'll still be there first Wednesday awesome Adam Markley thank you very much for sharing uh your journey with us what you're building at procs and the many other projects that you're involved in yeah thanks will a pleasure and uh can't wait wait to uh can't can't wait to catch up catch up again soon always always fun thanks Adam I hope you enjoyed that interview make sure you subscribe to the acquiring minds Channel below we are now publishing twice a week so tons of new interviews and stories to come stories that will help you along your own path to acquiring a business