Morgan mccaulay welcome to acquiring minds thanks for having me will uh excited to be here longtime listener uh listening to your pod always gets me fired up to focus on growth so you know thanks for that thanks to your guests for that I I think in my situation it might be easy to you know devolve into kind of a lifestyle business and and you've you've inspired me to think a bit a bit bigger so thanks for having me well great Morgan that's great to hear and we're going to we're going to spend time on that very topic so perfect perfect teaser there you acquired a home care business just over two years ago and of course Hare and Home Health Care we'll get into the definitions there uh is an industry that is growing that is seeing interest from private Equity seeing interest from Searchers like yourself so we're going to spend time also just on the industry learning about it and of course hear your story so let's start off Morgan if you would some background on you yeah um so name's Morgan grew up in South Florida uh we're recording here now I live here now um this is where I own and operate my business but between growing up and moving back here to buy the business uh I went to college in the Northeast studied economics um after graduating I moved to New York uh joined a macro hedge fund trading rates and credit um learned a lot about that business uh I was on the front office but I also met I also dealt with the back office I dealt with settlements I dealt with marketing legal it it was kind of a small business so I had a bit of a small business experience there um I stayed with that for six years so six years in New York City doing that and by the end of the six years um came to the conclusion two conclusions really one one that uh macro hedge fund management wasn't a long-term career path for me sort of the the top- down analysis and the short Horizon of the trades we were making wasn't kind of resonating with me um my boss my PM was incredible at it and kudos to him he's he's done great with it but it just for me I was a little bit more systematic and um I wanted to do more concentrated bets more Bottoms Up style analysis that uh that I could potentially have influence over the outcome of the trade as we were trading you know treasuries you're never going to influence the treasury rate um so uh towards the end of the six years I started looking for a job that would enable me to do bottomup style analysis um and also I wanted to move away from the city having grown up in Florida six years in New York City it was um you know just a bit too much for me so so the job search started I think what I really wanted to do was Private equity in Florida honestly um and what I ended up with was a family office in California so kind of close kind of not but um it was a blessing in disguise so what what I was doing over there I was the only non-family member investment professional at that family office we were doing private Equity Venture Capital um and also allocating to funds and and real estate and uh I wouldn't trade that experience for anything it just the the the difference between San Francisco and New York really struck me uh as far as the attitude and and sort of the the the pie like I always felt I kind of after that experience I kind of felt like New York was focused on your slice of the pie and and California was focused on the size of the pie um and I don't think without interesting I love that yeah and I don't think without my experience over there in California I would have felt confident enough to you know quit a pretty successful W2 and and go and pursue search um so it's been three years what do you mean what do you mean that in California the culture is more focused on the size of the pie like growing the pie growing markets creating new markets that yeah yeah it was all it was all and it could also be just due to what I was doing specifically right in New York I was trading and we were trading liquid security that anyone can buy and sell intra day inra week whatever and that always kind of felt Zero Sum to me um whereas when I was in California for for three years running this family office I was focused on um venture capital and growth Equity Investments where I saw you know everybody do well it was it was not zero sum it was it was positive sum um and that really resonated with me I you know I never got a chance to see that in my hedge fund job in in New York um gotcha yeah really really interesting observation okay Carry On and and I don't think I would have been able to jump from the hedge fund job to what I'm doing now without the experience I had there um in California so I was in California for uh three years running this family office um and towards the end of the three years the family office decided to kind of double down on San Francisco whereas when I joined there was a chance for me to potentially keep my seat and move to Florida um so I started thinking about ways to leave in maybe the summer of 2019 uh my wife and I were due to get married uh we were thinking about having kids and and her being from Florida as well just you know having kids and doing the family thing in San Francisco when our both our families are from the East Coast just was one reason to leave second reason I had been there three years and my exposure to different deals and different people and my network was expanding was all great um but kind of my my perceived career trajectory at that firm I would say tapered I you know I had been there long enough to see what it would look like I I was doing well and I would I think I would have continued to grow there um you know at a moderate Pace until I was maybe the CIO of the family office at at some point but it just to me seemed like it was going to take too long to get there and it also felt like as soon as my learning curve kind of slows down uh if if my compens after that point if my compensation hasn't gotten directly tied to my um output then then what am I doing so if I'm not learning I mean I'm happy to be paid in you know learning and knowledge and and all that but um if my if my learning curve is sort of tapered um I'd like to see the compensation directly tied to my performance and there was just the feedback loop in a W2 seat was never direct enough maybe is is how I'm feeling um well you sure you sure remedied that as a small business owner yeah now the every decision you make you'll feel by 3 p.m. and I I kind of love it I I really do love it I don't think there's any going back Morgan give us a quick picture of what a family office looks like inside we for those of us from outside the world of Finance we we hear this phrase a lot and probably for a lot of people they literally imagine kind of I don't know like a patriarch com checking in at lunch every day and a small team of people thinking about how to deploy this usually man's Capital um is that what it looks like I mean what is it what is this family office thing um well that you know that description would not be far off honestly um but there's an expression in in the family office world is um once you've met one family office you've met one family office they're all they're all completely different they're that different that there's that saying um so the family office that I worked for patriarch was a hedge fund founder uh there's all sorts of family offices you know there's people with media money people with oil money people with real estate money the the family office that I was at just happened to be a a hedge fund founder and everyone on the team came from hedge fund backgrounds including the patriarch son who had his own successful Wall Street career um so we were hyperfocused on trading strategies which already suited my background and we were kind of wandering off into Venture and private Equity type um transactions which you know maybe didn't didn't fit our history or family pedigree but I think the main difference between a family office and a fund is there's no investors there's no rules and there's no limit to the speed that a family office can deploy capital and there's no you know a fund might say they have this mandate to to long short equity and if you offered them a credit product they would just say no not in our mandate um we might represent ourselves as this hedge fund family office um you know the patriarch being a hedge fund founder but if you offered us some some direct Venture deal um we could say yes who you know who cares about the perspective right so I think that um you know potential Searchers or potential people looking for Capital they maybe take advantage of that a little bit they always pursue the family office because they know the family office can always bend their uh investment prospectus per se they know they can move quickly um and family offices get a little inundated with that sort of thing but but the reality is true they they can move quickly and they can change their rules if you if you get through to the right person with with a good idea and and another thing to just highlight that you said that is kind of a pretty important structural difference between family offices and private Equity Funds is this lack of the fact that funds have life cycles and so the and and funds have LPS investors who the people running the fund that GPS have raised money from and expect their money back with return and the So a family office the timeline the the the capital is more patient as a rule uh cuz they're not having to return money back up to their LPS is that a fair characterization yeah I that is a fair characterization um I never thought about it that way but yeah we have we have no no time Horizon you do have liquidity needs that you have to manage uh a lot of a lot of family offices are making Capital commitments that can be called at any time and um you're you're forecasting that and you need you need to manage liquidity but not in the sense that yeah you have to you have to have a defined investment uh per holding period for any one of the Investments that you you make yeah yeah well thank you for that side education there Morgan return us to the the plot here I know that you working working in this family office was also where you were exposed to search but why don't you tell it yeah so it was like I mentioned um you know I had already started think thinking about ways to leave the family office because they were going to keep me in San Francisco and and I I had learned as much as I I thought I was going to um around that same time uh we are diligen in a deal on a firm called Footbridge Partners Capital Partners run by Greg gonos I don't you're smiling like I I think you know him maybe you've had him on the Pod um anyway he was looking for he was looking for a seed deal to start Footbridge partner um so this is before it had begun maybe it was his first deck um you know I think they're up and running doing great now and uh that's when I got that's how I was introduced to search I was diligent I was looking at his pitch deck about investing in Searchers and I was thought oh I could be one of the guys getting capital from him doing a search somewhere um and that's when I was looking to leave so I I wasn't ever going to leave this job without a plan and and that was the introduction to search that was just like a light bulb oh I can I'm just gonna move back to Florida and do this and that's summer summer 2019 and I met I met with Greg I asked him if he thought I could do at that point he was he's a big advocate of traditional search right so right I met with him and that was the only search that I knew at the time and I asked him if he thought I could do traditional search because I wasn't in NBA and that that seemed the traditional path um right and he encouraged me that definitely you can no problem uh go do it and that was summer 2019 um so to continue Thanksgiving well hold hold on a second Morgan there so he um so right so Greg jonus is is raising money to build a fund to invest in traditional Searchers uh and yeah that that that as you said 2019 so this is three and four years ago uh and Greg is a known entity as as his Footbridge partner so really interesting to that you were kind of a little bit of a a part of that that story and so when when Greg first comes to the office or over Zoom or whatever it is and kind of gives you his pitch I assume he kind of explains this phenomenon of search he probably doesn't assume you all know what it is so he kind of he kind of you said it was a moment for you so so it was probably the first time any of you maybe around the table were hearing of this concept of Entrepreneurship through acquisition yeah I don't I don't think I met him in person beforehand but his his deck for Footbridge Partners came across the the desk so I I read the deck and the deck kind of explained it well and then I think we had a call with Greg where um I took you know the position of the family office and and and heard the pitch but then obviously I'm not on that call going to ask him could I could I leave here and do a search myself um so uh shortly after that maybe a week later I reached out to him independently and we got coffee in San Francisco and and that's where we really got into the Weeds on it and I told him that I was you know probably leaving here I you know I said all good things about the family office and you know I think he can I don't I don't know what what happened there Footbridge got off the ground um which is great right but that's where I learned about search and but Morgan you and you've told us why you were ready to leave your current job but you haven't said what turned you on so much about search in ETA and why it was it just immediately resonated um I think it was part like partly the overall Arc from my New York was sort of trading and you know was exciting you're moving big sums of money but I I didn't have any influence over the outcome of the trade and you're dealing with incomplete information you're always dealing with incomplete information but that's okay I think if as long as after the deal is done you don't just let the dice fall where they may you you you can have influence and at the family office seat I there were a number of deals we were in that were struggling and needed capital and I I helped run a you know an equity raise for them or I helped introduce them to to another portfolio company of ours that was a potential client and I saw you know what otherwise would have been a bad investment get new wind or new legs and that you know to me that seemed like a big drisking possibility um so that you know I I wanted to get closer and closer to that I I think I kind of was almost close enough at the family office but again I would have had to stay in California um and then the other thing was just having the extreme ownership right like when you start a new job it was it was okay to you know work salary and be be be bonused on just the the general wello of the the company that you're at but I had a real itch the whole time to just be I don't know kind of independent and eat eat what you kill and I never got kind of the formulaic comp ation package I was looking for there and search just kind of ticked all those boxes I'm like well if I go do this you know it's there's nobody to answer to it's it's all it's all up to me and um so that's why I chose to go do yeah well interesting Morgan that um those characteristics in you are are common on seen in entrepreneurs the the appeal of kind of killing what you eat and having unbounded potential um but you came to it uh you came to it somewhat circuitously uh but you did you did come to it and here you are all right so you're you're turned on by search you and your now wife did did uh did you say you guys were married in California or not yet yeah so I'll skip ahead we were engaged in California and and we were due to be married uh maybe the date's important February 8th 2020 um and that just seemed like a good time to you know I had the confidence that I was going to do search so I kind of tendered my resignation at the family office to move back to Florida and start searching uh as soon as I got back from my honeymoon of of my wedding um but in the interim between summer 19 and and getting married uh Thanksgiving break home in Florida I'm talking to one of my like longtime childhood best friends Pete who I think you're going to have on the podcast I ined you too and that that would be great um and of course it resonated with him big time you know and uh at the time I still wasn't I I was pretty confident I was going to do search but I it still it felt to me a huge risk leaving you know the career path that I was on and um doing either traditional partnered or self-funded partnered partnered just seemed like a little less risky for whatever reason so I had introduced it to him over Thanksgiving over Christmas I'm back in Florida again he's all in and we decide to like discuss what a partnered search would look like and um you know to the point that we read books called The partnership Charter we disclosed each other's current compensation at the jobs that we've had we you know I had never really done that with anybody kind of open the kimono type stuff about what we're making now what we want to make make um you know we went down the whole Rabbit Hole cuz we we're best friends we don't want to ruin that with the you know maybe a a business deal gone gone poorly and what we started with was um an analysis on traditional search he he kind of at the beginning was leaning towards traditional search I was I probably was too but but less so I I think I had slightly more savings um and when we got together over Christmas break and put pen to paper we we decided to after speaking to people who had done traditional searches as after speaking to potential investors to say hey can us two non-nba guys raise the capital for a traditional search and getting positive feedback on that um but we put pen to paper and and decided that that Equity Capital was too expensive and we were going to do a partnered self-funded search so I think what we thought was that um searching for a deal dilc in a deal and raising Capital at the same time um was going to be a two-man job and it just it just felt better to to like have somebody in it with you and we were um we were fully planning on doing that so I'm excited for you to have Pete on the Pod and and hear his his side of it but my side of it is I do get you know I I quit the family office job I move back I get married uh February 8th 2020 and the plan is I come back for my honeymoon and Pete and I are going to start self-funded partnered searching um so I come back from my honeymoon the end of February early March 2020 and it's co we can all remember that it's a little bit the world is a little bit different um so I was a finance guy Pete was an operations guy he was in a venture-backed startup that was doing well it had ups and downs but Co was a big uh Boon to its business and all of a sudden because it was kind of a last mile delivery business all of a sudden Pete's like I'm not I got to see this through we're we're going to get an exit to a spa uh we're going to sell this company and I got to I got to do this so so now my search now I've left California I've quit I'm married and uh in Florida and my search is evolving um so I I decided I'll keep self-funded searching but I'll I'll do it on my own um but I also started to I don't think I was fully committed to search after I lost the partnership so I was also still looking for potential I think what I was looking for was maybe a seat at a fund where I could essentially do search um but inside a fun maybe I should have done uh traditional but what I ended up finding was uh the family office I was with hired me back for some Consulting work um and then another company uh a potential investor who I had socialized my search with he own he was the the CEO of a local company in South Florida that was doing a capital raise and he hired me as a a consultant on that so for 2020 um I was kind of parttime searching solo I was part-time Consulting for both family office and the new Consulting project so I was working and I was part-time still looking for a potential family office or or private Equity seat so I would say that that the the partnership switch and maybe just all of Co in general because search search you're supposed to be looking for really boring businesses um sleepy businesses and in March through July of 2020 there wasn't a single boring or sleepy business everything was turned upside down small businesses in particular were were having a really tough time so I'm like let's walk this back a little bit and and maybe it was just that I hadn't I didn't have the confidence at the time to really go do it um so that's kind of what I spent 2020 doing until uh November or octob October of 20120 I I came across a deal um that I really loved I think I was broker only searching at the time and I took that deal and I want and the numbers just jumped out at me that the growth prospects jumped out of me and I I kind of put down everything else I was doing and and ran with that umg let me let me jump Morgan let me jump in here with a question before we get too far away from yeah yeah yeah you going way back up to your decision not to do traditional search uh the analysis that you and Pete who you thought you were going to be partnering with at that that time did was that it wasn't worth it tell us more about the conclusion that conclusion that you reached um you know we were actually analyzing our own balance sheets and and how long it might take us to S to close a deal and we you we' R read the Stanford study and you know the average term 18 months to two years to to close a deal and we we had socialized in in socializing raising a traditional search we also socialized with kind of high net worths and family offices and got their feedback and and they you know they had never heard of what a traditional search is so so we kind of got the sense that the money would be there anyway if we while we were doing this and then we also sort of you know papered out what the traditional search economics look like and the cost of that Equity Capital to have a salary that's you know between 70 and 150k a year is um it immediately puts you in a in a higher market cap more competitive situation and we sort of figure that all out in December of 2019 early 2020 by socializing and just talking to as me we spoke to a lot of Searchers we spoke to a lot of potential investors we spoke to traditional investors we spoke to traditional search fund investors spoke to high net worth investors um and everything just led us towards a self-funded search um well let me and let me just distill a couple things you said there uh or for the audience because I think they're really uh insightful there are many benefits to a traditional search fund but among the big ones are your it's called you know the reason self-funded is called self-funded is because you're having to do your search and pay pay for it yourself you're self-funding it traditional search of course you have you're paid a salary while you search and for many people they have to go traditional search for that very reason because they don't have the bank role to just live on off savings yeah um so that's one of the big benefits and you know big differentiators between traditional and self-funded and then of course as well you you're you're teaming with a group of investors in advance of your acquisition and so they don't have to invest in the business that you ultimately buy but uh typically the idea is that that that I mean I think I think you basically need to get there I might be speaking out of turn here you kind of need to get their blessing to move forward they get a write of first refusal on any additional Equity Capital that you would bring in um any offering that you know they can they can always fill the equity if they choose to so what you end up with in a traditional search that doesn't get funded is an equity Gap and that's kind of like an adverse selection signal is that um inv previously invested and you aren't even going to take up the whole thing but I mean it could be that you just you know you you harpooned a whale right and you need a lot of equity and the the people you spoke with before fill it so and then you're going to have the support of the the the these investors you hope uh over the course of your ownership um but the point is that Equity that they're kind of you know that they're providing to you or you know contingent on them liking the deal is uh and them paying you to search you're giving a lot of the economics of the overall business to them so there's a trade there as and this is what I'm trying to kind of distill because the way you put it you said you know the salary the way you put it was the salary that we would be paid if we did a traditional search raised from traditional search investors was too expensive so what you thought you were getting you were giv giving up in terms of equity was too expensive for the salary that you'd be earning while you did your search is that does that get to the nut of the thing because it's an important crystallization of it's expensive and and in a traditional search you end up if you're partnered maybe you end up with um you know 35% of the business if you exit there there's vesting periods um and so when you back in from if you start with that you know if we sell the business we own 30% there's two of us we're splitting it we have this pref stack from having raised search capit all the equity we paid ourselves in that year we were searching plus they get to roll that in at a step up into the new deal it's not that it's not a feasible way to do things but it it kind the the only way it makes sense for a Searcher to do that is to buy a a business north of like a kind of 10 million Enterprise value proposition um and then you kind of still have bosses as as your investors although that's not what we were thinking at the time but it I think what we also thought was it put us into a market cap that we being non-private Equity professionals were uncomfortable with um we you know we didn't think we had any real advantage in closing a big transaction um May you know maybe the investors on our board could have helped us do that but then like I said we we actually looked at it the other way it's like this money costs money and I have X savings you have y savings uh if it's only going to take us a year or two to do this do we have enough money to just do it ourselves because we had spoke to you know individ you know um non-traditional sech but but just um you know regular un you know self-funded search investors and and they had said yeah you bring me a good deal we'll we'll do it and so once we heard that we're like why why take this in expensive Capital if we have um sort of the savings to the float for a year or two it's kind of how yeah exactly so so if you don't go the traditional way you're a little bit floating out there because you don't have investors necessarily waiting for your call and you're going to pick up but you guys felt confident having that if you a deal Capital would be even if itn't formalized in advance like it would be in a traditional search fund exactly yeah we we we felt confident about that so we and then we we looked at our savings and we thought you know we we can probably search for a while and just just get one Pete was going to keep his job and search on the side and when we got a live deal that's when he was gonna throw in the towel actually was was his plan for kind of greasing the landing because time is important time is money so you want all these things to line up um and I looked at my savings and I thought oh you know I'll search on my own and it it'll be fine and um I'll say here now that I I think probably I reached on my deal a little bit because I was self-funded searching and the the tick of the clock and dipping into savings really started to get to me and I think towards the end of my search I I reached probably you know maybe because of that reason I I think when I was looking at my savings talking with Pete about how this would all go it was one thing and then um I got married I bought a house I had two kids and I'm I'm searching that all happened in 201221 um yeah and uh I I I felt an urgency I felt an urgency to get a deal done let me let me put it that way right right yeah uh well but and then you also said something Morgan kind of just off the cuff a few minutes ago that like you said reflecting back maybe maybe you should have done a traditional search you you said what did you mean by that um what did I mean by that I don't think you mean I don't think you mean like from where you're sitting today that you wish you had done a traditional search but as you were still kind of figuring out if you were going to try to get a job at private Equity or maybe go back to a family office I think what I meant is is um um you know I don't know what I don't know but but in the best case scenario if if a traditional search were to have gone like this for me um you know Pete decides not to partner with me because his his business is going great during covid I go out to all the people we spoke to I raise the traditional search capital I get great kind of mentors on my cap table my board and we go out and we buy a much bigger business than the business I bought um that would probably be a good result for me but it's easy to say that in in hindsight right so it you know it could have gone another way who knows what type of investors I would have had you know how helpful they would have been and and how big a deal I I would have ended up doing um I don't know because I didn't do it I ended up going another way I don't have investors I I kind of like it that that way so far um happy with the project I'm doing and um you know maybe towards the end of the conversation we'll talk about what I'm what I think I might do next but I I don't I don't know I it it would be open I think the answer is always a a bigger deal um and whether that involves investor capital or not um I don't know but I I I know it wouldn't be raising blind blind pool Capital like traditional search to pay for the Sear search but it would it would probably be a bigger deal that required an equity ticket um from investors yeah well Morgan let's return to November 2020 you were about to tell us that you about a deal that you found that you liked yeah November 2020 so I'm kind of I'm I'm I'm Consulting for these two Consulting projects and I'm searching on the side and then I find a deal that on bis by sell that I just loved it was is a um medical supplies Distribution Company and just it was the first deal I saw that was truly off you know offered kind of at 3x of of earnings and the earnings were I think uh you know close to a million a million bucks so three three million for for 1 million to make the the math easy um there was a little a little hair on that deal and that he he was he was trying to close the deal by December 31 this is something you always hate in family office seat is hey I got this opportunity but it's got to be done you know next week you know I need an answer um so this guy was trying to pull one of those he didn't broker it he was managing the sale himself and what he ended up doing was playing me kind of against another buyer which is fine and um and it and it and the speed of it was such that there would be no debt financing so this deal needed like a $3 million Equity ticket I thought it was such a great deal that I you know I did tons of diligence I I wrote up a big perspectus um and soft circled the equity rise with my network and and and kind of got the the equity ticket filled um we walked away from it in the end because there were certain things he wouldn't disclose and he was playing me against the other buyer and um he was just going to close with whoever was going to close first or fastest with the least diligence and it was the first kind of my first at bat and the farther I get away from it the more I'm like man that was that was a really good one um but anyway it it uh the process of doing all the diligence like really modeling out the investor terms my terms raising the capital negotiating with the seller uh I was like oh I I can do this even if this one doesn't work out like I can do it um yeah so I walked away from that deal in December 2020 and so January 2021 I'm full-time I'm full-time searching you you you're you're feeling uh even though you walked away from that deal you're feeling confident that you're feeling like this is this is achievable I felt a little bit of the sting of like all I did the last two months was focus on this deal and that two months is wiped but um it wasn't like I had been unemployed all of 2020 it had been a oddly good year for me and then yeah so but 2021 I'm all I'm all in on search my own yeah Morgan when you say just to for people who are less Savvy to to deal AB Dynamics when you say no debt so the deal that you lost no that you walked away from no debt on it so no sbaa loan so this guy wanted a $3 million check and so you you were you said you a $3 million Equity ticket that means you were going to raise $3 million in cash from investors um so and pay him stroke him a check for that amount of money um and I guess I guess really the only question is if you if you can share how do you decide what percentage of the business that these investors who are giving you $3 million get so I've learned a lot since then but I'll give you the answer of what I knew at the time I was basing it off of structures that I had seen at the family office and structur carry structures that I had seen at our hedge fund and other sort of SPV deals we invested in at the the family office and what I ended up offering them um was I think on close I owned 25% even though they funded the full 3 million Equity ticket um I got 25% for closing the deal and then I think it it went up to 40% and then 50% over hurdle hurdles of return to the the equity investors you know on an exit so after 2x I was at 35% after 3x I was at 50% so everybody was in line to really shoot for the moon there um and that's just a carry structure that I had seen in growth Equity deals at my at my prior seats so that's how it did it but now you know now I'm in the search world and I I probably would have structured it differently more advantageous to you obviously I think so so I think the typical structure now is if you bring say a $5 million deal um and maybe the equity ticket is 20% 1 million um what you are offering the equity investors as the Baseline this is current market I think is if they bring the million they get 20% 1 million out of five it's a $5 million deal you brought 1 million you get 20% even though because I brought the deal together who cares how I financed it with that dead or SBA I think the way Searchers justify this is they say um you know it's on the on the full five million I'm the one with the personal guarantee on the SBA right so I I should at least have over 50% of equity if I'm the only one with the 100% downside the the the investors who bring a million they get 20% um that's preferred Equity they first capital out so there's limited downside there and then I think what happens is the negotiation is over the step up so if you call 1 million out of 5 million 20% that's that's just a straight straight deal but a step up would be call a 2X step up I think is is high I think maybe Market is somewhere between one and a half and two right now depending on the The Searchers pedigree and and the deal and if it fits and all that stuff but call the step up between one and a half and two if it's two what that means is the equity's invest the equity's the Investor's Equity of a million into a $5 million deal one out of five is 20% but a 2X Step Up would mean they own 40% right two two times a 20 so I probably would have structured it something like that so that means I would have ended up owning somewhere between 60 and 80% instead of this waterfall over a a pretty strong performance that I was forecasting on that on that first deal right that's great that was uh an education thank you Morgan okay so you walk from the deal you're now springish 2021 you're feeling like um yeah you lost two months of your life but at the same time it was a great frankly great learning experience and gave you the confidence to Surge ahead full-time on your s on searching for 21 then what so now I'm full-time searching um I had had the experience of sort of shaking my Tin Cup for an equity ticket and I felt confident in doing in doing heard that one I felt confident in doing that again um so my search started uh with kind of a the only thing I really knew was my Geographic Focus was going to be South Florida you I had just bought a house I had just been married um we were due to have our first uh child our son Griffin in May of 2021 so this is early 2021 my wife would been pretty pregnant so committed to South Florida um but my the S so that was locked but the size was was relatively open I was I was looking at deals up to you know two3 million of viida and all the way down to 3 400 of of sdec you know because what I was trying to replace um and what I found through that search is when I started actually speaking with Brokers or or going through the deal process on those two3 million deals um you know I was under prepared underresourced I was it's there's private Equity players there there's there's experienced independent sponsors there um the deal moves quickly they they run kind of auction processes a lot of times and so I was still looking at it but I but getting one under contract I think at a reasonable price would have been uh difficult uh I tried uh I don't think I got any large deals under contract um so I started looking down market and um and then I then I maybe I've learned about the SBA program kind of then and I and I started I don't know romanticizing about having no investors and it just being all mine so so then I had like a number where I think the number was probably a$ four or five million do transaction where I was like I could own 100% of this um with an SBA loan and so I kind of bifurcated it into the two buckets and I just found so much more deal flow at the bottom end and uh and the more deals I worked on there the more I got convinced that I should just this should just be all mine and um that's the way I ended up going yeah this should be all mine meaning it just it seemed like it was something kind of again that that uh that concept that money cost money and so you feel like you could you were getting more and more confidence that you could do this without giving up any Equity so why give up Equity exactly yeah and I and I just and also the complication of bringing in in investors you know I have seen that dealing with investors um and Reporting at at my prior jobs and it's it's a job on top of the job of running the business and I the more I thought about it the more I thought it it'd be great to not have to do that um and I how much give paint a picture how much how much additional work is it for an operator to Prov be providing information to investors I mean I assume it's a quarterly kind of phone call in deck and the deck probably just has templates that you can swap out numbers or am I oversimplified dramatically yeah you would think yeah so I think it would be that and maybe it's more more than just the work is probably the um the standard that you hold yourself to and the questions that you would have to get cleared with your investors so what right now you know if if we had an expensive month because of doctor's visits for the kids or something and I wanted to pay myself a bonus that's not a that's not a phone call to anybody that's just yeah that's just me right so a lot of a lot of things like that and then my deal had a lot of structural stuff that I want to be the captain of um I did it in a Rob's rollover transaction where so I used my 401k to fund the equity ticket of the transaction um so me the natural person and me my 401k plan own the business kind of 5050 um and to change that 5050 Dynamic is a is a stock transaction that you'd have to run by people that I I don't want I don't have to now it's just up to me so really the autonomy uh uh is is what it was coming down to yeah okay uh well let's get into I mean we're we're we're what 50 minutes in here and we haven't heard about the deal that you did buy and we got and we got lots of details there to to share uh but this is great Morgan so please let let's get into the business that you bought tell us what you found what you liked about it all about it yeah so when you're searching by probably any kind of search you you end up going down these you start pulling on a thread of an industry um and in South Florida the industries were the big ones were home services is Big so kind of landscaping and and HVAC and plumbing you stuff like the traditional stuff those were just the the the prices on those at the time were were incredible I I did bid on a bunch of those and kind of miss it um and then uh the other big industries in Florida are Aerospace and defense I I thought that would be interesting kind of serving serving the Aerospace area and I I I looked at a couple deals there and then Healthcare was was the final one so I was on a healthc care a home care kick at the time and it was because that first deal the deal that kep me going was a medical supplies Distribution Company and their end customers were home care agencies so I had called them previously to say who makes the buying decision at your company and I learned a bit about them through that and so I was on that kick and I was brokered searching and uh another searcher in South Florida reached out to me to to have lunch and uh I'm like all right well we're kind of ear searching I'm searching it's kind of in the same area it's kind of competitive but yeah let's get lunch and uh I showed him a deal or two that I had looked at and passed on and he showed me a deal or two that he had looked at and passed on not passed on he actually bid on this one and he told me his terms and he told me what the seller said um and he introduced me to the broker that introduced him so that's how I found this deal and I kind of knew the I knew what he he bid so I thought I knew what the the market was um so when I found it I I was looking for a home care business um for probably two months before I stumbled on this one um stumbled on it in June of 2021 we closed in October of 2021 uh it felt like a long time for me because Healthcare is a heavily regulated industry um transferring the licenses from a registered nurse to you know a non-health care professional that was a big Tod do transferring Medicaid reimbursement contracts was a was a big thing that actually carried over through the close that that got us very close to the edge uh numbers wise the first two months into the business they Medicaid wasn't reimbursing us and eventually they did but um so I found the business in June of 2021 through another Searcher in South Florida and got under contract why were you able to execute on this business and he wasn't uh you said that their bid wasn't his bid wasn't accepted why were you willing to pay more so I think that his bid uh carried a bit more seller paper or a longer Horizon on the seller note um I ended up bidding what he told me he bid and um maybe my relationship with the seller through our phone calls was just better I I had already been pulling on the healthcare thread I I I had mentioned to her to the seller that I had an aunt in Florida that was a registered nurse that was um had previously been a director of nursing at a home care agency that that gave me confidence to go into it I was very apprehensive of jumping into healthcare because it's so heavily regulated with no experience and the only reason I did was because I felt like I had that Aunt as support and I had you know some family members and people in my circle encouraging me to go in that direction because of the demo Geographic Trends instead of you know landscaping or hvc or or Plumbing or something like that um yeah so I was already on the thread and I think maybe the seller picked up that I knew a bit about it and uh it turns out we her and I have some some um friends in common the seller but we didn't we didn't learn that until I think after we closed the deal um no funny but I think it was the I think it was largely soft touch and a bit of me knowing what she had already yeah turned down yeah that helps for sure for sure and so tell us about the business so it's a home care business um you could characterize it as staff in but the the real value proposition we provide to our clients is the credentialing and screening of Home Care Professionals take care of your your loved one like a like an aging parent or or someone who's sick and wants to stay at home and not in the hospital um you could do this yourself uh but the screening process is is uh time intensive and difficult unfortunately we recruit a lot of caregivers to help us provide our service and there's plenty of caregivers who have their CNA a certified nurse assistant license they um have experience at a hospital they have their CPR all their stuff is up to date and they're just unreliable you know not not showing up on time and we the core Val the core value ad that we provide is we've already registered those caregivers we've already sent them on cases and in the event that they have been un reliable um you know we have sort of marked that and we don't refer them anymore so that the screen that's sort of the main value ad other value add is we we we invoice long-term care policies and and Medicaid uh insurance policies um so you know nobody wants to do that themselves um and we also handle scheduling of emergencies and and there's someone always there you can speak to right you can always call the off if an N didn't show up you can always call the office and say hey my mom's alone and her condo so and so didn't show up um you somebody answers the phone for you there and we send and we send somebody immediately and we you know so that's the business um well we'll we'll get I want to get into a little bit in a minute um the different types of Home Care businesses that there are I want if you would give to give us a little education on that um because there's all these different kind of uh slices and slivers and niches within the umbrella of Home Care and home healthare um but can you tell us anything about size of of this business that you bought uh in terms of head count and or numbers yeah yeah H happy to go full transparency there so I do think I reached a little bit because of um a I know what the seller had previously declined and B um at the time there was there was a covid the cares Act was a was had a big stimulus package for SBA Loans and rates were super low so my my rate is locked at 5 and a half% but uh I paid 2 and a half million for north of 600k of SD so call it a 4X on SD or you know if you want to take 100K away from the SD you would call it 5x on iida which I feel I'm two years removed from this now I I feel is high the high I feel like I over overpay but um but the way things have gone would I do it again yes definitely do it again at that at that number and and that's because the way things have gone meaning you've seen growth that has grown into that mul pay if you pay yeah I have I have seen growth so I feel very confident that it's worth at least that or more now because we've we've grown 40% Top Line and bottom line since then um but also even if I didn't feel confident about the resale value of the business which isn't something I'm thinking about a lot um buying SD at 4X is is a 25% yield proposition so you I'm two years in of making 25% yield on what I put in but I put in 30% um 30 Equity 70 SBA um and then the seller there was no seller note actually it was a it was a escrow hold back on 10% um so she had 10% held back which 250k um which is Meaningful to her and it was only released over a certain perform performance hurdles which I think kept her um super interested in the business but I I'll say that the way the business went um from the first call I felt like her and I had a a good connection relation ship and and it got a little I don't want to say contentious but it got less friendly during the negotiation and up until the close but I kind of always knew as soon as we closed that she was going to be exactly who she was representing she was a you know a retiring nurse in her 70s um who wanted to be quasa involved with the business she wanted to see her caregivers still getting work she wanted to see her existing clients patients um being well taken care of and I think she looked at her business as a she probably felt her business was like her child right and I think I don't think she thought of me as her child but certainly over the course of the oneye transition um she definitely looked as me as like a a mentee and yeah I the relationship with the seller is very important I felt very strongly that it was going to go well and if it hadn't I can see a lot of ways the business could have gone wrong could could have gone poorly but it went it went great so yeah and I I credit a lot of that to her and on this point about the escrow uh the so no seller note but escro well how did you put it what was what did we call that the 10% on escrow was called it was it was held back um and and and and it was also you know it was forgivable against reps and warranties and the first year so if she had misrepresented something in diligence or what have you I could cancel that right or or not release it is this the same thing as a forgivable seller note or is it slightly different because it's not officially a seller note it's not a note because it was funded right um right exactly and that makes the whole deal more expensive but I never looked at the deal I I was never looking at deals like what's the least amount of equity I can put in I I was always looking at deals like I hate leverage like I'm about to put my life savings in here and and I just don't want to be over levered I always kind of had that mentality so that that's why I ended up putting more equity in than than maybe I needed um and then getting it over the line I I just could tell that she was never going to accept um some fiveyear paper or 10year paper that you would have had to do to make it to make it work on a debt service coverage ratio so she wanted kind of one year paper and I was like sure but we you know we got to have these performance hurdles um well one of the things that you'll actually one of the kind of counterarguments against some any kind of seller note type structure or uh or holdback is that it's actually not as material to the psychology of the seller as you you might think quar million bucks in her case it's it's that's a lot of money but at the same time it's also like she just got a check for two 2.25 million um and and so that that 10% difference now for her on the other side of the transaction uh is is maybe for for for let's call it an unethical or disinterested seller for somebody who who who's kind of not looking to be helpful and doesn't have the the kind of investment in the longevity of the business that you've already said that she did let's say she's not as kind of wholesome an actor that that 10% maybe might not really motivate them as much as we all like would like to think yeah I can definitely see it going that way um you know she she would have cleared less than two and a quarter because the broker fees um but but throughout the diligence I kind of learned a bit and since I've learned a lot about the way she ran the business but she was a micromanager she kept costs really way way down the size of the business when I acquired it was the absolute maximum business she could have been processing with the infrastructure and platform that she had without the wheels coming off plays without the wheels flying off the bus um so she was she was conscious of every dollar um to the point where we get a lot of it's a unfortunately Healthcare is still like a f fax run business we get a lot of faxes for authorizations for long-term care insurance policies and she would get these faxes she'd write down the authorization we just got um then she'd flip that piece of paper over and put it back in the printer upside down to save the paper wow to not buy more love it so 250k to her was important yeah yeah yeah perfect illustration yeah a paper saver a paper you know no no no blank side of a piece of paper will go will go wasted yeah um I know I know the type okay well this is great and so just to uh be clear you put 750 Grand of your own money into this 30% of 2.5 million yeah just just shy of it and um that was pretty much everything I had it was all of my 401k and almost all my savings yeah 5050 call it 300 each 325 each something like that with a new young family new mortgage two kids wife yeah my son was born uh May 6 21 I think we were under contract like we were already speaking by then I was under contract in June yeah and closing the deal in October he was couple months old good for you Morgan um and and they say acquisition entrepreneurship isn't as risky has 0o to one entrepreneurship which something I push back on uh but by the way also thank you for for sharing uh so transparently this this personal number of this okay we got we got some ways to go here Morgan and a lot of good stuff to come so let's move um yeah give us in a nutshell okay you so two it's been two years that you've owned it g give us in in a nutshell what's happened basically in under your tenure yeah so I get the keys uh I think I mentioned earlier we had a real cash flow scare in the first two three months just trying to transfer uh Medicaid reimbursements which were 20% of our business so we were business was operating as normal um but we were providing care to a number of Medicaid patients only 20% of our business but I'm receiving zero compensation or or cash and you know in exchange for that for a couple months while I'm trying to get the state to recogn this transfer of the license um so that was a little hectic but besides that I would say that year one um just went up and to the right uh uh probably because of the sellers interest in seeing me succeed you know she was so great she wanted to see me succeed she she also probably cared about the 10% hold back um and I was left at the end of that year thinking like you know what what did I do that that made this happen I think I took an approach during it um you know if it's not broke don't fix it and I was I was learning I was letting it run um I was doing a little maybe a little bean counting and I'm like well geez it's just you know this is going great um but I wanted but I knew I had to figure out why right um and and upon sort of rumination and looking back I I'd say the reason for that year one growth the growth was about 40% so so now we're doing 3 and a. half million in Revenue instead of two and a half um it was for two reasons inflation was was big in 2022 uh caregivers started making a lot more money and the industry just kind of defended the margin so the end rates for Home Care went up to clients everywhere so you know 30% of 3 and a half is a lot more than 30% of 2 and a half um yeah just we just kept it that way and secondly I think the census or the the car you know The Client List that was on the books when I took over uh they were aging and as people age they tend to need more help at home so the light like kind of the life cycle of Revenue in home care business is um it's interesting people reach out for help they need a little bit of help um and then the amount of help that they need steadily increases over time and I saw that happened uh throughout year one um yeah so I was starting to figure that out by the end of year one um and then year two I invested heavily in um you're you know the seller got her hold back back and she was doing more traveling and more retiring you know she I don't want to say she held my hand but there was definitely training wheels that first year and it was incredible and I but I knew it was going to go away and I didn't know how much of the growth was due to her right um and I I knew but I could tell that she was T taking a step back and and I went to replace her and that was um that's where I went heavy on recruiting and hiring um so the business let's say we probably have 200 caregivers in the in the field taking care of people but but the management the office itself she was running it herself plus two employees I ran it when I took over it was her me and one employee because one had left before the the deal closed and today it's myself and three employees she's still involved a little bit um but it's the type of employee the type of player and the the amount of um autonomy I'm giving them I think is is pretty different from the way that she was doing it like I mention mentioned earlier when I took over um she was at the ma the max size she could be without the wheels flying off the bus and today our headcount in the office isn't much bigger it's myself and three employees um but with our systems and the way we digitally intake clients caregivers um all those things I I think we can do double where we're at with our current org chart and platform um really yeah because find where the limit is but it's you know I'm utilizing a lot more technology than she was everything she had was paper charts um sure but but but still the the reason I'm so impressed by that possibility is because okay so it was doing $25 million of of Revenue when you bought it now it's doing three and a. half million and if you think you could maybe get to 7 million 67 million with the same infrastructure and overhead that you have now uh for a business whose margin are what's the 25% but so that's th that's a lot of sde in in a business which is notoriously I maybe this is not accurate but I I Feel Like Home Care has a reputation of being a very difficult business a lot of moving pieces lot of uh so not not one where you can get a lot of operating leverage but I'm hearing the exact opposite from you I think it's in the quality of people that you H you hire to your team so you know everybody on my team's making well above Market compensation and I give them a lot of autonomy um and then and then I'm I'm fully invested in the business I'm I'm still have touch points with clients with caregivers um today I I still have I you know touch points with almost all of them and I and I I see bandwidth even Within Myself to go maybe not quite double but uh close to double before I start to to break on that I do see where it gets hard to let go of um certain responsibilities and touch points to the business and I expect I'll have to do that and I expect the margin will have to come down from 25 we're not even at 25 anymore I think we're we're closer to 22 um but I don't want to let kind of the EA or SD margin come down much below 20 um that's sort of the goal so I guess Morgan like what would you say to Searchers out there looking at these types of businesses you're making it seem like a great business uh just we're we we've talked very superficially superficially admittedly just about numbers yeah and about how much operating leverage you you think you can get but you know there are a lot of these businesses for sale even just on bis by sell most of them smaller than what you bought admittedly but could you are those things that you would be enthused for Searchers to be looking at well so let's be clear that we're talking about private duty home care which means non-skilled and it means long-term care so these are for chronic conditions or Aging in place it's not Medicare it's not acute things where you're being discharged from the hospital and you get a a doctor's prescription for two weeks of physical therapy that's covered by Medicare that's that's a big that's a different business one that I thought would have a lot of cross pollination with my business and I thought I would end up buying one of those by now to cross-pollinate them but but specifically my business um I would advise that it's important to buy one with scale um a lot of our lead gen and inbound is you hear this a lot on um when you're searching and speaking with sellers about you where are the sales come from and they're like oh you know it was recommended by a previous client um and you and you you think okay well I got a diligence that sales channel right how real is that um in my case very real all the clients speak highly of their experience with my seller and my company and they all have relatives or friends or what have you so so there's a there's a a funnel there uh the business also came with caregivers that had a long relationship with our business and um that's very important sort the cold start problem is real because it's a it's a sta it's Staffing is a a matching problem it's easy to get caregivers if you have clients and it's easy to get clients if you have quality caregivers yeah but if you have neither um hard to get start starting from zero to try and build it up to where you have quality caregivers and I'm do I'm dealing with that now as we move into new markets we're trying to geographically expand we have great caregivers in um Broward County and we're trying to expand North up into Palm Beach County and Port St Lucy and Indian River and we are recruiting those caregivers on places like indeed and at nursing schools and you onboard them and but the only time you really find out if they're if they're qu if they're any good or quality is if you if you put them on a case so you have to have a case to put them on um and if you're trying to break into a new market and you're testing new caregivers on your first client in that market you can see how it could quickly fizzle right so that's a reason for buying um an existing entity that said I've looked at existing entities in my in our geographic area of expertise and I've come to the conclusion that I would rather compete with them than acquire them at this point going back to the Medicare or this is yours is not a Medicare agency break down I had teased it out earlier break down the types of Home Care and home health care agencies that there are I think there's four or fiveish depending on how you define them and just real concisely we won't spend too much time on this but give us vocabulary well I'll only talk about the two that I that I know the only one I really know is is um private duty long-term care which is what I'm doing Medicaid has a program that offers long-term care but that's for chronic conditions and aging so that's expected to be a long-term engagement the other side of the coin is skilled care and Medicare which is you know in the home is predominantly uh ordered by physicians discharged physicians at hospitals um discharging patients that that have a physical therapy need an occupational therapy need or a wound care or intravenous medication type need um the the patient gets a subcription and the Home Care Agency fulfills that need with skilled care and they bill Medicare um but those acute needs are usually uh you know handled by skilled care uh practitioners so LPNs RNs it's very expensive nobody would pay to have somebody like that in their home um out of pocket they only accept that for Medicare the type of care we're providing uh is um nurses assistance and home health aids which are they're allowed to help you with things like personal care which is getting out of bed getting dressed getting fed taking a shower reminding you to take medicine but they can't do physical therapy or intravenous medication or or things like that and and the engagement is more for long-term care and it fits because if it's going to be long-term it's got to be more affable you know you can't have a neurosurgeon in your house 247 right so that's that's sort of how it gets delineated across disciplines um and maybe the other disciplines you were talking about are probably hospice and uh maybe something El but I I can't speak to those because I've never looked at acquiring one of those I've looked at acquiring Medicare agencies and I haven't talked myself into it yet it it seems like a much more difficult business than than what I'm doing so to so just to make sure I got this the line between home care and Home Health Care you know is is unskilled versus skilled and it's also Medicare versus not so Medicare is where you would have skilled people in the home and it would be for a a shorter period because it would be for an acute need rather than a long-term need because neither neither individuals nor the government can afford as you said to put a to park a neurosurgeon in somebody's house for a long stretches of time exactly and those terms get conflated a lot um skilled and Medicare and acute and Home Care home so Home Care is going to be long-term unskilled and Home Health Home Care Home Health home health is going to be skilled and uh usually acute and and and more expensive and covered by insurance now let's let's Steelman the business that you're in uh with pulling in Robert Graham here uh who who's going to be a familiar name to to longtime listeners uh Robert Graham of s and also has acquired his own business business says in home care and I guess Home Health Care you talked to him when you were evaluating this deal and he actually as I recall didn't love the this particular business uh why and then why why were you able to get over his disapproval so I found him on search funer when I was I was digging in on this industry he was already an owner of one and Texas um and I told him about the deal I was looking at he didn't like it for uh two reasons the price which um you know he's right I you know I was in 2021 I was reaching um I'm fine with the fact that I reached but I think he also didn't like the private duty aspect of it and maybe didn't appreciate it he thought that um the bells and whistles of a heavily regulated Medicare agent that had the ability to invoice different payers like Medicare and and Medicare Advantage plans um maybe had more staying power but to me that that business model seemed like more sgna and you know more you know kind of more volume and business risk and liability and and a thinner margin um the clients in that business business though the amount of patients being discharged from a hospital every day is endless right so so the market there is is very is more solid I think than long-term Private Duty Care so he was he was more F your demand the demand side is demand side much easier to come across there yeah you just need to um you know kind of have the right referral sources at the right hospitals and there are markets that are saturated but the amount of people being charge from a hospital every day that needs some sort of therapy is is is kind of endless um yeah so that's the business he was in and the business that he liked and you know he advised me that my deal was maybe a little more a little too expensive it was probably he thought it was too small also I think after he heard my pedigree he's like you know look at this sde and after you pay the bank you know what are you going to be making you're going to be making less than maybe you made on Wall Street um and he also knew that the clients in the private duty side are come and go can come and go quickly you I've seen it in the two years that I've operated the business you I had one week or one month where a number of clients passed away from like the same flu in the same neighborhood and you know that really hurt our business so if you're not if you're not really focused on the top of the funnel in my in the long-term private duty business um you know you you can get into trouble so he he he was worried about the staying power of it um but yeah he you know the search fund Community is incredible I you know I'm just some guy that pinged him and he's like yeah let's get on a call like this and I got you know I took his two cents and um you know why didn't it discourage me uh I don't know maybe I just felt something with the seller um well you also as recall from our preall there you looked at the lifetime value of the clients and saw that that was a pretty pretty good number yeah it was it was something like 80% of Revenue was due to clients from the prior year um I've seen that go up and down in the two years I've had the business but it ticked a lot of search fund boxes right there was no customer concentration risk there was a lot of recurring Revenue there was no cap X it it's a fragmented Market with no um you know big player in the space it just ticked every box so you know I wanted to get opinions of players who were in it and and I listened to Rob and you took it into consideration but at the at the end of the day um it just took too many boxes and I so I did it yeah Morgan we got to start wrapping up even though there's some some juicy things I want to get to here so let's just see how we how we go one thing that you said to me that was really interesting on our preall was because you'd always heard about how small business owners can kind of reach a ceiling in their growth and it can be really hard to puncture that ceiling and get to the next plateau and you didn't understand it and I think I don't understand it still even though I know that it's the conventional kind of experience what but now you do understand it now that you kind of can see it and feel it so educate us on that I see it I feel it um and I just kind of went through it so in the first two years I um that you know the business was going well called the first 18 months probably six months ago or 10 months ago I I really I really did invest in growth and and creating a platform that could do more than what we're currently doing and uh it it cost me on bottom line so like our Top Line is going to stay the same we had that 40% growth in year 1 from 2 and a half to 3 and a half um in year two we're you know I can see my Quickbooks right now we're going to be at three and a half again so flat year-over-year but the the net the take-home pay is is going to be down a little bit maybe from um you know 23% to 18% or something something like that and um it was hard to choose to just spend that money on um building new things in the business that will help us get you know handle uh bigger business when there's no guarantee that you're going to have those bigger sales you have to invest in the infrastructure and the scale before you have the sales and yeah I can see you know I almost was thinking I was two years in and looking at my debt my net debt from the business loan was at was at 50% was half was halfway done with a 10-year loan I'd be done in four years I was halfway done in two years and I'm like well I could just keep doing it like this and in two more years there'll be no debt and you know maybe that'll you know maybe that's what I should do but when you're in this seat um if you know if I was older that's probably what I would do but um when you're in the seat listening to your podcast inspires me to focus on growth and think a little bit bigger I think I I mentioned that at the beginning and um so that's that's what I did Morgan to to be clear what you what it is is this decision to basically take a lot more like a small business owner will have sweat and toil to get where they're at and they're making a great living and they got a system dialed in and things are basically there's basically a smooth status quo and so the decision the reason why it's hard to then get to the next level is because the decision is to disrupt that status quo take out less you know take home less invest basically invest in the business so take home take take less money out of the business for yourself and put it back into the business without the promise of you know that yeah paying paying dividends getting new sales whatever it is you're targeting and and again like not not just it's not just an investment decision if I put in 150 or 250 into my business is that money going to come back to me but it's also this this psychological like you've got something that's nicely a machine that's smoothly running and you're scared about just disrupting that and can you recapture that that yeah no it's it's definitely it's all of those things you you have to finance that growth investment yourself and I can I can see it's a um it's kind of a risk tolerance question I guess and and if you had started from nothing and and you're in your 50s and 60s and it's it's at this scale where you're making 6 800k a year um can see how it would be hard pressed to go take some huge risk uh investing at that point rather than just take that uh off the table um and then you you hear a lot of um or at least I see a lot on on SMB Twitter um you know either there's nothing wrong with lifestyle business and there's nothing wrong with aggressive growth investment and m&a growth um just make sure you know which one you're doing um and I in the face of that I think I am growing at the fastest Pace that I'm comfortable with you know owning all owning all the risk it's my personal guarantee on the line um I would say I'm investing aggressively compared to most people would in that in that seat but I'm I'm managing the the the the reason I was able to invest in growth sort of 18 months into the project was because I had built you know I had I had firmed up the balance sheet certainly wouldn't have without having the balance sheet you know the net debt have been cut to almost half now now I feel like I can take a little more risk and the fact that that decision is in my hands is that's the best part about being an owner operator yeah wait wait well perfect perfect segue uh so I want to ask you yeah how how you're how you're feeling now that you're you're in the seat and and we've talked earlier about your psych psychology and how you got to got to this entrepreneurial Adventure um you nett it out for us and uh and also and also not just like are you happy are you not but just being an owner operator for a first time and how how it feels different than being a W2 person so all of that take it any way you can yeah well the last bit you said um just so much more satisfying I'm I'm deeply satisfied with what I'm doing every day you know I I feel like I'm always working on building my business something that matters something that has direct feedback to me um and then as far as how I feel you know uh from a risk standpoint where you know being a W2 Guy versus where I'm at now um I'm starting to feel a little bit more confident about this path I'm already two years into owning the business and it's been up and to the right you you think I would be like you know celebrating but um I'm I'm cautiously optimistic that it's going to go really well in 2023 when I when I look back at the business that I bought and when where we're at today um it's very different from the offices to the Personnel to our processes and digitization um it's it's all it's in a position to be a much bigger business um you know we're only 40% bigger than the business I bought but I I I think a double from here is realistic in the next year or two which would be a a meaningful result for me so yeah I feel I feel really good about the decision um just my general satisfaction dayto day is much higher um and I would I would recommend it to anybody who's who's got the edge my my advice would be to start searching speaking to Brokers speaking to Deals and try to mentally put yourself in the space of doing that deal because once you start pulling on the thread it feels more real and and that's kind of how the ball started rolling for me yeah yeah yeah W well if you can double this in the next couple of years call it Morgan first of all impressive that you think you can do that again without much additional overhead like wow uh and give or take but even if you can loose like roughly do that that's pretty pretty amazing and then secondly just going back to the point about demand and how if you're on the Medicare side in the in the home healthcare world the demand kind of as you said people always coming out of hospitals there's just kind of this persistent persistent demand but and in your case you don't have that so you're essentially having to top of funnel things drum up demand how are you so confident that you're going to be able to effectively double your demand in two years so we're going to focus on Geographic expansion but uh you're right that lead gen is um is going to be my number one Focus going forward and and I now have the support that I can focus on that I have I don't have as many in the business day-to-day things to focus on I can focus more on lead gen and I think a lot of that demand generation you can do by just being a little bit better at the margin and then the mom and pop down the street with your your SEO presence with your networking presence you know in person at the assisted living facilities at the hospitals um with recruiting better salespeople with providing a better experience to your existing clients so that they refer you every it's not just one thing that's going to do it you just have to do everything a little bit better because I've been shopping for tuck in Acquisitions and I've met with other Sellers and and and a lot of them are in their 60s and 70s and and they're just not doing those things there's there's yeah there's a couple franchise systems there's a couple private Equity players and they're they're trying to do that but um I'm gonna I'm going to bet on me to to be able to do that and and invest in the right people the other thing is I'm in South Florida and uh the demo Geographic Trends in Florida for this thing in particular are really good a a rising tide lifts all boats like I in the beginning inflation the first year you know our growth was due purely to inflation and our and the Aging population of our current clients you know essentially so you know today the median age of a baby boomer is 68 yeah like our our go-to client is probably 75 when they start with us so it's only we're on one of those Rising ties lips all both sort of things um and we'll try to expand geographically I don't want to make it sound you know too easy but it I don't know it's gone it's gone okay so far well well and actually but on that point Morgan like being somebody so you know what a lot of Searchers have to do is they buy outside of an industry they have experience in so they hit the books and and you know there's a steep learning curve to learn the industry once they get they get in there how difficult would you say it has been to learn this industry you you touched on it being a highly regulated one so that's probably a big part of the learning how what's the learning curve like for somebody who has no home care experience steep um very steep it is steep uh it's it's very it's heavily regulated um so just getting through the regulations like the administrator of the firm has to either be a Clin a clinical person a clinician like a registered nurse or nurse practitioner or something like that or have had supervisory experience in healthcare um but there are way you know obviously there's ways around that you see private Equity guys doing rollups and they own it and then the management kind of runs it um but the but the way I did it is just go all in and and I'm learning the regs you know one piece at a time and there there's no substitute for time in the industry I what I am finding at least in private duty long-term care is um I you know I was a little overwhelmed at the beginning but now I I find that uh oh I'm actually one of the only people like deeply interested in seeing the whole picture of the regulations and and I speak to other a agency owners of multiple years and they you know they they stopped reading the rigs a long time ago and they don't care where the industry is going and they don't know the whole picture and and and trying to transfer licenses around the state you talk to different departments um and each department kind of only knows their their narrow scope of it and and no nobody really knows the whole picture so private duty I was able to overcome all that I think with my two years experience so far um but the Medicare side um kind of the side Rob Graham advised me to go I would not even knowing what I know now would not feel comfortable buying a business the size of the business that I bought on the Medicare side because I just don't have that clinical experience and I just I wouldn't have been able ble to to you'd have to buy a much bigger business if I was going to buy a Medicare business which I I I don't I'm not going to take that off the table but it would have to have um at least a layer or two of uh Management in place already for me to learn from I wouldn't be able to buy a mom and pop Medicare business there there are those they exist you know run by an RN or a doctor or whoever who have you know just these small mom and pop Medicare businesses I would not buy one of those just cely due to the the learning curve you know regulatory burden hurdle to get over I just it's too much Y and it's and it's Healthcare right so it's a little different from other search right so like it's fine to be a profit maximizing capitalist in HVAC and Landscaping but in you know Medicare and end of life care and and taking care of people's loved ones at home it you want to do it by the rules it's not it's not move fast and break things it's you know it's be well educated on the system and and deliver the best care within those bounds and you know just just buying a Medicare business to roll them up without not without knowing much about it you know you could lean too far towards the move fast and break things you know theme in a in an industry that you shouldn't do that yeah well I'm really glad you said that and and we'll leave it there Morgan because yeah we we I have all of my questions have been oriented from a cap very capitalistic perspective and let's not lose sight of the fact that this industry exists to care for people who are at the end of life uh you know a a a very difficult and wrenching time for them and their families so it's um and and and one thing that came up I had Jerome Buon on probably nine months ago who bought a Visiting Angels uh franchise in North Carolina and now has two um and he and he we talked a little bit more about this aspect of the industry in that conversation especially with respect to the people who work in it you know the caregivers and how so many of them are in it because they're motivated they're so they're so there's so much heart they're so motivated just by the work um and uh which I found very beautiful uh to be in that there's an industry that's so Mission oriented um not to be naive though because Jerome was quick to point out that that also means that they're not necessarily always so reliable or so business oriented or so professional maybe as as a polished business person would expect um but it's it's it's a passion business in some in some sense um yeah yeah what I'd like to see is them be connected closer to the clients that they serve and receive a bigger piece of the pie um and our our business model sort of is geared towards that or Wards less spending on the regulatory aspect of it and more you know more more dollars in the caregivers pockets and then and then also just on the the HQ side you know in our office the administrative side I just want to mention I think in your recap like a couple weeks ago you said one of the things that Searchers in this operating seat felt most strongly they didn't expect was you know giving back to their employees so I have lots of caregivers in field um but the the real employees who sit with me dayto day the the four of us um yeah I love that they all are making Top Market compensation and um you know just trying to educate them about where this business could go has definitely been one of my favorite things about being an operator oh great well thank you for saying that great call back Morgan on that yeah okay well I have to let you go now we're over time we most of what I wanted to get to so uh we'll we'll have to leave it here how can people get uh reach out to yougan please uh LinkedIn is probably fine all right Morgan mccaulay all right uh anything I didn't ask or well there are and I already know there are some things but anything you didn't get a chance to say that you wanted to I think we said it all man that was that was really fun thanks for having me I I appreciate it I hope to see you down here in South Florida soon I know you have the ties so come on down and you know if you interview Pete you have to come meet both of us Blue Anchor do you know the spot on Atlantic I know it I know it well I'll see you there yeah yeah great all right thanks a lot Morgan yeah thanks will I hope you enjoyed that interview make sure you subscribe to the acquiring minds Channel below we are now publishing twice a week so tons of new interviews and stories to come stories that will help you along your own path to acquiring a business