Nick Acres welcome to acquiring minds nice to be here appreciate it Nick you acquired an MSP a managed service provider this is a category that we hear about a lot in search but I've actually not yet had on a guest who bought an MSP so we'll hear about the industry of msps you also worked with a search accelerator to buy this business so we're going to hear all about that as well and so much more Nick please start us off with some background on you yeah happy to thanks again will for letting me join your great show here um so my background by way of education is masters in chemistry and um while I was doing that work happened to invent something kind of in the Advanced Materials category that happened to Garner a lot of popular interests was in Popular Science for example was mentioned in Array kurzville novel and so you know get this crazy idea to try to start a company with this invention so figured out how to license the technology from the University I was at participated in a few kind of startup contests and ultimately raised some Venture Capital funding and um you know all told raised you know roughly 25 million dollars this was you know this was close to 20 years ago so that was a lot of money back then uh to raise from from VCS it was a great experience you know I had never had any business classes or Finance classes uh while in University you know it was just pure science track so I had to learn all of those aspects of running a business hiring employees all the legal just everything uh really really good experience and then we ended up bringing in Emerson Electric as they're strategic at about that eight year mark and um you know are still very young had no interest in working for a big large multinational and it was just a very natural uh way to to separate from that activity was that like a good exit for a young founder I mean give us you know net it out for us did you do well um I did okay so again it the I think the VC environment at that time you know nearly 20 years ago is very different than it is today um you know today there there's a lot of emphasis on protecting the founders position um back then that was not the case at least in my situation and a lot of the other Founders uh that I know uh during those times so you know I experienced quite heavy dilution throughout the yeah the multiple rounds of fundraising so it was perfectly fine you know it certainly wasn't life-changing but um you know I think the experience far outweighs whatever monetary gains there were thank you okay so after your your exit to the Strategic Emerson Electric carry on in your in your story please yes so uh I joined an engineering design and build firm and was running sales and business develop for them this was a really fascinating job uh to me and it was a tremendous fun you know probably the smartest folks I ever worked with uh were at this company and what we did was primarily in defense and Commercial Aerospace designing you know one-time unique pieces of equipment that would be used to test like the 787 for example or um test certain components in military jets the F-35 F-15 f818 all these types of things so again just a really great opportunity and fun job um but I did that for a few years and was then recruited to join a company in the chemical manufacturing space so uh you know there were a few very interesting things there um you know one it was my father-in-law's business so and I knew that there was no succession plan in place at that time so you know I was definitely thinking long term of that potential opportunity but then getting back to my my chemistry Roots so to speak um and that business when I joined had not yet gone through the professionalization Stage IT gotten to a very nice size you know probably 200 employees when I joined but they didn't have the systems and processes in place so uh you know one of the number of things I did was was really begin that professionalization so establishing kpis doing very simple things that uh like the first budgeting process the first time of implementing employee reviews modernizing the whole I.T infrastructure recruiting and running their board um and it really it really transformed the business and uh he was there for I don't know six or seven years and and doubled the company in size and revenue employees and square footage all these types of things Nick when you say double the double the business do you mean are are you the de facto leader of the business then at this point even though your father-in-law is the owner so my title was managing director I was really more of a president type role um you know my father-in-law was certainly was there every day literally Saturdays and Sundays too um but you know I was driving all of this change this this was I can't understate how dramatic of a change this was for the organization um I I think it had been around for 30 years by the time I joined or so um and had been doing things the same way that whole time so you know again a 30 year old business and now you're going to do a an annual budget for the first time ever these are these are big changes within those walls okay so you are leading the charge in the professionalization of this business and it's it's seeing to great effect you know all the key metrics are have doubled essentially over how many years it was about six or seven years okay and so then what happens at the end of six or seven years you you are not now the owner of that business so I take it that this succession plan um did not play out that way yeah I think probably the uh the best way I could summarize it is that if you've seen the HBO show succession that's what it's really like um which character are you none of the kids are very flattering portrayal so so no hopefully not no but I I did see someone write a comment about that show that basically said they've never seen a demonstration of the ramifications of complex narcissistic abuse in families the way that show laid it out and you know I think that's really what was going on um you know I'm careful I'm not looking to to air any issues here I think this is a very common I think I know a lot of second and third generation family business folks and everybody has the same stories um so I don't think it's really an uncommon thing um and we had just you know the family Dynamics I think we just reached a natural point of I think it pushed the organization and pushed my father-in-law about as far as they could take and um it's just time to do something else and of course you know the the difference between you and succession is that it's success in succession it's their own father in your case it was your father-in-law meaning there it was probably more delicate because you know that catches your wife in the middle um is there anything to say about that or does that fall into the let's not talk about it bucket no you know I'm happy to to comment on it um you know electrically it was uh it was a traumatic experience um and I mean that very seriously uh for myself but also my wives um so it was uh it was rough got pretty dark there for a while so you you leave that business and then then what you've got a lot of you're not yet what you're not yet 35 or not yet 40. um got a lot of experience so what do you choose to do with this experience well I mean the the first I think natural reaction is you got to go find a job um and tried to to do that you know certainly had some very good relationships there's a uh an owner of a fantastic business here in town that you know he put me through the full interview process essentially as a president of a division um it would have been it matched my skill set you know almost perfectly perhaps um but I remember after the the full interview process with his full leadership team and everything we went to lunch and you know I could tell that he was he was very nervous he was visibly nervous so I knew what the answer was before he could even say the words uh which was you know it wasn't it just wasn't the right time and his specific feedback was look you are too you are too raw right now I mean you got too much going on and he said I don't think this would be good for you right now um and it's funny how things things work out um you know at the end of the day because he said no you know and many other things in in the sequence of events you know here I am today running this company and having a blast and you know that guy is on my board for this company so it's great you know I actually owe him a thank you for for that decision he knew something that I didn't so you know after that experience um you know I just knew that I had to find something for myself um there had always been this threat of ownership it you know working for somebody else really wasn't gonna fit the bill and you know thinking back on the time at different points along all of these companies that engineering company at Joe's chemical you know I had looked at buying businesses not serious not not seriously in the way you do during cert you know I would see something or adhere something or meet a broker and kind of take the first step you know certainly at at the chemical company we explored uh acquisition opportunities looked at you know very specific companies that we could acquire um and I had the beginnings of um an acquisition thesis in that chemical space so you know after leaving there I started to flesh that out in more detail and started to shop that acquisition thesis to private Equity firms and uh actually started working um and I guess it was a pseudo independent sponsor type activity that I was doing although I wasn't being intentional about that um and and really begin pursuing deals with two private Equity firms and you know they were giving me deal flow I was generating deal flow myself via my network but also cold calling brokers in the industry and you know we looked at a number of things in in large 100 million plus acquisition situations uh submitted Lois but obviously never got anything to close I was doing that for probably 18 months and then um happened upon the the search fund world had never heard that term before uh started to investigate that and also at the same time came across Nova Stone Capital Advisors which is you know like the accelerator type model um sponsored search model and uh it was very intriguing to me because one I could get some compensation uh you know not that it was entirely necessary but you know this this whole world of acquisition was very foreign to my wife and so you know you talked to her about this and you know not bringing in income and I'm gone you know all the time what are you doing I don't know I don't understand what's going on here plus you're not making any money um so you know this sponsored search model had some appeal I applied to Nova Stone uh was accepted and became their first Searcher in the U.S so Nova Stone originated in Europe it's Swiss based and they were bringing the program to the U.S at that time so first Searcher in the U.S and ultimately closed the their first U.S deal how did you come across Nova Stone yeah I think truthfully I saw it come across my LinkedIn feed and you know whatever ad they were running was intriguing enough for me to click on and it was started with a a simple you know self-recorded video interview you know maybe a two-minute little pitch and Then followed by what ended up being the most rigorous interview process I've been through uh it took about six months many rounds um you know some Financial modeling testing all types of different things and uh was ultimately accepted wow that's so six months just to be accepted into Nova Stone that leaving aside your actual search that's just when the actual search begins that's right yeah and you had said is that your wife as as as many um as many of my guests have said about their own Partners or people in their their networks it's like they don't understand what a search is or what you're doing but they do understand you're not making any money um and so so you liked the idea of this of Nova Stone which is a search accelerator because they have kind of traditional search fund uh terms which include subsidizing or funding the search process for you so you are making an income probably less than you would make an industry but you're making something so you can take that that and show that to your wife and of course you know it does help it's it's not it's not purely symbolic um what what else did you like about the they're offering um and yeah tell me more about what intrigues you because let me reframe so most of my my guests have have been self-funded and kind of just gone out there and and figured things out maybe they've been through some sort of educational program but a lot of it has kind of been self-taught listening to the pods reading the books um and so an accelerator I'm always interested to hear about one's experience with an accelerator so tell us what you can about that experience why you chose it what you liked sure um I also was looking at you know I had this history of looking at larger deals with the private Equity firms um so I wanted to to continue to have the opportunity to play in that space and the Nova Stone program um looked like it would allow me to do so so you know their target range is in the two to five million uh of ebitda can go higher in some cases you know perhaps up to even eight uh or nine and so so that also fit with the very specific industry thesis that I had and what I personally wanted to achieve they also have a fairly significant team of folks that support you in their search so you know they have an M A team that helps you with all the financial modeling they have in-house legal to supplement different stages uh they have you know an Outreach team that can help you generate lists so I viewed the whole program as a way that would accelerate my search and improve the odds of success and I think that proved itself true during the various stages that's that's great and that does sound like a lot of added value now the terms a traditional search fund terms the the economics are also a giant question here um they're perceived as slightly less favorable than self-funded at least from a very kind of crude sense of how much of the business you'll ultimately you search your entrepreneur will ultimately own now traditional search fund folks will say yeah but you're you know it's a bigger as typically you're going to be buying a bigger business so yeah smaller piece but of a bigger pie did you think about that um at all did you did you um did you have other models of buying a business where you could compare and contrast those terms you know honestly no I mean I did at least understand that the Nova Stone terms were um very much in line with the the traditional sponsored Search terms but I was not doing this for any Financial motivations you know I was doing this for something different which was really to prove certain aspects of leadership that I believe strongly in you know in my experience at the chemical company I think achieved a lot of great resume building things you know doubling the size of a Bill's business building a factory uh in Poland running aboard all of these types of things but what I couldn't solve for was culture um and that bothered me so my motivation to do a search and ultimately you know be the person in charge was to prove that a certain type of culture that is really you know an employee first type mentality will work so that's why I did this well let's double click on this a little bit Nick so because culture can be you know it's one of those things it's very amorphous and it can all and sometimes it can even be kind of be poo pooed I mean probably by by leaders of companies that have bad cultures that's why they have bad cultures because they don't they don't take it seriously um but what uh for maybe people listening who underestimate the value of culture or haven't gone through the experience you did of a bad culture what would you tell them just to elaborate on on on this this hot button um thing for you this thing that was so hot buttoned that it actually it was your entire why for for this next phase of your career yeah so you know I guess having seen perhaps the the very negative side of this um you know living through that uh affects you you know if you if anybody is familiar or looks into kind of the Simon sinek or uh Barry waymiller uh is a company that has a lot of material about this employee first uh style and they have statistics you know don't don't hold me to the numbers but you know they have very high statistics that you know a a bad boss can contribute you know something like 80 percent of of the negative health effects on on a person than anything else uh in their life um you know I mean it really does affect people so you know what's what's the opposite of that and and I can we can talk about some of the things I've done here in short order but when you create a really excellent culture that allows people to do their best and people come to work excited they come to work empowered you know I could give you very specific examples of just Little changes for folks here that I've seen you know a salesperson just start hitting it out of the park just by supporting them and listening to them listening to what they want and letting them go do what they're they're best at you just wouldn't believe how this person has changed for me in just two months it's amazing that's so cool Nick well not to trivialize this question of culture but um you know I thought it was I thought it was interesting how succession and Ted lasso these two shows were both very popular and both airing contemporaneously and I was watching both and really they're both they're both kind of shows about the same thing which succession won about just um toxicity and dysfunction and um I mean yeah just just the I mean it's just exhausting and Bleak to watch that show um meanwhile you have Ted lasso uh which is a show about you know this unlikely leader in the incredible Ripple effects of a guy who's an exceptional leader and and how and how powerful that is and how it just changes everyone around him and just elevates everyone both individually and collectively um and it so these two shows are just two sides of of one coin which is culture so anyway encourage the audience to watch both but together uh don't watch just one or the other because we want to see a full picture of of this um all right Nick did you were going to say something well I was just gonna say you know perhaps to to put a finishing point on it is you know when you know I was told that the type of culture I'm describing uh doesn't work and you know the surest way to get me to go prove something is to tell me that what you're what you're saying is it just isn't possible what had you said that this person responded well that can't work what had you said I'm going to create a company with a good culture what were they were they so um discouraging about well I think it's you know perhaps the the criticism that you alluded to at the beginning there that you know no culture is not having a great culture doesn't um result in growth you know you gotta just tell people what to do constantly micromanage and you know beat them up yell at them all this type of stuff otherwise you know the employees are just going to sit around trying to get one over on you all the time you know that type of attitude okay Nick well we um that was a bit of a digression but um not really because it because it really is so Central to your story um but we got to catch up here a little bit on the plot so you're working with Nova Stone tell us tell us some about uh the search itself yes so my search started in December of 21 officially and I had raised my search capital on a perhaps hyper-specific search thesis at a very particular part of the specialty chemical sector for obvious reasons and began looking there you know I thought I would leverage my network and do the whole proprietary thing just like everybody kind of says at one point um you know began working with brokers in that space got some deal flow uh you know found one really great opportunity and especially chemical space you know just a perfect fit perfect fit kind of for this the reason for succession in search there were three owners all of retirement age that wanted to get out it aligned excellent with my background uh it was not near to me so I went and visited the the they were very forthcoming with information transparent even let me meet all of their employees this was all pre-loi so it felt like it was going in the right direction entirely um but you know I wasted a lot of time frankly uh through all of these steps to ultimately get to an offer uh that that was high on the multiple side of what I think you see in search it was it was close to a 7x and the reason for that is they were on their way to a 7 million ebitda um yeah it was just a great business so I thought it was a fair price was solving their succession um but ultimately they said no clearly you know I'm not really clear on the reasons why they still own the business um but wasted probably six months and was doing all the other you know pipeline building as well in that time frame and pursuing other deals but it was that experience as I know a lot of it your folks and guests now talk about that really shifted me to focusing on broker deals almost exclusively yeah at least you know there's a somewhat serious seller on the other side of things so this was brought me to about the middle of summer of 22. and was going in in addition to looking at the brokered opportunities I expanded um Beyond especially chemical thesis because other deals that I was looking at in that space the prices were just too too high for the search fund model you know the everything was over a five you know some cases 10 plus so it just didn't fit and I was starting to feel the pressure of time which was the reason for broadening the lens on Industries and uh you know so continue to look at a number of things submitted a few Lois I really didn't submit that many Lois throughout the whole journey maybe five or six and then came across uh I was just actually having a networking lunch with a local business broker didn't know of any deals that he had going into that launch sat down explained search funds which this individual was not familiar with explained the focus on solving the succession issue and after that dialogue then he brought up uh what became this opportunity in in St Louis Communications and the trick there was really solving this succession challenge the owner did not want to sign up for private Equity he wanted to retire um so it was really kind of a perfect I think that lunch was beginning of September of 22 we went under Loi Christmas Eve and then closed on May 5th so that's eight or nine months from that first meeting yeah and closed on May 5th means you just passed your two-month Mark so this is a very recent acquisition it is we are still in the honeymoon phase for sure uh you know I'm having a tremendous amount of fun it seems like the folks here are really enjoying the transition we we have plenty of problems um but I you know we solve those problems and just keep moving forward and so St Louis Communications so you're in St Louis just to be totally clear right that's right um great and then just um back into the search for a minute so you're working with Nova stone for this and so for out for the duration of all of this you're getting the support you're getting modeling you're getting search support one of the things that accelerators can also provide that can be so helpful is comrades other folks in your cohort who are searching alongside you um given that you were the only they're they're first and I assume only American at the time that were there other people in your cohort maybe in Europe that you were having Zoom calls with no I mean that's a very good point you bring up and so although I I was there first uh in the U.S they very quickly you know within a matter of months additional us-based Searchers uh were into the program and we um so yes of course we would talk amongst ourselves both the U.S based and the The eu-based Searchers which was really um great uh for obvious reasons and um the program has grown perhaps unbelievably yeah I think today you know don't quote me on the numbers but it's it's I think very close to 50 total Searchers so you know and that's roughly broken up 50 in North America and the rest in Europe so it's quite a large program and then going back to the economics for a second the uh we maybe we should just remind people what traditional search fund economics look like for those who aren't super familiar it's essentially traditional search fund economics which you said novason is close to or exactly a replica of but I'm not speaking for Nova Stone I'm just speaking for traditional search funds which are um basically eight they as as you'll say eight and a third eight and third eight in the third so you get so you get you as the Searcher get eight point three three percent of the business uh um upon closing and then eight point the the second tranche of eight point three three percent uh vests over your tenure I believe over a certain number of years you just earn it with time so that gets you to 16 and two-thirds percent ownership of the business I think I'm getting this right I hope I'm I hope I'm not I'm sure somebody will correct me if I am and then the last tranche of 8.33 is based on performance hitting certain um hitting certain growth or irr numbers for um for for the investors and the growth of the business so you kind of have to that's that's Performance Based and so if you if you hit that then you own 25 of the business and that's kind of the ceiling you know you're only as as a self-funded Searcher only ever going to own 25 of the business and um I don't want to digress too much but you know self-funded Searchers might own a hundred percent of their business or if they take on investors they might own 80 or 60 um so 25 sounds like not a lot um but again traditional Searchers look for bigger businesses so it's 25 of a larger pie typically not always typically uh and um another counter argument is that like you know if you if you come at it from a different perspective like a private Equity perspective where private Equity shops will buy a business and then install a CEO or an operator those CEO operators will often have a bit of a bit of equity in the business but only a bit I don't even want to say how much because I don't really know but I get the impression like single digits so from that perspective um 25 is actually a lot so um yeah endlessly debated at this point but the the point to leave the audience with is just those numbers and that 25 ownership Max is what you're looking at um based on time and based on performance anything to correct me on their neck or does that feel right no that's all um uh correct from my experience and in the novason experience with and you're absolutely right to compare it to the private Equity CEO model um in in the instances I've been involved in you know the CEO is you know three to five percent in that range so yes this this allows you to to earn more more Equity than that and pursuing decent sized deals yeah yeah and and now Nick because you didn't know much about search you were not somebody uh consuming the pods and in reading the books um before you you joined with Nova Stone um you know that actually happened rather quickly with you that you started working with them and got involved in your search but now you do listen to acquiring minds and consume other media as I know and and so you know about you know all these different structures you know about self-funded you know about um buying smaller deals and owning 100 of them are much more than 25 do you reflect any differently on it now now that you know what the range of options include is there do you envy at times self-funded folks are you or not at all oh that's a good question um you know truthfully I think for me I'm in I'm in the right spot for me you know being able to you start with the business of this size um you know have a a board of of the quality of folks that I want to have um you know having the free cash flow to to reinvest in the business in meaningful ways um no I think this is the right thing for me well and as you said at the outset the economics was not your your primary criteria at all you told us um STL Communications um did you did you give us a bullet points on the business how many employees it is it was founded in 1989 1990 he can you um go through those for us yeah sure so uh yes correct founded um uh 1990 and uh there are 41 employees today uh operates in I.T managed service space particularly what's called unified communication as a service you cast is the acronym and this basically means any type of communication uh technology that companies are using from their phone to zoom to teams all of this type of stuff falls under the ucas umbrella it seems to have a lot of the the criteria that people look for and desire in search fines you know recurring Revenue low capital um sticky very sticky product of course those were all of the things that that attracted me to it as well great okay and so in in the size of the business can you give us a picture there you I I know you need you you can't give us too much information but novastone requires that its Searchers look for businesses of two million dollars ebitda and above so we know it probably crossed that threshold is there any more color you can paint there yeah sure um happy to provide as much as I can without being uh too specific so you know the search range for Nova Stone and myself was really in that two to five million uh of ebitda and um you know I think we fell in The Sweet Spot of that certainly the the purchase multiple uh is important for all of us I think we did very well there um so it's uh I think it's a great deal decent size um plenty of real nice cash flow and um you know 41 smart folks that work here okay so you you say that it it operates in the ucas you what was that unified communication as a service was that right yes um that Niche within msps so anything kind of anything communication related um but can you can you give us more about the MSP industry maybe um you've already touched on why Searchers like it so much recurring Revenue sticky um maybe some of the niches maybe some of the opportunities like for people who are really novice to the value of of the MSP industry um tell us what you know a little bit yes so um the MSP space very broadly in in encompassing all of the the different little niche areas in it I believe is growing somewhere into you know five six seven percent compound annual growth but I I know specifically uh the ucas sector is growing at 15 percent uh in North America and 20 percent globally you know of course the drivers that we would expect or all of the the remote and hybrid work environment but also just different Technologies for communicating internally or externally with um employees and customers um so you know that that high growth area was attractive uh as well as we looked to create our value creation thesis and the other really interesting statistic is you know only about 25 or 30 percent of businesses have migrated to some type of cloud solution which is really what you know ucas operates on although they're they're nuances to that so you know tremendous opportunity for customer acquisition and the market is very fragmented uh lots and lots of companies in this space doing one million or maybe two million in Revenue and then you have of course very large ones uh at least in in my research and experience finding somebody in in this size range is is less common so you know certainly there's consolidation opportunities which is which is part of my plan um with so many smaller companies out there so you say it's part of your plan you STL the business that you bought is larger than a lot of the the other players out there so it smells like a platform acquisition to me a good a good platform to go out and go out and buy smaller smaller bolt-ons right is that the is that kind of the idea it certainly is one of the pillars of my uh growth thesis thesis um you know I'm looking at one company right now that's uh just a little bit above a million in Revenue you know close to 300 000 in sde you know looking very seriously at it you know and an Loi is is probably pending here very quickly and I'm looking very seriously at another one that um I I don't remember if it was on your podcast where a guest said the the fastest way to double the size of your business is with a signature and uh no it's a great line though and so this second one uh kind of Falls in that category that you know just you know we all know there's a million miles between here and there but um you know look we're already Off to the Races and looking for other uh bolt-on opportunities well let me let me press you on that a little bit as I'm sure your your Nova Stone folks have uh doesn't feel a little a little early a little over eager you're only two two months in the seat you have that much confidence that you could do another deal so like so soon certainly I you know I don't want to trivialize the the complexities here um the the million dollar size one you know I think would be fine it's in a relatively close geography to us um you know there they would roll right into my existing team I think fairly well the larger one certainly is is a is a different story and and we would be you know appropriately thoughtful about that um you know that one poses other potential issues at this stage but yeah you're absolutely right it is early you need to be cautious but uh also when an opportunity presents itself you know don't let it pass yeah and are these opportunities presenting themselves because you are now somebody that has people your competitors or local folks owners have heard through the grapevine you know STL sold and so they and so they call you up basically deal deal inbound deal flow because they heard about your deal with STL is that what's Happening Here no it's I'm I'm continuing to be intentional uh about the search process so okay continuing the same Playbook as I was doing in the search phase uh now as as the you know CEO of this company but you know it's related to your point being able to point to this acquisition both to the owners of these businesses but also the Brokers uh has added it has accelerated the ability to get in on these opportunities so I do think that's a benefit on msps the the industry of msps which is a lar I mean really large I mean any basically any outsourced I.T I don't even know if people use the the word it the phrase Information Technology anymore but any Outsource it is I guess an MSP of of some kind so you can just imagine the flavors of msps out there you play in ucas but for the edification of the audience rattle off some of the other niches that you know exist in MSP land um just to give give us some more vocabulary and and points of reference Within msps sure and there are many more than than I'm going to know but particularly when you see these smaller companies that are in that million or two million size range they probably focus on just one or two areas so you have companies that just focus on cyber security you have companies that are very heavy on you know backups and um server that just do server management and you see companies that just focus on voice um you know so there's just so many of those little kind of singular Focus companies out there whereas when you get to this size uh we roll all of that in into one shot so as I you know was looking at this and thinking about the opportunity and having come from a manufacturing background I I look at it you know our number of offerings as kind of our manufacturing capacity right so we can go into a customer and say look we can take over everything you know if you want to just do your voice or you want us to just do your security fine but we have the capacity to do all of this and you can consolidate your vendor relationships to just one just us yeah in that uh that resonates with with our customers um you know we also because of our size uh you know I liken it to lead time uh in manufacturing you know I I have the the head count or we can do bigger jobs bigger customers and get those jobs done faster um than if that same customer was going to go piecemeal this out to two or three suppliers well this this raises the question that so often happens in all like just in so many different areas of business like Niche versus kind of generalist um in terms of your strategic like as a vendor what what do you how do you provide do you double down on a particular Niche and become you know those guys for this Niche or or do you do you go more more broad which has its own value the value that you just that you just described um and then but also from the customer perspective it's like you know do we do a point solution do we go with these guys who really know X or do we go with the guys who can just you know their one throat throat to choke for everything it's it's that tension I've seen that tension that kind of dichotomy play out in so many different ways in business even when you're deciding on like a SAS tool we used to talk about this in martech land marketing technology land and in the SAS businesses I worked at do we want to be a point solution or do we want to you know give the customer the entire marketing stack um so anyway um but it sounds like Nick you do have a position on this at least for where STL is in terms of its own size and maturation that you are trending toward being more of a generalist MSP is that am I right I think that's that's basically correct um and you know also part of my value creation growth creation thesis is to expand our product offerings so you know I always approached customers no matter uh which company I was at and you know asking them you know what what do you need what can we provide you that we are not currently in using that voice of the customer to really help direct us in our product offerings a couple more questions on MSP and then I want to just ask some kind of broader questions about small business life um and a little bit more about the deal on msps so obviously so by definition you're dealing with technology as the owner of an MSP and so so how much do you you know you're probably learning a lot about the tech how much do you need to actually learn how much do you Nick need to understand all of these tools and the way they they function you know this is the classic you know if I buy a plumbing business do I need to do I need to you know learn Plumbing sort of thing how do you think how should somebody contemplating buying an MSP approach this question that is a very good question and I think about it in terms of size of the business so if I was buying the self-funded Style or size MSP that might be one or two million in revenue and the owner has to be in there in the thick of it and designing servers and you know really you know you have to know the tech at that size I think yeah yeah at this size you know there's a leadership team here um obviously a lot of techs and engineers at least thus far you know I haven't had to dive too deep into it um because I have a team that does that so you know that the very first thing I did in the business was focus on cash flow I mean we all know how important that is so we spent a lot of time in the very early days and weeks making sure the cash flow was good um just kind of making sure that the daily operations of the business or functioning so that that all of these smart and experienced people can do their jobs uh to the best of their ability you know I I certainly will get in more in to the technology but um you know thus far it's just been making sure the business functions making sure that people can do their job and taking care of customers you talk about cash flow and how you've really really prioritized that that that is often a a learning for new small business owners that they underestimate cash flow and how it works and how it can be tricky and actually complex seems like you knew that going in that you really wanted to get your arms around how cash flowed in and out of the business why why were you so Savvy as to really really focus on that oh I don't know if it's anything more special than just having the number of years under my belt in in other businesses and knowing and understanding uh how important cash flow is to the business and certainly is coming into this you know day one really not knowing anything um you know that just seems the obvious thing that you have to focus on um because if I've tried to explain to my folks here who actually they asked me a very similar question to you is you know do you want to get involved in learning the tech maybe even why aren't you spending more time on that uh and he said look the most important thing I need to do for the company right now is to protect it and at least the way I think about that is making sure the cash flow is working so that we can operate the business hey our folks pay our vendors um and and just keep functioning so it just seems the obvious thing to do to me uh well and on this topic Nick you there was a working capital infusion was there not at at uh closing tell us about the thought there and how you how you approach that correct so we did um fund the balance sheet with uh some cash at close and we also had a a very nice working uh line of credit with our bank which I have not had to use yet but it's it's nice to to have it there um I would say if we did not uh fund with cash at close things would have been tight in the beginning um so it was the right thing to do uh you know I don't know exactly but there could have been a couple weeks that were very hairy uh had we not done that but it also it gives me you know having that cash cushion at the beginning uh you know I'm in a real good catch position right now I have this line of credit so you know that's why I feel comfortable thinking about these these follow-on Acquisitions particularly in the smaller size and and we've been able to immediately invest in the business um you know doing some things in marketing uh this company was spending you know close to a hundred thousand dollars a year in rental cars and you know reimbursing people for personal mileage and I mean that number just struck me as crazy and so you know I've bought several company cars now that um you know because I have the cash to do that and you know it's it's ultimately Gonna Save Us a lot of money uh to to continue to reinvest in the business so um I don't know whose idea it was uh on our team but it was a good one to put some cash into business and how did you calculate uh how much cash to put in was it like a percentage of must have had a percentage of something pegged to something well we were looking at the Historical working capital in the business and um you know put about half of that amount as cash gotcha again a little bit more on this subject of learning the tech or not and you know buying this business kind of as an outsider not not being a you know you know a ucas expert why was there business buyer fit here I really I should ask this question more I really uh like the the subject of business buyer fit why why did this one you liked there were things about the business that you liked that you've already told us but why was Nick positioned to add value um and as and as a as a quick follow-on like could you have could you have bought a a plumbing business of a similar size or a blue collar business of a similar size um or was there something about the actual Service delivery that this was technical highly technical you know um that I mean Plumbing is technical but you know what I mean like actually working with technology um that was a particular fit for Nick so I have a few thoughts there and I certainly got this question from you know my investor base when I brought this deal to the table and you know I would describe things you know if you look at the my career history those three experiences each one was in a different industry you know fairly significantly differently um and so I was able to transition to three different Industries successfully uh learn learn what was going on in those businesses um but also you know my attitude in each of those three experiences is what we're really doing is it's about the customer service and whatever we're selling is just the widget behind that so you know really focus on delivering excellent customer service excellent customer experience and whatever is you're selling will will find its fit I mean we would even tell our our sales people very specifically at the chemical company what you are doing is you are selling the customer service and our chemicals just come along with that and I look at this I mean this business is to me just it's a service business right I mean you're selling this uh essentially software as a service to your customers and if you're not delivering that excellent customer experience um you know I just don't think you're going to be successful in the long run so some of the things this company uh was doing to demonstrate that is when we sign up a new customer they have a an escalation list of contacts all the way up to having the owner's cell phone number and you know so the customer oh the owner if you need to um you know we have a service line so if a customer needs help they can just call us whereas you know on the larger side our competitors you you it cannot get somebody on the phone you know you're going to send an email go into a ticketing system and at some point be able to interface with them but it's not going to be over the phone wow I mean these things sound simple they are simple but they make a difference I love that I love that thinking about that that the the widget um the ostensible thing you're selling is less important than the service uh the service is what you're selling and then whatever the widget is comes along for the ride that's that's such an interesting flipping it on Flipping it on its head and what about buying a blue collar business would you have done that Nick I think so I you know in in any of the companies I looked at um I would try to be very thoughtful about the fit for myself at the chemical company it was years 500 000 square feet largely manufacturing facilities where you're dealing with uh non-degreed hourly folks um so yeah I think it would have been would have been fine um so yeah Nick I also just going back again to uh this theme of the size of the business the working capital infusion the um your your attention to the cash flow and in your early weeks there in your first couple of months there also in how traditional in the traditional model you buy a bigger business which you did versus self-funded which is smaller but you own more of it but just the the question of buying small uh is also one of you know how much cushion there is and how much um you as the buyer of the business are going to need to be really involved in the business you've already articulated that you really haven't had to do that because there's a management layer there because you bought a business of appropriate size for that but do you how do you think about like folks that you might hear on this podcast who buy a business that has 400 600 700 000 of sde which is you know um 20 30 40 percent of your size or less um and much far fewer employees how do when you look and hear look at them and hear those stories how do you juxtapose that with your own no I I certainly have heard those guests and look I think anybody that goes down any one of the variations of this process of buying a business you know forging your own path in life creating your own legacy hey all the best I mean you know how could you say anything but congratulations to any folks doing that I mean it's just awesome um so you know whatever fits your particular situation yeah is is great right um you know I think my um I mean this has been a fantastic Journey for me I mean it's changed my life my only regret is I didn't know about this uh when I was younger you know um but you know perhaps uh you know I needed all the experiences to get to this point for to to be what it is but it's one of the things I really enjoy is um with I have a nine-year-old son and a six-year-old daughter and so when we're ever driving around I'm always listening to podcasts usually your show or or one of the others that are talking about search funds and I just I love my kids being exposed to this world you know because I certainly wasn't you know all of this type of stuff wasn't available when we were young and uh you know maybe they'll get that little seed planted and maybe they'll start out with a little you know 100 200 000 sde business on their own Journey awesome and and what world Nick SMB SM the world of SMB what what specifically do you like that they are getting a window into yeah exactly the the whole that there are other paths out there in life than the traditional go to university go work somewhere as a W-2 um but there are other things you can do and I think you know we we all in this in this community know the the benefits and power of buying a business that has been around for a while and the value creation opportunities there well I I reading between the lines you well I guess you've said directly that things for the first two months have gone pretty well um you you're having a blast uh so have you had any fetal position moments have you I mean you're well capitalized so so you also haven't had a cash crunch it sounds like any fetal positions and um physician moments or uh and and also tie that into like yeah just how how you feel being an owner Now versus a career of being um not an SMB owner like how does it feel different sure um gosh I don't know how to describe that uh it does feel it just feels amazing frankly you know when I come in here on the weekends when there's nobody here and you're walking around and it's like this is your own place it's I don't know how to describe it um but in terms of fetal positions look with with my sticking to professional experiences um you know I've had unbelievably challenging things already that I've dealt with right you know employee issues um you know customer issues you know all the all the things that business folks have to deal with so it's going to take a lot for before I'm going to get into a fetal position here um so having those experiences is I think good um you know but look we we've had challenges that just tell a story um you know I had a a key person here I think it was maybe week two or week three walk into my office and give notice and this is this is a key person and they said look this doesn't have anything to do with you Nick meaning me they're like you know I started this I didn't know the owner was selling this business I started this process you know and now I've accepted this offer I'm sorry but you know I like you but you know I gotta go do this so well uh why you know tell me tell me what what started you down the path of looking for another job and and they told me all of their things and you know the long and the short of it is is that you know if I fix those things would you consider staying and I think the person was shocked uh at this conversation and uh you know some of those things I could fix immediately some of them they were going to have to trust me and you know we talked it through and you know I think there were some tears person and they stayed and now they are wow you know shot out of a cannon doing an unbelievable job so earlier when I was talking about culture that's an example phenomenal well it must be so gratifying that uh your your vision for creating strong culture is or early indications are that it's it's just being received so well that's got to be very exciting I I we're wrapping up here Nick but I want to take a couple steps back into just the closing or the deal itself the um one of it again going back to working with an accelerator which I think will interest people one of the values um stated values of that is of course support all the way through including doing the deal itself so what is what is it how much of the deal are you doing because I I guess they provide you already said they provide an m a team so they've kind of got I don't know they provide due diligence or they hook you up with a diligence provider but there's probably a lot of diligence that's being done on your behalf versus if you were not working with the accelerator um what how much of the deal fell on you and how how is that partnership with them looking like as you marched through to closing so in in my experience so I was still the the focal point of the whole process you know it's my responsibility to organize everything involved in the closing I'm the point person regardless of what support we had so we certainly did have outside legal uh outside qov provider but I'm I'm coordinating all of those activities and reviewing it and summarizing and all of this type of stuff Nova stone for me was very helpful in the modeling just because that's not my my background I'm not an Excel wizard so they they could help and assist there and run all the different scenarios and um you know obviously they're reviewing all the due diligence reports as well we're working together as a team you know I also needed to create the kind of the internal investment memo you know this huge document that describes the value creation VCS you know the whole background of the company the you know potential returns all of this type of stuff um so you know I it was very helpful to me to have them involved um it was a very good partnership and at the end of the day you know I probably shouldn't talk about specifics but to get to close just like any close you know there's stuff happening even at the the last minute basically and Nova Stone needed to really step up to do some things to make the close happen and they did I mean they made it happen at the last hour to get it to the Finish Line one of the you know search there's many aspects of the search for the searcher uh that can be very lonely right yeah well I think all of your guests probably talk about this yeah the the close was was certainly interesting um you know as I mentioned you know the Searcher is the point person at least in my case probably in most cases so you know you're the recipient of all the stress from the broker from the seller from your deal team your legal you know the Nova Stone folks in this particular example and I've heard other Searchers talk about you know it's important to have your support mechanism and I've heard very specific examples you know I would call my lawyer and and you know just unleash and cry and you know fall apart and they would bring me back I would just suggest to think about that's not perhaps the best way to do it you know certainly have your support but your deal team maybe isn't the best support people you know I would suggest you need to start acting as the CEO during that phase and demonstrating that you can handle the stress of a close and you can handle people be treating you poorly for whatever reason because of their own uh processes in in the closing and act as the CEO and demonstrate that you can handle this stress so you can certainly handle the stress of owning the business just don't rely on your deal team as as your own personal support mechanism that's great Nick what what a lesson in in leadership you gotta you gotta choose your sounding boards and and the shoulders that you cry on carefully you got to be aware of who your audience is yeah and one I think this will be my last question Nick the kind of about Nova Nova Stone but more generally in tying it into traditional versus self-funded one of the things too that people like about self-funded um I mean you can have investors and self-funded of course so maybe this just applies to self-funded who have no investors is not having investors so people who buy businesses are entrepreneurial uh independent um probably don't love you know someone else telling them what to do generally investors don't tell you what to do but in some moments they might uh or they might strategically kind of compel you in a certain direction anyway investors can certainly feel like bosses um you have had VCS uh back in in the early 2000s and you've already said that was before founder friendliness was a thing you um have Nova Stone who are your investors um and then you had complicated experiences um you know working under your at the at your business with your father-in-law so you've had other authority experiences um how do you feel about in in now today kind of the weight of investors you are expected and will only be rewarded if you hurt hit certain growth hurdles um you know frankly they own the vast majority of this business um but it still feels like you're I'm hearing you in the way you're talking about it still feels like your business so just uh yeah just riff a little bit on that at how how it the role and the presence of investors plays in in into the psychological piece of this sure so you know I certainly have heard other guests of yours that describe a more active role from their investor base at least thus far with Nova Stone and there are other you know quote my colleagues that have acquired businesses in the program Nova Stone you know although they're very collaborative they're they're expecting you to run the business they're not interested in getting in here and being very specific uh about opinions on what should be done you know a whole part of their program is they're really only partnering with what they call mid-career professionals so people with a track record I think that's part of the reason why their interview process is so rigorous because at the end of the day and the size of their program you know 50 plus Searchers you know they need to have folks that they can rely on to run the business so I that that is a good fit for me personally in in that style now however uh I do like the fact that there are investors here um it that that keeps me honest not that I need that but um you know I do like that uh you know we are playing a serious game here of business you know although I talk about this culture aspect you know I am very motivated professionally in growth in growing businesses and I'm very clear with our folks here you know we are going to double this business in a certain time frame like that is going to happen and and we can have fun along the way but that's where we're going um and we're going to hold that line so and additionally um you know I I wanted to have a board I I've always worked with a board at every point in my career basically um and you know I've been able to recruit a series of individuals that I've worked with before that I know will hold me accountable and as I've described that here in the company because of course these folks here have no experience within any board Arrangement or anything look folks this is a good thing you know these folks here we can learn from them but also they hold me accountable to all the things that I'm saying that we're going to do this is just all this is all positive this is all good thank you for that Nick anything else that I have failed to ask that you wanted to make sure you got in no we covered quite a bit you know again I appreciate the opportunity um you know perhaps it sounded I I came into this whole search with being a bit naive which was true but having fine resources such as as your podcast uh I really have enjoyed listening to it and all the guests that's been very helpful along the journey so you know it was very exciting to me to finally be one of the folks uh telling their story um so thanks for that that's awesome Nick I appreciate your saying that that's that's uh of course Very gratifying for me to hear if people want to reach out to you Nick how do you prefer that they do that oh perhaps the easiest way um you should be able to find me on LinkedIn Nick Acres STL Communications um and I would further off or just because so many people were were helpful to me along the way that uh if I can be helpful to anybody feel free to contact me you know maybe a Searcher is acquiring a business we would we could do an I.T assessment for them either pre or post free of charge let them know what their situation is and opportunities uh for them you know I'd be happy to be helpful in any way I can well I don't I don't want to reopen the conversation that we're bringing to a close but a Searcher that I will be interviewing not for a couple months uh said to me in our pre-call I.T diligence is at least in his story was the most overlooked thing it should be top of the list it's never talked about it's been very challenging for him so um more to come on I.T due diligence um very nice thank you Nick acres really appreciate your time thanks 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