Shawn Moore welcome to acquiring minds thanks will very happy to be here honored to be here Sean this is going to be such a fun conversation you bought an art gallery it is a top performing Gallery in the country it's a 33-year-old business it's a sizable business we'll get into the numbers later and you are an art Enthusiast yourself with your own collection so this aligns with a personal interest and passion so we're going to hear all about this fascinating acquisition and of course learn about the business of art galleries and whether your cool story here is kind of a one-off or whether listeners should approach owners of galleries in their cities about selling but let's start with a little background on you first please Sean if you'd go ahead absolutely yeah I'm uh originally from the Minneapolis area and uh my family moved to Jacksonville Florida when I was about seven where I I lived there till I was about 18 I went to to Southern Methodist University in Dallas Texas where I double majored in finance and management information systems out of school I I got a job at ernston Young Management Consulting in 1998 it was a it was a great job right out of school I I started traveling a lot every week uh to different cities where I would have projects for three six you know eight nine months at a time and one of these projects was uh like a 9 or 10 month stint in in the Netherlands and it was based out of the ha but um I would be living in Amsterdam so this was a lifechanging event for a 24 yearold uh to go to Europe and you know be on an expense account and uh you know I and this was before pot was legal in the US by the way everyone so let's remember amam was a mea for a certain something back in deade and a half before you know Denver before Colorado paved the way you know here in the US so I was also traveling ing across Europe and got to visit you know up to 12 countries during that stint so I I kind of like lived in this hotel but I would check out on the weekends and check back in you know on Sunday night and you know amazing take the train down to you know Den hog uh you know on Monday morning that was my life it was great I was you know taking the train tun and from work and sometimes I'd stay in the ha and stayed at a hotel around on on the North Sea it was great you know it really it started my love of travel you know I think to to Norway and and France and Italy before that but after this you know it was a it was a marriage it became you know my number one passion really in life and you know coupling that with my love of world history and literature and learning languages very Humanity's you know focused interests I um it started to draw a connection briefly to my my business Choice here which is I started to collect art everywhere I went so I I started started buying you know paintings watercolors sculptures it started in Holland and France and um Czech Republic and and Spain and um you know eventually over the years you know all across Asia and South America as well but um Art became my kind of number two passion in life because everywhere I'd go I'd come back with something that I would put up on my wall that would remind me of that you know cityscape that pastoral setting that religious icon or you know whatever historical figure you know that I picked up and over the years my house became a museum of all my travels so Sean since you since you told me that on our preall I've been kicking myself for not having done the same i' I've Had The Good Fortune to be a lot of visit a lot of places and I've you know picked up a piece or two along the way but I but I I love the idea of just like you know that's going to be the thing that you do on every trip is is find something beautiful and bring it home with you and as a Keepsake as as something to decorate your space it's it's a great it's a great idea and build kind of building a collection over the long term each each item of which has kind of personal resonance and and recalls a memory yeah it's great and you I've got a friend who used to collect shot glasses everywhere he went I'm not going to say who he is but he is going to be on your podcast at some point and uh and you know he he'd watch me collect these paintings and and he got the bug you know he got into it and he started collecting paintings and now his home is is very much decorated with you know masks from Africa when we went to the World Cup down there and you know paintings from all over the world and and it's caught on with a lot of my friends and and uh even my mom who I also travel with so it's a it's a great you know Pastime and great Passion really cool okay so where where do you find yourself professionally in the Years leading up to where where you now are yeah so I I finished up the the gig with ernston young after the Amsterdam project so um I got recruited and took a new role as an executive account leader for a tech services company called service Source here in Denver they're a global company uh that provided uh recurring Revenue Management Services for big Tech and I manag the executive relationships and Global delivery teams for some of our biggest clients like Microsoft and Adobe and Ava broadc um mitel a handful of others think if you're Microsoft you know you've got your biggest customers and you're going to really have a uh you know close relationship with them but then you've got your your longtail or your SMB you know small medium businesses and uh you can't get to all of them right so they they would hire companies like ours to to engage with them at that level and you know and our our job was to you know bring in um that that large amount of recurring Revenue where you know if you look at one client it might not be much but if you look at all those SMB clients it was it was a lot of Revenue right so it was it was nothing to sneeze at and they didn't want to lose it and we were really good at at doing that and then the the last job that I had um was I I moved I was recruited to another role where it was a very enticing opportunity a great compensation package to be you know the VP of solutions at a at a larger like4 billion do Tech Outsourcing company that was looking to expand their footprint in the the tech industry customer success recurring revenue and and sales Services type of work that I was doing previously so I started getting a little frustrated after about a year and uh and maybe you know in that last year of employment there leading up to January or I guess April of this year I um you know I started looking for other opportunities and you know I'd message uh you know my friend the same guy who collects the shot classes say Hey you know when are we going to get out of this Rat Race you know what are we going to do and you know this is also my my best friend from college where when we were 20 20 years old 21 years old right after we graduated we' we'd sit up all night in our apartment in Dallas Texas and um you know sit outside of our balcony and sit there and try to talk about you know what companies we'd start up and you know how we could be CEOs somay and uh you know how are we going to get that done but we were both just you know too too green I think you know to really make anything like that happen and we had to learn our our lessons along the way and you know I truly do believe that you know my my career prepared me for you know the the the exercise that I just went through with the acquisition so um so I sent that text to him he came back and said yeah I know I've been thinking about it and then uh you know that's um probably towards the end of last year and then right after New Year's 2023 in beginning of January this year um he he called me and and said you know and he just started talking really fast and he was like really excited to tell me about all this reading that he had been doing over his Christmas break and you know he started talking about this book that he uh read called buy then build he told me about SBA Loans and how you can get a loan for up to $5 million you know but you have to have you know some collateral and blah blah blah and and then he told me about the acquiring minds podcast how he listened to maybe like 20 hours of it so far over his time at Christmas when he probably should have been hanging out with his family but uh I think he was you know really getting into it and um he also told me about the bis Buy sell Marketplace and then you know finally like the thing that clenched it for me was when he told me about the the robs transaction which is the you know the rollover for business startups acronym Rob OBS um this is what when it all clicked for me this is when everything changed and he shared how you can use the funds from a retirement account to fund a startup business or to acquire a business and or acquire the assets of a new business and as soon as I heard this it I jumped in with a hundred questions and uh because over the last 25 years of my corporate career I did a great job of tucking money away into my retirement accounts but I was you know only modestly liquid you know in terms of you know money that could put down to make an investment and so for me it was like the partying of the Seas where it was a creation of a path to a new future and all these light bulbs were going off for me and and I felt like this is my moment you know the the clouds were parting the light was shiny and cuz what seemed so harrowing before the idea of building a startup uh having low income for a couple years and you having to fund an acquisition with modest liquidity like that was starting to be no longer a problem like that was not an obstacle anymore so I I quickly told him to stop talking because it was all quite confusing but I said look immediately send me the the name of the book you know by then build by by Walker D send me your contacts name at this you know Rob's transaction company which for him was was guident and uh his contact was a guy named Josh leville who was awesome by the way and he was a fountain of information for me and you know I'd recommend listeners if you're exploring you know to go this path you know Reach Out find Josh level you know at at guid and and um tell him I sent you and and and finally I said what you know what's the link to that that podcast and so he sent me the link to your podcast acquiring minds which you know I told you this in our preall will like I can't thank you enough you know you you've created a community here and this podcast did so much for me and I really think you're doing your listeners a a huge service so uh thank you that's awesome Sean thank thank you for saying that man I appreciate that so much yeah of course and I couldn't hang up the phone fast enough once his T text messages started coming through I was like okay Gotta Go Gotta Go I literally said like I'm going to call you in two weeks and uh so we hung up I dove right into the book you know I started listening to the podcast I uh you know did my research on the Rob's transaction I started you know trying to understand you know what the whole business broker uh Market was all about because you Walker D really focuses on that in his book you know bu you know building relationships to get you know Upstream deal flow and and um you know I started um looking at Biz by cell but it was funny like the these things happened in phases right because as you're preparing you kind of need to arm yourself with information and the first time you get on Biz by cell is almost like nerve-wracking because you're like okay you know I don't even know what I'm doing here you know I don't know what I'm looking for but I was perusing and you know eventually filtered down you know some items um and and saw like okay okay within Denver you know there's a there's a ton of businesses you know available cuz I didn't want to move that wasn't an option for me I've got a I've got a a wife and a 5-year-old and a three-year-old and and so moving was not an option so was bis by cell also kind of a revelation because I a lot of people have an aha moment where they actually go on and they can see literally businesses within a 10 m radius of where they live that are for sale that you the idea that there's a Marketplace for businesses you can go buy I love bis byy cell to this day did was was that eye opening for you absolutely you know and I'd heard of the concept of buying a business before probably about N9 years prior and you know cuz I I knew a guy that went out and bought like a gorial services company and and to me it just didn't sound very sexy like why would I want to buy some business that's for sale that's probably not going to be successful it's you know for sale for a reason I don't know anything you know about how to do that and you know I I think I just wasn't ready at the time from a you know business maturity standpoint but but yeah when I looked at at this time I was thinking you know I didn't do I say I hadn't finished the book yet and I hadn't listened to acquiring minds you know the hundreds of hours that I've listened to since and um so I you know it it was it was fascinating right and you know so I I got vaguely from with it but but really I continued my education I I finished the book I think I I I got the audio book I listened to it twice and um you I it was like the best step-by-step guide for you know how to prepare you for you know that journey and um you know I mentioned before like there's a lot of focus in that book on um building Upstream deal flow and reaching out to Brokers and and I remember um after looking at B by cell the first like the first thing that really caught my eye was this multi-site Art Gallery in Denver Colorado and I was like I couldn't even believe it I thought for sure it was going to be you know one of these like small galleries in this part of town that you know uh that I didn't want to operate a business in because there there's there's an area like that and and um I I did the you know request more information and uh learned that it was in Cherry Creek which is you know a really upscale business and Entertainment District you know uh in in the center of Denver just like seven minutes from downtown they've got hotels restaurants bars salons galleries um you know all all sorts of you know shops and um super high-end growing significantly you know it's always been sort of the the high-end part of Denver but now like more hotels and apartment complexes and condos are are going in the area so it's just skyrocketing right now so I couldn't believe it was right in the heart of of Cherry Creek right at you know third in Detroit and um so go ahead Sean let me let me jump in real quick the actually before we get into the story of your buying the the gallery sure a little bit more on kind of as you approached it so a number of my guests have used robs but I'm interested that for you it was like such a big unlock because basically you were looking at your financial picture and you weren't super liquid so you didn't have a lot of cash and in your own mind you were like well I'm going to need this cash to buy a business I'm going to need cash to buy a business even if I can Finance it in some way I probably need more cash than I have but then your Robs was pretty healthy and so that was the difference for you because I feel like a lot of people who've been on I and I may be wrong about this um but they decided they'd buy a business and then they learned about this thing robs which is great oh I can tap my my 401k as well but for you it's like you wouldn't have proceeded if you didn't learn about the existence of robs and that you could access your 401k do I have that right pretty much I mean that that was the Difference Maker for me okay okay great and also I just want to try to uh tease out what the difference in your mentality was today versus whatever it was N9 years ago when you heard about somebody buying a janitorial business and at the time it just was totally unappealing and as I think as you put it like you weren't ready and and like now you were ready to hear something like that because you know everybody who is listening to acquiring minds like gets it but there's still a lot of people out there who don't get it and it's like you know why buy one of these old businesses and and it's just interesting it's kind of binary it's like it either it either really lands with you and you're like yes like you know you and he who shall remain nameless your buddy it just it just like it was just like it was it was an immediate like an epiphany and so exciting um and yet 9 years before and this is probably the case for many many people still like it didn't land on you at all it was like what do you think changed in you you know I I've said to so many people um God I wish I had done this 10 years prior you know because I've listen a lot of your listeners I think are you know you got some maybe in your late 20s but a lot of them are landing in their 30s right and and and I I have lots of jealousy you know when I when I hear them talking about what they've done because I thank God you know I could have done this 10 years ago had I known about the Rob's transaction uh but but timing is everything right and I was in the point of my career where I thought I was going to you know grow up and be a chief X officer of a tech company or a tech startup right and so that was my dream right you know we all have our dreams of uh you know take having some kind of like you know Financial windfall or exit or business success and and mine was to you know eventually find you know the right company the right product or solution that I really loved and believed in and and help you know uh scale That Into You know a global company and and so I think I was a bit blinded by that and blinded by the career climbing and and the rat race and you know once you're in that it's hard to you know pull your head out of the sand and and look around and and see what's out there so so I think when I heard about the Rob's transaction it made it real for me because I realized I've saved enough money I could easily qualify you know to buy a lot of these companies that I'm looking at you know whereas before I I didn't necessarily have that qualification uh or know that I was qualified because I didn't know about the Rob's transaction so I think part of it was my identification of you know the opportunity that I had that I could do it and and and also just you know being a little bit more season reasoned in business and you know writing contracts and selling and doing everything that you do as you get into those upper echelons of of the corporate world so uh my friend you know Yan and I we talk about it all the time how you know our our careers have prepared us for this point because a lot of the buying process the acquisition process really wasn't that hard for us it's stressful you know there's a lot of work you have to do there's late nights and you know your deals falling apart you know three or four times throughout the process and uh but it wasn't hard it wasn't anything that I hadn't like necessarily you know been able to do in terms of Mind share before so um it and and and why was that Sean because you guys both had kind of had sales experience and sales at a pretty high level where you're you know you're signing contracts worth tens maybe hundreds of thousands of dollars so like you're used to kind of high stakes deals sort of thing yeah like deals for millions of dollars and um and and you know leading teams you know across the country and across the world and and and selling to you know seasoned Executives and and the SE suite and you know managing you know critical uh operations or you know Risk Management areas for for big companies so it's like you're you're running parts of a business right you're you are running parts of a business and as you move your career around you you get to experience another piece of scope that you maybe hadn't done before and so it all starts to fit together and um you know personally I look at myself you know in my in my late 40s um being a bit late to the game you know maybe I'm just a a late bloomer you know here when I hear some of your you know 30s somethings on here but um you know it was the right timing for me and and that's what I guess I wanted to come back to which is you know I tell people all the time I wish I had done this but it really was the right timing for me and it was an Awakening and um and it just became obvious painfully obvious I I actually started telling I had my my in-laws in town for Christmas I started telling them when they were still here I think they left like around January 10th you know around January 5th guys I'm going to buy a business you know and this was you know four days after my conversation with my friend and uh you know and I just started kind of rattling off the the you know some of the basic stuff that I knew and and I you know I said I this is what I'm going to do and and I also told that to my wife and she was like what are you talking about she's like okay so you've been like you know drinking all throughout the the Christmas holiday and now you want to buy a business okay honey we need to talk you know but you've been talking to Yan again yeah yeah exactly you've been talking to your your good buddy again well Sean you know on this point about wishing you'd started earlier um I'll I'll spare you the we shouldn't compare ourselves because we all do including me but I but but like let's just indulge in in in comparing ourselves and in the reality that our egos exist look man you you you bought a $5 million business okay so so okay so you're not 32 you're whatever 46 48 but you still I mean how many people can say they bought a five billion $5 million business themselves and put that together and made that happen and now own this business and you've got a lot of years left in your career and you've learned this incredible skill of how to buy a business it's such a valuable skill that you could very realistically do it again and again and again so and and let's also not forget that the very point of ETA is that it's something of a shortcut this is a 33y old business that you get to roll in and be owner of so so in some ways you you know you you you're way ahead so I just say all that to put things in perspective no thanks for the pep talk I I'll call you every day and dog it people like me yeah there that's right just call me Stuart Smiley right okay well let's get back to the plot here okay the other last question I wanted to ask before you carry on um about your search as it to to the extent that it was kind of a search was did you it sounds like you were just kind of browsing bis by sell when you encounter the business that you now own was there any kind of other thesis that you had or what were like how well defined were your criteria let me put it that way yeah youve already told us that you weren't going to move so it had to be near Denver or in Denver yeah so you know the first time I got on bis by cell yeah I still didn't really know what I was doing I I didn't have a thesis I I didn't have criteria or scope yet and that and at that point it was still a bit intimidating to me because I didn't know what I was looking for but I was just kind of browsing around and just looking at types of business you know in my geography and you know I will say it wasn't like super enticing because you know there's a lot of stuff on there and um yeah you know but but after I got through the book after I um reached out to you know eventually you know a dozen you know SBA lenders and then finally got up the guts to call you know my first broker uh who had a deal had the art gallery deal on on Biz by cell um you know then I started fing in the blanks right because each call was an education you know each call I I brought you know the accumulation of the last call with somebody else and I was filling in the blanks and I was literally taking notes you know in like one note and uh and just you know writing down everything that you know I was learning that was like net new from previous conversations and so I started building this you know mass of knowledge right and you know by by the 12th call with a an SBA lender you know I got to the point where I could predict what they were going to say and so I would I would be able to volunteer you know the information before they'd have to ask you know and I already knew what the you know risk spots in my deal were um you know and so I'd highlight them before you know they'd even be able you know to ask them so you know it is it it builds confidence right you know with but you have to have the tenacity to to keep doing it and to keep filling in the blanks and uh and the curiosity and the guts right those first few calls like you I came out of the gate saying hey look uh I'm a novice here you know I'm I I need to use this as a learning opportunity U so I appreciate in advance you know this conversation and all the you know your willingness to kind of help me out here and and some of those early people that I spoke to like Josh level at guident and you know some of the lenders that I spoke to I feel like I made friends with them because they've become advisers and I actually still keep in touch with them because um I've Got Friends now you know that I'm you know kind of bringing along up up the rears with the you know the ETA so uh I'm you know making references and you know I'm going out and meeting people that I met along the way you know for lunch and and you know the it's great you know it's really great there's there's a lot of community in here as you know you know across uh bis by cell and search funer and uh and acquiring minds great Sean okay so let's let's get into the gallery now that you tell us the listing what you saw what you liked you've already said that it was in this great part of Denver that you knew was really that you were bullish about and also let's let's let's give it a name what is the gallery called it's Fascination Street Fine Art what a great name Fascination Street so what what else do you like about Fascination Street when you see the listing it it's named after a cure song by the way the the founder really loved the Cure so he named it after Fascination Street so well I I was actually good reminder because when I Googled it earlier today I that's what comes up and I was like oh this has to be more than a coincidence yeah yeah yeah yeah so okay so Fascination Street is uh is is a business that's been around for 33 years in the Cherry Creek neighborhood uh it was it was founded uh by my seller 33 years ago you know at first he was an art dealer and and he at first he was just into like Collectibles and animation and so we you know hung out a you know a shingle got an office somewhere in Denver and you know eventually this kind of morphed into um not just animation and collectibles but fine art you know he F like I think his first uh fine artart acquisition from an artist is an artist named Thomas Arvid who does this amazing photo realistic wine art and you know so it's paintings of like uh high-end wine bottles and glasses and from different perspectives and and it's incredible and this was where uh my seller you know made his first purchase and that was his first foray in into Fine Art and and I think he saw the potential on that so that's really you know where you know 95% of his business you know started growing around and you know he got in the space that we're in maybe 15 16 years ago it's at the the corner of East Third Avenue in Detroit in in Cherry Creek and nor Cherry Creek North he bought these three Parcels in the same building on the same floor and uh connected them in the back so we blew out the walls uh in the back Connected them and so now it's a it's one um you know uh Gallery with you know three Parcels so it makes it a really nice you know walk through right because there are like two really large Gallery sections uh on on the on the both ends and then in the middle there's a a frame shop which is something that you know one of his more recent um add-ons than probably two or three years ago so so we've got a fully functioning frame shop we've got uh a you know a really large Gallery about 6,000 square fet of space and you know it it's it's a it's a nice Journey you know from one end to the other to see all the different art that's in there and we've got about we probably represent 30 to 40 uh artists to today uh they are all um nationally acclaimed artists they're they are temporary artists so all of them are alive today so we don't have any any Masters uh don't have um we might have a couple pieces of Modern Art but but it's really focused on contemporary artists and and the business model is is such that or the qualification is that you know these artists need to be represented in other other high-end fine art galleries and and that's the qualification and um so we'll we'll look at them we'll see who's representing them and obviously we need to curate based on you know taste and theme and and then we'll we'll add them to the collection if they're not all already represented in in Denver or Colorado because in the art business there's a lot of exclusivity with galleries so you might have a a uh up andc coming artist uh who you know latches on to uh high-end Gallery in New York City and they want exclusive representation which means that artist cannot go in another Gallery but most of them um can be represented you know in you know by you know 200 square mile you know geography or something so I could have an artist that's represented uh by another Gallery in Aspen or or veil by a different Gallery but it does give you basically Geographic exclusivity in your local market you yeah you've got to have it there there are at least like four or five other galleries in in Cherry Creek and and there's no crossover and that's by Design and so does that mean that the those other four or five galleries you're very competitive with like you you guys really kind of duke it out because I assume you know there's only so many artists in the world that are kind of experienced pull through Demand by collectors and so you guys are really fighting to be the exclusive local dealer effectively or distributor what I guess or Gallery uh for those artists so it probably makes it a less than collegial experience with your your fellow Gallery owners that that's not how I view it actually and and the the one thing that I've learned in my journey is that there are many different echelons of the art industry you you know you've got your um you know Heritage House South bees you know auctions um you know in London New York City Hong Kong um and then you know there's probably a couple tiers you know below that of really high-end art dealing and they're trading in picassos and miros and Salvador Del and and a lot lot of you know uh Renoir in in Masters right and they're auctioning them you know 50 million here 100 million there and and that's a totally different space right and then so every every gallery has kind of a unique curation and they create an identity for themselves so I would say to some degree yes there's some healthy competition with the galleries in in my neighborhood but I I literally was in one of them yesterday while I was waiting to get a coffee uh 2 weeks ago I went in one of the other ones uh to just go in and introduce myself and and and try to get to know some of the staff and you know learn a thing or two from uh from them and you invite them out to lunch and they invited me to one of their events that weekend so it's it's very collegial you know if if there were a gallery you know that I competed with you know it wouldn't probably wouldn't be like that but I would say the galleries I compete with uh where where we have a lot of overlap in artists those are spread out across the country you know those galleries are you know in Key West and Fort Lauderdale and Las Vegas and lagona Beach and La uh and there are you know maybe you know a half dozen to 10 you know galleries across the country that you know we compete for deals but another surprising thing about the gallery business is um you know it's not fully dependent on walk-in traffic right I I am blessed by the fact that I have a space in like the best neighborhood of Denver and I get quality walk in traffic and and people have uh uh spending money to you know to buy art and they have the interest but I you know I I've we've structured the business in such a way that a lot of the business is online right and a lot of a lot of the business is uh is done through you know advertising who you have and um and making sure that you're able to capture those leads you know before other galleries do so I think there are other galleries that that know about Fascination Street and they they feel like they are a competitor because we are hustling to get those leads that's fascinating so so a lot of the kind of the businesses is internet based because one of my big questions about the business is like what does the internet do to a business like this or what did it do years ago and and what does it mean today and I so I want to I want to do a deep dive into more of the how the business Works in a minute but I want to catch the plot up to to you as owner can you give us some numbers that you saw there in the listing like give us a sense of of size of business it was a 4.2 million uh Revenue business last year um and that had a you know net net income of about 584k but there was roughly another U you know 500k of adbs and you know owners salaries and and owner owner benefits you know SD so really the the the SD was around 1.1 million and um and at the end of the day we we did valuation of 5.3 million which included uh 1.4 million of inventory and um and so when I look at the multiple well like I I look at the multiple uh the calculation for me was because inventory in the art gallery business is so much more significant than if you're buying a janitorial services Home Services Company right you you need some working capital need some inventory but but really the inventory is the lifeblood of the gallery business and also makes it a little bit more risky and and interesting when um when I'm having these conversations with banks trying to get a loan because you don't see a lot of art galleries come across and and all these Banks you know uh saw that as a a Nuance some some were kind of interested in it and you know others just sort of said yeah this is so you know out of our you know typical basket of deals that we're not sure and um so back to my calculation you know I I kind of looked at it like the valuation at 5.3 million I subtracted 1.4 million of inventory and you know it got to like a a $3.9 million business uh you know without the inventory so when you uh look at SD of you know you know 1.1 1.2 million let's say the multiple is around 3.25x and and that's how I see it and and that looked like a a good multiple for me a little bit of a premium when you consider you know the inventory but again the inventory is is different with the art gallery business okay well Sean I mean the thing that jumps out at me is that an art gallery owner can take home a million dollars a year like we just don't think of these as businesses that could do do that well when I think of but you know I'm ignorant of it so you know what do I know but but I think of an art gallery business as a passion business you know as uh you know somebody who's who's maybe an artist themselves you know maybe kind of adjacent to kind of a bed and breakfast or restaurant or you know something that somebody founds in retirement or because they're passionate your seller may well have been somebody like that but never one that has a lot of financial potential indeed many of them just struggle to survive if they survive at all so the fact this Gallery is doing basically when you when you add back everything over a million dollars in SD just blows my mind did it blow your mind did you have the same kind of intuition about the wrong intuition about these businesses yeah I mean I I think initially you do think it's a sleepy business and and honestly when I tell my my friends and you know some of my family members uh I'm I'm going to buy an art Gallery you know everyone's shocked because I think they have in their mind you know this Paradigm of an art gallery that is a sleepy business with you know a single person you know sitting behind a desk that may or may not get up and talk to you when you come in exactly know and and you just look around they say oh you know are you looking to fill a space on your wall and you know however that goes and and always empty like there's nobody else in there except the person sitting behind the desk yeah yeah and um but but that's not this business you know this business is you know with the 6,000 square ft you know we have a lot of inventory and we we proudly show as much of that inventory as possible but we also have an upstairs I have an upstairs office which is like an apartment and that apartment is all art storage so we have hundreds of paintings you know that are in storage and so uh we're constantly rotating the inventory and rehanging the gallery you know at least at least once a month we we have an art exhibition or an artist comes in and does a show for a couple days usually on a Friday night for 3 hours and then a Saturday afternoon for three or four hours and um and they come and you know they meet the collectors they do dedications on on the back of of the painting or they'll sign things take pictures and that really you know helps connect you know the people and the and the collectors you know with the art itself because the artist can tell them the stories and and you know ultimately that is the job of of of of us as a as a sales team to connect people with the art right you can come in and you can view something uh but you know if you don't really understand the technique or the background or you know all the obstacles that the artist overcame to get to this point you know it doesn't mean as much and then when you're able to personalize it with you know something uh that they see when they're on vacation here in Denver and it's a memory for them or it reminds them of you know their dog that they had you know 10 years ago whatever it is right you've got to connect people to the art and um you know kind of getting back to your question though you know the business is is built in such a way that it's it's about generating leads online and driving people to the website and um and when they come to the website um what we what we want them to do is peruse the art and they're usually coming because they've Googled an artist and that's why it's important for us to have a famous artist so they're Googling an artist that they're looking for um and that they're interested in and we do a good job of making sure that we're coming up in one of those like top three or four options for them to click on and once they do they come to the website they look at the art and and most artists in this space in commercial Fine Art do not want prices published on the website so they need to click inquire for Price send their email send their phone number and then that generates an incoming lead it generates an autor response to the recipient and then it generates an incoming lead to my team and I have four sales Consultants at the gallery that are dedicated to you know responding to these leads and also to responding to walk-in traffic but I'd say that's a lot that's a that's a big sales team I mean how many leads a day are you getting that you need four people to service them well it's not four every day right you know we we have a we have a schedule rotation right but ideally we've got at least two sales consultants in there every day right and and and the way the gallery is structured is I have two Gallery directors and I also call them sales Consultants because they're responsible for selling but they have a gallery director assistant Gallery director and then I have um you know one full-time sales consultant I have uh another resource who's kind of uh a hybrid role where she's a sales consultant the frame shop manager and also what we call Gallery assistant uh and then I have two Gallery assistants and and the gallery assistants their their role is really focused on you know receiving incoming inventory uh making sure that we're updating our systems our website our inventory software and uh you know packing and shipping items and they're also my marketing team at this point so that was one of my my newest hires I I looked for a gallery assistant that was willing to uh roll their sleeves up and do you know all of the hard work of rehanging the gallery and doing inventory packing and shipping but also I was looking for social media excellence and and video content creation because I think one of the big growth areas that I have in the business you know number one if you go to the website which which is Fascination st.com uh for Fascination Street Art if you go there the website is from 2004 right it is uh it is a a good symbol of early 2000s websites and um which you know for me was was good and bad coming into the deal because um if if the revenue is what it is and the profit margin is what it is today and I'm able to modernize that website make it so much more aesthetically pleasing and functional uh you know I've got a big you know growth opportunity ahead of me so that's something that that we've been working on and and you know back to social media uh you know the team had previously done a really good job of you know uploading photos on you know Instagram or Facebook uh and the website um you know that we have of the art you know to promote it but we weren't doing anything that was like sticky you know nothing in the kind of short form video where you that you see in Tik Tok or Instagram reals and so now we're starting to experience experiment we we we put out our first Tik Tock a couple weeks ago we're very proud of that I think we've got four or five of those and that may or may not be you know the the ultimate consumer that I'm going after but part of the the marketing approach is is really getting the brand out there the name the familiarity you know both locally and uh nationally so you know that's just one of one of the tools but we're also going to be you know updating the website significantly as we get into 2024 so Sean it was 4.2 million doll a year in sales right that's what that's what I right so four so that divided by 12 is what $350,000 a month something that ex exactly so $350,000 a month in art I mean so can I ask what your median sale price is for a piece just give us a perspective I guess what I'm looking for of course is how many units are you selling per week H that that's a good question I think the last I looked we had sold uh you know up to maybe 100 80 190 pieces so far this month right so um one thing that we also do well with I think is offer um uh lower priced items that are affordable for people that are walking in the gallery and you know maybe they're not ready to buy an $8,000 original canvas or they're not able to buy a $102,000 you know bronze life-size sculpture of an elephant I say life-size it's not really life-size but that's what we call it because it's really large you know that weighs you know 350 pounds um and so you know we have you know small sculptures and we have you know prints and we have um you know uh hanging sculptures and and pieces that can range between you know $200 to a, ,000 and and we do really well with that so I I'd say our average sale price is probably between $2 to $33,000 but you know we do go all the way up to you know our our largest piece that we we sold recently was $102,000 it was it was that elephant so wow wow and and so what percentage of that revenue is coming from online basically and and you're not e-commerce let's be clear because it's I mean it's it's kind of e-commerce so you get a lead online but then it sounds like it's a very kind of human like your sales Consultants probably have a conversation and obviously the higher the higher price the item is the more likely there is to be a conversation you don't have prices listed online so there needs to be some kind of interaction so so does that take place mostly over email or over calls or it depends or what yeah it it does depend but I I would say it's kind of a hybrid process between digital and and human intervention you know and and frankly I'd love to increase the digital percentage of that pie chart yeah but uh you know that's going to take time and you know the the original way of doing business in the art gallery is you know somebody walks in likes a piece you negotiate uh and then you arrange uh for um you know Handover or or shipping right so for us it's uh it's it's it's creating the you know digital footprint and awareness out there that we have the pieces that people are interested in bringing them to the website and then when they when they reach out to us via the website that's when the the human intervention begins and that process begins and and it takes place depending on the buyer right it takes place over email takes place over over over uh you know the phone and sometimes there's a little negotiation there you know some galleries don't discount and some do you know we we do discount but we you know try to try to hold those discounts to you know 10% right and uh but it also depends on on the artist and it it depends on the margin you know for the artist you know that we're buying from or from the publisher that we buy from so Publishers are are like think of them as like a you know an agency that represents multiple artists and um and we get certain buying terms from the Publishers and from the artists so uh some are better than others so that'll that'll drive what we're willing to discount so on the pie chart of where your Revenue comes from like what 80 90% of that is online leads you know i' I'd say it's probably closer to like 70 75 okay yeah okay okay well it's just you just trying to understand like to what extent this is a brick-and-mortar business you do a lot it sounds like to as you said to kind of establish the local community a connection between the artist and the local community so you have these events monthly at least where where the artist is actually coming in and doing an exhibition uh you've got this great space in a great neighborhood in Denver you've done a frame shop now which maybe let's hear a little bit about that but all of this feels like a brick-and mortar business that's trying to bring people in uh and you know that's not doesn't have to be mutually ex mutually exclusive that it's only brick and mortar or only e-commerce but it's interesting because a lot of the effort it seems is bringing people in and yet well over a majority of the revenue is is e-commerce um it's not a critique I'm literally just trying to understand the business I find it so interesting we should probably get back to your story uh and and um stop with all the academic questions about how the inard of the business works but as I said I'm very interested tell us why tell us why the seller did the frame shop inside and did you think that that do you think that that was a good strategic move I guess you got to say yes because you got employees who work in it yeah no I'll say yes but I I believe in my answer um look you know last year I think the frame shop did around 130 something, and uh this year we're already up uh you know 50% uh from last year same time last year so it was a great idea fantastic yeah yeah it's burgeoning right because when you sell art you know if if it's a if it's a painting a print uh people are going to need to frame that right so why not be the one stop shop for that right unless it's already pre-framed which sometimes we we get those but um so yeah it's it's it's it's actually one of the major growth levers that that I have right now that and you know increasing you know the the digital experience with a new website and and branding with social media so um yeah the frame Shop's been great we've got uh you know the frame shop manager who is you know the hybrid role she she does a few things and then we have um we had a lead framer and two framers also up there so we have basically you know four people running the the frame shop operation I had I had to let one of the framers go last week so we've got a a lead framer and a framer uh kind of doing all of the the bulk of the the hard work you know putting together the frames you know stretching the canvas you know putting it um you know together in a gallery wrapped frame and then uh and then framing it to the customers specifications well as I hear you talk about that it strikes me you know frame shops of course are their own type of business and many frame shops are just frame shops yeah they sure they have a few pieces of art on the walls that you can buy but that's not where the vast majority of their revenue is coming from but it seems like this this hybrid where you have a frame shop within uh a high-end Gallery is a great combination because you know it's kind of like the whole is more than the sum of the parts like they really both sides of the business compl complement each other beautifully um so that's that's really that's great and are you and I assume you are selling framing to people who are not just buying art from you you'll get people off off the street or whatever who absolutely pie and that's that's on my to-do list right now too is to really begin you know marketing that business you know independently right we've actually uh branded it separately we call it Denver custom frames um uh but but you know it it when you come into the to the gallery people often ask like oh is this Frame Shop separate you know because you could walk right into it through you know one of the corridors um but but we are we are going to put a a big push into branding it separately come here to get your your photography framed your your pieces framed your collections of uh you know things that you want you know uh you know put into a uh uh you know like a big box frame or something you know like I I saw like a bunch bunch of Michael Jordan Rings you know come in the other day with a Michael Jordan Nike Nike Air um you know shoe and so people bring in all sorts of stuff and and we're trying to make a big push for that and I think what we're what we're lucky uh about and this was no accident was that there was a frame shop um in the building years ago and my seller um basically uh capitalized on you know when when they closed their shop down he opened one up and you know kind of piggybacked on some of the clientele that might have known there was a frame shop there right so you know it is clever my seller was quite clever and in um you know in how he you know thought to expand the business and he and he did a great job over over 30 years so well speaking of the seller let's let's get back to the deal itself so thank you for your transparency and sharing all the numbers you used your r g give us kind of what did the terms of the deal look like cuz I know there were hiccups to say the least yeah yeah I you know before getting into that I actually I want to just tell you about like leading up to you know the first Loi like one of the cool things that I did with you know my friend Yan that I that I mentioned was once I got caught up on you know the book and you know acquiring minds and bis by cell um you know I I started you know we started talking every day right we started like exchanging notes every day talking and so he he was kind of ahead of me right and I but I was coming up right behind him but he was also kind of right behind another one of his friends um you know a guy that he had worked with you know at a at a bank previously and um and that guy was ahead of of yan and his name is Dan and and he joined a an accelerator called aquira which I'm sure you're familiar with an incubator for ETA and um and so the three of us uh started a pod right we got on a text chain together and we just started sharing information left and right and and I have to say like this was one of the most instrumental like uh you know uh parts of the journey that was so helpful you know because we we had each other if one of us didn't know the answer we'd just text into our group and we'd have like answers and ideas and you know different strategies you know coming back right away and I know a lot of people are doing that through you know search funer and other communities U but you know this little intimate group was so helpful and um and and we even um uh we even like we were sharing like SBA lender contacts and we all used the the same attorney a guy named Jeff Bachmann at AIS law uh who was incredible by the way highly recommend him he did uh for for all of us he did a flat rate through the process of uh of 20K from Loi to close and you know based based on on my research and talking to some other attorneys um that was a really good deal because a lot of attorneys were quoting a certain percentage of of the deal price um and you know I was looking at you know 30 to 40,000 potentially um you know had I gone with another attorney and you know his rates may have changed you know since the the 20K flat rate but he was smart Uber f focused on on limiting my risk and and you need an attorney that really does a great job of like you know breaking down all of the contract uh you know lengthy contract legal Clauses into understandable notes so you can make educated decisions about how you're going to manage your risk in the deal so um and do you think that having this pod with Dan and Yan because you guys knew each other and that that it was kind of intimate was more valuable than say just asking questions on search funer and and Twitter I think you've already answered that but but expand please yeah 100% like I I actually didn't know Dan we both knew Yan so Yan was the connector but but yeah it was it was personal it was intimate it was timely right you know I could put a question into our text group and there was a commitment to answer you know we were all supporting each other right so it wasn't putting it out into the ether and you know hoping that someone would come back with a good response you know in a couple days you know it was same day responses and we also used it as a a venting room you know a crying towel right because a lot of us went through you know many times during our deal where the SBA lender backed out or you know something really critical threatened the deal and um and and we could vent and you know try to help each other but more importantly help each other like come up with uh negotiation strategies to to get out of those issues right and to come up with something net new and Dan had great ideas he had such a treasure Trove from you know his incubator that you know he was giving us like templates and you know our attorney and you know but but Yan and I also had you know many more years of business experience too that we could offer you know throughout the process and and it was it it would I would highly recommend um reaching out trying to find people that are you know on the ETA path and you know if if if you you can even time you know where you are on your timeline as well like we were so lucky I think Dan closed his deal um let's say in like at the end of April I closed my deal June 1st and then I think Yan closed his like mid July so you know there there were six weeks before me and six weeks after me so we were all just like going through the same same stuff in many ways well you know I I I just want to emphasize because one of the things that my guests say over and over and over about what makes the search hard is the emotional toll and that it's a extremely lonely you're doing this weird thing often your family doesn't get it your friends don't get it your old business colleagues don't get it and then a the loneliness B the roller coaster the inevitable disappointments of broken deals Etc so between loneliness and disappointment and severe ups and downs it's uh if you can you know to kind of make this a little clinical like those are kind of the problems of search those are come some some of the key problems of search and if you can kind of alleviate or even eliminate those problems um in a peer group particularly as you said with people who are kind of going through if if if you can line up the timing amazing you're you're really I guess kind of making the search much more bearable 100% 100% and and and the process is like you said it it is lonely and and not everybody understands what you're trying to do and you know I mentioned I told uh my friends I'm I'm buying an art gallery and I get a mix of responses you know some people would say oh my God that's so awesome you know you're you're following your passion and you know they were just supportive I from an emotional standpoint you know but I I told uh I told my dad and he was like you know you've got you know bigger coonies than I do you know good luck with that you know it's like so not super encouraging and um and then you tell others and they come back and they say um oh okay well I never pictured that for you but um okay good you know and they and I think they think that it's like a big sleepy business and and uh so it's a mix of responses it is lonely and you know but but I will say like you oscillate during that process almost every day uh from moments of panic you know to because of the like Financial Risk that you're taking on um you know I'm I'm liquidating a large part of uh my retirement account and my logic was that um you know this this money that I've been saving for 25 years is going to maybe grow at 7% per year for you know each year if I'm lucky you know for the next like 20 years until I retire and um and that's great maybe it you know grows 40 to 50% um you know you know one 1 point4 or whatever it is um you know in in 20 years and but that's not game-changing and and and I I much more aspirational than that in terms of what i' what I'd like you know as I as I get older and uh you know I've got young kids now and I want to be able to uh you know give them experiences and and so I wanted to be able to put that money to use right so there's a huge risk but I want to use that that retirement money now and when I learned that there are no IRS penalties there's no tax that you pay on it I mean you basically the way it works is and we didn't talk about this but yeah the way it works is um you know you go to a company like guidant who who I went through and you pay a you know typically $5,000 fee and what they do is they they set up a C Corp for you by IRS regulations it has to be a C Corp and um and there are you know some considerations with that because if you look up double taxation with C Corp you can you know learn that um you know the the corporation pays taxes as well as the uh employees uh but there are ways to manage it um but they create a C Corp they also create a 401k plan for your C Corp and the way it works is that you roll the money over from your IRA or your 401k into this 401k plan that they that they set up and it's usually with I think Seattle bank and um that money is then sitting in that 401k plan and from there um you work with a guidant to do all the documentation and they create uh stock certificates so they actually issue stock for your company and anything that you're rolling over then becomes part like owned technically by the 401K plan of your C Corp and then once that's all done you you you monetize that by basically transferring it and wiring it into your business checking account so and at that point it becomes liquid but it's highly governed what you do with that money right you can't go out and buy a marijuana store you know you can't go out and you know just do a whole bunch of things with Airbnb uh you can't acquire you know properties that maybe you would have eventually use for Airbnb but there are rules and and you have to know what they are uh to avoid any kind of down down the road complications with IRS and then what guidant does is um you know there's obviously a lot of compliance that comes with that so they do an annual uh you know compliance compliance filing for you so you're paying them you know throughout the year to you know to to get that service um but it's uh you know it it it was the way to make everything possible for me and um you know but getting back to like you know the the loneliness and the risk and everything like you go through this process and you have the ups and downs and the loneliness and and the moments of risk panic I think is is balanced by this Horizon of opportunity you know this looking at these Financial figures and you say to yourself if I can keep this business rolling in the way that I see it performing in the last 12 months or 24 months then and and I done my performa my business plan to be you know conservative enough and maybe even account for some downside as I'm you know trying to take over the business and dealing with you know employees coming and going you've got to be honest with yourself about you know the conservative numbers or liberal numbers that you build but it it's invigorating right the opportunity there is like invigorating and and every day that you're paying your your loan to your bank or to your seller you are acquiring more equity in that business right so you know whatever the term of paying yourself exactly so with a lot of interest unfortunately and especially in this environment but but you're paying yourself and you know at the end of that 10year term that's your $5 million right that of equity you know when you close out those loans right assuming you do it in 10 or maybe you doing in less but that's your equity and then everything you know in theory becomes gravy in terms of your your net income right uh or your SD so it's uh you counterbalance between these two these highs and these lows and you know one day you're literally thinking you know am I going to you know run my retirement and my future into the ground what am I doing you know what the hell is this risk and and and it's funny because you go through this process of uh of um you know m&a right the acquisition process and you have to learn that you know M uh you know thank you to Walker di thank you to you and and others out there in the in the the hbr study which is the second Bible of how to do this uh but you know you kind of think you're you're total stud as you're getting through this process and and by the time you get to the closing table you know your family's patting you on the back and people are buying you a bottle of champagne you sign the papers and you think you are a Goliath you know you are a Titan of business and industry right and and you know it's the peak of everything and then you wake up the next morning and you think what the hell did I just do you know now I've got this huge loan payment I have this huge rent payment I have 10 Souls that work for me that I need to make sure I'm taking care of and and promoting and and and I've got to grow this business and and you don't sleep for a week at least you know you I've talked to ywn and myself like I was waking up at 3:00 4 in the morning and just not able to go back to sleep uh you know for at least 10 days after buying the business and and going into that operate mode you know you do feel uh for a little while like you know if I'm being honest like a a little bit of impostor syndrome you know and and like a deer in headlights right because you're you're just trying to take on the business you're trying to transfer accounts from the seller to yourself you're spending more time on customer service calls with vendors and with providers and merchant services accounts than you know and phone companies and cable companies than you ever wanted to but you know that goes away and then you start to get into the rhythm of the business and you slowly start you know learning how to run that business and um and and I think for me one of the big takeaways is making sure that you really trust your seller and that you establish a rapport with him or her during that buy process do not do this all through the broker at some point you know when you get into the deal you've got to insist with the seller's broker that you are meeting that seller and that you're you know going to that person's place of business after hours you know uh to avoid you know Discovery from the employees uh you know somehow you're meeting them and and getting to know that person learning about the business asking you know questions during the due diligence process and uh and and and you've got to have a good relationship because uh I think establishing that for me uh has been uh just so Uber critical for me over the last four months so I I took it over June 1st I'm almost four months into the business and uh my seller and I you know we've we've trans trans transformed our relationship you know from him constantly telling me what needs to be done to you know a friendship and a trust and he sees that I'm putting in the work and he sees that I'm learning and he sees that I know what I'm doing and and you know he's going to be a consultant of mine for at least you know 6 months and we may do you know a a phone call contract for the second six months but uh you know without that uh trust between each other um you know I I think it's a much scarier Road trust also helps getting the deal done because the deals there's a newsletter I subscribe to guesswork investing and he talks about coming from private equity into small business acquisition land he was a Searcher he bought a business and how in both private equity and down here in small business acquisition land it's not he he refers to the cliche um time kills all deals and he's like it's worse than that deals want to die they are looking for a reason to die they are they are trains careening down a track that at any moment are just going to jump the track and your job is to take this unwieldy beast and just do everything you can to keep it keep it on the track and so so as we all know you know deals die three times before they get across the finish line and so on and the more trust you have with your seller the better the more likelier you the more likely you are to survive uh survive that process what did that look like between you in your seller because I know that there were some fits and starts yeah so you know I'll get into the building trust first and then get into the deal dying a few times so on the topic of trust the way that it worked for me and my seller initially uh was that when I put in my Loi the same on the same day his broker uh told me and I thought this was a ruse by the way I thought this was like a a selling negotiation tactic he told me that another offer had just come in the day before and this is after this business had been on the market for 5 to six months so I thought oh this is like kind of convenient timing this is probably not real but I had to take it at face value right so so that impacted you know the monetary value of my offer and everything but ultimately it came down to um us um doing a meet the owner event so the other buyer uh candidate uh met the owner and I met the owner and we we came you know to the gallery separately after hours to to meet with him and and just you know talk about who we were and you what we wanted to to do with the business learn a little bit more about the business and you know another thing like that I I felt like I went out on a limb a little bit but I I gave him like my you know 60c like heartfelt speech about why I was doing this and you know what my goals were what I wanted to accomplish you know that it was you know ultimately for the benefit of uh my wife and my two children and for you know them to spend more time with their daddy you know as as they get older so you know I could take over the business really work hard for several years and and slowly begin to take myself out of the business that when I you know tweak it and get it where I want to and um and and the buyer or the seller since shared with me that um you know the other buyer candidate was significantly more well capitalized than I was there would be a lot more you know money down uh but you know it was the vibe that he got it was the uh familiarity with the the family story um you know and and mine was authentic right I'm not suggesting to be inauthentic but but but he connected with that and you know he turned down another buyer that could have been an easier transaction you know cuz we had our bumps along the way and a lot of it was related to my financing so um that I mean that's my advice for you know uh Searchers out there is to you know really find a way to connect with your seller and insists with you know the seller's broker that that you have the opportunity to to meet with the seller and not just do all the negotiation through attorneys and through the broker like he and I had lots of one-on-one conversations at the end of the deal where you know things were looking sour at certain points and he and I had lots of one-on-one conversations where he and I came up with clever ideas to solve a problem right and and credit to the seller he came up with a lot of those and and so did I and you know but and by the time we established this relationship that was uh you know uh open uh he was more than willing to you know acquest to some of my asks you know that he uh probably wouldn't have earlier in the process because he he is a tough negotiator and uh it was not an easy negotiation or process but I think towards the end you know we both wanted the deal for each other and do you want to can you share the terms of the deal yeah so yeah so originally the LOI was uh purchase price of 4.9 million that included 1 million of inventory it was uh going to be you know about 4.4 million of of cash at closing you know between you know me and an SBA lender uh I offered you know $10,000 of earnest money in good faith just to show that I was uh you know willing to stick into the deal and I asked for a um a 10% uh seller note of about 490k and offered I think uh a generous 7.5% interest rate on that seller note just to sweeten the deal 7.5 was generous at the time you know interest rates have gone up since um but at the time I learned that you know other seller notes were you know offering you know one to 1.5 points less than what I offered that kind of came back to bite me because that rate kept going up so I wish I had anchored at a at a lower rate but um you know and I asked for obviously exclusivity to ensure that the seller wasn't any entertaining any other deals and uh you know taking an off Biz by cell which I think is pretty standard and he came back and asked for a $150,000 earnest money deposit which everyone you know all attorneys and you know uh and I think his broker maybe too everyone was uh a little surprised by that but he really wanted to get you know me stuck into the deal um and it was interesting because he wanted you know to me really to show that sign of good faith but but that created a l lot of Downstream issues because our negotiation subsequent to that really was more around am I going to lose this earnest money uh you know if if the deal falls apart so it was all about where what date we were setting uh where the earnest money goes hard and it's no longer accessible to me despite what happens with the deal and we probably spended our Wheels uh for a long long time with attorneys and attorneys fees on on his side I had a flat rate just trying to navigate this right right um so we eventually settled on like a $100,000 earnest money deposit and we figured out how to make it work and you know ultimately he you know he bent on some of the on the terms related to it but um and then I had an SBA lender uh you know after interviewing you know 12 I found one that was um that was solid and they were going to give me a prime plus 1.5% uh variable you know interest rate which um was pretty good uh considering that I think the standard offer from SBA lenders is about prime plus 2.5 that's kind of like you know top shelf bottom shelf whatever you want to call it that's the standard offer that they're that they're making and if you can cut that down to 1.5 then you're doing okay there were some other flat rates that were available out there you know in the eights but uh a little harder to get and my SBA lender at some point during the deal said you know what you've got too much um blue sky or airball in your deal you know where I just didn't have enough uh collateral to satisfy the the loan um and that you know and that's even taking into account you know a life insurance policy that they were requiring me to take out so they came back and said we need to increase the seller note from you know 490k to about 1 million you know so he's in for 20% and um you know and this this didn't sit well well with the seller uh because we thought that the deal was starting to shape up right so the seller started to get fairly frustrated with the SBA lender at this point but um but you know he asked for a few things and eventually you know bent to the 20% so we agreed on on a $1 million seller note and then he came back and you know asked for a higher percentage interest on that increased value that he'd be loaning you know which the logic follows so we agreed on an 8% interest instead of 7.5 and um you know and then towards the end we got to a point where um we we needed to change the deal up a little bit and and and the SBA lender started to show him the uh you know maybe three or four days before closing showed him the uh the fine print on how the seller note would be subordinated to the SBA alone and you know it basically read you know this is all standard language from the SBA so you know anybody that's going into this you need to be aware that this could be a a gotcha with the seller but basically it says that you know his seller note uh if if I stopped paying it but I was paying the SBA loan he would have no recourse right and and I think my seller's like fear was that um you know after 7 years he would have no legal recourse and know if I were still paying my SBA loan and that I you know I could just stiff him ultimately and you know it's really not how things you know work but um but that was his fear and so he killed the deal at the 11th hour he he killed the deal I was actually out to dinner with two of my friends celebrating that I was about to sign uh closing you know in a day or two and I got a text from him and he said uh you know we've got an emergency this deal is dead so you so I left the dinner I'm outside calling him asking him and and you know and he was upset uh but he wasn't upset at me at least he reached out to you yeah because a lot of a lot of people a lot of sellers when they want to kill the deal they they ghost you yeah yeah you know and his attorney hadn't done an SBA deal as well he had a very like qualified uh experienced attorney he was very good but I think he was more experienced doing like private Equity size deals and you know never dealing with SBA it was his first SBA one and he even advised his client don't don't do this deal I can't recomend if you stop doing this deal you know I uh I can't represent you and so um you know so they were kind of you know twps in a pod at that point and and so he said look I I need the I'm going out of town right now I need the weekend to think about it and you know I I I still want to do the deal but I just don't know how we're going to get it done so that left me with two days of absolute abject you know disappointment and brokenheartedness and um you know but he came back on M cry on the shoulder of your pot yeah texting using that pod texting my pod you know um you know you know and I got those same texts from those guys when they went through it too but he came back the next week you know a little refreshed had some time to think on it and and he basically came back and he offered me like uh two options um you know one uh was a 100% seller carry uh 100% seller note um not 100% of the 5.3 but 100% of whatever loan that I needed to get there and um and he said or you know and this could be an interesting option um I am willing to you know be your partner for for two years and you can you can buy in equity and I'll be your partner and we can work together and then you know over the course of two years we can you know part ways and you know we'll have a a loan and maybe you'll have an SBA loan or you know maybe it'll be a seller note at that point but you can continue to to buy up your equity and um you know I thought honestly I was like really impressed that uh that he came up with those ideas and that he offered that and I was I was honored that he was willing to work with me as a business partner in that kind of a relationship and I told him as much and uh but I knew immediately when he offered the Business Partnership that that was not what I wanted to do because my you know you you got to come into this knowing what your goals are right and what what your desired outcome is and and my goals were to be my own boss and to you know have my own business and to be uh you know responsible for everything in the business to learn it inside out and and not to buy a new job right I know that's something a lot of people talk talk about is you know trying to avoid buying a new job and uh so you know I politely declined the partnership offer but I um you know and I was a little intimidated by doing you know the seller carry for you know the balance of everything for the loan but um because I would be so intrinsically tied to him because he is you know now he's my landlord he's my bank and he's my consultant right so we are very you know our our success is now mutually intertwined which is good but it's a very tightly wound relationship right so uh so I took him up on it and we got the deal uh dusted off we kind of had to go back to the attorneys and and say all right we've got a a you know fairly decent restructure of the deal here you know all other things uh notwithstanding we just need to change you know some of these you know loan sections in the deal and I had to go out and get different types of insurances and pledge him some security interest in the business if I were to ever you know fail on you know paying the loan and so you know he he definitely um wrapped it pretty tightly around me in terms of uh you know my my commitment to uh make make him whole in the event that something didn't work out but uh we we figured it out right and at the end of the day the final deal structure was a total loan of 5.31 million um and and at this point the inventory went from 1 million to 1.4 million because uh during my process that they told me that there's actually more inventory there was actually another 600k of inventory but I said that uh you know I couldn't take all that on so we whittel it down to 400k and I had to decide you know on some pieces and some artists that I I didn't want to bring in but I had a seller note of uh 3.91 million at 9% interest starting on June 1st and then um you know for that extra 400k he gave me a little bit of extra time to kind of swallow that pill so we set up a a second seller note of 400k at 9% interest that would start on October 1st so I'm a few days away from doing that that second note um and then I did a self-funded equity injection of of $1 million and that included you know my $100,000 Earnest payment um and I had to get you know an insurance policy and pledge you know Security in the business if uh if if some of that didn't work out so you had around a million dollars in your 401k I did I had I had uh a little bit more than that but um yeah that was a large bulk of it and and so this really I think you said it earlier but this is going really all in all in 100% in and what does your dad uh say now that now that you're on the the other side of the transaction I think he's he's still you know waiting for the shoe to drop I guess you know one way or another but but uh you know ultimately I I am happy beyond belief it is everything that I had hoped it was going to be I um and what is and what is that Sean what what is makes it makes you so happy you know I um I I I went from you know jobs where you have significant daily work stress and you have you know when you work in a big Corporation you have a highly matrixed organization typically and you may have a manager who is called your boss but you really are accountable to dozens and dozens of people right and and you don't always control uh the amount of work uh that is being asked of you right you know you we're all you know very reactive and and you don't control the The Funnel of business especially in sales so that was a lot of daily stress that uh I was doing doing for other people uh and it was really a grind and and for me as I've gotten older and maybe more set in my ways or maybe just more confident or maybe just more stubborn you know I just I started to reject that completely and um so this this new premise of really me being the boss me driving the tempo everything that I'm doing is for my family it's for our future success um you know there's a lot more motivation there there's a lot more willingness to you know roll your sleeves up and and get into it uh and and you know like like like we talked about earlier you know every payment that you're making is you know you're really paying yourself in equity so uh it was a no-brainer for me and um and while I will say that there is a a larger kind of overhanging umbrella of Burden you know Financial uh risk out there it it's manageable because I did the due diligence on the business and the business is performing as as I I expected you know it's it's not um it's not like uh breaking any records right now but it's it's doing what I needed to do and and we are having fun with it the team and I have really bonded and created a strong relationship I've got really smart people in the gallery and I I learn from them every day you know which coming from uh corporate business world coming to a gallery I think I thought that oh I'm going to be able to teach them everything and you know but they are teaching me everything and and uh and and I'm loving the process of learning I'm also loving the business that I bought because it's a passion business as well as a successful one so well let me ask you about that Sean because I recall you saying that you'd seen when in your kind of bis byell browsing more practical businesses maybe more sound businesses more of the type of businesses that a Searcher would traditionally go after and the conventional wisdom LED you there but then you're kind of your heart for for lack of a better way to put it um kind of raised its hand and was like you know if I'm going to leave corporate safe corporate where I'm I'm clearly having a lot of success and there's a there's a there's a path laid out for me and I can continue having success you know I want to do it for something that lights me up not just for more drudgery even if I get to be my own boss in that drudgery elaborate on that yeah you know I'm I'm surrounding myself and beautiful art every day in the workplace and and the art is my business and you know part of the fun now is that I get to curate the art I get to develop the relationships with the artists and um that that is like so fulfilling for me and and and I've also taken it upon myself to really study the art industry and along with that comes some really great things right so I I I've booked a ticket to go to the you know Miami art week right where art basil fair is going to be among a dozen other fairs it's a 5-day thing and you know I can't wait to go just like parachute in there and learn about this other aspect of the art industry right because like I told you there are some echelons to the business and and some of that is you know probably you know out of my reach in terms of you know the expense of the pieces that you know they're going to be showing and some of them are installations but but I'm rounding out my knowledge and and I booked another trip to go to the um uh European Fine Art Fair in MRI Netherlands in March next year um where I really want to get into you know the uh the European art community and understand what they're doing because right now most of our artists are North America based and if I'm able to expand internationally and you know curate some interest in that I think that'll be fun so it's a journey for me and and it's a it's a labor of love in terms of learning about something that I've always been interested in and uh never been able to really devote the the time that I wanted to to it so Sean it's so fortunate that you not only found a business that is a labor of love but it's also a really strong business because as we've already talked about often those often those things can cannot fall on the same bucket but here is a passion business that is also a really good business it seems like a business that would require passion like it it seems like your customers your employees are going to require your interest in art in a way that maybe somebody buying an HVAC business the the the crews don't necessarily expect you to be an HV HVAC technician or an HVAC expert now kind of earning credibility with those Crews is part of the process and is something you need to do but they're they're not going to expect you to develop actual functional knowledge so that you can go out alongside them in the cruise so some learning is definitely expected to earn credibility with your team in kind of a bluecollar business but not all the way in and in this you probably got got to go all the way in they probably they probably wouldn't appreciate in an art gallery business an arms length kind of owner am I right about that and then also curious could you have B seen yourself buying a blue collar a more kind of practical business what would that have looked like for Sean was that ever in the cards yeah so I look I to answer your first question I think um you know could anybody step in and buy an art gallery business uh with or without the passion sure but are you going to be credible as the as the owner and the the person that's driving the business uh if you don't have the passion for it probably not um but I I think that there's a parallel with that to any any business to some degree like you need to establish The credibility with your Crews or your teams or your sellers and you know the difference for me is uh having the passion for it just makes it like so palatable and not just palatable but makes it just so like invigorating every day yeah that uh it's such a differen maker right so and that that actually led to my ultimate decision because I was heavily weighing a few other companies some of these companies were like uh construction generator rental company one was a um uh multifamily dwelling renovation company another was a home construction company and these were all kind of like in my you know uh scope criteria that I was I narrowed down on bis by cell and I I really thought about it and I I looked at a lot of these and at the end of the day it came you know it and I know so many people go out there and they buy a business that they're not passionate about and and maybe it's hard to be passionate about an HVAC business or hard to be passionate about a generator rental company but are you passionate about building your family's future then absolutely if it's a sound business then you go in there you figure out how to run it and you know if you can step away and let the teams run it that are that you've highly trained over a few years then then I think that's a great recipe I just happen to get lucky with uh you know seeing this like Beacon of light out there at bis by cell the first time I looked and it was just something it just kept pulling me pulling me pulling me and ultimately I considered I think you know the differences of uh you know managing some of the labor teams um you know in the services business and all the HR that might be involved in that and you know some of the some of the transient nature of some of the employees um I I I I I weighed that and I thought you know I actually don't want to uh deal with that as much I'd rather be dealing with people that love art that are interested in it and that can can teach me about it and then I can just go Skyrocket into this place that that I love I think that's the perfect place to leave it Sean if people want to get in touch with you how do they how should they reach out yeah you can email me at uh Sean fascinations.com or uh you can go to our website at uh Fascination srt.com and uh we've got our phone number up there and you can you can call into the gallery anytime congratulations Sean on not only buying a business which everybody who sits in your seat there uh deserves to hear but also in finding this this passion business it's it's such an interesting business we could have spent another hour uh with me asking you about the ins and outs of of the gallery business so maybe another time um but really interesting and really cool that it's um it just lights you up so much so thanks for coming on Sir yeah thanks a lot will I loved coming on here and L getting to to know you in the process too thanks Sean 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