Stephen Quinlan, Paul Westhart, welcome to Acquiring Minds. Thanks for having us, Will. Guys, you're rolling up auto repair shops, which is intriguing in its own right, but you've also uncovered a way to amplify the value of this venture significantly. So, we're going to spend the first half-ish of the interview on the story, and then we'll turn our attention to this structure, how you found more buying power and more ways to create value beyond the conventional multiple arbitrage. Stephen, let's start with you. Give us a little personal background, please. Then, Paul, we'll go to you. Yeah, sure thing. Um, so I grew up in North Carolina. Um, lived there most of my life, went to school at UNC Chapel Hill. Um, and sort of right out of college jumped into a financial management program at General Electric. Um, it's funny, I've actually listened to a bunch of the episodes where you've had ex-GE folks um on the pod, so it seems like there's sort of a common thread between us on pursuing this, you know, entrepreneurial uh venture here, but um yeah, so I I I went to such a taste of corporate, you you run screaming. I think I think that's what it is, yeah. I think that's what it is. Um, okay. But no, I so so I did the financial management program, so six-month rotational program, you kind of build up, you know, your foundational finance skills there. Um, I quickly moved into a corporate development or M&A role where you know, I got to see a variety of deals um in a much larger context, so doing, you know, large enterprise value transactions. Um, learned a ton, uh but didn't really feel like I got to um kind of get into the weeds of the deal-making process. Um, it was more sort of churning out models and decks for the board and and that type of stuff, which is typical of any sort of entry-level position at that um in that role. Um, but quickly thereafter I I left GE um and went to Caesars. Uh similar capacity, so I was uh doing uh corporate development for them, largely looking at, you know, add-on acquisitions both from a uh real estate perspective and a and a business perspective. Uh and that's actually where Paul and I met. Um, so we met at Caesars. Um, I was on the M&A team, he joined shortly thereafter, uh and we became good friends. Um, he was on a rotational program at the time. Obviously, I'll let him go through his background, but um he was there for a few months, we became good friends. Um, and then after, you know, my tenure at Caesars, I moved on to a a health care company. Uh my goal, uh you know, throughout that trajectory of my career was to really get to earlier and earlier stage companies where I had kind of more long-term upside. Um, you know, learn a bunch at these larger companies, get to an earlier stage company, uh you know, that provided that long-term upside um was my goal. And I hadn't really thought much about doing, you know, what everyone's calling entrepreneurship through acquisition. Uh didn't even know it existed. Um, you know, the idea originated from Paul and and he can kind of describe where that came from. Um, but have always sort of been a uh a risk-taker um and knew in my head at some point that I wanted to kind of be in a position to control my own destiny in that way. Um, and so when Paul and I were kind of on the phone uh during COVID and we were all working from home, um you know, kind of he mentioned this idea of, "Hey, there's this really interesting opportunity and a really interesting credit product connected to that that could allow the two of us to, you know, through a self-funded way um you know, create a a totally new career for ourselves." Uh and so I uh I got really excited about that and that sort of kicked off our our search. Um, and you know, we cast uh in in kicking off our search a really wide net and I'd say we spent uh you know, the better part of a year just looking at opportunities and seeing what's out there. Um, there wasn't a whole lot of focus on any particular geography or industry. I think that, you know, kind of gave us a a little bit of a leg up in terms of what we were looking for. Um, and we knew we wanted to be self-funded. That's the other thing, it was never really on the table uh to pursue any of these other avenues, uh you know, traditional search fund or something similar. We wanted the cap table to be made up of of two people, um Paul and myself. Um, we could kind of dig into why that was, but um you know, we weren't really constrained by the idea of having to get equity investors over the line on certain deals that we liked. Um, and then obviously post-close we we wanted to be in a position to kind of have our decisions impact the bottom line diluted, you know, 50% as we're set up. Um, so that's kind of how we ended up where we ended up. Stephen, Caesars meaning what is Caesars primarily? What would you call it? A gaming business, a casino business, a hotel business, a tourism business? I would say all of those things. Uh yeah, so it's it's Caesars Entertainment. Um, they own, you know, 50-plus or they owned they they were acquired uh actually while I was there by Eldorado Resorts. They're not They're still Caesars, but the two of those companies merged um which kind of uh was the impetus for me moving out of there to the health care company. Um, but yeah, so they own hotels, casinos um across the US. Um, and so it was a it was a it was a really interesting uh niche and I learned a ton. Uh the the the M&A group, as it were, was two people, myself and my boss, so I really got a lot of exposure to the end-to-end M&A process, so everything from kind of the the documentation, drafting, negotiation to the financial modeling to presenting the deal um for approval to the board. I was involved in all of that, so it was a really good um sort of way for me to kind of prep myself for what was coming. At the time, I didn't know that, but it's definitely been, you know, the skill set that I've been able to leverage as we've grown, so. Excellent. Paul, I want to hear uh your backstory as well, but first just the the pitch to Stephen uh was was what? It was there's a there's a a financial product, a loan product that will enable us to to um set ourselves on a different path for our careers and have exciting careers. What I'm I'm I'm butchering it, clearly. What what did you say to Stephen? Yeah, yeah. I I had taken a entrepreneurial acquisition class in business school and the concept really resonated with me. This idea that you could go out, buy a business, run it yourself, have all all types of control over it. And so when I pitched it to Stephen, I said, "Look, why don't we go out and buy a business? Trades at two to four times multiples, we can make them pencil." And he said, "Sounds great. Where are we going to come up with the money?" I was like, "I've got the answer. It's in the form of the SBA." And that really kicked off uh a learning process for us in terms of figuring out all the different ways you can structure 7A, 504 loans, uh using essentially sliver equity from us um and being able to control all of the equity ourselves. Okay, thank you for that, Paul, but now rewind a little bit further and give us some personal background on you. Sure, sure. Uh from Southern California originally. Uh went to the University of Southern California. After that, went to go work on a Wall Street trading floor at Merrill Lynch, focusing on their foreign exchange uh spot and futures. Did that for a couple of years, went to go work at the Robert Wood Johnson Foundation in their endowment office. Uh focused specifically on their hedge fund portfolio, so allocating uh they had roughly $10 billion in in capital they were allocating. Allocating it to the most effective hedge funds we thought possible. Uh I did that for 3 years, it was a 3-year rotational program. At which point I was told to go to business school and uh applied to a number of places, got into Columbia, uh went there. And that turned out to be a pivotal moment for me. That's when I took an entrepreneurial acquisition class as I mentioned. Um, really really thought the concept made a ton of sense, but like most people, graduated, took the the least risky path and uh went to go work at Caesars Entertainment. Um, don't regret it cuz I met Stephen. Um, and so it ended up being, you know, fortuitous move for me, but at the same time uh probably set us back a little bit. So, it was 3 years at Actually, yeah, 3 years in a rotational program at Caesars. One of those rotations was in M&A um where I met Stephen, introduced him to the concept. Um, and went from there. And I think at the time for us, it was always us, Caesars corporate, it makes sense, but after COVID, it it it turned out it wasn't really the safest bet. Every week it was, you know, round after round of layoffs and kind of thought, "Why don't we take control of our own destiny? I know it's going to be risky to buy a business, sign an an unlimited personal guarantee, but at the end of the day, we have full control for for our futures. Let's go for it." And that really set off in motion kind of where we are today. And Paul, what was it that you do you think that gave you the nudge to finally do this? Cuz you'd been attracted to the concept immediately from that class. Was it COVID? Was it meeting Stephen? Was it seeing layoffs around you at at Caesars? All the above? Why why that moment? The pivotal one, I'll have to admit it uh it was meeting Stephen. Uh I think Stephen has a a bias for action that is is very very powerful. Um, so when I pitched it to him, it was like, "Okay, let's go." I think within a week and a half we were in northern Nevada looking at a an auto repair facility. Uh shortly thereafter we were looking at multifamily. So, it was a I'm kind of an idea guy and he is a very much at the energy behind it and getting it moving forward. So, that was it. And yeah, the other one certainly helped push push you over the line. COVID, kind of just boredom of corporate America, and the idea of doing that for another 30 years just wasn't compelling to me. Um, so that was kind of the the impetus for it. Cool. Well, interesting that the the one being pitched ended up being the the one really driving. You know, usually the one being pitched has to be convinced, but it sounds like Steven you flipped the script, which is a theme in the story of you guys as we'll get to. Great. So, you decide to search, and you had said, Steven, the just two of you on the cap table, um, even not wanting to raise equity just for to course you can raise equity for a self-funded search, um, didn't want to do that either. Was that just to to retain as much equity as possible, to have as much autonomy as possible, all of the above? How did you guys think about that? Oh, you're already of course also being diluted by 50% cuz you're you're partnering. So, you're you're sharing half the economics right there. Yeah. Yeah, 100%. Um, I think it's a couple things. One, I think uh, we just didn't want the constraints that tend to come with bringing on other folks into the cap table. And so, what that meant to us is both as part of the search, we wanted to be in control of the business that we found most attractive. And I think specifically as it relates to our auto repair, you know, I think it's it's generally speaking not the most attractive, um, market out there that that people kind of view as uh, something that won't be, you know, around in the long term due to kind of all the existential threats from EVs, at least as all the headlines read. And we can kind of get into our view on that. But, you know, our approach was look, we the the deals that have the more, you know, the most hair mean the cheapest multiples and the most upside. And so, we didn't want to really have to be constrained by getting those equity investors over the line. That's one. And two, um, we didn't we wanted to be the decision makers ultimately. You know, everyone who takes on equity is going to have some sort of governance structure where the major decisions are run up the chain and then pushed back down. Uh, at this point, you know, any decision that's made is made by the two of us. And not only does that, you know, do what I said earlier, which is kind of give you that feeling that the decision we make is impacting the bottom line diluted 50%, uh, you know, but it it it also just, you know, avoids a situation where you're you're having to move slowly because you're waiting for that approval. And that could sometimes be, you know, killer. So, Tell us a little bit about the search. You're based in Vegas at this at this time, and you haven't decided on auto repair yet. You're open-minded. You're you're really wide open. So, take us through the process of searching and in specifically narrowing down on on this thesis that you arrived at. I can start with a few of the things we were looking at. I think predominantly, geography was big for us. We wanted to be in the Mountain West. It's really business-friendly. You've got really positive demographics. A lot of people from California, Washington, Oregon are moving into those areas. So, that that basically for us was Idaho, Montana, Wyoming, Montana, or Wyoming and Utah. And so, for us it made a lot of sense to look there. We also wanted to be in a fragmented industry, one that wasn't dominated by one key player. I think in our particular industry, the biggest 50 players account for something like 10% of revenue. So, there's just a ton of room for us to play there. And we wanted something that had pretty simple operations. You know, Steven and I are coming from casino backgrounds with pretty limited experience as it relates to operations. We didn't want to get involved in something that had an engineering focus, anything that was really heavily dependent on one person. And that led us to a number of industries, but the most compelling one that kept coming up cuz it was they were always businesses for sale in the different geographies we were looking for. It was auto repair, specifically. And did you have to go through the um, rationalization that you're going to convince us of that this was a an industry that despite the headlines had real legs to it? Or, yeah, did you have to convince yourselves because we all reflexively are like, well, that's an industry that won't be around forever because EVs are going to eat it. It's funny. I I vividly remember Steven asking me one day, he's like, are we auto repair guys? And I I sat there, I was like, I don't know. I mean, we can maybe. Um, but no, look, I think because of that, you've got some pretty competitive valuations in those. So, we pick you can pick them up at two to three times pretty routinely. And I think sellers are are are open to that type of multiple. Um, and are realistic about the prices they're going to sell for. And a lot of the deals we've looked at, even the ones that aren't off-market, we're just not paying premium multiples. And there's no sellers and there's no I don't know that there's many people actually competing with us as we look at these other shops. I think three of the four should have just been us making an offer and getting it done. And how do you, while you could argue that there's another decade, two, three left in conventional auto repair shops, it still means that at the end of this venture, 10 years, let's call it arbitrarily, when you go to sell, that a future buyer is going to there see their own runway with these businesses is that much shorter. At that point, only another 10 or 20 years. So, it's not just about how much runway you guys have with these businesses looking into the future, but your future buyer is going to have that much less. I'm speaking now about kind of any declining industry. You don't have you're not just thinking about, well, is there enough room for me to make a career out of this? But, what is my potential buyer pool look like in an industry in decline? How do How do you How do you rationalize that? Yeah. Yeah, look, and I think I'll answer that two ways. I think the first one is the the obvious question of where is EV going? You know, and EV vehicles obviously have a lot less moving parts, don't break down as often as as combustion engines will. Um, look, I think the data is pretty compelling for us. You've got roughly 280 million cars on the road, 2 million of which are electric. It's it's less than 1%. California, your most progressive state as it relates to EV adoption, it's at 2%. Idaho's at 0.3. Um, I think the geographies in which we're targeting are going to be the last to adapt to that. Um, even if you take the most ambitious numbers coming out of California, um, Biden's 50% mandate by 2030, it's going to take forever for that in-place base of 280 million cars to to actually move when 5 to 10 million cars are sold a year. So, our view on that is that the tail is very, very long. And and the second point to that is I think we actually view the shift to EV as pretty compelling for our business. I think it's going to be very difficult for your mom-and-pop operator to adapt to that. I think for us, if we've got 5, 10, 20 shops, we're going to have the capital to be able to invest in the right people, the right technology, the right diagnostic software, uh, to be able to make that pivot. And I think for us, it actually is going to mean a lot of our competitors are going to come offline. And we'll make the shift. I mean, obviously drivetrain's going to break down less, but those are there's a ton of load-bearing parts, suspension, steering columns, tires that are going to wear out quicker. So, the idea for us would be to adapt our business to EV and actually use it as an opportunity to change. But, 20, 30 years down the road. Yeah. Yeah. Yeah, I would just add to that. I mean, I think that the reality in our industry is most owners of auto repair shops are nearing or at retirement age. And the reality is even if, you know, the the TAM shrinks over the next couple decades, we believe a scaled player like ourselves that has, you know, a really tight playbook around digital marketing and the processes that we have in the shop to get work in and out the door is going to be able to absorb or take over much more share than we had previously. So, as that as those owners retire, and most of them aren't getting the exits that, you know, we're providing to some of the the larger shops that we look for, um, they're just going to go offline. Um, and so, in that world, you know, we're going to end up being the ones with the capacity to take on what exists. And then as Paul said, you know, bolting on that EV capability adds to that. I feel pretty convinced. Yeah. And you know, you're actually not the first searchers that I've talked to who who bought auto repair, although the other person I'm thinking of who I just spoke with recently actually hasn't yet come on the pod. But, um, he made similar arguments and and convincingly as well. Um, so so, pretty interesting. We've hit on, you know, the auto repair and how EVs will affect auto repair, the kind of the giant question for this industry. You've also touched on the fact that it's a kind of a boomer classic boomer industry. A lot of owners are at retirement age. What other industry dynamics are there? Fragmentation, low multiples, you mentioned. Give us more. Real estate is is a crucial component of these businesses. Give us more attributes of the of the industry. Yeah. Um, I'll start with one. So, a big one that that we've noticed and I think has been one we've been able to take advantage of in a in a big way is these businesses, um, everyone that we've acquired or looked at, um, aren't, you know, professionalized in really any way. A deal that we did down in Utah, the owners were writing up tickets, managing the workflow and calendar using pen and paper. Um and that ends up actually being a huge damper on throughput. Um so we have the ability to come in, we have really robust shop management systems and technology that manages technician productivity, things like that that just can double throughput, you know, kind of day one uh with folks that know how to kind of manage those systems. And so that's been a a really big tailwind for us when we take over a shop, we can kind of expect a 10 to 20% lift in um in productivity as soon as we take over. That's one. And then the other one is most of the shops that we take over don't have a good sense for where the market is in terms of labor rates. Um we do pretty intense market research in that way where we're kind of comping out, you know, the labor rates that that owners are giving us through diligence against other competitors in the market. Um and we sort of step up that labor rate to that to that, you know, adjusted higher labor rate, which also gives us that immediate lift in revenue. Um so it's it's those two things. I think most owners aren't connected to the market as it relates to pricing. And most owners aren't professionalizing their shops in a way that could really increase their productivity. Sorry, Steven. The The labor rates, you mean what you're paying your people, what they're paying their people that then become your people, you give them raises? Sorry, no. The So we basically bill our customers in two ways. One is we charge them for the parts that we've ordered that are going to be replaced in their vehicle. The other is the labor hours of our technicians that are required to replace those parts. And so that labor hour parts and labor bills as parts and labor. So they're undercharging their customer for the labor piece of that. Sorry. Correct. Correct. Um and and you know, to the tune of in certain instances, you know, 30, 40% off on that rate. Um and you know, we focus our product, I would say is is one that's very focused on quality. So we're bringing in the best technicians at the highest rates. So we can justify that increase in rate at the locations that we run because we're putting out the highest quality and then on top of that, we offer our customers a really strong warranty that gives them that piece of mind on the workmanship. Paul, you'd said that you didn't want some sort of technical business involving engineering. So uh auto repair is not engineering, but it is the service being delivered is a is quite quite technical service. How did you guys get comfortable with with with that piece of it that you're not car guys, or maybe you are car guys. I assumed you weren't, but We're not. did you No. No, and and the honest truth is I would struggle to change my own oil. And in many ways it's one of our our main advantages. I I think for us it forces us to hire really good, competent people. But but to answer your question, I think it's a thing we heard time and time again as we went into this industry is that there is a dramatic labor shortage. Your average diesel technician's 50 years old and there just isn't a group of people coming in to replace them. It was It was concerning. I was and I'll be honest, day one when we closed Blue Wrench, the foreman of one of our locations was going to walk off the job and you know, didn't want the change, you know, was unsure. And it was scary for us. And truth be told, there we have not seen that shortage. We as we discussed earlier, the the MSA that we're in is is really, really robust. We can post ads in California saying, "Hey, come to Idaho, you know, see what it's like here, give it a chance, you know, much easier to live here in terms of cost of living. Great place to raise a family." And we've had tremendous success with that type of campaign. So that big risk we had is is essentially, I don't say it's zero, but it's it's not really top of mind anymore. You'd mentioned how your selection of the Mountain West was a big kind of part of the strategy. Is this kind of seeing more fruits from that of that selection that that the labor shortage, you're not feeling the labor shortage because they're growing cities where you are, growing markets. And I guess they're attractive, so people are leaving California to go there. Is that Is this basically like your selection of the If you'd been in California buying auto repair, you might indeed have a labor problem, but because you're in these attractive geographies, you don't, sort of thing? Completely. And I would say we would never ever look at this industry in California. That just wouldn't be on on something we would do. But certainly, you know, we have a robust pipeline of people at this point reaching out to us to join us, really skilled mechanics from kind of across the the western half of the US. So no, I I think it's certainly our thesis coming coming into play. Yeah. Yeah, no, I would add to that. I mean, I think what I mentioned on the labor rates will kind of facilitates not only a retention mechanism, but a recruiting mechanism. So by increasing those labor rates, essentially the the way we're billing out or the price at which we're billing out the time of our technicians, we're able to bring folks in at above market rates. So with those, you know, attractive compensation packages, we've also had a ton of success bringing in top talent. Mhm. And we're winning talent. I mean, it's not guys who are jumping from one independent shop to another. We consistently get talent from the dealerships and I think by all accounts, those are the places where technicians make the most money. Um but you know, at this point given, you know, where we're able to be on labor rates, the quality of work that we put out, the culture that we've worked really hard to to put in place, um we get guys from dealerships. And then it's a very, very small community in the sense that the technicians, especially in in Idaho, they basically know each other. All of you know, they they have it's a very tight-knit community. And so when you start to get that momentum around the culture that you've built, you know, the the strong competitive compensation packages and we've also added medical benefits, uh simple IRA matches, things like that that I don't think are standard in your average mom-and-pop repair shop. Um that that message kind of travels quickly uh and we've had a ton of success for through simple referral processes and things like that as well. So I think it's another benefit of being able to kind of increase those rates when we come in day one. It gives us more leverage on the recruiting side. Mhm. You know, that that's remarkable. I interviewed a couple weeks ago Scott Walton, who will have aired by the time this does, who bought mechanical, commercial plumbing, gas, and HVAC. And same thing. They They really kind of transformed the culture, made it a a more appealing place to work, and word traveled fast. Uh they they when they got into the business, there was a recruiting recruiting was tight. And after not very long, they were, you know, people were coming to them. They just had great inbound from people who wanted to work there. Uh and not They were doing their own marketing, but it was mostly there was a a big aspect of this phenomenon that was just people in their guys talking to each other, the technicians talking to each other and saying, "You should come work here, you know, things are going great, etc." Yeah. Um Yeah, totally. And and um you know, I think the reality is um we at this point it's it's close to zero, but I'll say it's zero. We basically have zero voluntary turnover. Um and I think that largely is attributable attributable to some of the things that we mentioned, but also because a lot of the technicians, especially the ones that work at, you know, independent repair shops, um get burnt out um and are oftentimes kind of tired of the culture of, you know, there there's an older mechanic who's the owner. They aren't really interested in growing the shop, which means that technician's upside is is is pretty capped um because most technicians are sort of compensated on a commission model. And so we've had discussions with with folks through recruiting or our existing team uh where they're just really energized by the idea that they're part of a business that's growing. And so their their opportunities aren't just limited to, "Hey, I'm going to be a technician at the shop for the rest of time." It's, "No, there's opportunities to be foreman, there's opportunities to be shop manager, there's opportunities to be regional manager down the road." All of these things that didn't exist for them even at the dealership, but certainly at you know, an independent mom-and-pop repair shop. Um and so I think that's a kind of another driver of why we've had successful recruiting efforts. And I think that that is a theme I've heard from guests before that new energy bring meaning a new owner brings new energy, brings excitement, brings um career possibility for the existing staff where where maybe they saw none before under the old owner. Right. Right. And and I would just add one more thing, which is we reinvest a lot into making our shops, you know, state of the art. So that includes, you know, bringing in lifts, tools, scanners, um all sorts of things that are going to facilitate the team being able to do their jobs more effectively, which for them means more money in their pocket. And I think again, that's it's it's a trend with independent repair shops for sure that that cash is kind of going into the owner's pocket. And when the technicians and the team kind of see, "Hey, we're really excited about reinvesting into the shop and and making your jobs easier and listening to the types of things that you know you tell us you need from a CAPEX perspective. I think that's something that that they really appreciate and kind of keeps them keeps them around. Some really easy wins there. I mean when we took over Blue Wrench, they didn't have a single swamp cooler. Idaho gets really hot in the summer and they were forced to wear pants and long-sleeve shirts. I mean we immediately in the first 3 months bought five swamp coolers. People allowed to wear shorts in the summer. Morale ticked up noticeably immediately. I mean so some of this stuff it just it's not rocket science. It's just being thoughtful about how you reinvest and and the needs of your team. They are a phenomenal team and we just kind of do everything we can to make sure we can retain them. Great guys. Well, I want to hear the story of Blue Wrench, which I guess is the first acquisition. So want to get dive into the details there, but before we do, give us a picture of of how much you've how many you've acquired to date and where. You're in Idaho now, you're in Boise? We're in Boise. So our Blue Wrench was our first acquisition here in Boise. Then we bought Eagle Auto Repair. Sorry, and Blue Wrench was two locations. So you've got two plus Eagle Auto Repair and then we bought G&R Diesel which is in Utah. And then we have a a fifth location that we'll be closing on here in a couple weeks. Also in Utah. a Also in Utah. But I thought you've done five total. I just added my math just got me to four. Oh, so that's maybe because Blue Wrench is two. Yeah, so you've got two it's five locations. Right, right. Sorry. Blue Wrench is two, then what was the other one? G&R and then G&R, Eagle Auto Repair and then fifth one. Undisclosed for now, but it'll close in 2 weeks. Yeah. Yeah. Thank you. Great. Okay, so let's hear about Blue Wrench. Why you said you were looking throughout the Mountain West, you kept seeing auto repair shops for sale. So there were lots of pickings there. Why this one? Yeah, I I can kick this one off. So as Paul mentioned, we kind of we looked at a bunch of different auto repair shops and got into kind of pretty detailed levels of diligence on a couple of them. The issue we kept running into was that they weren't really of size that of the size that we were looking for. So we're talking just around a million in revenue. And it it and you know the what we wanted to do was get something with more scale cuz obviously there's some de-risking connected to that. And so we we got familiar with the business by doing those kind of by doing that diligence on those shops. And a a opportunity in in Boise, Blue Wrench came on BizBuySell and we reached out to them. So there was a couple things that had us attracted to that one. You know, your typical auto repair shop is just general automotive. They're working on kind of mostly passenger cars, that type of thing. And this shop, these shops were more focused on fleet and heavier duty. And so we really liked that when we were looking at it high level because we thought the recurring nature of that fleet business was going to be a really good thing for us to step into and get our kind of get our bearings as owners of the business. They had some really big names in there that were really strong customers. Nothing that was kind of concerning amount of concentration, but definitely meant that you know, in time when times when there's a downturn, you're going to have that that recurring business. And we also thought, you know, relative to the general automotive side of things, there's going to be a longer tail on that diesel heavy duty diesel business. And so that is kind of the way we formed our thesis on this on this Blue Wrench opportunity. And obviously there was two locations instead of one, so you have a little bit more personnel that you can shift around and things like that. So that was kind of high level how we formed our thinking on on closing on Blue Wrench. And the two loc- Go ahead. Sorry, just the two locations were same types of vehicles, same types of labor, every kind of same business just spread across two locations. Mhm. Yep. And they also had active managers in place at both locations. So Stephen and I had the thesis that we could go in there and focus on on more of the high level decision making versus some of the other opportunities we were looking at where we'd have to step into a service advisor capacity actually selling to customers where we knew we'd be out of our depth pretty quickly. And the other piece of it that really gave us comfort is Blue Wrench had done 20 years in a row of growing revenue. And so we sat there and said, okay, short of us really coming in here and really messing this up, this opportunity should be at the very least steady and to its credit it has been. You know, it's interesting that Blue Wrench had been so successful because it was Blue Wrench, Stephen, that was pen and paper? No, they they they had a shop management system in place, but it was not used effectively, which I can talk about, but the the the pen and paper was was the Utah acquisition, G&R Diesel. Yeah. Okay. Okay. Well, um it sounds like it was a really Blue Wrench was a real outlier that that many of these shops, so so for the audience educating them on this industry, hard to crack a million bucks. A lot of these shops that you'll see on BizBuySell are going to be a million or less. So what do you think Blue Blue Wrench had done so successfully to keep growing revenue well beyond that that kind of ceiling? The truth is yeah, the truth is is that it was really a supply and demand equation. So there just aren't many shops of the size that exist that Blue Wrench has. So it's a a large 12-bay shop that can that can you know, has the lifts with the capacity to handle these larger vehicles. One. And two, the technicians to be able to work on those. They're really hard to come by, the ones that work on heavy duty diesel. And so you know, it was it was an opportunity that meant you know, we're going to we're going to be able to have sort of a competitive moat here and go out and win more fleet business. There's really one or two other options in the valley. And so they kind of were able to grow just by definition the fact there was a ton of demand for their service and not a whole lot of competition. And today we're probably the only people in the valley that can actually lift an RV. And so your your option is to go to the dealership who's going to tell you you're 6 months out or you can come to us, we're probably 3 to 4 weeks out. But we're going to be slightly cheaper than the dealer, same quality if not better of work and we can get it up in the air. So it's a big differentiator for us and the same applies for any heavy duty fleet with vehicles over 20,000 pounds. There's just very few who can handle those lifts. They're really expensive. I mean you're talking 50,000 bucks plus for a 20-30K lift. Mhm. And you were treating this as your platform acquisition, I assume. So this was going to be a bigger one, maybe and subsequent ones might be bigger or smaller, but this needed to be of a certain size cuz it was going to be the first of a roll up, right? Yeah, it's funny. We we kind of originally started off saying to ourselves, maybe we do want a smaller acquisition, a smaller shop, get in there, learn the business. You know, we're not taking a ton of risk on a personally guaranteed loan at a much smaller size and so that might be the right answer. We very quickly kind of changed our thinking on that front and that's why we went on the search for a for a much larger acquisition, which was which was Blue Wrench. And yeah, it's it's definitely the one that we viewed as kind of the platform acquisition that would be the starting point for for our roll up. And you know, my view through the whole process was we want as soon as possible to get into something. And the reason for that is my view was at the time, you know, you're not going to get that really solid off-market deal with no experience and not being in the industry. It's being in market, understanding the players, talking to the suppliers, all of that sort of thing and that actually kind of led us to our next acquisition. So you're not going to get those off-market deals until you actually get in industry was our view, which turned out to be true. So. And why did you decide though against a smaller business? You were entertaining it and then decided against it. Was it just quality of business? You just wanted you basically wanted to get into something that was going to be of higher quality as a business? I think quality of business is a big one. I think I mean on a risk perspective, I think we were looking at a total wipeout in either scenario. And so if you're going to have that as your as your downside, you might as well go for something of scale. And so that that was kind of the thinking that that led us to the larger acquisition. And as you get there, you just got better processes in place. You've got management in place. You get better pricing from your vendors. There's just a number of things that start to snowball the larger you get. And so that was kind of the driving force for us to go to the the two and a half million dollar list price. And it's also the you know, the leverage on the labor. So one of the shops we looked at for example has three technicians. You know, they're they're doing a million bucks a year, three technicians. For whatever reason, if we come in there and one of the technicians leaves, you basically lost third of your revenue overnight. And so you know, in the context of Blue Wrench, we had something closer to 13. And so that's a much more manageable situation you know, than would be kind of having three technicians. So that was kind of our thinking as well. And Blue Wrench having this kind of as you said competitive moat or niche in with these lifts that can lift really heavy vehicles. Does that then dictate that you need to kind of remain in this niche going forward or not or not necessarily you could look going forward at a passenger type auto body shop passenger car type auto body shop. It's a great question and I I think it's something that we struggle with I'd say daily in terms of what direction we want to take our portfolio. I think look there's highly compelling reasons to stay in the fleet game. It's recurring revenue where essentially the only player in town who can handle it. There's downsides. We don't get paid for 30 to 60 days on a lot of those things. It's really hard to find parts for RVs for some of these heavy duty vehicles. They can be back ordered for months. And so we look at it and we compare it to some of our other businesses that are cash pay. And we look at it and say hey look we've got 12 bays in our Meridian location. Currently four of them are set up exclusively for heavy duty. So we've got eight to play with. You know do we want to set that up with Honda Civics F-150s cash pay customers that we can just come in diag get them out the door. Or do you kind of go for the lighter duty fleet business that Amazon and businesses like that are going to have. I don't know that we've come up with a compelling answer. We market to both and whoever comes in we do. We take care of them but but no it's something we think about consistently as as what direction we want to take our portfolio and then specifically that location. Yeah. And I would I mean I would say that we've sort of made that the decision to diversify at this point. You know with our five locations we have everything from that heavy duty fleet business to passenger cars which is our Eagle Auto Repair to light duty diesel which is our G&R Diesel uh shop to a mix of passenger and light duty diesel which is our other location in Utah. And I think it works really really well. We have seen months where you know Blue Wrench the heavy duty fleet business is kind of the the the leading group in the portfolio and then other months where that's down for one reason or another and passenger car business is up. And so you kind of end up hedged across the portfolio um in a way that kind of makes the months more normal. Uh which I think works out really really well and I think that was part of the thinking behind as soon as we got into this acquisition got things stabilized moving pretty quickly into another another location. Um you know so that diversified our revenue one but two gave us scale as it related to you know labor and things like that. We had the the ability to shift technicians around when folks were sick or using PTO and that type of thing. Um but overall I think that the the way we've gone is this diversification play. Uh and it's worked out really well. Well for the listener who will hear your success here and and it might uh pique their interest about this industry. You've done a good job here of kind of pros and cons pros and cons of each passenger car kind of niche versus fleet and uh heavy duty niche. For a first acquisition of by a searcher do you come out really clearly one or the other that the the the the best first acquisition should be X or Y or you could argue either way. I would say as it relates to our specific portfolio I would say Blue Wrench wasn't the easiest acquisition now that we've done several and maybe that's cuz it was the first one and that that skews your thinking a little bit. But we've discussed several times Eagle Auto Repair would have been the easiest acquisition imaginable. Um they have management in place. The processes there are fantastic. They're rock solid. The team has little to no turnover. Culture in place there is uh best in class. Um it it it would have been a very easy first acquisition. In some ways I'm happy it wasn't cuz I think you get spoiled by that. And then you come into another shop and it's like oh my goodness what have what have we gotten into. Whereas you know Blue Wrench was pretty solid acquisition. It's as we go through these other ones I think we've we've kind of got some some battle scars and we know what how to solve a lot of those problems that come up. So I'd say probably want to go with an Eagle Auto Repair which is passenger. Yeah I mean my recommendation if someone was interested in the space is to is to it doesn't matter so much the revenue mix of the business that you're buying as it does the size of that revenue. Um I I just I would highly recommend that you go try and find a a shop and these aren't you know kind of a dime a dozen but a shop that does somewhere around 2 million. Um it's just critical to have that that scale that kind of reduces the risk around all of those other things we talked about um and I don't think you can go wrong between fleet and and passenger you know passenger vehicles but it's just really about that size. Paul how about a couple or and Steven how about a couple of um war stories from Blue Wrench. What what did you what are these battle scars come from. I mean we've got many. I I'd say look the one that that sticks out cuz it was it was at a time that was probably when we were most vulnerable was was day one when we met the team and the foreman of the smaller location essentially told us or he didn't tell us he told the former owners he's like I'm done. I'm going to leave and at the time we didn't know how hard it was going to be or how easy it could be to replace a a foreman like that. Um but we we panicked. I mean I was like what do we do. I mean we did everything we could to retain him and ultimately he did stay and we ended up having a great relationship with him and ended up promoting him to manage one of our locations. Um but that was one that really struck out cuz I remember going home that day and and like Steven what have we done. I mean we are this is exactly what we didn't want to happen. You know I don't think we upset anybody but you know just change as a concept was something he wasn't comfortable with. So that's one where you know now when that happens I wouldn't I wouldn't lose sleep over it but on the first acquisition yeah that was a that was a tough one. Yeah I mean I would say we got really lucky uh with the Blue Wrench team. Um they are an awesome group in the sense that they kind of trusted us. We you know we met them day one we laid out what our plans were for the business. Nothing necessarily was going to change day-to-day immediately but we planned on doing things like bolting on benefits that you know we understood from the prior owners they had a lot of interest in and and those types of things and bringing a positive culture and I think some of that resonated with them but at the end of the day you know they really trusted that that you know we were going to be um kind of uh doing the things that we said we were going to do. Um and you know we're super thankful for that obviously. Um my my war story is that um on our third acquisition down at G&R Diesel um I would say that we did not have complete information as it related to the role of the prior owners. And you know I've listened to to plenty of episodes well and I think this can be a pretty common occurrence. Um and so for us what that meant specifically was you know we were under the impression that those folks the the the prior owners there were two of them were just running the front. So they were picking up the phone writing up tickets contacting customers those types of things which we had no problem and we had the existing talent that we were able to port down to Utah. We actually moved one of our managers managers down there. Um but that ended up not being the case. So we got in day one and it became very clear after talking to the technicians that no not only were they running the front but they were also doing most if not all of the diagnosis of the vehicles that came in. So yeah so so the technicians that were in in the shop were basically taking orders from those two and kind of just replacing or hanging the parts based on the diagnosis from them. They were really experienced and skilled diesel mechanics but kind of assured us that that wasn't you know it was it was few and far between where they would actually go in the garage. Turned out not to be the case at all. In that situation uh we had sort of the top mechanic uh step up and fill that foreman role um and he's done an amazing job and obviously we've kind of increased his compensation commensurate with that new responsibility. Uh but it definitely meant you know a couple months of of uh rocky road because you know they were missing their two lead diagnosis technicians um and we really weren't aware of that. So it was overwhelming for our team at the front and then certainly the guys at the shop um but we were able to pretty quickly get some additional talent in the door to kind of help at the front and then also um promote the the lead technician there to a foreman role and he's done a a fantastic job so um that was kind of the other big war story. Mhm. Paul I liked how you put earlier that you you've spun this not being car guys thing to your to your to actually to an advantage. That it forces you to invest energy where you should which is not developing skill under the hood but developing skill in finding retaining and placing talent. And that is a skill. Uh and and that's really the the it's strategic. It's really only you guys who can do that. And the better you can get at that you know the it's a high very high leverage thing and and I'm not sure people think about maybe they do, but maybe newbies don't think about hiring and kind of recruiting and retaining and and figuring out especially in a business that's going to require some technical know-how where you're going to find those people or who on the existing team you're going to promote. All of that is is a is is not something that necessarily comes naturally to somebody doing this for the first time. So it's a skill to to cultivate in oneself and I really like that you framed it that way. You know, your your lack of ability under the hood forces you to cultivate this skill where maybe you would have you wouldn't have given it at the attention it deserves if you if you knew the first thing about cars. Absolutely. We see it all the time. I think a lot of exactly what Steven was talking about at G&R Diesel. It is really hard for an owner who knows very high level diagnostics to not go into the garage and do high level diagnostics. And second you're I mean now you're second-guessing your team, you know, you never really empower leadership in the garage. It leads to trouble and we have seen that time and time again. I mean that was at Eagle it's the exact same issue G&R as he said. And then at our other shop that we're looking to acquire in a couple weeks here it's it's the exact same thing. It just keeps occurring. Whereas for us we we're forced to make really targeted hiring decisions and the truth is it's kind of the one thing that can really sink us is is having the wrong people. And so we've spent a disproportionate amount of time on hiring training, making sure we give the all of our people the right tools to succeed. And then letting them go and and letting them run, giving them targets to hit and and see where we go from there. Yeah. Guys, how did you how did you talk your foreman, your Blue Wrench foreman back from the ledge? It was an interesting one. I mean it we just kind of hit him with logic. We said look, it's going to be changed to go to another shop. I mean you're going to have to deal with a whole new cast of characters. At least here the only thing changing is the owners and we're not really going to be involved in the day-to-day. You're still going to report to your manager at your location. And look, the idea is we've got two shops now. We're going to try to get to three at the time and now now are five. There's going to be plenty of opportunity to grow. I mean your career at one time was just foreman. His career then became he went to manager and now you know, who knows where he goes from there. But that was the vision we sold him on and that the change was for the better and I think very quickly he saw our investment in the shop in swamp coolers and diagnostic equipment that I think he said all right, they're not just talk. You know, they're they're actually going to stand by what they say and kept him. Great. Good work. Steven, I think you were going to say something. Yeah, yeah, I was going to say something just to the point of kind of not having the experience as a mechanic. So that really allowed us especially at Blue Wrench to kind of go in and pay attention to the data. I think when you're absorbed in like the daily operations and the diagnosis and writing up tickets and contacting customers you don't have the ability to spend that time working on the business and so we were able to kind of spend a good amount of time in those early months evaluating the fleet book of business that that they had and saying hey this business, you know, customer A is coming into us at a gross profit margin of 20%. That's not tenable. We need to figure out either a way to renegotiate that relationship or terminate it if we have to. And we did that fairly quickly and with the with lots of success on the renegotiation front, but in certain instances we terminated relationships that then, you know, freed up room in our bays for more positive relationships both from a, you know, financial perspective, but also kind of bringing in those guys to to get them in and out the door as fleets appreciate. So And to provide a little on that. I think we went into Blue Wrench and and it did probably somewhere in the neighborhood of 2.5 million the year before we acquired it. And Steven and I looked at ourselves and said look, we've got no experience. This is brand new. You know, let's be conservative in our underwriting. And I think we bogey that thing to do roughly 2.3 million and we ended up cresting the one year mark at 3 million. And it's doing exactly what Steven was saying. Just doing the simple things right. Unprofitable fleets gone. Winning new customers via more effective marketing makes sense. Let's put in place technology, processes that all are going to enhance throughput increase the quality of the work getting out the door. Just sticking to the basics and really nailing it was enough to get us to that point, which is great. That's fantastic. And are where do you think that will that that three might grow to? We're probably looking at probably around 3.4. Mhm. I'd say this year. Great. Yeah. So what is the you the five acquisitions? What's aggregate revenue across the portfolio today? Yeah, it's it's high seven figures. Okay guys, I want to start turning our attention now to the kind of the the structure, how you're putting all this together, which there's a lot to say about. Anything more to say before we get into that on on the businesses that you bought? Yeah, I think that um you know, as a listener to your podcast I I came across the episode of the of the two guys with the the trucking school um and I think one of them made a really good point that resonated with us. You know, at this point we've gotten pretty much scientific around it as it relates to our systems and and optimization, which is blue collar businesses specifically auto repair have very transparent operating metrics, you know, surrounding performance. And so it was really easy for us to come into a business that we really knew nothing about and understand what good looked like and what not so good looked like. So, you know, as I break down the two sets of kind of or two categories of employees we have you have service writers at the front and they're very clearly measured on and paid on revenue sold to customers. Great, that's an easy metric to kind of compare month to month, year to year and to have, you know, transparent conversations with them. And then the same goes for technicians. It's the hours that they bill and the amount of time they spend in the shop. And so if they're billing the same amount of hours that they're spending or clocking inside the shop, they're at 100% productivity. And so you want to manage towards that and hopefully get above that cuz that means that they're sort of making outside wages and you're making you know, the the labor hours on top of that. So just a for for folks kind of thinking about blue collar businesses, this is what we what we really like is the simple nature and straightforward nature kind of of the operating metrics and I think it also provides a level of transparency to the employees as to kind of how their compensation's going to work and look. It's a great point Steven and and I remember that's it was Tyler and and Bob Boniface who bought the the trade school in North Carolina and I remember them making that point. I I'd forgotten it until you just mentioned it now. They were drawn to to blue collar for a variety of reasons buying a blue collar business and this and but this was one of them that really you can measure the inputs and outputs really precisely in a way that in in white collar businesses you can't. So really kind of yeah just like you said. So understanding where there's or inefficiencies or where things can be optimized or basically just understanding overall performance becomes way clearer than in say white collar business. Really really interesting point and so it sounds like you guys have have are experiencing that. I've found that would would echo that. Great. Yep. Cool. Yeah, great. Thank you for that Steven. Okay guys, so where to begin? I think let's begin on the fact that these businesses are hard to sell for the owners. And that they typically also own the real estate. Does that tee you up to kind of enter into this into into this structure that you've devised? It does. I might take a step back real quick and just sort of provide the context on our first deal, which I think then lends itself to the subsequent discussion around how we've adjusted our approach to structure. So you know, as Paul mentioned at the very beginning you know, we knew that there was this SBA product out there, the 7A product. Um You know, in our early days that was sort of all we talked to anyone about and all we really felt applied to what we were doing. We kind of assumed that, you know, if we're if we're doing a business acquisition, we're going to use 7A paper and, you know, that's at some point going to run out given the you know, the $5 cap that they had on it. So as soon as we go into Blue Wrench you're and and you know, you kind of realize all right, this place is stabilized. We're in a position to start the roll up and do additional acquisitions. You run up against a bit of a wall in the sense that that basket runs out pretty quickly. And in our first transaction and we would like to have this one back if we could, we actually included the real estate as part of the purchase using the 7A product. And so a lot of that capacity was used on the first deal. It was really advantageous in the sense that including real estate in the transaction using 7A allows you to term that note out 25 years as opposed to the typical 10. Um, so we really liked that aspect of it, but what we didn't realize at the time is that would limit, you know, especially being self-funded or not not willing to take on additional equity, that would really limit our growth thereafter. And we actually ended up in a position where before kind of learning about the alternatives, um, where we had multiple deals in the pipeline in underwriting and got a phone call from our from our bank basically telling us, "Hey, it's one or the other. You don't have the capacity to do both of these on 7A and so you've kind of got to uh, cut the cord in in one of these situations. Um, and to us that was unacceptable, one, and two, meant that we needed to kind of investigate alternatives, which which sort of kicked off a lot of research and and discussion, um, kind of in the in the world of what else exists out there. Um, obviously there are conventional products that exists that exist for this type of thing, but the reality is they're sort of mezzanine-like products that are extremely expensive and in several instances include, you know, equity features that again, we weren't really willing to take on. And so we had some discussions with several bankers across, uh, you know, Idaho and Utah as to what our options were and that sort of kicked off the pivot into this new structure. And I'll pause there for a second if there Yeah, that's great. Thank you, Steven. So just just to be absolutely clear for people, as everybody listening or most people listening will know, the 7A SBA loan is what we use to buy a small business and it has a total of $5 million of available debt. So if you're thinking about doing a roll-up where you're going to buy um, a lot more that's going to require a lot more debt over the term of this venture than $5 million, you're limited. And so then you said, as you said, Steven, you you looked to other loan offerings by banks, conventional loans, and you didn't like the look of those because they can be rather expensive or maybe require some kind of equity, um, giving up equity. Um, so so you kind of felt a little bit stuck there. So just want to make sure I repeat back to you what I'm hearing to make sure I I got it right. Were you Do I have that right, Steven? Yep. Then just the other thing to to um, double click on that you said was the 25-year amortization. So if you buy a business that has real estate as well and the real estate component of the overall acquisition represents 51%, more than half, just you just half or more, excuse me, a little over half, that it could be 51%, then the entire loan becomes a 25-year loan. Um, so far better, you know, lower monthly payments, longer terms, it's almost like you're mortgaging a business. And that's a very that's very appealing. Um, and that's actually what you guys did and so that was good, but you ended up using a lot of this five more of the this $5 million than you would have preferred because now you've got that much less left and you're looking at doing a lot of these acquisitions. So you're going to bump up against the end of that $5 million real quick. Good. Totally. That structure we thought at the time we were brilliant because we had combined the we'd gotten it termed out 25 years, but as Steven said, it was a poor use of our very limited SBA bucket. We would have been much better off doing a 7A loan for the operations entirely and then doing a 504 loan for the real estate. It just uses much less of your SBA capacity. It's a 40% guarantee over 75 on a 504. And then the other miss we had, which Steven didn't mention, is we put 10% down on that deal. We kind of thought that was the way these were structured and you can actually use a seller note from uh, that's on full standby. The bank, at least the bank we were using, will treat that as equity. So we put 10% down, which in our case was something like 300 grand. Would have much preferred to have put 150 and taken 150 note and I know the seller would have taken it, so a couple misses on that first deal, but we learned and we adapted going forward. Mhm. Mhm. And just to be clear from your the personal story here, so you guys each put in about 150 of your own money into this to get things going. Yeah, thereabouts. Correct, yep. And and did you have to bring in more equity for subsequent acquisitions or are are you able to do subsequent acquisitions from the cash flow of earlier acquisitions? All all balance sheet cash, yep. Wow. Cool. Oh, I'm sure we'll maybe get to that again, circle back to that. Okay. All right. So so conventional debt isn't the answer to your problems. What is? Yeah, and so just to put I I also want to talk about the timeline cuz that's highly relevant as well. So when we did the Blue Wrench acquisition, this was April of 2022. At the time, I believe the prime rate was 3 and 1/2%. Uh, somewhere in that range. Um, so really favorable rate environment to do deals, that type of thing, um, which kind of is important as I get to how we adjusted our structure. So as those two deals that I mentioned were in underwriting, that was a year later and obviously rates had jacked up four or 500 basis points. I know prime today I think is at 8 and 1/2%. So totally different environment for sellers and for buyers, um, and a world in which we basically had to figure out an alternative financing mechanism for us uh, that would allow us to retain, you know, like I said, the equity, um, and kind of provide this exit to shop owners going forward. So the reality is, as you mentioned, 99 out of 100 shop owners are going to own the real estate, um, and by and large, you know, those locations are really strong, um, and they're not replicable, um, in any way in the sense that you can't find that in that small industrial real estate located there um, to to replicate what you what what, you know, what they have there. So the just to highlight the importance of ownership of that of that real estate for people who are in the business of auto repair. So we have these two deals. The bank says, "Hey, you've got to choose one or the other." We choose to do Eagle, um, and that was our last deal that we did on 7A. And we wanted to do this other this other deal, G&R Diesel. Um, we had we did a ton of research, lots of discussion with banks and basically the the findings of that were that there is a basket of credit under the SBA 504 green program that basically sits outside of any of your other, um, kind of loan capacity restraints. Um, as Paul mentioned, the key sort of attributes of a of a 504 loan, green or not, are that the the loan is made up of actually two mortgages. The first mortgage 100% comes from the lead bank. So they they come in at 50% of the loan or of the purchase price and the SBA itself, the SBA debenture, represents 40%. Um, and so this this program, not only does it exist outside of the, you know, typical $5 million it also allows you to have that $5 million capacity on the SBA portion for multiple projects. So to kind of say that in different words, you have five five and a half million, I believe, per project, you know, divided by 40% gets you to a number closer to 16 million per project for multiple projects. So on the real estate side, it opens up a ton of capacity to do deals and the structure is still the same where we're able to come in with sliver equity and if the seller is open to it, um, and we'll get to that in a second, uh, fill some of that equity gap with a seller note. Um, so it's a yep. And to be clear that the 504 is the real estate loan. The 504 is the SBA's real estate loan product. Correct. Correct. is a derivative of that called the 504 green. So what you just explained, this discovery of your of of yours, Steven and Paul's, is that is a real estate-related loan product. Correct. But you're buying businesses. Correct. Exactly right. So my point about business owners owning the real estate 99 times out of 100 was to frame up this idea that if a if a shop owner, you know, is going to sell their business and most times they want to do so completely, um, they don't want to sell just the real estate or just the business, you're looking at two transactions. You're looking at a real estate transaction and a business transaction. And so the structure that we came up with and have had a lot of success with, a lot of traction with, is that using this 504 green product to facilitate a cash out on the real estate for the owners and then negotiating a 100% seller note on the business. Um, and to take a step back, the reality is the, you know, individual shop is not really a marketable asset. Uh the real estate standalone is, the business standalone is not really. Um and so not, Steven? Yeah, because I I think the the reality is is a standalone auto repair shop is just not um you know, typically like we mentioned is going to be you know, a million bucks plus in revenue. Um and the business owner you know, the current owner um is doing something significant in the business that any searcher is going to be concerned about leaving, right? And so with our scale, where we have managers, um additional talent that we can port over to take over these additional acquisitions, we we end up being the only buyers in these processes. Um and so it's a situation that has allowed us to structure a real estate transaction that's a an attractive purchase price for the owner, where we cash them out, and then a business transaction where we sort of have carte blanche on on constructing the note in a way that works for the owner, to give them fixed income over time, and works for us so that we kind of meet our underwriting criteria. So, these owners own their businesses and they own the real estate. And intuitively, and they want to sell it all. They they want to get out completely. And sort of intuitively they think, I'm going to try to sell my business. And so they go to market with their business, but their businesses aren't very high quality and sit and don't sell. There's no there's not much of a market for the businesses by themselves. And what you guys have done is given them a way to have a liquidity event by saying, no, let's talk real estate first. Let's buy your real estate. Okay, so the cash that we're going to bring to closing day is for the real estate. We're also going to buy your business, but you're going to give us more favorable terms on that business. Did I just jump I may have just jumped ahead a little bit. But but there's the that's the uh the flipping the script that you did. You've now made this kind of a real estate first negotiation uh as opposed to they they're thinking, let me try to sell my business and then there's no takers. You say, well, we're going to buy your real estate and your business, but um this loan product where where we're going to get be able to get financing is for your real estate. And then we'll also buy your business and and but then you have very favorable terms to buy the that business because just you're giving them an out, which they otherwise wouldn't have. Yeah, and just to put a finer point on why the business um is not as marketable um is and there's few there's a few exceptions to that, Blue Wrench included, is the way that these businesses are typically run is one, the management issues that I I mentioned, which are you know, the the owner is heavily involved. Either they're wrenching or they're running the front or both. There's that issue, but the the more difficult hurdle to get over if you're coming at that deal with 7A is lots of those owners are running personal expenses, um all kinds of things through the business that make the deal unbankable, especially at a size where you're at like a million plus dollars. And so the way that we get comfortable with that is we obviously own four of these but let's use this example of the fifth shop, where we've run this exact structure. We own four of these shops. We know exactly the margins we need to get. We know what the car counts look like. We know what labor rates are going to be. It's pretty formulaic. And so we don't need, you know, to get a whole lot of comfort on their financials as they exist. We just need to understand how many technicians you have, what the car counts look like, what are your labor rates, and those types of things, and we can kind of replicate what we know we can do. Mhm. And it kind of put a some context around it. The G&R Diesel Shop was initially listed on the MLS. And so you get a lot of investors who will look at that and say, okay, great property, great location. What's the lease look like? And there is no lease. And the seller is going to want to actually sell his business. He's going to need to use that real estate if he wants to sell the business. And so when you pitch that to the investor and you say, look, there's no lease, but there will be. It's an unknown credit quality, unknown tenant, unknown term, everything. It's just not marketable. And I think we come in there and fill a pretty unique need where we can buy both. We just need the seller to play ball as it relates to providing a pre-sizable seller note. But in exchange, we can pay them top dollar for both. Mhm. Sorry, and why is it that the the busi- the real estate can't sell on the MLS? It could sell, but I I I'd say in that particular example, the seller is going to want to also sell his business and get cashed out on that piece. And he's going to need that building, cuz the buildings in our industry are critical to what we're actually doing. And so he's get you can't sell the business and say, hey, I got a customer base. You're going to need to find a lease somewhere else and port all the lifts over. So they go hand in hand in in our industry. And so that's the that's where we can we can really provide a a pretty elegant solution to them. Mhm. Yeah, and and just to go back to the point that I made on, you know, the timing and interest rates, what this allows us to do with, you know, being able to kind of negotiate terms as we see fit on the seller note, and then having a real estate loan that are going to have significantly lower rates um than you would on a 7A. I mean, I think 7A loans now are north of 10%. Um and so to get a deal to pencil in that world is is really, really difficult. But for us, where we can get below market interest rates on the seller note, and then competitive or low in this environment interest rates on the real estate cuz they're fully secured, um you end up, you know, with a a much more favorable cap structure coming in with 7A paper, taking out the business, and having to pay rent. Ah, so so the rate that you're getting on the real estate is less than what a lot of what searchers get on their SBA loans. Because it's secured by the real estate. This is maybe basic to real estate people, but educate us. Yeah, yeah, to I mean, to the tune of of three to 400 basis points delta. So our our interest our average interest rate on a loan today will be, you know, call it 7%. And if you go to get a Blue Sky loan, a 7A loan, um those are going to be prime plus 300. So you're going to be looking at 11 and a half percent money. Um and so our seller paper that we negotiate is either you know, commensurate with the rate we have on the real estate or even lower than that. So we have we have rates that are, you know, what you would have assumed were uh deals done back in, you know, early '22, late '21. Um but they're just because we negotiated those rates to get the deal done. Mhm. So so let's let's do to bring this home for people, let's take an example. Let's do walk through the numbers on an example if you can. Maybe G&R's is is the best one to do. Can you walk us through exactly what the numbers were and what the actual deal look like? Yeah. Um I'll keep it high level if you don't mind. Um but let's just say that the the um the real estate was um worth $2 million and the business was worth $1 million. So the way that that ended up getting capitalized is we brought in a 504 green loan um on the real estate. 95% of that purchase price came from some form of debt. So as I mentioned, 50% of it comes from the lead bank and they're first lien or first mortgage on the property. 40% comes from the SBA and then 5% comes from the seller. And so we go 5% down on that that $2 million piece of real estate. Um and then on the business side, on the $1 million example, um we were able to have them term out that note 25 years. Uh I believe the interest rate was close to 6 and a half percent. Um and there's a balloon on that. So what we we we basically the way we get folks to agree to these long amortization periods where we have low payments in the interim is we say, okay, you're we're going to make these payments for the next 5 years and then after 5 years the the the note accelerates. And the assumption on our end is either we'll refinance into something cheaper as rates come down, hopefully, um but in the interim we're paying down that debt and we've got cash flow and all of that good stuff. So it ends up being kind of a a win-win um and you know, the sellers are were really agreeable to kind of all of the all of what we were um what we pitched to them on that. So, you've got to $3 million kind of enterprise here. $2 million of it's real estate. $1 million of it is the the the op co, the operating business, and you only had to bring 5% of $2 million, not even 5% of $3 million. 5% of $2 million. More the rest of that of the $2 million for the real estate is is is debt at good real estate rates, not SBA 7A rates, good real estate rates, closer to your home mortgage rate. Yep. And the $1 million business that you've bought is 100% seller financed, also on a 25-year amortization, although it's got a balloon payment, so you're not you're actually going to they're going to get their money at the end of what, 10 years you said? They're going to get all their money at the end of 10 or five? Uh I think we had five, but yeah. Five, okay. Um, so 25 year years amortization, five year balloon payment, also very also a low rate. Correct. Seller seller walks away seller's happy because seller gets, you know, $2 million on on closing day and then a million dollars that'll come over the course of five, you know, in a trickle and then all at once at the end of five years. Um, and you guys only put in 5% * 2 million is what? 200 uh, $100,000? Yep. Great. Yeah, it it it's Great. You're silent, Paul. I feel like you want to say something. That's sliver equity. are you just are you just basking in the in your own genius? Uh, I I won't take credit for it. It certainly wasn't uh, my idea. I had the SBA idea, but I think Steven has been the one who's really pushed it to the limit with a little bit of creative backing from our our broker. And what is what is the the green designation here? That must mean that that there's got to be strings here strings attached. There are strings, yes. Um, so in order for a loan to qualify as green, you basically need um, a a an energy assessment. Um, and so there's a couple ways you can check this box and the bank basically manages this as they would a an appraisal or a environmental phase one. Uh, but they bring in energy consultants and I believe um, the threshold you have to meet is that you know, some 10 to 15% of energy efficiency improvement post close. Um, and so that basically means the consultant comes in, tells you what you need to achieve that threshold, you do that, it gets rolled into the total cost of the project, um, and then you qualify for that for that loan. So it's financed. So that the cost there is finance is part of the loan. Correct. Yeah. Oh. So it's really not onerous at all. It's not some Nope. No, I think it's all done by a consulting agency and it it a lot of it depends on on how old the building is. Like one of our buildings is I don't know from the 1950s cinder block construction. You can probably get away with just doing LEDs to to cut your your cost there. A brand new building to get that even to to meet that 10% threshold is going to require a pretty significant investment. So, there's some some give and take there depending on on the kind of building you're working with. Was that what you wanted to say, Paul? You were about to say something else. that was it. Okay. Great, guys. Okay, so you've so what you've explained is how you can do these deals in a really creative way with with little money down and a lot of powder, I guess, in the form of debt. So you're you're no longer you figured out how to uncap this this 5 million that most searchers are constrained by. Um, to round this out or to close this out is is how you'll package this at the end of the of the of the whole venture, right, Steven? That that's another key element of this. Yes. Yes, it is. Um, and and just one thing I would say about this structure cuz I think there's going to be some um, sort of raised eyebrows listening to us saying we're putting $100,000 down on a $3 million deal um, and concerned about potential, you know, resulting leverage from that. Um, we don't change our underwriting criteria. So the the those deals pencil the way Blue Ridge did, the way Eagle Auto Repair did in the sense that we have north of two times debt service coverage as a result of the transaction. So any you're able to achieve that obviously by having the flexibility on the terms of the business note and then having the cheaper rates on both the business note and the real estate side. Um, so it's it's nothing's changed as as you know, we're not taking more risk in that sense, but um, we stick to our underwriting criteria and that sort of shapes the high level terms of the deal and then kind of the capital comes in uh, behind that. Mhm. And one the portfolio pays for we already said this, but to be clear, these $100,000 the equity that you need to do subsequent deals is being paid for off the balance sheet. So it's not out of Paul and Steven's own bank account. The portfolio is self-funding its own its own expansion. Yep. Yep. Very very powerful. Tell us how the the other element of the big value unlock here upon exit cuz that's another key element to this, right? It is, yeah. Um, and so what I will say is, you know, Paul and I um, our approach is that, you know, we run the business as if we're prepping to sell it. Um, that means a lot of things, but it doesn't mean necessarily that, you know, at the end of all this we want to, but we want but we're you know, we're putting ourselves in a position where, you know, at an exit we're able to maximize the value of, you know, all of these transactions and the value we've added to the business. Um, so to that end, I'll I'll I'll sort of describe and and Paul help me out here if I'm missing any of the details, um, kind of how we think we're setting ourselves up for that. So, at the end of the day, um, we will and we are building a two kind of separate portfolios here. One is a portfolio of what we believe to be really valuable, well-located real estate and then a business of rolled up auto repair shops, um, that will become or is highly marketable. Um, and the reason I say that is, you know, we have done a lot to implement systems, management teams, governance, controls on the accounting side, all of that good stuff, um, to kind of build a business stand-alone business apart from the real estate that's marketable to someone that would be interested interested in something of that size. And so by taking these what we call, you know, one-z two-z's that aren't really marketable, pulling them together, putting in the systems, the management, um, all of that good stuff, we've created something that I believe strongly believe is very marketable. Um, and that goes without saying obviously that's any roll-up, um, but I think it's a a an interesting industry where we've done it, um, and there's, you know, very few strategic players in the space, but a lot of opportunity to continue to do it if you have the capital. Um, so anyway, Steven let me interject. That that piece which you've just finished saying is the kind of conventional roll-up. Correct. Buying one-z two-z's, improving the businesses, and then realizing multiple arbitrage. You you get in for two and a half or three X and then you roll up 10 of them and you exit for something much larger than the multiple that you got on each individual business. So that that's basically the conventional playbook that you just described. Totally. but in an interesting but in an interesting unlikely industry. Exactly. Um, and and so like I said, we've got this we've got this business that we've now created five locations that are sort of running, um, as you would expect with a with a sort of platform, um, kind of support functions and management team systems and all of that. And now, um, a portfolio of real estate. So, to get into sort of the way the math starts to work, right, is if you focus on, um, that the business side and, you know, assume we own all of the real estate of all of our locations, you're in a situation where you can sort of leverage this arbitrage between what people are willing to pay for business EBITDA and what investors are willing to pay for real estate rents. Um, and so to give a very simple example, let's assume we have $5 million of what we'll call EBITDAR. So it's EBITDA plus rent. So you have all the earnings power of the business represented in EBITDAR before you pay any rent. The idea is to the extent that you can rationalize this and we'll get into kind of the details of that, you can pull rent out of that EBITDAR number and sell that rent, sell that real estate portfolio at a premium multiple relative to what you get on any business sale. And so what I mean by that is let's assume small businesses trade for, you know, anywhere from of our size trade from five to eight times, right? If you pull that rent number out of that EBITDAR 5 million, that's going to trade at anywhere from 15 to 18 times, right? And that's obviously highly dependent on the rate environment and things like that, but just for the sake of broad stroke example. Um, so what you've done is you've given yourself almost, you know, in in certain situations 10 turns um, on that rent that you're pulling out of that business versus selling that same number at, you know, selling that 5 million at five to eight times. Um, so I'll pause pause there for a second, but that's kind of the arbitrage play that we're set up for. So two follow-up questions here that I have a hard time understanding. First, you earlier said that these businesses and their real estate are kind of inextricable. But now you're you're talking about indeed extricating them from each other. How how is that going to work? How can I buy how can there be a market for the grouping of businesses and not the accompanying real estate since they are so fused? Yeah, is it it's a great question. And so the main mechanism to solve for that is is the term of the lease. Right? So let's assume the order of operations is that you sell the real estate portfolio ahead of selling the business, right? The lease is going to have to have uh a longer term. So, say 20 years plus three five-year extensions. So, whoever's coming in there knows that for 35 years they don't have any risk that at the end of the lease term they're going to be asked to leave the property. So, you can you can set yourself up to mitigate a lot of that stuff by kind of selling the real estate first, ensuring that the lease represents something that's market that a buyer would sign up for um and you know, you you kind of mitigate that issue of okay, at the end of 5 years am I going to be out of a am I going to be out of a a location here for my business? And I'll say like the reality is is it just the business and the real estate attract two different kinds of capital. You know, most of the folks who are going to be looking at our our business are looking for or have much higher return thresholds than someone who's buying the real estate. So, real estate trends trades on what's called a a you know, capitalization rate, which is essentially a cash flow yield. And so, that is typically between 6 and 10% depending on the property and things like that. Whereas, you know, folks search funds, things like that, you know, that type of capital that's chasing our business in theory needs something north of 20%. So, you have two different two different buyers coming in here um and you know, it just it allows you to kind of part you know, partition the real estate, do that deal with with real estate investors who are focused on that type of return and then you know, focus the the business on folks who are focused on that type of return. Makes sense. Mhm. And and you can only do that decoupling at scale when when both portfolios are of a certain size. A portfolio of five or 10 body shop auto repair shops in five or 10 pieces of real estate. Totally. Totally. And that's where it gets interesting, right? Cuz it's like you the larger you are, the more capital you're attracting. And so, that's why we are focused on growing as fast as we can cuz we want to be able to put together a portfolio that attracts as much interested capital as we possibly can on both the business and real estate cuz inevitably if we decide to exit um you know, that's going to get you the best price. Um but it's just not going to be the case when you're a shop owner with a single piece of 6,000 square foot real estate well located, but you know, with a single auto shop. It's just not Yeah. that you're not going to be able to to take advantage of that. And and you guys can choose to sell these two portfolios, these two packages at different times. So, you don't also don't need to worry about the synchronization that so many sellers do, where they want to sell their real you know, you'll hear my guest say, "The seller only would accept me as buyer if I also took the real estate cuz they just wanted to be done with it." You guys don't have to do that. You can sell one then the other. And indeed it sounds like you would you would um sequence things. So, you sell the real estate first and then you'd sell the opcos. Exactly. Yeah. You kind of focus on crystallizing the value of the of the propco um and then you know, you can either run that business as you have and then eventually market it subsequent to that or you know, shortly thereafter. But the important part is that you have now in place a marketable lease and you're operating under that lease that you can then in theory, if we were to decide to exit, you know, kind of um go to market with the operating business. And I recall from the pre-call that you're you're you're also raising rent. So, that's another way that you're getting kind of immediate immediate value creation. Exactly. And you know, it it's not like you just press a button, right? So, the the the a lot of the value that we're adding is increasing the earnings power of the business at those individual locations so that you don't end up in a situation where you're over leveraging the business by by putting, you know, by increasing rent and putting it in an unsustainable place. Um what we've done is we've increased the earnings power at those businesses, which increases the amount of rent that they can reasonably handle that would be market. And typically, you know, that's measured in what's called rent coverage, um which is EBITDAR divided by, you know, rent. And so, that kind of gives you a sense for um kind of where you're at. And that that number I think most people like to see closer to two times. Right. Cuz I guess the question otherwise would be if this rent coverage concept weren't there, the the the argument would otherwise be, "Well, why don't you just charge your your opcos as much rent as possible if you're going to sell that rent for a higher multiple?" Like just as you know, just jack up rent as much as possible. And I and I guess that that points to the other question I was going to ask, which is my impression from my guests is that when they buy a business where there where there's real estate um as well typically seller owners, the generally retiring seller owner has charged themselves less than market rent cuz they want to show their business having more profit. So, but if what you're saying is that the the the multiple on that profit you they can kind of allocate where they want that profit, either is it profit coming out of the real estate because the rents are higher or profit coming out of the business cuz the rents are lower, you'd want to see more profit coming out of the real estate because real estate trades at higher multiples. So, why is it that so often that um owner sellers are charging themselves less than market rent? They should be charging themselves as much rent as possible to juice the value of the real estate which trades at a higher multiple. Right. Um well, I would say two things. One, this devil's in the details on the real estate. So, I you know, what I don't know is is this a you know, towing business that just has a yard in the middle of nowhere where vehicles end up after they've been removed from certain properties, in which case you know, something like that is going to be you know, pretty easily replicated um versus our business where it's you cannot set up shop anywhere else. And so, the earnings of that business are 100% facilitated by that real estate. So, it's not a storage facility, it's not, you know, what whatever, you know, cuz a lot of these businesses I think or that's where the real estate comes in is it's a it's not necessarily where the earnings are happening. And so, it's a little bit of a different equation. But in general, to the extent that you know, it's reasonable to assume that you're going to get, you know, let's say even a 10 cap, right? Which would represent a 10 times multiple in my mind it doesn't make sense not to move rent over or increase rent to the point where you get that premium multiple. And to your point about devil being in the details and if it's just real estate that's like you said a an acre in the middle of nowhere. Um in fact, your structure here I guess what I is there a takeaway for the audience in them looking at businesses that have attached real estate where they can do some sort of try to figure out some way that they can import what you figured out here into their own deals or is it very specific to kind of auto repair or any business where the real estate is almost intrinsic to the business? Could could that could it that kind of um this only kind of work in that context? Or I got I I guess really what's the takeaway for the audience searcher? Yeah, I think I think you hit hit the nail on the head, which is insofar as the the real estate is intrinsic to the business as it is for us um it's it makes a ton of sense uh to to do what we're doing, which is figure out a situation where you can, you know, efficiently capitalize the deal getting the real estate and the business and then set yourself up to move as much rent as you reasonably can. You know, obviously there are lots constraints on that, but as you reasonably can to that real estate business because it just inevitably is going to trade at a higher multiple. Now, bring this home. Say you do this over 10 you buy five make five more acquisitions and you've got a portfolio of 10 10 pieces of real estate, 10 businesses. How much value's been created? I that that's kind of open-ended, but put some numbers around this. I mean, how what are we looking at here? Can you do that? Or is that is that is that too I'm curious what Steven's answer to that one is. Yeah, yeah. I mean, I I I think that so, let's just assume that where we are now at at five locations, 10 locations is is double that. I mean I'll talk in very broad strokes here, but you know, we'll be um something close to 20 million in revenue um and on the business side, you know, my view is is that we'd be able to create three to four returns of of sort of multiple arbitrage on top of just the, you know, growth of the bottom line number itself. Uh and so, that you know, that that's a pretty meaningful meaningful number. Um and I think, you know, going from where we are today and getting to that 10 shops is going to be a a very heavy lift. I think we're right on the sort of cliff where you have to start to really build up that overarching in- infrastructure that supports those four-wall locations. Uh which, you know, Paul and I do a lot of today. So, a lot of the the back office support functions, managing benefits, employees, HR, all of that good stuff um is a lot of that runs through us and that's just not sustainable from where we sit today. And so, you know, that means significant investment in that in that infrastructure. Um and then, you know, when we get to that point, like I said, I think there's going to be a a three to four terms of of creation on that and some growth in the bottom line number. Uh and then on the real estate side, I think that's kind of where most of the value lies. I mean, these auto repair facilities are located in prime locations. I mean, one of our locations is a uh you know, spitting distance from a from a uh soccer stadium in Utah. Um they're just they're in really, really location really, really solid locations. And I think if you look at our portfolio now and you assume that that we kind of added an additional five locations, I think it's a it that there's going to be a lot of value created on that side as well. And I would just echo what what Steven said earlier. It's it's pretty muddy when you take over one of these one-sy, two-sy locations. I mean, the amount of financial plumbing, hiring uh that you need to do, dialing in your marketing strategy, all of that. It it's exhausting and it's a it's a ton of work. So, I think the idea of us getting into a portfolio of 10 to 20, getting it optimized, and offloading it is is is tough to stomach. I think for us it's let's get to that point, enjoy kind of the fruits of our labor where you finally have the processes, the management team to handle that. And then you can explore what the next option is, but it's probably quite a ways down the road for us. How many acquisitions How many acquisitions would you guys like to be doing a year? It's a great question. Or or maybe you think it maybe you think in terms of revenue, how much revenue would you like to be buying a year? I would say in the initial pitch deck we put together, we had said, "Let's do one more deal in the next couple of years." And Oh. I would say our pace is dramatically increased. I mean, we're already at five, I think. We're now getting quite a few inbound deals that come in organically. And so, I I don't see any reason that pace would slow down. I think if anything, that'll increase now that we've got a playbook that's replicable and that we can just continue to just rinse and repeat. I think if anything, the goal would be to get to 10 here in pretty short order and probably reassess there, but I don't see any reason we couldn't get to 20. Yeah, and there's I mean, there's sometimes I I I I dream and think about there's some certain opportunities where you could really accelerate your growth um with sort of larger roll-ups of shops that exist um you know, to the tune of 10 plus locations um that haven't already been kind of picked up by strategics. Um and to the extent that you know, we have the capital available to do those things, we you know, we'll definitely pursue it. And there are those types of of options out there in in both of our geographies. So, there's there's a world in which, you know, at some point you kind of turn your attention to those larger deals, but obviously that means more expensive multiples, potentially, you know, you're not picking up the real estate in that world. Um that that type of thing, but it's definitely something that we've we've sort of batted around. Sorry, Steven, that was portfolios of of businesses like yours that have kind of already been built consolidated into a portfolio like you're talking about doing. And so, buying one of those yourselves. Yep. Is that what you meant? Yep. And And with And you said without those might be without the real estate. So, this idea that you guys have of separating buying multiple um auto repair shops and then pooling them and then separating them into the opcos and the and the real estate, that's something that you've already actually seen in the market. People selling these packages of auto repair shops that are already decoupled from their underlying real estate. So, there's a precedent here? Yeah, there's a precedent. Um I don't know that it was the same sort of steps that we're talking about where that group owned all of the real estate, subsequently did a sale leaseback, and are now owning the operations. I think a lot of times the the existing roll-ups, you know, their most efficient use of capital is to just buy the business and not buy the real estate, you know, for those kind of yield reasons we discussed. Um but certainly, yeah, there's there's, you know, operating companies out there with multiple locations that um that don't own the real estate. I'd say we also have a challenge now. I mean, we're getting inbounds from I would say adjacent industries um like towing, businesses that we could certainly incorporate into ours. I mean, logically you could pick up broken vehicles on the side of the road, tow them to your to your repair facility and get that maintenance as well as all the maintenance those big, heavy duty vehicles require themselves. So, we we we struggle a little bit. I mean, I think a big part of our job is capital allocation. And And that's one where we sit there and and take a step back and say, "Look, in auto repair, this strategy of ours with the sale leaseback of the real estate just makes a ton of sense. Is it actually going to apply? Are we going to be able to juice the slim capital we have on those bigger transactions when in a a tow yard in the middle of nowhere doesn't have the same properties? Those are tough decisions. I don't have an answer to it. Um it's something we struggle with quite a bit cuz we do see quite a few opportunities in adjacent industries. But it is something that that's been coming up and probably something if we talk a year from now that we'll have done quite a bit more research and maybe have a deal in that space. Great, guys. And for the listener uh who who who's interests you've piqued, the this opportunity, do you believe it exists in You've already said you wouldn't go near this in California. You've said that you strategically chose the Mountain West and that it's appealing for all the reasons we've already talked about and it helped you solve your recruiting problem. Do you think that other regions of the country, if somebody's not um in the Mountain West? I mean, you you've already got that locked, so you're not going to encourage them to go there anyway. Uh but um you know, does this need to be in a high growth area necessarily, which the Mountain West is? The this your your playbook? I view it as just forgiving. It We were able to make small mistakes and you have this kind of tidal wave of people moving in that really helps us out. You know, we lose an employee, we can replace them. I mean, the Boise MSA has grown 30% in the last few years. I mean, that type of change is massive for us and really allows us to absorb some some mistakes we make here and there. I think your your margin for error is a lot smaller if you're operating in in a in a place like California where the market itself is shrinking. Um those would be my thoughts on that, but still possible certainly. to be clear, Paul, the reason you didn't like California for this business is because the population dynamics in California is kind of flat. Population dynamics. Yeah, I mean, California's got a few specific issues related to them as it relates to our industry. I mean, they're basically saying electric vehicles by 2035 are 100% of new vehicle sales. That's going to require a waiver from the EPA, which in a Trump administration is looking highly unlikely. Um but that's a risk that we're probably not willing to take. Mhm. Yep. Yeah, I think just I mean, naturally the coasts, west or east, are going to be much fiercer in terms of competition. You know, I feel like on in in some of these East Coast markets, um you know, I'm from North Carolina, there's auto repair shops on every corner. Um whereas where we're playing, you know, it's a good example of ours is Eagle. It's the only shop zoned for that purpose in the entire city. So, you basically set yourself up in in certain instances when you go to these places away from the coast that are not as densely populated to to kind of have those outsized or asymmetrical, you know, return options. Okay. Anything that we didn't get to? Do we feel like we captured the essence of what you're building here? I mean, I'll I'll touch on than the essence. The essence and the details. Yeah, yeah. I mean, I'll touch on the big one that that impacted us. I mean, it's a it's a big step jumping from, you know, the comfort of W-2 into a an entrepreneurial pursuit in a geography you don't know, industry you're not familiar with. Um we did it and it worked out so far well. Um so, I would encourage anyone who has kind of that entrepreneurial bend to to pursue it. It doesn't have to be in a highly leveraged strategy like ours. There's numerous other pathways to entrepreneurship. But I would encourage those who are on the fence to to give it a shot. Cool. Yeah, my my uh point I'd leave with is um I think a lot of folks, and we started this way, uh especially if you're sort of financially inclined or have the backgrounds that Paul and I did, um you can kind of end up in this analysis paralysis situation where you're going to go through, you know, hundreds of deals, never find that perfect one at that perfect price. Um and so, my recommendation is um find something and execute on it um cuz cuz, you know, you just you got to get started and then the best deals, assuming, you know, you're doing what we're doing, which is trying to roll up a a portfolio here, are going to come from being in industry. Um you're not going to to win deals off market and and things like that when you have no industry experience. Um and so, I think that's that's a big that was that's been a big tailwind for us is being in the industry, reaching out to owners, and having that credibility and being able to kind of assure them that you know, we're not going to take their shop and run it into the ground. You know, they know we have an existing operation. They can look at our websites. They can, you know, talk to our um our managers if they like, things like that that just really facilitate that that growth once you've gotten into the business. Yeah. Yeah, no, I love I love that advice broadly. The the value of of of getting in the game. There's a lot of value of getting in in game. Uh including uh if you're especially if you're going to implement a roll-up or you're or some sort of kind of programmatic acquisition, the sooner you can position yourself as a player in the industry, the sooner those those subsequent acquisition opportunities will present themselves to you. Totally. Yeah. Stephen Quinlan and Paul Westhart, thank you guys very much for the the story and the explanation of how you're building this. Really really interesting. Stephen, thanks for raising your hand to come on. I'm really glad we're doing this. Um definitely a unique structure and episode for acquiring minds. If people want to ask you questions about what you're doing, do you have a preferred mode of communication? Yeah, mine is email. Um Okay. Happy to provide my email and people can reach out anytime. Okay. Same. Paul, you Same. Good deal. All right, Stephen and Paul. Thank you guys very much. Thanks a lot, Will. Much appreciated. Bye-bye. I hope you enjoyed that interview. 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