kevin swenson thank you for joining me today on acquiring minds well good to be here thank you kevin you are rolling up the appraisal industry real estate appraisal you grew up in the real estate business you're bringing to bear your own direct experience in the appraisal sector of the real estate industry uh according to what you told me on our pre-call it is a classically highly fragmented sector thousands of tiny appraisal businesses around the us and you're doing this self-funded so um no investors as yet i know that your strategy is kind of in flux and we'll get into that but you've already acquired your platform business the first business that you're going to use to then go on and acquire others so we're going to hear the story of that first acquisition and then just really hear you know more about your strategy what a one-man roll-up looks like and and how it's all unfolding so start us off kevin with with some background on you of course tell us about growing up in the real estate business and then what your own direct career experience in real estate and real estate appraisal has been yeah i think thanks again will for having me um yeah i grew up in the real estate business my family owned and ran a real estate licensing school along with the real estate brokerage in the in the state of utah uh had a lot of exposure to real estate through that and a lot of interest right mostly in the investment side uh i spent some time uh with marcus mills mill chat during the 0809 time frame um in commercial real estate and then uh the majority of my career has been on the valuation side so since 09 um i joined a national uh residential uh mortgage broker and set up their appraisal desk um spent a lot of my career managing appraisal orders for residential transactions um did some time of course appraising real estate myself uh and then also uh have done a variety of really kind of startups vertical integrating um inside the real estate space so with that that lender we converted that appraisal desk to an appraisal management company so it could be a profit center um and then also i uh you know i i i had an opportunity to join uh an appraiser who you know i identified as as one of the best appraisers we worked with nationally um and worked with him for a while figuring out kind of how he was able to scale quality and service um and then i took you know i had this vision of of uh taking that at scale right taking the ability to output a lot of appraiser appraisals in a in a quality manner with higher level service that i wasn't really experiencing as the manager of an appraisal desk right as someone who was ordering you know thousands of appraisers monthly across the nation you know we had a lot of challenges with the service level that we were receiving from appraisers as well as quality so i took i i took this vision to uh an appraisal management company to start up their appraisal firm uh began recruiting a number of appraisers and implementing you know process to to what we were doing and um had had some stuff let let me stop you there because i want to give people um a definition of of uh well appraisal generally people will know what that is but um just a little bit of the history of it um and how relevant it was in the 2008 2009 time frame um and then also what appraisal versus appraisal management means so first uh at the risk of um talking down to people tell them what to tell them what appraisal means exactly and what its role is in a transaction because it is important that they understand sure absolutely so you know uh a lender right when a lender is giving money right they're going to want collateral in a real estate and in a real estate transaction that well the real estate is the collateral and they want to know they want to have some substance some knowledge of what the value of that real estate is right and so that's what an appraiser that's what appraisal is right an appraisal by definition it's an opinion of value uh based on facts right so an appraiser is is hired to develop an opinion of value um and uh so lenders will order appraisals so that they're comfortable uh lending on they're comfortable with the collateral that is the basis for the loan and an appraisal management company really they came about uh based on regulation and and changes to the industry in the 09 time frame you know i'm not going to go in great detail but essentially uh fannie and freddie they well in the fha and so on and so forth they wanted a third party to be responsible for selecting who the appraiser is they wanted to make sure there wasn't bias associated with that opinion of value right so a loan originator right who's going to be compensated for a loan closing they don't want that loan originator to pick a specific appraiser who they might have influence over the value that they are able to to select and so the industry evolved in 09 significantly such that there really were two options a lender can either set up an appraisal department appraisal desk that has very specific compliance rules or they can send those appraisal orders through an appraisal management company right so an appraisal management company is going to receive a volume of orders from these lenders and then they divvy out those orders out to individual individual appraisers or appraisal companies so even so they represent kind of a layer of a firewall if you will between the appraisers and the lenders that theoretically uh ensures neutrality and and lack of kickbacks and bias and influence that's that's exactly what it's about yeah and and just so people are clear in 2009 i agree with you let's not do too much of a history lesson but basically what was happening is the run-up the incredible run-up in real estate prices that was happening from 2000 i don't know two or three or four for the next few years um for lenders to be able to make a loan on a condo uh and to you know say it was worth a million dollars the appraisers have to agree that in fact it's worth a million dollars and so obviously the lender might want to influence that appraiser to say for the appraiser to say yes in fact this we we agree that this condo appraises at a million dollars when in fact maybe it shouldn't have or it didn't or you know the real underlying market value wasn't quite a million dollars and so you get enough of this misbehavior and you just get an acceleration of appreciation market wide that results in collapse i mean that's one piece of one piece of the complex jigsaw puzzle that was the real estate induced crash of 2008 or nine but it was a key piece because things have to appraise for these these loans to occur exactly right yeah cool okay um and so just personally why do you like is it just because you have experience in appraisal why do you like the appraisal sector of real estate versus the the myriad other things you could be doing in real estate like real estate itself like about like buying and selling buildings yourself yeah yeah i definitely have a lot of interest at all levels of real real estate frankly um you know i i expressed that i spent some time in commercial side and and that you know i had done a number of flipping have off and on throughout my career i love the numbers side of it right and so that's why i gravitated more to commercial uh you know i i love digging down into the numbers um the appraisal piece for me has been more of men in you know business right than it than it is actually appraising but um but yeah no it's it's all around interesting interesting for me okay so so you you're getting all this experience and and standing up an appraisal desk and and working with thousands of appraisers um to to hire them to do appraisals seeing that the service level is not what what it should be the quality of the work is not what it should be you've worked with somebody you can consider the best in the biz uh this this one gentleman was right right right and and what made him so so good and was he a one-man operation how or how big if not how big was his firm i'm just curious what like that you know the gold standard looks like in the appraisal world yeah gosh the standards gotten really low frankly right um and and part of it is it's just it's difficult to scale it's difficult to scale appraising right so if it takes eight hours uh per report for an appraiser to complete an assignment right and he's doing you know 10 files a week right when volume increases significantly right based on the number of appraisers that are out there we're asking appraisers to do three four times that right and they can't they can't scale at that level right and if we can get their volume down to you know three hours per report well then they can scale much better right and and that's really what's needing to happen in the industry so what we were in the challenges that we were experiencing frankly um i mean i'll probably shouldn't say this but this is a reality right there there are assignments right where we had this we had an appraiser who repeatedly for two weeks in a row right every single day we're reaching out to him and every day he's saying you'll have it tomorrow you'll have it tomorrow right um and uh unfortunately we use that appraiser again right even after completing that assignment because in that particular market where he's at he's the best option of the worst options we have right and so there's uh appraisers you know i think there's a lot of things that have happened to the industry and one of the one of the challenges of the compliance pieces the accountability is is a little bit different um so appraisers uh appraisers don't feel like it's important to give updates on the report on what you know that it's scheduled and when it's scheduled for and then it's been that it's been inspected and and in fact to them it's it's perceived as a obnoxious that we're asking those types of questions because they they don't have significant empathy for what it means to be a real estate agent where you're managing a transaction and expectations and it's emotional it's important um yeah and so they don't have a time yeah they're not a lot of advocating clock yeah so they don't have a lot of empathy for that and so that's that's a challenge right we we're not getting updates and then i mean i don't know if we want to go into quality but but the training for appraisers is is is a challenge and so a lot of appraisers don't don't have uh a great way to go about uh supporting their opinion of value so so well and um but take us now to the opportunity that you saw in the thesis that you developed yeah so i mean i was experienced experiencing a lot of pain right so it was it was not receiving those updates and and seeing turn times that were that were prolonged and you know there are certain appraisers out there that that have they're not one-man shops right so most of these appraisers are one-man shops so they are doing all the work which which ends up being data entry right scheduling phone calls uh doing their accounting their accounts receivable and they end up not being able to do all of managing all of that very well and uh the best appraisers right and this is this is kind of going back to the appraiser i went and worked with right so the best appraisers i had conversations with them we were very relationship focused um we felt like if we can discover and find the best appraisers and get them the highest volume of work right that's that's gonna erase the pains that we're experiencing in in uh fulfilling appraisal orders and so um yeah i mean that that's really what it comes down to is um if the if if we can provide some bring some specialization right so the appraiser is not scheduling a phone call right he doesn't have to put his head space into scheduling um a lot of the data entry right a lot of that can remove from the appraiser and um the people doing the data entry there's things that they can do to make the review easy for the appraisers because at the end of the day it is the appraiser's responsibility it's their license that's on the line 100 for the that report um but there's definitely a lot of things an appraiser can do to take his eight hours per assignment down to closer to three hours so so the idea is these one and two person operations or maybe maybe primarily one person operations they're doing all of their own back office if you will and if you can acquire if you can kind of do that for them as the parent organization so that they're just just focused on doing the the true appraisal work itself that reduces the the total cost of a project from eight to three or four hours um and you can then recruit appraisers better because you're providing you know this this home where all the junk that they hate the paperwork they hate dealing with is done for them in the background and they're just out there doing pure appraisal work you know this this reminds me of uh that probably there's probably this model probably exist all over the place but um in your world of real estate compass which is a name people will probably recognize you know well compass's strategy i think has been different things at different times but fundamentally they they rolled up real estate brokerages and i think their pitch was you know all of the will kind of tech enable you mr mrs real estate agent um with all of this kind of stuff in the background the crm the the whatever to make you you know to allow you to do what you do best which is you know managing a transaction you know showing people homes listing homes um and let us take care of the take the rest of the crap off your plate sort of thing um is that is that kind of a fair analogy yeah that's exactly it i mean at the end of the day an appraiser's job's going to be more more fulfilling right when they're spending their time and space inside their max value offering right and uh what we can pay them the most money for which is their analysis right um yeah and and and let's take as much of that other stuff away from them and so that they can spend more time in that and it's not just more time than that but it it also allows them to like really that the benefits are are significant not just from oh now they're doing they're doing more volume of orders but but the reality is is their quality increases right because there's more people reviewing their work um there's more specialization in the work that's done on the report uh they're by doing more transactions they get they get better at the analysis um they save time they save drive time right when they're doing more assignments per day right their drive time per per order goes down uh there's seasonality associated with the business right and so uh their slower months will experience higher transaction volume because you know their overall transaction volume increases allows them to take on more clients there's a lot of benefits not just from a income perspective but also just from a more rewarding fulfilling job where you're not doing data entry and scheduling you're spending more time doing real estate analysis and are there uh appraisal firms around the country that have cracked this or at least a little bit so that they're 20 person 40 person shops and i i assume that the way if if such a shop exists they've gotten there because they're kind of implementing a model like you described where they're taking a lot of the stuff off the the appraiser's plate do do are there any models of this that already exist yeah so uh the commercial side i think it's it's been this way to a certain degree for for a longer period of time on the residential side uh very little but it's changing changing fast so like i said in 20 2015 is when i started doing this i didn't really know of anybody doing it at any sort of scale um in the last and even a year and a half it was interesting i had through twitter right had a uh was able to meet somebody doing um some roll-ups in in australia done 250 plus acquisitions and a super interesting conversation with him because of the questions he was asking me um and the end of the conversation with him it was basically wow kevin right like you're on the early end of a roll up here there's really nobody starting to do it well since he and i had that conversation quickly there's there's a number of very large firms beginning rollups that i've run into as i've talked to sellers so it's happening uh for sure there's you know a half dozen that are they're starting to do this model my belief right maybe it's silly uh maybe i'm completely wrong but my belief is that the industry will completely consolidate that that you know again from being the the the client right the person ordering appraisals i don't like the current structure i i wasn't getting the quality and service but these large professional companies can give me a bunch much but that could give me a much better quality service it just makes a lot more sense so i so i think it's going to just continue to consolidate so on the point of consolidation so you developed this thesis that you shared with us and you set out to do a roll-up as an individual um not as part of a fund or a larger organization so what did you imagine the mechanics of that being the platform acquisition and then bolt-on after bolt-on after bolt-on sort of thing talk us through that yeah so i'm definitely learning as i go right and and and i would say i've always been open to to investors but i felt like i want to prove out my thesis first right so uh just have more control over a greater number of equity amount of equity if if i can really get the ball rolling first um and so you know my first my first plan was was hey let's just max out sba first uh let's show the ability to implement some process to these companies and increase the revenue through that process and then at that point we'll we'll identify the next step right whether it's bringing on equity to continue or or whether we're able to generate increased cash flow to continue to invest at a pace that that works with you know the goals that we have also uh thought through kind of some creative strategies um so i don't know if we talked about this earlier but um basically i had uh uh two acquisitions that i almost did at the same time and uh there are multiple reasons why that didn't happen i'm not sure it's a good idea to do two at the same time especially in your first acquisition but that seller ended up being more interested in a partnership structure and uh i'm super interested in that model itself because of the build uh opportunity and it looks like this right so uh two million dollar purchase price instead of acquiring for two million it's hey i'll acquire for three million within a three to five year time period um you know that's the option to purchase peace and then there's a joint venture piece to that and it's hey i'm going to come in i'm going to take over the back office process for your appraisers and through that we're going to take their you know the the 2.5 3 million in revenue and push it as high as we can right but the process has the ability to double the revenue and so um the idea being that we can fund that acquisition that three million dollar acquisition through potentially two things um both that increase and that significant increase in revenue as well as multiples expansion right by going and doing this option to purchase joint venture with multiple uh sellers and i'd say i have two sellers that are interested in that that model um and so that may be something i do um do they when you if you if you do this deal structure do they get a is there any sort of payday immediately or is there only a payday if and when you acquire at that agreed upon price you know whatever you said like a year did you say a year later or maybe you didn't give a time frame but yeah it's gonna take it's gonna take some time so three to five years is the amount of time i want three to five years yeah i think the goal would be to do it in the two to three year mark i think three years is is much more realistic um as far as upfront payment right there's there's some legal costs that i would cover but not looking to it it's a it it it requires some courting right it requires the seller me and we're like we have to get comfortable with working together uh they have to understand the vision that i have and and if there's buy-in to that which uh seems to be right like i speak the appraiser's language i i i get their business um i have a unique perspective from being the client right and seeing higher volume of orders and variety of ways that appraisers work um so i'm not necessarily looking to put a lot of money down it's hey let's let's do this together there's outs right there's for sure outs uh the idea is that there's increased revenue right so there is potential for them to benefit from a cash flow perspective during that period of time um but yeah okay okay well kevin tell us about um the story of your first acquisition so your your platform acquisition yeah so i i would i'd say that share this like i was searching for a long time right i'm going to back up and just share hopefully this is information that that that that is helpful but uh i went through kind of this oh i really want to do an acquisition right it's it's uh it makes a whole lot of sense to um well it's when i left the firmware as building an appraisal firm i left because i needed equity and i and i wasn't an equity owner and i thought i left with the idea gosh i can do an acquisition and you know roll the roll things up so i started learning about how do you do an acquisition came into buy then build uh joined walker's lab right the acquisition lab and yep um through that that process i i i was started looking for appraisal firms looked for a long time i've seen like 10 10 sales happen had conversations with some buyers learn learned a lot but i didn't get super aggressive until last march where i said okay i gotta do an acquisition let's go now i have a massive database forty thousand appraisal companies identified um gosh 30 in the top markets that i wanted to look that were the largest firms reached out to reached out to 30 had eight phone conversations that led to four interested sellers that i still have interactions with today the acquisition that i actually did wasn't from that list of 30. uh it wasn't in a market i was interested in it was listed with a broker i fell in love more or less with that acquisition because i was trying to find the best platform and these sellers there's two sellers uniquely were i wouldn't call them appraisers i'd call them mba quality business owner's first appraiser second and so it's a lot of what they were they the founders they were the founders yep okay go ahead yeah and uh just i that's why i went with that particular acquisition uh is is that they it wasn't quite the size i wanted right just under three three million in revenue um and but i there was a lot of good things about that business so went went ahead with that acquisition um i used sba um deal numbers um you know i i had basically seen appraisal companies if they're really small right two to four sda sd really not quite not quite four and i acquired on the high end i think there were two reasons why i was okay acquiring on the high end of that is uh the quality of the business and then the terms that i was able to get um so you know purchase price right around 2.5 million um the terms for better or worse right i i chased a five percent down deal right so and that was because i was trying to max out sba on two two deals with with the equity i had um so i had a five percent standby note uh for for ten years ten year standby by and then i i had another fifteen percent uh note with um one i think it was one year standby five year balloon um ten year amortization on that so while i did a low uh low down sva i felt okay with it because my debt service coverage was was pretty solid in the 1.75 area so it was five percent from you five percent full stand by 15 the balloon seller note so that's 25 percent and then so 75 percent especially yep right right which gave you that favorable debt coverage rate exactly okay and um and so you said it was a two and a half million dollar acquisition at around you know approaching 4x so my math says that's what 650 700 sd something like that great cool and and i remember you saying on our pre-call that you you know you have this roll-up strategy of course um it's really what's driving things but you also are you have a nice hedge in the fact that if you buy a really healthy solid platform company and the roll-up doesn't quite work out in the way that you thought you still made a great investment in the form of that first platform company would you did i get that right and do you still feel that way yeah i mean i i feel like like i'm a believer in finding something that the the both you've got to build opportunity in your acquisition and and then also just like when you've got experience and network to help you through it like that's an advantage um and so i i feel like i have that right we definitely have experienced some challenges right the market's a little bit challenging right now um but yeah definitely like i i'm pretty confident in the ability to continue to do some acquisitions but regardless right i i i'm in a space i'm interested in um and i'm i'm confident in its success yeah and and putting aside the roll up for a moment just let's say you just kind of were going to acquire this business and then plan to grow it organically and and maybe some some bolt-ons but you weren't explicitly trying to do a roll-up you have all this experience in real estate and appraisal as we as as is evident throughout our whole conversation and i think you just touched on it but you said it more directly to me in our pre-call that you have a philosophy about that where you're a big believer in leveraging expertise to do an acquisition um rather than what a lot of folks do who might be kind of generalist and they might kind of look at a lot of different industries and if they like the characteristics of an industry over a particular company within an industry they'll go for it for that reason rather than their own experience in said industry um so put that in your own words please because um yeah yeah go ahead come here i'm gonna say two things will oh you know hope hopefully i'm saying what you want to hear but uh one just like the big light bulb that came on for me like the whole reason i fell in love with acquisition was right i was vertically integrating for an appraisal management company i was building an appraisal firm uh and there was a huge light bulb that came on to me why it was why i was there it was okay these guys have x amount of revenue that that is in a business that generates 10 net profit margins and they're able to send 30 of their work potentially to a sister company that they also own that uh tow a business that generates 20 margin and not only that there's an intimate relationship between both of those companies that allows the appraisal firm in my opinion should be as or more competitive than another appraisal firm out there because appraisal management company can can say hey we love when you do this we hate when you do that right change it um just lots of advantages in that in that vertical integration and it's not so dissimilar than what i was doing at the lender level setting up an appraisal department that converted into an appraisal management company so intimate like knowledge of the customer to cater what we did to the customer but also we've we're getting this we we have this revenue that we don't have to go market with to get us to stand us up and then we can grow from there right so so i would say that was a big piece as i i and i don't see or hear it a lot in the business acquisition space but that's where i got my the big idea is if i can buy a business whether it's an appraisal business or whatever that i can then do a startup off of it to vertically integrate to me gosh that that that's pretty powerful and then the other part that you were talking about right like i use geeky terms to say this but find your sure thing right lean into your experience um that's that's what i've done right so uh as i was going through the acquisition lab with walker diable it was it was completely with i don't have to do this appraisal thing it's what like i just want to do acquisition like this is great and i ended up sticking with the appraisal piece for so many reasons and walker definitely helped me with getting clarity on that but a huge part of it is gosh i i look at a lot of acquirers that are going away from their experience and i i just think that there you can lean into your network that can be super powerful if you stay in a space that you know um there's lots of surprises it doesn't matter what business you acquire you will experience surprises i have right it's going to happen and if you can do it in an industry that you're familiar with with the knowledge that you have you it helps with your build right it helps you can pull certain levels to to do better and then when you experience challenges you already know the people to talk to you've maybe already seen a variance of this challenge before to be able to work through it and so there's and it's the lingo too right the language that you have with clients you already know the language um and i would even go back further to this like this alone potentially could be the reason to stay in your sure thing and that is conversations with sellers right so i reached out to 30 and had eight conversations that's a huge hit for proprietary search that that's a pretty good hit rate and at least one of them said hey i received you know these this type of outreach all the time the first person i've called right and it's because they could directly see the experience i had and i really think the friction of search if you can find your sure thing and stick inside that lane i think that your time to do due diligence your time to even decide what your like what your offer price is like a lot of the friction in the search just disappears i also think you can raise cap capital easier uh i'm a big believer in finding your sure thing and and if you look there's a couple guys out there like me that have stayed in a very niche lane uh that have i think experienced similar uh reduced friction in their search yeah yeah yeah i think that is all hard to argue with um my only reaction is if you if you really like the path of acquisition entrepreneurship and you don't have a sure thing or you want to leave your industry or you don't see an opportunity necessarily within your industry i mean you you had this light bulb moment within your industry that that kind of set you on the path to acquisition um and others kind of hear about acquisition entrepreneurship first and they don't necessarily have a light bulb moment with respect to the industry that they're already in um and and then the other thing i'd say is like what you hear over and over from my guests is especially you know which is often that they've acquired into an industry that they don't know that they're an outsider to they just spend sick those first six months learning learning learning you know humility humility humility and they really hit the books and you know they come in just just like sponges um hoping that you know they can learn in six months time what it takes other people to two or three years to learn because they're so incentivized to learn and they're so proactive about it because they're like you know obviously i need to learn an accelerated rate here so no question that i mean probably from day one you you didn't need to not to say you didn't need to learn stuff but like you probably felt like from day one you could kind of hit the ground running and many acquisition entrepreneurs it's you know day you know six months and day one is when they feel like they can start actually doing stuff and making changes and so yeah that that that would be nice to not have to do that um i just you know i know that if i make an acquisition it's very likely to not be based on a sure thing so i'm just kind of thinking through and my own reaction to hearing what you say nice to have nice to have but not a need to have maybe totally totally and and i'd share two two thoughts just to what you just said um this humility's huge right yeah i think it's a good thing and i also am a huge believer in acquisitions in your sure thing or not just on the basis that you will learn more in an at an accelerated pace it's not just that humility it's that accountability the weight of ownership forces you to learn at an accelerated pace period so it which i think is great for people in any career right like fine to that weight and i would say while i wasn't an owner in the opportunities i've done i felt the weight right like these were kind of unique circumstances while they were inside a corporate umbrella there was a weight of accountability that that accelerated my learning um the other thing i would say is i i mean i i'm a believer in this i don't see it i don't know how it happens but i think it makes a ton of sense and i've i've considered doing it inside the appraisal space and that is if you don't have a sure thing go find someone with a sure thing and and leverage theirs right so i've considered hey here's an appraisal acquisition i've already maxed my sba capacity not ready to do this acquisition but hey you know eta entrepreneur let's go do this one together right um i'm going to be able to have the lack of friction and getting the seller on board able to support them but they're still going to have the weight and the ability to learn and i think you know i think that's not a bad idea for eta entrepreneurs to go find people with the sure thing and piggyback off of that there's ways to make it a win-win situation for for both parties um but like i'm a believer in eta like i don't i don't disagree with you will like there's there's not one way to do it yeah yeah kevin because of your experience in real estate you know i i will see broker deals even on biz buy sell other other businesses for sale that are within the real estate industry such as title companies or home inspection companies and my understanding is that at least in those two cases those are also very fragmented industries um any quick thoughts on any of the either those two in particular or any of the any of the of these sub industries within the real estate ecosystem yeah so um i'd start with this like one thing again like during my clarity's phase where i was like do i just want to stick with the appraisal or go another route one of the things that i had researched was sba default data and it's kind of interesting over the last 10 years what had the lowest what industry had the lowest amount of default real estate right but that's that's totally deceptive because if you go 10 years prior right that 10-year prior period what had the highest amount of default real estate yeah right so so it's it's a it's a it's a cyclical industry right one me going into this acquisition like i was expecting to close in january close to late march um i as i was seeing things happen right um my expectation was january is going to work be the worst month i'd seen in more than 10 years uh inside the industry uh but i went for it anyway right i went into this uh with my eyes wide open it's a cyclical industry it has some challenges um and it totally does so that's what i would say is is real estate uh there's there's definitely opportunities and especially if you understand it um you know go for it but you gotta you probably should use less leverage this is the guy that used as much leverage as he could you probably should use less leverage uh you should definitely risk test it to uh it being a harsher industry not a not a greater industry but yeah there's opportunities inside uh the title space it's a relationship business right so make sure you understand that really well and and it really comes down to real estate agents right so just understand it but i think there's opportunities like i you know will i have grand big visions really honestly of of going inside and outside of vertical integrated company inside the real estate services space uh so i'm a believer in it but uh there's some unique challenges for sure so now that you're into the acquisition so so you remind me when you said you closed your your month three twen march 28th so march 28th yeah we're just just outside three months um how's it going and now being in the seat and also what's going on in the the macro economy and the in the real estate market um does that affect your strategy and how you're thinking about this roll up in the next two or three years yeah so carl industries uh like i said this earlier right i expected the month of january and the year really to be quite a bit down on market size i did not expect the government to the fed to raise rates at the pace that they have uh so they i mean they've raised rates probably at a pace never done before um and so that's impacted transactions right so transaction volume is down significantly down about 50 um and that's having some impact uh the acquisition i did had a component of residential 50 residential 50 commercial and you know i i went back and forth on the pros and cons of both of those right now i'm really grateful the the commercial piece is is not impacted right and that's that's uh at least not yet uh that's historically the case right so there's definitely some diversification benefits that is that that have helped significantly with revenue down though it's a little bit of a different difficult conversation to acquire someone whose revenue's going to be down right so that value conversation that was being easy for me right it was it was a fairly easy conversation for me to you know get into sde or riveta or whatever and then talk about multiple but now when we're talking about uh you know that sde number right what is it yeah because we don't know what's what this year is going to be look like we don't know what next year's going to look like so there's there's some challenges there um but i say the big thing right i'm actually trying to convert the the challenges of the market into a good thing and the way i see of doing that is uh it's easier to recruit appraisers in a down market so bringing them to my company that that's that's a lot easier to do when volumes down and they're hungry and but when i if i don't have volume of orders for them right are they going to stay and so i'm i'm super interested in doing an acquisition of an appraisal management company i've i've owned and well i haven't owned but i've ran an appraisal management company i've been the general manager totally responsible for appraisal management companies so i've done it before uh i know the space very well but really what what the advantage is i can take that appraisal management company to help me grow organically at the appraisal firm level by sending a certain portion of that business from the appraisal management company to the appraisal firm and really focusing on providing a superior quality and service with that that appraisal firm to that appraisal management company and other appraisal management companies and lenders so like too many words to say this but a pretty big pivot right instead of focusing on appraisal firm acquisitions exclusively kind of pivoting to okay let let's go raise some capital let's go acquire an appraisal management company because really that's going to accelerate the the growth of the appraisal firm and your but you you had always envisioned some vertical integration so buying the appraisal management company was in the in the plans it's just that's been pulled forward is what's changed yeah yeah so the appraisal so there's two things about the appraisal firm like it's a lot more fun to solve the problems of the industry at the appraisal firm level right an appraisal management company like that they don't have a lot of control over fixing the challenges that's at the appraisal firm level and so that's where why my focus and emphasis emphasis up front was at that level um but yeah it makes a lot of sense today to acquire an appraisal firm like their revenues are down too right that conversation of what is ebitda or sd is much more challenging i have some pretty specific strategies that i think allow me to take that on partly because i i want to control the amc but i don't need to be on a percent owner right and so um there there's there's ways for me to acquire and in this down market that make a lot of sense for the seller um and i think really kind of my whole play makes sense to the opportunity and are there no regulations around the appraisal manager like can could you just if you were able to take ownership or take control of a appraisal management company what's to stop you from just having a hundred percent of its of its business just sending you 100 of its business can they do that or is there some regulation there that they have to divvy it up you know third and the third and third or whatever yeah they think i mean technically i guess they could do that um there isn't uh a regulatory reason not to that's a challenge for many multiple levels right uh just as a manager appraisal management company right you just having that many appraisers right away to do that in the first place is it's not going to be possible um there's a lot a lot of challenges right from a scalability perspective as an appraisal management company you're having really receiving a lot of orders over a broader geographic area than an appraiser an individual appraisal firm's going to be able to cover oh because an appraisal management company probably works across multiple markets it's whereas an appraiser is going to just be a local very hyper local shop right and that's that's why i've got to go raise capital right for the appraisal management company because from an acquisition size right so 40 000 appraisal firms right with most of them being one-man shops appraisal firms i don't know the number i don't i'm not but but you're 2 000 across the country right so much smaller number and the average size is like i don't know right uh probably this one of the smaller revenues of an appraisal management company would be in the five to ten million dollars in revenue so um so like like my dream would go to be go do a 25 million dollar appraisal management company acquisition right now um and these appraisal management companies they all sprouted in the last 10 years i mean the category didn't exist prior to the great recession sure it existed but just not in large part right so i think what was what was more common are these one-off type transactions um uh the lenders were were doing for like verification of occupancy things like things like that they existed but not in large part okay okay kevin is there anything um more that you want to add that i haven't asked you i think you've done a great job i think you've asked some good questions um not that nothing comes to mind this has been fun well this is um this is um choppy waters ahead for for all of us uh but uh the market is is very fluid at the moment um and it sounds like you're a guy who adapts and adapts the strategy to facts on the ground so i suspect if we talk again in a year things may be different and your strategy may have evolved and so a good good excuse to get you back on but thanks for for your time kevin and your transparency thanks again will it's been a lot of fun