It’s time for another edition of “Value that company!”

Today, Pest Control - NW US!

$10 M ARR (24k customers at $100/q plus a little one-time)
95+% Customers are on cc autopay.
80% GM
$1.5 M SG&A
20% attrition in customer contracts can be replaced with part of SG&A
Additional additional grown can be had for 1x first year revenue (see thread below) ...

What’s the value of the company? My thoughts tomorrow!
Growth
BTW ... disappointed @girdley hasn’t weighed in here... evidently he’s counting on coffee beans to be a natural pest repellent...

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More from @SkolCapital

4 Dec
UPDATE: As promised, my thoughts...

1) Thank you to everyone for participating! Yes, I’m a nerd so I enjoy this, but it’s also a learning exercise for me. FinTwit is a wonderful place!

2) As I’ll explain below, my belief is this company is worth $15 M OR $30 M (LOL)
The challenge here is the zero growth unless additional capital is provided. So there are three options:

A) Sell to a strategic (another pest company). It’s well established in this industry that these companies can be had for $1.5x ARR so in this case ~$15 M
B) They could not sell, in which case I think @guessworkinvest makes a pretty compelling case below that the business is worth ~$30 M if they just sat and harvested the cash flow.
Read 7 tweets
1 Dec
Yesterday, as I was responding to a message on MLM’s I realized it was time for another mezz thread.

This morning when I was responding to a different message about placebos I realized the time is now!

This week: “Are you kidding me?”

Or:
MLM’s are big (and controversial) in Utah.

$NUS was early (I have several friends that made serious money there), but there are dozens of imitators because everyone wants to move up.
Let’s pause here to ask a question: Why Utah? Two answers

1) Mormon missionaries cover the world, and many have language abilities when they get home. MLM’s are especially big in Asia so some synergy exists.

2) Is more problematic, but I believe it’s true...
Read 18 tweets
23 Nov
It’s time to #GiveThanks

What does a monk, a maverick, the Illuminati, and a “cereal killer” have to do with mezzanine finance?

Time for a thread!
Late 1950’s : Dad is attending West High in SLC. Classmates include (soon to be) Gail and Larry Miller (below) who would go on to be long-time owners of the Utah Jazz.

More importantly, the woman who would become my mother was the year behind Dad in school.
60’s: Dad attends Columbia College in New York eventually earning a bachelors and PHD in Economics (no Masters)...
Read 18 tweets
16 Nov
Why did I start a new, different job shortly after starting my mezz fund?

Related: Why am I biased against specialty retail?

Given the $SPG / $TCO news, it’s time for a mezz thread...

Today, the beginning of my mezz fund...
2012: I was helping my parents with their investments, and had developed the idea for what would become Mountain Mezzanine.

We’d do a traditional mezz fund, but go downstream in terms of check size, etc.

I loved this plan and was having the time of my life getting started.
Meanwhile, Dad was mostly retired but had taken a controlling position in a small specialty retailer (80-100 stores). They were struggling. Dad called one day:

Dad: “Hey, I need you to come over here as CFO”

Me: “Umm; I just started the mezz thing”

Dad: “Yeah”

Me:
Read 13 tweets
3 Nov
You’ve voted! Now relax and enjoy another mezz thread!

Today’s topic is intercreditor agreements (You’ll understand the pic later)...
A few years ago, a small local PE shop calls. They had previously bought a small building products company and financed part of the deal with an out of state mezz group.

The company was trying to roll-out beyond their historical base, but things weren’t going well.
The mezz group was trying to run the old “lend to own” play...
Read 20 tweets
22 Oct
Just got back from lunch with a friend of mine;

We debriefed a situation that was the worst financial loss for both of us.

Painful, but time for a mezz thread on lessons learned:
My friend is a very successful consumer product CEO. If I told you his current or last company names you would know them.

He’s also an active investor in the middle market. He does equity; I do debt, and it’s a nice symbiotic relationship.
Several years ago; he made an investment in a flexible packaging company. Think this kind of stuff, but branded...
Read 13 tweets

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