I have written 3M in LOIs in the past 30 days across 3 different companies.

2 accepted.

Here's the play by play:
Deal 1: Small plumbing co - tuckin
700k sales
150k NOI
5 Employees
Good contracts (restaurants, recurring backflows)
Good assets (earthmovers, jetter, equipment, clean trucks)

I was into it. I presented 175k SBA. Quick shot down.

Back to drawing board, here's the 2nd round:
I took the weekend and thought about my risk. The big risk was employees leaving so I constructed a deal that mitigated.

New deal:
Seller finance
I subtract 20k per employee that quits, not fired

Seller was into it but ultimately decided to not sell. Hold for next year.
Deal 2: Medium HVAC co - merge
2.5M Sales
200k NOI
18 Employees
Good assets
Great reviews
Seller stay on for a year
Turnaround margins

Offered 800k SF. Seller accepted verbally. Had family death so convo stalled for 40 days. Came back together mid March to work to close.
Came back - still good for 800k but now wants SBA. Fine.

Redrafted LOI, had some sticking points on the noncompete and old C-Corp.

Turns out co was converted to SCorp in '18 which means theyre still in the 5yr asset moratorium. Whoops.

2 options discussed:
Asset purchase:
Assets bought at book
Remaining bought as "Personal Goodwill" because the company is based on him, defendable position

Equity Purchase:
I knock off 100k for the risk and we proceed as equity purchase. I use 338h10 filing to still get depreciation on goodwill.
We went Asset Purchase. Cleaner. Easier. Quicker.

Things are moving smoothly along the process. Honestly too smoothly.......
Deal 3: Medium Septic Co - Standalone
2M Sales
13 Employees
Strong brand
Great assets
Strong re-ocurring rev
Great reviews
Owner will run for a year (this is good)
Strong tech stack
Strong GM%!!

First offer was 1.62M Asset with 3Month NWC. (I know this is weird)
Their response was 2.31M Equity with no NWC. So basically - "Ya bruh, no".

So I went and cried in a corner because I really wanted this biz. A few days later I came back with 1.88M Asset, no NWC but seller note of 150k.

This received positive vibes but not "Yes".
They said, "hey there needs to be a 2 at the beginning"

I said, "Yeah thats cool but if it starts with a 2 its going to be the definition of creative - gimme a day."

So I call my good friends @SamtLeslie and @thegeneralmills and tell them I got a weird one. Run the deal by.
Here's the options:
1. Same. 1.88M with 150k sellers note and buying assets at book.

2. I buy 60% Equity for 800k, full seller note. Buy assets separate with equip loan for 500k, lease back. Seller retains 40% and operates co. I buy the remainder out for 700k in 3 years.
3. 1.6M purchase price through SBA, 100k seller note and a 400k consulting fee paid out to the two shareholders over 7 years.

I explained the options, pushed for Option 2 because I thought it was dope.

They asked for a few days.
Came back - They're all "nahhhh that aint me." But here's what we can do:
1.9M EV
1.2 equity sale with 100k seller
700k assets sold sep

Seller stays for a year and operates.

I clicked my heels and proclaimed "hell yeah" (this happened) because gentleman we had a deal.
I get step up on assets above book, upfront depreciation
Use a 338h10 on the equity portion to still depreciate as intangible
Escrow holdback for nonsense (big deal for equity purchase)
Seller note on top

Not super excited about equity but we have a few more derisk clauses.
There's the highlights of the past month of dealmaking.

Excited to have these two co's under LOI. We have a strong integration plan for each and our team is primed to mobilize.

Ill keep the updates rolling on twitter &podcast as we go through DD and approach close.

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More from @WilsonCompanies

8 Apr
People have been asking me for a while about leasing commercial vehicles and how we scaled our fleet as we grew. Fleet is tough, its one of the biggest barriers to growth for truck based companies.

Great question and there's a lot to it, here's the start:
When I bought my families business we had not been growing so fleet needs were minimal.

Our business always bought used vehicles between 15-20k and put them on the road. They ended up being maintenance heavy and we would ride them until they died.

So they looked terrible.
In 2018 I bought another company and we merged. That company also bought used and rode til they died.

The end result was we had to make a ton of capex in a short period of time to have a usable fleet. We probably had 15-18 or so vehicles at this time.
Read 7 tweets
6 Apr
So every week we have a real estate meeting to discuss our current holdings, problems, opportunities, etc.

Today we had some discussion for our 2-5 year timeline, which includes potential acquisitions.

One big problem is I'm not sure what to buy.
Listening to @moseskagan decent MF deals are hard to come by and I'm finding the same in Ohio.

I like Multi Family, but only if the deals are right, and they're not.
Listening to @sweatystartup I want to jump into some storage facilities, but even that market is starting to get super frothy with people fleeing MF, office, and retail.

Also I'd be competing with the current REITs who own a large amount of self storage, and rolling up more.
Read 7 tweets
30 Mar
Just wrapped up a short due diligence seller meeting with a 2.5MM revenue company.

A lot of what I did today is soft skills, I asked about 80 questions, most are simple yes/no answers.
Most of the important words that were spoken today were me educating the seller about the next step in the process, which is...

Purchase Price Allocation
Purchase Price Allocation is basically when you get to split up the tax advantages that come with a business transaction.

This is also one large aspect of a transaction seller's know the least about.
Read 9 tweets
30 Mar
Today we are meeting with one of our target companies, this is a $2.5MM HVAC business that is a great value add for us.

We're going over our 150 due diligence questions.

Here's a few of the big things we're looking for.

1. Skeletons in the closet:

Off-balance sheet loans

Potential staff red flags (ex cons, drug use, etc)

Quick glance at insurance risk profile, workers comp, driving.

Discussion of potential legal issues.
2. Potential Synergies:

Existing org chart - who stays who goes.

Geography overlap - service additions

Back office SOPs
Read 5 tweets
13 Jan
Some discussion last week about promoting techs to managers and why I have never seen it work. A few folks asked for a more in depth look.

Here’s how I look at it:
When a SMB owner realizes they need an Ops/service manager it’s a big deal. They’re making a brave choice to step away from day to day. To trust someone with their business and staff. They're saying, “I take this business seriously and I’m ready to grow”. Time for next level.
If this is your first OPs/Service manager hire then it is one of the most important hires you make in your business. Why on earth would you promote someone who’s qualification is wrench turning and not leading teams?
Read 14 tweets
5 Jan
This is a very long thread. @SamtLeslie asked to give the playbook for service companies so here it is. Follow it and you’ll get to 5M+ in a few years.

This is pure operations playbook.

No leadership, financial or HR discussion. Enjoy.
Doesn’t matter much. @sweatystartup has an awesome list of service industries on his website that will get the job done.
If you are under 3M and in multiple trades you’re doing it wrong. I was there and it was a mess.

Businesses under 3M don’t have good system, managers, effective onboarding, training, hiring practices, or pricing methods. If you did then you’d be bigger.
Read 25 tweets

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