2 Years to $40m: The Anatomy of a High-Velocity Roll-up

You have mostly installation base, they're out. And then you start with the things that you get to know after the conversation, customer concentration, if they work for facility managers, if they work for public sector, then after, and those can be in one conversation, right?

Then you're going to where you need data and you need to develop a relationship with the guy. Before issuing an LOI, we ask for the code and the revenue of their customers for the last five years. And then we look at churn rates.

Getting the data is the hard part because now you need the the trust of the guy. And then we reject every business that has a high churn rate, right?

More than 10% for us is a no-go or we defer a lot of the payment. And so we have a bunch of checks that we do by talking to the owner and getting that data. And then we get to out of those 300, maybe 70 really are target.

And out of those, 35 don't want to sell. So it's really not, the pool is not infinite where you can fish, but in the end, it's quite reduced, right?

Yeah. What a luxury in the European markets. I know it's the same in the UK that all of this private company information is public and you could just go through the list. It's amazing.

Well, it creates problems. For example, this Abuela company, right? It was the biggest deal, 2 million EBITDA.

40% margin, and we pay a little bit dearly for that one. And given that it's almost like a very search fund prime material, so this guy had received 150 letters from all kind of potential acquirers, and he was sick of it, right? Like, that also makes it so that he didn't want to hear, he said, another guy wanted to buy my company.

So I have these letters here from, like, everybody wanted to buy. So it creates also its own kind of problems, yeah.

Mm-hmm, mm-hmm. And so to be clear, you said that you can identify, you're so familiar with the industry now, you can just by looking at the financials, the public financials of these private companies triangulate whether or not it's majority maintenance or not. Yeah.

And just going back a couple beats, but what I didn't hear you say throughout all of your decision-making criteria working these businesses down the funnel is operational excellence. And you've already told us you don't need that. In fact, that's the value that you're going to provide in many cases.