From Searcher to Sponsor: How to Buy a $22m Business

And you'd think that that is intrinsic to a larger business, to using an independent sponsor model in a larger business, or is it just intrinsic to FloorGuard and the opportunity for growth that you see here?

A little of both. I mean, certainly, I think Florida has more opportunities to grow that I saw. But I do think being in a larger business, I think it's easier to grow a larger business because if you fundamentally have a good product and you see, you know,

So you might see a couple of opportunities, but you can only go after one of them versus here. We can really go after two or three opportunities and still have cash reserves and be building up balances for potential acquisitions down the road, bigger ticket things that could come with that.

One minor point we're just getting very far away from, and so I'm getting back into the weeds a little bit of your relationship with your lender, but it's important for people to hear. I think it's the case broadly in a structure like you have with Oxer where you have, you know, it's a hybrid debt and equity check and they're on the board. You can, you don't need to be so concerned with covenants.

And for SBA buyers, they might not know what that is, but a covenant is with your lender meeting certain performance requirements of the business. So it's more than just you're paying them back according to the... the amortization schedule.

They also want to see that the business is performing in certain ways. And if it's not, even if you're making your loan payment, you violated a covenant and that can be trouble between you and your lender. And covenants don't exist in SBA loans, which like so much in SBA land is an exception to the rules of most finance.

Covenants generally always exist in conventional loans. In the case of an SBIC, if they're close to the business and they're on the board and they have equity in the business, they might overlook or understand if you violate a covenant here or there because they understand the business and they're right there kind of alongside you and they're not going to...

they're not going to necessarily hold your feet too close to the fire if it's just a momentary dip or a J-curve dip and you can explain it away. So just wanted to call that out because it's an important feature if you start talking about taking, you know, debt that's not SBA debt. All right. Now, circling back up to where we were in the conversation, Jan, also talk to us about...

as the deal became an independent sponsor deal and all the mechanics that shifted, the sophistication of putting a deal like this together. And maybe just start with the materials that you have to assemble. I mean, your floor guard deck is, you know, a hundred page tome as all sponsor decks are and are expected to be.

No, a hundred percent. So the... there was a lot of quick work that needed to happen between the, you know, the, the making the switch to, this is going to be an independent sponsored deal to now, you know, you know, I, I oversimplify that Eureka moment of, Oh, this is possible because, you know, yeah, Nicholas did that. And then that was great.

And introduced me to Oxford, but then there was the, the other Oh crap moment, which is now I've got to go raise, you know, another, you know, $5 million. Like, where is that going to come from now? Oxford and Everside certainly clipped away at a good chunk of that.