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

So they have had many... iterations of these conversations already. So they're practiced at their pitch.

And so they always, I mean, I'm always quite impressed with how well sponsors answer almost any question you throw at them. But is that just a feature of the fact that we're speaking to them late in their raise? And are those first few conversations much choppier?

For me, there were. I can't speak for all sponsors, but for me, it was it was a bloodbath. So I knew some benchmarks around what the market would bear in terms of carried interest and what people would believe in an upside case and a base case. But those first couple of calls, it was...

defending you know one floor guard in the investment a lot of questions around you know epoxy that's a commodity you know why do you believe that you can continue to command this kind of gross margin and the you know why do you think you can grow you know the the business had had grown pretty significantly the last two or three years but a lot of that had happened after covid

And there was a big COVID supply chain crash, which brought a lot of buyers into the United States. So a lot of questions around, why do you think you can sustain that? And the first few calls that I did were terrible.

They were really bad. But it also helped me figure out what I needed to get tighter on in the story, where I might need to tweak my deal terms a little bit. And it got a lot better towards the back half of it.

But it also... Frankly, every time I got a question from an investor that I didn't have a great answer to, it helped me develop a thesis around it that in a lot of ways we've kind of implemented as a strategy now that we, you know, now that we, the floor guard is, is up and running. So it was, I think it was valuable, but it was. It was tough, the first couple of ones.

And I think it gets better once you've done that. And you can also point to a track record. For me, I didn't have a track record.

All I could say is, you know, I've been in building products consulting. I've worked with some of the larger, you know, building products, building materials companies out there. But again, you know, you look at a management or a strategy consultant and everyone's thought is this is a person who just tells other people what to do, make some slides, doesn't really know how to operate a business.

And so I needed to. you know, make people realize, hey, I really wanted to get into the weeds. And I had a good sense of kind of practically how you operate a medium sized business.

And it took some convincing. And while it was grueling to have all those investor calls, there is the benefit. Of course, the stakes are high, but there is the kind of side benefit of...