Day one when I signed it. Yep.
Acquiring Minds
Product-Market Fit in the Trades: 4x in 2.5 Years
Episode
Excerpts · 431 segments · ~1:37:34 long
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05:43 Pat's background and path to acquisition14:02 Search criteria and product-market fit thesis22:22 Commercial HVAC revenue quality28:51 Meeting seller Steve by happenstance38:27 Deal terms and working capital46:48 Seller note, collateral, no personal risk53:12 Ownership transition and growth via follow-up1:03:49 Licensing structure and no-SBA advantage1:26:11 Private equity competition in the trades
Handed him a check y $33,000 and then you brought another 40. You're buying a, a small and fragile business. But, but you're also not, I mean, I feel like this is a pretty mitigated deal structure. The, the seller financing, was that personally guaranteed?
That's another big part of the deal that we should probably hit on. So I put up, I, at the time I had a couple single family home rental properties. And so I basically put up as collateral enough property value to cover that on the balance of that loan if need be.
So we did put, we ended up putting liens on those properties. But also I felt reassured because God forbid something went awry. I'm not losing my house that I was living in, you know.
Yeah, I'm not losing. The assets that I was putting up were assets that I don't want to, I don't want to lose those assets. But if worst case scenario happened, like, I'd still be able to, you know, gather myself and, and move on and, and still be okay. Um, so.
Well, that, that is one of the benefits of buying small is that, God forbid, it just goes to zero.
Yep.
Depending on your balance sheet. And everybody's situation is different, but you're more likely to be able to absorb an absolute failure.
Yes.
Than if you buy a, you know, max out your SBA loan and it's got, you know, four and a half million dollars of SBA debt hanging over your head.
And I also knew too that, you know, my monthly, when it would hit my monthly seller note the business as is today, without having to grow it, it would, I would still be able to sustain that payment, no problem, and also pay myself at least $50,000. So I was doing very simple, simple numbers and math on an Excel spreadsheet, but I felt pretty confident in that.
And Pat, but also, talk to us about this period where you retained your W2.
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