Second-Time CEO Buys a $30m Title Company

So I always recommend that for folks. But you do create a lot of value when you find businesses and opportunities where it's fairly obvious that you could do things a little bit differently and just make it a better business too.

Sure. Randy, thank you for all of that. I've been curious about the business. Back to the plot. So can you tell us about the structure of the acquisition?

Low interest rates, high refinance volume. And so we had to. We couldn't look at the company on a. On a TTM EBITDA basis.

We ended up taking a three year average of their EBITDA because their EBITDA had gone from low single digits to all of a sudden now it's eight. And a good chunk of that eight was refinance volume. That was not going to stick around for a period of time.

Inevitably we kind of settled on about 5 million in EBITDA as the number and we applied a 6x multiple to it and closed somewhere kind of in that 30, $31 million range of that. We did a seller in a note for a little over 4 and then we also had senior debt for about 14. And then we put in about 13 in investor equity, the bulk of which we have already returned.

And that structure sounds pretty conventional for a traditional search deal of this size, I'd say.

Yeah. And we have an amazing debt partner in KeyBank that we've refinanced the business and created kind of a nice structure that allows us to go and do future acquisitions as well.

Say just a little bit more on that. What does that, what did that look like, that refinancing?

Yeah. So we refinanced the business last summer in order to return and this might help too. In in search fund for quite a while there was a structure of investor equity that was pref A and pre B and the first half of it often would carry, you know, probably a 14 to 16% coupon on it and the other would sit at 00.

And I chose that because I my goal, having a cash flow business was to be able to pay that original pref A down so that it was not continuing to compound on itself. And so that was kind of our goal with the refinance. But while we did the refinance, we also created a delayed draw term note that we could tap.

So long as we were in certain debt covenants. We could just go to the bank and say, hey, we're going to go do these two deals. We need, you know, four or five million dollars to go do it.