Exactly. Yeah. Thank goodness for creative accounting folks. It really saved the deal and allowed us to get it done.
Acquiring Minds
Second-Time CEO Buys a $30m Title Company
Episode
Excerpts · 345 segments · ~1:22:28 long
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05:00 Lawyer to CEO at 2911:00 Wanting equity, path to search18:28 Accessing search capital mid-career23:41 Finding and understanding Meridian Title33:40 Title industry cyclicality risk46:59 Deal structure and financing55:15 F reorg saves the deal59:09 Reps and warranties surprise1:05:59 Leadership changes and CFO1:13:04 EOS Lite operating model
Yeah. Great.
So reps and warranties. We did get thrown another loop or thrown for another loop. Close to close. I can't remember if it was about three or four weeks ahead of time.
The seller's council had realized, hey, we think we want to rep some warranty policy. And with the company, there was a kind of a consent order that had occurred back in 2017, 2019, that was going to stay with the company because we were doing a stock purchase because we needed the licenses and things like that. And there were no issues with the company.
But I think just to make themselves all feel better, they. They wanted to reps a warranty policy, and we needed to move quickly. So we ended up finding a group that was.
That was willing to do it quickly. It's not cheap, I'll say that much. The policy itself and define it, Randy.
Define it. Give us more. For those who don't even really know what it is, is.
So it's an insurance policy, you know, in the event that we missed something in diligence, where something was wrong, a liability existed that we just were not aware of, and maybe even the seller wasn't aware of it. It could be an HR issue, a tax issue, in this case a regulatory issue, so that we would have an insurance policy to go back against instead of coming back after the sellers for the…
And that kind of helped get them a little bit more comfortable with a couple of the things. And inevitably, though, your diligence gets way more intense when you start doing a reps and warranty policy, because your obligation is that you've, you dive into every aspect of that business and you have a subject matter expert for every aspect of that business. I have never racked up a legal bill that…
But because you have to have an attorney from every discipline essentially dig into the business, see if there's any liability that exists that we weren't aware of and surface that. And then they have to get in front of the reps and warranty carrier and essentially certify what they did, what they found, so that the carrier feels comfortable that, hey, they didn't find anything, there's nothing…
And I would say that probably very quickly added another $150,000 in legal expenses to what we were doing. One, we were doing it quickly. It's a ton of different experts.
And then on, on their end, I think the policy itself was probably 2 to $300,000. Might be, might have been more than that. But thankfully they were paying for the policy, we were paying for the legal work.
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