The Origin Story of a Compounder ($80m and Counting)

They're people that we've met, you know, along the way. We say, do we want to work with this person? And if we decide that we want to work with them, we find a way to make that happen.

And again, the numbers, they obviously need to make sense, and, you know, we need to do a level of commercial diligence, but we're really oranging towards getting the right people in the seats on our bus and trying to realize a larger vision together. And I think, you know, we make it expressly clear across all of our organizations that, you know, what is our, you know, where do we want to go?…

What can you share? Kind of what a typical structure is for one of your acquisitions, and. And what the seller there would roll into Hickory.

Yeah, so we, you know, I think it looks a lot like that initial Stanley Ruth acquisition, just to go back to that, with the exception of, you know, there's a rollover portion where they would essentially, you know, it's still an asset purchase. They roll their ownership into a new entity that we own together.

And then there's some terms and agreements around what a potential exit would look like if they wanted to walk away or wanted to realize an exit. I think for us, we're a young team, and we've got this vision to build an enduring company that goes decades beyond what we initially set out to do. But we also realized that not everybody wants to be doing this in 20 years from now.

And so I think it's something that we set up to allow people to gracefully exit if they decide to. We've been fortunate that we have not had to deal with that. And the partners that we have right now Are, you know, fully engaged and, and in great position with us and.

But yeah, so we try to pre. Negotiate everything up front so that we don't have some kind of issue in the future.

But you do want to see them have a commitment for some number of years. That was the whole point that you just said. So you don't want them deciding that they're not, you know, after two or three years, they're, they're done.

You want it to be five and seven years at least, I would imagine.

Yeah. And that's one thing where, and I, I don't know a lot about Kelso Industries either. I'll look them up later. I'm interested. I know there are, there are some groups that I am aware of and I've heard stories on the other side from sellers where they, you know, they had some rollover equity.

But, you know, maybe it's a seller who, who due to age or whatever reasons, their, their plan from the beginning is to get out in two or three years. And the buyer is promising to them, hey, don't worry, you're going to get this check today, but you'll get another bigger check in two, three years. And the seller says, okay, I'll, you know, I'll, I'll tough it out for a couple of years.