They like the franchisors, but there's only so many of those and they're going after franchisees. They love the roll up strategy, right. And so if you've done the roll up and here's by the way, here's the way you work the roll up on franchisees, okay.
Acquiring Minds
From $1m to $25m in 6 Years
Excerpts · 708 segments · ~1:55:50 long
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If you get in the right system, right. You buy them at three to four times cash flow. And then when you get to a certain size, let's say you get to $5 million EBITDA, you can sell for seven plus EBITDA times EBITDA.
And if you're using debt for this, you know, okay, that leverage starts to work pretty nice. So they don't want to just buy jobs. Right. That's why you got to get to the certain scale where private equity finds that interesting.
Right. But then when you get to a certain point, you've done a lot of things. You've you finance debt with this, a lot of it. And then you also get multiple expansion. You know, it can be a nice way down the road to exit.
And you're clearly at that size now that you could exit. You would be big enough to be interesting to private equity.
Easily I could 3 million EBITDA. Well they, they say for my, by the way my four wall EBITDA is going to be about $4 million before overhead. Right. So I'm definitely there of where, where people are interested in and if that's a route I wanted to go.
You know, in our pre interview I told you I have a love hate relationship with private equity because I think they, a lot of times they, I've seen too many times that they bought a franchisee and they destroyed it because they want to manage it like a spreadsheet. And like for example, everyone in my company is eligible for an incentive trip to Cabo San Lucas. Now only 10 to 15% of them make it…
Right. And the private equity firm be like well that's just an expense item and get rid of. But they don't understand is the ROI on that. They just look at it as an expense.
They don't think about the fact that I can put that in every advertisement for every job that I have.
And when I recruit you, will I get to talk about our Cabo trip and show you pictures that doesn't talk about how everybody in the organization might add more hours to make because the criteria is that for massage therapist is the number of massages of the year and I think average ticket and so well if you're not, if you're only working 25 hours now you're gonna give me 30, 35 hours so you can…
And you're gonna try a little harder And a lot of people maybe don't get there, but they get close, they keep trying. And then, and what happens when all those people that went on the ship go back to the spas? I mean, the ROI is insane.
But like, you know, private equipment, like, well, there's, there's a couple hundred grand off that trip. Let's just, let's just cut that. Not realizing all the ancillary benefits of that stuff.
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