Leaving Wall Street to Buy a $1m Manufacturing Business

And particularly I found people coming from the public markets where multiples are in the teens on up, they just can't believe it when they see businesses trading for 3 and 4 and 5x down here in the lower middle market. And so, and so it's a, it feels a bit of a contrarian take what you're saying, but I think it's really what, really more that.

Well, yeah, the multiples are low, but there's so much risk here and so often so little growth to be had that in fact those low multiples are justified. They're not necessarily inherently screaming deals.

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but one thing to add on to that, it's only, it's only a discount or it's a great multiple paid. If for some reason in the future you can trade up for a better multiple or increase it.

Yeah, yeah.

And so if you're buying, let's say we'll go back to those, those examples earlier and you buy, you buy a car wash and it's, it just cash flowing that you can just milk it, which is fine, and then trade it for the same three later. But what was, where was the real discount? You just bought cash flows.

I see. Okay.

So. Okay. Yeah. I think one of the beauties of a small multiple is the ability to basically leverage it into a greater multiple. And that's where your real return is.

Okay.

I know a lot of your guests have said that in the past.