How to Own 20% of Multiple SMBs

It's commercial cleaning business and those margins are single digits. So yeah, they're doing like 3,3 6 in revenue and have about 350k in SDE. So like wow, that's more typical. Like you're probably thinking of.

There's a little more room out in the rural parts of the country. So if anyone listening lives in a rural area in the country, you want to start a business, like it's not a bad one to get into because of what you said, like low barrier to entry. But yeah, like the margins were.

Yeah, about 25%. They were strong and I've been able to maintain and actually grow those a touch. So there's, there's a way to do it. It's just, it's just getting the weeds the business a little bit and Being really tight on everything. You can, you can do it like any business.

Yeah. Yeah. Okay, well, maybe we'll return to, to commercial cleaning a little bit and get more thoughts from you on it. But for now, more about the business. Okay. 2 million in revenue.

500 of SDE, 1 point, so 1.6. So that's just a little bit over a 3 multiple in what was the deal structure?

Yeah, so it was SBA financed 90% of it. I had a 5% seller note on 2 year standby, then an 8 year term following that. And this was back for those in the space, this was back before the new rule change where it had to be a 10 year full standby to be, for the seller note to be part of the equity injection.

So that two year standby qualified as part of my equity injection, which means I only brought 5%. So yeah, 5% note, I brought 5%. 90% SBA, no real estate.

Honestly a pretty, a pretty clean deal. No contingencies on the note like nothing fancy. Seller stayed on in whatever capacity he was already in, which wasn't much anyway for couple months.

Just helped me out hopping on calls and stuff. It was nothing too formal. I didn't have to like retain him for a long period of time.

So the deal structure itself was pretty, pretty straightforward.

Yeah, yeah. And boy, you, you did get from the perspective of bringing little equity to the deal, a great structure there. So as you said there, there was a rule change last summer where before, what you got was the seller note. If it was the seller note could be counted as equity.