Complexity Hides Fragility: Losing a $20m Business

So you guys were six, you guys were a turn and a half above that. But that's not a crazy amount. That's not, doesn't strike me as a crazy premium given that again, I don't know this industry, but certainly the quality of revenue here seems just fantastic. I mean it's, it's prescription life.

Life preserving prescriptions. Right?

Correct. Yeah. All of the drugs, either their life would be significantly diminished either in time or in quality if they didn't have it. So it was, or you know, likely death. Right. So there, there were just a lot of factors going in where this is like, hey, this isn't going away.

Yeah, yeah.

And on top of that we were looking at multiples. If you get to about 5 million plus 5 to 7 million in EBITDA, you're starting to see multiples jump in the tens. So, you know, the, the arbitrage there was real where, hey, we, we just need to figure out how to keep a portion of this percentage of growth within an okay rate.

The seller also the other thing that was great is the seller didn't want to just be done. The seller wanted to stay on as an operations role and really want to help on finance and in sales. And so we said, hey, like we can come in partner and come in from that approach rather than, yeah, we're going to figure out on day one how to run this company.

And so that was really, you know, an enticing piece of how do we mold together as a leadership team. And so that on. Right.

And did that correspond also with a nice equity role by that seller?

Small, but I wouldn't, wouldn't. It wasn't substantial, just slightly less than 10%. Yeah.

Okay. Okay. To your point about multiples expanding at 5 to 7 of EBITDA and this business was sitting at 4 when you bought it. This is something I don't talk much about in acquiring minds, but on the Mind's Capital podcast, it comes up a lot, this idea of zone, zone skipping.

And when multiples expand and they expand at certain thresholds because when you go from when you get into 5 million EBITDA north, that, that unlocks a whole new group of buyers, 10 million and above, 25 and above and so on.