And I. The timing of this was just perfect because we kind of snuck this in before. They've changed some of the rules and stuff, but actually, no, no rule change was. Was forthcoming. I mean, we didn't know that it was like, close, but back in August 2024, you were allowed to keep an owner on as long as they retained a percentage of ownership, didn't matter how much.
Acquiring Minds
Buying Small to Then Buy Larger ($1m SDE)
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They didn't have to give a personal guarantee or anything like that. And so each of the other two owners retained 2% each of the company, so they got a nice little payout for themselves, but they retained a little in order that, you know, a year on, they're still a part of the business. And so that was a part of the story as well, is, hey, look, I'm not buying this to jump in and just run it 100…
I have some capabilities and some, you know, some things that I think I can add to the business, which we can chat about if you want. But. But the. The. The person that I'm going to install in the. As the president is Actually one of the previous owners, you know, that's stuck around in the business and I think that's helpful.
I mean that was, that was huge and it's been huge that he has stuck around. He's made a gigantic difference in the year since of helping the business grow like it has.
Well, let, let's do turn our attention to that, Joe, because that is a really interesting feature of your story. We'll probably close it out on this segment. Although I have a follow up point and question I want to make sure.
But just to be clear. So there was three sellers you said, and all three of them retained a couple points of equity.
The role that completely, completely cashed out was the majority owner. So the, the guy that the reason why the business had come up for sale was the majority owner who then was acting as the president and the creative director and all. He had wore all sorts of hats at the agency but, but he, he wanted to retire and so he, he got bought out completely.
So we bought out him 100%. But the other two who were staying working in the agency retained 2% each. So you know, bought 96% of the agency rather than 100%.
Yep, yep. And by the way, the rule change that you're talking about means that, which happened this summer of 25 means that today the owners to roll equity like that or what, what an SBA jargon is a, I think it's just called a, or was called a partial buyout, if that's what they called it.
Right.
They would have to personally guarantee the loan for I think maybe the first two years, maybe so not forever. I think I have that right. Yeah, but you know, owners just aren't going to tolerate for a couple points of equity or even for 10 or 20% equity personally guaranteeing the loan that you are the ones, you know, with you running the ship.
So it's, it's become kind of a non starter for rolled equity in SBA acquisitions which in businesses that are tradesy blue collary where there's licensing involved and oftentimes a way of dealing with that would be that the seller has the license and stays on rolls equity and stays on for a little bit to be the main license holder of the business has really hurt the ability for, for deals with…
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