When to Buy a Large Consumer Business

Is there not a fear that one day the state government decides to change.

Thank you.

I think it's a great point and that's, and I should have mentioned that in the, in the deal portion of our conversation. That's a bet that our, that our investors had to underwrite. So we spent a lot of time and diligence talking to industry SME and you know, market regulators to understand what the tensions were within the state of Texas.

What we, what we ultimately see is that we're too far down the path of deregulation. There's too many players in the space space that have deep pockets that are kind of capitalizing on the deregulated market. And we are going to bet that the status quo maintains, I would also bet that the status, status quo maintains in a lot of other states as well.

But in Texas specifically it's a competitive advantage to our economy especially as you see more data centers and those sorts of things moving businesses, moving to Texas. It's much easier, I won't get into the technicalities, but it's much easier to plug into our grid as you probably remember in 2022. Right. I mean we, we are on an isolated grid.

The rest of the country is on, is on a different, is on a completely different grid. And so that's a competitive advantage for Texas in terms of bringing in business and bringing in generation. It's much easier to plug into the ERCOT market versus others.

So I don't see that the regulators are going to, to make any sort of, any sort of change in even the long term term because it's a competitive advantage for the state and ultimately our investors had to get comfortable with that and we have to be comfortable with that. But yes. Does the risk in theory exist? Yes.

One of the other things Taylor, that you and your investors would, would consider is who a likely buyer for a business like this is on the other side of your hold period. In the traditional search model, which is more akin to kind of traditional private equity, there is typically the expectation that there will be an exit at some point. Not explicit but implicit, I think it's fair to say who, who…

So we, so we don't think it's a, it's a strategic because essentially what you have to underwrite if you're a strategic is that you're taking on customers that have switched in the past that are condition to switching and that you can keep them into your, and you can pull them into your customer journey, into your retention model.

So if we were to be purchased by a provider, you have to believe that you can keep that customer and maintain them over time. And so we, we don't think it's strategic. We believe it's probably a private equity buyer for us, I will say within the traditional search space the interest has I guess increased recently for long term holds.

I don't know that we've necessarily seen that, that play out. But you know, we make decisions as a search fund board with the long term in mind. We, we don't, we've never, we've never discussed a sale.