Rolling Up an Industry with 1.5x Multiples

They do.

They don't expect me to pay for it, but I use that number as kind of like a washed out for how much they generate for the income. So I just say like, okay, like, okay, let's don't count this. So I would just in my head calculate this as what you bring into the business by actually doing nails.

Okay, so for me, that's kind of like a washout in term of, okay, there's this cash now and then there is this revenue that usually the owners would generate themselves. For me, just to keep it a bit simpler, just kind of wash them out. Right? Just this is a net zero number because like you say, SBA loan is not going to underwrite that cash amount.

Okay, but so the revenue that, the revenue that they're generating, you have now kind of canceled out. You're not worried about that as much. You cancel it out with the cash, the cash side.

So those two things cancel out. But still you do need to take into account the fact that they're the management. So, so you don't. Because you don't. Maybe initially you'll be the manager of one of your acquisitions, but obviously for this to scale, you need to have new managers for all the locations.

And in general, these owner operators are managing them. So how did, so, so the earnings of this business, the one, your first salon, were what, what were they? What were the earnings?

Oh, you. Okay, so I said revenue like it was fluctuating between the years, but let's just say on average $950,000 a year. Their reported SDEs was around 220 and.

So 220 of SDE here. So how did you arrive at the kind of the adjusted EBITDA number with a manager in there? Walk us through how you how you thought about those numbers.

Yeah, so for me when I think about the manager, right. So I kind of spent a lot of time also looking after posting on indeed on Facebook Marketplace and there's different publication in Vietnamese publication that post job site for looking for nail techs and managers.

So there is a kind of like an average salary usually people who looking for like an assistant manager or like a receptionist but but most of the time they kind of act as like a assistant manager slash managers. There's roughly about you looking at paying people between 6,000 to $8,000 a month. Right. Depending on the skill set they bring to the table.

Right. So roughly I call us calculate okay. To pay a manager I need to budget 80 to $85,000 a year to have a manager who is good and can run the salon once I set up the process and all of the different system that I want to implement. So yeah I would say 80 to 85% was what I use as a manager slash a receptionist management salary for my budget and then I need to be able to pay myself too right.