The Joy & Pain of Buying a Tech Business

So that's why we went with revenue. And, and to add to that. So it's essentially business that's taking a lot of reinvestment. All of that comes out of ebitda.

And so EBITDA doesn't end up being a good, a good barometer of the, of the health of the business, but it's also implied therefore all this reinvestment is occurring not just to maintain inventory. No, it's, it's true reinvestment where growth is expected later. So in other words, it's growthy.

Great. And what of the size? So I know you just said that EBITDA is not the best barometer, but since that's how we tend to think in search land 1 1/2 million of EBITDA or we can even look at revenue. 5, 5 1/2 million.

That's not, that's not a large revenue number for traditional search and in traditional search reminder to the audience, the, the businesses that are looked for by searchers are often quite a bit larger than on the self funded side. This feels actually in line with something a self funded searcher might have taken down.

Although 8 and a half million would have required Parapassu debt, it's 3 and a half million above what the SBA can tolerate, but it's doable anyway. So, so how did you get comfortable with a At least on paper, a smaller business. Yeah. So when Antonio and I were searching, the two things we cared most about was where one, a growing industry and two, a motivated seller.

And we. Because we felt like if you buy in a growing industry, you can sustain a lot of mistakes and you're not bumping elbows with aggressive competitors.

And the motivated seller was important because it's less likely that seller will hide things from you if their motivations to sell are super clear. It just felt like a check. There's nothing weird, doesn't sound fishy, there's nothing crazy.

Obviously he didn't know about ChatGPT coming out 12 days before we bought the company, but. And in that context, the industry was growing or is expected to grow high 20s percent per year this decade. And growth was like the company was showing that growth, you know, 25 CAGR.

25% or so, 3 year CAGR. Obviously coming from a small base, so it's easy to grow high. But that was good. The margins sort of adjusted for reinvestments and stuff like that.

Just like steady state margins were good, 31%, 32% cultural fit was good. With a seller. We really liked him, he liked us. It felt like it was a company and a team that we would and we are happy managing.

And then lastly, the logos are and were still very strong. So, you know, this was a small company but working and still working with names like PepsiCo, Heineken, Nestle, you know, Aramark. Big names that have just been around with the company for six, seven years and just continue to consume things from the company.