00:16:44 · Mikk, Justin Escajeda
[00:16:44] S0: And how have you financed most of them? You said the first acquisition was SBA loan. How has it been with others? [00:16:50] S1: We got a couple SBA loans. We've paid cash for two of them. And the rest, we did some kind of negotiated seller finance deal, you know, with the with the owner, which I prefer the most. You know, it it it keeps the banks out of it. You know what I mean? You can be creative about about what the owner wants and what you need. Because here's the thing, it's like, that's what I always try to tell people that are selling their company. Like, look, I know that you're making money. I know that you're making money right now. Right? But you also don't have a debt service. You also don't have a guy you're paying $150,000 a year to run your company. You're doing it, right? So it's like, with a debt service and a giant salary, you might be looking at $500,000 a year of your bottom line. And if you're only making $600,000 a year, dollars 500,000 a year, well, you're at nothing. So that's why, you know, we're very careful on, you know, just because a company is good, we could buy it wrong and make it a bad company, right? And I'm not in the market of, you know, I'm not in the business of losing money just because I'm buying something shiny that's for sale and destroying someone's life work in the process. So it's probably it's probably why there's there's long, you know, voids of of just looking at companies and and not pulling the trigger on anything.
00:18:28 · Mikk
[00:18:28] S0: Do you do anything special when it comes to sourcing those deals, or they just come to you because you're... We will cover this, but you're you're this Pittsburgh based. And and... But, yeah, how how has it been when it comes to those those acquisitions?
00:18:44 · Justin Escajeda
[00:18:44] S1: Word-of-mouth, mostly. People approach me. And also too, I I... You know what? I've gone on those buy, biz, sell sites. I don't know if, you know, a lot of people are are are on... Look at those sites or businesses for sale with the brokers. I've never bought one off of them, but I've looked at them. You know, one thing about those sites is I always notice I try to fill in the thing or like, Hey, can I have some information about this site or this company's? I'll sign an NDA, blah, blah, blah. It's like one out of 10 of those brokers get back to you. I don't know if anyone else has had that experience, but like, it's like... I don't know if that's like a part time job as like a business broker for a lot of people, but regardless. But yeah, that's it's pretty much it's pretty much word-of-mouth for the most part. I buy locally. I have been trying to I'm actually, you know, I live part of the year down in North Carolina and the Outer Banks. I'm down here right now. And there's there's a couple companies that I like down here that that have worked on my house down here that I that I've engaged with, you know, maybe, like, a long term, like, hey, if you're ever looking to sell, you know, I I I like your company, this and that, but I haven't bought anything out of out of state. You know? It's... So I I can't... I don't know how that would be. I guess it... You know, assume probably the same, but I I I haven't done it yet. I've I've stayed pretty much all in Pennsylvania.
00:20:14 · Mikk, Justin Escajeda
[00:20:14] S0: So how has this story unfolded for you? Has it always been, like, a goal to to be, like, concentrated in in one market as it's it's one moment... From one moment, it's become like a competitive advantage, or it's just happened? [00:20:29] S1: It has been a... There... There's been times where it's a competitive advantage. You know? I can make a deal with a general contractor sometimes, hey, if you... You know, look, let's take a construction site, for example. A general contractor has a job I could think of just recently, a Long John Silver's to build, okay? Well, I can I can approach them? You know, Long John Silver's, what are the three things that I know I can do on that job site? And I can do the masonry, the block, any kind of brick on the building, the hardy siding, and and the roof. Right? So I, you know, we to stimulate these relationships with generals because that's less they have to do. You just give me that package of 30% of your job, and now you don't have to worry about it. You only have to deal with one contract as opposed to four, you know? And that's attractive to people. It's definitely attractive to some general contractors and some of our customers too. Same with residential, you know? If they a massive loss from a big storm, have roof, you know, brick, windows, all these things need fixed. They... They'd much rather just pay... Talk to one person as opposed to three or four different contractors because that... I know what that's like. It's tough. [00:21:40] S0: Do you think, Pittsburgh will become too small for your ambition one moment?
00:21:40 · Mikk, Justin Escajeda
[00:21:40] S0: Do you think, Pittsburgh will become too small for your ambition one moment? [00:21:44] S1: I don't think so. I mean, there's a lot of there's a lot of good good companies in Pittsburgh. And and, you know, it's... I don't know. Maybe. I guess. I I guess it could. Anything could happen. But as of right now, like, I'm not, you know... I'm more concerned about, you know, buying things correctly and managing them properly, you know? If I don't have a solid plan for how... You know, I may have a solid plan on how to buy the company, but what's what's the plan for the next twenty, thirty years? How is that gonna be managed? Especially especially if the if the if the if the seller is the guy who's who's running the whole show, which sometimes happens. [00:22:25] S0: The companies you've bought, how often is... Like, the Gieman risk is obviously there. It's always. But how have you... What... What's the best way to solve it? Like, how how have you been thinking of this, and how have you been working on this when when doing those acquisitions?
00:22:25 · Mikk, Justin Escajeda
[00:22:25] S0: The companies you've bought, how often is... Like, the Gieman risk is obviously there. It's always. But how have you... What... What's the best way to solve it? Like, how how have you been thinking of this, and how have you been working on this when when doing those acquisitions? [00:22:39] S1: I think that there is more... I like, you know, key man risk. I like that. And I I think there's more of that than there is companies in the under 10 or $5,000,000 revenue range than there are ones with a decent management system in place. You don't see a lot of absentee owners, grades of absentee. Some are just kind of like consulting, other ones are in the day to day, of all ranges of involvement. But that I most companies in the range that I'm buying companies have a pretty big influence on how the company works. So I always have to either have a person in place for that or possibly bolt if the company's small enough and it works, they could bolt on to one of our other companies and go under their management. But yeah, but having that filling that void of that owner is terribly difficult. I mean, having a person to, you know, you're not asking somebody to just run a company for you as a new job. I mean, aren't, you know, I say it all the time, these aren't guns for hire, these people that you're having run your companies. Like, they're actively making a lifestyle change, you know? And finding those people are, I mean, it's, like I said, it's terribly difficult.