00:04:41 · Mikk, Justin Escajeda
[00:04:41] S0: Like, how how how big was this company? How much did you did you pay if you're willing to share? And how much... Like, did you do any diligence on this? And how was how was the whole story of this one? [00:04:51] S1: Yeah. My diligence was pretty I mean, I didn't really know exact... You know what I mean? Like, I didn't do a great deal of research on, like, how to buy companies. I kind of stumbled my way through it. You know. But we got an SBA loan. The company was for about 800 and... 837,000 or 867,000, I think, when it came down to it. And we got an SBA loan for it. And to be perfectly honest with you, the going all the way through that process, you know, the bank essentially, you know, really coached me on how to... The process of closing on a closing on a business, you know? So I give them credit where credit is due, but... And I I didn't, you know, I didn't have to take any courses or anything. I just... They just told me exactly... It was tough. Don't get me wrong. Get... If anyone listened to this got an s... Ever got an SBA loan, it's it's not exactly a a comfortable process, but it's it's it's monotonous. It's long, but it, you know, it turned out pretty good. [00:06:06] S0: And now after the first acquisition, did it like some some shape or form, like opened your eyes that you can really expand your portfolio by by just acquiring these type of businesses? Or what was the thought process and maybe maybe a lesson and takeaway from this for you?
00:06:06 · Mikk, Justin Escajeda
[00:06:06] S0: And now after the first acquisition, did it like some some shape or form, like opened your eyes that you can really expand your portfolio by by just acquiring these type of businesses? Or what was the thought process and maybe maybe a lesson and takeaway from this for you? [00:06:20] S1: Yeah. It was definitely an moment after the first year, because you gotta remember something too. I bought I bought that roofing company in probably the worst time of the year for roofing. We closed in January. And so I had about three months of roughing it, you know? And there's not a lot roof work you could do in the Northeast in the wintertime. And so, like I said, but after the first year, it was very evident to me that this is a very sustainable way to grow. And I think it was so much easier than starting a new company from scratch, because I had started a couple companies from scratch, it is, in my opinion, I know some people enjoy it, but in my opinion, it's tough. It is very hard to get into the market you're in to be a new guy. I'll tell you, if don't ever have to do it again, I never will. I really would not. To be perfectly honest, I think I could say with with pretty much full certainty that I will never intentionally start a new company ever again in my life.
00:06:20 · Justin Escajeda, Mikk
[00:06:20] S1: Yeah. It was definitely an moment after the first year, because you gotta remember something too. I bought I bought that roofing company in probably the worst time of the year for roofing. We closed in January. And so I had about three months of roughing it, you know? And there's not a lot roof work you could do in the Northeast in the wintertime. And so, like I said, but after the first year, it was very evident to me that this is a very sustainable way to grow. And I think it was so much easier than starting a new company from scratch, because I had started a couple companies from scratch, it is, in my opinion, I know some people enjoy it, but in my opinion, it's tough. It is very hard to get into the market you're in to be a new guy. I'll tell you, if don't ever have to do it again, I never will. I really would not. To be perfectly honest, I think I could say with with pretty much full certainty that I will never intentionally start a new company ever again in my life. [00:07:37] S0: Maybe you can add here. What's maybe something builders understand, like folks who bootstrap a business that acquisition entrepreneurs often don't because many of the listeners as well, they they often don't start a business. They they they are with a investment banking or private equity background, and they just go and first thing and acquire a business.
00:07:58 · Justin Escajeda
[00:07:58] S1: Well, I guess it I guess it... You know, from what I've seen, you know, and definitely looking at companies on, you know, the under $10,000,000 mark, right? Like, I'm not looking at these mega huge corporations. So it might be different in that respect. But for these companies that are, have only been run by a founder up to this point, Look, man, that's... It is really important, in my opinion, and from what I've seen and from talking to tons and tons and tons of employees, like people don't particularly like change, you know? And here's the thing, when a company is first being sold, that's a big deal and it's a scary deal, not only to the owner, but to all those long term employees, you know? So I always talk to the current employees, maybe whenever the seller allows me to a little bit before closing and be like, listen, I do not wanna change anything. I wanna keep it all the same. And to be perfectly honest with you, I have no idea why people go and buy businesses and and and and chain... And immediately change all this stuff. Like, hey, we're gonna do x, y, and z. It's like, you know... And may... Maybe that's why that's why I don't... I haven't bought as many businesses as some people because, you know, I'm I'm really particular. Like, look. You know, if I if I buy if I buy a car off the lot, you know, a a fully loaded Mercedes Benz, whatever, it's like, I'm not gonna go change it. I'm not I'm not gonna go start taking shit off and and this and that and and changing it. I'm spending all this money because I like the way this thing is, you know? And it's such a... And in my mind, it's just such a simple principle. It's such a simple, you know, method of buying companies. Like, hey, just wait for these great ones to come and the ones you really like that you don't have to change anything, and then you could pay a premium. Then it's okay to, you know, overpay. I mean, I've overpaid. Believe me, I've definitely overpaid. But like, you know, I don't feel bad overpaying for a company that I know I'm gonna hold for the rest of my life and operate the way the founder has done it. And here's the thing too, those founders, those people who started those companies, I mean, it's like, not all of them, but most of them, they love hearing that. They love it, the fact that their name is gonna live on for another generation.
00:10:30 · Justin Escajeda, Mikk
What they built is gonna go on for another generation. That you're trying to learn from them how they did this and how they operate, you know? And then sure, can... Mean, we make tweaks. There's no doubt about it. Like half the time, most of these companies don't have a very good accounting system. They don't know what accrual accounting is. It's like a half cash, half accrual, weird morph, and like you gotta, you know, they don't report everything at times. But for the most part, the processes and the culture and the sales and the margins, we we really try to keep the same. [00:11:07] S0: Out of all those acquisitions you've done, what's maybe some of those, and if if there is any, some of the major changes you have had to do, maybe not like post acquisition immediately, but maybe within the first year. Has there been anything which you would like to bring out?
00:11:07 · Mikk, Justin Escajeda
[00:11:07] S0: Out of all those acquisitions you've done, what's maybe some of those, and if if there is any, some of the major changes you have had to do, maybe not like post acquisition immediately, but maybe within the first year. Has there been anything which you would like to bring out? [00:11:25] S1: Accounting? Mhmm. Accounting accounting is probably the biggest one in almost every single one of them. Yeah. We sweet... We... Like I just described, a lot of them, they don't report everything. You know, it's like cash accounting with some accruals sprinkled in. There's sometimes two sets of books for cash and checks. But we that's one that is one thing that we are very adamant about is totally clear cut accounting. Oh, and you know what? Sometimes a little bit marketing, I'd say on the residential side, you know, marketing is really important in residential construction. So, you know, there's things that we've learned that worked that will add to the marketing, but nothing nothing big. Nothing nothing really big that I could think of. [00:12:21] S0: Give us the overview of the portfolio today, and then let's... I'll I'll I'll then try to understand what what Justin actually looks for when when doing those acquisitions and what has been the thought process of of doing some of those.