00:12:33 · Justin Escajeda
[00:12:33] S1: Great. So we have two commercial masonry companies that do some residential, but it's mostly commercial work all the time. One North, one South Of Pennsylvania, one in Western PA here in Pittsburgh, one in Northern PA. Four roofing companies, and they they all all have specials at different things, you know what I mean? Some repairs, some are commercial, some are residential. One company that we bought, Bronson Roofing, it completely, it only does shingle, like re roofs, and they just do thousands of squares a year, you know, and, you know, that's what they specialize in, that's what they did before. We haven't tried to change them. Their insurance brokerage, a material supply company. We have a general contracting company. We have inks installation. We have a design studio slash luxury remodeler. We actually just bought the company. It's really neat. And we have a property management company. Yeah, well, and like I said, they don't have to be synergistic as a reason for us to be interested in them. I'll say that. You know, it's great if they are, but but a big thing that we make sure of is, are they okay as a stand alone business? You know, that's the most important thing. Because a lot of things can go sideways, you know, after after an acquisition that you don't account for. So that's... But like I said, the synergy definitely helps out, you know. We can definitely help each other out on jobs, share share numbers with each other, you know, to to subcontract one another, you know, save thousands and thousands of dollars on insurance and, you know, favorable pricing on construction materials when we can, you know. So
00:14:48 · Mikk
[00:14:48] S0: Like, not too many people have acquired, like, 10 companies and, like, running a portfolio like this. You have, like, a significant amount of data. Have any of the acquisitions gone wrong?
00:15:00 · Justin Escajeda
[00:15:00] S1: One acquisition I could think of, I paid too much for, all right? And I'll tell you why. I was really looking at the last three years as opposed to... And I was kind of... Want... I'll tell you what. There was a little bit of emotion in it because it was a masonry company, and I really liked it. And it had flashy, like tons of assets. It was nice. It was a cool company, and I wanted it. And the prior three years, I really didn't look in, they were great. They were like 5,000,000 top line, 1,000,000 bottom line. It was... Every year, it was like clockwork. Well, here's the thing. I kind of dismissed the fact that they were working on the same four jobs in those years, right? Now, if I would look past those three years and notice, you know, in the couple years prior to that, well, they were doing like 2,500,000 a year, right? So and sure enough, you know what I mean? Like after those jobs closed out, we're back down to, you know, dollars 2,500,000 a year. Now we pay... Now don't get me wrong. We made it work. The company's still viable. It still makes money, but I definitely think that I overpaid. And there some stuff that went on with the owner post closing that he was a little bit of a slime ball about and some things we had to get over. But you know what? You're gonna have that. You're not gonna have... You can only... You know, you can only... You can't sink to other people's levels. You have to act as honestly as you can and and hope to try to avoid the snakes. But I'm still I'm still happy that we bought that company. You know, I really am.
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.