How This Entrepreneur Failed At A Turnaround Acquisition And What He Learned Through The Experience
The one thing to remember
In a turnaround, do not buy the P&L—buy only what you can prove transaction by transaction.
What happened
Dustin Pillo bought an unnamed ATM parts repair business for cash in about March 2023 as a small-business turnaround. He says he did light diligence and later discovered unreliable books, overstated margins, obsolete inventory, above-market customer pricing, and an industry that had matured and consolidated. The hoped-for customer win-backs did not materialize, and the company was burning cash. In March 2024, NEX ATM under Grant Victor bought the inventory and effectively acqui-hired Dustin, leaving him with a painful financial loss but a new operating role.
Who's telling it: Dustin Pillo, the buyer and operator of the failed turnaround acquisition This is the buyer Dustin Pillo’s account; the seller’s, employees’, customers’, broker’s, and acquirer’s sides are not included.
Timeline
- Thesis
Dustin studied small-business acquisition as a path to entrepreneurship and wanted operating experience so he could later run a larger company.
- Sourcing
After walking away from a larger Colorado deal, a broker brought him a smaller ATM repair turnaround opportunity.
- Due diligence
He performed light diligence, did not get a full quality of earnings review, and did not fully understand the industry or transaction-level margins.
- Closing
He paid cash for the ATM repair business, avoiding SBA debt and a personal guarantee but still putting personal capital at risk.
- Operations
After closing, he found messy books, misclassified costs, obsolete inventory, overcharged customers, unrecoverable lost accounts, and monthly cash burn.
- Exit
After an unsuccessful industry conference and continued losses, he sold the business assets/inventory to NEX ATM under Grant Victor and joined the acquirer to run a larger operation.
stage where a mistake was made
What went wrong 7 issues
Light diligence on turnaround
Dustin says he bought the turnaround after only light diligence because he had already spent time and money on a prior failed deal. That left major accounting, margin, inventory, and market problems undiscovered until after closing.
Mistake made at Due diligence → showed up at Operations
“I I did a light diligence because I had spent so much time and money in the previous deal”
Warning signs
- The buyer had just spent months and money on a prior failed deal and was under pressure to get a new deal done.
- The business was described as a turnaround, which should have raised the diligence bar rather than lowered it.
- There was no SBA lender or institutional party independently reviewing the business.
How to prevent it
- Before signing the purchase agreement, the buyer should have run a focused financial diligence workplan even without a full QoE: transaction testing, margin rebuilds, inventory sampling, and customer checks.
- The buyer’s accountant should have tested revenue and COGS classification on a sample of high-volume services before closing.
- The buyer should have kept a written diligence checklist and refused to close until every high-risk item had a documented answer.
Books hid true margins
The P&L did not reliably show the economics of the business. Dustin later found revenue and costs were misclassified, and costs for certain repair workflows were not tied back to the transactions that generated the revenue.
Mistake made at Due diligence → showed up at Operations
“we had income getting booked into cogs cogs and income”
Warning signs
- The company had many bookkeepers and general managers come and go.
- The seller had been absentee for years, increasing the risk that no one controlled the books.
- Some transaction margins looked unusually high compared with the buyer’s HVAC experience.
How to prevent it
- During diligence, the buyer’s accountant should have reconciled the P&L to invoices, purchase orders, shipping bills, payroll, and inventory movements for the top revenue categories.
- The buyer should have required the seller to demonstrate how each major gross margin line was calculated using actual transactions, not summary reports.
- Before closing, the buyer should have adjusted valuation or walked away if the seller could not produce reliable cost accounting.
Industry was shrinking
Dustin says he did not understand that the ATM cash dispenser repair market had matured, commoditized, and consolidated. The company’s old performance reflected a better market period, not necessarily a recoverable baseline.
Mistake made at Sourcing → showed up at Operations
“the business and the industry had peaked during this period of prosperity”
Warning signs
- Dustin says competitors had already passed on buying the company.
- Cash usage and ATM growth were no longer the same tailwinds they had been historically.
- The industry was consolidating toward larger players with scale.
How to prevent it
- Before LOI, the buyer should have mapped the industry trend: ATM usage, cash usage, dispensary demand, consolidation, and repair outsourcing versus in-house repair.
- The buyer should have asked competitors and suppliers whether small independent ATM repair shops were growing, shrinking, or being consolidated.
- The buyer should have built a base case using flat or declining volume rather than assuming old revenue levels would return.
Inventory was obsolete
Dustin thought he was buying valuable inventory that could be liquidated in a downside case. After closing, he found much of it was legacy inventory that customers no longer used.
Mistake made at Due diligence → showed up at Operations
“in my case it was not it was Legacy inventory”
Warning signs
- The business repaired legacy ATM components, where technology can become worthless rather than merely discounted.
- The buyer assumed inventory could be sold in a fire sale without verifying market demand.
- Later, even the acquirer had difficulty justifying the value of the purchased inventory.
How to prevent it
- Before closing, the buyer should have physically inspected inventory by SKU, age, last sale date, and current compatibility with active machines.
- The buyer should have tested liquidation value by asking real buyers for bids on a representative inventory sample.
- The purchase agreement should have excluded obsolete inventory or priced it at verified liquidation value, not book value.
Lost customers were not recoverable
Dustin expected that sales effort could win back former large customers. He later learned some customers had moved repair work in-house, so the old revenue was not realistically available.
Mistake made at Due diligence → showed up at Operations
“zero opportunity to get that business back”
Warning signs
- Historical customers that once spent $200K-$300K per year were no longer buying at that level.
- The seller attributed losses to relationship neglect, but the buyer had not independently verified that explanation.
- Large customers had grown enough to justify internal repair teams.
How to prevent it
- During diligence, the buyer should have listed all lost or declining top customers and verified the reason for decline directly or through industry references.
- The buyer should have separated active recurring revenue from hoped-for win-back revenue in the valuation model.
- The buyer should have treated seller claims like “just take them to dinner” as unproven until confirmed by customers.
Customer pricing was unsafe
Some revenue came from customers paying above-market prices. Dustin reduced pricing and refunded an overcharged customer, which he says was the right thing to do but also reduced cash flow in an already distressed business.
Mistake made at Due diligence → showed up at Operations
“they were way overcharging these these these corporations”
Warning signs
- Recurring revenue looked attractive, but it depended partly on above-market pricing.
- Dustin says one prior seller comment about overcharging should have been treated as a red flag.
- Reducing prices to market levels materially hurt revenue after closing.
How to prevent it
- Before closing, the buyer should have benchmarked pricing for every major customer contract against market rates and replacement vendors.
- The buyer’s attorney and accountant should have reviewed whether historical overcharges created refund, audit, or lawsuit exposure.
- The buyer should have negotiated an indemnity, escrow, or purchase price reduction for any pre-closing overbilling risk.
Cash burn forced exit
Once the business failed to regain customers and margins proved worse than expected, it burned about $10,000 per month. Dustin chose an exit rather than signing a costly lease or risking bankruptcy.
Mistake made at Financing → showed up at Operations
“I'm just bleeding money it was like $10,000 a month”
Warning signs
- The business was a turnaround and therefore likely to consume cash before improving.
- The lease renewal or replacement decision created a major fixed-cost cliff.
- Dustin was close enough to the edge that a customer’s early payment helped him make payroll.
How to prevent it
- Before closing, the buyer should have built a downside cash plan showing monthly burn, payroll, refunds, vendor liabilities, and how long reserves would last.
- The buyer should have set a maximum loss limit and a pre-planned exit trigger before putting more personal cash into the company.
- The buyer should have avoided new fixed obligations, especially leases and personal guarantees, until actual post-close margins were proven.
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Transcript 1782 lines · 13404 words · auto-generated captions
hey everyone it's Helen from SB deal
hunter today we have Dustin pillo with
us an entrepreneur who acquired a
mechanical company about 15 months ago
um Dustin had to sell the company which
we'll talk about uh in this interview
but he's now running a larger operation
uh under Grant Victor which is an ATM
machine service and solutions provider
um looking forward to hearing Dustin
story uh Dustin it's great to have you
on
today thanks so much alen excited to be
here excited to share my story I I
really just hope that your audience can
learn from some of my mistakes and and
be able to to share in the excitement as
my career has progressed but with the
idea of looking through every adversity
as an opportunity to learn and grow
absolutely um well Dustin I guess to
start what's your background you know
what kind of LED you down this uh
acquisition entrepreneurship sort of
space sure well let's start with kind of
my professional early career and
education I I started as a salesperson
and had a lot of success I I learned a
lot about people and how to communicate
read body language and and that was
really helpful in a lot of different
areas of life but looking around of my
colleagues even as a young person I
realized that it really wasn't a career
that I wanted to pursue long term so I
kind of started to focus more on the
business side and and understanding that
but I was drawn to politics early on I
volunteered in many Camp campaigns many
of the officials are still in office 15
20 years later uh so I kind of learned a
Grassroots campaign effort and
fundraising and and all that and it was
it was really exciting so I decided I
wanted to pursue political science in
undergrad really enjoyed that I the
debates and class and and the professors
and all the ideas it was a really
exciting time I decided to go to grad
school at Florida State University
because it was in the capital and I got
a job at the governor's office in the
Capitol which paid for school so I'm
like hey this is a win I'm working for
the governor of Florida I want to be in
politics and I get to free school this
is it and within probably a month of
being there I was like wow this is not
where I want to be and I really tried to
make it work and and obviously we just
had the election recently and I think
politics have gotten even more divisive
than they have back when I started in
2008 at the governor's office and I just
I Tred to make it work I went from
working in the governor's office to a a
policy Think Tank which was a fancy word
for a lobbying organization and learned
a lot about policy and became kind of a
nerd and we did a lot of lobbying on the
hill and and really what I learned about
that was a lot of lobbying is really
just informing the elected officials of
the issues because they can't be an
expert in every industry and every issue
so you're there to kind of educate them
in a way that makes sense so they can
make a decision I enjoyed that but there
was just so much money influencing that
that it really was not the environment I
wanted to be in to to to give it the PC
answer U right around that time is where
U my dad was an interior designer and he
had this very high net worth client
who's redoing this huge house and I
expressed interest in changing careers
and he said you got to meet this guy
he's he's super wealthy he just exited a
software company and you should just
talk to him so I was down for I think
Thanksgiving one of the holidays and I
meet this guy and like most Entre
software entrepreneurs he's a little
he's a little strange to be honest you
know he's kind of one of those guys who
are super super smart and just is kind
of awkward to communicate with and
within like a half an hour he it kind of
felt like a job interview and it was it
was really one of those things where I
was like okay I need to shift gears a
little bit and start talking about where
I can provide value instead of kind of
just seeking advice and he he expressed
the interest in starting a private
school he wanted to start a private
Christian School in Braden Florida where
I grew up because he was unhappy with
the education that he was getting from
IMG Academy which is a very very Elite
Sports Academy in Bradon and he said
look we're we're just beginning this
thing you'd be my third hire do you want
to join the team and I was like okay uh
I guess I can move back to my hometown
and and I threw out a number that to me
at the time was a big number and he's
like done so love it it went from me
kind of just getting advice from this
guy to him offer me a job and then this
is kind of where the story gets really
weird he hires two more people he we
didn't buy the building I think we
leased the building leased to own the
building and then he goes okay guys
start a school and left and went back to
Colorado so we had never met each other
the backgrounds were very divers only
one two of the five of us had had
educational backgrounds and we really
had am ambiguous titles and he's like
okay guys just start the school so I
love that I organizing chaos kind of
starting things from zero I just thrived
in that environment but what it taught
me was the importance of a team and I I
know that everybody in business is like
it's the team it's the employees y y but
that really really solidified the idea
especially in a startup or early on
company how important it is to have the
right team from a cohesive perspective
but more importantly from different
skill sets if a lot of us are thinking
the same you don't have that healthy
debate you don't have the different
perspectives that was one thing and then
the other thing was just the the type of
people that want to either give or they
want to get and we had some folks on the
team that were all about their title and
how much money they made and and how
important they felt and it was like look
we we all have to do what we have to do
to get this thing going and it doesn't
matter that you have a VP title and you
don't want to help work on the bathrooms
it's like that's just gonna be required
uh I I know that you think you're
important but you're not that important
and and we all have to have have that
attitude and that really helped me
understand the importance of hiring so
that that's kind of the the beginning of
the career and the beginning of business
you want to take a break there ask any
questions or you me to keep rolling yeah
yeah no let's let's keep rolling what
happened next um like how long were you
you know working or I guess building the
school up um you know what kind of cause
you to leave and ultimately you know
what happened next sure well I had every
job at the school because I'm kind of a
jack of all trades master of done kind
of guy I I like knowing a little bit
about a lot of things that's really
helped me in my life so I was able to
work in a ton of different roles I
helped build the the boarding program so
we rented an entire uh apartment
building and I furnished that and uh we
started a transportation program between
that building and the school I started
the the cafeteria and the food service
program I mean it I I did all these
things and I just loved it it was like
okay project get the transportation
going and then the next project was get
the locker room designed and and
finished and managing that team and I
just I loved every part of that
Journey what kind of happened was is as
the school grew we ended up having a
staff of about 35 people the scw school
grew to a student body population of
about
120 we started to kind of make money it
was difficult at first the complexity of
getting accredited in a school is
extremely difficult and one of my
colleagues that was ear an early hire
she managed a big part of that process
and I supported her and it was
incredibly challenging we got it done
but what ended up happening is I worked
myself out of a job
I was the project manager Business
Development guy at the end and we ended
up having an admissions Department that
was was pretty pretty strong team and
the they were doing a lot of p&l
analysis and they were like okay well
who's on here and who's contributing and
in the past a lot of I was contributing
was not really going to the bottom line
and it made sense because we were in
build mode but once you have an
established organization I just kind of
became an anchor on the p&l and they
were like hey you're you're one of the
highest paid people here and you're not
really providing value to the bottom
line so they bounced me around a little
bit and ultimately the last job I had
was a personal assistant to the founders
so as I said High net worth people
always traveling multiple homes multiple
assets and got exposed to that level you
know growing up very humbly in a
two-bedroom one bath house with you know
workingclass parents being exposed to
that world was really interesting
but it also taught me a lot about money
and more importantly about people and I
remember one time we were in the car and
he got a call on his phone and it was a
friend of his son's mother and she said
hey hey hey uh just wanted to give you a
quick call um we're trying to clothes on
our house and the old house hasn't sold
and we have to put down a deposit so can
I borrow $70,000 from you for a few
months
and he's
like what what do you mean and she's
likew I just needed to borrow the money
you know it's not a big deal and he's
like well I don't really have that kind
of cash laying around and like I need to
look into it and it was just it was
baffling to me that people would call
him and just ask to borrow
$70,000 they're not even tight like this
is just like a buddy of one of his kids
and it but I was like does that happen a
lot he goes all the time and he said my
ire
relationship with people is built around
money and he said it's really
unfortunate I I never know if somebody's
there because they want a business
investment or they want to borrow money
or they want to extract something from
me or if they want to just truly be my
friend and I obviously became very close
as a personal assistant you are like in
these people's lives I mean I became
very close with their kids and and
obviously his his spouse and I are are
even closer because she's more of like
the ground level person and he's the
30,000 foot guy and it taught me the
obviously money is fun it's a great tool
to grow businesses and buy businesses
and and generate more wealth but I saw
the pitfalls too I I I saw how it
impacted his children how how they grew
up with very little adversity and how
they had to kind of find their way and
they have since which has been great so
it initially I was like man this is a
great life and then I realized how much
much responsibility comes with having
wealth and that really kind of shaped
what I wanted in my life which shifts
kind of It kind of ties into your
background about Financial Freedom it
became less about having a ton of zeros
behind my my number in the bank account
and more about well what's the best
thing that I could buy with the money
and that's where I shifted to kind of
more of a an understanding of what I
needed to to deploy money in a way that
added value to my life and not created
this this kind of wall between me and
the people around me like it did for my
former employer so I didn't want to lose
friendships because they asked to borrow
money and I said no or I borrowed money
to them they never pay me back that's
what happened all the time he he would
he would just give money and say well I
won get that back but I don't want to
lose the relationship over it so wow
what I what I learn and and you you've
done this in your life is the the best
thing that you can do with money is buy
back your time and then spend that time
giving to others and whe whether it's
your family or your friends or your
community I I feel like the best use of
of money is to just buy your time and I
I had one guy who very very successful
exit um $750 million
exit and I asked this guy I was like you
know what did you learn from your
journey and he said well I've gone
through three marriages my kids don't
talk to me
um my health is terrible the doctor said
that I will die in five years if I don't
change my entire lifestyle and I have a
ton of money in the bank he's like so
what was the point he I just became
obsessed with work he goes I could have
retired 25 years ago but I became
obsessed with work and now I have to try
and rebuild a life with people that
matter in an environment that I've
created it was really informative to to
my understanding of business so let's
kind of fast forward a little bit to
well go ahead ask a question if you have
one please no no that's super
interesting and I totally you know I
think I always optimize for time
leverage and I think that's it's it's
underated you know too many people sort
of Chase the dollars and ultimately you
definitely hear these stories a lot um
by the way excuse me I'm uh moving but
um a lot of people definitely I guess
I've I've heard these stories of people
you know who made a lot of money but you
know sacrifice their health their family
and all these things and ultimately I
think I don't know to me it's probably
just not worth it um to each their own
of course but I think that probably is
the general consensus uh but I'm curious
for you you know being around all these
folks how did that inform kind of what
was next you know were you then sort of
exploring options um in terms of like
did you know you wanted to be an
entrepreneur even what kind of happened
next well I I did and and what's funny
is my mom found
this picture of me when I was a kid uh
and it was kind of like one of those
dress up things where you you dress up
is what you want to be when you grow up
and mine was a business guy so I've
always wanted to be a businessman but
it's just one of those things where you
you can't really build the skills and
get the street credit unless you get out
there and do it because you can't just
apply for a CEO job if you don't have a
CEO experience but it's like well how do
you get CEO experience so I had to kind
of learn that journey of working my way
up in a way that made sense and the
startup was was the beginning but ju
just before we move on I did want to
have an anecdote about about money and
time one of my previous roles was an
account manager at at a large a hbac
manufacturer and I had 40 accounts and I
became very involved in a lot of these
business owners uh you know businesses
and training and Etc and I had one guy
that that was very successful and he was
complaining that he had taken his boat
out of storage had it detailed and
didn't take it out the entire season and
with putting it back in
storage and I said okay you made a
million dollars last year you could have
hired a GM at 200 or 250 still made 750
which is plenty of money for most people
and had to work maybe an hour a week I
said so help me understand well no one
can do it as good as me
I said okay let's say that's true might
be what if he did it 90% as good as you
you just bought a 100% of your time back
for 90% as good of a job you can be here
to make sure that he you're filling in
the gap of a 10 and you can take your
boat out every day and you can spend
time with your kids and your mom who's
who's sick and it it just became like a
control thing and an ego thing and that
was really inform to me I'm I I I do not
want to ever be that guy who's like no
one can do it as good as me or or I have
to control every aspect of the business
to the point where I make myself crazy
and I have no time so I just wanted to
add that little anecdote in there
because really really interesting it's
it's very relatable I think I I told you
in the preall you know I think that was
the biggest unlock for me too in my
businesses and you know knowing that I
wasn't sort of the go-to person or the
one in charge of everything and sort of
like the Jack of all trades everywhere
um really not only allowed me to have
more time to myself but also allowed us
to grow our business a lot bigger right
you're only one person there only so
many hours in your day and that's
ultimately you know truly I think it's
it's one of the biggest mistakes folks
make with thinking about you know
running a business and starting a
business or buying a business um but no
totally totally agreed
there 100% right I mean it's key person
risk that a lot companies are
unsellable because the owner or the
founder has built the business around
them they hold all the relationships
with all the customers with all the
vendors you know they they have all of
the details around why it functions and
and what works that's not what you want
if you ever want to exit the company I
mean you you just own a job at that
point and I think you you did a great
job in your businesses of doing that
because if you have an absentee business
everybody wants that especially
investors they don't want to have to get
out there and hire an entire management
team because they have to replace the
founder with four people that kills the
p&l it kills the profit and that that
knowledge transfer is difficult so it it
is just so important
to you know I in my business now I mean
it's a much larger organization so I
have four managers that are professional
they been here for 10 years they're
really good at their job and I just
empowered them to do their job and run
their Department Ms which has freed me
up to do more of the thing that I'm good
at which is strategy and growth and my
predecessor amazing guy he was more
wired for the operations so he liked
being in the nitty-gritty getting his
hands dirty every day problem solving
but unfortunately that doesn't allow the
business to grow because it can only get
so efficient you know if you want to try
and increase Sops and and squeak out
margins here and there that works for a
while but ultimately growth is the key
uh be Beyond just
efficiencies no Tot so I know jumping
around a little bit but no no but let's
let's fast forward to I guess maybe two
years ago or I know you know you made an
acquisition 15 months ago um what kind
of led up to that uh were you is it
something that was kind of top of mind
for you how did you sort of even learn
about this as an
option well the the startup helped so
that gave me an understanding of of you
know you can use money to build
something or buy something and and part
of that the the founder would invest in
other companies so I was exposed to some
some small business Investments and some
private Equity Investments so that was
really I kind of planted the seed but in
my mind I'm like I'm not a 100
millionaire I can't do this I didn't
realize that there was a niche for
people who have small amounts of money
and the opportunity the ROI if you have
the skill and the desire and the risk
tolerance you can build wealth and you
can build a meaningful amount of it with
a very small initial investment so that
was kind of where I entered into a
research mode I started reading the
books the hbr book how to buy business
Walker D's book and then I just I became
a business nerd and and I went from the
political nerd and constantly following
all the political crap making myself
crazy to I literally just turned off
everything when I left the governor's
office I was like I'm I'm done with this
life and I just turned it all off and my
and I tell you my stress L went down
considerably unfortunately my brother he
works in the Executive Office of the
President and he's gone through four
administrations so he has to be part of
it but he's he's trying to just maintain
his sanity while he while he serves you
know our our people our citizens but I I
began to to just really study it and
then Network within this this community
I I became friends as I said before with
you know former entrepreneurs that had
exited current CEOs current business
owners and just try to learn from them
and understand what it took and I I
eventually realized that I needed to
save a little bit of money so I began to
flip houses that was kind of something
that I had done in the past that allowed
me to generate some wealth and I got my
real estate license and started to buy
very small condos that were you know
really dilapidated they had hoarders in
them and I would fix them up and flip
them and I'd make 25 or 30 grand on that
and that was to save 30 Grand in a year
in a normal W2 is really challenging you
got to cut like everything out of your
life that's fun or I could make that in
three or four months flipping houses so
I was able to build enough cash to start
looking for a business and I I learned
that you know based on 100,000 or
200,000 whatever you had in cash you
could buy x amount of business started
to do the bis by cell searching you know
it's kind of like a complete vacuum of
time you just go on there and it's it's
like kind of like social media for
business nerd you get on there and
you're like that's interesting this is a
you know they produce paper clips and
this person produced and you just find
all these weird businesses and it's
funny I'll talk to my my friends that
are not in business and I'll be like can
you believe this guy has a uh I found a
um a septic cleaning and repair business
guy was making 700 Grand a year in iida
he had three employees and it's just
it's one of those nasty job that no one
wants to do but if your septic goes down
you're not going to be like oh yeah
we'll fix it next year like you are
fixing it right then so it's kind of
like HVAC that I was in people are not
gonna not have air heat they have to do
it and he was making crazy money um with
this small team and I would send these
deals to my friends and share them I'm
like wow this so fascinating so I I knew
I wanted to do it and uh ultimately I
had a great W2 job so let's fast forward
I'm I'm in a corporate role I had gone
from outside sales and HVAC and plumbing
electrical to a corporate role I was AED
really enjoyed that that's where I had
the business development opportunities
with these 40 clients and um just had a
real hard time scaling within a
corporation I I was one of 800 people
and while I had exposure to the
leadership it's just it's hard to get
promoted it's hard to to grow and I'm a
guy who's like I'm gonna work twice as
hard as everybody else but if I do that
I want to make it twice as much as
everybody else and it it wasn't really
wired that way and unfortunately in the
organization so I realized pretty
quickly I I just had to to get out and
ultimately I made the decision to just
go all in uh at the end of
2022 see I'm getting my dates mixed up
now let's see when all in as you quit
your job and you're like I'm a full-time
search or did you already
find not quite there because I wanted
every I mean every dollar I had I knew I
could leverage up with an SBA so I
didn't want to quite live off of savings
yet but I worked remote in this role and
my boss is really cool he's like look
just if you do your job I don't care
which I think it that's how it should be
and I did a really good job and I was
hitting my goals but I would spend 30
hours a week searching and that was what
led me to my my first deal which
ultimately did not work out I I invested
many months of diligence went flew from
Florida to Colorado to visit this the
the owner uh toward the facility meet
the staff and a lot of that went well
until it didn't what really happened was
I feel like because I had told the
seller that I was moving to Colorado was
quitting my job he thought this guy's
all in and he just started to kind of
turn the knobs and the levers of the
deal in his favor in the very last few
weeks before closing and the the last
part of the deal breaker for me
ultimately was the triple net lease but
there was a lot of things like work in
progress and inventory that oh we'll
work it out we'll make it fair that just
wasn't fair in the end and then the
triple net lease on this building that
he had owned for 50 years his dad owned
it and then he owned it but no money
into uh that's what killed the deal
because I'm like what what kind of guy
wants me to take over a triple net lease
with terms that I mean I got to replace
everything in this building and then we
had a lease to own Clause so it's like I
spent all this money and and TI and then
I go to pay you a premium for the
business or for the building later it's
it was just really a bad way of doing
business and you know I'm not going to
say this guy's a bad guy but it it was
not a way
in my mind of showing his
Integrity so I talked to my attorney
about it and she said you need to walk
so I learned a lot about having tough
conversations in person that's huge
because you can be email Warrior all day
long there's a lot of nuance to emails
you know you you'll read an email based
on your mood if you're in a good mood
you read emails oh okay I get it you're
in a bad you're like how dare they say
that and it's so important to have these
tough conversations around work in
progress inventory AR all that stuff in
person eye to eye and you can read that
body language and you can really see if
they're doing what's best for themselves
or for you or or for the business that's
how it really should be it really should
buil down to what's best for the
employees what's best for the customers
not about us because if we serve our
employees and our customers we we'll be
taken care
of so that that's kind of where this got
really squirrely because
I had moved to Denver from Florida so
this is the all-in moment in my life so
I I spent a year about 10 months
searching and then found this deal we
had a closing set for the end of
December I moved out there December
one really excited didn't have a car
because I had a corporate vehicle so
walked away from a corporate vehicle
corporate job moved out there and had to
walk from the deal so now I'm in like
absolute panic mode and this is where
where this emotional resilience piece
that I've talked about you know with
other podcasts comes in because it's
really really important to have the
ability to endure large amounts of
stress and uncertainty and do so with
Grace because you can panic and you can
make dumb decisions and that's where you
want to try and reel back the emotion
and default on logic and it just becomes
a habit and just letting go of all the
negative thought thoughts because being
in panic mode is not going to solve the
problem and that was what I went into so
that that was where I started to focus
on networking and refining the the
search to just Denver and really a very
tight geographic area thankfully it had
a lot of density so it was a lot of
options and and that's where it kind of
leads into the the last deal that I
bought so I guess question on the first
one you spent months on on this deal
were you looking at other deals you know
simultaneously where you like I'm all in
on this because I think a lot of people
don't realize that like often times more
often than not the first deal you pursue
is not going to work now I think a lot
of people end up wasting a ton of time
being just so not just financially
invested but emotionally invested in
this one deal and then there's this huge
sunk cost which you know when you find
something that's wrong you want to be
like oh but I can fix it oh but I can
you know deal with it um because I've
spent five months on this on my life on
this deal right and it's like we've had
to pass on deals like very I guess last
minute in the scheme of things and it's
tough it doesn't get easier and it's
like I I always tell people like you
can't be emotionally attached but I
don't say it like it's an easy thing um
but no completely completely agreed
there yeah curious I guess you know how
did you kind of navigate this did you
have a strong pipeline the whole time
where you just kind of like I'm all in
I've already you know obviously towards
the end you mov so you were actually all
in all in but during couple
months well we I mean objectivity is the
key here you you cannot get emotionally
invested because the Stellar is
emotionally invested for sure so we
can't have two emotional people
negotiating on a deal the seller is like
this is my baby this is the most
beautiful baby in the whole wide world
and I'm giving it to
you that's that's already difficult to
overcome so you can't be emotional as
well but as far as deal flow yeah I I
kept exploring deals up until we had you
know a contract pretty much ready to go
I mean we we had gone through multiple
drafts of contracts this is way past the
LOI phase I mean we are we are in Deal
making phase and in my head I'm already
spending the money I'm going all right
well I'm gonna buy this this piece of
machinery and I'm gonna invest this in
marketing so like I'm I'm going and you
know but but to be honest it was
exciting because I'm going from a low
six figure salary to to a seven figure
you know Eva in a business and even
after Debt Service this is quadruple my
income so I'm like this is exciting and
it gives me a lot of opportunities to to
be diverse in how we grow this thing and
taking care of the employees Etc so yes
there was definitely an emotional
component and excitement there um I I
tried to stay objective until the very
end but once it became real with with a
contract that was kind of where I just
stopped the pipeline
but yeah that makes sense it the
previous deals I was looking in kind of
the three to 400 e range and this was
the it was a 1.2 which ended up being a
one after you you added back a lot of
the the the uh well you you remove the
ADB backs I guess you could say from the
seller because it was all these just
random stuff in there that he had used
for for many years um but it this was
top end of my my buy box I mean I was
really leveraging every bit of SBA for
the deal as well as you know my my down
payment but I what I did learn in the
process and I think a lot of people in
this space understand
is when you go small there's certainly
upside the problem is you don't you lack
a lot of the Personnel we talked about
in the past a lot of the processes and
procedures a lot of the historical
financials and crms and and things you
need to mine data and understand Trends
those AR really exist in these small
companies so while a small business
looks like a better deal that's why I
ended up buying was a much smaller
business it it's typically much higher
risk so when I walked from this deal a
broker called me had been I have been
dealing with locally and he said hey I
got a turnaround for you you know you've
done startups in the past you've done
fix and flips and houses this is a Fix
and Flip let's let's you know get you in
there uh you know the industry is very
mature but you can buy low turn it
around flip it in a couple years and you
know in my head I'm thinking well man if
I could buy this thing and flip it in
two or three years I don't need to make
10x if I can make two or three x that's
great return I've learned a lot I've run
a business and now I have the street
cred to get out there and do a bigger
one the idea was I wanted to run a much
larger company but getting somebody to
write you a check without having
experience running a company is
difficult I don't know how these 20-some
PR a college get these huge checks
because you know the guys that I know
that are that have that kind of money
they're like you know I I want to know
that you can do this and I'm not taking
that that kind of risk unless I know you
have the experience to to perform so I
ended up buying this business and and
that's kind of where things went South I
I I did a light diligence because I had
spent so much time and money in the
previous deal and it didn't in my mind
necessitate a true quality of earnings
because it's a small deal obviously I
didn't have the SBA peeking in and
looking under the hood which would have
probably found some of these things that
I missed and but the biggest thing was
not understanding the industry looking
at a p&l is a
skill reading between the lines of a p&l
is an art and that is something that
I've learned over the past year
is understanding financials is a skill
that you can be taught but the art of
going okay well why did payroll go up
and then down and why did did um you
know this cap backs go up and down and
and you know the trends and
understanding not just historicals but
what be is behind the numbers what
people are behind the numbers from a
customer standpoint from a vendor
standpoint from an employee standpoint
so all these numbers tell a story and if
you don't have the skills to be able to
ask the right
questions it really can be to your
detriment and that unfortunately is what
happened to me so I I get in I'm I'm uh
I guess before before you even continue
when you you know you decided to pursue
this turnaround um how did you finance
it or I'm guessing you did not go SBA
since it was a turnaround um so there
was no like personal guarantee on this
sort of on this opportunity if it went I
guess further south that's the right
word um but yeah what did that look like
how did you structure the deal you know
given it was a turnaround which is I
think more unusual compared to you know
a lot of the folks thatw you who are
buying more so that like established
cash flowing business right and and it
had historical financials that show that
it it could again outside looking in you
could see it had great financials in the
past but they had gone down I paid cash
for the deal and and to me again it was
less risk I'm I'm not leveraging $4
million from the SBA I'm not personally
guaranteeing this amount of cash I'm not
paying 8 n 10% interest on this cash so
in my mind I'm like it's a it's a a
safer bet but what I didn't understand
was the industry dynamics that the
business and the industry had peaked
during this period of prosperity and
then it just began to really really
mature commoditize and consolidate and
there was a reason why this company
hadn't been acquired in the past and
that that's where you got to ask
yourself especially in a turnaround am I
the luckiest person on the planet or am
I the dumbest because why have so many
other people passed on this business
because you know he went to his
competitors and were like hey you want
to buy me you want to buy me and they
all passed that should have been a huge
red flag for me so a little bit of NE
nav and and huous involved in in that
decision I don't regret it though I mean
I lost a lot of money I actually have
$88,000 left to pay off all my debt so
i' I've got about 6,000 left in the
checking account for this business and
hoping to pay it off by the end of the
year because we we do have one customer
that we retained after we were required
that was a carve out and I was able to
to generate some some Revenue uh since
the acquisition of the business in March
in the merger with my current employer
and that's helped pay off the majority
of the debt and then we got to go back
to adding to my my savings to try and do
this again in the next three four five
years
no that's uh we we'll dive into that
more but I guess you know paying cash
for the deal makes a lot of sense you
know I guess hindsight's always 2020
right but you know looking back what
could you have done I guess during
diligence is it you know actually you
know getting a proper Q done is it
speaking to other owners in the industry
like what what would you have done to
kind of uncover these things um that
that you
missed excellent question I'm going to
pull up some notes Here I can give you
high level on it for sure but what I
tell other entrepreneurs now because I
I've had people reach out and Linkedin
and have asked me you know I'm looking
at a deal we're really close what do you
think the the number one thing is the
Integrity of the seller is this somebody
that you believe in that believes in you
that the customers believe in that you
can trust because if you feel like in
this in the previous seller there's a
lot of things where he's like oh yeah
that you know we might be over charging
that customer but don't say anything and
you know that should have been red flags
for me but on top of the seller's
Integrity which is the number one thing
the second thing is going to be go down
into the minutia of each transaction so
I had a person call me and she had a
dumpster business and she or looking to
buy dumpster business and she goes you
know it's it's profitable and and
there's high margin and y y and what do
you think and I'm like you need to
understand every aspect of that dumpster
service from how often they're going out
there who's going out there the travel
time the gas what's in the dumpster is
it hazardous waste is it Furniture is it
food um what the trucks how old they are
how often they're serviced so you need
to be able to understand if you're
bringing in $500 for a dumpster pickup
and the p&l is saying it's costing you
300 in cogs you know your GM's 200
obviously you can do the math down from
all of your expenses but you need to
understand what is impacting the cogs
and the expenses expenses are typically
fixed to not fluctuate too much but the
costs in that kind of industry and in
many can fluctuate and I told her I said
you need to look at several deals not
deals several transactions from a
workflow perspective from start to
finish how are you going from 500 to
whatever your net is and what's
happening in between and more
importantly ly what could change if you
had to replace the hydraulic system for
the truck what did that cost if you had
somebody get hurt what does that cost if
you had to replace the entire truck if
you know all these different variables
like you need to think about in a worst
case scenario what could go wrong that's
going to impact that that gross margin
that net and and so I kind of walk
through it with her and she's like oh my
God that's that's so helpful and that's
what I didn't do I I looked at the these
transactions and some of them showed a
60 plus percent margin and I'm like oh
my gosh that's crazy I mean coming from
agac where 40 45 was phenomenal I'm like
this is a dream so I'm trying
to understand how I can grow those High
marging categories we'll get rid of
anything that's under 15% FOC hyper
focus on that turn this thing around
well that is not what happened because
the the business was so messy they had
so many bookkeepers comeing go so many
GMS come and go because the owner was
totally absentee for the last 5 years
that we had income getting booked into
cogs cogs and income we had um like
these transactions were showing a
fraction of the true cogs because of the
way that he was categorizing it so it
didn't get caught by my accountant but a
quality of earnings I mean that can be3
or $50,000 you're not going to spend
that for a deal that's under a half a
million dollars I mean it's crazy to
spend that kind of money so if you're
going to cut Corners you need to go into
the minutia I also should have taken so
we talked about going into the
transactions and understanding every
aspect of it but then you need to go
into the inventory and take 10% of that
and go open market and be like first of
all is this inventory even valuable
which in my case it was not it was
Legacy inventory and unfortunately like
Technologies it's becomes totally
worthless it's not like well you could
sell it for less money it's like no no
we don't even use that anymore it's junk
and that that hurt because I'm thinking
I'm buying a half a million dollar worth
inventory and I'm like well in a worst
case scenario gosh I can sell it for 75%
off in a fire sale and make back some
money not the case unfortunately so
understand your inventory and the last
thing is your pricing is is the industry
pricing comparable to your competitors
are you up or you down and
unfortunately we had some large
corporate customers that had been locked
into a contract so we had recurring
Revenue which is great everybody wants
to see that but they were way
overcharging these these these
corporations and I and I went in and I'm
like I someone is gonna figure this out
eventually I know you've been doing this
for 10 years but I don't feel good about
overcharging them knowing that this is
double what the industry is paying for
this type of repair this type of part so
I went in and changed their pricing up
and that killed my my Revenue but it was
the right thing to do because I I I
didn't want to get sued either I mean
these corporations somebody goes in does
an audit and they go well we've been
over paying for this for five years now
you know you owe us four million dollars
you know five years of of of
overpayment I didn't want to risk that
and I wanted to do the right thing in
business I I've always been taught and
I've always had this experience that
doing the right thing
it matters more than anything um and I
can give you an example so when when we
were really in the darkest days I mean
we were the end of
October I had own it since March of that
year and the whole time we're trying to
fix the books we're trying to figure out
how to make money we're we're cutting
staff because we had staff that was not
doing the work and we're just we're just
trying to keep this thing
afloat we find out again we're charging
another overcharging another key
customer and
I it was like about $110,000 that he had
already paid us and this guy owns like
40 companies I mean I know him
personally he's super successful guy
$110,000 is nothing to this guy and and
my accountant comes to me and she's like
what do you want to do and I was like
the right thing so I I emailed him and I
said look you've overpaid me for this
the $210,000 I don't have the $110,000
to give to you can I pay you back a few
thousand a month over the next couple
thousand via credit we had we had
recurring business with him but I still
needed the money you know coming in I
can't just you know give him a whole
credit for the next month's work so we
agreed to a couple thousand dollars off
each month of his bill as a credit and
eventually paid him off right before we
we sold in March of of 24 uh of this
year and
that I think that act of
honesty I think it really helped me
sleep at night but more importantly it
buil it built trust with a Serial
entrepreneur who I have now become very
close with and in the very end in
February I I had uh I had him on a
60-day term I called him up and I said
hey man I can't make payroll I was like
you owe me
$26,000 is there anything you can do and
he's like I'll pay you today there's no
problem so you know totally forfeited
the terms on the deal because he knew I
was struggling and he knew what it was
like not make payroll wasn't paying
myself wasn't paying my bookkeeper but I
had to pay my people he just paid the
bill right then so again doing the right
doing the right thing in business is
good
business 100% I mean that's not easy
what you did I mean I don't know how
many people in your position would been
like I'm just going to return you money
right well they would have said like hey
I'm going out of business I'm losing
hundreds of thousands of dollars this is
your problem yeah no and look you
already went into this knowing it was a
turnaround situation what did first 30
60 90 days look like and you know was it
even like what was what was sort of more
I guess unexpected um given I'm sure you
had a degree of like I know there's
going to be things that I
need well it it it just goes against all
the conventional wisdom when you buy a
business they say don't change anything
for six months and just listen and learn
and that's not the case in a turnaround
I mean you are just bleeding money every
everywhere so you have to make decisions
on the Fly and you have to be able to
trust your books and so I'm making
decisions based on financials that are
coming in each month that are totally
wrong and it took me about a month to
realize this so I I the first month I
didn't really do a whole lot of changing
but I just plug some gaps here and let
go of some guys that were just not good
employees and I called the the seller
and I was in a room I had my inter in
there I had my bookkeeper there I had my
sales manager there and I called him and
I said hey I'm trying to get to the 60%
margin on this transaction this is a was
probably the third highest volume on the
p&l help me understand when when we get
this thing in we fix it um so it was
called an advanced exchange and if you
had a broken part instead of you sending
me the part me fixing it and sending it
back to you which takes a week or two
you would call me and say say hey I have
a broken part I send you a a refurbished
part right away and then you send me the
broken part back I then refurbish that
and put it back in stock the problem
with that is is you have to pay for the
return shipping you have to pay for the
repair of the part and then put it back
in inventory and all he was doing was
the
first the beginning of that transaction
so he was taking the money for the
transaction
setting the part out and then when the
part came in he wasn't adding cogs to
bring the part back and repair the part
to the first transaction the cogs were
just kind of buried in the p&l somewhere
so it looks like wow you're making 60%
margin on this thing because the only
thing he was was adding to this was the
shipping cost so I I'm just like well
help me understand he's like well I I
tried really hard to to figure that out
and ultimately we couldn't we couldn't
find a cycle that worked because every
time you know one comes in we repair it
it just goes right back out so like the
transaction never really ends and I'm
like no no it it ends when it gets back
and we fix it that's when it ends and
you need to apply the cogs of get
getting it back and fixing it to that
transaction and he was like yeah well I
couldn't figure that out so I just did
it in my head and I'm looking around
this conference table and everyone's
like what in his head how do you how do
you do that he's like well it's just
real complicated so you know the way I
ran the business was if I had money uh
if I made if I made gross margin at the
end of the month in in the department it
was a win I didn't really dive too much
in the details and I'm like what are you
talking about so that was where I I
totally went Deep dive into the
department and looked at again what I
should have done from the beginning and
the advice I give looked at every
transaction how much are we actually
making how much time is excuse me is
going into to this repair and I found
out that we were losing 20 to 25% on
every repair we were doing on certain
repairs everyone because we were
undercharging and we had way too much
labor involved and I'm like this is all
this stuff I should have found in the
beginning and ask questions about does
this make sense do we increase price is
Will the Market bear that or do we stop
doing it and and this is where I think
if you're going to be buying a business
understanding how read a p&l is
important but reaching out to folks that
are in the
business or adjacent to the business and
asking the question how do you read this
does it make sense I mean I could have
made one phone call to my current
employer and they would have told me
freely hey do you make 70% or 60% margin
on a advanced exchange and they would
have laughed they' been like of course
not that's ridiculous we would never
make that and and and of course when I
got bought out I told this story story
to the to the board and they're laughing
and they're like man we could have told
you that I was like great well now I
know hindsight hindsight 2020 though um
I guess tell me more about the industry
you know you mentioned that it was peing
you just you have no ideas on the
decline um tell us yeah just more about
that and how you learned that and tell
us just more about the industry as a
whole the industry is unique uh it's the
cash industry so it's it's the ATM cash
dispens industry and it's really broken
up in two different divisions you have
the financial institution division so
very big expensive ATMs and then the
retail Division and that's what I was in
in the previous company that's that's
the company that I run now so retail
that you'd see in the convenience store
gas stations um Etc the industry
obviously grew as cash um usage grew and
then when credit cards came out it
started to decline and then you have
things like venmo and PayPal now
electronic exchange that further stress
the market when dispensaries came out
that was a huge Boom for the industry
because they were all cash based so
massive um deployment of ATMs and cash
and all of these dispensaries well
that's kind of on the decline now too so
what's happening is the industry is
still strong it's just consolidating
because you could be a small business
like the one that I bought 10 years ago
and make a ton of money because it was
constantly growing whereas now it's more
of a mature business and it's really
just maintaining with some very very
small growth projections which is just
causing that internal
consolidation but the company I work in
now is a huge player I mean that it's
the biggest player in both fi financial
institution and Retail and there's four
organizations Under the Umbrella so we
have two um one on the retail excuse me
one on the direct to Consumer customer
side and then um one that's a channel
partner business and the and the FI
Channel and the retail same thing we
have a directed consumer and then we
have a channel partnership so it it's a
really interesting portfolio of
companies that allows us to play on both
sides of the street leverage buying
power with the oems but the oems make
machines for both the the the banks and
and the retail so we can Leverage The
buying power to to give us economies a
scale interesting and with the business
you acquired what's you know did they
have routes like how did that
work uh well I'm not sure what you mean
there like were they were they servicing
like what what specific function oh okay
yeah the one that yeah sorry so the one
that I acquired that was eventually
acquired yeah was was just a repair
business so we we were not uh we were
selling machines but we didn't have the
scale to sell machines and make money u
w which is difficult to do unless you're
selling thousands of machines um so it
was really primarily a repair business
so we would sell parts small parts the
internal components of an ATM and then
repair those components so that that was
really the business so basically with
less us less usage less obviously ATMs
fewer ATMs breaking was that basically
what was happening exactly yeah and
there's just not people that are
entering in the market so you're you're
you're not getting new businesses
popping up all over the place that me to
buy ATMs it's just guys that have been
in it for 20 years who are expanding
their portfolios or consolidating
smaller portfolios so it's just you're
getting more and more bigger players and
the folks are expanding do they
generally have their own internal sort
of repair teams or is it just that it's
hard to kind of take their business
because they already have someone who
they're working with great question
that's a great that's a great
observation another thing that I didn't
read in the p&l so I'm looking at
customers on the business that I bought
that were spending $2 $300,000 a year
with us and he and he's going well I
lost them I wasn't really nurturing that
business and you know you just need to
call them or take them out to dinner and
and you know do your sales thing with
them and you can bring them back well
the truth was they had gotten so big
that it Justified an internal repair
division because they're going man we're
spending all this money and this time to
send Parts across the country let's hire
three or four guys and do it internally
that's what happened so a lot of these
customers that I'm looking at going man
if I can get back half that business
that'd be great zero opportunity to get
that business back so that that's
another kind of Pitfall of the industry
is as it consolidates there's going to
be situations where they go man it makes
sense to just do that inous not all want
that I have guys that are definitely at
scale that have five six 10, machines
that are like I don't want that headache
because it is a headache for sure I mean
it's very very detailed it's very Niche
a lot of historical information is
needed to be able to fix these things
because they're Legacy some mean some of
them are still running for 20 years so
you can't find repair guides on a 20-y
old ATM you need to have a guide that
just knows how to fix them those are
hard to find so there's still
opportunities there it's just you know
it's a
challenging yeah no and and you know as
a kind of as side you know what you said
that the seller's response was you know
that they he he wasn't nurturing the
relationship I feel like during
diligence it's so important to take
everything with I don't know if it's
like a massive grain of salt but really
just not take the sell's answer um for
GR like just just believing everything
um obviously the Integrity is important
but you know they're also marketing
their business and they want to buy it
so um it's kind of like you hear a lot
of like the reason for sale where
someone's like oh I just you know I want
to move on to my next venture like
something along those lines new
opportunities that's the worst answer
yeah and they think it's like this great
thing and you're like but why and
they're like oh actually this business
like not doing well and it's horrible of
course who would who would walk away
from a business generating $500 million
dollar a year absentee nobody would do
that nobody would sell that unless they
had some crazy opportunity Ju Just cash
flowing a million dollars a year not
having to work you would keep that
forever yeah Florida is a great example
of this so I I was in Florida for a long
time in home services and there is this
loophole in the law around insurance and
Roofing where
the roofers were getting called out by
insurance companies to assess the roof
and if it had a certain I I may get the
details of this wrong but the general
story is accurate if a certain portion
of the roof was not repairable they had
to replace the entire roof well that's a
counter incentive for roofers to go out
there and just do a small patch job
versus an entire replacement so roofing
companies exploded for like three years
because they were going out and
condemning every roof they went to oh
yep it's you know a A bird hit the roof
oh gotta get a new roof and you know
these are 30 to $50,000 projects so
these companies exploded and I had tons
of friends that were on Roofing that
were making crazy money all insurance
jobs paid in full nuts well the the
legislature got lobbied by the insurance
companies hey this is this is broken
like we are getting screwed by these
roofers and it's difficult to get
somebody that H that has the knowledge
to be able to give you a fair assessment
of the roof so they they closed the loop
and then all of a sudden all these
roofing companies are for sale on bis by
sale and if you look at these you're
looking at financials going oh my gosh
you know 30% growth 40% 50% it's just
going like this and you're thinking man
I if I can make him that hockey stick I
can make a fortune well what you don't
know is that all those jobs they did are
gone because they're going to turn into
repair jobs instead of Replacements
that's just one example of understanding
the industry in the D
and those ones are sort of tougher to
know you know there's also more obvious
ones like you know when you were seeing
right after Co a bunch of labs for sale
right and they're doing so well crazy
grow to talk to them I like oh it was
all Co Labs uh right but you know it
just it's it's really funny not if you
just like didn't ask any questions and
just assume that this is going to
continue then you're screwed uh but I
guess back to your story you know with
the business you I think you decided
ultimately you had to sell it but kind
of what led you to that decision and
what at what point where you're like I
can't turn this around I need to pursue
other
options yeah great great question it it
really was uh we did an industry event
so October was That Make It or Break It
went to an industry event and I had
spent a lot of time researching prices
and and service offerings I rebranded
everything I spent our last $5,000 to go
to this industry conference in Vegas and
I told the guy I was with in my
operations manager I'm like if we don't
get business if we
don't generate the guys that we used to
service and new business we're done well
unfortunately a lot of my competitors
were good at what they were doing
including the company I work for now and
they were good people so I'm meeting
them and they're offering the same
service that I was offering at about the
same price at about the same quality and
it just didn't make sense for them to
switch back I mean they they had
switched because there was a period of
time at my former company that maybe had
poor service or maybe had bad repairs
and they switched and it was not enough
incentive for them to go back so we were
not able to claw back any of that
business or generate new business and
I'm looking at the books going I'm just
bleeding money it was like $10,000 a
month I'm
bleeding and I don't want to have to
file for bankruptcy I mean I I had
enough cash and reserves for emergencies
to to cover it but the lease was up at
the end of March that was
$25,000 a month that I was able to avoid
that dodging that bullet funny story I
was actually looking at um signing a
lease in the summer before things got
really bad and a couple of landlords
were like we we can't rent you your
financials you know they just they're
not strong enough and I'm so glad for
that because I push so hard I'm like
I'll personally guarantee it like I'll
do whatever it takes I'll put more down
on deposit and I mean regardless of what
I offered they were like no so they were
able to see this wasn't a healthy
business and thank God didn't sign a
five month fiveyear lease I would have
been ruined financially I mean it it
this hurt really bad I lost a lot but
I'm not ruined I it was painful but I
had enough to kind of scrape my life
back together and and try and start over
whereas the opposite would have been
total bankruptcy and that's just not how
I'm wired I mean as I said I have 8,000
left to pay off I paid off my credit
line to the bank I paid off all the
vendors I paid off everybody except for
Dell I owe Dell eight grand I bought new
computer and I financed them so that was
a a a mistake
unfortunately um I mean it's it seems
like you're doing the right thing and
still living by um trying you know the
Integrity sort of that's important um no
I be look and what happened after like
how did you even think of like let me go
try to I guess get acquired or it's
almost it's almost like an aqua hire in
some ways yes uh how did you kind of
navigate that great question so I I
eventually I just came down to two exits
it was a volume inventory exit so we had
a plan to put the inventory on pallets
in a very specific way where we felt
like customers would want to buy it you
know it was kind of like a like like a
little gift box on a pallet with all the
different parts they would need for
their their deployments their their um
portfolio that was that was option a uh
but would have taken a lot I would have
had to find a place to store it I would
have had to moved it by pallet would
have been a huge pain and option b was
to sell and obviously these companies
hadn't bought the business in the past
so I'm like why would they buy it now
but I made one phone call I I called NEX
ATM which is one of the the companies
under Grant Victor a guy named Cooper
was was running at the time and I had a
lot of respect for him I had met him at
the conference you know my my last ditch
effort at the conference he he was he
was very um collegial and very
supportive and and understood where I
was at and ultimately he set up a call
with the CEO of Grant Victor and the
board and what I thought was an
acquisition call turned into an
interview pretty quickly what I didn't
know is that Cooper was trying to leave
the business to run one of the other
companies for personal reasons he wanted
to have a little bit less demanding role
a little more flexibility personally and
I had no idea that I was interviewing
for the business that was acquiring me
um because they kept asking like would
you want to run a p&l and would you want
to do this and I'm like well yeah of
course I you know I run a business now
I'd love to run a business again and
they were like okay and then it ended up
offering me his job uh and a great offer
and paid to relocate me to to Utah I
didn't have a partner at the time which
was great and um was able to get out of
my lease they bought me out of my lease
and I moved here right away they're like
we want you to start within two weeks so
I went from like losing
everything fire selling all this stuff
trying to figure out the logistics to
we'll buy all the inventory we'll send a
semi Tru to pick it up and we want you
out here right away to start start
learning and I'm like this is this is
the dream I mean this is a great
opportunity and and now I'm running a a
company that's way I mean it's it's 20
plus times the size of what I was
running before and as I said I've got a
leadership team that's great I have a
board of directors that are great that
I've learned from the CEO is a super
smart guy uh watching him in meetings
and watching him navigate is a is a
really awesome learning experience for
me so I I feel fortunate to be where I'm
at and tried to have the right attitude
during the whole process because being a
nasty person or angry or trying to screw
everybody else because I got screwed
didn't help and and I I think
having that attitude open this door
because I would have been not
susceptible to any kind of positivity
because if I was just living in a in a
dark place so I end up working out and
and now I have the opportunity to grow
within a much larger organization and
and um you know maybe even be part of
the sea Suite one
day that's I guess that's uh that's
pretty that's just an incredible story
and and obviously you know they're
they're buying the company really
because they believed in you and they
wanted to really have you on board so I
mean that that speaks
volumes it means a lot I mean it did and
and it became very pretty apparent
because we're having a hard time
justifying the purchase of the inventory
now that I run the p&l I'm like all
right well how much of this stuff is
junk and how much can we actually make
money on so it was it really was an aqua
hire and and I appreciate them doing it
and I've worked really hard to create
value for for the for the business and
and I have I mean I've added the bottom
line and I want to continue to do that
to to thank them and and grow this
thing um Dustin I know we've gotten way
over so thank you for your time but um I
guess final question you know do you see
yourself ever going back into into
Acquisitions uh Maybe not turnarounds
maybe just you know maybe the original
idea of buying that maybe that million
dooll even a business but um yeah what
what's what is this sort of
how does this sort of change your
opinion on becoming your own
boss still still have that dream I I do
um but I would like to buy a much larger
company for the reasons I explained
earlier about having the right team and
having the processes and and having all
the infrastructure to do what I'm good
at um you know I I've been kind of
targeting understanding the cro role I
had not been familiar with that in the
past that's a really f fascinating role
we one of my colleagues at one of our
oems has that title I had to look it up
I was like what's a cro and I was like
oh my God that's like my dream job like
a CEO is great but in a big business is
a lot of politicking if you're publicly
traded it's a complete nightmare did
with quarterly earnings and investors I
don't want that I want to be the guy
that's at the sea level driving growth
that can remove all the red tape that
can be entrepreneurial that's my my
dream job so um if I can do here that'd
be great if I can do it in another
organization I'm open to that as well
but the dream would be to build the
skills that I need to be effective at a
larger level I mean in that in that5
to10 million do EIT range where I'd like
to be and I know that I'm not going to
get somebody write me a check that big
until I have the experience to back it
up and and the the results to back it up
so that's kind of where I'm at now is
building building that that repertoire
of EXP experience and and change and um
being able to present that in the future
to the right person no that that makes a
lot of sense any sort of final words of
wisdom for you know folks listening to
this who are maybe going down this
journey the first time um where you were
maybe two years
ago absolutely I I think you have to
begin with yourself and understanding
the emotional toll this is going to take
on you and your family that's I think is
the most important thing and and really
getting to a point where you are okay
with uncertainty and risk because this
is risky regardless of what you think
you're looking at a 30-year business
always showing profit that could turn
around in a second I mean CO's an
example of that a lot of businesses had
great fundamentals and Co happened that
there could be another Co there could be
another
unforeseeable and you need to have the
emotional capacity to deal with
overwhelming amounts of stress in a
positive way that's number one and then
we'll re re illustrate what we talked
about before number two the sell's
Integrity do you trust this person with
your kids you know could could they be a
babysitter for your kids could they you
trust them alone with your spouse like
this is the kind of level of trust you
need to have with this person spend time
with them personally go golfing go play
tennis go do something physical where
they're challenged to see how they
behave and observe closely have your
spouse meet them or your part your
business partner meet them at dinner and
get their Vibe and the last thing is
just understanding the Nuance of the
industry that's so key call people I
mean I I called people in the first deal
that I had the the metal Metal Fab shop
um that were competitors and I said hey
I'm looking to buy this company what do
you think and they were honest I mean
they gave me their their time and their
their experience for free and and I
think a lot of business people will do
that because they know where you're at
and they can empathize so th those are
kind of the three takeaways that that
emotional piece um the Integrity of the
seller and then understanding the
financials and the nuance and and the
the story behind the
number yeah no that's that's great
advice Dustin thank you again for going
over with me thank you for your time
today um really to hear how how this is
goingon to progress follow it I'm gonna
be following your journey so hope to
stay in touch thanks so much take care
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Deals with the same mistakes
1 fatal · 5 major
1:10:13
When a $2.8m Acquisition Is More Like Zero to One | Dave Gilbert Interview
“If the EBITDA, customers, people, and sales engine are not verified bottom-up, you may buy a “cash-flowing” business that is really a leveraged turnaround.”
5 major
1:04:15
We Bought a Business for $1.1M and Nearly Broke
“A small, local service business can look cheap until debt, key-person risk, accounting complexity, and dozens of tiny operating details consume all the margin.”
$5M lost
6 major
1:32:58
The 7 Year Collapse of an SBA Acquisition | Scott Duncan Interview
“If the seller, a few craftsmen, or one customer relationship are the real business, you are not buying systems—you are buying people who can walk out the door.”
3 major
1:20:53
Raise $800k to Buy an $8m Business | Kevin Bibelhausen Interview
“In an inventory-heavy acquisition, closing the deal is not enough—you must also finance the cash gap between buying product and getting paid.”