Raise $800k to Buy an $8m Business | Kevin Bibelhausen Interview
The one thing to remember
In an inventory-heavy acquisition, closing the deal is not enough—you must also finance the cash gap between buying product and getting paid.
What happened
Kevin Bibelhausen bought Heritage Fabrics, a North Carolina textile design and distribution business, in January 2023 for roughly $8 million. The acquisition did not fail, but several things went wrong or nearly went wrong: his expected capital provider walked away, he had to raise about $800,000 quickly, and the business proved more working-capital intensive than he and the bank fully appreciated. After closing, the company was tight on cash and waiting on a line of credit while managing long inventory and sales cycles. This case is best read as a near-miss and operating-risk story rather than a total loss story.
Who's telling it: Kevin Bibelhausen, the buyer and a first-time small-business acquirer The story is told mainly by Kevin Bibelhausen, the buyer; the seller’s, lender’s, broker’s, investors’, and employees’ perspectives are not included.
Timeline
- Thesis
Kevin decided after a health crisis that he wanted to leave his corporate career and buy a small business.
- Sourcing
He searched broadly through brokers and found Heritage Fabrics through an SMB Twitter connection.
- LOI
A capital provider he expected to rely on dropped out just before the Heritage LOI was signed.
- Due diligence
The deal went through quality of earnings and the numbers reportedly came out close to expected.
- Financing
Kevin raised about $800,000 from many small investors over roughly five weeks during the holidays.
- Closing
The acquisition closed on January 13, 2023, with a large cap table that made loan closing more painful.
- Operations
After taking over, Kevin found the working-capital burden acute and waited months for a promised line of credit.
- Integration
He focused on supporting employees, changing legacy culture, and reassuring staff that technology improvements were not meant to replace them.
stage where a mistake was made
What went wrong 6 issues
Working capital was too tight
Kevin says he and the bank did not fully understand the working-capital requirements of an inventory-heavy textile business. After closing, the company was effectively operating paycheck to paycheck while waiting months for an expected line of credit.
Mistake made at Financing → showed up at Operations
“I certainly didn't understand the full picture and the bank didn't definitely definitely didn't understand the full picture, either, because I we were undercapitalized.”
Warning signs
- The business had to carry inventory to maintain customer trust and could not simply order after demand appeared.
- A spring collection required ordering product in January, right as the buyer was entering the business.
- The target had long 60- to 90-day payment terms and a sales cycle that could delay returns for about a year.
How to prevent it
- During due diligence, the buyer and QoE provider should build a weekly cash-flow model for the first 12 months after close, including inventory orders, receivable collections, debt payments, and seasonal releases.
- Before closing, the buyer’s lender should provide final written approval for the line of credit, including borrowing base, collateral, conditions to fund, and first draw date.
- Before signing loan documents, the buyer should raise or reserve a separate working-capital cushion large enough to cover at least one product cycle, not just the purchase equity.
Capital provider pulled out
A capital provider that Kevin expected to support the deal dropped out just before the LOI was signed. Kevin chose not to tell the broker because he believed it would have killed the deal, then had to scramble to raise the equity himself.
Mistake made at LOI → showed up at LOI
“hey, good luck to you. We're just super busy. So you know, see you.”
Warning signs
- The buyer did not yet know how to raise capital independently and was relying on a provider to solve that gap.
- The provider’s support appears to have been non-binding even after signed contracts.
- The buyer had not yet built his own network of high-net-worth investors.
How to prevent it
- Before LOI, the buyer should maintain at least two independent financing paths: a lead equity provider and a backup list of individual investors or funds.
- Before depending on a capital partner, the buyer’s counsel should review a written commitment or engagement letter that states exactly what the provider will do and when they can walk away.
- At LOI signing, the buyer should have a funding tracker showing committed, soft-circled, and backup capital, with weekly follow-ups assigned to the buyer.
Investor outreach started late
Kevin waited until very late in diligence to start investor outreach, leaving himself only about six weeks to raise approx. $800,000. He ultimately succeeded, but only through an intense and stressful sprint.
Mistake made at Sourcing → showed up at Financing
“I didn't start reaching out to investors until QOV was just about finished.”
Warning signs
- Kevin says he did not have a network of high-net-worth individuals when he began.
- The raise needed about $800,000, a substantial amount for a first-time fundraiser.
- The capital raise happened over the Thanksgiving-to-Christmas holiday period, compressing the timeline further.
How to prevent it
- At the start of search, the buyer should create a target investor list and schedule introductory calls even before having a live deal.
- Once under LOI, the buyer should send a weekly investor update with the deal status, equity need, diligence milestones, and expected closing date.
- Before quality of earnings is complete, the buyer should already have investors soft-circled for more than the required raise, subject to diligence.
Buyer lacked industry experience
Kevin bought a textile design and distribution business despite having no prior textile experience. This increased his reliance on the existing team and made industry-specific cash and product-cycle risks harder to understand upfront.
Mistake made at Sourcing → showed up at Operations
“I did not have any experience in the textile industry.”
Warning signs
- The buyer was originally looking at healthcare, technology, and IT services businesses, not textiles.
- The business depends on design judgment, overseas mills, inventory bets, and jobber relationships.
- Kevin described textiles as a “sleepy” space with its own norms and multi-generational relationships.
How to prevent it
- Before submitting an LOI, the buyer should recruit a textile or home-furnishings industry advisor to review the business model, product cycles, and customer relationships.
- During diligence, the buyer should map the full product journey from design to mill order to sample books to repeat sales, with timing and cash impact at each step.
- Before closing, the buyer should secure retention agreements or clear stay interviews with key design, operations, and customer-facing employees who hold the industry knowledge.
Large cap table complicated closing
Kevin liked having many small investors because it broadened his network, but it made the loan closing more painful. A large cap table can create extra legal, bank, and administrative work at the worst possible time.
Mistake made at Financing → showed up at Closing
“I like the fact that my cap table is large. It made it a huge pain in in closing the loan.”
Warning signs
- The raise relied on many small checks, often around $50,000.
- Kevin was oversubscribed but still had investors drop out late.
- The buyer was new to raising capital and did not have a pre-existing investor base.
How to prevent it
- Before fundraising, the buyer should set a minimum check size or use an SPV so the lender reviews one entity rather than many individual investors.
- At loan application, the buyer should give the bank a complete cap table plan and ask what documentation will be required from each investor.
- Two weeks before closing, the buyer’s counsel should confirm every investor’s documents, wires, accreditation materials if applicable, and lender-required information are complete.
Legacy culture needed repair
The business had legacy cultural baggage from an earlier leadership style. Kevin saw an opportunity to improve morale and processes, but integration required trust-building because employees could interpret change as a threat.
Mistake made at Integration → showed up at Integration
“they sort of lived in fear”
Warning signs
- Kevin contrasted his style with a founder who had ruled with an iron fist.
- Employees had long tenure and deep knowledge but were used to paper-heavy processes.
- Kevin had to reassure people that new technology was not intended to replace them.
How to prevent it
- Before closing, the buyer should ask the seller and key managers about historical management style, decision rights, and employee concerns.
- In the first week after close, the buyer should hold an all-hands meeting explaining that technology changes are meant to remove low-value work, not replace employees.
- During the first 90 days, the buyer should avoid sudden process changes without involving the employees who actually perform the work.
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Thesis
LOI
Due diligence
Financing
Integration
Transcript 2436 lines · 16554 words · auto-generated captions
Kevin Bibelhausen, hello again.
Hey, Walker.
Kevin, we were on stage together a few
weeks ago at SMBash
for a panel discussing
raising money from investors as a
business buyer, as a self-funded
business buyer.
Lots of good reviews of your your
performance up there on stage, Kevin.
So, I'm really looking forward to this
conversation. We are going to revisit
the topic of raising money from
investors as a self-funded searcher,
but place that in the larger context of
your entire story. It is a great one,
and you bought a great and interesting
business.
So, let's of course start at the
beginning. Kevin, give us some
background taking us right up to, you
know, this decision to want to buy a
business.
Yeah, so I
I graduated college with a degree in
music and thought I was going to go and
be, and I was for a little bit of a
professional singer, professional opera
singer.
So, I I ended up going getting my
master's degree in music and studying
down in Texas and thought I was going to
go get my doctorate and do that whole
academic route, but um
it wasn't it's as you as you may know
and my my younger self was too
obstinate just to
see it, but it's hard to make a living
doing that.
Especially making a living, you know,
the create the lifestyle that I wanted
to lead. So,
it didn't take long before
I I changed plans and then moved into a
corporate role
where I spent, you know, about 10 years
leading teams and
I did all kinds of work through sales
and project management and then I moved
into technology and software. Um
all that leads up to when I when I
joined a Parkland
Health now it's called in Dallas, Texas
where I was
I was in the senior leadership team for
technology and strategy ops.
And
that I mean I I really enjoyed the work.
I enjoyed the healthcare industry. I'd
been in the industry my my whole career
except for the music piece.
My dad came from the healthcare
industry. So it was just kind of part of
my blood.
Um
and it's funny that like immediately
when I joined the hospital, I also
started like looking over the fence and
looking at like oh maybe the grass is
greener over there. I was looking at
buying a business because I just read
the HBR guide that came out in 2017. I
was reading it in 2018. Um and I
remember looking at the you know reading
the reading the guide
and thinking as soon as you come across
the the story about the guy buying a
port-a-potty business. Like this is the
business I want to buy. This is the
coolest thing cuz I always knew I had
this like entrepreneurial streak.
I I And and frankly that that's that's
kind of what excited me about the music
career is that you are the CEO of your
own brand, your own career. It is you
you're putting out there. And I really
liked that aspect. I didn't quite
understand it at the time but but
looking back on it, that was that was a
pretty big thing for me. Um and so I
tried to buy this business in 2018
through a brokerage that everybody's
heard of um and it didn't end up
working. It was a it was a small deal
cuz I didn't have any money.
And
it fell apart in financing because they
they told me I needed X in equity and
then you know through underwriting
they're like actually we need 2X. I'm
like well
I don't have any more money. I get
that's literally all the money I had. Uh
and and I didn't know how to raise
capital. I didn't know you could raise
capital at that point. I didn't I didn't
understand that there was fundraising
and self self-funded. It's kind of an
oxymoron.
I didn't realize you could raise capital
for this kind of a search. So you know I
knocked on a couple doors, didn't go
anywhere. Then I broke the deal and and
kind of licked my wounds and went back
to my my job.
And
unfortunately, or fortunately, it I
guess depends on your perspective, I was
in healthcare and in a health system
during COVID.
And you know, in addition to being, you
know, on the in the um
uh the disaster management side of that
and opening up the uh uh
the command center and and running, you
know, helping run the command center for
the for the whole hospital. Um I ended
up getting COVID and it ended up giving
me, I was one of the unfortunate few who
got myocarditis because of it, which
means my heart went from about this size
to about this size. And um
you know, it so caused heart failure.
And I didn't know that until I went to
the ED,
uh same hospital I had worked at, and
within the first 5 minutes of me being
in the ED,
uh the doctor looked at me and was like,
"You're going to need a heart
transplant."
Um which is pretty jarring. I was 30 at
the time. Pretty jarring, uh especially
since I thought it was some sort of like
stomach issue. Um it just it's it's
difficult to describe how everything,
you know, you feel, but I mean it was
sort of like one of those things you're
never thinking about a heart issue at
30. No history of heart issues in my
family at all.
Uh so, you know, then then began the the
long journey of
well, I was going to I was going to be
in and out of the hospital for the
majority of this is 2021. Um so, I spent
a not insignificant period of that year
in and out of the hospital. I had um
what's called a PICC line,
uh which is basically a central line
that goes, you know, through through an
artery to down to your heart, delivering
a continuous infusion of uh what the
cardiologist affectionately call the
rocket fuel, uh which was keeping me
alive and helping my, you know, helping
my heart
be supported throughout this whole
process while they started to titrate me
up on oral medications and fortunately
and I think it's a combination of of
luck, you know, just my body responded
well to the medication and age. I mean,
I was it was unfortunate that I
contracted this at 30, but also I was 30
and so you're able to recover
a hell of a lot quicker doing, you know,
when you're younger than when you're
older.
So I haven't had a heart transplant. I
was able to be taken off the list, but
you know, it was a scary period going
through
I'm not sure if anybody, you know,
listening familiar with what palliative
care is, but it's basically where they
come in and you talk into life and you
talk about, you know, what you sign
wills, you sign all this kind of stuff
and you know, the it's never something
that I had done before, obviously.
Most of us haven't gone through that and
it was it was a very sobering, as you
might imagine, experience. But anyway,
so getting through the palliative care
portion,
it was it was one of those sobering
clarifying experiences where I was like,
okay, if I get out of here and if I'm
able to recover or even if I get the
transplant and
what what do I want to do after all of
this is over? You know, what have I
sort of what have I learned about myself
and am I am I happy doing what I'm
doing? Is this the life I want to be
leading? And the answer I kept coming to
was no, like I wasn't I wasn't happy
with what I was doing. I I didn't
I didn't feel fulfilled in what I was
doing. I wanted to own more of my career
I wanted to kind of call my own shots. I
wanted to create value
for myself and for my family and for
employees and I wanted to be a small
business owner still. You know, I I I
never really lost that from 2018 I'm
reading HBR guide
and so this was sort of a moment like I
I as soon as I came off the PICC line
around Thanksgiving of that year. So I
was it was in the beginning of the year
when I went in the hospital and I ended
up getting off the PICC line right like
right before Thanksgiving of that year.
Um
I started looking for businesses
and uh it one of the things that, you
know, it's I don't really want to go
back to my uh my corporate gig. I wanted
to uh I wanted to make this happen for
real. And that's when I found, you know,
I bet this whole community had sprung up
around buying small businesses that just
that didn't exist in 2018. Um I was sort
of left to my own devices in 2018, for
better for worse. I mean, I learned a
lot doing that. But, you know, SMB
Twitter was not a thing.
Um and now there's I mean, there's
podcasts like this. And it wasn't back
then. Um so, there's a whole ecosystem
that had developed around this concept,
and I felt right at home cuz, you know,
it's like, "Oh, I This is what I wanted
to do 5 years ago, and now I'm Now
there's it's a little bit more mature.
And uh I can actually get the help that,
you know, somebody coming from, you
know, no finance background, no PE, no
investment banking, like I was just a
corporate guy.
Uh I I needed I needed the support and
the help and the network to be able to
do uh what I wanted to do.
So, uh to repeat the dates here. So,
this is late 2021 now when you emerge
from your health crisis, and you decide
you're going to buy business. Pretty
much, yeah. And I started I really
kicked off that search in earnest um
January or February of '22.
It was like late January, I think. Where
uh and so, it was about that was about a
year after my initial diagnosis, right?
So, January uh February 2021 is when I
went to the hospital, and then went
through that whole thing. And then the
following year was when I kicked off my
search. Uh
around the same around the same months.
Yeah.
Well, that's a pretty dramatic start to
a search, Kevin. Very inspirational. And
And look at you now. Here you sit, a
little bit over a year later. Uh uh
the owner of a a really neat business,
which we're going to hear about. Yeah.
Okay. So, you
start looking. Give us the kind of the
nature of your search, and also, you
know,
you had from your previous, quote
unquote, failed attempt to buy a
business, you didn't have enough
capital, and you also didn't realize
that raising capital from investors was
a thing. This is something that you
learn about the second time around. So,
start taking us through that.
Yeah, I So, when when we started the
search,
I was looking I I I made a decision
early on that I was uh
or I guess the decision was made for me
just by my personality that I I had a
time frame. I wanted to buy before the
end of the year. Uh and I so I drew that
line in the sand, and uh I ended up
missing it by a couple weeks. So, we
closed the 13th of January '23. So,
missed it by 2 weeks, but
Close Close enough, Kevin. Close enough.
Close enough. And uh but that was the
goal. So, knowing that that was the
goal, and uh hearing a lot about
proprietary search, I quickly decided
that wasn't for me
um just because the sales cycle is so
much longer, and it's it's very
relationship-based,
and over a long period of time in order
to actually develop those contacts, and
I frankly just didn't have the time for
it. Uh so, I stuck to brokerage search,
and I did, you know, I did everything
that, you know, everybody tells you to
do. Just get on broker lists, start
setting up calls. What I didn't do great
was I was I was very broad in my search
um
as far as geography goes. And, you know,
that was that was because I was with a
certain capital provider who was who was
um
you know, encouraging national search,
and and I would have moved anywhere if
for the right business. But, given my,
you know, given my
uh preference, I was living in Texas at
the time. So, Texas would have been nice
uh to buy a business in, but I was also
attending uh the Fuqua School of
Business at Duke, uh and so, North
Carolina made sense, or you know,
somewhere in that Carolinas-Virginia
region made sense. And um that's how,
you know, I I ended up falling in love
with with Heritage Fabrics, which is the
business that uh
that I bought and moved to just north of
Charlotte in Concord
um
beginning of this year.
And
when you say working with a capital
provider, let let's hear a little bit
more about
the Yeah. What is that mean? Was that
your answer to having money to, you
know, the investor capital that you
needed to buy the business? Let like
let's let's get into that some. Yeah, I
was scared to raise capital because I
didn't know what I was doing. So you you
had decided you did need to raise
capital. You're not so flush now a few
years later that you knew Definitely
not. Definitely not. I'm not going to
need money. No, um you know, coming out
of what amounts to public health IT um
not a lot not a lot of money there.
Uh and so I certainly was was not I
didn't have a bankroll. Let's say that,
you know, like a lot of the guys do
coming out of, you know, uh uh sort of
more
I guess those you know, sexier jobs they
come out of IB or they come out of
consulting or something and they've got
a little bit saved away. That wasn't
really the case for me.
So I needed to self-fund the the whole
thing and and what may basically pay for
make sure I could pay my mortgage. Um
and so I I ended up leaving my corporate
job and picking up a couple consulting
assignments just to be able to pay my
bills.
Um and you know, I I was afraid to raise
capital. I didn't know I at that point I
knew you could and
it seemed to make sense for me to say,
"Okay, well, I'm going to try and buy a
the a bigger business and if I'm going
to try a bigger business, then I need to
raise money and but I don't know how to
raise money. I don't have I mean, I
don't have a network of high net worth
individuals
in my Rolodex. Uh it's just not my
background. Um so I didn't really know
where to start and so there's there's
starting to be some capital providers
that the equity providers that that have
come on the market. I partnered up with
one of them thinking that, "Okay, now
that can solve my raise issue. You know,
they're going to help me with that. So I
can focus on finding the deal and and
doing all the underwriting all that kind
of stuff.
Um
you know, that ended up that ended up
not working out. I got a call
you know, three days before my LOI for
Heritage was signed
and basically got the you know, hey,
this is after signed contracts and
everything.
Um I got a call
hey, good luck to you. We're just super
busy. So you know,
see you.
Um
so I was I was left with
the decision at that point like one do I
tell the broker?
Um and I've he he may watch this and
I've we've had this conversation where I
was like you know, hey, I just so you
know, we kind of pulled the rabbit out
of the hat with this one because my
capital
provider dropped you know, three days
before and I had to scramble and figure
it out. So you did not tell the broker
after that after the capital provider
dropped. Yeah, I mean that wouldn't have
scared them off.
That would have sunk the deal for sure,
but you know, I had enough faith in
myself and at that point I well the
reason I had faith in myself is because
I made some phone calls afterwards and I
talked to the guys you know, from SMASH.
I talked to I talked to Sam Brzostowski.
I talked to Kevin Henderson. I talked to
Eric Pacifici. You know, I those were
the first three phone calls I made after
after the other phone call. I'm like
guess what just happened.
What do you think I should do and to a
person they're like you know, you can do
it on your own. You can raise it. You'll
be fine. Here you know, we'll help you
with a list of people to reach out to
and so that's that's what they did and
Sam published that list on Twitter. I've
referenced you know, I've referred
multiple people. I was just talking to a
guy yesterday. I referred to that list.
Like look, they're what they're what we
call public domain investors like people
who are people who are active in this
space who want to be
who want to be LPs in these deals and
want to see deal flow. I mean they exist
out there and there shouldn't be any
guarding the door and getting if you're
willing to grind and do the work,
you know, you should be able to get in
front of these people and and and raise
you know, a pretty substantial amount of
money. A couple of follow-up questions.
Did you already know personally Sam or
Kevin or Eric, the three people you
reached out to? Yeah, so I actually the
way I met them was through Twitter.
Uh so Kevin was based in Dallas and so
was I. So he was the first one I reached
out to.
Uh and
I kind of I I I I don't even remember
what the initial contact was like. It
was basically like, "Hey, like your
content, you know, what what I'm looking
to kind of get back into this space and
Kevin said, 'Uh hey, we're doing this
SMB meetup in Dallas. You should come.'
So I did. Uh and then from there, you
know, we had a conversation. He's like,
"You know, you really ought to meet my
friend Sam. He's got this bootcamp in
Tampa that he takes people through and
kind of just, you know, takes them
through the whole search process and you
meet different, you know, deal team
members and uh you'll get a network and
all this kind of stuff." So I said,
"Okay." Um and I took a look at it and I
I put in my application and um you know,
went to went to hang out with those guys
uh in Tampa for
about a week. And so you did the
bootcamp? I did the bootcamp. Yeah, and
and it was great. I mean, he he he he
was he was right. I mean, there's two
there's a great people that run that and
um and the network is great. You know, I
I still I still talk to some of the
people, you know, from my bootcamp
class. Um and in fact uh I think Sam
just posted a couple weeks ago that five
of it was like five of 20 or 25 five of
25 something like a pretty good chunk of
us had purchased businesses within that
year since the bootcamp. Mhm. Um which
is pretty cool, you know, so now my my
cohort, my peers have taken the next
step. And so now we're all we're all
circling around and saying, "Okay, so
what about these CEO groups that we can
put together and share, you know, kind
of what we're going through." So that's
sort of a next phase of the
uh of the of the whole search process is
now, "Okay, we we did it.
Uh how do we get better at it? And how
do we make sure we don't, you know, step
on a bunch of rakes throughout the whole
process? So, yeah, it's a lot of fun. By
the way, the investor list, so that was
something I linked to in when I
republished our panel from SMB Nation,
we'll be right to again here. That that
really is a valuable resource and it's
it's great. I mean, it it it's I just I
love the internet. It's simply a Google
Sheet. I mean, it's nothing fancy. It's
just like a live Google Sheet that
anybody can click on and get some
basically have a Rolodex of investors at
their fingertips. Yeah. Um
Sam Rosati and Kevin and Eric of SMB Law
Group, when they said, "No, Kevin, you
can do this." Were they saying that
because they liked your deal or they
liked you or are they just encouraging
people? I'm just I'm just curious. Like,
they were so they were so sure that no,
it's okay if you lost your capital, you
can still make this happen. I wonder
what they were evaluating to be so
confident. Yeah, I mean, I think there's
definitely a an aspect of of personality
there, too. Like, hey, you're you're
committed enough. You're you're grinding
enough. Like, you're not you're putting
in the work. Right? Like, you're not
just passively looking. You're you're
you're putting in the work and you're
going to you're going to get a hit,
essentially. The um But but of course,
it comes from the deal.
Uh you know, you have to have a good
deal with good terms in order to
in order for the deal to pencil out and
be attractive to investors. Um and so,
when they when we talked about the deal,
it's like, you know, they said it was
one of the things that was reemphasized
at bootcamp, too, where
you know, if you have a good deal,
capital will come. Yeah. And
that sounds that sounds sort of flip,
but it is it is true. Yeah. If you have
a good deal,
it the capital will be there. It may
take a little bit longer than you think.
I mean, I was fortunate to be able to
raise pretty quickly. I offered pretty
aggressive terms purposefully in order
to raise quickly, but um Aggressive
against yourself like generous to the
investor. Is that what you mean?
Yes. Yes. Yes. Mhm.
Great. Um and and so the the business
that you found was from a broker in
North Carolina. Was it like on
BizBuySell? I know you didn't find it
there, but was it? Do you know?
I don't think it was on BizBuySell. Just
knowing knowing the broker, I just he
doesn't he wouldn't want to deal with
all the low-quality leads coming from
BizBuySell. It was a It was a high
enough EBITDA business that I mean, it
was on their website, of course, but not
I don't think he would have blasted it
out. Just not It's not the right vibe
Well, especially knowing the company
like I know it now and knowing the
owners, they wouldn't have liked that.
Um
and so it needed to be a little bit more
selective. So, I actually found another
SMB Twitter connection. I found the
business through Clint Fiore
and so this broker was part of I think
he leads a mastermind
and and Clint is part of it or vice
versa, one of the two.
Um It's it's sort of like a best
practices group, right? So, so he knew
this broker
uh and
I found this deal through him and then
so I connected with the broker in North
Carolina and we had some conversations
about the business and
um you know, then we went through the
typical IOI LOI process and then did it
on-site meeting and everything. Mhm.
Mhm.
Great, Kevin. Well, we're we're going to
hear all about that, but let since we're
at this stage in the story, let's let's
dive a little bit more into this process
of raising capital. So, your equity that
you thought you had pulls out 3 days
after LOI signed, you talk to Sam and
Kevin and Eric Pacifici, they say you
can do this. Um anyway, the investor
list. So, what
how much money do you need to give us
some numbers? Yeah.
And then tell us how you like literally
what it looked like when you opened up
the spreadsheet and did what?
Um I needed about 800 grand. 800,000
dollars.
Yeah, and it was a sort of it sort of
fluctuated based on, you know, how I was
modeling it. And it's it's a little
squishy until you kind of get to the end
you're like, "Okay, this is the deal
we're going forward with."
But I That's about what I needed. Um
and it's by no means the largest raise
ever in self-funded. I mean, there's
people who have raised more than I know
about um for sure.
Uh but it's a substantial chunk of
change, especially considering that I'd
never done it before. I didn't have a
network of high net worth individuals.
So, I was very reliant on I was very
reliant on that list. And very reliant
on network referrals uh to people who
you know, sort of second connections of
people that were on that list. Um you
know, it's funny the the
uh
the
giving nature of so many of these
people. I remember specifically, you
know, emailing So, I went through the
whole list. I I emailed or called all of
them. Even if they said they only invest
in HVAC, I didn't care. I called them.
Um How long is the list, Kevin? How many
people is on this?
I think, when I I I think that's about
it. I'm sure it's growing. I mean, I I'm
on the list now. So, I know it's
growing.
By one, at least. Yeah, yeah, at least
by one. I'm sure there's more, but but
uh but yeah, I I kind of went through
the list and did email blasts and did,
you know, I had a teaser and I had a SIM
and I had I had it all automated. So,
when they sign the NDA, they would where
they get a teaser, then they sign the
NDA, and then they'd automatically be
sent the SIM, and then I would follow up
with them um
uh um in after a couple days in
reviewing it and trying to schedule a
call and have the conversation. But it
So, it took me about 5 weeks to to raise
the 800 grand, but and keep in mind like
this was during This was literally
before Thanksgiving to right before
Christmas. So, I was raising money over
the holidays. You know, I I remember
sitting in my parents' basement in uh uh
at the end of the year and during
Christmas. My parents thought I was
crazy. Um they they really didn't know
what I was doing. Um to to them I mean,
looked like I was doing a drug deal or
something in the basement. But, I'm just
like dialing for dollars, right? Trying
to Trying to, you know, get investors on
the phone and I had an investors drop
out at the end. And so, I had to make
You know, it was It's a wild process.
Uh and it's in It's It's incredibly
stressful. As if you don't have enough
stress on your plate doing this whole
deal, the capital raise process is is
yet another uh thing for you to handle
and just is If you have to raise as much
money as me and you didn't have, you
know, a network going in, I mean, you're
you're collecting a lot of small checks.
Yeah. Um And by small, you mean 50,000?
Yeah, which is wild to say because
that's a ton of money to me. Right.
And
it's just So, to to say that those are
small checks is like is is still kind of
blows my mind. But, in the grand scheme
of things, they are. Right.
And But, every time, you know, I would
get So, like, "Okay, I'll take a flyer
on you." And But, that flyer is $50,000.
That's not an insignificant
basically gamble on a on a new on a new
uh new searcher, a new GP uh
of a an industry that's that's a little
wonky.
Um you know, not the traditional tried
and true. It's not a It's not a HVAC
company or a plumbing company or
something that's been beat to death in
the search world. Right.
So, I mean, I I
I kind of love the fact that my entire
cap table is filled out with these small
investors because to me, it's like I I'm
going to get I want to be able to reward
them with, "Hey, thanks for trusting me.
Here's what we're going to Here's where
we're going. And here's here's what
here's what the the end goal is. And
we're going to grow and there's
opportunity in this industry." And I
love the fact that there's, you know,
they're just regular people. You know,
there there's there's of course there's
attorneys and insurance guys and all
this. But, I got I have a a JAG lawyer,
you know, in the service. I've got, you
know, just just regular people. And I
love that, you You it's it's just people
who are who are interested in who are
interested in building equity through
assets and and helping And and and so
these these these quote regular people,
Kevin, they're basically presumably
they've heard about this list or maybe
they're from Sam Rosati's network and so
they're just professionals who have some
liquid cash and want quote unquote
exposure to this asset class. They just
want to be in some SMB deals. Okay. So
they're not professional they're not
professional
money allocators or capital allocators
or or even private equity funds,
although I'm sure there are some of
those. There's got to be some of those
and on that list, but No, well oh, on
the on Sam's list. Yeah, there's some
family offices and things like that on
there.
But but no, primarily primarily that
list is is regular people. And there's
there's people like me on there with
with funds and and things like that, but
but yeah, mostly it's just hey, I'm a
I'm a successful big law attorney and my
my time is is spent best doing what I do
and not, you know, underwriting a bunch
of deals necessarily or or trying to do
this this search thing on my own. So,
here's the check, put the money to work.
I'll go I'll go, you know, do what I do
best and you do that, you know. Mhm.
Mhm. Um
Kevin, you said it's just crazy and wild
to raise money. Um is there anything
any way you can elaborate that I on
that? Is is it you just a lot of calls
going back and forth cuz you're
basically scrambling to to to
to scare up every penny sort of thing or
is there something other other other
than that that's weird and wild about
this process? I think it's I think it
has to do with the time frame or the the
deadline I gave myself. Mhm.
And I I don't regret it. I think it was
very important to kind of put that line
in the sand if I want to buy before the
end of the year. But in doing that, I
didn't you know, when we talked to Costa
during the panel, he mentioned, you
know, there's a lot of socialization
that goes on with the investors and
really kind of building that credibility
before before you go and ask for money.
That's not what I did because I I I
didn't I didn't have those investor like
I didn't have that network and I and
frankly I didn't have the time.
Uh so I didn't start reaching out to
investors until
QOV was just about finished. So I had I
had maybe 6 weeks or so to get the
capital.
Um
was that the right thing to do? I don't
know, but that's that's what happened.
Um going forward and you know, I've I've
got connections with with more people
and you know, I can start laying the
groundwork a lot earlier on and I'll
have a track record, but initially you
know, why would anybody talk to me
unless I had the deal, you know, to the
point where I I had spent money on it
and and diligence and making sure the
numbers will flush out. So I felt the
responsibility to go in there and and
make sure that the deal was buttoned up
and ready for ready for prime time
uh before I started asking for money
because I
frankly I would only get one crack at
it, you know, if there if if they turn
me down, it's
you know, that's that's one that's
another person to cross off the list and
suddenly, you know, your percentages get
lower and lower and lower.
Uh you know, so if you screw up early on
and you and I which I did
uh for sure my my pitch got way better
as time went on, but some of those early
investors
um they they may have been interested if
I had a a more fully formed deal and
knew what I was doing in the beginning.
Uh but yeah, it's a learning it's a
learning experience through the whole
thing and and the the pressure uh of
raising capital in a short period of
time. I mean, that's why I mean, we can
talk about this later too, but that's
why that's why I joined Formation
Capital as a GP because it's it's an
incredibly stressful thing to do to
raise money, especially your first time
and you know, having a fund that that
invests in these kind of deals, you
know, that's that's more professional
and more professional fund managers and
and and investors uh who've got a
network of people to be able to come in
and write a much larger check. So, if if
we're writing out a $500,000 check for
my deal, well, suddenly I only need, you
know, two to 300,000
friends and family, call it, right? Even
though
they they're friends now, but they
weren't friends then. Yeah. Yeah.
Um, Kevin, let let's just highlight the
the point you just touched on a second.
You mentioned how Kosta Dobrynin on the
panel that the three of us were on said,
um, you know, kind of cultivating a
relationship with investors before you
go to them and say, "Hey, investor, can
I have 50,000, 200,000 dollars for my
deal?" And there and and it's kind of
like that and Kosta wasn't the only
person to say that. It's
That's kind of like the best practice
you heard floating around SMB Ash a lot.
And it's intuitive. It makes sense.
Like, much easier to ask somebody for
money if they know you. Um, of course.
But but on the other hand, you I think
it was you on the panel who made the
point that like
that that's all well and good. That
sounds good, but it's also like a lot of
investors are like, you know,
they it's when you have a a live deal
that they that they realize that their
own time is going to be is going to be
well spent um, by talking to you because
they also are protective of their time
and they don't necessarily want to talk
to some searcher who's just starting
and, you know, in a year might, you
know, bring them a deal. Uh, because,
you know, they just So, so there's kind
of um, there there's kind of there's
kind of a contradiction there. It's
like, yeah, you want to cultivate, you
know, they they want to know you as well
as they can before you ask them for
money, but at the same time they don't
they probably just don't want to talk to
some every random searcher who gets a
notion to like buy a business. And they
can't. Yeah, I mean, so so it's kind of
like I don't have an answer, but it's
just it's this tension is something to
be aware of. Totally. I mean, just going
back to the point earlier about where
these people kind of come from. I mean,
they're regular people, but they're busy
people. They're busy professionals. They
have to They have to operate at a pretty
high level in order to have the capital
to invest in these deals, right? So, cuz
again, $50,000 is not a paltry sum.
Yeah.
Um so, they they have to be fairly
successful professionally.
Uh and they don't have time to talk to,
you know, each individual searcher. Now,
I I talked to a ton now, you know, as as
as part of the um as part of the fund
uh and and generally just because I like
it. And I know I remember I remember
what it was like
uh where, you know, those those early
conversations were so key and I
appreciate the people so much who
who really just out of the goodness of
their hearts, uh you know, did things to
help, did point me in the right
direction. I'll never forget. Um
And I've never I've never really even
talked to Nick to Nick Hashka. Have you
had him on this podcast?
Oh, yeah. Yeah, a couple times.
shout him out here because I will never
forget and we should tag him because I
will never forget emailing Nick and and
seeing if he was interested in
investing.
But, his email came back and it's
something to the something to the effect
of, "Hey, we're working on another deal
right now where we don't we're not we're
not interested for whatever reason, but
I will send this deal to my investor
list." Mhm.
Who does that? I mean, like that's
that's incredibly kind. He didn't have
to do that. But, but that's that's
indicative of this community. I mean,
there there
you know, there's more people like that
than than people that, you know, you you
you don't like or people that are out to
get you. I mean, there's I mean, so,
again, never I
Yeah. Yeah. Yeah.
Well, and also, Kevin, I I I I feel I I
just want to clarify what I what I just
said. I also don't want to suggest that
people who are just starting out
yeah, that that investors just don't
want to hear from them, aren't going to
take them seriously. I mean, and I I
certainly don't want to disparage people
who are just starting out. I mean,
everybody started out at some point. So,
you want to build relationships with
investors, but also investors can't talk
to everybody that might want to talk to
them. And so, you just got to thread
that needle. So, that's all. That Yeah,
and the best way to prove that you're
you're bringing value to the table is to
bring a deal. I mean, that's just that's
the reality. Yeah. Yeah.
Um great. Well, Kevin, more to talk
about on raising money, believe it or
not. Uh
actually, quick aside, you mentioned
tech that you use to to automate the
sending out the NDA and when they
signed, then they automatically get the
SIM. What is there is there a a SAS tool
for that or did you jerry-rig something
with Zapier? I I jerry-rigged something
with Zapier. So, again, my background's
in technology. So, I I hate doing
repetitive processes. And um
I So, anytime someone I just actually
this this was born out of my my
relationship with brokers and my
experience with brokers where I mean,
I'm sure you've had people, you know,
you've talked to people who it's like
they just, you know, here is send this
fill out this form and it's like six
pages. Transworld's famous for doing
that where they got, you know, a whole
stack of stuff you have to fill out. Or
just the the broken processes, super
manual, very dinosaur, very paper. And
um
it just made me frustrated. And so, I
was determined to have the opposite uh
call it user experience or investor
experience. And so, they were able to,
you know, I would I had this email that
I would send out and say, "Hey, here's
the teaser attached. Um if you would if
you want to know more, click on this
link to fill out the NDA." It was all
DocuSign. And as soon as they would fill
out the NDA and sign,
uh I had a zap in the background that
would send them
uh my my data room
uh filled with, you know, a model,
historical financials, tax returns, um
the SIM, you just all all all the
investment materials that you would
expect. Um and then from there, you
know, I would I would then follow up in
a few days uh and um
and see if I could close. Mhm.
And what data room what were you using
for data room? Just like Dropbox or or
some data room specific? I use OneDrive.
Okay. Okay.
Great. So, there's some trigger in
DocuSign that when somebody signs, then
you use that trigger in Zapier to then
send them another email with a link to
your One Box, which is your data room,
effectively. Very cool. Very cool.
Um
Kevin, you I saw a LinkedIn post of
yours where you say where you talk about
this
uh fundraising process. You say, "I
raised a good, you know, $800,000 from
only 300 Twitter followers." And And so,
what I want to highlight there in which
was the I'm just highlighting what you
were the point you were making is
you know, it it's it's becoming trite to
say get on Twitter, SMB Twitter's the
best. Yeah, I say it all the time. Like,
you know, so everyone knows that
already. But, I But, you you were making
a really good subtler point, which is
that I even people who actually do, you
know,
take action on that on that call and get
on Twitter, they probably feel like,
"Well, no one's going to take me
seriously until I get above 1,000,
10,000, you know, I have some
respectable number of followers."
Because, you know, we're all programmed
by social media now and we all want big
followers, right? Follower numbers. Um
but, you only had 300. And And so, which
is not a lot of Twitter followers. You
can scare that up pretty quickly. And
so, your point was like, you know, not
only get on Twitter, but like, you don't
need to be, you know, one of these
Twitter superstars or even have, you
know, a few thousand. 300 Twitter
followers was enough for you. Expound on
that, please. Yeah, because it was a
place for me to to talk about what I was
doing and and establish credibility or
establish myself as somebody who was
Look, I'm I'm I'm very honest. I I try
and I try and come out on Twitter and
say exactly what I'm thinking and
feeling. Sometimes it's good, sometimes
it's bad. I mean, I've I've had posts in
the last couple weeks where it's, you
know, you you have the Well, there's
this operations post, but you have the
extreme highs and the extreme lows
um in business. And there's obviously
the same thing in search. Uh and search
is incredibly lonely.
Uh running a business is lonely, but I I
think search is lonelier. Uh if at least
it was for me. And I think a lot of that
was just the desperation to be able to
finally do something. And so you're
you're constantly driving and
um you know, that being that being
difficult. But yeah, I mean 300
followers you can I only have like 2,000
followers now. I mean it's still not a
ton, but it's it's about it's about
having an asset that you that you put
your thoughts into that somebody can go
and review. They can kind of see your
your thought process. Like, oh this guy
is he's talking with the right people.
He's writing things that I that that
that resonate with me. He's he's
thoughtful.
Uh and he's present. You know, just just
the fact that, you know, being
it's a little bit of a squeaky wheel
type thing where, you know, if you're if
you if you try and out if you're a
wallflower, I I've talked to hundreds of
searchers. Well, that's probably an
exaggeration. I've talked to a lot of
searchers. Sometimes it feels like
hundreds.
Uh who who uh who say, you know, I'm a
I'm a lurker on Twitter. You know, I use
And that's what I used to do for sure.
Yeah. Yeah. Um but it was only after I
really kicked off my search that I was
like, I need I need community in order
to do this.
Uh because it's, you know, I'm I'm
grinding away at my consulting jobs.
I'm, you know, I'm frankly being a bad
employee doing that. Um
because most of my effort and my thought
was going towards search. Fortunately, I
was remote the whole time. So I'm sorry
to my former employers, but that's
that's the reality. Um and uh I mean
just like you said. Yeah, look. You mean
it is what it is.
Um
they know that. I got uh I I certainly
got got the can on one of the uh
consulting assignments because I was um
I was otherwise occupied. And I deserved
it. I definitely deserved it. Um but
yeah, it look. I mean you just need to
be able to yourself out there and and be
public and I think that whole building
in public thing is is maybe overused,
but it it's true. Just to be able to put
yourself out there and have that have
that
uh
memorialized in social media so people
can go back and kind of see the
evolution. It's great. I I highly
recommend it.
Well, and actually, so Kevin, it maybe
that I missed your point of that
original LinkedIn post cuz it wasn't
about the fact that you had few
followers and your follower count is
less important than just being there.
You what you're what you're exhorting
people to do is you you do need to not
lurk. You need to put yourself out
there. You need to write stuff so people
can see and get to know you and as you
as you put so well, kind of memorialize
your thought process. So this isn't just
getting on Twitter and then lurking
around. This is getting on Twitter and
putting stuff and actually putting your
thoughts out there. Even if that doesn't
that doesn't accumulate tons and tons of
followers, that is beside the point. But
having a document of your thoughts is
valuable and does require you to put
yourself out there and and really to
only to truly get the value of Twitter,
um you're going to need to do that.
Yeah, I mean, followers are are are I
guess you could say a symp- like a
symptom or not not a symptom, but like
an outcome, you know, of of the work you
put in and and why you're there. If
you're there just to gain followers,
you know, you can go buy followers like
some of the some people who are on
Twitter. They go buy and follow go buy
followers. Um you know, ask them how it
does for engagement and all that kind of
stuff. Who cares? It doesn't it doesn't
do anything for you except for, you
know,
yeah, give give you a a bit of posturing
and like, oh, I've got 10,000 followers.
Okay, but they're all fake. Who cares?
You know, if you have if you have a
small amount and and your your
intentions are I want to put myself out
there. I want to meet cool people. I
want to and and just and and DM people
and and just treat it like treat it like
a networking tool like it's supposed to
be used. And, you know, don't don't be a
jerk. Don't don't send out a bunch of
like there's I mean, you
I'm sure, receive all of these DMs on
Twitter where they're all the hustle
bros out there like, "Oh, do you want to
get ripped in 6 weeks? Or do you want to
do What whatever it is?"
Who is that guy, by the way? I don't
know, man. Like but but there's there's
no shortage of people doing that stuff.
Don't do that. Be a real human being
when you reach out. You know, don't just
try and blast stuff out there to try and
set meetings with people. Like that's
people can see right through that.
You're not fooling anybody. But be be a
real approachable human being and you're
you'll you'll see the difference. You'll
you'll convert a lot of
uh a lot of calls and just frankly make
new friends. And that's that's what this
is all about. It's all about
relationships.
Great points, Kevin. Uh I want to ask
just a couple more questions on on
raising money from investors because I
think this is just going to be so
valuable for people. Um and then I want
to just hear
to kind of the math of this to the
extent that we can we can do this off
the cuff and comfortably. Um the the
questions are
uh or one one is just to let people
know. So, ultimately, raising this
$800,000
you actually didn't need to bring any of
your own money into the deal. Now,
as you and I have joked, like that we're
not out here advocating buy businesses
with no money down. Um but it happens to
be, you know, it happened to happen in
your case. So, anything anything to say
there?
Yeah, look. I mean, I I certainly didn't
go into this process thinking that I was
going to be able to, you know, not put a
nickel into the business. And that's not
It's not entirely true cuz like I did
pay for QofE. I did pay for
Right. You know, so I did pay for
certain things, right?
Important clarification, yeah. Yeah,
yeah. But as far as equity that I that I
put into the deal, like I I only own
common stock. I don't I don't have any
of the preferred shares that investors
um that investors own. And I I could
have bought preferred shares, you know,
at the same terms and I I just didn't. I
didn't have to. I had I had the
fortunate
uh position at the end of my race to be
oversubscribed. Um even with people
dropping out, which they did at the 11th
hour, you should prepare for that if
you're raising your own money.
Um
And even even with that, you know, I had
enough people at the end where it's like
I I ended up actually, what's funny is
one of the guys that that I had to turn
down is now my partner through Ocean
Capital. Um so that's we stayed in
contact and and that's how I ended up
with those guys is, you know, he he
emailed me about a fund that he was
starting and to send him any deals, you
know, that I was like, well, I'm I'm
thinking about doing the same thing. And
so now we're partners. Um so you just
never know where some of this stuff is
going to go.
But yeah, it's, you know, I I was in the
fortunate position to
be oversubscribed and I didn't I had the
money ready to go,
but I did was able to leave it on the
sidelines. Um
I was okay giving up the extra equity in
order to stay liquid on more liquid on
my personal side. On your personal side,
yeah, great.
And other question, Kevin, what So your
this initial group that you were working
with who had
you thought was going to provide the
capital and then and then bowed out
leaving you, you know, to scramble, what
is the learning there?
One of my guests has talked about
basically kind of at the kind of talking
to two different sets of investors at
the same time with the idea that, you
know, he might ultimately decline one
side. I don't know what the the ethics,
the the morals are here, what the best
practices are, what investors expect.
What what can people How can people
prevent
you know, the the struggle that you had
when you lost your capital and had to
scramble to put together a a group? It's
interesting. There's actually a couple
lessons, I think. You know, the first
one is
um
First of all, it was a blessing in
disguise because it it it it gave me the
opportunity to to really get outside my
comfort zone. I mean, the whole search
process was outside my comfort zone.
Bec- I I had done it before in in '18,
but but nothing at this scale and
certainly not at the size of company I
was looking at. Uh so, that was
uncomfortable, but I figured it out. And
same thing with raising money. Uh
it's a lot of it's a lot of stress and
it's a lot of effort uh to do them
simultaneously, both first time.
Um but man, did I learn a lot. And and
it really changed my perspective on a
lot of things. And um I guess I would
say that, you know, if if you're up for
the challenge, if you if you really feel
like you can grind through it, I I think
it's a a worthy exercise to go through
in raising your own money cuz you're
going to you're going to meet a lot of
friends. You're going to
uh you know, who and that again can turn
into partnerships down the road that you
that you otherwise wouldn't have
thought. Um so, so definitely
that was a a blessing in disguise. I
would also say trust your gut
because if you who
it's easy early on
uh when you don't have a nickel in your
in your um in your soft commitments
to
sort of uh
pitch investors like or or to think
about investors as like, "Oh, do you
have a pulse? Are you breathing? Can you
write a check?" Um that's great. You're
welcome on the cap table.
That's probably not the right way to
think about it. Uh I certainly had that
attitude early on because I I didn't
know what I didn't know.
Um but I I I would tell anybody that's
looking to raise capital from an
individual, from a firm, whatever, that
if your conversation with that person is
anything less than, "I want to go have a
beer with this guy" or "I want to you
know, this person would be fun to go to
dinner with"
it ain't worth your time.
Because that you're you're I think Coast
have said this on our on our panel like,
"You're getting married to that person."
You may have said it well. It's like,
"You're getting married to that
individual."
Um
I mean, there's there's a certainly you
know you can exit later but but for all
intents and purposes you guys are you
guys are joined at the hip. And you you
better make sure you like that person
because they're going to be all up in
your space if things go wrong and you
know if if they're not supportive people
you should you should be able to figure
that out right away. So a lot of it is
just intuition and and I didn't trust
mine. I I was in that sort of
desperation mode. Um so those are the
two things I would say you know Trust
your gut. And you know you never know
what might turn into a a good experience
or a blessing from from something bad
that happens. Yeah. Sure.
Well and what about Kevin having a
single capital provider?
So you know there are some searchers
you know might work with a group as you
were starting to do or might work with a
family office and so they have one
source of capital versus raising from
you know smaller checks from a lot of
different folks. That that you know the
the a lot of checks from a bunch of
different folks kind of diversifies the
risk away of you know your your big
capital provider pulling out. Any
thoughts on that
kind of I I don't know many people
who've had just the one provider. Okay.
I I know they exist but but I would say
this like you're also
How how how are you going to be in this
business long term? Are you going to be
are you going to is your plan to acquire
more companies or is this a
one-and-done? If it's one-and-done fine.
Go use the one capital provider and and
move on with your life and that's that's
an excellent you know I I certainly
could do that if I wanted to and and
never step back in the into the world of
SMB Twitter or any I would be miserable.
I love this community but you could do
it right and have a very nice life. I
would also say this too like I like the
fact that my cap table is large. It made
it a huge pain in
in closing the loan. Definitely. But
guess what all those people are invested
with me now and it's easy to have
conversations with them about future
deals. And so if you have if you have
more than one capital provider. So if
you had somebody that brings you a big
check, again like that's First Round's
model, right? They bring a $500,000
check, but you need 800. Uh that's I
think actually a positive for you
because you can go find two or three
investors to make up that two to
$300,000
that are going to be in your corner,
that you know, you maybe you put on the
board, maybe you use as advisors.
Um I I recommend that because you're
those if if it's all about long-term and
you're thinking, you know, you're
thinking about the future, building your
network that way is a good idea and not
just being reliant on one provider. Mhm.
Great, Kevin.
Let's do a little bit of numbers to help
people understand. So let's say I had
been one of your investors. Let's say I
um gave you a $50,000 check.
What uh what are what are the
expectations around,
you know, my piece of the business, my
return, when I'm going to be paid back?
What does all of that look like? Yeah,
so I I put um I as as my conversations
progressed with investors, I realized
that uh the most important thing, and
maybe this is obvious to everybody, but
it certainly wasn't obvious to me at the
time because I'm thinking more,
"Investors want growth. Investors want
growth." That's not really true.
Investors want their money back.
They want their money back as quickly as
possible in order to de-risk the
investment, right? So if you if you give
me $50,000, the first question
uh that you would probably ask is, "When
do you When are you going to give me my
money back?" Um and so when I modeled, I
I I ended up switching my modeling to to
be more of like a payout, you know, at
the end, you know, with a recap or a
sale or whatever, to okay, I'm going to
try and do heavy distributions up front
if possible.
Um of course it's a model, right?
Anything can happen, but I'm going to
try and do heavier distributions up
front and make sure that, you know, they
get their they get their pref rate and
everything, but they're also getting
their capital back. That's only it's
that's going to build credibility
um you know, that I have their interests
at heart. I want to de-risk for them.
And then have everything be I call it
blue sky upside, right? Once they get
their money back and they've they've
been paid their their preferred rate,
everything that happens from there on
out is is all upside for them.
Um and that's that's a much more fun
place to be because then it's then it
really is about growth. Um so for the
first couple years I'm I'm focusing on I
mean I'm focusing on growth, of course,
but I'm also
thinking about how to do distributions,
healthy distributions, in the first
couple years in order to try and make my
investors whole
uh perhaps quicker than quicker than
normal.
And so let me let me trace this through
and and you correct me if I get it
wrong. I've given you a $50,000 check
and you've negotiated with me let's call
it a 10% pref rate. Mhm. So that means
you owe me $50,000 and every year uh
you're paying me 10% on that $50,000 and
that's compounding. Um so what so so I'm
getting a return on my money and you're
going to pay me back, but I'm also
getting equity. Let's put a pin in the
equity Let's put a pin in the equity for
a second. So let's say uh and so when
you talk about distributions, people
probably know this, but this is
basically just the profit you're taking
out of the company um to give to the
investors rather than reinvesting that
profit back into the company to to grow
the company. Okay. So let's say So let's
say you pay me Let's say just to make it
super simple, you pay me pay it all back
in 1 year. Um you would pay me my
$50,000 back at the end of year one plus
plus
$5,000. Exactly. Took me a second.
Exactly. Plus $5,000. Um and if it if it
had been 3 years, you'd pay me, you
know, the $50,000 over the course of 3
years, but whatever my balance was with
you
Exactly.
was compounding at 10% on the balance
remaining. Yeah, exactly.
So and so that's the that's the kind of
debt piece. I mean, the way the this is
structured is a bit of a debt equity
hybrid. So, that's the That's the debt
piece. But, for my money, for my
$50,000, I've also got a piece of the
business. So, it's preferred equity. And
so, what does that look like? Do I have
proport like my $50,000 is proportional
to whatever the valuation was? So, let's
say the valuation was $5 million. Does
that mean I have 1%? My $50,000 gets 1%
of the $5 million business?
Um I think not. There's a step up. Can
you Can you explain how that works?
Yeah, so it's proportional to the equity
that's injected. So, I raised 10% of the
deal. So, on, you know, for for round
numbers, we can say, you know, it's an
$8 million deal. It wasn't quite $8
million, but whatever. I needed to raise
$800,000.
Uh and that $800,000, there's there's a
step up applied to that. Now, step up
market step up somewhere between
I would say two and
three is pretty high, but you know, it's
a one and a half to two and a half is
kind of market for a step up. Um meaning
so, you put in a dollar and you get that
multiplier for the equity. So, $1 equals
two.
Uh so, you would you would get um
you would get a uh
percentage based off of off of that. So,
it's a sweetener, basically. You know,
your money goes further. Um as it So,
$50,000 would really act like $100,000,
no step up, right? You could put in less
money and get more equity. Yeah.
Exactly. Yeah. So, you're putting in
$50,000 and in return, you're actually
getting $100,000 of equity. So, the step
up is to is meant to communicate that
you're basically you as the investor are
in the money from the very moment of
your investment. I mean, it's a pretty
It's a pretty sweet deal. Um
and and and right, you made another
great point that one
confusion amongst beginners is they they
think about the amount of investor
capital as a percentage of the
enterprise value. It's not. It's a
percentage of the equity. So, there was
$800,000 of equity into your deal. So,
whatever $50,000 would be percentage of
that $800,000 of that equity.
Exactly.
Well, um I'm I'm I'm revisiting this um
more and more in the podcast just cuz I
think the more people hear, you know,
beginners to this whole model hear it,
the more it'll kind of settle in cuz it
it takes a minute to to learn how these
things are structured. All right.
We are actually going to move into the
acquisition now, Kevin. So, tell us tell
us all about tell us all about the
business you bought, please.
So, I purchased a company called
Heritage Fabrics. Um and uh from the
beginning of this podcast and, you know,
knowing my story, uh I did not have any
experience in the textile industry.
Um and the joke that I would always tell
um investors as I was raising it was
like, "Well, you know, Warren Buffett
bought a textile company. It worked out
great for him."
And then, you know,
they were like, If you're savvy, well,
if you're savvy and you you know
anything about the history, right? It's
like, "Wasn't Didn't you say that was
his worst investment?"
That's the That's the joke, right? So,
no no, Warren Buffett bought a mill and
that was when mills were declining and
all that kind of stuff. So, we're not a
mill. What we do is we we do the design
here in North Carolina. Uh we have
designers uh that that work for us and
they work with the mills in
collaborating on on design, color,
um construction of the product, and then
we do the weaving overseas uh in a
number of a number of uh a number of
different countries. And then we import
the product back and then sell it to um
uh companies that basically serve the
interior designers. So, somebody's
coming to redo your house, they would
use one of our customers to provide the
fabric to provide the drapes, provide
the upholstery, all that kind of stuff
for for your
renovation or your um home refresh,
right? And And similar things for for
hospitality, right? We We do a decent
hospitality business, too, where if you
go any we we've had product at
everywhere from the Four Seasons to
to a you know, Courtyard Marriott to you
know, any any of that kind of I mean,
it's it's the gamut, right? So, we have
customers that will go out and bid these
contracts
to do a hotel refresh, which is a as a
increasing business right now as people
come back from COVID and a lot of those
refreshes, you know, they got to do
every 5 to 7 years.
A lot of those were were put on hold.
Well, now now the dam is breaking and
they're they're starting to do those
refreshes now that people again and um
frankly, if you've traveled anywhere in
the last couple years, like you know,
it's needed. Some of those hotels are a
little worse for wear, which is good for
us.
Yeah. But yeah, so that's that's the
business, right? We're we're we're a
we're very much a middleman
since we don't you know, we don't
manufacture any product here.
Um it's it's it's not
cost
the cost to manufacture here in the
states is tough for textiles. Everything
can be done much cheaper overseas. So,
we keep we we're I think I think of us
as more of a design house, you know,
with it's it's we're product based and
we're design house. I think is the best
way to the best way to really describe
us.
And so, your your vendors would be the
overseas mills
Mhm. and and and who provide the actual
raw material of the fabric and do the
weaving
and you'll work with them to come kind
of come up with designs, which are then
proprietary Heritage fabric designs.
Yep, you got it.
Heritage fabric designs, got it. And
then on the other side for your
customers, is your product um the way
you sell your product is it kind of like
a do you have like a book of fabrics
that an interior designer flips through?
How do they buy and find your product,
your fabric?
Right. So, our customers put the books
together. So, customers So, we sell into
a specific type of customer and their
their whole model is it's changing, but
they're the the historical model is is
do those books. They're incredibly
expensive to produce,
um,
but but for us, the way we show product
is is is we have, you know, big old
swatches that we go to and we visit
customers. We just did a show in High
Point, North Carolina, where we had
everything hanging on the wall.
Uh, it was beautiful. We I mean, the
team did an amazing job and that was the
first time they'd shown in 7 years. Uh,
and we had a we had a really great
reaction. But, um, but those customers,
so, uh, that that would sell directly to
interior designers will come shop our
line uh, and basically fill out their
books. Um, you know, they would have
exclusive product that they put in their
books, but they're not going to have
exclusive product for everything because
that's very expensive. Um, so they would
come to us with what's called open line,
where we would sell to
uh, these these these companies are
called jobbers. So, we would sell to a
jobber in New York, but we'd also sell
the one in California, the same product,
all over the country because it's it's
what we call open line. Mhm.
Okay, great.
Really interesting business, Kevin. And
the I think you said revenue was around
7 million.
Uh, revenue is closer to 10.
Closer to 10. Okay. I don't know where I
got the seven number. Revenue is close
is is approaching 10 million dollars and
what are margins and SDE look like if
you can share that?
Uh, margins, we stay around a 50% gross
margin, 45 to 50% gross margin. Um,
and you know, that's that's sort of a
blend from, you know, furniture gets a
gets a lower margin for us, uh, just
based on that industry.
Uh, cut yardage is obviously the highest
margin since we're selling, you know,
anything we would send out with smaller
cuts. It's we're going to charge a
little bit more for it and so all of
that blends together and and you end up
with that 45 to 50%. But we that's where
about where we try to stay. SDE when I
acquired the business was, um,
uh, 1.7 for the last, uh, last couple
years.
Uh, well, that's a pretty sizable
uh business for it especially pretty
sizable FTE number. Any thoughts on why
you were able to to buy this business as
opposed to a strategic or a private
equity group? Yeah, because the owner.
Um, the this industry is filled
more than I'm sure there are other
industries like this, but this industry
has so many multi-generational owners
and families. They're I mean, from the
mills I was just I had dinner with I had
dinner with a customer yesterday.
And we were talking about this like from
the mills on down
they're all family businesses. There
aren't very There's There's been a few
that have been acquired by private
equity and
frankly run into the ground. Um, but by
and large if they're it's all family
enterprise. So, the owner or previous
owner
was
adamant about making taking care of the
staff, making sure that they just didn't
get absorbed as a division somewhere and
you know, the staff would be an offer
anything. He wanted to make sure that
that the people were taken care of. He
wanted he desperately wanted the the
business to stay independent. And as I
go around and travel and talk to
customers, I I realize how big of a deal
that was and how um
how well he set me up uh that way
because, you know, we we are a very
important supplier to a lot of the
largest uh jobbers, these these interior
design focused companies in the country.
Um, we we are primarily known for
drapery and sheer products. Uh so,
mostly window.
Um, we're doing a little bit more
upholstery, but that's certainly not,
you know, what we're known for. But you
know, as suppliers go in and out of
business, uh
the ones that like us have been
consistent maintain stock. We don't We
don't play games with um you know,
keeping keeping low shelf quantities. I
mean, our business is inventory. You
know, we we have to have inventory in
order to ship. Otherwise, they why
wouldn't they just go overseas?
Right? Um so, that's that's our
business.
And why did you like the business,
Kevin? Aside from the fact that it had a
nice big SDE.
Well, certainly that was a screening
criteria, but yeah, I mean, I I'll tell
you. Um I mean, I certainly wasn't
looking at the textile space.
Uh I started as you might imagine
looking at healthcare companies and
looking at, you know, more technology
companies, IT service companies. Um but
I found the multiples uh from that were
that were related from COVID. So, they
were all having banner years and then
wanted to trade
uh on those years that weren't
sustainable. So, that was that was a bit
tough in the healthcare industry. IT
services is a is a pretty big target for
PE, so you're competing, you know, with
a lot of uh a lot of larger acquirers.
Textiles is a little sleepy. And um so,
I was able to buy it for a reasonable
multiple. Um and that was attractive to
me. So, that So, it was they were
willing to trade reasonably.
Uh they weren't, you know, asking 10x
or, you know, what something crazy like
some of the IT services companies were.
Um
and
honest to God, and this is something
I've told I've told so many searchers,
and I see I see a lot of the opposite.
I see I see some, but I see a lot of the
opposite on Twitter where
I I bought this business because I
trusted the owner.
Um
the owner, honest as the day is long,
you know, look across the table, you
look him in the eye, you know he's you
know he's for real, and, you know,
that's backed up by the fact that when
we did QOV, everything flushed out uh
pretty darn close.
Um
and so, I knew what I was buying. You
know, they they do reviewed financials
and audited or audited financials every
single year.
How often does that happen for a small
company, Small privately held company?
It doesn't. Yeah. So, I knew what I was
buying. And for my first acquisition,
that was really important. You know, I
started I started thinking like I could
be excited about anything, right? Even
if I ran a plumbing company, I could be
excited about that product. I I doesn't
matter. Like I just wanted to get in the
game. I kept telling people, I don't
care what jersey I wear, I just want to
play the game. Porta potties, man. Yeah.
So, so I
at that point I was industry agnostic
and like it's a cool product. It's fun,
it's pretty, it's you know, it's
fashion.
So, there's some excitement there, but
look, I mean the financials were good.
The people were honest. The team is long
long long tenure.
There's a There's a lot just the bones
of the business are good. And they
frankly, I mean they they were they were
stagnant because, you know, there's
um the previous ownership group had
different goals. They had, you know,
they were they were getting older and
needed to to
to take care of family, frankly.
And it was just time. And so, you know,
me coming in with with more energy and
and youth,
I think is good for this business, but
also good for the industry.
And I I can't tell you how many times
I've heard that just being around and
visiting customers, being in different
shows, where they're excited to see
somebody, you know, in their 30s come in
from outside of the textile space.
They're a little leery. You know, it's
like why would you choose this business
and where did your money come from? Like
do you have family money? Decidedly not,
but
you know, they're they're curious
about how I raised $800,000 on Twitter.
Yeah.
Yeah, I told some of them and they're
just like
uh they That must blow their minds,
yeah. Yeah, completely foreign. Yeah.
Really cool, Kevin. Um
you mentioned maintaining stock
and you know, that you're an inventory
business. And And one of the cons of
this business or one of the the
weaknesses, if you will, which we've
talked about pre-call, is how working
capital intensive it is. Um so,
elaborate on that and then and then tell
us
managing working capital is something
that, you know, a lot of people come
into buying a small business come into a
small business operations and ownership
and they're just kind of smacked up side
the head with the realities of that.
Uh I I suspect I I would experience
that, too, because it's kind of like
from the outside it's like what's
what's, you know, what's so tricky about
it and then to a person they all say
it's tricky and it it's it's a it's a
skill set. Um and so, as I understand
it, it's particularly acute in your
business. So,
um educate us. Yeah, so it's that's
absolutely true and something that I
I mean, I certainly didn't understand
the full picture and the bank didn't
definitely definitely didn't understand
the full picture, either, because I we
were undercapitalized. Uh we got lucky.
Um you know, we we have some good cash
management and um you know, we were
careful, but we were a business paycheck
to paycheck,
technically. You know, if you want to
use a a more of a personal finance term.
Um for the first few months and and we
kind of still are. Um I'm waiting for my
line of credit to come in because uh but
in I I was promised a line of credit um
before
uh during in my term sheet, but uh that
didn't end up materializing. So, I've
been fighting with the bank and the SBA
for the last 5 months trying to get
that. Hopefully, we're going to tie that
up next week, but um I'll let you know.
But that's a huge piece. That's a huge
deal for us. Like I keep telling my my
VP of ops, like where are we going to go
celebrate after this closes because once
we have that line of credit, which is
based based on our assets, we have a we
have a really
the inventory is very valuable and the
AR is very valuable for us. So, we can
borrow quite a bit of money uh against
that stuff and which will only fuel
growth. So, we'll have access to a lot
more capital, which will be awesome for
the business to actually breathe some
new life into it and
um I'm very much looking forward to
that. But, yeah, the working capital
side, um, when I came into the business,
so we typically will release twice a
year. They'll release a spring
collection and a fall collection.
In order to meet the deadline for the
spring collection, we have to order
product in January,
which is right when I was coming into
the business.
And if we spend,
you know, that that that collection
costs $300,000.
That's not what we have in the bank
today.
Uh, so money flows quickly out of the
business when you're paying your vendors
overseas, and then you're floating it
for a very long time
because you don't see a return on this
new product that we just showed. We
really don't see a return for a year.
Because now what will happen is all of
our So, we just got back from the show,
right? Uh, in High Point. We got an
unbelievable response. So, we're going
to be starting to send out samples. So,
what they do is they get the samples,
and they'll get samples from all these
different suppliers, and they'll go
through and say like, "Okay, here's what
we want to book. Here's what we want to
order." And then they'll request sample
allowance from us, which is typically
given at a discount because making the
books is very expensive for these
customers.
So, then we'll we'll have to decrement
our inventory and take the hit up front,
uh, or take a discount, um, in order to
give them some material in order to make
their books.
Then you hope you get a placement.
Uh, or or you get the placement, but
then you hope then you hope it actually
sells. You know, it's going to be in a
book that they give to interior
designers, and the interior designer's
going to go through the book and figure
out what they want to order. Mhm. So,
it's it's a long sales cycle. So, you
really don't see And those books will
come out now in the fall, right? So, so
it'll take another season for everything
to sort of work its way out, and then
we'll find out who, you know, which
products did well, which products didn't
do well. Yeah. So, it's it's a it's a
it's a it's a gamble. You have to have a
lot of trust in your team and in your
designers in order to make sure that we
need to make we need to make beautiful
product that's going to stand out, be
differentiated against our competitors
because
it's we're we're taking bets here, you
know? We're we're making bets on this
product and not all of them are going to
be winners. I mean, that's just the
nature of the That's the nature of this
business. We're going to have dead
inventory or inventory we need to
liquidate through other channels. Um so,
yeah, that's it's it's a it's a
challenge. It's a fun business, but that
part's a challenge. And
it being a challenge, is that because
there's a learning curve and you, Kevin,
are figuring it out and once you do,
it'll kind of this question of working
capital will stabilize or is it a
constant challenge? I mean, sure, sure,
it'll stabilize, but but just cash
management in general and the fact that
you're making very long-term bets on
this company. I mean, you're again,
you're not It's not like you're It's not
a service business where I'm collecting
credit card
immediately after service, right? You go
in, you repair the pipes, you know,
swipe the card, revenue gets in my bank
account, we're all good. That's not the
way this happens, right? Where our
payment terms are long, payment terms
are, you know, 60 to 90 days,
um both supply and buy side.
Um and, you know, we're not going to see
a lot of sales and repeat orders on this
stuff until
2024.
Yeah.
Um so, it's that part won't go away.
That's just the nature of this business.
Right.
But certainly some of the kinks will be
worked out and we'll get better at at
managing the cash together and and a
line of credit will certainly help as,
you know, I look forward to closing that
in the next
week, let's say.
Great. Well, yeah, let me know.
Just a couple more questions, Kevin. I
just want to um call out something that
you told me on the pre-call, going back
to the trust with the seller. Mhm. You
actually
stayed at his condo when you were
visiting the business. I assume this was
post-close. Uh there probably wasn't so
much trust that you were staying in his
place pre-close.
But uh but that's that's nice. Tell that
little story. Yeah, it's actually
actually goes a step beyond that. So,
the the apartment So, the owner lived in
uh in Winston-Salem, which is about an
hour from here. So, he would drive in um
but his wife uh his wife put put her
foot down and said,
uh "You're not driving back at night."
Because he would he's a night owl and he
will stay at the office
until late. He'll he would he would be
here in very late in the in the evening
and then
uh
try and drive back and she said, "You're
not doing that anymore." So, the the the
solution was he rented an apartment 5
minutes from the office and would
essentially do like the consultant's
schedule. He'd come in, you know, on a
Monday and then he'd leave on a Thursday
or whatever uh and stay in this
apartment. When I was talking to him uh
you know, obviously I moved my family
here from Dallas, Texas and we're trying
to figure out the living situation
and uh he's like, "Well, you can just I
mean, you'll have the corporate
apartment, you know, just you can have
that. You can have all the stuff in it.
You can have
uh because I'm not going to need it
anymore. And so, the business was paying
for the apartment and so, when he we I
gave him about a month, you know, I
stayed in an Airbnb for the first 4
weeks or so, but um you know, once he
had all it's a one-bedroom apartment, so
there's no way I was going to end up
staying with with him, but you know, we
we exchanged the keys at that point and
was like, you know, he took me around
and he showed me all the modifications
he made to this apartment. He'd been
there for 10 years, 9 years, something
like that. So, it it was like a sec- it
truly was a second home to him. Yeah. Um
and it had been, you know, furnished
with
uh I mean, he's from the furniture
industry, so uh lots of nice furniture,
uh quality stuff and look, I mean, I I
it worked out for me that we had an
pretty immediate place to stay while we
you know, sell our house in Texas and
figure things out here
um for long-term plans. But yeah, it's
uh it the living situation was kind of
funny, you know, in in talking about
like, "Well, maybe I'll maybe I'll buy a
house immediately. Maybe I'll
uh I I had an idea at one point that I
was going to buy an RV and live out of
the RV in the back of the warehouse.
Um I love the scrappiness of that. I
mean, just trying to figure it out,
right? And he's like, "Well, you can
just have this apartment." Okay, that'll
work. So, it worked out great.
Well, I assume that had been an ad back
that apartment. So, you you know, you
probably which No, it wasn't. Really?
No.
No, that mean there's there's a lot of
things I mean they they were very
They were very fair.
They were very fair.
Kevin, I haven't even asked you about
what I think is one of your favorite
topics because I see you talking about
it on social media, people.
Uh the people aspect of uh of of buying
and owning a small business.
Um
Just as a as a hook into this, one of
the things that you you've said recently
is like, you know, private equity type
financially minded uh people need to
recognize that the realities of being a
an SMB owner are much more about people.
That is a theme that comes up time and
again on this podcast.
What do you have to say on the topic?
Yeah, without people you don't have a
business. I mean, you I
I it's incredibly important to me that
the team is bought in, that we have good
people around us. Um and
to to a person, I mean, we have we have
great people. Um and I want to do
everything I can in order to support
them and help them flourish, you know,
professionally, economically. Um
and you know, it doing so is a
privilege.
And that's a differentiator we have in
small business versus being in in a
large corporate. You know, it's funny
that
when I was talking to um I was talking
to my VP about, you know, how to how to
do reward how to do bonuses, how to do
all this kind of stuff for employees
that that have gone above and beyond for
the show. And uh he he gives me a
suggestion like, "I didn't realize I
could do that." And he kind of looks at
me and he's like, "You can do anything
you want." You know,
which is which is very it's it's freeing
in a way, but it's also like, "Oh, I
kind of can do what I want here. And I
don't have to go and ask permission from
my boss's boss
to give somebody a raise or to, you
know, help them out with, you know, some
some random thing or to, you know, give
them a day off or to let them work from
home or to let them, you know, whatever
it is, you know, there's no there's no
red tape they have to go through. Um and
I think if you're not if you're not
using that to your advantage in small
business, you're leaving a ton on the
table. If you're ruling I mean, if
you're
ruling is not that's that's not quite a
Freudian slip, but like if you are
ruling with an iron fist and you're
you're a tyrant and you're, you know,
that's that's the model that you're
going you're I think you're going to be
in for a rough time and that's that's
what a lot of I mean
with a lot of these people, I mean,
they've not the previous owner, but the
but the founder came through and when
ruled with an iron fist. He built a
successful company, but, you know, they
they sort of lived in fear
um uh of of of him. And, you know, I
could not be more opposite from that.
So, there you know, there's a lot of
adjusting that they have to do and um a
lot less of, you know, like guarding
things for job security and I have to
basically tell them it's like, "Look
guys, if I'm bringing in a improvements
or I'm bringing in new technology, it's
not to it's not to replace you. I'm not
trying to replace you with technology.
I'm trying to remove some of the medial
tasks and let you work at a higher level
uh and do things that are, you know, a
little bit more challenging and things
that are, you know, that you're capable
of doing, but for right now you're
you're basically stuck pushing paper
because that's the setup that we have
and I, you know, you've been doing it
for 20 years, I get it. But, um
but you have enough industry experience,
I mean, they 20 years industry
experience, like they know what they're
doing and they could be so much more
valuable if we eliminate some of that,
you know, paper pushing medial stuff and
give them the ability to actually kind
of grow into grow into higher-level
responsibilities and take more ownership
over certain areas. So, I think if
you're not providing those growth
opportunities and you're not providing
the the flexibility that you can offer
as a small business owner, I think
you're missing the boat.
Great. Well put.
Kevin, you to last question, uh you've
mentioned Fruition Capital a couple
times. Tell people about it and tell
people who might have a deal how they
should how or if they should reach out.
Yeah. So, uh Fruition Capital is a we're
raising our inaugural fund right now for
um for first 5 million. Um it's going
incredibly well. Uh we've got, you know,
a lot of positive responses on both the
searcher side and the investor side. Um
it's a bit different of a model than
some of the other ones that are out
there, but but we're all I mean, I I
know a lot of the capital providers out
there and they're I mean, there's a lot
of good people in this space. But, uh we
want we want to come in there and be a
fund that uh is known for, you know,
having great investor relations, finding
awesome deals, uh unique deals, and good
sponsors, and then just being great
operating partners uh along the way. You
know, we we want the long-term we we
we're aligned in the long-term success
of our of the sponsors that we that we
end up backing, and we want to eliminate
the stress uh from from uh
from your deal.
Yeah. And but in the raise process
because look, I I know how it is, and
it's stressful. And if I can if I can
even give you, you know, if you can have
half the stress that I did doing this
raise in a short period of time, I think
that's a success.
Um you know, having having more options
available to you is certainly uh a
positive thing uh as a searcher. And as
an investor, what we provide is we
provide diversity.
Uh you know, we provide, you know,
access to a number of deals uh in a fund
versus one one deal at a time. Um and
frankly for all those busy professionals
that I mentioned, you know, like that
are on my cap table and that are on, you
know, a number of cap tables, investing
in a fund might be the way to go because
you're able to basically outsource the
diligence and the deal process and you
can just you could be the bank, right?
And you're able to again work at your
highest and best function, if you're a
big law attorney, insurance, whatever it
is, um you can work at your highest and
best level and let, you know, let your
money go to work in these funds finding
awesome entrepreneurs who are willing to
and to I mean the thing I kept saying
was I'm willing to crawl over glass to
make this deal happen. And I think I
even posted that on Twitter and during
one of the periods where I'm just like,
I will get this deal done.
Um
that's that's not necessarily a rare
sentiment of these among these people,
you know, they're they are the people
who are going to close deals, the people
who are going to get into this this this
niche are incredibly dedicated,
incredibly passionate, willing to just
put it all on the line and um I mean
there's there's no I don't I I can't
imagine doing something else. Like these
are these are some of the most, you
know, they're some of the smartest
people, some of the nicest people and
everybody wants everybody else to
succeed because there's plenty of room
for everybody. Um so, you know, to kind
of put a bow on it, you know, if you're
an investor and you're looking for
diversity in investment, uh
please reach out or if you're a
searcher,
uh I I I've talked to tons of searchers
and I'm happy to talk to you. Um you can
just reach me at [email protected],
that's the easiest way.
Great. Or Twitter, right? Of course, as
we've been talking about Twitter.
Twitter, of course, and LinkedIn. You're
active And LinkedIn. I'm I'm I'm nothing
if not reachable.
Kevin, thank you very much for coming on
to do this. Thank you for being on the
panel a few weeks ago. You are very
generous with your time and thoughts and
I appreciate it and I'm sure the
audience listening to this will as well.
So, thanks a lot, sir. Thanks, Will. It
was a ton of fun. I hope you enjoyed
that interview. Make sure you subscribe
to the Acquiring Minds channel below.
We are now publishing twice a week. So,
tons of new interviews and stories to
come.
Stories that will help you along your
own path to acquiring a business.
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