Host: My guest today, Brandon Adams, bought an ice distribution company. Does that sound kind of random? Well, it did to Brandon too. He never expected he'd be moving ice for a living, but it turns out to be a pretty great business, especially if you're looking to acquire a first business as a foundation that enables you to buy others, as is Brandon and his partner's plan. So this interview is valuable not only because the business itself seems like a great opportunity for an acquisition entrepreneur, but because Brandon is kind of a hybrid. He's an operator who does not flinch at doing the actual work of the business, as you will see. But he's also a long term investor with a big vision for buying businesses. Enjoy the conversation with Brandon Adams. Welcome to Acquiring Minds, a podcast about buying businesses. My name is Will Smith. Acquiring an existing business is an awesome opportunity for many entrepreneurs and on this podcast I talk to the people who do it. The Entrepreneurship Through Acquisition Summit at MIT is coming up. As we all know, success in entrepreneurship through acquisition ETA is all about people and specifically your leadership of the employees that you inherit when you acquire a business. And that is the theme of this year's summit at mit. Leading high performing teams. I'll be there. I'm actually moderating a panel about how and when to make changes at a business you've acquired. A topic that regular listeners know comes up again and again in the interviews here on Acquiring Minds. So highly recommended you come. It's a virtual event. Friday, March 11th. To learn more, go to mitsearchfunds.com you'll see a link at the top of the page to the summit. It's going to be a great event. Last year there were hundreds of attendees. Friday, March 11 and mitsearchfunds.com Brandon Adams, thank you for joining me today on Acquiring Minds.

Guest: Will, thanks so much for having me.

Host: You are the CEO of Philadelphia Dry Ice Company, a 45 year old ice distributor. I love it because it's one of those very niche businesses that many people have probably never heard of, but it's just hiding in plain sight out there. So we're going to hear your story of buying into this business and a little bit about the business of ice distributors itself. So start us off with a quick history on you, Brandon. Take us right up to your decision to want to go out and buy a business.

Guest: Yeah. From the Philadelphia area, grew up here, went to college here. September 11th happened my senior year of high school. So I was kind of always edging towards government service, military service, and ended up taking that route after college I enlisted when I was a senior in college, actually in the army. And I spent six years as a reconnaissance team leader there, which was fantastic. Ended up trying to consider making that a career and really wanted to go down that path. I had a good friend of mine who is from my same unit who was working for a hedge fund at the time. Kind of convinced me to give that a shot. I was pretty dead set on going into the army full time, but he set me up with an internship at this investment fund. They specialized in energy infrastructure. So think pipelines, refineries, storage terminals and whatnot. And, you know, kind of fell into a really good situation there. It was a really small team, all from the same area where I grew up. So we had a lot in common. It was a lot. It was a lot like, you know, just a couple good friends sitting around, you know, working hard, making money, playing hard. It was really collaborative. It was fantastic. And, you know, two analysts while I was interning there decided to leave, go on to different opportunities. And so I kind of picked up where they left off. I volunteered to pick up the slack a little bit and help people out with the modeling and the investment thesis and whatnot. Ended up doing decently well and got offered a full time job. And I thought that, you know, I'd done the, the army thing for a number of years and this might be a different adventure. So I decided to take it. And it was a great experience. I stayed there for 10 years. The fund when I started was $30 million, I believe. And at its peak in 2015, 2016 reached 12 billion. It receded a little bit after 2016, but, you know, we did well. We ended up being bought by the Blackstone Group and folded into their credit arm, gso, where it still stays today, is still in their credit army. But yeah, I would say maybe about 2015. I had a really good friend from high school, Don Ware. He was doing a little bit of banking in New York, but his father owned a small. What I thought was small, but after I got in a small business, started to learn that it was actually fairly large. It was an automation parts distributor here in the city. And he started buying up some other small businesses to try to diversify their revenue stream a little bit. And my friend Don came home, moved home to be president of those two businesses. And so we started meeting up, you know, every month or so. We'd grab a beer, I'd ask him what he was up to, what small business life was like, and he asked me what, you know, life was like. In finance and you know, the grass is always greener. I thought that what he was doing sounded really, really cool, you know.

[5:40] Host: What did you like about it?

Guest: Well, it wasn't finance. It wasn't sitting in front of a, it wasn't sitting in front of a computer screen for 12 hours a day. Like a, like a study hall.

Host: Yeah.

Guest: Now, you know, I'm sure that different offices and different teams have different, different dynamics, but that's what my, my team felt like at least. So I like the fact that, you know, things were, things were different every day for him. He was solving many different problem sets at once, kind of not the same one over and over again. He get to manage people. That was something that I really missed a lot from the army was, was building strong relationships with people and building teams. And so that's something that he was doing a lot of that I wasn't really getting to do a whole lot of. We had a team set up where it was one portfolio manager and about five analysts. And it was like that when I started and it was like that at that point. It wasn't changing. So yeah, I thought it was really dynamic. It was kind of a blend of different skill sets that I had built up in the army and that I had built up in the civilian world. And I thought it'd be interesting to give it a shot. So we had talked about it for a number of years about him wanting to get some skin in the game and build some equity. I think the, the two businesses that he ran for his father, I don't believe he had any equity in them. So he wanted to get some skin in the game and I wanted to, you know, to, to prove myself on my own as well. So we tried to develop a thesis for a couple years and then in early 2020, the thought that we had gotten to the point where we could execute and so we both pulled the plug and dove in head first into our investment partnership, which is called K4.

[7:27] Host: And did you always. Was it just assumed that you would go out and buy a business rather than starting something from scratch?

Guest: Yeah. So that was kind of the route that we had, we had settled on for a number of different reasons. So first of all, we didn't have any, any skill sets to build a product. Sure, you could make the argument maybe we had the skillset to go and build a service, but really it comes down to risk mitigation and the fact that there, our thesis revolved around the fact that there are so many great long standing businesses out there that that are ripe for, for capital and ripe for people like us, younger, kind of more enthusiastic folks to take over. And maybe as the businesses that we found, they've reached a plateau where their owners kind of got to the point where they were happy with what they were, what they were doing with the business, what the business was providing with them. And the business had the foundation to do much more. But they had either capped out on their ability to do so or capped out on their ambition to do so. And so we thought that there were a lot of opportunities out there for us to come in and kind of pick up the torch where they had left it.

Host: You know, it's interesting all the different ways people get into searching for a business to buy, but there's often just a moment where, where people don't realize it's. Don't even think about it, don't realize it's possible. And then they do. But your business partner and friend kind of having seen his father buy a business and then buy other businesses, it probably felt very accessible and familiar to him just cause he'd been front row to his own father doing it for a few years. So that's kind of. He probably didn't. Many of us, me included, we learned very late in life relatively that this is possible. But he'd been seeing it for years, so that was probably something that just made it seem much more kind of accessible to him than to your average searcher.

[9:30] Guest: Yeah, that's exactly right. And I think that once we started reflecting on it, we've been surrounded by entrepreneurs almost our entire life. You know, my dad was an entrepreneur. He was in the service industry, you know, financial services as a wealth manager for a number of large companies. And then, you know, when I was maybe in middle school, he, he broke off and founded his own practice. My mom, same thing, she was a, a clothing designer. And when I was young, you know, she had her own own company making clothes for young, young girls. Same with one of our classmates at Haverford, Dave Rosner, who is somewhat of a, I guess, semi celebrity in the ETA world. He founded a really great search fund with Greg Geronimus when they were at hbs. And so we have all these people around us who've done this before. Dave has been a fantastic help for us and is one of our advisors. And during the search process and especially during the acquisition process, when we're trying to get through due diligence and the legal documents for this company that we bought, he is outstanding and incredibly helpful. And you know, once we dove into this this business. Once we dove into the. This world of search and eta, everybody's been fantastically helpful and we're surrounded by a lot of entrepreneurs that we. Entrepreneurs in our network that, you know, maybe we had overlooked before.

Host: Yeah, it's a very collaborative space. This is something that you hear over and over, and it's just really a gift to be in a space where people are so eager to help.

Guest: Exactly.

Host: The Philadelphia Dry Ice Company. How did you find it? Tell me about your search overall and then how you found this particular opportunity.

Guest: Well, it's fantastic. I guess I'll just tell you about the search process. To start, we really were old style at first. We were sending out letters, we were sending emails, we're making calls. Part of that was Don's dad told us, hey, if. If someone's trying to get through to me and they want to stand out a little bit, I would, I would recommend that someone come see me in person and tell me about why they want to buy my business. So we did that quite a bit, actually. We just drove places and if the owner wasn't there, we'd drop off a letter for him. If he was, we try to try to talk to him.

Host: Would, you know, would you have done a lot of pre research on that company?

[12:01] Guest: Yeah. So it started out, you know, I would just Google map our geographic area. So both of us live in the western suburbs of Philadelphia. And so we wanted to find a business that was a decent geographic fit because we both have small families and we're fairly rooted in the area, having grown up here and, you know, having gone to high school right down the street, this is where we kind of want to be. So we are very geographically focused, maybe not so much as industry focused, but so we're Google mapping every industrial park within about an hour's drive, hour and a half drive of where we live, you know, And I would just make an enormous list. I would try to find out generally how large they were. And I would kind of triangulate that based upon number of employees. I would get revenue numbers off of Manta, which I learned were just incredibly off base. And then, you know, I'd look, I would look to see what industry they were in. I would look to see who owned them. I would look through the, you know, the Pennsylvania Department of State website for, you know, business owners and try to figure out who owned them, how old they were, do they have family working there. And so I made a list of, I don't know, close to 2,000 businesses maybe. And then, and then we got to work sending them emails, calling them. Terrible, terrible hit ratio on that. I think, you know, out of all of those letters and email sent and whatnot, we probably heard back from maybe three or four business owners.

Host: Wow.

Guest: Now, surprisingly, one of them was a pretty good hit. And we, we ended up going decently far down the road with him, you know, probably three or four in person, due diligence meetings, figuring out what he wanted. And it just ended up not being a great fit. He was more looking for an infusion of capital than he was kind of a retirement plan. But, you know, we've stayed in contact with him. I thought he had a really interesting business, one that we, we probably would have come close to maybe wanting to own. I don't know if we got farther down the road if we would have pulled the trigger or not. But we've stayed in touch and you know, we're trying to harvest those relationships for further down the line if they, if they fit, you know, a little farther down the road.

Host: So, Brandon, why did you. I mean, what you just described sounds like, you know, a very kind of methodical, proprietary outreach process which is pretty sophisticated for, for people doing this, you know, outside of kind of a traditional search fund context or coming out of an MBA program. And so why did you choose that method? And did you, were you kind of against using businesses, you know, broker broker deals and enlisted businesses?

Guest: No, not at all. Part of it was because of what, you know, Don's dad had told us about how to stand out and how to kind of, you know, approach people, try to find a business that you think is a great business, and then try to dig down versus, you know, just trying to find what's for sale. And you know, it's for sale and you don't know why it's for sale. But the other thing was we were early enough along in the process where we hadn't built out a full, you know, full list of which brokers were high quality brokers versus the ones who were just going to feed us a bunch of stuff that was going to waste our time. So we had started to reach out to different brokers in the area, hadn't started to see a ton of flow. And we're still working through that process. But, you know, Don's father had found those businesses that Don was running through a broker. And we, we got on his list and funny enough, the ICE company came through him. I think that a lot of people have reached out since we bought the business and since, you know, I've started Talking about it on Twitter and the network has increased, asking about the broker landscape. And I think there are a bunch of really good ones out there. I think it took us a little bit of time to sift through and find out, you know, which ones were worth spending a lot of time with and which ones weren't always as great about sending us businesses that either fit the criteria or, you know, just generally speaking, we're advertising businesses that looked like they would be a good fit for us. I think that's changed a little bit now that we've kind of curated that list a bit more. But at the time, we didn't know anybody from the other person. And I know that Dave was telling us that he had a lot of success going to networking events of attorneys and accountants who might be representing potential buyers. And I'd heard that a lot of people have had success going that route. Unfortunately, when we started our search in, you know, mid to late 2020, that just kind of wasn't a possibility due to Covid, those types of events weren't happening. So we are resting a lot on just trying to get in front of businesses that were local and trying to get in front of those people, and then harvesting and trying to curate that broker list, which I think we've gotten down pretty decently now. We found a bunch of really good ones that we talked to pretty frequently and. Yeah, go ahead.

[17:41] Host: Is there any shortcut for figuring out who the good brokers are in one's particular geography, or is it just like anything else? You just kind of. I mean, you can either look for referrals and have somebody who already knows tell you, but if you don't have that, is it just kind of reaching out to a lot of brokers and kind of getting a feel for them, having conversations, and the best ones will rise to the top?

[18:05] Guest: Yeah, I think there's a lot of word of mouth. And early on in our search, I was new to everything. I was new to this ecosystem, wasn't entirely familiar with even who to ask for, who could recommend a broker. So I spent a lot of time on Biz Buy Sell and trying to see who was on there, trying to get on their list, see what they were offering. We had a general financial and operational guideline for what we were looking for. A lot of the companies on Biz Buy Sell are a little smaller than what we were looking for, so it just took a while to find them. And then once we found them, see, okay, what industries are these guys mostly playing in? What size are they mostly Playing in when we call them and interact with them, what kind of feeling are we getting in terms of how easy they're going to be to work with, what kind of information they're going to be willing to share and how. And I think we've gotten enough experience where we have a handful that we really trust and we look towards where we can. We could say it's going to be a good relationship and we're not going to waste our time.

Host: So yeah. When you said you were looking at biz by selling, many of the businesses there are were less smaller in enterprise value than what you were looking for. What were your criteria, your search criteria and how did you decide?

Guest: Yeah, we started out.

Host: What criteria was.

Guest: We started out probably a little narrower than we should have simply because we're, we're already starting with a fairly narrow geographic focus. We started with a financial or ebitda range of 1 to 5 million, which at the time we thought was a fairly narrow window. And what I'm now, you know, after a little bit of experience I'm seeing is a fairly wide window when it comes to the micro market or the lower middle market in terms of, you know, what you're looking at in a $1 to $2 million EBITDA business. Vers what you're looking at in a $5 million EBITDA business. The reason why we kind of picked that range was, and it was our impression at the time that if you're playing sub $5 million, you're generally not competing with many private equity firms. I think Covid and the general financial landscape changed that quite a bit and it's persisted to even now where I think a lot of those firms are playing even sub million dollar EBITDA in some, in some circumstances. But we also needed something that was large enough to support two salaries or at least one and a half because Don actually still runs one of the other businesses for his dad and works on the ICE business, you know, two or three days a week. So we needed something large enough to support two salaries, small enough that we weren't going to overpay by competing. And then operationally we were looking for something that was generally within our skillset range. So me with a background in, you know, we'll call it defense, but it's not really, I don't really have an experience in, you know, defense business, but experience in infrastructure. And then Don's experience lies mainly in light manufacturing, the two businesses that he was running. So we tried to find businesses that generally fit that schema or want like the ice business that we found one that's just incredibly simple and so straightforward that, you know, the likelihood of failure was fairly small.

[21:52] Host: Okay. Okay. So this broker sends you the Philadelphia Dry Ice company and it, it fits the bill. What do the numbers look like on it and what do you like about this business?

Guest: Yeah, so I'll start with the last question. What we liked about it was, like I mentioned, the simplicity. Very, very few SKUs. So say about 65 or 70% of revenue is based on dry ice sales. And then the other part of the business is the logistics, is managing the trucks, managing, dispatching and delivering the ice and moving it from point A to point B. That's maybe the more difficult part of the business. But honestly, that's what drove us to consider this. When we think about what we want to do long term, we kind of have the idea of, I'm sure this is a dime a dozen, but of wanting this long term holding company where we assemble a portfolio of maybe 5 to 10 businesses over the next 10 to 15 years. Very similar to the Chenmark model. And this seemed like a great opportunity where if nothing else, this is going to generate a lot of cash for us to go out and purchase other businesses down the line. There's very little risk of us screwing up what's already been established and there's a decent chance that we could grow it a good amount. So I think it hit all of those markers for us as a good opportunity. And you also asked about the numbers. So we bought it from a gentleman who had bought it from the original owners about 4 years prior. So the original owners had established this company with their father back in 1975. And these are your typical South Philadelphia Irish guys. They're the ones where, if you think about 1970s, 1980s Eagles game, they're the ones standing on the corner hawking T shirts and pretzels and ice. These guys are fantastic and they are the epitome of old time entrepreneurs because they sold this business, they made a decent amount of money on it and they went out and started more businesses. The one now runs his own construction company with his son and the other makes wine and he's, they're just, they're, they keep going and they're fantastic. And they, they live close by. They, they stop by and, you know, answer any questions we have for them. They're also our landlords, so, you know, they stop by every now and then. But they're incredibly helpful. They're great guys. You could see why they were successful growing this Business. They had gotten the business to the point where they were doing probably about 550,000 to $600,000 of EBITDA. And then when the gentleman that we bought the business from took over, he grew it quite a bit. I think the first year he owned it, he grew ebitda to about 700. The second year he hit 825. The third year, 850. And then during COVID it was a phenomenal year. I think he did roughly 2.8 million in EBITDA that year. Driven primarily by the fact that we were all staying home, we were all ordering our food online and having food delivered straight to our door. So the demand for direct to consumer food logistics skyrocketed and thus the need for dry ice skyrocketed. So a lot of his windfall in 2020 wasn't so much a byproduct of him winning business that was going to be staying around. It was really him acting as a dry ice broker, if you will, and just having the nameplate of the business and its history and people knowing it as an established, you know, entity for selling dry ice. You got a lot of inbounds of, hey, can you, can you do £40,000 here, can you do £80,000 there? And instead of saying into his credit, instead of saying, hey, no, I can't, unfortunately, we're too small, you know, he said, hey, hold one, let me see what I can do. And he would just call people across the country trying to broker ice here and there. And he did a great job and he scrambled and he did exactly what any good entrepreneur would do. And he made the best of a bad situation. He turned it into a very good situation for himself. So he knocked it out of the park in 2020 and 8 million in EBITDA. Yeah.

[26:55] Host: Wow. Up, up from. Would you say 825 was 20, was 2019?

Guest: Yeah. Yeah. Okay. Yeah. And then, so what ended up happening was he had bought the business because he, he had, I think he wanted to bridge himself to retirement a little bit. He had a corporate job that I think he, he lost in 2016 or so, and so he had a couple years until he was set to retire. He needed to bridge himself a little bit. He used his savings to buy this business. And then when 2020 rolled around and he hit his number and a little bit more, he just wanted to be done and wanted to retire. So it was a good setup for us. He had not done a ton of growth or tried to grow the business a ton. He knew what it was, it was good for him. He kind of tried to keep it going. He was successful in a couple different realms, growing EBITDA a bit and he got the wet ice business for the stadiums and a couple other opportunities, but didn't put a whole lot of effort into marketing, into sales. And so he looked to sell and we stepped in and I think it was good because he understood that 2020 was an anomaly. He wasn't looking for a multiple of 2.8 on the business. He was very upfront about that. He said, I don't expect that. I don't even expect a multiple on a fraction of it. Just the business is what it is. Prior to 2020, 2020 was an anomaly. So here are the numbers that I'd like you to go off of prior to 2020.

[28:31] Host: That's great. I mean, because otherwise it could have just been a non starter.

Guest: He wouldn't have sold it to anybody. Yeah, you wouldn't have sold it to anybody.

Host: Yeah, great. And so what did you. What you liked about the business obviously was how profitable it was. It throws off cash, a sizable amount of cash. And that can be a great foundation for your future plans. And you think it's kind of an evergreen business. I mean, refrigerating food as it's being transported isn't going anywhere. And a lot of the use cases that you described don't seem like they're going anywhere. What about just like growth opportunities? What value in particular did you see being able to add to it? Or was that not even necessary as long as you kind of. I think as you said, you don't screw it up. Anything other than screwing it up is gravy. And you don't really need to necessarily grow it to have it be what you want it to be.

Guest: That's right. What attracted us to it was really just the baseline of, hey, this is really simple business that kicks off a lot of cash. That could be a cow for us in terms of going out and fulfilling our mission of establishing a portfolio of different companies. I think when it came to growth, you always hear the obvious adage of the prior owners weren't putting any effort into sales and marketing. This was actually the case in this environment. We didn't bank on being able to grow the business all that much. I think in our models we assumed GDP plus a percentage or two, fairly small amount of growth. But we saw a lot of inefficiencies in the way things were being run here. You know, taking paper tickets, dispatching drivers in a really inefficient manner. Just really small things here and there, which would be, you know, great experience for us to come in and try to tackle these basic issues. And like I said, if nothing else, we're relying on the baseline here of don't screw it up, you've got cash to go and buy other businesses. And then I think in terms of growth outside of sales, what we were looking at was we probably couldn't scale simply within, you know, reselling dry ice. That's very difficult to do without, without manufacturing the ice, which is obviously very capital and labor intensive. That's not completely off the table for us, but it wasn't something that we were planning on right off the bat. Where we see potential growth is looking upstream or downstream of what we're doing. So upstream, in terms of. If we look at really large dry ice distributors and manufacturers, what else are they doing? Well, they're doing other industrial gases, they're doing welding supplies and equipment and anything that has to do with. With food logistics. And then when I look downstream, I think food logistics and I think healthcare logistics. So are we doing anything? Are we supplying the logistics providers with any solutions for other bottlenecks they have other than, you know, this commodity that they include in their box? So that's where we've started to spend a little bit of time exploring. But honestly, no, we're just attracted. The fact that it's very simple setup, very simple to operate is very plug and play. I never thought that I'd own an ice business, but we've been really happy with the way it's done so far and kind of where it's going.

[32:13] Host: And what about other competitors or upstarts? One of my first interviews was with somebody who had acquired a food distribution business. And he said that one of the challenges in that business is that any guy with a truck can start up tomorrow and compete with you, undercut you on price and compete with you. Now, obviously, moving dry ice around probably takes a little bit more than, you know, you gotta have some truck that offers the necessary refrigeration. But I think the fundamental point remains. Are there moats in your business or is it really just you're. Your clients are as sticky as your track record is good with that client?

Guest: No, the moat is really your relationship with the customer and the relationship with the supplier. So dry ice is scarce enough that you're rolling in it if you've got the equipment to make it. And that equipment is extraordinarily expensive. Dry ice takes up a lot of space too. If you want to sell it at scale, it takes up a lot of space, so does the wet ice. So you have to have the space, you have to have the relationships, you have to have the capacity to move it around and know what you're doing with it. So I guess, no, hey, if I had a decent amount of capital and I could buy a few trucks and I could buy a decent space, sure, I could start selling dry ice and I could start selling the wet ice. I would say separate those two markets. The wet ice space is very saturated and very competitive. The dry ice space though, you're going to need to be able to do it. You need to be able to secure the ice to be able to do it. And I think if you're an upstart, you're going to pay, you know, two or three times the amount of money that we pay for our ice, and you're going to have to place it in areas that are going to be able to, you're going to be able to generate a margin off of that. The types of people that we, that we sell to, you know, expect, you know, pretty cheap, pretty cheap ice. Now, it spans the gamut. So people who walk in off the street to buy ice from us just at our front door, they pay a retail price for that. But you know, the folks that we sell £20,000 a week, £40,000 a week to, you know, those margins are fairly small.

[34:37] Host: Yeah, you acquire the business and you think that it seems, you know, it seems like a simple business from the outside and you know, your, your mandate is just don't screw it up. And then you find out that in fact. Well, why don't you explain to me why you found yourself driving a truck for the first six months?

Guest: Yeah, that was a, that was definitely a failure of the due diligence process. So our due diligence focused a lot of, on making sure that they were earning the amount of money that they said they were going to earn. We were really focused on the financial side, just really a derivation of our deal structure probably. So we went 80% SBA with a 10 year amortization, 10% seller note and 10% equity. The seller note was a one year standby period followed by a 10 year amortization with a bullet payment at year five of the amortization. Overall, it would be year six. We had worked the numbers such that there was still a decent cushion with what this business was generating that we'd be able to service the debt, pay ourselves and still have a decent margin in there. We Were primarily focused on the financial aspects of the business because we're personally guaranteeing a lot of money.

Host: Yeah.

[36:00] Guest: Where we probably lost sight of was what the owner was doing every day and how that was going to affect our lives once we owned the business. So, you know, we did ask him, we said, hey, like, you know, what do you do day to day? How do you run your day? You know, he mentioned that it was mostly logistics and HR and sales and, you know, communicating with our suppliers and securing ice. That makes sense. He was doing all that, all right. But he was doing it from, you know, the cab of his truck because he was also a full time driver and delivery guy. So we get the business. We were supposed to close in January and his terrible lawyer dragged it out till the end of April. So that whole time that we should have been, you know, getting a. Some training and ramping up slowly but surely into the busy season. We bought it right at the beginning of the busy season. So there was no time for sitting around the office and learning how things go. We just had to go. And so we showed up, day one, jump in the truck and off we go, delivering ice all day. Showed up at 7:30 and we stopped at 6.

Host: So was this a shock to you? Was there kind of a moment where you were like, hold on a second, wait. You're in the truck all day and that's what I'm going to be in the truck all day?

Guest: Yeah. I mean, we knew that he was making, you know, he was in the truck some time, he was making some deliveries. It was not so much known that it was really all day and he was, he was kind of shooting from the hip on all the other aspects of the business. You know, we knew that he wasn't trying aggressively to grow it, that he wasn't focused on strategy, he wasn't trying to see if there was good fit to grow downstream or upstream or whatnot. He was just managing the business as he inherited it. But man, yeah, we did not anticipate that we would be sitting in the truck and just be regular delivery guys for a while. I think after a couple weeks of that, it really started to reflect on me that this was a real gift and that we're gonna, we're gonna benefit from it.

Host: Yeah.

Guest: In that, you know, all the other guys saw that, you know, we weren't afraid to do hard work and get in there and do their jobs and oftentimes, you know, get up to speed on their jobs faster than they do and do their jobs better than they do. You know, knock out all these deliveries quicker, keep, keep going and keep driving hard. So we built up a lot of credibility with the team doing that, which was a good side benefit. Not that we wouldn't have shied away from doing it otherwise, but I think that they saw how much we were willing to grind and to be there and be there before they got there, stay there long after they went home. And the other thing that we found out was that this business operates 24 7. So just like any, you know, home service business, like a plumbing business, we have on call hours. So we were getting calls at, you know, 8, 9 o', clock, 10 o', clock, 3 in the morning. And. And we had to figure out quickly how to manage that because before the guys who started this business in 75, they would, they would do everything, and they would do everything themselves because they lived a block away. So someone called, you know, some nightclub would call them at midnight for 10 bags of ice, they'd go do it. So we had to quickly change that and manage customer expectations a little bit. But yeah, it was a total eye opener the first couple weeks. And, you know, I, I would have left to go home and I'd be eating dinner with my family at 7 o' clock or 6 o' clock or whatever it was, and my phone would ring of somebody needing ice. And I had to, A couple times I had to leave the dinner table with my wife and my daughter to run downtown and deliver ice. And that was a. I talked to Don, my partner, after that. I said, something's definitely going to change, not just for me, but for the other employees too. Because how do you put a price on having to leave the dinner table with your child to go make sure some dingy restaurant has a couple, couple bags of ice? So we set some minimums on that. And a lot of effort was put into kind of changing customer behavior and setting their expectations appropriately. So now what we've kind of gotten them to do is if they kind of know ahead of time that their ice machine is going to go down, which they normally do, because these are, these are restaurants that will call us every day for three months, you know, wanting ice after hours, said, hey, your ice machine is not broken, fine. But like, we know it's broken, you're not going to get it fixed for another couple months. Send somebody down here to pick it up. You'll pay a cheaper price. And it's not that much ice. You can fit it in your car or ask us to deliver it during the day. That's Fine. So a lot of effort went into that, and then a lot of effort went into kind of managing expectations for, for other customers too, like the grocery stores and whatnot, of what our minimums were going to be going forward for that. So at the very least I could answer my wife when she asked me why I'm leaving. It's for a good reason, because it's going to be like a enormous order or something. But oftentimes it's also in the middle of a really bad storm or terrible weather. So it's kind of treacherous to be driving a truck around then also.

[41:52] Host: So this, you know, I imagine, as you said, it's kind of a blessing in disguise. I mean, not only do you build credibility with the crew, with the rest of the team, but you just intimately familiarize yourself with what their day to day looks like and what the challenges. You know, you're essentially in a logistics business and now you've done six months of the very logistics, you know, frontline logistics. So it's probably, I imagine you've had lots of insights about what the day to day is like for them and also areas for improvement. So. And I also imagine, you know, that there's, as you pointed out, there's enough cash coming out of the business that you can hire somebody into your role and step out of the, you know, the cab of the truck here, kind of at your discretion whenever you want to do that, feel like you've learned the business enough to do that, you can probably hire your replacement to do the driving. Have you done that yet? Are you planning to do that?

[42:45] Guest: We're actively working on that right now. And you're absolutely right. And that kind of brings up another good issue. You know, we had the, we had the money at the time that we bought the business to hire another driver. We hadn't thought about hiring a general manager because we still wanted to be deep in the weeds and learning what was going on with the business first before we handed it off to somebody. But we had the money to hire another driver or even two, however many we needed to fill those tasks and take up that slack. But as I'm sure you know and many of your listeners know, the labor market over the summer was awful, especially for that kind of sliver of the market where you're paying anywhere from $15 to $30 an hour.

Host: Brandon, you say that you overlooked this fact and due diligence that the previous owner was spending all day in the truck. What, what should somebody out there, what should you have asked that you can Coach other people to ask that. You didn't just, hey, what do you do all day? No, no, really, what do you do all day?

Guest: Yeah, it's a great question, and it's difficult to think about how that question might be asked about any other business than ours. Well, I'm just trying to think about, you know, if I walk into to our business and I see how things are going and how they're operating and how they're moving. I don't honestly know if I would have gotten the right answer out of him any way I asked it. I could ask him, yeah, how many hours a day are you spending in the truck? He very well may have lied to me, and I wouldn't have known the difference because I don't know how many people it takes to move as much ice as they were moving because I just didn't know what I didn't know, obviously know. Now, I suppose I could have taken a look at like an average order ticket and seen generally how many orders fit into a truck and how long a truck might be out, but it would have been too much work to come to a very fairly inconclusive answer. Yeah, it's a tough call. You really are kind of relying on sellers to. To be honest with you. I think generally just getting a good feel as to whether a seller is being honest with you about other things will tell a lot about if that answer is truthful. What are his business dealings like? How do his financial reports look? Is he trying to fudge the numbers here or there? If he's willing to do that in one aspect of his business, he'll do it in another. And how he translates to that to you.

[45:30] Host: You know, one of the other things about you in particular, Brandon, that jumps out at me is as a thought at the top, you said that you missed from your military days leading people and cultivating a team. And it's a contrast to what a lot of my guests, or just people in this space, I think feel, which is that, you know, they look at the financial potential of Small Business Acquisition and their eyes go wide and then they get into the business and there's all these people problems, all these people issues. Like it doesn't, you know, what it looks like on the spreadsheet is not what it looks like on the ground, but you. It actually sounds like that's something that you not only thrive at doing, but actually kind of missed and looked forward to doing again. Do I have that right? And do you think that that differentiates you?

Guest: Yeah, I love it. And so funny enough, when Don and I started talking about going forward and doing this with K4, he expressed to me, hey, I've been operating these two businesses as president for six or seven years now. My goal with what we're doing is honestly to step back and do more of the finance stuff and leave the operational and HR stuff. So I don't know if we're going to be a great fit. Because he was viewing me as the finance guy. I said, well, funny enough, I don't want to do the finance stuff anymore. I really want to do the operational and HR stuff. And he looked at me and he's like, you know, I don't know if you know what you're getting yourself into. And I said, no, I'm perfectly clear of what I'm getting myself into. I'm all, I'm all for it. And he's like, okay, well, let's, let's go ahead and do it then. And I have, I've really enjoyed, you know, just, it's tough when you inherit a team. So, you know, technically, you know, they got fired from the last owner's business and hired by our business, you know, at the same time. So not everybody was a great fit, which is fine. But, you know, most of the folks here were, you know, were nines or at least eights and a couple tens sprinkled in there as well. And they're, you know, I really hesitate to throw out the word family, but a lot of them are. So one of the ladies who works as our office manager is the sister of the guys who started the business and his son or her son is one of our warehouse associates. A lot of these people live in the neighborhood right around South Philly. And it's a very family oriented environment and they're, they can see through you really quickly. So, yeah, you come in and you demonstrate a lot of empathy. You give people, you know, a lot of slack to operate with at first. Just getting to know how they move about and what they're all about, what their goals are, what their ambitions are. And you just kind of tell them, look, I'm here to make sure that you have the right tools to execute the mission with my intent, you know, and they appreciate that. So, you know, just the first couple days we took a walk through and, you know, just met with every person, said, hey, you know, what's your goal being here? And it's okay if your goal is just, hey, I just want a steady paycheck. Like, that's incredibly noble and that's great. And I'm gonna facilitate that. But, you know, we had a couple guys who did express interest in, you know, not being a truck driver anymore. Like. Like, hey, you know, I think it'd be cool to, you know, yeah, maybe drive the truck, but, you know, maybe manage the facility or have some sort of path beyond just, you know, being a delivery guy. And we're working towards that for them. They know that we're working hard to do that for them. And so, yeah, you're just coming to work every day and you're showing that you're putting in. You're putting in the effort to, you know, help them realize their goals as well. And that's something that, you know, I recently did an interview with our high school's newsletter, and they asked about. I said, hey, you know, your business deals a lot with legacies and, you know, carrying on business legacies. You know, what do you want your legacy to be? And I'm like, well, I don't really care about having a legacy. But, you know, from a business perspective, I think a lot of. I think leadership in business is a lot like having a coaching tree in the NFL. You know, the wins and losses only tell one side of the story, and it's a really small side of the story. What tells me more about how you ran your organization is where other people have gone and how they've succeeded and what they've told people about you and about how they were helped to that position by you. So the conclusion is, obviously, you want to build a great platform, but the objective in building that great platform is so that platform can help other people reach their. Reach their goals and ambitions. So everybody here knows that.

[50:51] Host: That.

Guest: That's our intent is to, you know, the reason why we're working so hard and the reason why we're trying to grow the business beyond what it was before is so that it can work as a machine to help them.

[51:05] Host: Last question for you, Brandon. When you and. Sorry, remind me of your partner's name, Mike.

Guest: It's Don.

Host: Don. When you and Don were sketching out what you wanted to do and you came upon the thesis of, you know, retiring business owners and being a great succession plan for them and acquiring multiple businesses over a number of years and having a portfolio of businesses, how does one decide to do that? A portfolio of varied, assorted businesses that, you know, that may not be complementary at all. They may be very different types of businesses versus taking those same 15 years and intellectual and financial horsepower and. And. And just trying to grow the one business as big as you can, two very different paths. But it just seems like, like, for example, if you're looking at your second second acquisition, you know, a year from now, and you're looking at a completely different industry, then you start over, you have to learn that industry, and you'll get better and better at learning industry industries. You'll be able to learn industries really quickly. But still, you know, you're kind of, there's, in some sense you're starting over again versus, it would seem there'd be a compounding effect on instead having that second acquisition be within the same industry in which you already are. And you already, you've already invested a year and a half in capital and learned a ton and have a network, et cetera, et cetera. So how does one decide to be an acquisition entrepreneur that buys a business and grows within that, and grows that business within that industry as long as. As hard as they can, versus building a mini Berkshire Hathaway?

Guest: Yeah, it's a good question. And, you know, the answer is probably twofold. And unfortunately or fortunately, you know, both of the aspects of those answers are fairly selfish. So the first part hits on kind of what you mentioned in terms of learning new industries and that we, we want the challenge. We want the challenge of, you know, spending a couple of years in one business and establishing it as a good platform and then, and then trying it in a different realm. The second answer is probably more practical in that the whole objective for us is in an end state, a financial one, and having different businesses, you know, operate in a symphony together is more diversified and represents a better form of risk mitigation for us longer term.

Host: Okay.

Guest: And so that's kind of what we set out with. I will say, you know, in our experience so far with this business, we've seen some opportunities just, you know, tangentially to what we're, what we're doing with the ICE business that fit more with staying focused on, I would say, logistics generally. So we've thought about, hey, okay, with this 5 to 10 business strategy, you know, is it something where we want to have the ICE business and we want to have a landscaping business and we want to have a light manufacturing business, or, you know, what we've seen is we are building up an expertise in, in this logistics and distribution business. And, you know, one of the great opportunities we've come across is, is logistics, real estate, just going from place to place, seeing and knowing, you know, where they're building, why they're building there, what they're building there, how big it Is, you know, what, what assets do they have? What is it facilitating? Where might you be able to do that better? Or in a. With a smaller footprint or with a bigger footprint? We're starting to learn a lot about why this logistics machine operates the way it does and where it could potentially be better. So, yeah, it's funny, people say you find more business just by being in business.

[55:11] Host: Yeah.

Guest: And it's certainly been true, you know, just since we've owned this one, you know, we've been approached by vendors of ours to see if we want to buy. Buy their business. We've been approached by real estate folks to see if we'd be interested in their spaces and owning their spaces. We've been approached by competitors to see if we want to merge with, you know, merged geographies. So a lot of different things have happened, a lot of which we didn't expect. So I wouldn't say that our Overall goal of 5 to 10 well diversified businesses is not still our goal. But, you know, the opportunities that are in front of your face are oftentimes the easiest ones to pursue, you know, versus setting out on another two year, you know, one to two year trek to find another business through brokers or otherwise. So.

Host: So you're staying open to the possibilities.

Guest: Exactly. Yeah.

Host: Brandon, this was a great conversation. We talked about Twitter. What's your Twitter handle? And is that the place, best place for people to reach out to you?

Guest: Yeah. So I guess that's a great question. What is my Twitter handle? I believe it's at Brandon P. Adams. So. So Brandon B R A N D O N P as in Paul Adams, A D A M S. Feel free to reach me there. You can always email me brandon4inv.com or if you're local, feel free to stop into the Ice Shop. We're down in South Philadelphia at 2235 Hartranft street or grab lunch with me at Pennsylvania Rose Diner anytime you want.

Host: All right, very good. Brandon, thanks very much for your time today.

Guest: Will. I appreciate it. Thanks for asking me to come on.