[00:00:00 - 00:04:39]

Will Smith: Today's guest left a successful career on Wall street to buy a business. Brian Anderson had been at it 25 years, and when the hedge fund where he worked as a portfolio manager shuddered due to a succession issue, he decided it was time for a change. So in his mid-40s, Brian pivoted and he bought a small manufacturing business in Vermont. It went well in the early years, then went badly when Covid hit and finally stabilized. At that point, Brian sold the business to his coo.

Listen for that segment to learn how you might exit your business if you don't have a PE or strategic buyer knocking on the door. As always, the story is a big part of today's episode, but Brian also came to our interview having thought deeply about his lessons and what this ETA path really means to him. In the show Notes, you'll find a link to a 10 page document where Brian lays out the story, the numbers, the deal terms, but also my favorite part, the takeaways, some of them philosophical.

An Excerpt

this experience has given me something incredibly meaningful.

A pursuit that gives me purpose, direction, fulfillment. This is difficult for others, even me to an extent, to believe, because so much of this experience hasn't been done with perfection or ease. But in the world of entrepreneurial acquisitions, I have found something that aligns beautifully with my values and strengths and passions, he continues. Thus, entrepreneurial acquisition isn't just a business model for me, it's a canvas for my values. I highly encourage you to click that link in the Notes to read Brian's words, especially the last two pages where he reflects on whether he's happy with his choice of this path.

Meantime, please enjoy this interview with him. Here he is Brian Anderson, former owner of Deco Manufacturing. As you know, when buying a business, so much of your success comes down to the people. Will Barlow and Williams Attorneys Bill Barlow and James David Williams return for a Legal Office Hours Today Thursday. All about the legal questions related to

employees and incentives in in acquisition deals,

Bill and James David will cover non competes and non solicits. Always a big question among searchers, employee benefits and equity and other bonus incentive structures. That is today, Thursday, March 19 noon Eastern. The webinar is how to handle common employee issues when buying a business.

Link to register is right at the top of this episode's show notes or

on the Acquiring Minds homepage acquiringminds Co.

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 team at Aspen HR recently published a short white paper targeted at searchers Entitled A New CEO's Guide to Human Resources. It lays out the key items you should be thinking about as you transition into CEO and owner of the business you bought.

The link to download that is in the show Notes Aspen HR is a professional employer organization or or peo which provides HR compliance, flawless payroll, robust HR technology and Fortune 500 caliber benefits all for a fraction of the cost compared to using multiple vendors. Reach out to Aspen HR for your complimentary HR diligence checklist and benchmarking analysis. Go to aspenhr.com or contact Jenny the directly at jenny aspenhr.com Brian Anderson welcome to Acquiring Minds.

[00:04:39 - 00:04:42]

Brian Anderson: Thanks Bill. It's.

It's really, really good to be here. I appreciate this.

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Will Smith: Brian.

You left hedge funds and Wall street

to go buy a small manufacturing department

business in Vermont four hours from your

home in Westchester, New York. You sold the business in February 2025. So almost exactly a year ago from when we're recording. So we are going to hear a full cycle journey today and most importantly your reflections on that journey.

You put pen to paper to distill what you learned from this whole experience and it is a valuable and powerful 10 pages that we'll link to in the show notes. Thank you for your willingness to do that. Let's begin with some background on you please. Brian.

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Brian Anderson: So I graduated college in the early 90s.

I had an accounting degree. I also was a student athlete and I didn't go the traditional route to Big six accounting. I instead took that degree and went down to New York City and started working for investment banks. And in mid-90s I went and received my MBA while still working. Then I went into hedge funds and got involved in event Driven Investing.

Event driven investing is a strategy that seeks to generate returns by capitalizing on price inefficiencies in corporate events such like mergers, acquisitions, spinoffs, distressed situation bankruptcies, regulatory changes and activist investing. And I did that for many years until 2015 when basically the fund closed. And that was a secession issue between the higher ups of the family and the principals at the firm. And so that kind of left me in a position to decide what's next. And obviously the first inclination is to just jump back in.

And as I started exploring that, I realized it might not be my I just might not have the, how do I say it? The wind in the sails like I did originally. And so then you start to think, well, what's next? And I then basically started to really contemplate the idea of buying a business which played upon us.

[00:07:17 - 00:07:18]

Will Smith: Let me pause you there, Brian.

[00:07:18 - 00:07:18]

Brian Anderson: Sure.

[00:07:18 - 00:07:23]

Will Smith: Just to get a picture of your career to date at that point. So how old are you first of all? In 2015?

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Brian Anderson: In 2015?

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Will Smith: Yeah. When all of this starts to, you know, when your career pivot occurs. How old are you?

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Brian Anderson: Yeah, I'm 47 probably.

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Will Smith: You're 47 at that time.

Okay. And so you have been quite successful. We, we assume over the, those.

[00:07:40 - 00:08:12]

Brian Anderson: Yeah, it was a good career. It really was.

It was not only success in terms of monetary values like everyone basically likes to look at it from. But I, I loved what I did. I loved the world of event driven investing. It's exciting, collaborative and you know, it was an accumulation of a lot of steps, different steps throughout the time, throughout the years that basically I think were in the end look back with great success and great fondness, to be honest.

[00:08:14 - 00:08:16]

Will Smith: But a demanding career.

[00:08:17 - 00:09:06]

Brian Anderson: Yes, a very demanding career. So that was part of the rationale from actually starting to reevaluate life. I was an international portfolio manager. I lived in London and worked New York City for many years and.

But when I came back to New York and I was doing that, I was really burning the candle at both ends. I was getting up with Europe in the morning and I was putting myself to bed with Asia Pacific at night and there was a little hours in between. So it gets, and it's very. You have to, you live and die by each day. You're constantly evaluated based upon your performance.

And so it just, I don't know if I needed a pause. I just don't, I just didn't have the same thrust to basically start again.

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Will Smith: You don't want to go back and do the same thing and re. Establish yourself at a new firm. And so how does the idea of buying a small business come on your radar?

And why do you pursue that path?

[00:09:17 - 00:12:18]

Brian Anderson: Well, when you don't have really an idea, what's next? But I had a good amount of capital to actually contemplate. The idea kind of naturally introduces itself. It's well, what can I do?

Well, I want. I can do my own thing where I run my own business. And how would I do that? Well, you can buy a business or you could start a business. Yeah, those are the, the two, the two options and, or you could just go in and you know, a third option is you go in and you could be just do something that just pleases you on a daily basis.

Be a Walmart greeter or something to that effect. But I, I always had the Drive. I first of all, I love the game of M. And a second of all, I always had a little entrepreneurial edge to me growing up and throughout the years, partly because I always, you know, as a kid had the paper routes, had the, you know, shoveled snow, mowed lawns, do all that stuff. But yeah, work for my dad's business. At the same time, I was always contemplating my head, well, what's he was, it was a, it was a home service business and I was always thinking with my brothers, I was like, well, how do we make this better?

You know, we. There was no real intention to ever take it over, but it was always there. Even happened when I was in the world of hedge funds. I was, you know, while I was talking to CEOs of companies or when I was working on companies or even working within the fund, I would be contemplating like what's way to better make this more efficient, optimize this. And if you have that, it's really tough to turn it off and sometimes it can be distracting from what you're actually doing.

So that kind of led me down that path as well.

So as you start to explore that, the last thing it probably was that was a factor is I looked at the asset class and when I speak of the asset class, I'm talking about small businesses to acquire. You know, it didn't back then, it didn't have, I didn't have the terminology of the ETA would use these days, but it was, I looked at companies at certain sizes, I knew what capital I had and I kind of saw what some of the results were. And the risk reward, which is something that you definitely pull from your days in Wall street when you do that kind of analysis is I really think it's skewed, especially in this smaller port part of the M and A structure is really skewed towards the reward side. It's not published that much, so you're not going to see those numbers. But when you talk to people and you kind of do the back of the envelope math in your head, it's a great asset class.

And the last point that made it really powerful was every time I brought this up to people, they all gave you the condescending oh good for you kind of attitude. And that, that to me, being the contrarian that I am, was more of a reinforcement than it was a, an argument against.

[00:12:18 - 00:12:29]

Will Smith: And their condescending respect response to your project was based on the fact that this is kind of small potatoes compared to high flying Wall street, kind of

[00:12:29 - 00:13:04]

Brian Anderson: the obvious or it Was it, was it was, it was a silly use of risk too. You know, why would you, why would you go do that when you can just work on the street?

Or why would you, you know, go out and change course so dramatically? It's just, you know, I peop. I feel people are inherently risk averse and that plays to that end. And you know, a lot of people were actually supportive in the way they would talk about it, but they would be like, I would never do that. So.

Which also makes the asset class more attractive in my mind because, because less following.

[00:13:04 - 00:13:31]

Will Smith: Right, right. Less competition for, for assets in the, in the asset class. Yep, Brian, but one thing that you had said to me in the pre call, which was interesting, is that

in

fact you didn't find the multiples in small business acquisition land to be screaming deals. You, your, your phrase was they were fairly valued. So say more about that.

[00:13:32 - 00:14:38]

Brian Anderson: Well, what I mean by that Will, is, is that, I mean that certain of the assets were fairly valued. And I'm a value investor.

I mean when I look for two things in a business, I look for the value and I look for them there to be a catalyst. And when I was looking at the world of small businesses, everyone basically touts cash flows and that's an obvious thing. So when you look at the cash flows, the cash flows that you basically the business generates, you're effectively paying multiple on those. And what that means is that you have a payback period and that you know, I have based upon the risk. And then you have to have a growth profile on the opposite side of that.

And when I found like, let's take example, like people go throughout the idea of a, a car wash or a laundromat. I mean when you do the math on those, those cash flows and what they were trading, you were just buying the cash flows. It you weren't, you weren't buying, you weren't getting any great value there.

[00:14:39 - 00:14:48]

Will Smith: And, and why is 3x on the, the cash flows coming off of a small business not a great value compared to the multiples you would see in Wall Street?

[00:14:50 - 00:15:57]

Brian Anderson: See that, that's, that's tough to say because when you compare the Wall multiples between Wall street and you compare the multiples in small business, there's a couple things going at there. First of all, there's much more capital chasing public and Wall street, even private equity of larger size. So the multiples obviously go there. And as you, as businesses get smaller, they all seem to, the multiples seem to basically come together because they start to share the same risks. You know, smallness in itself is an inherent risk because you know, you don't have scalability and things that you can't go out there and buy your way out of problems sometimes.

So they, the multiples all converge at the lower end. But at the same point, if you're buying a business that's three times and it's generating that much cash flows, it, and it's, there's no growth to it. Well, you've just bought yourself three times for that, that cash flow. And it's really, I don't, but isn't,

[00:15:57 - 00:16:01]

Will Smith: isn't a 33% cash on cash return.

Unbelievable.

[00:16:01 - 00:17:17]

Brian Anderson: Yes. On, on a relative basis. But in the other. Yeah, I, I just, I, I, I, what I'm, what I'm referring to is that in order for me to pay three times for a business that basically is zero growth and three, the business at that valuation relative to me paying three times on a business that basically has greater growth potential and has catalysts, there's catalysts to it that second business will, I'll, I'll take every time.

And so I just found that, you know, as you looked at all the businesses, a lot of them were priced fairly and so you had to find the ones and not, not all of them. I saw them, there were some outliers and some were really cheap. But then you realize there wasn't the catalyst. You couldn't, there wasn't a catalyst or there wasn't something that you could pull to make that more valuable. So the valuation is obviously a function of many things, but it's the cash flows and growth.

I feel like a lot of them were just basically didn't present the growth either side or if they did, the valuation reflected that growth and you weren't getting it at a discount.

[00:17:17 - 00:17:18]

Will Smith: Yeah, yeah.

[00:17:18 - 00:17:19]

Brian Anderson: Does that make sense?

[00:17:19 - 00:19:24]

Will Smith: Well, it does and thank you for the explanation. The reason I'm pressing on it is because we hear so often that, that the appeal of this market or this asset class is the, is the low multiples.

As, as the Rick and Royce will say, the magic is in the multiples. And particularly I found people coming from the public markets where multiples are in the teens on up, they just can't believe it when they see businesses trading for 3 and 4 and 5x down here in the lower middle market. And so, and so it's a, it feels a bit of a contrarian take what you're saying, but I think it's really what, really more that. Well, yeah, the multiples are low, but there's so much risk here and so often so little growth to be had

that in fact those low multiples are justified.

They're not necessarily inherently screaming deals.

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[00:19:25 - 00:19:40]

Brian Anderson: but one thing to add on to that, it's only, it's only a discount or it's a great multiple paid. If for some reason in the future you can trade up for a better multiple or increase it.

[00:19:40 - 00:19:41]

Will Smith: Yeah, yeah.

[00:19:41 - 00:19:59]

Brian Anderson: And so if you're buying, let's say we'll go back to those, those examples earlier and you buy, you buy a car wash and it's, it just cash flowing that you can just milk it, which is fine, and then trade it for the same three later. But what was, where was the real discount?

You just bought cash flows.

[00:20:00 - 00:20:02]

Will Smith: I see. Okay.

[00:20:03 - 00:20:16]

Brian Anderson: So. Okay.

Yeah. I think one of the beauties of a small multiple is the ability to basically leverage it into a greater multiple. And that's where your real return is.

[00:20:16 - 00:20:17]

Will Smith: Okay.

[00:20:18 - 00:20:20]

Brian Anderson: I know a lot of your guests have said that in the past.

[00:20:20 - 00:22:20]

Will Smith: Yeah.

One other point on what you were saying about how the multiples converge in the lower middle market. Lower, lower middle market, mainstream market. I'm reminded of a great point or the same point made by Jeff Homer who bought little music schools and rolled up 40 of them. And now he's beyond that and eventually partnered with private equity. And he also came from, from finance.

And in the, in the world of finance and public companies, the, the, the risk premium for businesses is absolutely reflected by the multiple. So, so a business with or, or a category perceived to have more risk in it will trade for a lower multiple than the reverse. And so, and so multiples diverge and there's all kinds of multiple variety up,

up there, down here, as you said,

they all converge to 3 and 4x or 2 and a half to 4 and a half x which is a really tight band.

And, and, and, and so the, the. But what that means is that of course the risk profile of all these Main street lower middle market businesses is not the same. Is not the same. So the businesses with high risk are not necessarily being penalized for that or the businesses with low risk are not being rewarded for it. So you can you.

So within that you should, what you should do and I think that this is probably the analysis we're about to hear that you did is find businesses that are lower risk but are still trading for those basically the same multiples as the entire asset class. It's almost like risk premium isn't reflected much in the multiples down here. It is somewhat of course and we talk about that on this podcast, but not nearly as dramatically as in bigger businesses.

[00:22:20 - 00:22:56]

Brian Anderson: I perfectly said. Will perfectly said.

I mean there's, there's so many different things as you as a business gets larger that basically makes its multiples expand. Obviously the amount of capital going towards it. And you know, you can look at this the, the balance sheet or the, the, the, the operating margins of the business. You know those things. You know a software business isn't going to trade for the same as a.

Basically a heavy cape in that but in the smaller world they do in which. Where is the greater risk is the question.

[00:22:57 - 00:22:57]

Will Smith: Right.

[00:22:58 - 00:23:13]

Brian Anderson: So if that's, it's just, it's. And part of it is a feel thing.

You know, sometimes I, I can't, I can't actually put a, I can't quantify what it is but I'm like oh, that's, that just seems like it's too expensive and that's, or that could be cheap.

[00:23:14 - 00:23:20]

Will Smith: So, so tell us then as you started to really examine the market where you found pockets of opportunity.

[00:23:20 - 00:26:05]

Brian Anderson: So I kicked a lot of tires. I, I did, I did my, I started looking at situations. I would did the biz by sell, then got in touch with brokers and I just, I kept on and kept on coming back to better valuation in the world of manufacturing.

Now I saw some dogs in there, but it just, and it was more of a, it became more thematic to, as I started to come through, through that and as I started looking at it or get to the next stage that more and more we're manufacturing and so visit a lot of companies, talk to a lot of people. But at the same point it helped me Narrow my focus at that point. Just at that point. It could be different in a couple years later. But at that point it just seemed like it was.

And I found a couple of. I started looking at manufacturing because I thought there were some things that were being underappreciated in the world. I thought first of all they, they like most businesses, no, not like most business, more so probably suffer from the whole secession issue. There is a lot of family businesses that basically, you know, when started when United States had greater what they consider onshore manufacturing might and you know, a generation, maybe a generation and a half or two next, basically don't see the value in that business. And that business hasn't evolved probably the way it should have from a capital expenditure point of view.

So they're a little bit behind. But they also. You can find these pockets where there's still great demand for the product and some inherent cheapness to it. So that's where I kind of started. I just.

It was more of a feel thing and I started coming back to those and then I, I stumbled upon the company I bought which was Deco Manufacturing and that checked a lot of those boxes. It was. It was a product or there was a business that had a product and the product was not going to be offshore, it was not going to move overseas due to the attributes of the product. And it was small, it was niche and there was great. There was good customer, recurring customer that had a macro element to it, just like most of the business in manufacturing.

But at the same point the cash flows were great. Cash flow margins and steady growth for most of the periods.

[00:26:05 - 00:26:23]

Will Smith: Right, well, tell us more about Deco. Tell us whatever numbers you can, tell us what it produced, what this market it played in and what the actual widget was and the history of it. So give us some more bullet points here and paint a picture, please.

[00:26:24 - 00:28:39]

Brian Anderson: So Deco, the Deco itself is a machine shop. And it's a machine shop that basically does job shop manufacturing. Okay, what do I mean by that? A machine shop is something that basically does subtractive manufacturing. It's the opposite of additive manufacturing.

It's. In order to get the end product you have to take away something so you can imagine that is, you know, just the removal of some, some material to basically get to your end product. It was originally. A lot of the machine shops were originally conventionally set up as manual machines and a lot of those evolved from the, the old days. It's moving towards being more automated.

But it's. In the end it was. It's slowly moving. It's probably not as fast as the. The upside of the market in the manufacturing.

It's very labor intensive, it's capital intensive. But. And the job shop is what makes this business kind of interesting. It's a job shop. It's is.

Is something that is low volume but high customization production.

So it differs from other manufacturing process like flow based, continuous based.

When you make a product, it doesn't follow the same flowchart as the last product and there's very low volume of it. With that, you have to understand that there is there since you have some pricing power because it's harder to make and it's just not something that can be as commoditized as easily by throwing it on a line. So that's a good thing. The thing that was neat about Deco was not only. So most of the job shops and machine shops within them have.

They do a lot of products. They outsource people send them ideas and they'll. They'll do it on a. On a. On a, you know, just on one customer basis.

Well, we actually had a product. The interesting about the product was it's called a work rest blade.

[00:28:40 - 00:28:43]

Will Smith: Workrest work rust blade.

[00:28:43 - 00:28:48]

Brian Anderson: A work rest blade for center work rest blade for centerless grinding.

[00:28:48 - 00:28:49]

Will Smith: Okay.

[00:28:49 - 00:30:13]

Brian Anderson: Okay. Thus the widget. I don't know how much time we want to spend on this, but it can get. Can go deep. But one of the great things about this product was there was as I.

It was. It was effectively a make to order. Now that's great. From pricing, from the. The.

We had a product and it was effectively make to order. And the product that we had had so many varieties of it or variations of it based upon the dimensions that the customer needed that there were thousands of SKUs. I mean everyone was basically different. And so we would have to make it to order. And that is a manufacturing complexity, an operational complexity.

But also it also gave us some pricing power and it gave us some. It made the product very desirable because in my mind, because there's nothing that you can send overseas. So. And it was. There wasn't a lot of competition in this.

As I said, it was niche. So there's just. There were so many little things that made this product great but at the same point added complexity to the. The actual operations of the company.

[00:30:13 - 00:30:21]

Will Smith: Yep.

And was it a single product and customized in all these different ways, but was it essentially a single product shop?

[00:30:21 - 00:31:50]

Brian Anderson: Yes, it. It. It's a single. It's a single product shop.

And that's. That was. That's a difference From a lot of other job shops and machine shops. They were outsourcing people. We had.

We were a customer customer but people knew we made work rest plays. That's how we sold ourselves. It just operated like a machine shop and a job shop because of that. But the beauty of our product was it was it served a certain type of machine called a centerless grinder. And that process is the best process in the world.

I'm not. Yes still probably in production for making cylindrical hard materials like steel and carbide. And so the we were serving a need that was was was I feel like always going to be there. I can't see anything on the horizon really replacing it. You know there was a fear about additive but it's just.

It just can't do it at the speed that's ever going to be close to what centerless is for in the near future. And it's. There's one more attribute about it is that these product which was great would the work rest blades. We made them new and often 50% of the time we were of our business was actually repairing them. We would basically take ones that we had made previously, remove the part that had worn or broke which was usually carbide, replace it with new, refurbish it, send it back out.

Great. Okay.

[00:31:51 - 00:31:56]

Will Smith: And about the business broadly. How many employees, how old a sense of revenue.

[00:31:56 - 00:33:15]

Brian Anderson: So the business itself started in the actual 80s.

It had had an original owner, then a second owner who I purchased it from and then me the time when I when I was there the business itself was. Was under a million in sales and it was probably about 300,000 in cash flows give or take. And it's the employees number of employees was it was always pushing around 10 at the time.

And that was pretty much so meant that if I which kind of worked for me because I there was a size that I was looking to buy because I was using my own capital. And my other thesis was I wanted to enter into the business to learn a business from the bottom up so I could understand all functions that basically supported the business and then use that as leverage for my own knowledge going forward to make my make more acquisitions. You know, I really was intent on trying to become an owner operator just to basically sharpen my skill set in the sector as a.

[00:33:16 - 00:33:56]

Will Smith: As a step toward future acquisitions. So you saw this and we talked about this in the pre call a model that I'm a fan of where not to avoid being an owner operator but to lean into being the owner operator for the first time.

Number of years at least to learn to learn the business. It's your time to, to get a, a degree in your own business, in your own industry, learn every nook and cranny and then emerge from that at the end of two, three years, whatever it takes as a super smart operator in that industry, tons of credibility and much better position to then go acquire other businesses.

[00:33:57 - 00:34:18]

Brian Anderson: Exactly. Exactly. It's.

Yeah, it's, it's, it's admission of as much as I know I'm still ignorant about many things on the smaller scale and how to, how to basically become that person that understands that and then you know, grow with it accordingly.

[00:34:20 - 00:35:23]

Will Smith: And does that explain why you buy bought such a, such a small business? Now this will be, this is a teasing. This will be a, a theme throughout and as when we hear your reflections on this size is a big one of your big thoughts takeaways. But that's quite small. And you weren't listen, I mean the ETA podcasts and books weren't, hadn't yet been written but even just looking at whatever your earnings had been on Wall street, this business was generating three.

Call it 300. You weren't gonna, well, you're about to tell us the structure. But even you know you weren't going to be taking home all of that 300. There was probably going to be some debt service in there, some reinvestment. So you're looking at going from whatever you were making on Wall street big bucks down to I don't know, 100, 150.

How did you think about that? Or, or, or maybe not take anything out again, bit of a, bit of a spoiler there. But. So how are you thinking about that? Because that is financially a big step back for you.

[00:35:24 - 00:36:07]

Brian Anderson: Yeah, I wasn't thinking as much on a financial basis. I mean it wasn't, I wasn't. When I, when I bought the business, I bought it with my own capital and I was thinking it more of what is what it, what basically would give what it would basically give me or give the opportunity were given an opportunity to basically to expand going forward. I didn't really see it as sacrifices that I was making because it just, I realized that it's, it's the classic J curve that you know, you have to, in order to basically buy something, you have to start somewhere.

[00:36:08 - 00:36:09]

Will Smith: Yeah.

[00:36:09 - 00:36:57]

Brian Anderson: And if my, if my intention was to basically run this and grow it, the near term basically issues didn't weigh as heavily on my decision making as maybe other people. I always, I mean at one point in my career I Took a massive pay cut to move from the world of investment banking to hedge funds to my first hedge fund. But I looked at the risk reward as great. I guess this is similar here is I think the reward is to the upside, the risk is I guess my near term cash flows. But if I didn't find that to be that, that challenging, I don't find it to be that risky.

Yeah, that makes sense.

[00:36:57 - 00:37:23]

Will Smith: It makes perfect sense. And it is, it's an important point for a couple reasons. First of all, just as people hear your story and know put themselves in your shoes or not, you did have a nice balance sheet. You know, at 47 year olds, 47 years old after a career in Wall street, you had real resources.

So you had, you had the ability to, you had the ability to not have income coming out of the business.

[00:37:24 - 00:37:24]

Brian Anderson: Right.

[00:37:24 - 00:39:30]

Will Smith: And on top of being able to basically pay almost all in cash for the business. Most people don't, that's fine, but just need to underline that. But then also I just think that is a great perspective because so often in our world when we talk about buying these businesses there is a, there is a bit of a near termism or a short termism where the entrepreneur is saying how much can I earn from the business that I'm going to buy tomorrow?

You know, am I going to be able to pay my, replace my $250,000 salary tomorrow in this business? Of course not everybody, a lot of, a lot of people probably, in fact most people do expect to take some sort of cut to their, their annual income by buying a business. But anyway, anyway you, you, you cut it all the way. You were going to basically reinvest everything into the business and you were thinking about this not what it could look like in year one, two and three, but beyond that. So just to just a, a perspective that's a little different than kind of the typical searcher in 2026.

Before I. And so let's want to hear about how you did a little bit more detail on how you did buy the business, structured it. But just before we do that heard you say capex high capex related to your business. And, and that's a characteristic of manufacturing broadly and that's a, that's a ding on manufacturing. We don't like this feature because it means every time you hit capacity of your current resources at the, at a manufacturing company, there's a big investment to then expand capacity and, and grow into that.

So there's all, there's these, there's this stair step effect and you're always or often needing to make big investments, big strategic decisions to get to the next level. As opposed to say a blue collar trades business where you can kind of grow more linearly by adding another person than another, then another. How did you think about that? Because that, that is one, one feature that would be in the con column we assume, right?

[00:39:31 - 00:40:19]

Brian Anderson: Yes, I mean it certainly is but it's basically something I think that you should, you should basically factor into your equation of the cash flows.

Okay so you know what is, what is a scalable cash flow or you know what, so you take the base cash flow, put in things like if you had an owner salary or that you want to put in there. But capex should also go in there and that also should be in the, you know, if you envision a certain growth pattern you should also put in there the, the added labor of that.

Especially if it doesn't, you know, some of these businesses, you know, are as if it's labor intensive, it doesn't have as much operating leverage as other businesses.

[00:40:20 - 00:40:43]

Will Smith: So when you factor for that and you pro forma having to make big CapEx investments, does the business look as good? Because I, I just feel like I, I'm, I'm told that that, yeah that that is how you would model it but what you end up with is a business is just whose characteristics just aren't as, as, you know, cash efficient as, as others.

[00:40:43 - 00:42:46]

Brian Anderson: Yeah, I, I, I think what you need to do will is you need to normalize it and look at it over of you know what, just a period of years. Like how much am I going to have to spend annually Just basically over this period of years and just adjust your cash flow accordingly and see if that cash flow number works out.

And I think this business did, I did that number just because I was a big, you know, obviously part of Wall street free cash flow was the, was the, was the metric often looked at which includes capex expenditures. So that, that, that, that was just something that I think needs to be done by everybody and that's, that gets back to the whole idea of valuation and is it inherently cheap? Yeah so, and, but when I looked at deco, those numbers worked out. I mean I, I made certain assumptions about that now deco. And a lot of things is when a lot of people look at manufacturing businesses that are, that are basically been out there for a while, you should see like a lot of these basically operated with very low capex.

And the reason is, is they bought these manual machines that were, and this was of course the Story of Deco. Not, of course, but this was a story of Deco. And the other bolt on acquisition I made is that these, these machines were from the 40s and 50s and they were made with cast iron. And they basically stood the test of time. I mean it's amazing now, but they were very manual intensive and so, and they were the standard up till the 90s and then 2000s things started to basically change in the world of machining.

So a lot of these businesses got by for many long times without capital expenditures.

Therein lies another thing. In a negotiating tactic, you're like, okay, well I see your business, I see these cash flows, but these are the capital expenditures I'm going to have to make. So this is what I'm willing to pay.

[00:42:48 - 00:43:56]

Will Smith: What do the following Acquiring Minds guests all have in common? Doug Johns, Morley Desai, Tim Erickson, Chirag Shah, Shane Ursam.

They all went through the Acquisition Lab,

the accelerator in community for people serious

about buying a business.

But they represent just a sliver of

the Lab's success stories.

The number of deals across the Lab's

cohorts now stands at over 120, with over $300 million in aggregate transaction value.

The Acquisition Lab was founded by Walker Deibel, author of Buy Then Build, the

book that introduced so many of you

to the very idea of buying a business.

The Lab offers a month long, intensive, almost daily Q and A sessions with

advisors, live deal reviews with Walker, Deal

team introductions, and an active community of serious searchers. Check out acquisitionlab.com, link in the notes or email the Lab's co founder, Chelsea Wood.

Chelseieuythenbuild.com how did you structure the acquisition, please?

[00:43:57 - 00:45:49]

Brian Anderson: So it was mostly my capital. I had some seller financing and I did that will just to keep the person in the game. The, the seller was. There's two things I, I didn't use really. I wasn't planning on putting a lot of leverage on, on the, on in the beginning, which we can talk about.

Um, and the seller was also, he really was, didn't like the idea of debt. He just, he, he just, he, he, he, he thought it was a bad thing. And he was a great guy and very, very, and just an amazing, he did a great job with the business. So I, I, I, when I structured it, I just had a little seller financing and I kept him in the game because I just wanted to make sure that he was true to his word. And he was and we, so it was mostly me just cutting a check for the whole purchase price at the Beginning I didn't use debt and this is something I know we talked about in the pre call but the rationale was that if I was to understand this business at some point I could like to then put on the, what I did deemed to be the optimal capitalization of that company.

So structure the structure of the capital structure according to the business and the growth profile I saw going forward. And that's in that might, I think that would be an advantage as opposed to at the beginning putting too much on or not putting, you know, not putting, putting it on in terms that you didn't, that you didn't find were advantageous. I had that option or that luxury. And so I, that's, that's basically was part of my rationale as well.

[00:45:49 - 00:46:55]

Will Smith: That was great, Brian.

And you know I do think that that's probably Finance 101 but for, for the rest of us we might this. So just to say what you said there again in my own words, it wasn't that you were not going to put leverage on it, but you were going to put leverage on it later on the other side of the transaction only after you had gotten familiarity with the business and, and, and, and come to what you thought was the optimal capital structure. And so this idea of optimal capital structure is basically how much leverage a business can or should have on it. And there, and there's, and there's an optimal amount. And so often in particularly self funded search land, it's a lot of people are just like as much leverage as possible because that means I have to bring as you know, I bring as little equity as possible.

And you'll see as we well know, we'll see leverage up to 90% which is extremely burdensome on a business.

And you don't, you search or buy

or don't even know what you're buying.

[00:46:55 - 00:46:55]

Brian Anderson: Yeah, right.

[00:46:56 - 00:47:10]

Will Smith: And so that's just an all.

We all understand that that's just an awful lot of leverage. But then when you add to that that, that you don't even really know what you're buying. It's, it's like wow. And so

the idea.

[00:47:10 - 00:47:11]

Brian Anderson: Can I interrupt one second?

[00:47:11 - 00:47:11]

Will Smith: Yeah, please, please.

[00:47:12 - 00:47:27]

Brian Anderson: I did. I also think that is that the original model with the leverage is a function of that most of these started in the traditional search fund model. Okay.

And if you think about it that, that that model needs leverage.

[00:47:28 - 00:47:29]

Will Smith: Yeah, yeah.

[00:47:29 - 00:47:48]

Brian Anderson: And so that's what was the foundational understanding of it. And, and, and you know, and obviously they want to keep the, the person that's basically buy the if you're running a traditional search fund, you want to keep the buyer's equity as it a little bit down. You also want to keep the leverage high.

[00:47:50 - 00:47:59]

Will Smith: But in traditional search funds it's not the 90% model. The, it'll be more of a conventional debt to equity structure on those businesses.

[00:47:59 - 00:48:11]

Brian Anderson: Right. But at the same point the leverage lies. The, the, the, the I, I find it, I, I find it to be leveraged aggressively.

Aggressively. Yeah.

[00:48:12 - 00:48:51]

Will Smith: Okay. Okay. Well, and so, and so but your, your overall point here, the kind of Finance 101 is that depending on the attributes of a particular business, the amount of leverage it can or should support varies a ton.

And, and you, and from the outside looking in, it's near impossible to know what that optimal amount is. So just a, just a really valuable learning there. And so your point was you were going to get into the business and then decide what the optimal amount of leverage to put on it was. And you were, as you said, had the luxury of not needing the leverage to get into the business in the first place.

[00:48:51 - 00:48:55]

Brian Anderson: Yeah, and I think it's a simple analysis too.

It's.

[00:48:55 - 00:48:56]

Will Smith: What's the analysis?

[00:48:56 - 00:49:29]

Brian Anderson: Well, I just think it's in this, you know, obviously get, can get, you can make it more complex, but if you get an understanding of the business and then you can see how you're basically what, what patterns your customers buy on and you can basically predict how those customers or do a estimate how those customers will do in a down market situation, then you can basically say okay, well with that sales at that level and where are cash flow? Zero, not negative.

[00:49:30 - 00:50:09]

Will Smith: Yeah, well, and searchers should be doing that analysis.

How much, how much of a decline in revenue can my, the amount of leverage I'm going to put on this business support before I'm in the red. Right, but your, but your point is that that decline we just sort of as a blanket exercise, we look at 10% decline, 15, maybe even 20% decline. And can, and can the structure I'm putting on this business still support a 20% decline in revenue? But those are all hypothetical, hypothetical numbers. Your point is once you're inside the business, you'll have a much more realistic sense of what those declines could be in a down market.

[00:50:09 - 00:50:24]

Brian Anderson: Right. That and what the capital expenditures will be. And, and the other point that I think we talked about previously, but you also will have some financials behind you to help with your negotiation with any

[00:50:25 - 00:50:29]

Will Smith: debt provider financials behind you, meaning your own performance.

[00:50:29 - 00:50:43]

Brian Anderson: Your own performance, you know, and how much that differs from the actual Performance of the, of the previous owner.

And you can, there's a comparability because that's, I got to assume that's an issue with some of the capital providers.

[00:50:43 - 00:51:09]

Will Smith: Exactly. So, so, right. So for, for the listeners, when lenders are looking at giving you a loan, underwriting a loan for you, you are such an unknown, they, they're going to be more conservative than if you were a known entity who had demonstrated performance in the business. They're going to be more generous with their terms because you've been de.

Risked self funded searchers are kind of highest risk protagonist for, for, for a bank to underwrite.

[00:51:09 - 00:51:10]

Brian Anderson: Yeah.

[00:51:10 - 00:51:11]

Will Smith: Okay.

[00:51:11 - 00:51:11]

Brian Anderson: Yeah.

[00:51:12 - 00:51:14]

Will Smith: And the purchase price, did you tell

us what it was?

[00:51:14 - 00:51:16]

Brian Anderson: It was just a little over $1 million.

[00:51:17 - 00:51:21]

Will Smith: Okay, so in a. Something between 3, 31 x, something like that.

[00:51:22 - 00:51:24]

Brian Anderson: Yeah, it was, yeah, exactly.

It was lower in the three.

[00:51:25 - 00:51:43]

Will Smith: Okay. And just to understand how much risk this represented for you, you're buying this business effectively in cash with a seller note. Just a little bit of a seller note. If it, you know, how much, how much, how much risk was this for you?

I mean, if things didn't go well, what did that mean for you?

[00:51:43 - 00:52:40]

Brian Anderson: I don't think it would, it would by no means wipe me out. It would hurt and it would hurt personally and financially. But it was, it was an endeavor where I basically set aside the right amount of capital in my mind that I would say it's me entering a new asset class in terms of investments and me basically putting a good portion of my, what I would deem to be my financial portfolio towards that, that, that, that asset class. Obviously it's concentration risk.

We know about that. But, but at the same point it, there was a certain degree of belief in it and I had done enough work to realize that there is great returns. And this gets me, gets back to my point of me loving the asset class then and now even more, even more so awesome.

[00:52:40 - 00:53:06]

Will Smith: Brian. Well, there's, this has already been just really rich, but I'm just watching the clock and we're going to need to move quickly here because I, we haven't even gotten into your ownership, so I'm going to try to not interrupt you as you, as you tell us the story of your ownership.

I'll interject here or there, I'm sure because I really also want to get to your reflections which are so well put. So please, you get into the business.

[00:53:07 - 00:57:57]

Brian Anderson: Yeah, so I get into the business in the first three years and I'll try to keep this brief. The first three years go great, the sales grow basically 50%. Cash flows don't keep up because of.

Don't grow at the same rate, but they grow at a great rate. I had made some capital expenditures and brought on some, some heads that were non operating and it worked. It worked out great. So much so that I became what I became what would be deemed as capacity constrained. There is really no more output that we could pull out of our current place.

I looked at some options locally. I was kind of hamstrung and able to pull the trigger on that because one of the key operators or the supervisor on the floor basically kind of indicated that he was not willing to basically even go to a new site even, even locally because he lived effectively next door. So I, I pivoted and tried to figure out other ways and I then came upon a competitor that was essentially trying to sell their, their business. And this competitor was once the, the big dog in the industry probably 20 years previous, but now they were, they were just a shadow of their former self and it was in Connecticut, so it wasn't really right next door. But it, the, the beauty when I went and looked at the business is that it was, it had a lot of capacity and it also had some, some, some machines.

It had a requisite number of machines and had some bigger machines so it could expand some of our capabilities.

The, the downside of it, it was. It was a distressed asset. It really was. It was part of, of a lot of other machine process or this place it was a part of was a machine shop that did so many different things. And so I had to carve this business out.

Worked at the same site when I basically bought it. But the, the owner was old, the culture was as poor as you can get. I felt like the employees were battered and the place was a mess and just needed to be cleaned up. But here's a good point. 3 years what I was going to do is I was going to basically extract myself.

I was capable now to extract myself from the Vermont business. So that's a plus, right? And they. And now I was going to go down there and we were going to basically turn around, do work a turnaround on this other business and gain capacity and operate the two sites.

So. And I bought this thing at real dirt prices. I. Dirt cheap prices it was. And I, I just structured it, I structured it well, but it was, you know, I knew there was, there was work to be done and we.

So about a month and a half and I. Things were kind of going well. We were showing some Synergies. I was having some guys from the Connecticut place look, come up to Vermont, learn some of the trade, because they were just not nearly as productive as my Vermont place. And then Covid kicks in.

It really kicked in just right after my close, and I made a really bad decision shortly thereafter. I figured, like, I could only sustain one of the businesses, you know, the. Just when I did the math, and I don't think my math, I would redo the math the same way, but. And I chose to keep the business with the capacity, the Connecticut business, over the Vermont business. So I ended up shutting the Vermont business down and operating exclusively out of Connecticut.

And that was just a bad, bad decision. It was a big productivity hit. I lost tribal knowledge. I know we talked about that, but that's. Tribal knowledge is knowledge that basically exists only at the employee level.

So there's no way, if that employee goes away, that. That that knowledge could be extracted. And I was. The thing that was probably the worst was I was not only back in the business, but I was back in the business way deeper. I had to get to the level of the product, the employee level, where I had to learn the business completely from the bottom up at the machine operators, from the machine operator's perspective.

[00:57:57 - 00:57:58]

Will Smith: Wow.

[00:57:58 - 01:00:19]

Brian Anderson: So I had to then, you know, because I lost this tribal. This great way we did productivity and that what was going to be the transition to the new place so we could operate both. But then that went away. So I had to learn that.

And then, you know, then I had to document, I had to standardize it, I had to improve it, and then I had to educate others. I was now teaching people how to try to learn how to run these manual machines, which is a skill set in and of itself. And I have never really done it. I got a fundamental understanding. So it just.

That was in addition to doing everything else on the business, because I was covering so many other functions there. And it just, you know, I was. HR function. It was. I was back in.

I was back in deep, and I struggled with that. And so didn't the financials. The productivity went down, so didn't the margins, and so didn't the. The sales.

We came back, the demand started to come back in many regards, but the productivity didn't, and thus the cash flows didn't. So I then decided I. To go outside and have. Seek help from a coo, which I had to really pay out of my own. My own pocket almost to do so, because all those cash flows were mine.

And then that didn't work originally. And then I found myself a second COO where it did. And, but over that time we had made, we were emerging, we were getting more productive customers come back, things were getting streamlined. I had basically, I had done some of the things that I hoped I was going to do. I had done, made sops for the business.

I, you know, I reduced process variation. It was, I just, it was now working better. CEO came in, was very, was extremely value added. And we got it back to basically firm footing again. It was probably about the level where it was when 2019 rolled around in terms of sales.

Still not there in terms of the same cash flows, but it was a turnaround that was done.

[01:00:19 - 01:00:20]

Will Smith: So that was what year now?

[01:00:21 - 01:00:27]

Brian Anderson: That's, that was probably around 2024. Under 2024. Right.

Shortly there when I, before I sold it.

[01:00:28 - 01:00:40]

Will Smith: Okay, well, before we hear about your decision to sell it, let's also hear about the sacrifices that you made, personal life, family life during these years.

[01:00:41 - 01:03:28]

Brian Anderson: Yeah, I mean it was so when I bought the original business in Vermont, I knew it would be a, something that I, I, I, I, I looked around. I, I was flexible enough and I had had enough discussion with my, my wife who's been amazing through it, and my kids who were amazing through this too. I have two children and they were, they were, you know, kind of teens at the time or young teens.

And they um, and I basically kind of made it sound like, guys, I'm gonna be salesman, I'm going to be home on weekends. And my wife had a father who was a consultant for a very well known Southern consulting firm. And she said like, you know, he was, he was there on the weekends. You know, he would travel a lot into Mexico and over and throughout the country on that. And so she kind of understood and she was, she was very supportive.

But I had to travel up to Vermont every Monday morning, you know, four hours. And then I would come back on Friday evenings for four hours and I would do that. So I was away from my, my family, you know, five days of the week and having a phone call, you know, every evening and trying to basically play dad that regards. And it was lonely, it was really lonely. The whole buying of a manufacturing business was lonely.

And then I, then when I bought Connecticut and moved the business down there, the basically that was, you know, that's an hour and a half from my home. And so I would drive up there and drive them home every day because I had to be there for that business as well. So it was just a lot of time spent. My family was Always supportive. There was, I'm not going to say that it worked out perfectly.

I mean there was times where yeah I would hear, you know, my kids got older and they became those difficult teenagers are like you're not here. They would yell at me and stuff. But you know, back in my. They're both in college now and they both back. Look, look fondly on the years there were some good.

I mean we used to get to go in Vermont. They would come up on the weekends and we'd ski. So that was awesome. But you know I, I put together some of the sacrifices I made. I mean I, I work on average with the Travel time probably 80 hour weeks and, and I, I logged in 360,000 miles of, of, of of driving and over the nine year till I closed it little under nine.

But which is, do you want the, the, the metrics to that it's like

[01:03:28 - 01:03:32]

Will Smith: yes, this is in your document. How many, how many trips around the Earth is that?

[01:03:32 - 01:04:22]

Brian Anderson: It's 15 and a half trips around the Earth and to the moon and on three quarters of the way back.

So that's a lot of miles and but it's a great time to listen to podcasts. Plug Plug and but it's also, it's it also time to get time to reflect. But it's, it was, yeah, it was difficult and it's, it was learning I. From a perspective that those are things that you know, made me more appreciative and made me, make me, help me make decisions going forward but it also made me better and the same point, you know, it, it's. Yeah, it's, it's, it's, it's the climb as we, as we talk about.

Not the pit, the climb. Yep.

[01:04:22 - 01:04:55]

Will Smith: Yeah. Yeah. Thank you for that, Brian.

I mean that, that, that is a real, I mean 12 and 16 hour days for years and a lot of that away from the family. That's, that's a serious, serious sacrifice. And and so we're going to hear more about your kind of reflections on what you do differently and, but the value, the benefits that was kind of the negative. But there's been so many benefits to this journey. Let's just wrap up the story piece.

Why do you decide to sell and how do you pull that off?

[01:04:56 - 01:09:13]

Brian Anderson: Well, I think the decision to sell was at this point what's next?

And it kind of came upon me one time when I was reflecting with Deco and the new CEO on board and that was part of help to help decision. But I said to myself I'm like what is the most undervalued asset here. And I realized it was me you know, me being in the business doing thing fighting with regulators about you know, silly things or doing you know, HR related things when I shouldn't have been and making you know, daily operating decisions. It just was a waste of the resource of what I should be doing. It's you know, it didn't play upon my strengths of as well it can.

And so that was part of the reflection. I was like okay, it's time to move on maybe so how do I do this? And that also kind of came inside came about the same way is that in the CEO I had who is the person I sold the business to. He was. He was a huge talent.

He was. He was very. He was came. He was younger came from his. From the.

Came from the technical side of the operations understood the automation side and that tremendous which is tremendous regards that understood how to basically make the products really well. Had a good good mind about how to scale things and and from a. From a operational perspective.

But he was. It was. He was. He was. He was holding back in some regards when he was with me.

And part of it was is that he didn't want to make decisions that were. That were reflective that would basically be you know his, that this. He would be on the line for the decision. Like if we need to make a capital expenditure he would maybe hint at it but he wouldn't say like this is the machine we need.

And I and but he had visions and I realized that he had to realize him on his own. So I kind of did a Mr. Miyagi on him and I don't know if you're familiar but so he. I basically started to tell him you know, say like well how would you do this? And and we we had these conversations. We would go out for coffee and a couple times and.

And I was just seeing if he came up and eventually he came up with it on his own like well maybe I should can do this. And, and then one one one day we had a meeting on Thursday and he came back on Monday and he's like I went and looked at some some sites and I I see that if I could downside the business he had all these ideas and if I bring in this machine and this and and I was like Aha, you got it and stuff. And so then we we. We got and we figured out a price. I did I seller financed it all and and we we closed in last year and he's doing great.

You know it's Obviously he's, he's, he's, the business I gave to him was amazingly structured well from the front office perspective. I mean if there's one thing I did on that business it was I had everything on the front office so much better and that wasn't his strength so he didn't need to really do as much on that regards so then he could concentrate on the operational side while learning the nuances of being on the front office. So he's the owner operator, but he's also making changes and he's making a lot of expenditures that I didn't make. But he sees the value of I think he's extended himself a little bit in some regards. But at the same point he's, I, I, I, if I, if I know this business and how it operates, he's, he's going to be fine.

He's going to be fine in terms of he's not overextended. He's gonna, and he's also, it's, it's gonna, it's gonna work with for him. It really is. He's right. Your

[01:09:16 - 01:10:23]

Will Smith: recognition Brian, that you were the most underutilized asset in, in the business and your interpretation was that therefore I need to exit the business. Why wasn't your interpretation, oh, this tells me that I've learned everything I can so now it's time to go buy more. That remember that that was the, that was the model initially. Go get in there, get your degree in the business, learn everything you can so that you are positioned well to go make subsequent acquisitions on the other side of that process. So that maybe and by the way so that might be just a good kind of test for people, operators themselves listening of when, when they're ready to step out of the business is when they feel like their own talents are being underutilized.

That that's kind of the tell that it's like okay, time to go buy more businesses or, or work on growth pure strategy or, or sell the business. But anyway, so, so why did you choose to sell and not acquire more at that point Point?

[01:10:24 - 01:12:02]

Brian Anderson: Well, I think if I wanted to do the, to stay that I don't know if I would have been able to do what the new what what was being done with the business that currently that needed to be done? Because I needed to. I, I just there's, there's a couple things.

I, first of all I, I, I think that I still would be involved in the business as much as I tried to extract myself there at the end I still was involved Pretty heavily. And I think that that was the chief reason is like okay, I just, I don't see myself get myself that it could happen. But I needed this. Once again, this comes back to the CEO. He needed to spread his wings and I needed to basically be less involved in the business.

But he wasn't assertive enough to basically put that and if I put him in that position I think he would have, might have, might have paralyzed him because he was looking at the decision not as, not his own only decisions for myself. So that's part of it. And I did. I also thought it was a great decision to like step back, see if I could maybe scale up this as opposed to just doing something in that size. And I didn't really think about running them.

I thought of them as independent of each other. So much so that I just felt like being part of Deco or Deco still being there would be more of a distraction to me really getting out there and going for it.

[01:12:02 - 01:12:02]

Will Smith: Great.

[01:12:03 - 01:12:12]

Brian Anderson: Yeah. I just think the cash flows would be better for also the business if, if I wasn't there and Jeremy was running it himself.

[01:12:13 - 01:12:16]

Will Smith: So at this point you were starting to take cash out of the business for yourself.

[01:12:16 - 01:12:33]

Brian Anderson: I mean I, I've, yeah, I, I, I always, yeah the cash flows were, were always mine and I would take them as I needed them. But you know, at the end there, yeah it's, I, I, I extracted what I needed and I was, yeah it was, it was time. I, I don't know how better to say it.

[01:12:34 - 01:13:32]

Will Smith: Yeah, well, I just want to underline there that you know how you figured out a way to step out, get, get out of a business that you are the owner, operator of without selling to private equity, selling to a strategic buyer.

And so it's, we talk in this world so much about exiting the business but we talk about it as if it's sort of a foregone conclusion that you can just sell the business and often you can't sell the business as we as we do know because there many businesses that we see that we don't buy and there aren't buyers for these businesses because they're not good businesses. Not saying your business wasn't a good business but, but it, we shouldn't assume that it's just like that there's always going to be a buyer at all. And, and so you have, you have introduced us to a way of exiting yourself from a business without having a buyer out there in the market. You sell it 100% seller financed.

[01:13:32 - 01:14:44]

Brian Anderson: Yeah, yeah.

That's a really good point. They both, they both kind of coincided. This person needed to go that way and I was able to exit if I ran a process. I don't think it would have gone as well. I mean my, the numbers I came out with, the returns were good.

I came out with. I, you know, I'm doing this math and I came out with 25% IRR and you know a two times MOIC. But it's, but you know, I, if you ask me, you know, I, I feel like it was this, this pro. This business could have done much better if, if we ever got to see the whole idea of buying the bolt on and not being that I could have done better. So do I look at it like a screaming victory?

No. Do I look at as a, as what I look at this business as is I look at like I did it twice. I brought a business first and I grew it. Great. And then I acquired a distress business with one bad decision in the middle of closing that.

But then I built that up to actually again. So I built it. I've done it twice and had a good exit and had incredible lessons learned from it.

[01:14:45 - 01:14:57]

Will Smith: Well, we're going to get to those, a couple of those lessons in just a minute. So I'm going to condense kind of three themes of your, of your, of the document that you prepared into kind of 1 1ish questions which is

[01:14:59 - 01:14:59]

Brian Anderson: how

[01:14:59 - 01:15:21]

Will Smith: do you think about what you want to do next and the lessons of buying small or the size or being so involved in the business, how that plays into the model that you'd like to pursue next and your thoughts on the, on the path overall of buying businesses. So I think those are all kind of related.

[01:15:22 - 01:19:13]

Brian Anderson: Yes. Okay.

So I mean what's next for me? I mean I love the world of entrepreneurial acquisitions and I'm using that term broadly. It's just, it's buying a business that still you can, you can entertain entrepreneurial, your entrepreneurial side and to, to basically to help the business grow. I think it's still, as I said, it's a great asset class and I, and I'm not one. I'm not stepping away.

I, I want, I won't. I just, I don't have that, that, that part of me. I, and I've so I'm, I'm right now diving back in, starting to source ideas. You know, I'm, as I said, I'm kind of a special situations opportunistic buyer and I look for value. But I, at the same point, one of my mistakes, I Made was I was, I did it really very much so alone when I was in the business and, and it was incredibly lonely.

And so with that I want to basically introduce myself or to this, this world and through conversations, through this podcast and through conversations I've had with many of your guests. And I think, you know, I, I, I need, I, I, I'm, I'm trying to, and see an idea if you know, people want to partner with me not necessarily as a, a normal partner or even as, but just as someone that could be with my support network. And I, I feel like that is, you know, where I'm trying to leverage myself right now. The reason why is because I, I feel like that I have to step up, I have to step up in terms of the size of the business. And this is one of the themes that you've kind of touched upon is I, I have to step up in terms of buying a bigger business.

It, you know, one of the, my, my lessons is is that buy a business that you can scale and that has, and what I mean by that is that has a size to be had to scale. Now how we determine that it's, it's, you know, sometimes a case by case business but obviously cash flows is a big, big, big amount of, a big function of that. But I've had other people tell me and you know, people that I've talked to through some of your podcasts and stuff, you know, also look at it as a, a headcount, as a, as a determinant of what, what, what, what a proper business to be scaled would be to think so I think some of those are going to come into play. But I'd love to step up next. Do I want to go necessarily into to be an independent sponsor if the right opportunity presents itself and yes, do I want to go back to be, to buy a small business?

No. But is there in between something you and I talked about? I think possibly is that as well. But I have to, I have to give that, I have to, you know, right now get myself reacquainted with network. I've, I've looked at a business.

I try to have a negotiations with this one that back in the end of 2025 that, that failed. But that was the hairiest dog you've ever seen. And so that's, you know, where I'm kind of at. In addition to that I'm doing some consulting just to help people and nothing I'm charging for just because I think just what I've learned from this podcast is there's real value to this whole ecosystem and you know, working with others, including helping others and you know, learning from others is just immensely valuable. So Brian, one of the, one of

[01:19:13 - 01:19:25]

Will Smith: the mistakes as you put it in your document was I got stuck in the business. And so this is what you are determined to avoid in the future. What, what would you tell searchers about

[01:19:25 - 01:20:46]

Brian Anderson: that really depends on what you want. If you love the business and you just, you know, and you love being an operator and you love the day to day struggles of that or and victories, then you know that maybe that's not the theme for you.

But my, my, the way I look at it is, is that for me is that I don't want to be in the business. It doesn't complement my strengths. I want to be working on the business. I want to be thinking things on the strategic basis. I want to be big picture in it and then, but helping figure out situations.

Not, not being, not being distant from the business, being part of the business, but not ever having to be operationally dependent the business not ever having to be operationally dependent on you and where you know, helping people realize and empower people to realize what, what needs to be done. Working with a team and helping to bas. Be the, be the person that is the leading that team to good decisions and helping them realize those decisions even though if they don't realize them themselves.

[01:20:47 - 01:21:03]

Will Smith: But Brian, you actually did explicitly want to be an operator when you bought the first business.

And so was that a mistake or

was that you've done that now and so that chapter, you've finished that chapter and you don't need to go back and do it. Is that what we're, what are we hearing?

[01:21:03 - 01:21:15]

Brian Anderson: Yeah, you're hearing the exact, the second. It was not a mistake. Okay.

It was. I got caught up in the business. I did make some mistakes to get myself out of the business, but I think I did at one point.

[01:21:16 - 01:21:44]

Will Smith: And so, so the model, you don't think it's a bad model? The one that we touched on at the top where Searcher buys a business and is in fact the operator operationally very involved for the first number of years as a dues paying educational experience to then emerge on the other side to go off and buy other businesses or know how to grow it better or whatever so that you just don't, you're past that now, you've graduated, you

[01:21:44 - 01:21:45]

Brian Anderson: don't need to do it again.

[01:21:45 - 01:21:47]

Will Smith: But, but you still believe in that as a model?

[01:21:47 - 01:22:34]

Brian Anderson: I do. I mean for me, a personal benefit of Me is like, originally I was a financial guy and I was an institutional investor and you know, understand all those sides so that you'd look as a financial sponsor. I mean, I am, I'm an owner operator now.

And so that's, that's amazingly, that's amazingly powerful. And it's so. It, it has its value. And learning those mistakes, going through those, that once again gets to the climb. It's like, yes, maybe I needed a better way to extract myself from the business or not get back into it a second time and get caught in the business.

But so, but learning that and taking those licks. Gosh. I mean, you're, you're. Oh, you're. You're going to be thankful for it.

Those, as you say on your podcast all the time, those fetal moments, those, Those are what make a person.

[01:22:34 - 01:22:46]

Will Smith: That's a perfect segue, Brian, to the benefits that you, you, You've. You've gained from this other than financial. You've touched on them. Speak to them directly, please.

[01:22:47 - 01:24:10]

Brian Anderson: Well, I mean, it's just I, yeah, I talked about all the things that we've done that accomplished and mistakes I made, but personally it's been great because, I mean, I just. First of all, you had to. In order to be that owner operator, you have to learn to be a leader. And that's, you know, as much as you think you have that until you put yourself in that position where everything is dependent on you and everyone looks to you and you know, especially if it's a company like, you know, you could have that within a division, but it's still difficult to actually, basically to really feel that you have to. You have to learn tactics and people management and decision making and things.

Those things. I grew immensely. I became so much more emotionally intelligent. It was, you know, things. And on Wall street, it's okay to have, have a, A fiery temper.

You know, maybe not as much now, but back in the day, I mean, when I, When I was working on trading floors. Oh my gosh. The, The. The energy. So there it was just.

But now, you know, you have to, you have to keep your calm. You have to be smart. You have to basically approach things with a. A certain. Not a certain equilibrium that basically allows you to.

[01:24:10 - 01:24:13]

Will Smith: Equanimity would be the meditation word.

[01:24:13 - 01:24:41]

Brian Anderson: Yes, exactly. Yes. I love that. Being a yoga guy, I love that.

Is that, is that, is that when you basically think that you are not. Your, Your thoughts are not distracting you, they're actually helping you and your emotions are not distracting you there. So, So I become a More effective communicator. My. Not only in the workforce, but at home and with friends and family.

What else?

[01:24:41 - 01:25:00]

Will Smith: I mean, the relationship you, you mentioned in your document, having appreciation and gratitude. Good, good old gratitude. You know, that one of the most powerful emotions that we can, that we can invoke in ourselves. But why?

What gave you gratitude? What about this journey gave you gratitude or taught you gratitude?

[01:25:00 - 01:26:37]

Brian Anderson: Well, it's, it, it's, it's, it's mistakes, losing, going down. You know, it's easy to say gratitude when you win the super bowl, you know, and thank everybody like that. That's, you know, that's, that's gratitude because you're at the victory.

But to have gratitude when things are difficult to, you know, when others pick you up or you have to pick yourself up, and you do it in a way that basically helps as opposed to hurts and that lesson learned, it's just. Yeah, it's just. Yeah. I find that, you know, when you kind of are, you know, making that climb, as I've referenced, easier, it's like when you get to that top, you kind of appreciate what, everything. You look down, you kind of appreciate everything right there and you're thankful for the climb.

It's nothing more than that. I mean, it's a people, There's, I've worked with wonderful people, really, you know, and they know who they are and I thank them and it's just, but the difficulties throughout it have been great, you know, and it, you know, I've had good fortune too, so I have gratitude for that. And you know, meaningful relationships. I have gratitude for that. You know, that's.

Those, it's. But those, those are what helped me and you know, and it's helped shape good values on me. My values are better now. They just are.

[01:26:38 - 01:27:33]

Will Smith: Well, I hate to end having on this question.

You just talked about all of these more important character benefits, good values. And I'm going to ask you this. The opportunity cost, or looking at the, your case, the road not taken, which was continuing in finance, you presumably have all sorts of friends and colleagues that did continue along that track since 2015. And you say something in your document about how they have merrily gone on to earn tons of money and maybe even with less, with less hours and less fetal position moments than you. So how do you, how do you evaluate it from that kind of dollars and cents, opportunity cost perspective?

Is it just that the soft benefits outweigh all of that other stuff or, or what? Let's be, let's be materialistic here.

[01:27:33 - 01:27:42]

Brian Anderson: Yeah, I Would have done better if I stayed on the street and probably.

Probably would. Done better if I stayed on the street. Okay.

[01:27:42 - 01:27:43]

Will Smith: Only probably.

[01:27:44 - 01:28:41]

Brian Anderson: Yeah, I mean, I can't, I can't be assured because you don't know what happens, you know, in those, those number years.

Um, so. But the, the likelihood when I would done. I would have done better. Um, but it would. I've done screamingly better.

I can't say to that. That that's not the point. But the point is from the dollar perspective. Yes, from a. But that also doesn't take in consideration how I'm situated right now.

Like right now, if I was in Wall street, what's next? You know, how do I get to the next phase where here I'm a, I'm a, I'm a, you know, I'm a financial sponsor potentially, or I'm an owner operator too. You know, I'm positioned to go, well, go into my next, my next state, which I wouldn't have had if I had the, you know, that on the street. But I'm also the. I'm just better for it.

It's like I've lived more meaningful lives. You know, the stories that we all have when we go into this, the personal stories, like, it just makes food taste better. It makes, you know, it makes.

[01:28:42 - 01:28:42]

Will Smith: I love that.

[01:28:43 - 01:29:04]

Brian Anderson: And so, and that's, you know, I can sit back and I.

When I hear people that I, I know and friends, when they, they're going on about first world problems and everything like this, I just sit back and smile because it's, It's. I've seen the other side and you know, I don't talk about. I've actually seen it and that's why it's, it's powerful.

[01:29:05 - 01:29:29]

Will Smith: Great. We'll leave it there.

Brian. What a. What a journey. And thank you for sharing it with us. As I said at the top, I just love your reflections more than.

More than anything else. So encourage everybody to click on the link that will be in the show notes for your document and be eager to hear what, what you do, what specifically you do next, Brian. So be in touch.

[01:29:29 - 01:29:41]

Brian Anderson: Thank you. And can I give a special thanks to you, Will, Sophia, Pam and Anton and the rest of the team.

I appreciate that. I love this. The collective intelligence from this podcast is amazing. Amazing.

[01:29:42 - 01:29:50]

Will Smith: Well, thank you so much for saying that, Brian.

And on behalf of the team, they'll love to hear themselves shouted out. So really nice of you to do that. Thank you, sir.

[01:29:50 - 01:29:51]

Brian Anderson: All right, you be well.

[01:29:51 - 01:30:35]

Will Smith: Hope you enjoyed that interview.

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