Host: Upon meeting the seller of lodging source, a 20 year old corporate travel business, today's guest knew he wanted to buy it. So in addition to the story of how Dan angel did in fact buy it, we also unpack what he liked so much. This corporate travel agency has a great model and strong value proposition for its clients, not to mention nice margins. It had generated $900,000 of SDE on 3 million in top line revenue and the year before. Dan Bought also has a fantastic number two, the VP who'd been there for 15 years. And a key factor in Dan's success with his acquisition was the buy in from this key woman, Jamie Moylan. Jamie's sense of ownership was strong, as was her protectiveness of the team and she was blindsided by the news of the sale. So we're doing something new today. We're hearing not just from our buyer Dan, but from Jamie as well. We get her first person account of what it's like on the other side of the stories we tell here on Acquiring Minds to be the key woman in a small business and learn it's been sold to meet and adjust to the new guy from outside the industry. It's a fascinating listen and while you'll recognize many of the patterns, I hope you agree that they have particular force coming directly from an affected employee. I want to thank Dan for his idea to bring Jamie into the interview and of course Jamie for being game. Here they are. First Dan angel, owner of Lodging Source, then Jamie Moylan, VP at Lodging Source. As you know, entrepreneurship through acquisition and franchising play very well together, especially if you're looking to build a portfolio of businesses. Today Thursday is a webinar called Anatomy of a Franchise. Holdco Connor Gross will cover topics like single brand roll ups versus multi brand portfolios, industries with the most opportunity in franchising, franchise acquisitions, the sourcing and diligence and integration, case studies and more. It is today, May 1st noon Eastern. Register at the link in today's show notes or on the Acquiring Minds homepage. Acquiringminds co Connor did a webinar with us last summer that was very popular. I have no doubt that today's will be as well. Also, if you haven't checked out our new sister pod, the Mind's Capital podcast, we're now up to episode 12. The Minds Capital Pod is a weekly show focused on independent sponsors. As you know, the independent sponsor format of buying businesses is quite different than that of search. Bigger businesses, more outside capital, higher expectations from investors, and for some searchers it's where their business buying careers will take them. A number of our guests on the pod, like last week's Nick Hashka, who's been on Acquiring Minds a few times, are examples of exactly this. Started as searchers, now independent sponsors. So come learn about the next level of buying businesses through the case studies and practitioners of independent sponsorship. The show is Mind's Capital podcast. It's on YouTube and Spotify and Apple and anywhere you get your podcasts. Every Wednesday a new episode drops. Please check it out. 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. Running payroll, paying your bills, closing your books and producing financials. These are critical tasks every business owner must do or oversee. But spending time on them distracts you from the leadership in growth work you want to do. So let system 6 do it for you. Owned and led by a former Searcher, Chris Williams, System 6 is a leading outsourced finance team for hundreds of SMBs, including over 50 searcher acquired businesses. Chris, Tim and the System 6 team understand firsthand the challenges, the opportunities of jumping into a business as its new owner. So whether you own your business already or have one under LOI, talk to System 6 about how they can give you time back and improve your financial operations. Mention Acquiring Minds and they'll provide a free review of your books and Financial Ops, a $500 value. Check out system6.com, link in the show notes or email helloystem6.com Dan Angel welcome to Acquiring Minds.

[5:20] Guest 2: Thanks for having me.

Host: Will Dan, you bought a really neat business lodging source with with a great business model. We're going to hear all about it today. We are also going to hear from your second in command, Jamie Moylan. Jamie had been with the business for 15 years before you bought it, so we're going to hear her perspective on the business selling to you. But let's start off Dan, with how it was that you came to want to buy a business in the first place. Sure.

Guest 2: Thanks. So I guess just taking a step back. So I was, I was born in South Africa and I moved to the States when I was 18 months old. I moved around a lot growing up, but primarily was from the Midwest. I spent a lot of time in Cleveland and Chicago, went to Syracuse for undergrad and then my first job out of Syracuse was at Bear Stearns in 2007. So right before Bear Stearns collapsed. So I got a front row seat to basically The Big Short. The movie the Big Short, yeah. Saw that from a, you know, front row. Luckily, the place where I was at Bear Stearns was one of the few places J.P. morgan didn't have, and J.P. morgan acquired Bear Stearns, so luckily kept my job. But it was 2008, and it was just, you know, sort of a. A tough time to be on Wall Street. But at that time, I sort of decided that I wanted to go work for a hedge fund. I thought that was sort of my dream goal, and that's all I ever wanted to do. So I sort of set my sights onto kind of how to achieve that. So I spent the next few years getting my CFA and then sort of planning to go back to business school, which I thought would give me the ability to sort of pivot to go work for a hedge fund. Was fortunate enough to get into University of Chicago at Booth, and spent sort of the two and a half years while I was there really focused on how to get a hedge fund job. I was living in Virginia at the time, and I was doing the evening weekend programs. I was flying to D.C. or to Chicago every weekend, which was a lot. And I was working full time at the time, but it was good.

[7:26] Host: And Dan, what was it about working in the hedge fund industry that turned you on so much?

Guest 2: I think when I saw everything collapse when I was at Bear Stearns, I just realized those funds are probably the smartest out there. I was always just fascinated by the markets. I was fascinated by how they invest. And in my mind, it was just the ultimate goal was to go work for one of these hedge funds. That sort of changed once I went to go work for one. But, you know, that was. That was initially the ultimate goal.

Host: Great. Okay, carry on.

Guest 2: While I was at Booth, I ended up getting an internship with a small hedge fund in Chicago, ended up moving out there. And at that point, I basically went to school full time while I was in Chicago working for the. Interning for the hedge fund. The last class I took at Booth was the search fund class. And I just accepted a full time offer at a hedge fund. So I was all excited. And I had a buddy at Booth who told me, he's like, you got to take the search fund class. And I had no idea what the hell it was, but I was like, all right, I'll take it. It was my last class at Booth, took the search fund class, and that was taught by Brian O' Connor and Mark Agnew. And this was back in 2016, so a little bit, you know, a Lot changed in the industry since then. But I was. I was blown away. I couldn't believe that you could sort of just graduate from getting your MBA and go buy a company and become the CEO. It made no sense to me. But I was just, as I'm sure a lot of people have said before, you know, sort of blown away by the concept. But I just accepted the hedge fund job. That was my whole sort of like, goal and dream to get that job. So I sort of put the search fund to the side and went to go work for the fund. Fast forward about six years. I've been working at the fund for a while. And look, I love investing. I love the markets. I love understanding how companies sort of create value. One of my favorite things when I was at the fund was always interviewing the management companies to understand how they actually operated the business and ran the business. And a lot of times I'd always kind of, you know, leave those meetings feeling like, what am I actually doing? I'm investing in these companies, but I'm not actually creating any value. I'm not helping these companies actually grow. And so I kind of, in the back of my mind, had the whole idea of search. You know, this was 2022 when I kind of started having these feelings. So, you know, six years after I took that class. My twins were two at the time. I was getting to that point. You know, I don't know if I'd call it a midlife crisis, but just sort of, a lot of. A lot of soul searching. What am I actually doing? When my kids ask me, what am I. What do I actually do for a profession? Like, what am I actually going to tell them? And so my back, my mind, I kind of had this idea of search. A couple other things kind of happened that, that summer I had a good buddy who passed away right before COVID in 2019. And we. We sort of put off a memorial for a couple years, just, you know, during COVID and everything. But I saw his mom that summer and she said to me kind of like, you know, just. Just thrive was what she said to me. But it basically meant like, you know, just make the most of life. And after that and just, you know, sort of all the soul searching, I decided, you know, I want to go operate something, I want to go build something. I want to give people a job. I want to sort of leave an impact on something. And I just, I wasn't getting that feeling at the hedge fund. So late summer of 22, I resigned from the job and decided I was Gonna go search.

[10:53] Host: Awesome. Thank you for that, Dan. Just going back to the hedge fund. So it turned out that. It turned out that it. What it was missing was a sense of building something or leaving impact. Was it great in all the other ways that you hoped it would be, or had some of that been an illusion?

Guest 2: Yeah, I mean, look, I mean, you know, from, you know, was making good money at the time. All that stuff was great. You know, the markets are tough. We had just kind of come through Covid, which was, you know, obviously a very crazy ride with, you know, the markets dropping and then rising. And the summer of 20 was just, you know, insane times for the markets. But I did, I did love investing. I still, I still do, but I just wasn't getting that. I figured I thought I could do more. And I also, at the time, I wasn't really managing a team. I was sort of basically just doing a lot of research and investing, and it was sort of long term investing. In my mind, I think I would do better, you know, managing a team and sort of, you know, working with people more and growing something. So I feel like that was sort of was missing from my life, to say the least.

[12:04] Host: That's great and really powerful. Your story about literally the memorial service of a good buddy of yours and his mother telling you kind of, carpe diem, go, go for it, life is short kind of message thrive. Her word, very powerful.

Guest 2: Yep.

Host: Okay. Thank you. So, so, okay, so you decide to pursue this path. What does your search look like? What. What are the steps there?

Guest 2: Sure. So when I was at Booth and I took the search fund class, the only thing I really knew at that time was traditional search, which I know, you know, obviously most of your listeners know about. I didn't really know self funded really even existed. So looking back, like, if I was 28 and, you know, graduating from Booth, I think the traditional path would have made a lot of sense. But, you know, six years later, I'm in my mid-30s, I've made a little bit of money, I'm doing okay. In my mind, this self on the model made a lot of sense to me. And to be honest with you, I didn't even know the cell phone the model existed. I think I can't remember if I learned about it on one of your podcasts or just reading, you know, sort of searchfunder.com but I didn't even know cell phone that existed. I spent a lot of time going back and forth like, do I really want to go raise a fund? Do I want to get investors. Do I want to go that route? And it just didn't make a lot of sense to me. You know, I think you had a podcast maybe that summer of traditional versus self under the. There was a debate, I came. I think you had one of the guys from SIG and there was somebody else on it.

Host: Yeah.

Guest 2: And it made a ton of sense to me. And look, there's in my mind, like there's pros and cons to both sides and it's, it's really sort of a personal choice of, you know, where you are in life and what you're thinking. But for me, the self on the model at this point in my life made a ton of sense. So I went down sort of the self funded model. I went to sort of a. Kind of. Before I sort of launched my search, I went to the Southeast ETA conference at Charlottesville, which was like just. I went down to that weekend. I left that weekend to sort of like, you know, it was like a game changer, like an aha moment. Like this is, this is 100. I'm. I'm making the right choices of what I want to do. Listen to a few of your podcasts. On the drive down to Charlottesville and the drive back from Charlottesville, you probably

Host: saw some people on stage down there who were on the podcast. That's. And that's ceta, the Southeastern ETA conference that rotates through UVA and Georgetown and I guess unc, I think, and I

Guest 2: think Duke as well. Or at least it was.

Host: Oh, maybe it is Duke. Yeah.

Guest 2: Yeah, but that one was at uva and it was just, it was a special weekend. And then, I mean, look, I've never operated a company before. You know, the class I took was six years in the past. I didn't really know what I was doing. And so I really wanted, I wanted some support. And so I made the decision to. And I did a lot of research, but I ended up going with, down to Tampa to Sam Rosati's Pursuit boot camp. And that was great. I mean it was just, you know, Sam taught me a ton. You know, I met my entire deal team when I was down there. Um, having the cohort of other people who were about to start their search and be able to sort of lean on them and touch base with them throughout my search and you know, still talk to them today, all of that was great. And so having that sort of support while doing a self funded search I think was, was a huge help. One of the, one of the biggest, you know, sort of, you know, I guess pain points of a self funded search is it's really hard to kind of keep yourself accountable and, or hold yourself accountable. And so kind of having that cohort I thought was, was really a huge help. And then also again, you know, meeting my entire deal team when I was down there really helped me eventually sort of close the deal. I think was, was a huge help. Kind of knowing my banker, knowing my lawyers, all that stuff, kind of having more of a personal relationship, I think was a huge, huge help for me.

[15:56] Host: And Dan, of your cohort down there from SM boot camp, did many of them acquire?

Guest 2: I would say, I know, I think five or six of them that have already acquired. You know, I think There were about 15 in the boot camp. I'd say, you know, maybe only like 10 started to actually search. Five kind of just came down there to kind of, you know, kick the tires. But I'd say majority have, have, have acquired since then.

Host: Yeah, very cool.

Guest 2: No, it's, it's, it's, it's amazing. And I've gone down there to speak a few times and it's, it's just a great sort of group of people that, you know, all kind of, you know, same sort of, same sort of goals, which is great.

Host: Yeah. And, and Dan, you talk about wanting support, which of course makes sense. The traditional search fund she chose against. That's one of the classic reasons to do a traditional search fund is that you have this, you know, this package you have of, of how kind of how to do it, how to structure things, capital and investors, most importantly, that provide support. So I, I gather you basically, yeah, you saw that. But still the other reasons that it didn't make sense caused you to choose against it.

Guest 2: Yeah, I mean, look, and I spent a lot of time thinking about it, I think, you know, and I'm like, look, as most of your guests have done, like I interviewed a ton of searchers, several of your guests as well. But you know, I think where I was in life, I thought I had enough sort of advisors outside of sort of the boot campus, you know, sort of more senior advisors that I can kind of lean on, people that I, I become, you know, in my network that I could lean on. The bootcamp was a huge help. And I think the idea of owning a business a hundred percent, not having to go do the search up front or raise the, you know, the search fund up front. I also spoke to a few people on traditional search who said like, look, if I had done it all over again, I would have done a self Funded search. I talked to a few people who told me that they found companies that they probably would have bought in a self funded model, but they didn't really get approval from their investors. Yeah, and look, there's nothing against a traditional search. I think if I was again, you know, graduating from grad school and that's what I was going to do, I think it's, it's a great model and there's a huge, you know, you can probably ultimately buy a bigger business. But for me, and you know, at that point in my life it just made more sense to do the self funded model.

[18:17] Host: 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 and 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 in an active community of serious searchers, check out acquisition lab.com link in the notes or email the lab's co founder, Chelsea Wood. Chelsea Buy, then build dot com. Well, and of course the other thing that you mentioned is that you had, you had a bit on your balance sheet, you had some money that you could put toward and many, many people doing a traditional search fund really are just coming right out of school and might not have much money at all. So can you share what, how much money you had to put toward this project?

Guest 2: Yeah, I mean I, well, I basically took out the entire money I had kind of in the fund and I, you know, because I wasn't working for a year, I knew I had living expenses and then sort of what ultimately would be left over. So I kind of budgeted that I would have two years of searching in my mind. I did not want to get anywhere close to that. I wanted to get it done as obviously as soon as possible. I just, I also knew the faster I got it done, the more of those sort of savings I could put into the fund versus if I took the full two years, I probably would have had to, you know, maybe look for some investors. And I ultimately didn't have to get investors, which was which was a huge, you know, benefit that I, you know, didn't want to have to deal with.

Host: And when you say fund now, you just mean kind of like the vehicle that you had set up for yourself to go search.

Guest 2: So. No, so I say what I took the money out of the hedge fund that I've been working for. That's what I meant.

Host: Ah, yeah, okay, okay, okay.

Guest 2: Sort of that whole, that whole carried interest first.

Host: Oh, I see, I see.

Guest 2: Okay, yes.

Host: So that was your kind of source of net worth at that point?

Guest 2: Yes. Am I sort of my living? So my wife was sort of a stay at home with the twins. So it was, you know, as that money dwindled, you know, my, my search accelerated to say the least.

Host: And so how, how does that work? You have like a, a balance in a hedge fund of future carry and you can draw. I don't, for those of us who don't understand.

[21:01] Guest 2: So I mean, so typically, you know, most funds your bonus paid, you know, you get a fixed salary, but then your bonus paid is typically goes, gets reinvested into the fund. So, you know, after working for six years, I had a decent size, you know, amount in the fund and when I left the fund, I, I withdrew that to sort of, you know, living expenses and ultimately, you know, the, the equity for my investment.

Host: Gotcha. And then on the equity for your investment, what size of business? What were your parameters for size of business you could buy EBITDA and revenue wise?

Guest 2: I mean, I think I was looking for something, you know, I think at the high point it probably wouldn't have been over a million and a half of SDE, but I know I looked as low as 500,000. You know, I ultimately landed on something around the 900 range. But you know, depending on what I found, I was looking anywhere from 500 to one and a half pretty much.

Host: And so if you could find it

Guest 2: was on the higher end, I probably would have got. Had to get some investors depending on the multiple.

Host: That, that was my next question. So million and a half SDE, let's say it sold for conservatively 3 and a half X. That's already above 5 million. Maxing out the SBA loan and requiring, you know, $500,000 or more of liquid cash from you or equity. So if you don't have that on your own balance sheet, you have to raise it. Okay, super. Now what does the search look like? What can you tell us about that?

Guest 2: Yes, so I left Sam's Boot Camp in November of 22 and I sort of launched My search vehicle, which was Oliphant Legacy. I spent way too much time on a website and a name and, you know, writing all the verbiage on the website. I thought it was gonna be the most important thing I did. Creating a logo. I had a good buddy create a logo for me. You know, I had put a bunch of elephants on my website and I thought it was, you know, beautiful, but spent way too much time doing that.

Host: And what is Oliphant? What was that a reference to?

Guest 2: So Oliphant is actually elephant or elephant and Afrikaans. So sort of a little homage to being from South Africa. And it's sort of like a family animal that we all sort of

Host: Little

Guest 2: family homage, to say the least.

Host: Okay, okay. Well, I will say that we all agree that over investing in your logo and website and stuff is probably not time well spent, but you did a good job. That's. It's a pretty cool brand and logo. All the fun. Yeah, I like it. Thank you.

Guest 2: I appreciate that. But the amount of sellers I spoke to who asked about it were minimal. So the amount of time spent on it, to your point, was not. Not well spent. But anyway, it's still important to do, and it's one of the steps sort of to check the box and, you know, I rent, read way too many blogs about how to, you know, do you do Olafant Legacy or Olafont Partners, Olafant Capital? But, you know, anyway, not time well spent. So I. I launched the search pretty much right before Thanksgiving of 22, and I went for the. Pretty much for the broker model. So I just wanted to get as much deal flow as possible. I ended up doing a little bit of a proprietary search towards the end of my search. But I would say 95% of my deal flow was broker. Initially, my wife and I thought we'd be sort of open to moving anywhere. So my geographic constraints were minimal. I kind of had the entire east coast and I'd even go back to the Midwest. But Sam sort of, you know, talks about something at his boot camp called sort of the Big three, little two. And he talks about, you know, if you're going to have geography, industry and size be sort of your big three, you got to at least have two of those three be somewhat constrained. And, you know, getting started, I realized my deal flow was sort of just all over the place. So I ultimately ended up deciding I only wanted to look in the, you know, DC, MD, VA area, the DMV. But with that said, I ended up finding a business that was based in Charleston So so much for that. Right.

[24:57] Host: But it's remote, so, but it's, it's,

Guest 2: it ended up being remote, so it ended up working out fine. But so during the search, I think, you know, so initially, you know, my idea was for size. I wanted some somewhere around a million SDE and for industry I wanted, you know, B2B or specialized distribution, which is kind of what everybody says. Right. And so having those as constraints was, and then kind of having geography, my geography being completely flexible. There was just way too much to look at, especially on a brokerage search and you know, to sort of hone in a little bit, especially kind of being self funded and trying to hold yourself accountable and, and finding a good sort of search model. I thought it was important to, you know, ultimately sort of decide, I'm only going to look in the dmv. Again. That ultimately didn't work out because I bought something that was based in Charleston. But yeah, you know, I had come across it, but I had already sort of decided that's where I was going to start to look. So that was helpful during my search. But yeah, so, I mean, do you want to talk about sort of the

Host: initial I jump back into the story?

Guest 2: Yep. Yeah. So I, I came close on a corporate sign manufacturer and I thought it was gonna be the one. You know, had dinner with the owners, visited the plant. You know, I thought it was gonna be the one. But that one ultimately fell apart over price. And really what it fell apart was because of working capital, which I know people talk about all the time, but, you know, working capital, working capital, working capital, that is such a big thing that, you know, I think searchers need to be aware of and really understand that. I thought I understood it coming from, you know, the hedge fund world and, you know, analyzing businesses and looking at balance sheets. I really thought I understood it. And it's still such a hard concept to truly understand. But that deal ultimately fell apart because of working capital.

Host: Because of your discomfort with the working capital characteristics of the business.

Guest 2: Yes, so. So the operating profit of that business was, you know, a little bit higher than what I ultimately bought with Lodging Source. But from a cash flow perspective, you know, when I was looking at it, I just couldn't see the cash flow. And I remember talking to the broker and saying, you know, where is, like where's the cash? Are, are, are the owners taking distributions? Are they paying down debt? Like, where's the cash? And, and his comment to me was, it's all in retained earnings, which, you know, if you understand sort of like basic accounting, like that makes no sense. Right. So what ended up being the case was all the cash was getting tied up in accounts receivable, in inventory. So they were a corporate sign manufacturer. If you think about, you know, who the GC is going to pay first in terms of the subcontractors, the sign people are, are the ones, the one of the last people to get paid. So they were growing, which is great. But in terms of cash flows, it wasn't there. And, you know, it's easy to put it into, you know, an Excel spreadsheet and say, oh, operating profits growing. But if you don't have cash to pay down that debt and you're planning on, you know, using 80, 90% leverage, you can't use retained earnings to pay. So that one ultimately fell apart. And then, so that was probably January, February of 23. So I started in November 22nd. And then shortly after that one fell apart, I came across Lodging Source. And, you know, again, I sort of just made the decision that I was going to look at the dmv, but I saw a sort of corporate travel management company based in Charleston. And it was during one of one of the brokers I sort of, you know, had a decent amount of deal flow from. And it caught my eye for a couple reasons. Number one, if it hadn't been remote, Charleston would have been, would have been a great place to move to. So we would have moved there. And then number two, Corporal Travel Management. It just, it intrigued me. When I was at the hedge fund, I had sort of covered the travel industry a little bit. So I knew hospitality. I understood sort of the ecosystem and the relationships between hotels and the brands and, you know, so that made sense. And when I started going through the deck, they had a bunch, they had a deck, a slide that had all the logos of a bunch of their clients. And the clients were, you know, there was a lot of restaurants on there that you've, you know, probably eaten at and some big, big chains. There was some relocation companies that I, that I knew of and there was a lot of construction companies with names that you've heard of. So I was like, no, these are like legit clients. Like, what are these guys doing? And I was fortunate enough that one of those clients, I had a pretty good relationship with some people that worked there. So I was able to sort of ask them, like, you know, what does this company, Lodging Source do? Like, how do you guys use them? You know, obviously had to be so much a screeks. I, you know, you know, signed an NDA, but just trying to understand sort of like where they fit into the value chain. And this company spoke extremely highly of them. So I was like, all right, let's, let's kind of keep digging in. So this was again, sort of early

[29:41] Host: spring of 23 and Dan, and maybe this is probably the time to tell us what the business does.

Guest 2: Sure, sure, sure. So. So Lighting Source is a corporate travel management company. And the niche that we sort of focus on is group project and extended state travel. So, you know, this isn't your typical transient C suite travel, going to conferences. This is, you know, a construction company that is going to go install, you know, a big construction job. And they're based, you know, in Atlanta and their job is somewhere across the country and they're going to go spend, you know, a month or two months there. And the last thing this company wants to do is go source hotels and find discounts. So that's what we do for them. On the restaurant side, we do a lot of new restaurant openings. So if a big, you know, chain is going to open up, you know, new chains across the country, they're going to send four to five people there to, to do interviews, to train the people to hire to set up the restaurant, and they're going to be there for a month to two months to set up this restaurant. And again, their core competency is, you know, either being at the restaurant or, you know, on the construction side. The last thing they want to do is deal with hotels. So it's this extended state travel that we deal with. And the nice thing that we do is we don't charge our clients anything and we get compensated by the hotels on the back end through commission. So it's a really nice value prop to the customers. And what I noticed too is, you know, this was, you know, call it early 23. So, you know, Covid's still relatively fresh and from in the travel industry. You know, they definitely got hit during COVID for sure. But in terms of like, this wasn't corporate travel that like, just doesn't exist anymore because of, you know, zoom calls. This is travel that has to happen no matter what. Like, construction jobs are always going to happen. New restaurant openings are always going to happen. So this was travel that kind of was, I wouldn't say Covid proof, but really had, you know, less of an impact than the rest of the travel industry. And as I dug in the big chains, you know, Hilton, Hyatt, Marriott, all of them are investing in extended state travel because they see sort of the Growth opportunity here and the fact that it's, you know, relatively not recession proof but it's, it's got a lot more stability than sort of the rest of the travel industry.

[31:54] Host: Well, amazing to be diligencing a travel business a year or two after Covid, which of course travel being, you know, one of the industry's hardest hit by Covid. And to see that it, you know, it felt it, but it didn't get absolutely crushed. In fact it did okay through that. What a testament to the business model, which I would like to just repeat. It's such a cool one. So basically it's B2B businesses. Think, think big. General contractors or anybody involved in construction or like you said, restaurants opening, opening new units, new locations, need to deploy teams, cruise out to these remote places or your non local places and those teams and crews are going to be on the ground for months, couple months, weeks and months, two months call it. So five people need to go to Tallahassee for two months and headquarters like just doesn't want to have to do. It's a big, that's a big logistical pain in the butt. So you do that for them and you do it at no cost because you earn just like any travel agency. I think this is the traditional model of any travel agency. You earn commissions from the hotels and other service providers that you pair them with, that you put them with.

[33:09] Guest 2: And so we can leverage our scale obviously and then so we have sort of pre negotiated discounts with all the big chains and then on top of that when it's a much bigger job, we're able to sort of negotiate at the local level. So all you, you hear Hilton, Hyatt, Marriott, most of these hotels are you know, privately franchised hotels. So you're actually negotiating with the owner of that hotel as opposed to just negotiating with the big corporate. So we have the big corporate discounts that are nationwide but we're also able to, you know, leverage our negotiation skills and our, you know, our, our teams to, to get them even higher discounts for the, for the bigger jobs. So yeah, I mean, you know, we'll do some jobs that are only, you know, a couple days but for the most part, you know, we're going to average, you know, I'd say 10 days, the average. But we have some jobs that are over a year long which is just crazy. But you know, we do it.

Host: And so the margin, your margin is in. Well so it's sold to your customer at X and then you guys are actually passing on some of that discount and there's enough and there's commission there for you.

Guest 2: Yep. So one of the nice things that we do in one of our sort of our, our value props, our customers is they are paying the exact price that we get the hotel for. So we're not, there's no sort of, some of our competitors charge a little bit of a premium to get the spread there. We give our clients exactly what we're paying for. So pure transparency there. And then we get on average about a 10% commission on the back end. So 10% off of that gross hotel stay. So for $100 room, we're getting $10.

Host: Okay. Okay, great. And what is this called, this industry? Is this corporate travel agencies, extended stay travel agencies.

Guest 2: It's sort of corporate travel management, you know, extended state travel.

Host: Great. And then so working capital wise, how

Guest 2: does it work from a working capital standpoint?

Host: Yeah, yeah. Like, it's amazing, right? Especially contrasted to the sign business.

Guest 2: Yes, exactly. So there's no inventory, there are receivables. So we're still getting, we're still collecting from these hotels, but for the most part the hotels pay us, pays us within, you know, 30 to 60 days of checkout. So that there's not really an issue there. And our main cost is labor. So it's really, when I, when I took over, we were 15 people fully remote. So I have, you know, a team across the country, across all the time zones and we've grown that to 23 now, which we'll, we'll get into. But for the most part, you know, we're getting sort of 10% off of the gross bookings. And you know, our only real cost is labor. So you know, from a margin standpoint, it's, it's anywhere from, call it 30 to 40%.

Host: Great. And the way that works is so you're in some sense, you might say in kind of Internet speak, you're a platform business. So you've got a certain number of dollars flowing through your platform. That is lodging source. That's not your real revenue. That's kind of the gross revenue that, that's gross bookings.

[36:07] Guest 2: Gross bookings, sort of net revenue below that, which is 10% of that number. So from a gross booking standpoint, we're doing a little over 30 million in gross bookings.

Host: So. So $30 million worth of travel booked by you guys in aggregate a year for all your customers. And then 10% of that is your kind of top line sales number or $3 million a year.

Guest 2: Correct.

Host: And then your, your margin, your real net margin on the 3 million, which is really our net. Your sales number is 30 to 40%.

Guest 2: Correct.

Host: So very, so great margins. So that's like you said, 900,000 to over $1,000,000 of SDE this business had.

Guest 2: Exactly.

Host: Great. What a great business. So actually, on the working capital, though, I was. I thought that it was negative. Working. What is it? Negative cash conversion cycle. But no, you. Because you basically, you do the work of booking the trip and then get paid later. So there is still some. There still is working.

Guest 2: We're still collecting receivables, but for the most part, that's really the only thing. And from. From a cash conversion standpoint, it's. It's pretty solid.

Host: Yeah. So tell us what you looked at in terms of, like, the. How you thought about the size of the market. You mentioned that, you know, as, you know, public stock researcher that you were. You could see that Hilton and Holiday Inn were, were getting into extended stay. Sure. But what, what is the size of this market? I mean, how niche is this? Did what your tam. At the time of purchase, did you think there was a lot to grow into or was it tapped out? What. What did you think?

Guest 2: Yeah, so what. I mean, what I kind of looked at was I tried to find who the competitors were in the space. And so part of that was, you know, spent a lot of time sort of doing due diligence on that space. And there's one of our largest competitors is a company called clc. Not to give them a shout out, but they are one of our largest competitors. They are probably, you know, at least 50 times the size of our. Of our company. So my mind outside of them, it's relatively fragmented. But in my mind, you know, if we could sort of double our business, we'd be barely a rounding out of them. And that's kind of the way my mindset was that, you know, you have this one big competitor, but for the most part, it's relatively fragmented outside of that. So the market, what I came up to was around, well, we could really go. So a lot of people still do it in house, Right. Some of the extended travel. Some people still do it in house. And so we're trying to tell people, hey, don't do it in house. Let us take that off of your hands because it's a huge pain. We'll do it for you. So I think the entire extended state travel industry is probably 20 billion. I'd say the amount of. The amount that's sort of outsourced is probably over 5 billion.

Host: Oh, wow. Oh, So a huge amount for you to grow into.

Guest 2: Exactly, yeah. And I think more and more people don't want to do it in house anymore. Right. So more and more people want to outsource it.

Host: Yeah. Well, especially your value prop is incredible. It's basically, it's no cost to the

Guest 2: customer, which sometimes people think like, where's. What are we missing? Where's. Where's the catch?

[39:02] Host: Well, is there a catch? If, say, say somebody does it in house, can they maybe negotiate the. Is some of the money that you're keeping? They could keep sort of thing, yes.

Guest 3: If.

Guest 2: If you had the amount of time and the resource to go negotiate on your own and say we don't need commission, then yes, the hotel would probably give you a little bit of a bigger discount because you wouldn't be getting the commission. But most people don't have the time to go negotiate those. And then on top of that, because of our scale, you know, we're not just one company. We have 30 million. We're able to leverage that scale to get these negotiation, these discounts across all the chains, which, if you're just one company, you might not be able to do that.

Host: Yeah, right. For sure. Of course. And the great. So any weaknesses to the business? What didn't you like about it?

Guest 2: I never thought I would buy remote business. You know, I always thought I'd be the person who was in at the warehouse at 5am and that was especially as like a new owner to gain these people's trust, gain my team's trust. I thought being remote would be a huge, huge hurdle. So I never expected to buy a remote business. I talked to. I can't remember if you've had me as a guest. Chris Williams at System six. Sure.

Host: Yeah. He's been on a couple of times and he's a sponsor. Yeah.

Guest 2: So I remember, I think I met him at Sam's Boot Camp. And, you know, so he had a remote business. I talked to him about it and he told me it's like, you know, it's sort of what you make of it and it's all about sort of the culture that's already established there. So I spent a lot of time sort of understanding, like, how am I going to sort of gain this team's trust? And so I think to, you know, maybe rewind just a little bit here. So I met the seller. I found the deal in February. I flew down to Charleston to take the seller out for dinner in April. And I think, you know, me and him had a. Had a really, really Good relationship. I spent a lot of time doing sort of due diligence before submitting an loi. I think a lot of, you know, searchers sometimes do the whole spray and pray and just send Lois all the time. I was a lot more hesitant to send an LOI and that's just, you know, sort of a personal choice. I think part of it was coming from the, from the hedge fund world. I spent a lot of time researching a company before we would invest. And so I just spent a lot of time, you know, with a seller, you know, talking to some of these, you know, these customers, trying to understand the competition before I was ready to sort of pull the trigger. But talking to the seller who had started the business in 2004, understanding like what his role was at the business, what his team, you know, what was the real value prop that his team had with these customers and like, what would happen if he left? Like, how important was he to the business? Like, if he left, would Hilton and Hyatt know about it, what our customers know about it? And to his credit, you know, not only had he created a great team with a great culture for remote business, but, but he had also sort of, I think, you know, again, to his credit, taken himself out of the business about two years prior to sort of putting it up for sale. And you know, who you'll speak to later, you know, Jamie had kind of stepped up into the VP of operations role and she was basically running the company for the, for the two years prior to him putting it up for sale. And when you meet Jamie, you'll understand sort of the culture that was created at Lodging Source is sort of second to none, which I didn't really. You can't really see it until you buy it, until you're really in the seat. So I think the amount of time asking the seller questions and asking him the same question from different angles to really understand sort of that culture and kind of how he ran the remote business. You know, we spent a lot of time on that, but I ultimately got comfortable with it. And looking back, I couldn't be happier with it being a remote business.

[42:42] Host: If you ask owners in the ETA and search community which insurance broker provides highest quality work, great outcomes and has a practice dedicated to searchers and acquisition entrepreneurs, one name comes up again and again. Oberly. Oberly Risk Strategies has worked with hundreds of searchers over nearly a decade and is in fact led by, by a two time successful searcher, August Felker, which makes Oberle, a specialty insurance brokerage for searchers. By a former searcher. And if you've got a business under Loi, Oberle will provide complimentary due diligence on that business's insurance and benefits program. An easy, no risk way to get to know August and the team at Oberle. To take advantage. Check out oberle-risk.com that's O B E R L E- risk.com link in the notes. And what was the sale price?

Guest 2: So a little over four times. A little over four million.

Host: So a little over four times for a business that's doing. Call it $900,000 in SDE. Yep, that's remote. That's seems like a fantastic. Just purely numbers on the kind of superficially.

Guest 2: Sure.

Host: Remote business. 4x for almost a million bucks. I'm surprised it wasn't more competitive or was it competitive that there weren't more buyers out there who were trying to get.

Guest 2: So I think there's a couple things I think in there that we should probably unpack. You know, I mean, I was told it was competitive, but you never really know until that could also just be the broker and the seller sort of telling you that it's being competitive. So you never know.

Host: Sure.

Guest 2: I think if you look at the growth. So from 22 was kind of coming out of COVID So I think 21 was actually back above the 19 level. So we were sort of back above Covid levels. And then 22 grew, I think, you know, call it mid teens. And then 23, when I first started talking to the seller was growing mid-30s. So it was up 30% year to date when I started talking to him. Wow. So the numbers in terms of, you know, 4x, that's sort of 4x, I think like 23 numbers. It wasn't 4x 22 numbers, if that makes sense.

[45:03] Host: Oh, okay.

Guest 2: Which makes it a little bit tougher. Right. So, you know, I'm always taught that when you buy a business and you evaluate a business, you're always buying it on, on future cash flows. That's the most important thing because that's, that's all that really matters. A lender is only going to lend it to you on sort of historical financials. I mean, obviously they're going to try to understand the story. So that made things a little bit more complicated. Especially when you look at sort of two years of financials and you're going back to that point, know, a full year of 21 and 22, they were significantly lower than sort of 23 numbers. Right. And so that's where I think if you Looked at a purely 22 numbers, it was definitely, you know, more than 4x, which made things a little bit more complicated. But in my mind, I was relatively confident in that that growth was not just like a Covid balance. It was real growth.

Host: And why were you so confident in that? Because that is the central question of what you paid for this business was. So when you say Forex 4x on the most recent year. Year. A fantastic year.

Guest 2: Yep.

Host: And typically it's such a hard one because you were, you know, because of COVID threw off all the numbers for everybody, particularly in like a travel business. So what. What would have been the best, you know, the sort of standard approach there, averaging 21, 22 and 23 maybe, but 21 would have been such an aberration. Like, can you really count it if we. How did you think about. And because that the multiple on 22. So. So what was the SD SDE of 22?

Guest 2: I think it was purely on 22 numbers. That might have been closer to like 5x maybe. But I knew once I went down there to meet the seller, it was a business I wanted. And so this was sort of, you know, call it, I think April of 22. I. We didn't get an LOI signed until the end of May. So, you know, I think there was some hesitation on the seller side as well because, you know, now this business was growing and, you know, was you ready to sell it? I think he was at a point in his life where he'd been running this for almost 20 years and it had been all. He sort of knew and you know, look, the business was doing great, but he just come out, come out of COVID and it's stressful. And I think he, you know, his. His kids are graduating from college and he's wanted a different life. Right. So I think he was ready, but at the same time, he didn't want to, you know, leave all this growth on the table. So, you know, there was a lot of back and forth, but I think we ultimately got to what I think is the right price, given what, you know, the future cash flows, if that makes sense. And then to your point, to understand that that was real growth, I mean, we went back and forth on questions, analyzing, you know, customer concentration, which there wasn't a ton of it. Understanding how long the customers, his biggest customers had been with him with the business. And I think that was. Understand that some of his biggest customers had been with him since like the early years and didn't like, leave that these new customers, like the Retention rate would be high. But at some point you sort of, you know, you can only know what you know. Right. And so at some point you're taking a little bit of a risk. Right. I mean it's a small business and, and I, I'm sure if you asked the seller the amount of times I, that we called and had questions, I probably annoyed him to death. But you know, that's kind of what you have to do. Right. And I finally, I think got confident in the fact that this, this was legitimate growth.

[48:05] Host: Well, and, and it, it sounds prudent, Dan, because, because now that we, we, we think about the multiple based on, you know, the previous three years you were paying a nice premium actually. So this was not a, a super cheap. Well, I never claimed it was, I never suggested it was cheap, but it was now it was, you know, very fully priced and so you needed to get comfortable with it. And when you talk about forward looking versus backward looking, of course the, the multiples that we talk about in, in our, but when we talk about multiples in our world, we are talking about backward looking multiple, not forward looking.

Guest 2: And I'd say, I think one thing that I, I would also sort of like talk, you know, tell the listeners when you're, when you're thinking about like you know, a multiple, like it's, it's easy to say like let me just throw like three times on EBITDA or throw four times on EBITDA and that's what it should sell for. And, and you know, to some extent that's ultimately what you do. But you know, what goes into that? You know, is there capex, is there equipment that you're, you're, you're working on, you know, what is the growth of the business? So a higher growing business with no Capex should trade at a higher multiple than that has no growth and a ton of Capex. Right. So you can talk about EBITDA all you want and add back, depreciate, depreciation. But if, if you're an equipment company and you continuously have to spend that Capex, that depreciation isn't an add back because you're going to continuously spend that every single year as long as you're growing the company and buying new equipment. So you know, I think it's, it's important to really understand like what goes into a multiple. Right? Like a multiple is only one way to value a company.

Host: Such a good point.

Guest 2: You know, the growth and the, the capital intensity is a huge component of that.

Host: Yep, absolutely. Well, and, and you know, one of my favorite lenses through which to assess a business is the quality of revenue. The quality of the, the dollars are coming in year over year, meaning how likely are they to come back. And I heard you mention these long standing relationships, so we can tell that it's not a recurring revenue business, which is sort of the, the gold standard in quality of revenue. But it sounds like there's a lot of repeat business talk to us about how you thought about quality of revenue.

Guest 2: Yeah, and that part's a little scary, right? I mean, we don't have contracts and that's one of our, you know, the, the selling points. Our customers is like, you know, just give us a try and like, you're not going to, you're not paying us anything. So our customers are sort of the ones staying at the hotels, but our revenue comes from, comes from the hotel partners, if that makes sense. Right. So our customers, we don't have contracts with them. So that was, you know, a little concerning. It's like, you know, what, when my seller leaves, am I going to lose all these customers? And so, you know, that was something I really had to get comfortable with, that the fact that he had taken himself out of the business. But, you know, to your question about, you know, recurring revenue, it wasn't recurring. So you're still sort of relying on these customers to continue to come back to you to book again in a new project or a new restaurant opening or a new construction project. But it was reoccurring. Like we've had some customers with us since 2005 and seeing them come back over and over again, you know, that was helpful. And then again, I think my ability to talk to some customers, you know, without sort of, you know, letting them know, like what I was actually asking, I think was a huge benefit as well. And then I was also really fortunate enough during my due diligence, I connected with somebody from grad school who I didn't know when I was at grad school, but we sort of overlapped and he had been with a company who was a competitor but actually sold his business to the biggest competitor. And we connected. And you know, again, I had to be very careful of, you know, telling him like, you know, what I was doing, but huge help in terms of giving me sort of, you know, industry insights and understanding sort of, you know, the players and, you know, the value dynamics. And again, all of this I think maybe more and more comfortable, which, you know, was a huge help with ultimately, you know, closing.

[51:55] Host: Great 10. Anything to say about the closing or terms. What were the terms of the acquisition? You told us the purchase price. But how do you structure it? Sure.

Guest 2: So it was about 80% SBA and 10% seller financing and then 10% equity. The seller financing had a two year standby and then that has sort of a. It's a little complicated. It's a two year standby that then turns into a five year AM, five year amortization, but actually has a bullet payment at the end of year three. So two in the bullet payment at year five post acquisition, but your three of them post standby, if that makes sense.

Host: It does, it does.

Guest 2: And that standby obviously gives me the ability to, you know, get a little bit more leverage on the SBA side because, you know, not having those debt payments for your debt service coverage ratio those first two years makes, you know, that's sort of the reason for the standby.

Host: Exactly, exactly.

Guest 2: Keeping the seller, obviously, you know, it's only 10, but he's still incentivized to make sure the business doesn't fail. And, and that was one thing, you know, to the seller's credit. I mean, he loved this company and he loved his team and I think that really shined through during my due diligence. Like, he would forward me emails of like the team giving each other like shout outs on a Friday. And you know, there's like these happy emails and you could tell he really, really cared. He did not want to see this business fail. And again, look, maybe I'm just gullible, but I really believe that by the end that he, you know, he wanted to see this business succeed and, you know, me and him still, you know, keep in contact and talk and you know, he loves hearing the updates and so it's been great.

Host: Super, Dan. Well, let's hear about those employees. So this is, this is where Jamie Moylan kind of enters the story. And as we said at the top, the audience is going to hear from her directly, which will be fun and different. Your idea? Great idea. Thank you. Thank you for it. So, so you. So tell us the story of now. So you've signed on the dotted line. It's time to introduce you to the team. Go ahead.

Guest 2: Sure. So I guess taking a little bit step back from signing the dotted line, I knew there was a number two in the business. And like I said, I knew the seller had sort of taken a step back. So I knew this person was sort of running the company. The seller was a little hesitant on me speaking with her prior to signing, which, you know, looking back Might have been a little crazy, but I sort of agree to the fact that I would wait till we signed before I spoke to her. But I knew like, to some extent, like, I mean, like, we have a great team. So it's not just Jamie. We have, we have a fantastic team. But Jamie had been at the company for 15 years when I bought, when I bought it. And you know, she's pretty much been in every single position at the company and it's a small team and Jamie was sort of, I think, you know, the culture we have today is because of her and, you know, to the seller credit, seller's credit as well. But I knew she was going to be important, so the seller told me he was going to. So Jamie's based in Iowa, so again, we're obviously fully remote. And in my mind I was going to go, you know, as soon as we signed, I'd go out there, but the seller really wanted to go break the news to her first. So we signed on a Friday, which was actually my six year wedding anniversary, which is, you know, quite, quite a coincidence. And so, so I'm sort of celebrating. My wife and I actually have a trip plan to go to Charlottesville the next day on Saturday to celebrate our anniversary. And also the fact that I'm closing. And then I was gonna fly to Charleston on Sunday to break the news, the entire team on, on Monday.

[55:39] Host: Dan, Sorry, have you said where you were this whole time?

Guest 2: Sorry. So I. So after Chicago, we moved. My wife and I moved back to Northern Virginia, which is where she's from. And so we moved back right before COVID So we. At this time, I've been working remote for the, for the hedge fund in Northern Virginia. And then obviously during my search was, was all in Northern Virginia. So not too far from where you are right now.

Host: Exactly. Right. And Northern Virginia also called the DMV by. By people. Yeah, exactly. D.C. maryland, Virginia. Go ahead.

Guest 2: So again, so signed on Friday and then I was gonna basically fly to Charleston and break the news to the entire company on Monday morning. And the seller decided he was gonna fly to Iowa on that Friday to break the news to Jamie. And so, you know, it's been a great day. I'm getting all these texts like, congrats on closing. And so I knew the seller was flying out there, so I sent him a text like, you know, how's it going? And he just texted me back saying very emotional. I was like, oh boy. And then like, didn't really hear from him. And then I think late, I think it Was that night or the next morning, he said, jamie wants to do a video call with you tomorrow morning. And I was like, all right. And I'm like, okay. Like, if I. If I can't convince Jamie to stay, like, you know, who knows what's gonna happen, right? So we drive to Charlottesville for our little wedding anniversary getaway, you know, post close. And I remember we were driving there, and I'm like, I'm texting the seller, like, you know, which I prepared for. And he's like, you know, just be yourself, whatever. And so I'll never forget my. My wife at the time was like. She was, like, six months pregnant. So I had her sit at the bar of the hotel while I went and did this video call from the hotel room. I still make Jamie feel bad about that today, but I walked in there, and, you know, it was. She asked a lot of good questions, like, why are you buying us? What do you want to do with us? And, you know, I had to try, give the right answers. And, you know, to her credit, I think she. She gave me a chance. So she listened to the seller and, like, know why he was selling it to me, and, like, why he was selling it. And I think not only did the seller really care about the business, but, you know, Jamie being there for 16 years, I think, you know, really cares about the team, and I think that all shined through. And so she wanted to see this company succeed. So I think at the very least, she was going to, you know, at least give this a chance before just completely, you know, leaving. But I think hopefully she. She never does. But I think, you know, she. She wanted to see this succeed as well. And I camera. She had, like, a. There was like, a. She was going to visit clients in Dallas, but any. She ultimately met me in Charleston. I think I made the announcement on the Monday, and she flew in on the Tuesday. And I'll let her tell her side of the story, but we spent a couple days together in Charleston with the seller, kind of the three of us sort of just talking about sort of the transition and going through everything. And, I mean, it's stressful, right? I mean, it's stressful for me. I'm sure it was stressful for her. You know, the seller's got a bunch of emotions going on, and he's happy he sold, but he's also sad that he's.

[58:48] Guest 3: He.

Guest 2: That also said that he sold.

Host: And what's your sense of how she's responding to you?

Guest 2: I mean, at the time, I was relatively confident like, you know, we had a good, we had a good, you know, meeting and introduction and good relationship and like, I thought we could build on things. And I think I tried to kind of sell around my vision that like, look, I want to learn, I don't want to change anything on day one. I do think this business has a ton more potential than we've sort of achieved already. But like, I realized like, I'm not going to do that on day one. But I'm also sure, like knowing myself and I'm sure if you ask my wife this thing, I know I can be probably a little overbearing and a little, you know, let's try fix the world in one day. So I'm sure it was a lot for her, but I think she saw the potential of like what we could do together and what the team had. And I think she was excited for a little bit of a change as well, I think. But I can only imagine what she was going through and I guess we'll find out in a little bit.

Host: And when you said that she. On that very first call where the seller, seller's name is what Mike. Where Mike says to you, Jamie wants to have a zoom call with you the day after he's broken the news to her. You said that you were hoped you were giving her the right answers to her questions. What were the right answers or what were the questions and what were your answers?

[1:00:16] Guest 2: Yeah, I mean the questions were like, no, first of who, who are you? Right. And so how to give her my background. And it's funny, so I, I had my twins at the time were 2. She had, I think her twins were 10 or 11. So right away we kind of had a little bit of a connection. Right. Just, you know, makes me a little bit more of a, of a human. Right. I'm not just this like other person coming in and buying this company. And look, you know, I come from the finance world and this is hospitality, right. So I'm sort of this, you know, I think we joked about on the pre call. I'm this finance bro coming in here to the hospitality world and like, you know, my team is also very female dominated, right. So, and it's. And so I think that was definitely like we had to sort of, you know, make that connection and get that relationship going. But so it was, who are you? Why are you buying this business or why do you want to buy this business? So I had to kind of explain to her that my idea of wanting to build a team, grow a team, you know, give People employment. I saw the opportunity in this business and then the questions are like what do you want to do with the company? And part of it's like no, I want to just learn for the first year. I don't want to make a lot of changes, I don't want to make any changes initially, you know and I think had to be myself, had to be as honest as possible and I, you know, I think it's all worked out great.

Host: Well, it sounds like Jamie really, I mean it sounds like she's a very high agency person and it sounds like in these interactions you felt like you were being interviewed oh 100 that first morning.

Guest 2: I'll never forget sitting in that hotel room getting sort of like, you know. Yeah, getting interviewed pretty much, yeah.

Host: Which is, it's always so interesting this question of like how employees react because we buyers are concerned that they will rightly that they'll leave, that they won't be happy with the news and that they'll leave and of course we need them especially in a business like yours which is all human capital. There's no capex, it's all just about the people delivering the service. On the other hand, then we're then reminded that like most people hearing the news that the business has been bought are themselves concerned they're going to be let go and don't want, you know, are just hoping that they can hold on to this job and that they're not going to be like, you know, know, private equity out of there. So and it's. They're probably both true or depends on the situation, depends on the person etc. So it's just always anyway in this particular dynamic. It's interesting to sound like she wasn't worried for her job. She was basically deciding whether or not she wanted to continue on under the new owner and she probably felt like she had, you know, not she had cards, I sound like Trump but that she, it just sounds like she was very aware of her own value and wanted to make sure that this was still going to be an environment she wanted to continue it which is, you know, that's one of the two primary reactions an employee would have. Probably.

[1:03:16] Guest 2: Yeah, I mean I think 100% spot on with that. I think the other thing and you know, I'll let her answer this but I think she was also like sort of interview interviewing me on behalf of the team. Right. Like I think she, yeah she cares greatly about our team which I think will shine through when you speak with her. And so she wanted to make sure like it Wasn't just about her job. It was also about, like, making sure, like I was going to come in there and change anybody else's job. So I think she was also interviewing me on sort of behalf of the team. Right. And I'm sure after we made the announcement, I can only imagine the inbound calls she was getting from the rest of the team. And again, remember, we're not in person, so this is all remote. So I can only imagine her phone blowing up that Monday morning.

Host: Well, that's such a great point. And it's yet another wrinkle to all this, which is like the leadership of a business that you buy is not just thinking about themselves. They're probably thinking about their people. They're probably see themselves as acting as proxy for the rest of the team and, and do. And diligencing you or trying to understand your motivations on behalf of the team. Such a good point. It's not just about. It probably is often not just about themselves. Yeah, great. Good stuff, Dan. So, okay, so, and then, so beyond those first immediate days of interaction, interactions with Jamie, how does it, like, progress over the weeks and months that follow you? Sounds like you guys have a good working relationship today, but you are different culture, presumably in, in you, in your person than mice. So, so how's that gone?

Guest 2: A lot of learnings. Right. Like, I, I came in there and I mean, it's stressful. There's a lot of, you know, didn't want to make any change. There's still change going to happen. It's a small business, so there's things that can be fixed. There's issues that are out there. And so trying to pick and choose, like, you know, which issues we're going to try to tackle each week. You know, I came across an email I had sent to Jamie early, early on when it was, it was like a late Sunday night email. And it was like, here's our to do list for the week. And I reread it recently and I was like, what the hell was I thinking? Like, it's just, it was like reading it myself made me anxious and I was like, what was I like? So I'd say those.

Host: It was long and it was, it

Guest 2: was long and it was things that like, you're not going to change overnight. Right? I mean, these are like big industry issues, not just our company, like across the board. Like, there were things that we wanted to try fix that just, it's just not going to happen overnight. And I, I think what I've learned or what's what's happened over the last, I think, you know, year and a half is like, it's sort of like kind of like that cliche of like, you know, a quarterback in the second year and like, things sort of like slow down a little bit and like, he kind of sees the field. So, you know, I think things have just slowed down for Jamie and I and I think we realize like, you know, and part of this is like, you know, we've tried to implement like some aspects of traction in the, you know, EOS in the business and, you know, just learning and just. I think I spent a lot of time that first year trying to get to know my team and trying to let them know that, like, my job was to try and make their jobs easier and grow the business. So I didn't want to come in there and, you know, make their lives harder. I didn't want to pay them less. I wanted to ultimately pay them more and make their lives easier. And I think most would say that we've, you know, somewhat accomplished that. And yeah, I mean, I think it was. A lot of those first six months are stressful. Right. And I mean, I'm sure all your prior guests would say the same thing, but it's. And I'm sure Jamie felt a lot of that and a lot of that stress was stuff that she. Probably not just Jamie. And I keep saying just Jamie, but let's talk about the entire team.

[1:06:50] Host: Right?

Guest 2: That stress wasn't stuff that they need necessarily needed to feel because they didn't have that prior to me coming on. Right. Like they had this nice little business running things are going the way they wanted to and incomes me. And so like, it took a. You know, there were definitely some learnings there that I think self reflect. I don't know if it was like self reflection, but just learning to kind of just take things day by day a little bit more.

Host: Okay, so. So you're. You feel like you came in, came in hot and you. You would probably recommend to others like the just kind of learn, don't try to do a lot of changes too much too soon sort of thing.

Guest 2: I mean, the funny thing is I even told myself not to come in and make a lot of changes. And we did make a lot of changes. It was more just learning. But I think I also came in there asking a lot of questions like, why do we do things this way? Why do we do it this way? Why can't we do it this way? And not necessarily making changes. But again, I think I come from a little Bit of a different world than hospitality. And I think my team would laugh and would all nod their heads.

Host: Well, and so actually, but that's a, a question like for you and not just them, is the different culture, the different pace, maybe the different sense of urgency or competitiveness in either small business broadly or in this particular industry. Hospitality does that. Is that something that ever frustrates you? Coming from a harder driving environment?

Guest 2: Yeah. And I wouldn't say harder. I mean, I think my team works extremely hard and they're, I think they're. My team's passion is. And I know this doesn't sound cheesy, but my team's passion is our customers. Right. Like they want to see our, my customers or our customers do, do well and you know, for a stay to go correctly and for them to have non. No issues and you know, we put our customers first. But I, there's, there's a passion in hospitality that I didn't recognize coming into it. And I think that passion, and I don't even know how to always explain, maybe Jamie will do a better job of explaining than I am. But that I think shines through in the fact that we have this remote business with, you know, 20 plus people who see each other once a year, but I think consider each other like really good friends and it's, it's pretty special to see that. And you know, I'm not taking any credit for that. I think that's purely Jamie, the team and you know, the seller doing that over 20 years. Right.

[1:09:13] Host: I don't know much about the hospitality industry, but I, I do in some ways. I feel like the hospitality industry is like the service is service almost, and, and so it draws people who just like deliver. The act of delivering good service itself is the craft. And yeah, that, that's maybe unique to that industry. It's not one I'm used to either. It's a beautiful thing.

Guest 3: Yeah.

Guest 2: And I think you're spot on on that and I think that's a great description. And a lot of my team prior to working at Lighting Source worked on property. Right. A lot of them were either a director of sales over there at the front desk. Some of them started their careers, you know, cleaning, like, so that idea of services, like, is a huge part of their lives.

Host: Great. Dan. Well, anything more to say on the plot? Well, why don't you just catch us up to where things are right now? Numbers wise, business wise. You said you've already gone from, what was it, 15 to 22 people. So catch us up on where things are today versus where you bought. And then we'll start closing out.

Guest 2: Sure. So. So yeah, we've grown the team from 15 to 23. 23. And three of those people are actually based in the Philippines. So we've. We've sort of explored sort of the international hires.

Host: How's that working?

Guest 2: It's been incredible. I mean, my team over there, we've gotten just really lucky. They are some of my favorite workers and extremely positive, energetic. It's been a great sort of addition to our team, to say the least. And I think there was initially some hesitation to try that within our team. But I think as my team sort of has met these people, these folks, and gotten to know them, especially us being remote like you would never know that there's any sort of cultural difference or international. They work us hours and they're completely part of the team. So that's been great.

Host: And Dan, do you think that the stateside people, the everybody else are at all threatened by this?

Guest 2: Initially when we brought up the idea that we were going to try this, I think they were threatened, but I think once they realized the reason for this, and again, this goes back to like, my idea or my hope to make their lives easier. The idea is to give them more support. Right. And so a lot of my team in the Philippines right now sort of are what we call sort of like the admin of my. Of my travel reps. So, like, they do a lot of the. Some of the grunt work that my travel reps used to do and now sort of no longer have to do. So the idea was to make their lives easier. And I think as they've seen that, they've, you know, I think gotten more excited about that. So we've grown from, again, 15 to 23 people from a booking standpoint. Last year we were up high single digits, which, you know, I thought we could have done a little bit better, but I. Last year was really a year to be intentional about, you know, increasing the size of the team, giving us more support, focusing on technology. We did a whole sort of relaunch of our internal database website. So sort of our entire ERP we went from what we call Lodging Wizard 1.0 to Lodging Wizard 2.0, and that was a. A huge thing. So a lot of last year was on, like, structure and organization with the intention to set us up to really grow this year. And this year, you know, we're off to the races. We're up almost 40% year to date, which is great. You know, wow. It's it's early on, so not to get, you know, too excited. And, you know, Jamie always gives me, sort of gives me for not being too. More optimistic, more positive. But I always want to be a little bit hesitant and not get too excited. But we're up, you know, again, we're doing great so far this year. And I will say, like, in terms of like, revenue and like, operating profit, like, you know, so last year we were up again high single digits. Operating profit probably decreased a little bit. And that was, you know, somewhat intentional with, you know, with our hiring and, you know, investment in technology,

[1:13:01] Host: with the

Guest 2: idea that we can, we can sort of expand margins this year with, with more growth because I think we're set up now to have more capacity to

Host: grow, which is just very classic J curve, 100%.

Guest 2: But, but one thing I do want to sort of just, you know, emphasize to the listeners, I think a lot of searchers come in thinking like, oh, I'm going to double the business and increase margins and, and have 90% debt. And so I think it's important to know that, number one, like, growth isn't free. Chances are this seller was running the business not necessarily bare bones, but was running it at a pretty high margin level. Like, yeah, they might have been running some things through the business, but, you know, when you look at SDE like they were running it relatively bare bones and, you know, growth isn't free. You're going to have to reinvest, like, you're going to have to hire salespeople, you're going to have to get new technology and all that costs money and you have these debt payments. So, you know, sort of buyer beware that you can just double the business and increase margins. I just don't think that, you know, always jives right away. So.

Host: And your point about the 90% debt, too, is that when you have so much debt, such a big debt payment every month, you have that much less to work with. You have very little to work with to reinvest, even if you were so inclined, 100%.

Guest 2: And things go wrong, right? Like you think you have this adjusted SDE number that's going to be perfect on day one. And guess what? Like, you're going to miss some things during due diligence that like, maybe you thought were there and you're, you know, you're going to lose some revenue, you're going to lose a client. Like, things happen, right? So leverage is great. And like, you know, I wouldn't necessarily, looking back, I don't think I would Change anything. But it definitely changes the way you can grow a business when you have a large debt payment that's eating the cash flow every month. But anyway, so, like, you know, things are going great right now, and I think the team's in a really good spot. You know, we're doing some pretty great things. That's exciting.

Host: And. And Dan, when you talk about 40 growth so you could get to at the end of this year if things continued apace, what is that, 42 million in bookings?

[1:15:05] Guest 2: Yeah, I mean, I. I would love that. You know, I think our Q1 last year was not a great quarter, so I think we're sort of, you know, going against some easier comps to start the year. So, you know, being perfectly transparent, like, I don't think I would love us to be at 40 for the year, but I just. I don't. I don't know if that's gonna happen. But yeah, I mean, I think our goal is to get to 40 plus over the next year.

Host: I kind of want to have you reflect on a few things that you said going into this. First, on the remote nature of the business. You keep talking about it indirectly, but speak to it directly. Now, what. What should buyers out there think about that? Maybe you hadn't. When looking at a remote business to buy.

Guest 2: I think I partially got lucky.

Guest 3: Right.

Guest 2: I mean, it's, you know, it's. I did my due diligence to make sure we had a good culture, but without that culture, I think a remote business with a new sort of CEO, new president with a small company like, that's really hard to achieve. I think it's. I think it would probably be. I would. I'm happy my business is remote. I think it's. We have a lot of advantages being remote, but if I was a searcher starting from scratch, you know, a remote business is. That's. It's a high hurdle and I think, you know, and it's hard to diligence culture, right?

Host: Yeah.

Guest 2: So, you know, part of me says it's a little bit of luck, right? Like. Like I was lucky that the culture I thought I was buying really was there. I think it's a hard thing to know for sure. And I think if the culture wasn't there, you know, it. It's hard to keep people. But I also think, you know, there's a lot of advantages remotely. People enjoy the remote aspect of business, so it's a hiring advantage now. But, you know, if I was doing it all over again, I wouldn't go after remote Business. I just think it's, it's worked out really well. But I wouldn't say that's like a, a thing. I would have like made my, my search focus to go for remote business.

Host: So, so the, the point is that the culture, you believe that the culture needs to be really strong for a remote business to, you know, be functional or be a quality business. And so then the question is how you diligence culture. And that's hard. But that would be your admonition to searchers if it's remote. Really, really do what you can to try to understand the health of the culture.

Guest 2: Yeah. And like, look, I mean I think you know, coming in like, you know, we, we tried to do new things like you know, we would send our, our employees like door dash once a month to buy them lunches because like we couldn't really take them out for lunch in late 23. We got the whole team together like right after I bought the company. So I think it's important for a remote business to find ways to get the team together, find ways to, to be on video. But it's, you know, it's definitely not easy. And I think that diligence of culture, again, I mean, I don't want to call it luck, but it, it was a huge, a huge benefit to our company.

Host: Is the opportunity in this industry, as large as it sounded like that your biggest competitor is, what was it, 30 times, 50 times larger? 50 plus 50 times larger. Now that you're inside this industry, does it actually seem like you can, there's that much space to grow into?

[1:18:00] Guest 2: I do, but I would say like growth is not easy. Like I thought last year, oh, we'll just grow because we've grown the last few years and it'll be easy to grow. And like when you shift your focus away from growth to like operations and structure and hiring and technology, you're probably not going to grow. Right. So I think the idea that growth is easy, it's not. I still do think we have a huge opportunity and I'm really excited about it and I think we're, we have a lot of potential with the way we're growing. You know, we try to talk about like sort of sustainable growth and making sure that we can grow with like the right team, the right technology. So yeah, the opportunity is still there, but you know, it's not easy by any means.

Host: And again, now that you're on the other side of your transaction and more than a year into your business, reflect back on doing self funded versus traditional search Anything more you have learned about that decision or is it. Basically, it was, it was right for all the reasons you've already. You thought it would be?

Guest 2: Yeah, I mean, I think it's definitely right for all the reasons that I thought it would be. I think there were some times early on having, you know, more support would have been helpful. I think during the search, finding ways as a self funded searcher to hold yourself accountable is, is really difficult.

Host: Right?

Guest 2: So I think having, you know, a monthly newsletter where you kind of set goals and send it to people who may or may not read it, but you're, you're finding ways to hold yourself accountable, I think was, I think once I bought the business, you know, I'm lucky. I think I have some really good advisors and people who I've met over my, you know, my years who are in my network, who, who I can lean on and ask questions as well as sort of searches from the boot camp. Right. And look, the search community is, I mean, as you know, is, is incredible, right? Like, everybody wants to help each other and it's, it's really something special. The amount of resources that are out there compared to when I first found out about a search in 2016 is like, it's crazy. The amount of resources that are out there, I mean, like, you know, your podcast included. So I don't, I don't think I would have changed anything, but there's nothing wrong with it, with the traditional model, and I think there's a ton of advantages to it as well, but for me, it made the most sense.

Host: Anything else, Sam? Anything? I didn't ask you.

Guest 2: I don't think so. I mean, I, I will say, like, you know, I remember like, driving to Charlottesville for that first Southeast conference and like, listening to your podcast and thinking like, how cool it would be to one day be interviewed for this. And so it's really, is a kind of a full circle moment. So I really do appreciate it and it's, it's been great talking to you and it's, it's awesome.

Host: That, that is, that is awesome, Dan. It's of course, deeply gratifying to me, but, you know, ultimately you're the one who deserves the, the congratulations. You, you were sitting there listening to a podcast and you actually went through all the many challenging steps to get here. So congratulations to you.

Guest 2: Thank you.

Host: All right, dan. And so lodging-source.com is the name is the URL. We'll link to that, we'll link to your LinkedIn and people can contact you that way, please. And, and now people are going to hear from Jamie on the other side of this transaction. So thanks again for that idea, Dan.

[1:21:05] Guest 2: Absolutely.

Host: Enjoy it.

Guest 2: She'll tell you the truth.

Host: Dan angel, thank you very much.

Guest 2: Thank you.

Host: I hope you enjoyed that conversation with Dan. Now we'll hear from Jamie for her perspective on the acquisition and transition of Lodging Source. Jamie Moylan, welcome to Acquiring Minds. Thank you, Jamie. As you know, this is a podcast about buying businesses. So the listeners are entrepreneurs who have already or aspired to acquire a business to own and to lead. That is a complex and difficult and delicate process. And one of the make or break elements to any business buying story is how the employees of the acquired business react to the buyer, the people that you're talking to in this audience. And you said yes when invited to share your experience as an employee of an acquired small business to give us some perspective on what it's like as an employee. We talk about this theme so much in Acquiring Minds, but we never hear it firsthand from an affected employee. As you were, as you are. So thank you for being willing to do this. Let's get into it. The audience will have already heard Dan's story, so they know the plot points. What was your background, Jamie, at Lodging Source, when Dan entered the picture? Sure.

Guest 3: So I had been at lodging source for 15 years. I started when Lodging Source. I lived in Charleston, South Carolina at the time. We had an office there and that's when I started at Lodging Source. I had no background in hospitality at all. So the learning curve for me out of the gate was pretty big. But there was only three of us employees at the time. We had a very tight knit group. I was very close with the previous owner and we, we had a lot of fun growing the business and meeting a lot of new people. During that time, I moved and became the first remote employee at Lodging Source. We moved back to I'm in the Quad Cities in Iowa to be closer to family. And in that 15 year journey, I did just about every job there is to do at Lodging Source. I dabbled in actually managing accounts. I did some business development. I spent some time doing invoicing and learning QuickBooks and accounting. I learned about hotel commissions. So in that 15 years, I felt like I had a pretty, a pretty full circle of knowledge about, about Lodging Source and what we do and how we do it.

Host: And so you were employee number, I guess four. The, the, the founder plus one. Two. And then you.

Guest 3: Yes, yes. Okay.

Host: And, and so, and the number of employees at time of Acquisition was, was what?

Guest 3: I think around 20, maybe, maybe a little bit under. I don't remember exactly. Now we've made quite a few hires in the last year and a half, so it was like 18 to 20.

[1:24:08] Host: Great. And the other two employees that start, that were there when you started, are they still there?

Guest 3: No.

Host: So you're the longest, other than the seller founder, you're the longest tenured employee.

Guest 3: That is correct.

Host: Okay. And what was your official role title when Dan bought the business?

Guest 3: It was vice president of operations, which as a small company basically just meant I had my hands in a lot of different things. So I was sort of overseeing operations on a high level in every area of the company. So I was working very closely with the previous owner, running day to day operations, helping promote growth and really big picture work with lodging source.

Host: And how active in the business was the seller was? The owner?

Guest 3: He was, he and I worked very closely. I would say he was less customer facing. So I would say most of the people that we worked with closely didn't even really know who he was. So he did a lot of the back end stuff. He handled payroll, he handled all that stuff that I didn't really focus on and I, I handled more of the customer facing, employee culture piece of things.

Host: Okay. And a little bit what I'm driving at is to the extent that you are basically running the business.

Guest 3: Yes. I mean for the most part there was, I wouldn't be so bold as to say I knew everything and was completely running it, but I was running most of the day to day operations for the company. Yes.

Host: Great. And you've said you've touched on it, your relationship to the owner. Can you expand on that? You know. Yeah. What did that look like?

Guest 3: He was, we had a very close personal relationship. We really enjoyed working together. But he was also at my wedding and he danced with my mom. He knows the names of all of my children. And you know, we worked very closely together for, for 15 years. So we had a very good relationship and rapport for, and level of trust with each other for sure.

Host: Let's get the kind of the story of when you learned that the business had been sold. What did that look like? How was the news delivered?

Guest 3: Sure. I, it was right around the time I was getting ready to celebrate my 15 year anniversary with the company. And so the previous owner had reached out and said he wanted to come visit me, which was, had never happened before. I just made the assumption that it was a, let's go have an anniversary, you know, Lodging Source anniversary celebration. Dinner. So he flew to Iowa, and at that time told me, I think it was the day that the. The transaction happened and the deal closed, that he was no longer the owner of Lodging Source. I, you know, I didn't really see it coming. I didn't even know that selling the business was really a possibility at that time. So it definitely was a disorienting moment for me. And at the time, I had a trip planned for a family wedding and some work meetings in Dallas, Texas. So it kind of catapulted me into a whirlwind of learning that this happened. I flew to Dallas, I changed my flights, and I flew right from there to meet Dan for the first time. So it kind of all happened very quickly, like within a matter of a few days. I. You know, life was happening as normal. And then all of a sudden, I found out about the buyout, and I flew across the country to meet Dan for the first time. So it was. It was a very chaotic few days for me. But that was kind of my first experience with what was going on.

[1:27:43] Host: You said it was disorienting. Can you say more about how you felt? Because so many buyers, you know, this is the. The news that is delivered that, you know, they're the kind of protagonist in. And so being. Having empathy for how people receive this news and. Or at least some. Some understanding of it is really what this conversation's about. So can you say more than disorienting?

Guest 3: Yes, I think especially because we are a small company and because I had such a good relationship with the previous owner, it felt sad, I think, at first. Like, I felt blindsided, of course, but I also, you know, that was kind of the only thing I knew with Lodging Source was working with this owner and the relationship that we had. So I don't think initially I felt, you know, I don't know if I ever felt betrayed or anything like that. I think I just felt taken off guard. I'm a planner. I like to know what's coming. I like to be ready for things. And there was just nothing that I could do to be prepared for that. So it was just. It was hard for me to find my footing. I wasn't sure what I should be doing or how I should be doing it or really how I should be communicating with my team. So there's just a lot of uncertainty where I wasn't sure how I was supposed to be reacting or what I should have been doing to either make this transition better or if I should abandon ship. I just had a lot of Conflicting thoughts happening, I think, in my mind, um, about the right things to do and how to do it and when to do it. Just because I didn't have time to prepare for this like I would normally prepare for anything in my life.

Host: Interesting. So it sounds like a lot of this is about the. It was about kind of managing the what happens next, kind of what actions you're supposed to take. That was a big kind of emotional component.

Guest 3: Yeah, absolutely. And I think that's why, like, in hindsight, you know, if things could have been different, what I've liked to know about it. I think the thing I come back to is, you know, it's all fine now, but, like, the. The lack of being able to prepare and plan and think through the way that this was going to look was probably the biggest struggle for me was I kind of had to do it on the fly. And I don't like that. I like to plan and think and prepare and be very thoughtful about my actions and intentional with what I'm doing. And I couldn't do that throughout any of this process. I just had to kind of dive in and figure it out along the way, which is very uncomfortable for me.

[1:30:13] Host: And did that make you feel annoyed, resentful, at either the seller or Dan the buyer?

Guest 3: Probably a mixture of all of those emotions. I still have a good relationship with the previous owner. I still speak to him. So I'm not harboring any sort of real resentment at the time. It was just total overwhelm. Dan kind of came in hot. He asked a lot of questions, which is great. But it was very overwhelming to me because I didn't have those things prepared in advance like I wanted to. So, yeah, like, out of the gate, very frustrated, very overwhelmed. It was just. It was hard to keep my head above water in those days, and hard to know, you know, what to do next. I think there was that period of time where, you know, Dan had bought the company, and he was there trying to, you know, find his footing too. And the previous owner was still there as well. So it almost felt like I wasn't sure where my allegiance was supposed to be. So it was just a very confusing time. And I probably was mad at everyone. You ask my husband. I was probably mad at the world during that time just because I just. I had such a difficult time finding my path and. And figuring out what I was supposed to do for lodging, source, for my family, for myself, for Dan. I felt like I was letting everybody down for a while there. Cause I just wasn't, you know, I was very disoriented and not sure where I was supposed to be putting my energy.

Host: Ah, interesting. So. So part of this is, like, you. You felt like you couldn't do your job at maximum effectiveness because you didn't have clarity on.

Guest 3: Absolutely. Yeah. And I think that was where maybe a lot of the gray space with Dan and I first happened was I didn't. I was kind of taking more of a passive step back because I wasn't sure what he wanted from me. And as it turns out, what I think he wanted from me was to take a more assertive step forward. But I just didn't know that at the time. So it was very. I think he and I were trying to figure out the best way to work together, and I was trying to give him the space he needed to be the new owner and do things the way he wanted to do them. But he was wanting me to step forward and. And to help him do that. And so it was just a very confusing time, I think, for the first few months, where I was trying to figure out what this was going to look like for me and for lodging. Source.

Host: Mm. Jamie, do you think that you would have bought the business or would have. Yes or no. And then. Next question. Would you have liked to have been invited to buy the business even if you wouldn't have bought it?

Guest 3: No, I would not have liked to buy the business. I don't know if I care. If I was offered to buy the business, it would have been flattering just because I think it would say that there was a lot of. A high level of trust in me and what I was doing for the company, but I don't think I wouldn't have said yes. And I don't think I really care that it wasn't offered to me.

[1:33:06] Host: Okay. Okay. So you said Dan came in hot. You said you flew to Charleston, changed your plans. Flurry of travel changes. Go to Charleston, meet Dan, say more about your kind of reactions to meeting him, your first impressions.

Guest 3: Yeah. So I had flown all over the country, had been at a wedding. I've been at meetings. I flew into Charleston. I get to the lobby of the hotel, and that's where I was supposed to meet Dan. And Dan comes in the front door of the hotel. He hadn't eaten lunch that day. He was dealing with issues at the bank, trying to get things changed over. So he was kind of all over the place and chaotic, and it was. It just. It felt very crazy right out of the gate. I think he was trying to juggle a lot of things and figure out what he was doing. And so was I. And he's. Dan's an intense person. He also, you know, he invested a lot in this and took a big risk and he really cared about it succeeding. And I think he was. You know, it came through to me as, as a lot of energy and it was very overwhelming at the beginning to try and keep up with. With the pace at which he was trying to absorb information because I, I think because of the role I was in, I was his biggest source of information. And so a lot of those questions and energy and ideas came at me, which was very overwhelming right out of the gate just because, you know, like I said, I didn't have time to plan and prepare for these things. I was just trying to navigate on the fly. And, you know, I think he, he had a lot to learn. This is not an industry that Dan is familiar with. So he did have a lot of questions and thoughts and ideas out of the gate. And it felt, I mean, and I don't. I don't know what he said, but hopefully he would admit that he had. He was moving really fast or trying to move really fast. Not that he made a lot of changes out of the gate, but he, he had a lot of information to absorb and it came at me pretty quickly from.

Host: Yeah.

Guest 3: At least how it felt to me at the time.

Host: He, he referred to like a Sunday afternoon checklist that he sent one week that he. That he looks back at now and kind of cringes a little bit because it was just. It was so much so soon and stuff that, you know, aren't just kind of bigger items than. Than can just show up on a to do list for the week sort of thing.

Guest 3: Yeah, it's sort of in my hindsight mind feel. It felt like, okay, Monday, 9:00am Change the world. And it was, it was very overwhelming at the time. Yeah.

Host: You mentioned how he's not from the hospitality industry. How did, how did. That's also a common feature of these stories that the business buyer buys into an industry that they're not from necessarily usually. So how did. Was there a perception problem there? And he's coming from finance. So, you know, we, we. Dan and I joked, you know, about the kind of positioning of him is like finance bro buys business sort of thing. What were your perceptions of this outsider to your industry coming in and buying the business?

[1:36:09] Guest 3: Yeah, I mean, he. Thankfully he didn't make a lot of changes out of the gate, which I appreciated. He did ask a lot of questions, but he Also came to the table with a lot of ideas that I would shoot down because, you know, unless you have an understanding of the industry, some things will work and some things won't work. So I think, thankfully he didn't. He challenged the status quo without making a lot of changes. So, you know, a few months in, he would start coming to me and still does. Will say things like, I have an idea. Can't wait for you to tell me why it won't work. So. So we now sort of stand in this tension of, Dan is the visionary and he has a lot of good ideas. And I. I think not coming from the industry is actually a value add a little bit, just because, you know, I see things through this hospitality lens, which isn't always the right way to look at things. Um, yeah, so he still comes to the table with a lot of questions and ideas, and I'm standing on the other side of trying to make sure that I protect what I think makes Lodging Source special and the culture that we have. And it's really created a cool dynamic, I think, of me sort of tethering us to those things because I have been around for such a long time and Dan really coming in and challenging us in new and different ways. And I think it's. It's really pushed us into this cool area where we're still us, we're still Lodging Source, but we're trying some new things. And I think it's got the team very excited too.

Host: Dan tells the story that you wanted to speak with him after the news is broken to you. You want to speak with him. You and previous owner and Dan have a zoom call the very next morning, and you're basically asking him what his intentions are, who he is. Just getting kind of the download on what's going on here. What do you think you do? You. I know, I know that was a moment of a lot of uncertainty and overwhelm for you, but what do you think you wanted to hear? And you know, what we're getting at here is what do we think that employees want to hear from a new buyer? I'm sure everybody's different, but to the extent that you can generalize, your. What you wanted to hear would be great.

Guest 3: Yeah, that's a great question. What did I want to hear? I think I wanted to hear that he wanted to add value, to understand and add value, I think. And I think he tried to strike that balance of saying, like, I want to understand the business that you have and. And give you opportunities to make it better and to expand on what you've already done. So I think, I think coming in and truly wanting to understand and add value would have. It meant a lot. I think. I know I asked him, I think I said, why Lodging Source of all the businesses that there are out there? And I actually can't even remember what his answer was. I think more than anything, I just wanted to see that he had a genuine interest in. In us and our business. I don't know that I was looking for anything specific other than I wanted to know who he was and is he somebody who cares about people and I can have meaningful conversations with and that is a reasonable person. I think I just wanted to see who he was more than anything and get a feel for the kind of person he is. First impressions, I think mean a lot, especially in. In our industry and hospitality, you know, having a certain level of. Of care and warmth and understanding and all of that means a lot in this space. So I think more than anything, that's what I really was trying to gauge.

[1:39:38] Host: And do you think that you were also a bit of a leading question, asking on behalf of your team or kind of diligencing or trying to learn what you could about this new owner on behalf of the team or purely for yourself?

Guest 3: Oh, no, absolutely. One of the biggest things that I feel protective of with Lodging Source is the culture that we've built. I had a hand in hiring every single person that's here. So I, you know, I knew that I would be the one, for the most part, sharing this news with them. And I wanted to be able to come to them and say, I spoke to him and here's what I think that he's here for. And I absolutely wanted to be able to share some information with them about how I thought this was going to go, because I. I think at the time I viewed myself as a bit of a human shield. I felt very protective of this team and culture that we had built. So absolutely, I felt like the. The first line of defense in trying to figure out who this guy was and what he wanted with us.

Host: And was there any fear that you'd lose your job or that others would lose their job? That's one of the other patterns that we see, is that. That employees in an acquired business worry they're going to lose their jobs because it's. There's going to be downsizing or efficiencies or what have you any. Any of that?

Guest 3: You know, not really. Just because our business is such a service business that I think for the most part, what Dan bought was the service that we offer and that takes the people that we have. So. So I don't think there was a lot of that, thankfully for us. I mean, for me, it definitely crossed my mind just because I thought, you know, the previous owner was a little bit more hands off and I thought Dan would maybe want to do more of what I was doing, like the hands on work. So there was definitely a part of me that thought, you know, maybe he is going to want to step in and do more of what I'm doing. So I think I didn't really worry about the rest of the team. I certainly, you know, thought for myself maybe, maybe I'm going to get shoved out. The one thing that I think Dan did very well. Dan did a lot of things well, but one thing that I appreciated upfront was he put a lot of trust in me right out of the gate. So that fear that I had, it didn't last very long. Just because once we started working together without even really knowing me very well, I think Dan put a lot of trust in me and what I was doing. And part of that's probably because I'd been around lodging source for a long time. Um, but that, that meant a lot to me too, right at the beginning.

[1:42:06] Host: Well, and is that the, the thing that you referred to earlier where there was uncertainty in your mind around like how much you should lean forward versus step back, was that this thing. And so initially you were kind of like wanting giving him room to lead, but then you saw that he kind of wanted you to keep leading so that he could take notes, like you say, more about that whole dynamic and how it finally settled out.

Guest 3: Yeah. So we would have these meetings and you know, we're. And I think that's the other thing to. It's important to mention that made this tricky for us is we're a completely remote business. So Dan and I didn't get to be in the same room together. So we would get on video calls every day and go through his to do lists and I would just be like trying to take notes and make to do lists and you know, receive like everything that he was saying and try to understand what he was going for. And he would say things to me like, Jamie, push back. And I think at the time I was thinking like, okay, he's just, he's giving me things that he wants me to do and I need to figure out how to execute on this. But what he was really asking for was for me to say that's a terrible idea or yes, let's try that. Or he was putting this all in front of me so that we could talk through it together. And I think at the beginning, I was receiving it more like, you know, here's just the things that I need to do now. Which is probably one of the reasons it felt so overwhelming for me. Whereas what I think what he meant was, let's have a conversation. Is this a good idea or is it not a good idea? So I think that's when things started to settle down. I mean, he simmered down a little bit, I leveled up a little bit. But I think what we really came to a place was of understanding that this was a. We're working together, not about who's. Like to figure out who's right, but to figure out what's the right thing for lodging source. So as soon as I started being more assertive and, you know, asking some of my own questions, we got to a much better place. I think it wasn't a good dynamic when I was sitting back and being more passive, just because, you know, he needed to understand the business and I needed to assert my opinions in that space.

Host: Yeah, I wonder what the learning is there for the listener who might buy a business. Is it like, could Dan have articulated like, hey, you know, I'm asking for, you know, I just wonder how you guys, if there could have been. You could have gotten to the mutual understanding faster. It's kind of a rhetorical question.

Guest 3: Yeah, maybe. I. I think, you know, if I were to give advice to someone, it would be the more communication you can put around your expectations of someone, the better. I don't know that Dan did a bad job at that. I just, you know, I had never been through anything like this. If I were to have to go through anything like this again, I think I'd probably do it better this time. Um, I'm sure I made a lot of my own mistakes right out of the gate, but absolutely, the more. The more communication you can put around your expectations of someone. Specifically in my role, where I was, you know, I had a lot of people reporting up to me, I think would have been helpful.

Host: Yeah, you've touched on it now a couple times, this change. So, again, a common pattern in our world, people buy businesses with the expectation that they'll improve them, as arrogant as that might sound, as the, you know, as the. The newcomer to the business. And it's always. There's always this sort of philosophical question of, when do you start changing things at the business? Do you do it aggressively and quickly? Because there's already disruption. You buying the business is already this disruptive moment. So just more disruption that the team's kind of already dealing with change. So just lean into change and do more changes right out of the gate. That's, I would say, generally done less. The kind of the, the, the conventional suggestion is to wait and learn as new business owner. Wait and learn and understand the business. If for no other reason than the changes that you make might well are bound to have these ripple effects that you can't foresee because you just don't know the industry and the business well enough. And then I guess the other big, the other big factor here is like how receptive employees will be to change. Because in a lot of businesses or just in a lot of, you know, kind of professional life, people are kind of at cruising altitude and they have their daily routine and they're, they're just not eager for that to all be disruptive, that people just don't like change. You know, it's kind of classic human nature. So anyway, I put all of that at your feet. You, you sounds like you did want to hear from him that he was here to improve the business, which implies some change, but also it sounds like he wanted to, what did you say? Change the world on at 9am Monday morning. So, so I don't know, how do you respond to all that or what might you tell prospective business buyers out there about, you know, being on the other side of those. Of that, of that change?

[1:46:51] Guest 3: Yeah, I think it was, I think it was very important for Dan to understand the business before making changes. Because quite honestly, like, if he would have changed some of the things, like right out of the gate, that they maybe seemed simple on the surface, like you said, the ripple effect of that could have been pretty bad. Just not knowing the industry and not knowing, you know, why we hadn't done this in the past. I think it's easy to walk in and be like, well, this is stupid. Why do you do it this way? And it's like, well, we've done it this way because of X, Y and Z. But if you don't know those reasons before you make changes, I think you can go down a pretty bad path. So I think it was important to know and to really understand before making changes. And yeah, I do. I think Dan's fear with me probably was I had been around a long time. Did I have it in me to, you know, to do something new and try new things and to make changes? I think that probably scared him on his Side is like, all right. Jamie's been here 15 years doing the same thing day in and day out. Like, is she going to be up for, you know, trying new things and taking some risks and.

Host: And, and did you have to ask yourself that?

Guest 3: Yeah, definitely, yeah. Be like, do I. Do I have it in me to go round two is sort of how it felt. It was like round one of lodging sources, like the old me. And going round two is, you know, like I said, still tethering us to what I think is, you know, the core of lodging source. But we look a lot different now than we did before, and I think it's exciting. So I definitely had to ask myself that question and, you know, my family was a big part of supporting me through that. I travel a lot more now. I didn't travel before, so, yeah, definitely had to go through that and decide that I was ready to pour in more.

[1:48:37] Host: And what about team members? Do you feel like there were some team members who were up for the change and some who were not probably up for change just as a concept, like, just didn't want to change?

Guest 3: Yeah. And I think, like you said, nobody likes change. So I think there's still people on our team that are kicking and screaming along the way as we do things. But ultimately, I think maybe some were more scared than others. Some of our team came from more corporate environments, and we are a small company and everybody is very close. And so I think the reason change scares people here is because they feel protective of what we have, because it's. It's fun to work here and it's cool and you get to work remote. And I think for the most part, as long as those core things don't change, I think they've seen that the changes we're making are good. So I think it just took a few things that are like, hey, let's, you know, roll this out. It's going to make your life easier. And I think we've proven that we're making very thoughtful, intentional decisions. So we're creating trust along the way, which is really helping with that environmental change.

Host: Yeah, it's great. It's well put. Just a couple more questions for you, Jamie. This is just wonderful to hear about the. When the owner, previous owner, was still in the business and the kind of awkwardness or uncertainty about who you're supposed to be listening to or reporting to or talking to as your boss, this is something that, again, comes up a lot. Although it's also something that we're told to kind of try to Avoid, if you can, for precisely this reason. How do you. What would you tell people? Do you think that the previous owner, it would have been better if he just. He couldn't have not been there day one because Dan had so much to learn from him?

Guest 3: Sure.

Host: Do you reflect back on a way that that could have been better handled where it would have been less certain for who you should be kind of following as the leader?

Guest 3: Yeah, as much as I, you know, I really like the previous owner, I. It probably would have been better for there to be some sort of line in the sand for arts team where like, he just was more gone. Like he would still join meetings sometimes and he started lodging source email address and he was still part of the team there for a little while, which I know was very helpful for Dan because there was things that he needed to learn that I probably couldn't have showed him. But I think it probably is better to have a little bit more of a quicker turnaround just because that question might be answered differently from the rest of the team than me, just because I was more front lines with it. And I think it was probably most confusing for me specifically, as far as. So I kind of want to separate that from maybe what's best for the business. You know, what's best for the business is probably a smoother transition and Dan learning more from the previous owner and all of that. Selfishly, for me, it was a very confusing time. So personally, I would have rather had that be a shorter timeline. And I think Dan ended up kind of feeling that way too. Like maybe the transition was a little too long. So I think probably keep keeping that transition time as short and sweet and possible is probably better for everybody because I think Dan was trying to figure out how he's supposed to lead and what his, you know, leadership style is going to look like. And that's hard to do with somebody else who previously owned the company.

[1:51:47] Host: Exactly.

Guest 3: So.

Host: Exactly.

Guest 3: It was probably good for the company, but probably best to keep that as abbreviated as possible.

Host: At least.

Guest 3: My selfish lens.

Host: Yeah. Yeah. And the rest of the team, it affected less because they're reporting to you, is the point.

Guest 3: Yeah, I think so. Yeah. I think they just didn't have as much of that.

Host: Well, it's. It's a tricky one because as a buyer, you. You're clinging some. You know, I think the reflex is to cling to the owner because you're basically trying to download their brain as fast as you can. And when they're gone, I mean, depending on, you know, buyer, former sellers, Will former owners. Sellers will often continue to help out, but really, you know, once they're gone, they're really pretty checked out and you. And you start to feel like you're really on. On your own at that point. You really, truly are on your own at that point. So there's a, There's a reflex to try to hold on tightly to, to those owners, even though it's. It creates all this ambiguity within the kind of hierarchy. Okay. Couple more questions for you, Jamie. The buyers often want to meet team members at the business they're considering buying for, or at least management or managers or key people, as we call it, like which you very much were for a variety of reasons. It's one way is just to kind of diligence the business, you know, get, you know, kind of learn more. That much more about the business. Um, make sure that, you know, get a kind of a window on the culture of the business. Because now you're meeting not just the seller who, but, you know, more people within the business. What is it like culturally, the making sure that they're, you know, a key person is like, knows about it and is. Is receptive to you as buyer coming in. So there's all these reasons that it's, it's. You desire it as a business buyer. It rarely happens. It's. It's hard to do. The seller doesn't want to do that because they're. They basically, for all the obvious reasons, they're opening themselves up to all this risk that their team learns that they want to sell, which will create uncertainty about the future of the business and then maybe keep people decide, oh, well, I should leave now. So it's a tricky one. But with all of that said, do you think that it would have helped for you if the seller had given Dan the opportunity to meet you pre close?

[1:54:09] Guest 3: Yes, I would have loved that opportunity. I think it maybe would have made those first three to six months less, you know, chaotic and intense for me. You know, in hindsight, would I have met Dan and been like, this guy is intense. I'm not here for it. I can't level up. I don't know like I do, you know, I'd like to think I would have been more, you know, thoughtful and, and strong in the moment. I don't know. But I would have loved to have that opportunity to feel more a part of the process. I would have liked to think that I would have said, let's do this together. I want to be a part of it. I want to help you understand the business before you buy it. I'd like to think that's what I would have done. Obviously, hindsight, I don't know for sure, but I think that would have meant a lot to me to be a part of the process as well. Just because I had been around for so long and that I was so invested in the company. If the previous owner would have come to me and said, I'm thinking about selling the business, do you want to help me find the right buyer? I think I would have said yes. I think I would have walked alongside him and, and helped find the right person. So. But again, like I said, I totally understand the risk and, you know, there's a chance that, you know, previous owner decided on someone who I didn't like and I bounced and now we have a lot of problems with the, with the close. So I, I see both sides. I like to think I would have been a value add during that process, but. Yeah, not sure.

Host: Great. Jamie, Anything that we haven't hit on that you'd advise people out there, the, the people following in Dan's footsteps to buy their own businesses?

Guest 3: Yeah, I think, you know, I, Dan did not make a lot of changes up front, which was great, yet it still felt like drinking through a fire hose from me. So I would think, you know, someone who's buying a business, they're, they're assuming risk. They're probably entering an industry that they don't understand. They have a lot of ideas because they've been looking at this business for however long. But I think you have to remember, like, as long as you've been thinking about this, this is brand new to everyone that you're coming into. So if it feels like you're moving quickly to you, it feels like lightning speed to the people at the company. So, you know, I think just go slow and spend a lot of time understanding and know that, you know, things aren't going to change overnight. Even, even come slow with questions, come slow with learning just because it's, you know, it does feel like a lot. It feels like drinking through a fire hose when this is the first day you've ever, you know, heard that this was a possibility. So I think go slow and show that you care and you understand. And I mean, having gone through it now, my perception of, of the buyout is so different because we're, I feel like we're in such a good place and Dan and I have a great working relationship. He and I have traveled a lot and done a lot of meetings together and my, you know, feeling about the buyout now is much more positive than it was during the first six months. So I think the more you can do to make that beginning time not feel so intense, it'll just make it easier. You know, we ended up in a good place now, but I think those, those first three to six months can feel like a lot for everyone. So just taking a breath and keeping the pace manageable is the best you can do.

[1:57:18] Host: Excellent. Jamie Moylan, thank you again for doing this. Really, people are going to just love hearing this perspective of yours, so we all really appreciate it.

Guest 3: Absolutely. Thanks Will.

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