Host: Hard but fun. I think that captures how today's guest feels about having bought a business. Darrell Lindy got the notion to get into small business while in the Navy where he was working in the supply chain. He was buying material from a lot of different small business owners and got a window into their lives, their careers. It seemed fulfilling, seemed fun, and it seemed like a good fit for Daryl. One MBA later and he had found a business doing $650,000 of SDE right there in Rhode island where he lived and he and his wife had resolved to stay. He closed this past July 2023. Now about that MBA. Listen for what Darrell has to say about whether you should have one before going down this path. Hint Nope. Some other topics we hit on Buying a cashy business, buying a business with real estate, how to deal with a rocky transition and as ever, the realities of small business ownership. How hard is it? Also at the end, Darrell and I talk about New Majority Capital, his initiative to enable more underrepresented people to become owners using the path of eta. Please enjoy this conversation with Darrell Lindy, owner of AA Thrifty Sign and Awning. 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. You already know that business owners are making amazing use of virtual assistants, often based in the Philippines. And while virtual assistants are helpful, virtual professionals are transformative. More Staffing is a boutique agency that hires a players in the Philippines not for simple tasks but for deep competency work. Think operators, supply chain managers, controllers. More Staffing de risks your engagement with a 12 month guarantee to you and they provide coaching for six months to their talent. When an engagement begins, that means your hire is coached in the background, no additional cost to you so that your working relationship flourishes and is as successful as it can be. Global staffing is increasingly the norm and building the muscle within your business to take advantage of it will be crucial in the years ahead. Speak with More Staffing about the pool of capable affordable managers they can connect you with. Check out Morenow Co. That's Morenow Co. Daryl Linde welcome to Acquiring Minds.

Guest: Thank you Will. Great to be here.

[3:00] Host: Darrell, you bought a sign in Awning business just a few months ago. You closed sizable business 77 year old business in the great state of Rhode Island, a state that I spent some years in way back when. And in addition to your acquisition, you're also spearheading a couple of other initiatives that are near and dear to your heart and showing early signs of a lot of promise. So we're also going to hear about what those are. But start us off, please, Daryl, with some background on you.

Guest: Background. So it starts in 1992. Will. Just joking around about that, but no. Originally From Maryland, Bowie, Maryland. Went to the Naval Academy for undergrad. Graduated 2014, commissioned. Spent most of my time on active duty as a Navy Supply Corps officer. So was dealing with logistics procurement. And it was there where I was working with a lot of small businesses, you know, trying to, you know, get things, you know, for the Navy and kind of saw a big opportunity there. So, you know, towards the end of my time in the Navy, you know, trying to figure out what I would do next in life, decided that, you know, I could or figured out I could actually buy a business and was kind of hooked on it ever since. So went to business school, did that, did a dual degree at the Kennedy School and MIT Sloan, and throughout that process was always searching for an acquisition target. Happened to find one about 30 minutes where I lived, which was pretty much my radius that my wife was allowing me to do that in, and jumped in. So closed on July 7th. And he has been about 110, 115 days since then. So.

Host: But who's counting? Daryl, when you were in the Navy and you said you saw an opportunity and that then you later learned about buying businesses. Connect those dots. What was this opportunity that you perceived while working in supply chain in the Navy?

Guest: Yeah, no, it's one of those things where I, I saw a lot of, you know, older, predominantly white men, you know, that I was doing business with that it seemed pretty simple. They were, you know, selling things that, you know, obviously my submarine or the Navy needed. And it was one of those things where it's like, well, why can't I do that? You know, I've been on other side purchasing it, so can I be on the other side actually selling it? So it was one of those things where a lot of them would joke after we developed relationship, like, hey, if you're thinking about getting out or, you know, staying here in Hawaii or, you know, not moving, you know, maybe you can come by this, you know, pretty. Yeah. So it was just one of those things where they kind of planted the seed in my head a little bit.

Host: Oh, interesting. And these were all people who were doing well. So you also saw not only a kind of I could do what they're doing, but like an attractive career in, in what they had built or what they were Running?

[6:07] Guest: Absolutely. Yeah. It was something that, you know, the lifestyle was attractive. You know, just, you know, I thought they were, you know, all pretty fulfilled in what they were doing. So it was a combination. And it's just something that I was like, hey, let me. Let me jump into this.

Host: Cool. And were. Were you somebody who had kind of was predestined to be in business or to be an entrepreneur? Or was. Or were these. This exposure to this kind of class of small business owner? Was that really your first inkling that you might be an entrepreneur?

Guest: You know what, it's really funny you mentioned that. Well, my grandfather, you know, started a business third generation right now, so was always kind of familiar with the small business realm. But just growing up in the D.C. area, both my parents kind of working, you know, and, you know, government or nonprofit, it was one of those things where, um, I felt like I was never going to do it until I really got close to it. Um, you know, being in the Navy and kind of was like, you know, well, why. Why not do this? You know, like, what else am I going to do once I get out of the Navy? And this seems pretty fun and another challenge. So. Great.

Host: Thank you. I think you said that you were once in business school, you were doing a dual degree, you were doing an MBA at MIT Sloan, and the Master's of Public Policy at Harvard's Kennedy School. I get that, right?

Guest: Yeah, public administration, but, you know, public administration.

Host: And so. But you went into these programs already feeling like you might buy a business, so you were using your time there to learn about that. So why the Masters of Public Administration? Where does that fit into being an entrepreneur?

Guest: Yeah, that's a great question. You know, Well, I. I think that maybe there's an opportunity for me to, you know, pivot or kind of enter back into, like, government in some way. And, you know, really one of the. The big things that was kind of always like a. A driving thing in my life was just seeing, like, the like, of diversity and, like, who I was actually doing business with in the Navy, you know, who I was buying from. And that. That really bothered me. And if there are ways to, you know, kind of help with the procurement process. And that's something that I always wanted to jump into because I just felt it was so important to me. So a part of me doing the MPA was, you know, trying to figure out, like, if there was a way for me to, you know, eventually help later on once I got some of this, like, you know, small business, you know, operator, you know, experience and, you know, understanding, you know, both sides of the issues and hopefully trying to help it later on.

Host: So while you're doing these programs and you're at Sloan getting your, your mba, you are learning about search, taking ETA classes. What does that look like? What's your education look like?

Guest: You know, it was kind of the dirt road path. I was on Search Funder and I was reading the books, you know, many of which your guest have mentioned on here. Whether it's, you know, the HBR guide of Buying a Small Business. Buy, Then Build. Why should White Guys have all the Fun? You know, you read all these books and you're getting expired. You're, you know, the Outsiders. It's funny because I was actually reading the Outsiders and very serendipitous, but was having lunch with the guy who, it was his father as one of the outsiders in the book. So I'm like telling this guy, you know, hey, I'm really interested in, you know, buying a small business and you know, right now reading this book called, you know, the Outsiders. And it's funny because like one of the guys you know in the book, his last name is, you know, X and he's like, yeah, that's my dad. So it's really, really, really funny. But it's one of those things where I think all these things, you know, inspired me. And one of the key things I want to drive at is just like, I really feel like I enjoyed my time in grad school, but in a sense I felt like it slowed me down from what I'm doing right now. And I don't necessarily know if the experience was necessary for me to get where I'm at right now, but I'm really happy that I did it. So I think a lot that I learned, whether it was from those books or utilizing the resources that I had in my network. My, my wife's a cpa. So you know, a lot of times when I was like doing, you know, initial, you know, DD on anything, you know, I was showing it to her. My father in law is a CPA as well too. So, you know, I was kind of, you know, bouncing things off of him. You know, I had other friends, you know, in the network or, you know, from listening to acquiring minds who I would, you know, contact and reach out to. And you know, I got to say too well that this podcast was actually, you know, really helpful to people in my family to listen to episodes and kind of convince them that this was like actually the right path for me. Like, hey, you know, you know, I can actually do this. And so I want to say thank you for that. That's so great to hear. Yeah, I mean, to. I forgot what the initial question was. I started to ramble, so I'll let you.

[10:59] Host: That's okay. So did I.

Guest: Why?

Host: But I have, I have some follow up questions here, Darrel. So let's hear a little bit more about how as you reflect back, you feel like your MBA was, you're really glad that you did it, but it wasn't. You don't feel like it was actually necessary and it actually slowed you down a little bit because. And maybe orient your answer toward this fact that I do have a lot of people who on the pod who have MBAs, and MBAs, often from, you know, just sterling schools like your own. But then I also have a lot of people who don't, and I have a lot of listeners who maybe don't have, you know, an MBA from Sloan or hbs. And it's probably intimidating or alienating to feel like, oh, so do I have to have gone to a top 10 business school to do this thing? How do you, how do you answer them?

Guest: I mean, absolutely not. You know, I would say there are so many resources out there and I know we'll get to new Majority Capital later on in the interview, but there are so many resources and people who I feel will be able to help in this process. For me, you know, I only took like, maybe like a handful, like I would say like one or two classes during my entire three years. I really focused around, you know, buying a small business or, you know, operating it. And you know, I think that I'm actually, you know, doing this right now. And you know, how many other classes I had were necessarily on that topic, you know, it was really self taught. It was outside of the classroom with the resources that I, I mentioned before. So I mean, I mean, in short, absolutely not. Do not feel like you need to do that. If anything, I think that it'll just slow you down and maybe you might be talked out of it, you know, because so many other people are not going that path in business school. You know, I think of my class from Sloan and there might be one or two other people who are actually like pursuing ETA right now. So, you know, the, the masses are not doing this. So, you know, if anything, you know, the connections that I make from list or, you know, people who have been on this podcast or, you know, I work through New Majority Capital or, you know, just, you know, talking to other people in the SMB space to me is more impactful than some of maybe the relationships that I have from people that I met at Sloan just based on the kind of career path and what people are choosing to do afterwards.

[13:27] Host: Man, Darrell, that is such a good point. That has never occurred to me because I come at this from what I just said, which is that there are a lot of people from MBA programs who are guests on the pod. And so you it feels like from where I'm sitting, so many MBAs are coming into this, into ETA, which I guess, you know, ETA is not a huge space and they probably are overrepresented. But if you look at it from the other side, as you just articulated, being in, in one of the business schools in one of these programs, it's not like you know, going into investment banking or consulting. Everybody's going into eta. If you're in the business school, it's still I guess a tiny sliver of your graduating class that chooses to do this. So from an MBA's perspective, you're still doing something quite unusual, quite adventurous, quite off the beaten path, fair, very farewell. Yeah, that's so interesting. Value of perspective. August Felker is a two time successful searcher, first with a traditional search fund. The second time around he did a self funded search. Today August runs Oberle Risk Strategies, an insurance firm with a dedicated practice group for searchers and acquisition entrepreneurs like you. If you've got a business under loi, Oberly will provide complimentary due diligence on that business's insurance and benefits program. A great no risk way to get to know August and team. They love helping searchers. They've worked with hundreds. Oberly is a specialty insurance brokerage for searchers by a former searcher. Check out oberly-risk.com O B E R L E- risk.com link in the show notes. Okay and I also want to circle back on two books you mentioned. Four Buy Then Build, Harvard Business Review Guide to Buying a Small Business which I looking at here on my desk. But you mentioned two others, the Outsiders, where so just indulge me. I'm going to tell people what that book is in case they don't know. And then you can tell us about the fourth book, the so the Outsiders is by William Will Thorndike who is kind of, I don't, don't want to butcher this, but in and around the search space himself, I think he's an investor in search deals. And the Outsiders is a book of five or maybe six, seven case studies.

[15:50] Guest: Yeah, seven case studies of you know, unconventional CEOs who, you know, killed it, you know. Right, right. I'll let you kind of, you know, go through the, the summary of that because I, I don't want to butcher it because I've only think read it once, but it's been a while. Yeah, right.

Host: And I, I, I, I, I listened to it. So, so, so, so I'm no expert on the book, but yeah, seven case studies of these CEOs who showed incre judging by returns that they generated for their investors. And one example is, is it John Mahone Maloney, the guy who did, who, who was Comcast or Cox, the early cable television pioneer, and a lot of his story is about acquisition and he's actually the guy who came up with the, the, the framework of ebitda. He's credited as kind of the inventor of that term. So anyway, these, it's a, it's a case study of these seven kind of historically overlooked CEOs who just generated incredible returns over long periods of time. It's pretty dense and it's, it's really, it's truly, they're truly like case studies. So this isn't necessarily like, you know, a nail biter. It's more of like a methodical look at how they did what they did. And then the other book, the other book, Darrell, is why Should White Guys have All the Fun? It's, it's a book that's been mentioned here and here and there on this podcast. But, but, but tell us what that book is all about.

Guest: Yeah, no, it's a book about Reginald Lewis, who was an acquisition entrepreneur who was formerly a lawyer, you know, doing a lot of stuff on the deal side and kind of just got in the game and story is very inspiring. You know, I would really encourage listeners here to just pick that up on, you know, audio or, you know, hard copy, however you consume your books. But to me, it was really great. Just kind of see someone like me, you know, do it. Totally, you know, so I know you've had others on the podcast like Bruce Fan and things like that. So I, I really love those, you know, people who I would say are, you know, predecessors to me in this game, you know, who, you know, are doing it and you know, are doing it well and, you know, kind of giving back to others too.

[18:04] Host: So totally awesome, man. Yeah. So this, so why should white guys have all the fun? Also to, to note, Reggie Lewis was active in the 80s, so this is a, this is a, an older story, but he was wildly successful and at a time when you Know, he was. The black community was much less represented than, than even today. And yeah, he just absolutely crushed it. And that book has been an inspiration for many black and otherwise. So this isn't just a book for, you know, you know, ambitious African American people to, to read. It's a, it's a book for all of us. It's really quite an inspiring story. So, yeah, great. Thank you for that, Darrell. So pick us up. You're, you're at Sloan and when does your search begin in earnest?

Guest: Yeah, no, so I think at a certain point, if I remember correctly, I know my wife and I were like doing like this five day hike in Brazil and like talking about like goals like you know, into the new year of 2022 and you know, I still had a year and a half of business school left and you know, I was like, I just need to, you know, do this now. I just need to do the search. And like my wife's talking about her goals too and I'm just like, hey, 2022, like I'm starting to search actively. No more of this, you know, just you know, networking and trying to like, you know, build up the context and you know, figure it out. Like I'm doing, you know, self funded search, you know. So got back from Brazil and you know, actively started searching, you know, so was still in school, had three semesters left as I mentioned, but was really organizing my day to where, you know, I was reviewing a certain amount of deals a day, you know, trying to do site visits, you know, plan my schedule around it and just kind of be consistent. Got my first deal under Loi that May, and it's, it's so funny how things kind of come full circle. The first company that had under Loi, it didn't actually pan out as far as an opportunity is actually a current customer of mine or a current client. So we're doing some work for them, which is just like so funny. So I actually like two weeks ago sent a picture to the two former owners who have since then sold. Kind of just joking around saying, hey, it's come full circle. I was actively looking for Darren.

Host: Let me hop in. Why did you choose self funded versus some of the other options, namely traditional search fund.

Guest: So I guess this is a key point. So was stationed in Newport, Rhode island, last duty station. And I know you spent some time at Brown. My wife did not want to leave Newport. So we've been here since 2018 and I just knew that, you know, Rhode island was going to be home. So to me, I Knew I had a very small geographic radius. You know, really wanted to find something that was, you know, 10 minutes away from where I live. But I, I landed on something that was 30 minutes away, which I'm super happy about. But I just knew the geographic like lack of flexibility that I had was one of those things that led me there. And then also too with everything from wanting to be the majority owner of the business that I was buying for purposes of just control and being able to certify my business, whether it's veteran owned or minority owned, all those different things that kind of led me to the path that doing self funded was like the only way I could go.

[21:41] Host: Yeah, yeah, makes sense. And for people who don't know, Newport, Rhode island is a lovely New England town. They're one of its big tourist attractions other than I guess the boating and just the loveliness is. I can't remember the name but there's. There are these. The robber baron mansions from, from the. What's the name of that era? Whatever. The kind of.

Guest: I'm forgetting the Newport mansions are amazing. I don't. I.

Host: The Newport mansions.

Guest: Yeah, yeah, yeah. But I guess there might be other names for it. You know, every time we have visitors who come my, my wife does that activity with them. I kind of sit at home and work and do other things. So mansions are great. You know, we love like the, you know, the food scene here and just like there's always things going on here in Newport. So we like the walkability and.

Host: But is it close enough to pro. The metropolitan Providence, Rhode Island, Rhode Island's

Guest: of course biggest city, 40 minutes away.

Host: So could your search extend to Providence or. No.

Guest: You know, was technically it was. So you know, as you. As I told you during a pre call, I. I bought in Warwick, Rhode Island. So about 30 minutes away. So like I'm actually walking distance from the airport which is like pretty cool.

Host: So you know, walking, walking to the airport.

Guest: Yeah, I've done it. I've done. I've walked to my flight. Oh really? So. So yeah. So great. Great geographic location. I love the business that I bought is at Cool.

Host: And Warwick is considered kind of greater Providence. That that does qualify the Providence metropolitan area. Just tell us more about the search and, and kind of how it, how it unfolded.

Guest: Yeah, so you know, I, I think that you know, I was going through this and actively learning and doing so. Yeah, I kind of had these guides out that you know, I was reading and talking to people and messaging on search funder and trying to ask questions and you know, I connected with a couple people at that point who, you know, I saw as mentors, who, you know, was kind of asking questions as I had them. But, you know, to me, it was just kind of like, let me learn by doing, so let me try to find a deal. You know, the next goal of this process is to try to get underneath loi and then, you know, so on and so forth. So the first deal that I found was for a ship maintenance company. And, you know, I really liked that aspect because, like, I understood the opportunity just based on my time in the Navy. So they were doing ship maintenance. They had a fabrication division that they were making all types of niche things for ships. And then they also had a generator division. They were selling and leasing generators, and, you know, got to loi on that deal. And I think with just how much time I had left in school and this being like a year out from when I was actually graduating, I kind of had a little bit of cold feet. You know, it was just. There were certain things where even though the company was about 20 minutes away from where I lived, a lot of the work they were doing was, you know, at shipyards, whether it was up in Boston. So it was really not the best geographic fit for me, just based on, like, how diverse the. The white or spread out the work was. Excuse me. And it was just like, the first thing, you know, I was, you know, a little bit like, man, wow. Like, you know, I said I wanted to do this thing, you know, in January, and here it is, it's May, and I have a deal already. You know, like, this is, like, too soon with everything going on. So, you know, I think after talking to the sellers and, you know, they had some apprehensions, too, just with the way I wanted to structure the deal, that it just made sense that, you know, we kind of won our own ways and there was no bad blood there. They actually found a strategic in this space to end up acquiring them. But, you know, that showed me so much, you know, whether it was just like, dealing with the brokers, you know, you know, you know, drafting, you know, an lly, you know, being able to put together, like, initial, like, structure, like, you know, talking to, like, the banks and, you know, trying to figure out, like, financing where I felt, like, the learnings from that first one, just, like, it gave me a lot of confidence to say, like, hey, okay, cool. You know, when the next one comes, you know, I'm ready. But I'm more focused, too, because I know what things I want to see and what I don't.

[26:16] Host: Well, that's a great kind of silver lining positioning of a deal that doesn't come to fruition, where you just learn a lot going through the process, even if you don't get it across the finish line. Not to say that all the brokenhearted searchers out there who have spent tens of thousands of dollars on a deal that died, I know that that's cold comfort. But there is. But there is some value at least like you experienced to going through the deal process because you learn a ton at every turn. Yeah.

Guest: And I think will to point to that too. I think for me, at that point, I had no deal costs. You know, I was so early on that I didn't engage like any lawyers or qov. Like, a lot of the stuff that I was doing was just within my network, but I felt like there was like a big time suck. So I wasn't like, you know, fully happy that this happened. You know, I think about, like, my. One of my semesters at school. Like, I was like, oh, man, like, I wanted to search. I started searching, but then I missed out on all, like, the fun, you know, social aspects of school that, you know, it's a big part of, you know, the graduate school experience. So to me, it was really. It wasn't, you know, as fun, you know, when I was going through it. But now I look back and I'm like, man, that was. It definitely was a good experience and glad that I had that. That first one underneath my belt.

[27:48] Host: Yeah. So you, you were investing quite a bit of time, even if you weren't putting any money into it yet. Yep. Okay, so carry on.

Guest: So, yeah, so at that point, you know, the deal, you know, kind of falls apart and go my se. Go my separate ways with the sellers. And then it was like, okay, summer's coming and, you know, I was hoping to really close on a deal at some point, like during the summertime, so I could just like, ease myself into the business and figure out how I was going to finish school. So I kept looking for opportunities and I think the deal probably broke up maybe in May or so. And, you know, I found the current company that I acquired in June, actually found it in June. So it's funny because it was. I found it on biz by sell and it was listed as like, a niche manufacturer. And from my time spent with that first business that I mentioned them just having that, like, fabrication division for the business, I was like, man, this is really what I'm like, looking for, like, something that, you know, if Worse comes to worse, you know, I could always pivot like what I make, whether it's some sort of like DoD application for it, we could always, you know, switch it up. And I request the sim. After, you know, filling out all the NDA paperwork and didn't get a sim. I got like an email from a broker which there was so much stuff that was like misspelled in this email. I was just like, this is not a real opportunity. Because I think that so far in my search it was very, somewhat just systematic as far as what I was getting. So this was the first opportunity that it didn't look like what I had saw. And I was like, ah, should I really go? But after requesting it, the broker gave me a call and we started talking and he gave me some more color and I was okay, maybe this is like a really serious opportunity. Let me go and actually like look and explore the business. So I get there and it's a, it's a sign, an awning manufacturer. And I go in and it's funny because we go, I go after hours, probably around like 5 o', clock, all the employees are not there and I see all the projects that are currently in production that are in this shop and I'm like, wow, this is everything that I've seen like in the community, like things out in Newport, things in Providence, you know, like I've seen these like businesses and I'm like, man, this is amazing. You know, just like signage, like it's you know, an awnings and things like that. So I really fell in love, I think with like the opportunity once I actually toured the business. So like one like big I guess, like lesson or takeaway that I think I had from that experience was just like, man, like if I had just like, you know, kind of drew the opportunity aside just because it wasn't packaged up in this like nice sim, you know, with eaten, you know, and you know, all these, you know, bullet pointed things that I might have missed this opportunity.

[31:01] Host: So it's a great takeaway. I was just looking at biz by sell as one does this week and came across a teaser that had misspellings in the title and not to mention in like the actual paragraph describing the business. And I, you know, I had, I, of course my reflex was like, no next. But, but then I was, then I kind of had, you know, then my logic kicked in and I, I remembered the point that you're making now, which is like, maybe there's opportunity here and precisely because other people are overlooking it for the same reason I was about to overlook it. Maybe there's even more opportunity here sort of thing. I'm, I'm just very casually browsing. I wasn't serious about it, but, but there's actually the parallel in real estate, which you'll hear people say, which is in a really competitive market, if a listing has bad photos, you know, many home buyers just won't even take a second look. And so, but it may just be that the, that the listing agent wasn't very good, didn't, didn't, you know, invest in professional photos, and that there could be a real find there. Yeah, so. So totally.

Guest: No, no, absolutely. So we go and, you know, I'm kind of looking at this business and, you know, I'm seeing all the different, you know, ways it touches, like, just like the, the community. And I'm like, man, this is super impressive. And like, I was excited. Like, I felt like there was like a, there was a, an opportunity there that I, like, it just clicked. It was like a different feeling than from when I saw, like, the first opportunity or other opportunities. It was just a different feeling. So I, I, I got the sense that I was like, this is something that I can actually jump in and do. And I, I don't know, it's like a, a weird feeling that I guess you can't really describe. But it, I was, like, more confident at that point to, like, actually move forward with the acquisition than I was with other things. Even though I had, you know, questions around the, like, the financials and, like, the presentation. Everything that we'll, we'll get into in a second, I assume. But yeah, it was one of those things where I was like, hey, you know, maybe I saw it on like a Tuesday, and I was like, hey, do you mind if my wife comes by, you know, tomorrow or Thursday? And she does, like, a tour too, so she kind of understands and sees the opportunity. And then, you know, the next step really was trying to get to some sort of deal with the seller.

[33:27] Host: And was it the fact that you saw these awnings and signs under production, you saw that they were the names of local businesses, and you saw that it was kind of by, you know, by the nature of what it does, it's, it was, it's really kind of enmeshed in the local business community, or was it more that you just kind of thought you saw it and you were like, this seems kind of fun to be in here, or, like, I can do this. Like, it seemed more accessible than like, a shipbuilding maintenance business where There's a lot more specialized knowledge, presumably.

Guest: Yeah, yeah, no, I think it's a combination of everything you listed. Like. Well, I saw myself, like, actually being the owner of the business for, like, the multitude of reasons you just listed. Um, so, you know, I think it's powerful, like, when you can, like, visualize something really. I mean, it's. So I think I was able to just, like, visualize it more for all of those reasons.

Host: Okay, so you're. You're excited about it. You want to show your. You show it to your wife. So then I assume the deal starts. You start moving forward with the deal.

Guest: Yeah, start moving forward the deal. It was funny because so my. My wife, maybe a day or two later, she got, like, the same tour that, you know, I did of the business. Was able to see a lot of the, you know, same things that I saw, you know, maybe at a later stage of production, you know, that I mentioned to her, like, you know, a day or two prior and just, you know, understanding. Oh, man, like, I. I know this business. I know that business. And like, oh, man, this is. This is really cool. And we got to the point where, yeah, she got the same tour as I, as I. And then we met again, the seller broker and I and kind of talked about, like, initial, like, you know, deal, like, high level. I had put together something based on the numbers that were presented to me and, you know, kind of like just how I felt, you know, signing like a 3x multiple to discretionary earnings and was like, hey, you know, we'd love to buy the real estate, too, in the deal, and, you know, we can talk about that piece. And tried to get to a deal with the seller, and it was really. That was. That was a little bit more intimidating to me just because this opportunity, what it was listed at on biz by sell, was a lot higher. And I feel like, if anything, what the broker presented, like, made it seem like it was worth a lot less. But then when I got and saw the business, I was like, okay, well, there's some, like, sort of middle ground here between what it was presented as on business buy or. Or what the. The seller wanted for it versus what the broker presented it as. And like me actually, you know, kind of seeing it, you know, in the flesh. So.

[36:15] Host: Yeah, can you give us some. Some stats of the business in terms of numbers and headcount?

Guest: Yeah. So the 2021 discretionary earnings were right around 645,000. So felt comfortable going in at a 3x multiple for that. The seller had an appraisal on the real estate done and one piece of that was going for 1.6. So felt comfortable with that and kind of was like, hey, if the real estate doesn't appraise for that value, then obviously we would have to figure out how to make that work. But it did appraise for that plus more. So felt good about that. It was just that when I get to the point where I'm making the offer, it was, well, hey, there is this other component of the business that you should know about. All of our customers don't pay by ACH and credit card or wire. I'm like, what do you mean? And I guess the listeners here can kind of read through the lines because I think this is something that is probably pretty common with small businesses, especially ones that have been around for a while that, you know, there's some cash. So it was very, you know, difficult for me. Kind of this like, you know, the former Navy supply corps officer who like, you know, got audited and like, you know, like more by the book to like, you know, kind of be presented with this information that like, and hey, we're a little bit better than we're actually kind of presenting because of this. And it was funny because like, I don't know how scripted this was, but like owner like kind of pulls out like a lot of cash, you know, and you know, kind of showing me that like, hey, yeah, you know, so I can't.

Host: If, when you become owner, you will be carrying around giant rolls of hundreds. So. So it's a very cashy business. So. Yeah, so if cash heavy business is. Yeah, there's kind of, there's kind of a lot of flags around that. It, it's typically, I'll correct you.

Guest: Yeah, I don't know if that's necessarily a cash heavy business. I, I just. Our customer base is very diverse and some people prefer to pay with cash,

Host: but when you, but there's a lot of actual cold hard currency flowing in and out of the business, more than more than you might be used to. And so there are a few concerns there. First is that that gives a small business owner the opportunity to underreport their income. So, you know, they're making an extra 100 or $200,000 in revenue that they don't report because it's not tracked anywhere because it's in cash. And so you have to figure out how to weigh that. And then you have to just. Yeah, you have to. If they have to wonder if that has been a temptation of the sellers and if the seller, therefore has other temptations, like. And then also if there's a difference in valuation, because if there's enough cash going through and they've really underreported that cash and they're telling you, oh, no, actually we do. I'm just being arbitrary here. $1 million in revenue, not 800 that we report to the IRS. What do you buyers supposed to do with that information? Are you supposed to give them credit for a million or credit for what their tax, you know, what their tax return says. 800,000. So it's. It's very. It's. It's a complicating factor. And it's just. Yeah, it's just not very buttoned up. Like you said, you're used to a very kind of audited, buttoned up process from the Navy. So these, These. I'm kind of. I'm kind of taking your point and running with it. But does that feel right, like, about how you were reacting?

[40:17] Guest: Yeah, no, absolutely. Absolutely. It felt right. And I guess my bigger concern was like, well, how do I, you know, convey this point in a very sensitive way to, like, you know, the, you know, bank that I was looking to, you know, get an SBA loan with, you know, and, you know, that was. That was the biggest concern when I'm, like, presenting this offer and I'm just like, hey, well, we, you know, what will. What will they see? Because I'd never gone through, you know, the SBA like, you know, due diligence before and was. Was worried about that.

Host: And Darrell, does a seller who has a significant percentage of their revenue coming in as cash, do they want to get credit for that? Meaning when. When they go to, you know, when you go to do evaluation and in kind of an offer price, are they insisting that, you know, the extra $100,000 or $200,000 in cash that comes in every year, that. That you. That you account for that in your. In your offer?

Guest: I think the owner was kind of giving this information to me, like, like, hey, you know, this is a good business, you know, because of this also. And like, you know, it's. It's not going to really be reflected, you know.

Host: Okay.

Guest: But, like, you should feel even more confident slash, you know, move forward with this opportunity because of this. Okay, do I. I also think that there was some sort of, well, like, hey, can we, you know, move this offer because of, you know, the outside cash. And, you know, to me, I was just like, hey, I don't really know. I mean, like, the end of the day, like, we're going to be going off of like tax returns and like, you know, what you kind of have, this is what the bank is going to be using to, you know, underwrite, you know, the business. And you know, you kind of already, you know, got credit for this also too, you know, already, you know, so like you can't again trying to get credit on it, you know, on the back end as well too when you, when you sell, it's a little bit hard. So you know, I think I kind of had to continue to reiterate that. And it was one of those things where later on I'll talk about like the, the kind of the formal, I guess deal structure, but there was a significant amount of the deal that the seller had to take on a note. And like to me, you know, it's just like, well that's because of, you know, your, your earlier dealings. You know, you, you might have been able to avoid that if you, you. He didn't do that the way he did.

[43:06] Host: Okay, well. Well maybe now is a time. Well, before we get into the deal terms, Daryl, can you tell us how a little bit more about the business, how many people and the, it's, it's history. It's an old business.

Guest: Yeah, yeah, old business. The founder, Al Andrews, 1946. The, the owner that I bought it from actually bought it out of probate court from, bought it out of the probate court. But currently when I bought the business we were about like at 25 employees or so. So a decent amount of employees.

Host: The split between signage and awnings.

Guest: Yeah, about 70, 30. So 70% signage, 30% awnings.

Host: And the awning. Is that all commercial business or is there some residential for the awnings?

Guest: Some residential retractable awnings. So it's a very small piece. I think it's a great opportunity for us to do more. So one of the things that I'm looking at but a very small piece of that are residential awnings.

Host: So it's mostly a, a B2B business. And how did you get comfortable with the non recurring nature of, of buying a sign? If I'm a business, I only need to buy a sign or an awning once every however many years.

Guest: Well, it's, it's so crazy. I mean I think that you know, initially I was like reoccurring revenue but you know, to me I was like the project based stuff like it's all over and it's like, you know, to me whether this is, you know, schools or universities, hospitals like our Our client base is so wide or who we, we touch. So I was like, everyone needs a sign. Where are you at? And when you, when I looked at like the, the landscape of just like Rhode island, like it was one of the only places to really go. So it was, it was, you know, really cool. Just based on the nature of the work, we can do everything from the design to installation. So like we're full service, so a lot of other places aren't. So definitely advantage we have. But I got comfortable with it Will, because it was all over, it was needed and I just saw the opportunity. So I was like, there's always going to be work for this business.

[45:20] Host: Well, and, and it's the longevity of the business also of course is a testament to its, its enduring profitability. The. You had said that there's, there's kind of nowhere else to go in Rhode island. Meaning it's a leader in the market in Rhode Island. Is that what you meant?

Guest: Yeah, yeah. No, I would, I would say there's been some consolidation, industry, some closures. I mean this is really a trade. So there were a couple like, you know, maybe smaller shops, you know, couple individuals that, you know, owner ready to retire, employees were older, shut down or there was a, there was actually an acquisition of one of our largest competitors maybe like four or five years ago by an out of state player. So there, I guess my, my point is, is that it's an industry that is needed but there is not a lot of options in the industry. So I, Yeah, so I felt pretty comfortable because of that too.

Host: Yeah, well, that, that sure is a nice, defensible, powerful place to sit. So let's hear about the deal. I definitely. We still got a ways to go in your story, Darrell, and I'm so mindful of time, but I want to hear how operating has gone and of course I want to get to your other projects as well. So let's get into the, the terms of the deal and we'll keep rocking here.

Guest: Yeah, no, so the deal structure changed up a lot. You know, I, at one point I mentioned there was real estate involved and there's actually another piece of property that was part of the deal that I had to do a conventional loan with. So had two deals going on simultaneously. An SBA 7A loan and then like a conventional loan, but ended up getting to the point where, you know, my, my equity injection for the deal ended up being about like 400 and some K and then the seller took a, a note for 530k and then the rest of it was debt. So I'm including like, you know, the working capital that I, or I guess post deal, you know, we got working capital obviously. But it was, it was a struggle because initially the way I was structuring the deal, the seller was going to have like part of his note on full standby and he was 78 years old. So he was just like, I'm not going to do this if, you know, it's going to take me 18 years or whatever it is to get fully paid out. So that was one thing that we had to work our way through. But yeah, we did. And his note is over a five year, is a five year note and over five year period and it's on standby for two years. So that's how we end up dealing with it. So.

[48:31] Host: Great. And so your offer was about 3x on 645k. So that's 1.3 approaching $2 million for the, just for the business. Right around 2 million. And then 1.6 for one piece of real estate. And then there actually was another piece of real estate.

Guest: Yep.

Host: And you, and you dealt with those two transactions. You said two transactions going on at once. So one was straight real estate purchase, the other the business. And what you just shared with us was all about business is 500,000 seller note. Okay. And on the, on the real estate, is that something where there's like less negotiation? That was kind of just a more straightforward transaction. Is there anything to say there or share with the audience?

Guest: Yeah, on the other piece of real estate, no, it was just a kind of conventional loan. I mean that to me was a little bit more straightforward, but it was my first time like, you know, doing that as well too. So it was a learning process, but a lot less complicated than the actual business acquisition.

Host: Daryl, now this is something I should know and don't really, I'm not that familiar with, but aren't there ways of doing 7A loans where it's a single loan, but it's blended between the business acquisition and the real estate? But it's a, but it's a single loan or.

Guest: Absolutely. And just, just to clear it up, because I don't, I don't think it was very clear. So the two pieces of real estate, one was operated by a tenant on a triple net lease. So I wasn't able to do a 7A loan because of like the space occupancy and like, not it was a separate, you know, parcel land, but it was one of those things where the seller wanted to, you know, kind of completely, you know, tie up his or clean up his estate. So he was like, hey, either buy the business or you buy everything. But I'm not going to just sell you one piece of real estate and then have this other piece of real estate. So I was, I was okay with that. And yeah, had to figure out how to get a deal done. But yeah, wasn't able to use a 7A for that other piece of real estate.

Host: So. So when real estate can be under the umbrella of a 7A loan is when that real estate is part of the business.

Guest: Exactly.

Host: Yeah. Okay. Okay. Exactly. I need to be educating myself on, on how that all that works.

Guest: Okay.

Host: Anything more to say about the kind of the colorful nature of, of this transaction and the. Yeah. And the acquisition itself or should we move on to operating? Go ahead.

[51:10] Guest: No, no, I think nothing else other than this deal takes such a long time because of the constant nature of it changing. You know, initially, you know, the seller and I, when I was on assumption that hey, I could just buy like the real estate in the business. And I think part of this was kind of like maybe the seller playing some games or having some sellers remorse, like you know, getting into like a deal and just like kind of like, hey, you know, I'm so like what else am I going to do with my life? You know, you know, 78, like should I really be selling? And you know, I think he was kind of having cold feet. But at the same time too, like I wasn't necessarily in a super big rush to close because I wanted to kind of tie this time, this up for like after I was like graduated. So I knew I was graduating in like May. So we were both kind of in this like hey, like we want to make a deal happen. But you know, the, the structure was constantly changing and there wasn't necessarily like a big push from either of our ends in a sense, like looking back.

Host: Well, lucky you, Darrell, because isn't it that time is supposed to kill all deals? And yet in this case, in this case, both parties were happy to let it drag on for their own reasons and it would have still worked. Yeah. Great. And circling back a little bit or a lot a bit to your, to your mba. And you had mentioned your wife and your father in law being CPAs both, I think. Yep. All right. Yeah. You had said on the pre call that that in terms of your, the knowledge that you felt you needed or lacked with respect to buying a business was specifically on finance stuff. And you had, but you had your wife and father in law in your personal network to help you with those gaps. So maybe fill in the gaps there. Were you leaning on them heavily? How much finance financial acumen do you feel like you one needs to do a deal?

Guest: Well, yeah, I think, I think, you know, even before understanding the finances, I mean, you have to understand how the business works, right? The financials is really just telling a story of how like the business works. And I think that for me, one of the things that I should have done a better job with and I didn't do is I never went and actually saw operations during like operating hours for the business. You know, I would, you know, go in after hours and you know, spend time with the seller or maybe spend time like doing surveys in the weekend. Like kind of understanding how he was looking to like measure projects or like quote projects. But just understanding like how the business was like working was one thing that I, I didn't necessarily do. So even to like my wife and father in law, in a sense, you know, I would tell them things, but not necessarily having like a full understanding of the business, you know, what I'm telling them, you know, they're not necessarily, you know, fully looking because they don't necessarily, they're in a sense removed in a sense too. So there are some things that I missed in due diligence. Like one of the things that, you know, I mentioned to you during a pre call was that the seller kind of made it a practice to early invoice projects. So in a sense you have this big awning or assigned job done. Let's say the project maybe had a week or two to complete. I'm just using a random time frame. He would invoice it in the hope that he would be able to collect payment for the project simultaneously on delivering the project. Now we know that for whatever reason, there might be a case where work doesn't go as fast as you think it would, or maybe you're not able to install the project because of X, Y and Z or whatever act of God happens. And there were a lot of things that were early invoiced. Whether it was intentional or malicious, the fact of the matter is it was just early invoiced. So those were things that maybe inflated the financials. And those are things too. Like at close, because I bought the business balance sheet clean, where the seller kept receivables, where there were projects that were early invoiced that he's trying to collect payment on. I'm like, well, hey, it's still in the shop here. I'M still doing work on it. I haven't installed it. Hell no. You're not collecting payment on that. That's like mine. So it's stuff like that where I feel that my father in law and my wife were able to, you know, look at the numbers and kind of tell me what questions to ask. But like, as far as understanding, like the practice of the business, they missed that, you know, and like, I missed it too. And I think really if it would have been someone who would have been able to like, you know, marry all of it together, it would have been better for me to just like know and just have a better grasp on. So a big fan of people doing QOVs and kind of getting, you know, people who are knowledgeable of the space to get in there. Because at the end of the day, my, my wife and my father in law are. They're auditing like larger, you know, you know, Fortune 500 companies. They're not necessarily doing small business, you know, on in Warwick.

[56:39] Host: And you feel like a Q of E, formal third party Q of E would have caught this or, or was it you go showing up during actual working hours would have caught this or you would have needed both.

Guest: It's a combination, right? I think it's a combination of it. And I think for end of the day, it's obviously some sort even bringing in a third party provider. They're somewhat removed in a sense too. So I think it was really on me to have a better understanding of what the business was. So I could have asked the questions or told someone like, hey, look into this for me.

[57:16] Host: Great call out, Darrell. All right, let's move into operations here. Talk to us about how the transition went. Just give us kind of. Oh, give us a story.

Guest: Yeah, so transition, I think, you know, day one, we closed on a Friday, you know, seller's like, hey, you could come in today, but like, actually, let's do this on a Monday. No one at this point had known that I had actually bought the company. So it was kind of like a secret. So, you know, I was like, okay, cool. What time do I show up? He's like, let's do a 745. I'll gather all the employees around and you can make your introduction as the new owner of the business. So prepared, you know, a speech to the team, which I thought went pretty well as far as, like, who I was, you know, why I was buying the company, like, what I wanted to do, you know, who values things like that that I had. And it went pretty well. I felt like I. I had people, you know, come up to me and, like, say, congratulations. Like, you know, I really felt something when you were, you know, speaking like, you know, I'm pretty excited this. And then I would say the transition after day one was definitely not what I expected. You know, things like the business was owned in a trust by the seller and his wife. And you. I found out that, you know, the seller was no longer with his wife and that the person who was actually doing all the bookkeeping and accounting, he may or may not have been in a relationship with this person. So there were certain things like that where I was like, oh, shoot, now what did I get into?

Host: It's always the bookkeeper. Yeah, yeah, yeah.

Guest: It's always. I know. It's not like, you know, it couldn't. Yeah, no, it wasn't. Yeah, it was always. So it's. But it was. It was funny to me because what I would do things like we have a third party that we use for, like, tech services, and they were like, you know, we went over, you know, get on, like, the network and, you know, get email stuff set up on my computer. They're like, well, if you ever terminate someone, you gotta let me know beforehand. And he said it like four or five times like, who do you think I'm gonna terminate? I just, like, you know, so it was funny because, you know, I ended up having to move, you know, forward without, you know, that.

Host: That bookkeeper and your msp, your IT person predicted that. That that's what they were saying between the lines.

Guest: Exactly. Exactly. So. But, you know, the. The relationship, I think, got pretty, you know, contentious with the seller and I, you know, after a week or so, by. Or not even a week or so, maybe a couple days into it, just because of some of the things, you know, that, you know, I saw it was happening as far as the accounts receivables. And I'm like, hey, you early invoice all this stuff like. Like, why, you know, and it's still here. And then, you know, the fact that there was one point in our agreement that I thought we were pretty clear on where it was. Customer deposits. The way our industry works is, you know, customer will put down a 50 deposit before any work is commenced on the job. And for whatever reason, whether it's waiting for permits or, you know, just work to commence, maybe we're working with a general contractor and there's somewhere in this workflow pipeline that we can't necessarily start what we're going to do because we're Waiting for them to get to a certain point. There were a lot of projects that the seller had collected deposits for and was not willing to turn over. And just this being a project based industry, and I knew we kind of had a moving target as far as, you know, where when we were closing, you know, I was like, hey, well, there might be a customer deposit that you collected, but let's say that work is 90% completed. You know, obviously you use that customer deposit to buy materials, you know, you know, pay, you know, you know, staff to do work. Kind of makes sense for you to keep that deposit, you know, but on the other hand, there was like this category and it was so large, it was hundreds of thousands of dollars that no work had commenced. And I'm just like, this guy has no intention for actually giving me the customer deposit. I was like, this is crazy. So I'm still actually working out all that stuff with the seller right now. It's been pretty painful. Obviously, I have the seller's note that I mentioned too, so I guess the worst case scenario can offset there. But it's just one of those things where I, you know, I think that if I was actually spending time in the business beforehand, you know, maybe would have been able to, you know, catch that as being an issue, you know, versus, you know, kind of only spending time in the afternoon or, you know, the weekends with the seller.

[1:02:21] Host: Well, it raises the question, Darrel, if, like, there's a best practice here because so many small businesses are project based, despite the fact that we all want recurring revenue. The reality is that many, many, many small businesses are project based and they all must experience this. You bought you as the business buyer. You know, there's 50 streams of work going on, 50 projects going on when you inherit the business, all at various percentages of completion and, like, how to account for that. So. So I wonder if there. Yeah, I'm just kind of thinking out loud. I wonder if there's a best practice here or is it just as simple as kind of catching it initially and going through project by project by project and getting agreement on how. What percent completion it is and how much of that money, you know, is, you know, and then kind of splitting. Splitting the money. Yeah, yeah, commensurately.

[1:03:15] Guest: Agreed. Well, I think every situation might be different. I mean, there's projects that we have that might be only, you know, $1,000, but then we have projects in the hundreds of thousands of dollars. So there's definitely a big ra. So, you know, I would, I would say, yeah, I mean, that's a useful activity, but it's always kind of like a moving target, depending on, like, where you're at with closing. So it's also like a very complicated, you know, activity too, because of the timing.

Host: Yeah, totally. Yeah, good point. So what did you find in terms of the culture of the business?

Guest: Oh, man. So I think that was one of, like, the big things I was actually able to, like, improve on, like, right away. I mean, to me, the. The culture. It's funny because I'm in the process of doing a rebrand right now, and, you know, I'm trying to be able to get, like, a. A good grasp of, like, who we're. We are right now. But in a sense, like, when I took over the business, there was a lot of, what I would say, just like, chaos and finger pointing. And, you know, I think the, The. The culture for me was one that was, you know, very tense. There wasn't necessarily any, like, process. It was. Yeah, it was just, like, not an environment that, like, I would ever want to work in for, like, a long period of time. And it was just crazy that I had, like, a lot of employees who had been there for a lot a long time. And there's some people who, you know, this. The signage industry, you know, is not that large, who had left and went other places. And, you know, one of my big things was like, hey, like, let's get, you know, good talent or people who used to be here, and for whatever reason, they maybe had, like, a disagreement with the previous owner or were unhappy of things not necessarily changing. Like, let's figure out, like, how to get this, like, good talent, you know, back in. So been pretty successful on that front of bringing some, like, you know, key people, whether they're fabricators or people in our department back in the business and got a GM in place as well, too. But it's. Yeah, the. The culture was not a very good one.

Host: Will and, And Daryl, what are you doing to. So quickly? So, as you said, you're 100, 115 days in. So coming up on four months. What specifically have you done to make it a more attractive place to work and. And. And recruit some. Some of your previous defectors? Yeah, recruit some of your defectors?

[1:06:04] Guest: Well, no, I think one. It's. It's been, you know, actions and I mean, I know it sounds corny. Like, my, My day one speech was only like, a minute or two long. I mean, I don't necessarily think that people, like, are really going to, you know, listen to that. I guess they'll see the actions. But one thing I do, like, I have like a lunch every month, you know, for, you know, the entire team will bring the team together. It's about like 29 people now. 29, 30 people. And you know, they never had that before. They never, like, the previous owner never bought them lunch and they never were able to like, you know, collectively, like, talk about, like, hey, where are we at with things as far as, you know, our goals and visions, you know, get some input, you know, so small things like that, which I think have been just like super impactful. But I mean, I genuinely just feel like I care. Well, you know, so like I. I had, I don't know, small things. I mean, I, you know, I had one. One guy who recently just had surgery for pancreatic cancer. So I was able to grab dinner with him like, you know, two days ago, and he's still out right now. But I think it's like things like that where, yeah, like I. Generally.

Host: Showing you care.

Guest: Yeah, it's just showing you care and just like, you know, being able to, like, listen and, you know, take feedback and just try to implement things that, you know, make sense. And I think people appreciate that because I don't know if they were necessarily ever being listened to before.

Host: Well, Daryl, I'm struck because you seem pretty relaxed about this, but it doesn't sound like the worst transition I've. I've heard absolute nightmares. It doesn't sound like yours is like this at all, but that. That it was. That there was some challenges and you walked into a culture that wasn't super organized or hospitable, but you seem pretty. Pretty okay with how things are going. Am I reading you right?

Guest: Yeah, I think you're reading me. I think I'm super optimistic. I'm. I mean, like the month of July, I. I had a. My daughter. First kid was born, like, literally like 10 days after I closed the business. Wow. Like this, two babies at once. Yeah, I know this timing is like, not the greatest, but. Yeah. And I feel like I've. I've been punched in the face a couple times during the acquisition, but, you know, I'm super duper, like, energized by the team, the people, like where we're going. So. Yeah, I mean, I. I think I'm counting the days because I'm like looking at my 100 day plan and like kind of saying like, how many things I haven't gotten done that I want to get done, but I'm just like, I am super appreciative of, like, what we've been able to accomplish so far. So that's great.

Host: Congratulations. Well, actually, and also something you've accomplished so far is hiring a gm. So tell us about that a little bit. Listeners are always really eager to understand how they can start working on rather than in the business. What does it look like in your case?

Guest: Yeah, my case. You know, it fell into my lap. It's one of those things where, you know, I think a kind of just like, being able to listen and get input. And I felt like one of my big gaps with the acquisition, especially since, you know, I have this contentious relationship with the seller, was just, like, knowledge of the industry. Like, I, you know, at one point, you know, we were. I bought the business and, like, the. The owner, like, maybe in the first, like, day or two is going over, like, an awning job with me and was talking about a valance. I'm like, googling. I'm like, what the hell is a valance? You know, so, like, it's one of those things where I'm, like, learning about the industry. And, you know, I feel that it was key for me to have someone who was able to provide a little bit more of, like, the technical expertise and, like, kind of covered down in several facets of the business. So it's funny because it was happenstance. It was dealing with suppliers, you know, who kind of come in and want to introduce themselves as they know the business was sold. And one of the suppliers who came in to introduce himself end up being someone who was just like, hey, you know, if there's ever. If you ever saw, like, you know, you know, a need or, you know, have, like, you know, an operations guy or like, a gm, like, you know, I would be pretty interested in that. And I kind of kept it in the back of my head and continue to develop a relationship, you know, with this, you know, supplier and just, like, kind of, you know, get to know, like, who he was and, like, you know, understand, like, you know, what he brought to the table and, like, get feedback from others on, you know, whether he would be a good addition to the team. And, yeah, he's been on board for a little bit over a month now, and it's. It's been absolutely great. I'm at home right now. I'm gonna go in after we're done with this interview. But it's definitely good to have some added flexibility. And I think, too, one thing I didn't mention, Will, was that my father actually retired from his job, and he's been up here you know, helping me out in the business too. You know, sometimes, you know, you know, working with family, you know, there's, you know, there's, there's definitely frustrations. And I think, like, sometimes I'm like, oh, man, is, like, my dad, like, actually, like, trying to help me or is he trying to, like, hurt me? Like, what is he trying to do? But, you know, he genuinely has my, my best interests in mind and it's, it's been good to have, like, good people around me trying to help accomplish the mission.

[1:11:23] Host: I love that, man. I love, I love that your dad's helping you in the business. Of course there's going to be stepping on each other's toes, or I, I should say he's just stepping on your toes because you're the protagonist here. So there's no stepping on his toes. Yeah, but, but no, no, that's, that's just great. Well, great. So, and then hiring the, so the hiring the GM kind of, you weren't even expecting that. And so have you felt a material difference in you just kind of being able to focus on strategic stuff much earlier than you thought?

Guest: Absolutely. I, I feel a big difference. I feel that, you know, right now, since we're, we're project based, you know, it's, I mean, our processes are so important, you know, to be able to, you know, get jobs out in a timely manner, you know, because when I

[1:12:10] Host: first

Guest: bought the business, it was crazy how much jobs were just sitting in the shop or just being held up for different reasons. And just like, man, this is cash that could be in the bank. Because once we actually get this thing installed and are able to wrap up the project, we're able to invoice the customer right away. So trying to clean up those processes so we can just become more efficient and, you know, deliver to the customer faster. So I felt a huge difference since he's been on board.

Host: Darrell, stepping back a little bit just to reflect on now being a small business owner, I want to ask you two related questions as context. Running a small business is difficult, is hard. Some people are become, are very overwhelmed by it. Even if they know it's going to be hard once they actually get into it, they. It's harder than they thought it would be. How hard do you think it is in your experience so far, and maybe kind of follow up to that is how relevant do you think your military supply chain, your Navy supply chain experience has been?

Guest: Yeah, no, I think the first question, how hard has it been? How hard did I think it was going to be. I thought this was going to be a lot easier just based on, like, my former experiences as, like, a, you know, naval officer. And it's been a challenge. I think the timing of it, just, like, how many different things, whether it's, like, the legal component with the salary that I'm dealing with right now, like, the personal family component with my daughter being born, just trying to figure out, like, how I should, like, best be spending my time, like, you know, working with my dad for the first time. Like, there's all these different challenges that I don't think anything can really prepare you for. You just have to kind of get in there and do it and be committed to figuring it out. And I think that's what my naval experience taught me. There's no book for this. Even though you mentioned the books at the beginning of the thing. I remember one of the first books they gave us at the Naval Academy was Message to Garcia, and it always stuck with me, even though I don't even know if I really fully read it. But the summary for it was, you just got to figure it out. Maybe I'm. I. I might be butchering that takeaway because I didn't. I don't know if I fully read the book, but I think for me, like, everything is just like, hey, we'll figure it out. I mean, no challenge is, you know, insurmountable. There are resources. I mean, there are things that we progressively will get better at and figure it out. And I think if you have that mentality, you'll be successful at it. Even though, you know, I've talked to people who this hasn't worked out for, and there's things that are outside of your control. But I think that even, what talking to them, it's kind of like, hey, they'll get on the saddle again and do another one to figure it out, because I think this is all, like, you can all figure it out. You really can.

[1:15:17] Host: Daryl, anything more to say about your story before we hear about New Majority Capital?

Guest: Yeah, I. I can't. I can't, like, tell listeners enough, like, how much fun I'm having. Like, this is. This is fun to me. Like, it is cool. Like, you know, being in. Working with the team and, like, in the day, like, you got to be having fun doing this stuff, right? And I think you should, like, know, like, down, you know, in your heart whether or not you feel like you're going to be having fun leading people, figuring big problems out. Like, you should know, like, and I think that was part of Me like that I knew from like the Navy, like, hey, I had like fun doing this, but like, man, you gotta, you gotta have fun with it. And you gotta know you're have fun with this because if you don't, like, it's, it'd be miserable. Like, you know, like, I think some people, like my wife, lover, she probably wouldn't enjoy this as much. Like, dealing with all the people issues and like the chaos and, you know, the stress of it, you know, But I think it's fun.

Host: So a glutton for pain.

Guest: No, no, no, no.

Host: I don't think that's what it is, Daryl. I think we just all have different things that we gravitate to. And your point is that we, this has a very distinct character to run a small business. And you got to really look deep to make sure that, that, that, that the character of what this is is compatible with what you like and how you like to spend your time.

Guest: Absolutely.

Host: So tell us, Darrell, about New Majority Capital.

Guest: Yeah, no, Will, this is, you know, I, I think the other like, side of me is like, hey, I'm living this. But I also want to create a framework for other people to do this. I think it's so important for us to get more. I don't know if I necessarily want to use the word, you know, underrepresented, but maybe like non traditional people who are in the space. You know, I think about like the other business owners I've interacted with, whether or not they've been in the Navy, you know, are, you know, currently, you know, with this acquisition. And they don't look like me. Like, you know, it's crazy. Like in Rhode island right now, I think they're like 168, like business owners with employees who are black, you know, and I think like, that's like a crazy number or stat for me. Like, and that shouldn't be that way. So, you know, with New Majority Capital, you know, our goal is to, you know, increase the number of women bipoc entrepreneurs through small business acquisitions. And we have a for profit entity, we have a foundation. I'll start with our foundation. Our foundation, we run a 10 week course to help entrepreneurs from A to Z to go through this process of buying a small business. And I think the beauty of it is that the course created with some Babson faculty and my co founders who have co founders who have acquired as well. This is through our experiences, like, hey, what do you need to know? How do you get there? And we ran our first inaugural cohort in Providence we had three entrepreneurs in the cohort who've successfully acquired since we have a cohort right now that we're running down in Atlanta that just started back in September, so hoping to get more of these acquisitions going, people who are able to help others, and then on the for profit side, raising a fund to be able to finance these acquisitions. I mean, I was very fortunate in my acquisition to be able to use the VA home loan and then take out equity from my house and use that as, you know, the injection to do a deal. But so many people are not fortunate. And I think about it and I'm like, hey, man, this seller would have had an issue trying to sell a business because it's hard. I mean, it's hard for multiple people to be able to source capital. So, you know, why not make this a win win? Help business owners who are looking to transition their business do it to a new generation of entrepreneurs who are ready to take it on. And that's kind of like the entire goal of what we're doing. So super jazzed up. I feel like it's like the other side of me, because being an operator and owner, you know, all the lessons learned and things like that, I'm channeling in it and like trying to bring it back to like the majority capital so we can just improve this for the people after us.

[1:20:04] Host: That's really, that's just so cool, Darrell. And so a couple follow ups there. So you, in your first cohort, Providence, you've actually had three acquisitions come out of that. That's great. I mean, that, that's, that's really the, that's kind of The Kippy.

Guest: Yeah.

Host: Three of 29. So over 10. And that's just, of course, maybe some other. Those will get across the finish line later. Absolutely. Yeah. That's phenomenal. And this is, you said 10 weeks, so this is. Is it 10 weeks part time, full time? Give people some more color on what it looks like 10 weeks part time.

Guest: I mean, you know, we're kind of averaging about 10 to 12 hours of like total work for a fellow going through the cohort. But the way we structured is that we have two virtual sessions on Monday and Thursday, you know, every week, and then other 10 weeks. And then we have some in person sessions that are scattered throughout about three in person sessions throughout the program. So on average, it's about 10 to 12 hours a week that people going through the cohort spend on our programming.

[1:21:10] Host: That's, that's, that's great. And so you have. Go ahead.

Guest: No, I Was going to just say, well, the goal is that actively people are looking at opportunities and we're helping them through the opportunities that they're looking at through the course. So that's why.

Host: So, so the model is not like, by the end of it, they start looking at sims. You want them looking at sims for the duration. And a lot of this is kind of workshopping actual live deals.

Guest: Absolutely.

Host: And you said you have a cohort going on in Atlanta right now? Yep. And. And didn't you tell earlier this week?

Guest: Yeah, earlier this week. Doing some work with the cohorts and. I'm sorry, I interrupted you.

Host: No, that's great. And how many people are in Atlanta in this Cohort?

Guest: We have 37 right now.

Host: Oh, and I think you told me that you were also going to launch one in my backyard here in D.C. that's the plan in next year.

Guest: Yep, absolutely. So we'll be down in D.C. in February. So applications and all that stuff will open up sometime in December. So definitely post a known the show links or I don't know what you call it actually for that show notes. Excuse me, later on.

Host: And Darrell, just circle back to something you said about you used home equity, line of home equity from your home, and you were able to buy your. To buy your business and you were able to buy your home because the VA loan. So you feel like you've benefited from these kind of programs that you, you know, otherwise wouldn't have had access to capital. And so you're a believer in kind of that things like that can. Can really move the needle and help individuals in a concrete way.

Guest: Absolutely, absolutely. I'm living proof of it right now. You know, buying a Newport, I guess a while ago was a good decision. So.

Host: And succession ready. Have you already talked about succession ready or is that.

Guest: Yeah, no, No, I haven't. So that's the other side of this coin. Another program that we developed and delivered. And really this is for the business owner who is, you know, thinking about transitioning from their business. How can you, you know, get the most value for your business? What do you have to do to put yourself in a position to exit successfully? So that's been great. We ran a cohort of that back in Providence last fall. Had about 21 business owners who were in that cohort. Average business about like $3 million, you know, as far as top line and great, you know, opportunities. So, you know, you know, we're. We're kind of thinking our future goal is like, you know, this is a win win. If we can Kind of help, you know, people from Succession ready and then people from our other group, beta that we were talking about before. We can kind of marry these two groups up. It's a win, win and absolutely, yeah, make society a little bit better of a place.

[1:24:06] Host: Fantastic. Daryl, what is, is there anything that we haven't touched on that you wanted to get a chance to say?

Guest: Yeah, no, I, I, you know, one right now continuing to raise for fund one for new Majority capital. So, you know, I know like my biggest, like, call to action after listening to this. If you're someone who, you know, maybe is thinking about this and you know, a few yourself or people in your network who would be interested in, you know, being an LP in our fun one, you know, please reach out. But at the end of the day, too, I, I can't reiterate enough, like, you don't have to go to business school to do this, but, like, please kind of believe in your heart that it's like the right thing for you to do because it's so tough if it, if it's not, you know, so. And it's fun if it is, and a lot of resources and, and people that will help you out. So. And I'm one of them. So don't hesitate to reach out.

Host: And on that point, Daryl, what's the best way to do that?

Guest: Daryl-a r y l@newmajoritycapital.com Great.

Host: I'll also link to your LinkedIn in the show notes.

Guest: Is that.

Host: Do you check LinkedIn? I know that's how we first connected. So I, I guess you do.

Guest: Yeah, yeah, no, I do. I do check the LinkedIn. So you can, you can hit me on LinkedIn on no other social media, though. You don't. You won't find me on Instagram or Twitter or anything like that.

Host: Okay. So, Daryl Lindy, this has been great. Thank you very much for, for coming on, sharing the story, being transparent, telling us about not only your business acquisition but, but your other. Your other projects. New New Majority Capital chief among them, which sounds like it's something that, that has the potential to have a whole lot of impact.

Guest: Absolutely. Thank you, Will, for the time. Really appreciate you keep doing what you're doing. Thanks, Sam.