Host: Jordan Carter's search was brutal. It took him years to acquire his business and he and I spend a lot of time going through it to really understand how months can just slip by when doing a search, especially when doing it part time, especially when you don't have a targeted industry, especially when you're trying to raise money piecemeal from investors. There's much to be learned from Jordan's hard won views on search, so hopefully this interview will enable you to shortcut a lot of what Jordan learned on his own. I know it caused me to think hard about doing a full time search versus a part time one, as well as the most efficient way to raise capital for a search deal in 2022. Spoiler there is a happy ending to this search. Jordan did buy an awesome specialized business with low competition and high Demand. It's grown 40% in the two years since he acquired it, so you're going to hear all about that as well and how he brings value to a super niche business that he was completely new to. Enjoy this conversation with Jordan Carter, Owner and CEO of BNA. 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. 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, Oberle 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. Oberle is a specialty insurance brokerage for searchers by a former searcher. Check out oberle-risk.com O B E R L E- risk.com link in the show notes Jordan Carter, thank you for joining me today on Acquiring Minds.

Guest: Thanks for having me Will. Good to be back.

Host: Jordan. You're a partner at search investment group sig. Regular listeners will probably recognize the SIG name. Your partner, Robert Graham was in the recent debate about self funded search versus traditional search funds which got some attention and you and Robert together were actually on an early episode of Acquiring Minds talking about self funded search. Advocating for self funded search. It's a big big part of your philosophy philosophy as it as it pertains to search. So I'm sure we'll get into that. But really the headline for today is about your own search. You are a former searcher and CEO of the business that you acquired and that business is called bna. It's in the grant space. So grant research, grant writing, grant administration, and you'll tell us more about B and A in a minute. But your search was long and difficult and it really informed how you feel about self funded search and the work that you do now helping and investing in other searchers via sig. So with that stage set there, Jordan, please start us off with a quick bio on you.

[3:34] Guest: Sure will. So I grew up in North Texas and went to school undergrad at Southern Methodist University SMU in Dallas. Didn't know what I was going to do when I graduated. So I did what a lot of undergrads do and they go into business, they study undergrad business if possible. One of the highest optionality career paths out of that undergrad is investment banking. So I went to go do that for a few years, moved on into private equity investing. Both of those stints were in New York and then did business school for my MBA at Wharton and then came back to Dallas to search full time to acquire a company. Bought it in the middle of 2020. So July 31, 2020. So that's the high level. Quick, quick and dirty background.

Host: Great. And tell me how you discovered search or, you know, bridged the gap between living in New York, working in PE to moving back to North Texas or to Dallas and searching.

Guest: Yeah, so I actually first discovered about search funds, period. Just the bigger, just the word search from a colleague when I was in private equity. He was actually looking at going into business school to do an mba. And I asked him what he was going to do there and he passed me the search fund study to take a look at. And I just was enthralled. I didn't know that was a possibility. I had only known at that point what I had known, which is finance. I was working in there for several years and I figured you're just going to have to just climb that ladder and continue to build experience over time. And at the same time I had read stories about people like Steve Schwarzman, the founder of Blackstone, at age, I think it was 28 where he founded Blackstone. He was a managing director of Lehman Brothers back in the day. So there was a time in our recent history where people were younger and were entrepreneurial and they were encouraged to take those risks. And I believe search funds is an avenue through which over the past few decades it has enabled that drive to be expressed. And it's just the people who look at this and get excited about it. I think that's what's happening. They're tapping into that underlying drive. So for me, that was where I first heard about it. And I went on to business school to spend time and make sure that was the right path for me. Because it was the first time in my life I experienced something where I felt a calling. I felt like this was it.

[6:06] Host: And you. So you went into business school with an eye, like a eye on search. Your attention was on search and you were going to figure this thing out if it was for you?

Guest: Yeah, absolutely. So I tried to triangulate it through a couple different ways. So I thought, do I just like operations? Is that what I think is interesting about it or is it really the, the risk and associated reward of stepping into a business and having ultimate responsibility for everything? Failure. It's your fault. Every single time as a business owner, was that or was it I just wanted to be, you know, in operations because in private equity I did enjoy spending time with the management teams. After we bought the company, I would say, can I go spend time over there? And they know, they said, no, no, no, we have to go do another deal, another acquisition. Because when you're on the investing team, that's your job. And no matter what people say in private equity, unless you're deployed at the company every single day, you're not getting operational experience. So, yeah.

Host: So you were drawn to operations. So, and what did you conclude that you liked both the operations and the risk reward profile of search?

Guest: Well, I did an internship with a private equity portfolio operations group. So I directly tested that out and that was definitely not for me. You know, it was an okay internship. But once again, you're slotted right in the middle of a company. You're helping senior leaders out to drive certain initiatives, but somebody else and another group of people really are making those calls. And the real eye opening point Will, was when I sat down with essentially my principal over that summer internship and I asked him, I said, what do you want to do in five or 10 years? And I didn't tell him anything about what my career aspirations were or thoughts at that point. He looked at me and said, I want to go buy a small business and run it as a full time CEO, owner, operator. And I just left that day. And I just thought, wow, if that's not a sign, I don't know what else is. I was trying to kind of see, you know, see Was it operations? Is it, is it really search funds? Which one is it? And the operation portfolio, operations group guy was telling me he wants to go do a search fund, essentially.

Host: Yeah, yeah, that's excellent. And you got into business way back in undergrad as you said, because it was kind of didn't know what else you wanted to do. So you probably weren't somebody that saw themselves as an entrepreneur early in life or even into undergrad or maybe even shortly after undergrad. But as the search idea, you were exposed to it and the possibility of it really crystallized clearly that that entrepreneurial aspect of it is in fact, I think in a word that's really kind of what drew you, is that it's entrepreneurial. Is that fair? And so now I suspect you do see yourself as an entrepreneur.

Guest: Yeah. So if I look back, you know, I did give a high level overview, but in high school I started a business in myself and used PayPal as the, as the payment medium, doing kind of customized computers back when the PC world was a little bit more entrepreneurial. There's all sorts of little brands starting up and I didn't know how to do it. I didn't know how to put together the chips or solder chips or assemble all the boards inside of a desktop PC. But I found people through forums that did and I put together a website and put together the payment platform and the marketing and, and advertising to, to make that a thing. It never got big, but it was definitely good money for a high schooler. So I certainly had that entrepreneurial drive to do something. I was proud of that company. I was proud of what we were able to do, even if it was only, you know, let's say a couple thousand dollars, you know, over a relatively short period of time. But certainly going to college and getting into kind of that track of everybody else is going towards finance. Everyone's going, you know, the top of the class and the business, the undergrad business school was going into investment banking and the prestige of that, I was certainly at that time, without really knowing what else I wanted to do, drawn toward it. So that was my, that was my foray into the woods and I came back out of it and found what I truly do believe has been my calling. And I'm very blessed to have to have made it through that, that or across that chasm.

[10:26] Host: Yeah, well, there were still many other challenges yet to, yet to come before you were a successful searcher. So, ok, you're in Dallas to search. Right. So tell us, so how old are you? What what year is this? And you know, sort of give me the kind of sketch a picture of us for us, of your search as you were kicking it off.

Guest: Yeah. So I want to share something about my, my psychology personally that I experience and maybe this resonates with some people. You know, you hear that I went to business school to go, to go really pursue or learn or evaluate whether I wanted to do a search. And I did spend time with two search CEOs who had successfully acquired companies groups. Lucas Braun and Ryan Robinson of onramp based in Austin, and then Jim Vesterman of Raptor Technologies based in Houston. And so during my two years at Wharton Business School, I got to spend time with those search CEOs and be right next to them. And, and I certainly had the experience of within the first, you know, 36 to 48 hours, I came home and I said, this is it, this is exactly what I need to do. So it kept. Every time I pulled the thread from reading that initial search fund study from my colleague next to me on the desk in private equity to spending time shadowing really search CEOs, I kept feeling the calling get louder and louder. And what was interesting about that background is that when I graduated in 2016, so I was 30, I went into business school at 28, I graduated at 30, and I actually did a summer abroad at INSEAD in Fontainebleau, France. It was a sister school of Wharton. And I took the opportunity, I would recommend it to everybody to go do it. It was an awesome experience meeting in a totally different class group and demographic profile if you do get that chance. So I actually finished in August of 2016. That was my technical graduation date. I came back, I took some time to think about going the full time route, really assembling my, you know, my finances and everything because I did spend my business school focusing on enjoying business school, making good friends, networking and certainly those internship experiences. But otherwise I didn't, I didn't start searching while I was in business school. And a lot of people try to do that. I didn't really attempt to do that. I wanted to make sure I enjoyed those two years. So in, towards the end of, in the fall of 2016, I started a consulting entity to conduct independent consulting, doing market research projects or strategy projects. One of them was exploring the value chain, basically building out the value chain for a certain division of a large company that was backed by pretty large well known groups. And that's a lot of work. You gotta, there's a reason they're outsourcing that Work, it's tough and there's no real end. You just have to keep going and figuring out the deeper and deeper elements of that value chain. But yeah, so I started an independent consultancy in the fall of 2016 and continued that through the end of 2017. While I was ostensibly part time searching. That was the beginning of my search.

[13:55] Host: And was this because you needed to generate income? Why didn't you go full time search at the get go?

Guest: That was exactly right. So I thought that I had to have enough cash to 100% purchase the equity required for a business acquisition. So I had not heard of the concept of raising outside equity capital, especially significant amounts, over a million dollars of equity capital for somebody who's coming from a modest background and maybe had some Savings or a 401k from early career years. But I don't have over a million dollars in my bank account when I'm going out to search. And I don't think most searchers do. So yeah, I wanted to build a base beyond my burn rate. You know, I was single at the time, didn't have any other major financial commitments other than just a roof over my head and food. Right. But needed to build up a base because I thought, well, it's easy, you just take 10% or divide by 10% and that's the largest business purchase price you can afford. And so that's what I went forth and charted forward. I talked to a lot of people, a lot of other searchers and I'll tell you back in 2016, 2017, it just was not as heavily evangelized that there is. And there's, there weren't groups, right? There weren't even formalized groups to, to raise equity capital for people.

[15:20] Host: So you were trying to not only support yourself, you had, you know, your living expenses were low at the time, so but cover that and then save 100, 200, 300, 400 or whatever, whatever you needed to get to, to buy a two or four million dollars business.

Guest: Okay, I did that will. And I also liquidated my 401k. Not at once, but over the search period. I basically called my 401k liquid. I said that that thing is for search and you know, I had a reasonable amount in there but you know, for me it was, it was all in. And, but that developed over time. I will say, you know, for starting part time search, fall of 2016, beginning of 2017 and I acquired my company in the middle of 2020. There's a story there, right? I went through a psychological metamorphosis if you will, of commitment. And for somebody who had gone into, you know, gone into two years to ostensibly think about it and evaluate it and still come out and think, oh well, I can do part time, let me do some part time consulting while I'm searching. It developed a longer journey than it probably had to be. Certainly.

Host: That's so interesting. So what do you think? Yeah, I mean, and I'm glad you kind of made my point for me. So you were already drawn to it. It's kind of. You went into business school already knowing about it and saying to yourself, okay, I'm going to really learn something about search while I'm at Wharton. And then you come out and you're doing a part time search. Why do you feel that you were not on, you know, didn't have a sense of urgency about it? Why did it take you a long time to commit? Wouldn't it be great to have experts at your back when buying a business? People to help you polish up your pitch and processes as you go to market as a searcher, then help you evaluate opportunities once you get some deal flow? Such experts exist buy side advisors, but they'll cost you to the tune of tens of thousands, even hundreds of thousands of dollars. But another option exists, the acquisition lab. The lab is a do it with you buy side advisory service, not do it for you. Founded by Walker Deibel, author of Buy then Build, the lab represents Walker's vision for what is most needed to make a searcher successful and available at an accessible price. It's cohort based and you will come out the other side of your cohort prepared to go to market as a savvy searcher with a tight message in process. So brokers take you seriously, pre approved for a loan and with an entire community at your disposal to help you along the journey to buying a business. To learn more, check out acquisitionlab.com link in the show notes.

[18:04] Guest: Yeah, so. So building up the capital base for what I thought I needed, and that's a big point because people just don't need as much cash as they think they need. They just need to cover their, their burn rate and save enough to be able to put in the minimal equity injection. Not the whole thing. When you think about it that way, I was needed. I thought I needed to earn more than I needed to earn to be able to go full time and just cut it cold, cut the independent consulting out and shut it down. But I also did tell myself a story at that time I said, which I think a lot of part Time searchers do tell themselves this story. Well, there's a lot of baby boomers. It's a, there's a silver wave and, and especially if I'm looking for something between, let's say $500,000 of SDE up to a million dollars of SDE, that way below traditional search, way below private equity. And there's gotta be just a ton of targets. And it shouldn't be that tough to just send out email campaigns and have brokers respond and send me deals because I'm gonna convince them that I'm the right operator and buyer and they'll believe me. Cause you know, searching is great and, and all the great, the great, should I say, lies that one can tell oneself right when you're in the middle of a part time search. That and I was putting hours in but so it was kind of like

Host: you thought it should be ultimately when you got serious about buying that business that it shouldn't take that long because there's just going to be so many opportunities and you are a qualified buyer, you had Wharton on your resume. It wasn't going to be that hard to convince whoever you needed to convince to be the buyer of that business. And so what you were underestimating was in fact how hard it was going to be to find the right target.

Guest: Coming from an institutional investing background where you have ultimate availability of every informational item, every data item you could ever dream of. And going into this market was definitely a rude awakening. So I figured that out firsthand. So remember I did not intern with a searcher. I interned with search CEOs. So I had some conceptions around what I thought searching would be like. But most searchers who launch out don't. They don't intern with searchers. I do think it's valuable experience to see how tough it is. Go sit with somebody for a month or two, especially somebody who's in their first year, and watch how. In fact, I actually don't recommend sitting with somebody in their first year because they're still trying to figure everything out. Go in their second year, they probably have some processes down and in place and they've learned a thing or two. They've gotten some bruises and cuts which are healed over into scars or scabs and will make them stronger the next time they jump into the field and play the game. But it is way more brutal than I ever thought it would be. And I learned that over time again while I was part time searching. So that's a big point when you're part time Searching, your rate of learning is so much lower than if you're full time throwing your whole body into the arena and getting torn to shreds. You throw yourself in there, you're going to come out and go, okay, I've got to change something tomorrow. In part time search, it's like you discover that after a two week period you say, oh, okay, I just learned something after two weeks that could have taken you one day if you were full time searching. So I lived that firsthand for that first kind of year over year.

[21:23] Host: And when you said you were doing part time, how part time was it, I'm curious, was it fully half part time, 20 hours a week or what?

Guest: So the issue with doing consulting as a part time role, especially for high level clients, you know, Fortune 100 or, you know, 500 clients that are inherently demanding, you're basically as an outsourced arm of a multi person team. So you're this, you know, this resource doing this special project. I would partition out maybe 20 hours a week and it would become 30 or 35 because I would bid projects at a fixed price. And last time I checked, if you don't do a good job, it doesn't matter how much time it took, your reputation's on the line as an independent consultant. So when in doubt and when there was that natural search anxiety of looking at deals or I looked at several sims, I, you know, killed them, had some broker calls, you know, what else do I do with the rest of my day? Oh, you know, I should go pick up that project, I should go take another draft, review through it because it's due Friday. So it became a filler in many ways. Sometimes it would, it would be part of my week where I could partition it out. And I felt other times it just crept in because it can always be better. Right. Anybody who's put together a presentation or an Excel analysis knows that it's really never done. It's done when the project is over, when the deadline hits.

Host: Sure. So there were, I mean it was really, I mean there'd be weeks where you'd put 30, 35 hours into it. So your search would only get five, 10 hours maybe.

Guest: Well, I would definitely work more than the 40 hours I was working, maybe, you know, 60 to 70 a week. So that's another aspect as well, taking care of your psychology. So at that time, you know, it was very, it was definitely a roller coaster for me mentally to go through that and imagine, right, you're trying to build a capital base while trying to pull down all these different deal overviews and you're reviewing their finances and getting on seller calls and nothing is hitting. And, and you're not even getting Lois signed because you can't, you're looking at the deal and you're like, I can't even buy this company, but I spent four hours on it this past week. And that's just one company. And you're not, your sleep is suffering typically, I mean you're not doing 40, you're, you're typically doing more when you're taking on a part time search and you're actually trying to do both. Well. Yep. And, and it creates, it makes you a worse searcher, makes you a worse consultant. You end up being if you have three jobs. Right. You're just pulled three different directions.

Host: Sure.

Guest: And sure. Something, something's got to give that time period.

[24:04] Host: Okay, so when did you realize or when did you decide to stop doing the consulting and go full time? Because ultimately your search did end up being a full time search. So what was that evolution?

Guest: So after about, about 12 months or so of essentially launching my self funded search website and vehicle and getting out there and sending blasts, broker blasts of emails, I said that's it, I think we got enough cash, let's go. That plus the 401k being able to be liquidated was enough. And I also felt that kind of never ending cycle of consulting where you kind of do, do projects, then you get paid and you go do another project, you get paid. This is not what I wanted to do. That was not my dream was to start my own consulting entity and, and build that from the ground up doing special projects. I just, I think that was really to develop the cash base. So it was really the fall of 2017 and I would say effectively January 1, 2018 was truly my first day of full time searching and not looking back and just saying, just go from this point forward, don't ever look back. No more consulting. I promise myself that was it full time.

Host: Can you share what your financial position looked like, like what your 401k had had and how much you were able to save up from the consulting?

Guest: I think the 401k was probably in the 80 to $90,000 range. And then consulting in one year made about 150,000 and so net of taxes. You know, you think about that as cash in the bank that you're then able to deploy out. That's the combination I had. And again. Right. I thought I needed all of that to devote to a business purchase. I wasn't at that time, thinking of anything really large, I was thinking, like a lot of people probably, let's go for something a little smaller, maybe $500,000 SDE and build some experience. And it's not as much to bite off a smaller team. I can manage this because it's the first time in my life that I would be managing my own team, managing my own business.

Host: I mean, as many times as I've heard you say to me, both recorded and offline, that that's wrongheaded, I still feel the pull to do exactly that for all those reasons. You know, 500,000 in SDE seems, seems good. Let me do this the first time and then, you know, later I can be more ambitious or the business that I acquire, I'll grow organically. So here you are, top of 2018, you've got whatever, 2, 250 grand to help you out and buy a business. So how does it go? So you do so you do so, yeah. How do things change once you go from part time to full time?

[27:00] Guest: So full time, just even after the first few months, will talk to anybody who's made that transition from part time to full time. The only word is regret. You just look back and you look at your part time. Put the financial position aside, right? I mean, there's a reason to build up a base. And if you truly have zero, if you have zero, you probably should build up a financial base before you do a self funded search, because the chance that you're going to find an SBA deal that's going to require you to put in 10% of the equity check is reasonably high. You talk about not going too small. The paradox is if you go too big, you're in commercial debt territory where they don't have that requirement. You don't have to put in a penny of your own money. We've helped someone do that right. With Search Investment Group. But the chances are you're probably going to end up, and you could very likely end up in the SBA range and you're going to have to put some money in. So, so put that aside for a second and think about it from that standpoint of. All right, if you have enough to be able to devote to an equity injection and you can cover your burn rate, there's nothing, of course, nobody would disagree with this. There's nothing like doing something full time. You know, you can, that applies to really every avenue of life. You can do any other analogy, but I was able to move faster, I was able to form relationships with brokers, I was able to develop my processes better. So I tightened up my investment criteria checklist to be relevant to the market in which I was operating as opposed to trying to bring in what initially was my private equity investment criteria checklist. And that was too rigid. Right. For this space you have to be a little more loose with some of those criteria or nothing will pass. And just the iteration, you talk about startups like Lean startups, you have to iterate and iterate over and over again and you'll figure this out. So that's. That just sped up immensely once I had launched full time. And it just kept going. I kept learning, I kept adapting and moving.

Host: Yeah. And it was. Yeah. And the. So you had a target industry at this point. So during the part time search you'd already narrowed down an industry or industries that you were interested in?

Guest: No, actually I was, I was generalist. So I was going for anything that I felt like I could understand and would want to operate for 10 plus years. So that's a personal thing. Some industries you just don't want to touch. You're just personally not interested. And you couldn't get excited to get up out of your bed and show up to work and run in there with your arms over your head and lead a team if you're not. If you can't do that in industry, just mark it off your list. Doesn't matter how beautiful the industry is or how great it is for investing. So I was looking at lots of different types of industries. Logistics, third party logistics. I really wasn't looking at healthcare technology, software. I can talk about any one of these. There was some of that logistics was distribution, professional services, certainly B2B. I also was interested in business to government services. My private equity position prior was government related acquisitions and government contractor type companies. And so I certainly was interested in that angle as well. But I didn't want to close myself off. There's that element of optionality that a lot of people still want to retain when they're doing a search and you just open your, your opportunity set to a lot of different industries. You don't want to miss out. Right.

[30:48] Host: So it's still 20. Okay. So top of 2018, your search accelerates dramatically. You're iterating on your processes so you're getting better and better and better at a much faster rate. But it's still not until two and a half years later that you close on bna. So kind of give us the, give us the kind of short version of those two and a half years, particularly the Low points, which. And I know there were some.

Guest: Yeah, so, so definitely iterated. I will say that having a generalist approach with. And you're just one person, right. So you're a single searcher. I had multiple classes of interns that were there to, to support me on special projects, but they can only do so much. Right. They can't take a, a amorphous document and find those little things that are unique to that company that make it not able to survive in your process and therefore should be let go. They can fill out a criteria checklist and I did have them do that sometimes, but even then they would miss something or they thought it was customer concentrated and it wasn't, or they thought it was not recession resistant and it was. So it's hard to manage that process of trying to teach interns but also gain value from them, from their contributions. So I did have teams of interns. But getting back to the point, you're one person and if you're spreading yourself across multiple different industries and just saying, if I like it or if I fundamentally believe the industry is somewhat healthy, I'll take a look. I do think that probably negatively affected my deal flow at that time from brokers. I always say this. You never know what deals you're not getting shown. People only know what the pipeline is that they have. So I can go look at my CRM and say, look at all these deals, look all these sims I'm looking at. But if you really graded it, how many of those sims are old or have been, in other words, have been shopped around for a while and nobody's buying them, they're just left over on the market? How many of those have no business surviving at all and you're wasting your time? And how many deals are not in your CRM that could have been, had you done something else that was more targeted with brokers or built relationships or, you know, building out a proprietary deal flow sourcing engine of sorts. So if I look back on that search, there were several deals I went down and chased that I should not have chased at all. I should have killed very early. And there were other deals I didn't chase or I didn't feel like I could pay up on the valuation. But I look back and somebody else got that company and they locked it up. And the broker even called me before, you know, or during otherwise being accepted and said, you know, you got to get your valuation up. There's, there's two other buyers who are in this range to be competitive, you got to get there, give yourself a shot to get in front of the seller and then the seller will decide who that person wants to work with. Right. And sometimes it becomes a personal decision if they're all in the same valuation range. And I just didn't believe it. I thought, well, maybe, maybe the broker is just, just playing games kind of thing.

[34:03] Host: Yeah.

Guest: And of course a month later I hear that, or a couple months later I hear that the company was sold successfully and I see the searcher on LinkedIn and he's doing really well. And I'm just, I look back and I go, huh, maybe I should, maybe that was a learning point.

Host: So can you, can you give us some examples of both, both categories? So the businesses that you gave too much time to and you could, and you know now being smarter, you would disqualify much earlier. And then, and then the latter example that you just talked to where you, you see now that you should have been willing to pay up for a particular company. Do, do, do the criteria that led you one led you astray, do you remember what they were?

Guest: Yeah. So the answer on companies that I chase, that I should not have chased, that I should not have pursued or killed early, I would encourage this is, this is basically a learning that I had. I would encourage basically trying to right size the actual operation of the company because people have heard it before. You're not buying the history, you're not buying what the seller or the founder owner has been running. So that founder owner may have, it may be the chief sales officer, the cfo, the CEO, the coo, the marketing person, the coder, the technologist. They're doing everything right and that's the history of the company. But what are you buying? You're buying, you know, what you're going to step into and then build towards the future. There's a reason investors look at five year projections or ten year projections, or even one or two year projections. But you have to first in that initial year level set for what you have to do for the company to enable you to run it. So one example was I was really interested in a software company, a smaller one that had a nice niche product that did not have customer concentration and had the potential to be able to be modernized and yet had a really secure sticky position with its customer base. I found one, it was just too small. And the CEO, founder owner was doing everything that I mentioned. Right. They were doing everything under the sun. And only weeks later, weeks and weeks later, after even doing an on site visit, I visited them actually with an implementation of their software product with a customer. And, and I went back into the drawing board and I looked at it. There was several hundred thousand dollars of, of hiring I had to do and in addition technological debt. So the downside of being able to modernize a software product into a set, into a cloud version from an on premise version is that cost money, that costs a lot.

[36:46] Host: Oh yeah, sure.

Guest: And you look at that now the EBITDA is negative. So really this is a growth equity investment. It's, it's more akin to maybe VC than it is to, to private equity which is essentially what search funds are. I mean it's micro private equity. You have to buy cash flow. So sure, the book says it had, I think it was $750,000 of cash flow. That's not true. Not going forward. You just can't. I mean the on premise solution was, was falling apart and yeah, customers were staying with it which was great. But yeah, you can't do that forever.

Host: Yeah, those modernization opportunities, you have to ask yourself is it you know, inexpensive to modernize this? You know, is it, you know, the classic getting rid of the fax machine and putting in some, you know, putting in Google Cloud or whatever or is it our G suite or whatever? Or in the case of moving from on prem software to cloud, is it an enormous, is the modernization an enormous undertaking, not only financial but just, I mean that's ripping the guts out of the software product. And so you gotta be honest with yourself about that. Go ahead.

Guest: Yeah, so that's a good example Will, of a company where doing some fundamental things upfront and I also, also having somebody who was going to be brutally honest with me about hey, did you do this? Did you look at this? Because I had never looked at acquiring a small software company before sub $1 million of cash flow. I'd never done that. Most searchers have never done these things. They've never looked at a third party logistics company and they don't, a landscaping company. They don't know what they're really looking at. At first you got to see a couple to, to get, to get a sense of what's good and what's not good. And very quickly you just, you just finished 12 months. So the search goes by really fast and you have to, you have to iterate while balancing your learning with, with, you know, decision making under uncertainty. So I tried to do that, learn some, learned some hard ways on those things. So I had spent real diligence money on that deal and Will, I actually submitted the first draft of the purchase agreement to the seller. I heard crickets for three days in the middle of the night. On Wednesday night, I got an email that said, hello, Jordan, I have decided to no longer sell my company. Thank you for all your efforts. Regards. And this was kind of around when I was also having that sense of, well, I can make this work, I can make it work. Right. Psychologically, you convince yourself, yeah, it may be expensive, but there's probably a way to, to modern or let's do a half modernization and once we get enough cash flow, then we'll actually truly do a rewrite of the software. So I just felt like I could just staple it together. And I think a lot of searchers do convince themselves of that. They tell themselves the story. This is such a great company because it did have some good attributes. But anyway, I think I'm mixing the timeline up a little bit here. But the point is, is that I had spent real money with the attorneys, I had spent real money on the quality of earnings and it was gone. The seller can at any time just decide they don't want to sell anymore for just a reason.

[40:03] Host: Yeah. But in fact, in retrospect, I mean, this is an example of one of the deals that you looked at that you're glad didn't close. So it was a blessing in disguise. Yeah, okay.

Guest: Yeah, I would have probably been suffering trying to box my way out of a brown paper bag. And really that's, I think, what it feels like when you have just a couple hundred thousand dollars of cash flow. Oh, yeah, by the way, you have an SBA loan to pay and you're struggling between being able to afford that travel to a customer or devoting it to paying a salesperson the minimal, minimal possible salary to get them on board. And it's not. That would not be fun to fight.

Host: Now, going back to the deals that did go well for their successful buyers. The guy who posted on LinkedIn and you can see that he's doing really well. What had you missed about that business? Why did you not think that slightly heftier valuation was justified?

Guest: Yeah, so the business I'm thinking about is a blue collar services business in a city, think of like window washing, that type of thing. And had a lot of good basic things that we know are good search deals, no customer concentration, a reasonable sized team. And I believe it had a little under a million dollars in cash flow. And I just, I believe it was going for five times. And I just thought, my gosh, that's a lot of money to spend for a Smaller deal, Maybe it was $800,000 of cash flow, something like that. And I just felt, wow, that's just really expensive. There's no way that people are willing to pay that for a blue collar services business. That has got to be kind of hard to grow. I mean, labor wise. And you have price sensitivity from the customers and they start asking for discounts because if you're going to do my other building, then that means I want a volume discount. And so you just have all this and then the risk, right, of those people getting injured and the lawsuit risk. I just couldn't believe that a business like that was truly going to go for five times. And I was thinking three to four. So I didn't pursue it. But you can do very well with those businesses. And I look back, the two reasons I didn't pursue it was number one, I felt I didn't have enough cash equity personally to be able to cover it. But number two, I felt like that would have put me at risk. I felt a 5x multiple of EBITDA was going to over capitalize the company with debt, over lever it. And I hear that from searchers, they get a little sensitive around putting too much debt because the SBA will let you do 90% financing. And for a lot of people that sounds kind of crazy, right? So you can do that.

[42:56] Host: I don't know, Jordan, it sounds like, it sounds like your thought process was, was prudent. I mean, 5x for a blue collar business, that is expensive. And so it's gone well for the buyer and I'm glad to hear that. But you know, maybe it's gone well because of his good fortune. And really the chances that it were that it was going to go well were pretty slim and you were right to pass on the deal. And he's just got, you know, he'd had a little bit of luck since he's bought the business. I mean, 5x for blue collar business sounds pretty, pretty rich and doesn't leave much margin for error on your loan.

Guest: Yeah, the company though had everything else going for it. Again, no customer concentration, a stable operations team, a good culture, you know, everything really else it had had going for it. And the thing with these businesses is you don't really see a lot of like, like, right. You see, oh, this is, these are a bunch of terrible businesses in this industry and they see one that's okay. And it's hard as a searcher to think is that a great business for this industry or is that just a little bit better than okay? So you know, without getting into extreme detail here, it was a really good business for a smaller blue collar services business. It had good growth to. It actually had pretty good margins. But I just, I just couldn't get comfortable. Especially when I see blue collar services businesses with such good margins. I wonder, is that temporary? Is there some impact around the corner? But yeah, definitely, five is expensive. Five times is definitely expensive. But I guess my search could have been theoretically shorter had I won that, had I put an offer in. If you don't put an offer in, you won't even get a chance to pursue it.

Host: Jordan, you said you were working, you had teams of interns, but they were doing sounds like deal analysis, industry analysis. Were they also doing any proprietary outreach? Were you doing proprietary outreach?

Guest: I was doing proprietary outreach. I used the interns to help clean some lists. I went to public library. They have A to Z databases of business names categorized by NAICS code and SIC code. I found out through calling that those NAICs and SIC codes and sometimes they didn't have websites. That's all you really could go off of. So you either call or do an email. A lot of times those were just wrong. Right? They're just completely miscategorized. But we would also send the names and the website addresses, if they did have a website, to an outsourced overseas team to gather and find out which emails were deliverable. And I created a drip campaign of emails to those business owners to see if I could, you know, get them. And usually on about the 6th, 7th or 8th email where it's where it was like, hey, checking in, you know, I, I know you've seen my emails before. I just want to get, you know, 10 minutes for a college to see if you would be open to selling your business. And then a brief little overview of myself. And that's when, that's when sometimes it would hit the seventh one, they said okay, you got me. And it was just a drip campaign. So it was automated, sending out those. I, you know, I didn't have a ton of good fortune from proprietary searching. But I will say some initial calls with business owners in industries was incredibly enlightening. The ones that weren't even selling. I talked to a, for example an asphalt striping and power washing business owner and he said, why do you want to buy a company in this industry? I told him all some reasons of why I thought it could be lucrative or attractive. And he said no, it is incredibly competitive. There's always price pressure. It's hard to keep your people. This has Been one of the hardest things I've ever done, and even that I'm eking out in this. In this metro area, you know, maybe a 5% annual growth rate. I'm clawing tooth and nail to do that. My margin is. I just said, okay, and I said, thanks very much. I appreciate your. Your insight. I mean, I was just having a conversation. He said, yeah, sure, sure, man. I'm just, you know, I just was curious why you were interested in buying a business in this industry. But that's where some of those conversations were most helpful, if not for buying an actual business.

[47:18] Host: Absolutely. God, that would be so valuable to have a business owner tell you something like that. On the other hand, I feel like a lot of the industries that people in search buy into, like landscaping. I'm sure you have a lot of owners that feel that way, that if you got them on the phone, they'd say the same thing. Landscaping? Are you kidding? It's brutal out here. And yet we. You know, you and I both know a lot of people who have successfully acquired landscaping businesses are doing really well with them. So, you know, as with. As with all things, it's. It's tricky. You got to be careful not to over index on. On one. On one person's, you know, experience. All right, Jordan, so. So you. So you didn't have great success with proprietary, but you were doing some. When did things get, you know, really. Just. Where did you get really discouraged? Because I know you did.

[48:08] Guest: The losing the LOI or losing the deal that was under loi. That wasn't the only one. There was another one as well. I talked about the software deal, but there was another deal that I got headed under LOI that I was spending accounting, CPA quality of earnings money on. And that one I found some things that just. I had to kill the deal over. And just every time you lose an loi, the later the stage it is, the more damaging it is to the searcher's psyche. And we say, searcher. These are people. I mean, I. I was a human doing this, and you're alone, and nobody. Nobody has a vested interest in your search. I mean, you can talk to your buddies or. But they're. They're busy. You know, they go to work and they have a job and they get a bonus, and they have a 401k and health insurance, and you can talk to, you know, your significant other, and they can just say, oh, that's. That's unfortunate, or it's too bad, or, let's just, you know, go get Something to eat or something. But they don't understand what you're going through. Yeah. And the seller doesn't care. They moved on. Or, or you had to tell them the bad news. So you had to make that judgment, call and maintain discipline during your search. But it still hurts either way because you look back and you think, did I just waste three months of my life really devoting all my time and effort? Because you're one person. Right. You're a one person deal team. And so it takes all that and to pick that up and just get back to sourcing or pick it back up from wherever it was. Maybe only 20% of your time was doing sourcing while you were, you know, had your deal under loi. It just feels like you went back to square zero. It feels like you didn't learn anything. In reality, you did, you did learn something. But, but made no mistake, you, by definition, you lost time. You, you lost that three months of your search.

Host: Yeah. And you said that, you know, you had maybe kept up. 20% of your time was devoted to continued deal sourcing. Do you recommend that percentage of people's time? Because you hear this a lot, that, you know, people get just fixated on the deal that's right in front of them and they forget to keep their deal engine going, which is really important because that deal that they're so excited about and looking at could very well fall apart. So what's the right amount of attention you should continue to give to your deal sourcing while you're working on a deal?

Guest: Yeah. So I think it's actually much, much higher. And we at Search Investment Group really encourage our searchers that are working with us in partnership. We encourage them to, let's say you just get a deal under LOI, you should be sourcing.60% plus of your week should be sourcing. Wow. And as you continue down that path, the pendulum should swing or the bifurcation of that time and attention should slowly erode into maybe 50% sourcing down to 40% as you get closer. You think about it, I think the LOI to close rate in self funded search, or let's say between even 1 to 3 million dollars of EBITDA is actually 10% maybe. So 10% of those, Lois, maybe less, actually get to closing for any number of reasons. Right. You could identify something in diligence early on. Oh, that's why the business can't be sold. Or something happens on the seller side. There's a range of different things that could happen, but I think it's about 10% or less. So if you get multiple deals under LOI and, and we do support people to be able to do that because you can't just keep doing 10% bets in succession. So if you get three deals under LOI, maybe your sourcing component is less than 60%, maybe it's 40%. That's because you're chasing two other deals. You got two other deals you have to work on and get term sheets on and do business and market diligence and move fast and that's a lot of work. You're not going to be sleeping.

[52:08] Host: Yeah. Yeah. Okay. Okay. So how did you find bna?

Guest: I was reached out to. I was in the Dallas area searching and there's a Dallas area broker who was not wouldn't post to public domains. There was no interexo or axial or biz by sell posting for this opportunity. He really did larger deals. He would do more private equity sized business sales as a sell side investment banker business broker and this was a smaller one. And he took it on anyway because he said as I learned he liked the sellers. He felt that they were really great people and he thought the business was interesting and unique. And anyway, I kept up good relationships with investment bankers and brokers who were even upsized a little bit from what I was looking at. And I reached out to him, I said do you have anything? It was just part of my standard broker outreach emails. He said actually I think I do. And this was in the fall of 2019. And he just went into the office and he told me about a company and he didn't name any names or anything but he gave some high level overviews of it. I said that does sound kind of interesting. And he said yeah, I think it's. I'm learning about this whole searcher space. I think it's good for a searcher. I think this would make, this would fit. And so I said I'm very interested, keep me posted. And I believe it was the beginning of 2020, about January, he put out the confidential information memorandum and I took a look at it and I got to say initially I just said is this the right business for me? It's like local government services. It seems like you have to get to know the staff at city government. I don't have any background in city government. How am I going to form relationships with city managers and department heads of public works? And it just felt like something that somebody else should buy. And I was very close to just passing on it for that reason alone. Just thinking I Was going to have a very low crossover.

[54:22] Host: Yeah,

Guest: that's how I found it.

Host: Well, and so how did you, and so how did you convince yourself to give it another look or to open your mind to the possibility of getting into it? Also, going back to your earlier point about you should be excited. Not only do you have the qualification or can you figure the industry out, but it should turn you on. Did the idea of local business services and grant services do that?

Guest: I did like government facing services, I should say. The company also has a small software product, so it kind of scratched that earlier itch of wanting to. That other software company that I had that bad experience on was a local government facing software company. So I love the customer base. I love the idea of serving especially municipal government because instead of serving the federal government, you have multiple customers, you have multiple potential. I mean there's hundreds of cities in Texas alone.

Host: Sure.

Guest: And they're all small. But you, they all need the same type of service or software product depending on the price point. And you can modulate that depending on the size of the city. So I think it's really interesting. I did always find that it was one of my, one of my bullets, if you will, on my one pager that I would share with brokers was, was government facing services, know government facing software. It was certainly of interest, but I was, at the time I was thinking of it more from a standpoint of I thought a lobbyist maybe would need this because it was grant funding opportunities. And I thought, well, isn't that kind of messy? Don't you have to kind of get to know people and network and find how the money flows between different governments? It just sounded kind of messy.

Host: Yeah.

Guest: And I started convincing myself that maybe this one's not it, maybe this is not the thing. And what saved me was, was talking with one or two advisors and asking them, posing those questions at them. Do you think this is something that I can't handle because of it would require somebody to have come from the city government arena?

Host: Yep, yep.

Guest: And they really encouraged me to continue looking at it. And so I kept it, I kept going. And the more I kept going, the more I got interested during that, during that process. And at a certain tipping point, I just said I want, I want to buy this business. Meeting the sellers was great too because I learned at that point in my search the integrity of the founder, owner you're working with. And that, that gut feeling that, that instinct you get when you talk to them is, is hard to teach to a searcher. But if you get that, that feeling that somebody is actually has a, a very pure interest in the kind of buyer they're looking for and why they're doing this, why they're selling and all these other things and what they truly want to do once they do sell and they're taking this personally, that's a good thing. And I found it was very unique from that standpoint. The sellers of this business were spectacular.

[57:21] Host: And you met with them in person then because this is a virtual business. Correct.

Guest: It is a hundred percent remote services and software business. And yet it was operated out of a suburb in North Texas from the founder owner's home. And we did meet in person. So we went under LOI in February of 2020 and the deal ended up closing in July 2020. So in between those months there was quite a bit of activity going on. We did have meetings in person, but they were social distance. They were masked at my attorney's office or the sell side business brokers offices. It was hard to communicate, it was hard to kind of get close and really even shake hands. Right. It was a tough time to make that shift from in person trust building to well, I'm in person but I can't even see half your face. Sure. Type of thing.

Host: But what a time to do your first big deal.

Guest: Yeah, yeah, yeah. So that's. I did, we did get to meet in person, but I wanted to take them to lunch, I wanted to take them to dinner and I couldn't because of the situation.

Host: Yeah, yeah. And Jordan, give us a little bit more detail on what B and A does. You've, we've danced around it, but speak directly to it, please.

Guest: Yeah. So B and A grant services and Software started in 2000. The founder owner was a soon to be mother who had to leave her city government job in California who had written grants on behalf of the city to seek funding from state and federal sources to fund key projects. So those could be infrastructure projects, it could be firefighter equipment or vehicles or low income community centers. It could be really anything that the city needs to do that tax, local tax revenue alone does not cover. And the city needs to be the one that does it. Let's say, let's say rehabilitating a road or intersection signage or things like that, or building sidewalks in low income communities so that people can actually walk on the sidewalk and not in the middle of the street and potentially get in an accident. So she did that on the side as a ancillary duty and she was very good at it. So when she had to leave the city to have her first child. They called her and said, can you please keep writing grants for us? We would love for you to do that. You're so good at it. And she said sure. And little did she know at that time, that became a business. And then she hired a friend to help her do some grant writing as she got more activity than the city referred her to another city that was looking for somebody. And it just built from there. So 2000 all the way to 2020. When I got an opportunity to purchase the business, it had just grown organically. I'm pretty sure they had never taken on debt. It was just cash flow, organic growth over time and built up to about 22 people at the time that I purchased it in July 2020.

[1:00:22] Host: 22 people. And can you share any numbers around financial numbers so what the revenue was and how profitable or what the margins were and if the EBITDA was. If you could share that.

Guest: Yeah, so I can give. The revenue was in the A2, about 2.4, $2.5 million of annual revenue and is pretty healthily profitable. We had about 40% margins at an EBITDA level really because it was professional services and there's a lot of underlying elements of the different aspects of what we provide. So we have grant research to help cities find grants and identify those that fit their key projects that according to their five year strategic plan. Then you of course have to have somebody write them to develop these 40 page, very detailed, essentially think of them as very detailed word documents, all sorts of statistics and maps and schematics. And then we do grant management. Once the grant has been awarded to the city, you have to administer that over a period of years. Right. It doesn't just come to you in one check. The granting agency pays it out over time according to you, hitting certain stage gates and milestones and reporting requirements. So it's a full lifecycle company. And anyway, yeah, so it's, it had pretty good margins and about 2.4 million of revenue and about 22 people at the time. As of right now, we're almost two years in. It's June of 2022 and we're on track to be at about, about 3.5 million of revenue.

Host: Phenomenal. So, so, so what is that for doing my math here.

Guest: Yeah.

Host: Was that 40% growth? 40 in two years?

Guest: Yeah, it's. It's about almost 50% growth.

Host: That's amazing.

Guest: Yeah, that's great. Yeah. 30 people now and about 50% growth. Yeah.

Host: And, and is that through. Why? Let's let me put a pin in that question. I want to ask more about growth in a second. But first a couple of things.

Guest: The,

Host: you know, when you were doing your part time search and you were, you were doing consulting and really not enjoying consulting and you know, having, saying to yourself, you know, I didn't, this is not, I didn't set out to start a consultancy and grow consultancy. That's not what I want to be doing here. You are effectively, you own a consulting business. Right. So can you square that circle for me?

Guest: Yeah, absolutely. So my role in this company is to support the team, to enable them to be successful, to design new initiatives, to help recruit and retain talent, to create new business opportunities, to serve our clients better, to be more efficient with our resources. That's my job. I do not know how to actually be a grant consulting consultant. I've never done grant research, I've never written a grant. That's a, it's a great question. I actually think it was a good, a good background when you think about it. And I did utilize that when I talked with the sellers, I said, hey, I ran my own consulting entity for a whole year, you know, before I focused full time. So that actually came back to help because I said, oh, that's interesting, that's really great. So you know how hard it is to win clients and to perform for clients and how demanding clients can be. And I said, yes, I do, totally. Yeah. So yeah, I think it helped in a weird way with getting this one. But yeah, it's a great company. It has a wonderful culture. It is predominantly women operated and it's just a spectacular group of people that do really great work and they're passionate about it. It's mission oriented. You're really helping communities develop things that they wouldn't have otherwise been able to do. So

[1:04:16] Host: and to your point about not knowing how to be a grant consultant, so you know, that is a, that is a big characteristic of, of search in general is that searchers acquire businesses that oftentimes are coming completely from outside the industry. You know, you know, former former investment banker buying a plumbing company as an example or in your case a grant consulting business. So yeah, how did you, yes, I understand that your role is not to be a grant consultant and write grants, but at the same time, you know, all of your staff or a large percent of your percentage of your staff, that is what they're doing. So there. Was there any part of you that, that made you a little bit uncomfortable or how do you, how do you deal with that because you got to be able to speak the language of your employees, do you not? So, so how does Jordan Carter deal with that?

Guest: So I certainly dove in and looked at all the materials. I had many, my first 90 plus days was listening to people all across the organization of what they do, what it's like when you jump into something like this. I felt like I was very much a pupil. I was learning from, you know, the. Who was the vice president at the time and the sellers. Right. They were, they were sticking around and I just said, okay, tell me everything I need to know. What are we. Let's go break this up into kind of a learning program so that I can train into understanding what I need to know about this business. It was opaque at first. I was like, grants, municipal grants. What is, what is this all about? Yeah, I didn't even know this.

Host: So niche. Yeah, I didn't either. Yeah.

Guest: But I will say, though, you know, you're going to undergo this training process no matter what company you buy, unless you came from that industry directly. So if, yeah, you came from, you know, plumbing or landscaping. Oh, yeah, you're going to jump right in there. You know exactly which levers to pull. But most, most searchers don't. It's the first time they've jumped into that industry and you're going to have to just learn it over time. So I wouldn't, I wouldn't even say it's. It wasn't as tough to learn as I thought it was when I was first looking at materials. I just thought I would never learn it. But I've gotten, I mean, yes, because I've, I've had to talk directly with clients with nobody else on the phone about, you know, what we're able to do and, and resolve issues. And certainly you have to be credible and, and be able to have a background on it. So.

[1:06:42] Host: And the credibility piece also just comes into play with your, with your people. And, you know, I think the classic approach to this is what you said when you, when you acquire the business, you just come in with humility. You know, really a learner's mindset. You say, I'm here to learn from you all who are, you know, making this business function. And, and it sounds like from all of, all of my guests that, that that approach generally works, that even though you don't know anything, if you're eager to learn, your new employees will be, you know, eager to help get you up to speed. But I suspect there's still some people who feel like a searcher A new acquirer of their business who's coming from the outside, outside the industry, see them as opportunistic or, you know, that they just don't have the cred and what have you. And I just wonder if in a business like yours, that's actually the mission is a big part of why people work at that business. If you didn't bump up against that more than say if I bought a landscaping company, you know, the people that, that, that work at BNA really are motivated to help local governments. And so they just might not be as open minded to weak capitalists as people in other industries. You follow me?

Guest: I do. So the way I communicated this was the way that, the only way I really knew how, and I think it's probably the right path for most other searchers as well when they step into businesses in this situation. I told them the truth about exactly how I see myself fitting into the team that I'm not here to become this world class expert of identifying and writing grant opportunities or identifying opportunities and writing beautiful proposals that win. I cannot do that. But what I can do is, as I explained, will support them. I can enable them to be healthier, happier. I did some things early on. I know a lot of searchers tell stories of this search CEOs they say, oh, I fixed this one thing that was in the technology stack or in their workflow. And they said, oh my gosh, thank you so much for fixing that. You're producing value, you're helping make my day better. And I. One of those things was we had just an extreme amount of detail on the timesheets that was required from, from the, from our consultants to submit their time. It had to be like multiple. I mean you should see some of these timesheets. It was paid paragraphs explaining what they did over a 45 minute period. And it was almost as if it was a product in and of itself and that would then be cleaned up, proofread and printed for the clients. And it wasn't easy to unhook, but just focusing on that as a pain point for really the entire team and solving it and making it much more streamlined. I got it to be a dropdown box. You just click, drop down, click it, boom, go to the next one, log your next time time log. And they just said you that for months afterwards they kept saying thank you, thank you, that was amazing. I really appreciate it. Wow. So just showing that, yeah showing that you have a value to contribute that is not their value, that it's different and that your job is to support them. That's, that's how I feel about it. That's great. They got it. And a big credit to them for adapting through that change because it is hard.

[1:10:02] Host: Yeah, Jordan, we're coming down to the wire here, but you mentioned the growth and one of the tweaks. You just mentioned the tweak that you made to improve the business. This doesn't sound like a business that where modernization was the big thesis of what you could do as the CEO. It sounds like the opportunities were elsewhere. So were there opportunities? How has this 40% or 40, 50% growth in the last two years come? What, what, tell me the quickly, what has happened over the last two years for you to get the success?

Guest: Cities have to outsource this service and cities have to outsource it because it is very typically, very rarely used. You don't need a full time grant writer unless you are a large city, in which case they have three to four or five people, they have a grant department. So most cities in the United States, by number, by absolute number, cannot justify the cost of having a full time employee focused on grants. And even if you did that, one person will only have so much experience over one career. We deploy a team based approach pulling from across water parks and rec, public works, fire, police, I mean just public, public health. So just across all those different arenas, we have experts of each that have gotten experience, that are able to tactically deploy that experience for the client as they, as we see fit, as we need to. So I say this to say that the cities can't afford it and it's hard to build that experience in such a niche area. Most of grant writing is nonprofit focused and it's much less technical in that arena. Municipal grant writing is much more technical and difficult and strenuous to do and very, you know, demanding. And all the fun things about client service that, that become very tough on the actual consultants and can burn them out. So the marketplace for competitors here is actually very small. There's only a few, you know, a few people, a few small, similar sized businesses to ours that are doing this. And it's because it sometimes does take 20 years to build reasonable scale enough to actually be worthy of being able to self fund that cash flow into future growth opportunities. So all this to say there are a lot of opportunities to create new service lines and to also sell our existing service lines into other cities just by doing good work and continuing the mission. And that's special because most market niches, most industries, there's lots of competition Everybody's competing on price and you can't get, you know, attention of the decision maker. And, and yet we can. And if anything, we just need more people. We need more great grant writers who want to make this a passion. And with that, I'm confident that we can go out there and go talk to cities and, and sell the service, which is essentially getting them sometimes 60, 70. We have a few clients that are getting 100 times return on their investment. For every dollar they spend with us, they're getting 100 times of that hundred dollars back through winning grant awards. We don't get compensated off that, but that's our measure of success.

[1:13:27] Host: And so. So a lot of this growth that you've seen the last couple of years has been Jordan doing more proactive sales or just kind of industry tailwinds because there's just demand for what you guys are offering and there's. And it's kind of been organic.

Guest: There's so much demand that that didn't change. There's way more demand than we can serve. But I've moved several people around in the company that expressed to me that they didn't feel comfortable in their position and they wanted to do something else, and that actually unlocked a good value opportunity. For example, one person was positioned as a manager, and yet she really just wanted to do business development. I put her in business development in January of this year and she's just hit it out of the park. Tapping into what someone really wants to do within our company, as long as it adds value and is contributive to the mission, I'm supportive of and I've told the whole team that if you want to do something different, tell me, let me know. Let's see what we can do. And certainly it's got to be something related to grants, but, you know, there's. You can be a researcher, you can be a writer, you can be administrative manager, you can be a people manager, or you can be in sales, you can be in marketing. So I want people to, to lean into those natural, you know, desires, so that actually helped unlock a good portion of it. And then, yeah, just, just getting out to clients and, and evaluating our book of business across the board and saying what can we do to serve more with our existing platform? We have a research product that is actually scalable. So selling that into the existing channels doesn't create that much incremental more work, but is inherently valuable to all those little cities in, you know, state of California, for example, they all want access to that targeted research, which Is, which is a really good product that we have internally. So it's a mix of things there.

[1:15:19] Host: Great. Jordan at the top. When we were talking about your search, you said a couple of times that you didn't realize, like you felt that you needed to have all the cash that was going to go to your, to the equity piece of your, the acquisition and that you were mistaken in that. And obviously sig, the group that you're part of with Robert Graham and others, is a source of equity capital for searchers today. And so, so SIG exists out there for searchers like Jordan Carter of 2016, 2017 to work with. Are there, are there a lot of options? Like what, what would you tell, like, let's take SIG out of it. Did Jordan Carter, like have what other opportunities to go and get that capital did he have that he didn't realize? Because you're making it sound like he was, he was, you were really naive and that there's a lot more capital out there that maybe searchers who aren't super sophisticated about the space don't realize.

Guest: Well, I really do think, well, that the standing up in just the past few years of groups that are committed to solving that equity question is the game changer because otherwise you have to patchwork, piece it together yourself. And I actually have a story there in, in May, June 2020, I tried to do it myself, right. Sig did not exist. There was no search investment group. I, I did it myself. I contacted every investor I possibly could on searchfunder.com sure, we all know that website. Every single investor, I emailed them, I got ahold of every single one of them. I had an Excel sheet tracking of all of them. And of those zoom calls, let's say they were 45 minute to an hour Zoom calls each less than 1 out of 10 actually was even close to the finish line when we were, we were raising equity, when we were calling the equity into, people actually had to do the wires to, into the bank account to fund the transaction. So it was very. And part of that was there's some little investor tire kicking. People say they're investors and not investors and they hide that they're not really actually investing. They're just looking at the asset class. And the other part was people who just wanted an outsized portion of the equity. They wanted 45% or 40% of the common equity on the equity raise. And I said, look, I'm not, I'm not going for that, you know. And I was at the time looking to raise debt at 15% conversion to common equity where I would, you know, have 85%. So we were just way off and I just, they just said, look, if you get more realistic, then come back to me. And the bigger the check, I'm talking even like a little bit over $100,000, the more power they kind of threw around over that phone call, over that zoom call. So I personally had a very, I would say, brutal equity raise process myself. Trying to just punch it myself. You know, there's that common element through my search of I try to do it myself, try to do this, this other thing myself. And I just learned the other side of the, of the, the chasm. I look back and I go, was there an easier way? I think, you know, some searchers spend time trying to build investor relationships piece by piece, you know, one by one, just have those connections. But you never know how they're going to react until you show them your deal and you show them what you're asking for on the equity side. So I actually think it's a waste of time. Try to build investor connections. I talked to plenty of investors and I had known many of them from prior calls because I did the same thing all other part time and full time searchers do, you know, every now and then call some investors. So I don't know, Will, it's hard to say because you're right. At the time there really wasn't anywhere else to go. You either patch it together yourself or you just go buy a small business and fund your own equity check 100% of it. That's what I felt was available. It's not the same since then.

[1:19:21] Host: For the past two years, obviously the origin of SIG was your vision to fill this gap in the market.

Guest: So that was my first half of the equity raise was me punching my way out of a corner. Right. And Robert and I had known each other from a prior Texas search group networking event. And I was talking to him about my deal. I said, I got one under LOI and I'm just having trouble getting equity lined up. And he said, maybe I can help you out. And so he lended some of his investor contacts for me to make warm intros and reach out to them. And the hit rate went from, you know, 1 out of 10 on search funder or less to 7 or 8 out of 10. And before we knew it, we got the equity raise completed. So that was really the first search investment group deal was my, my company.

Host: It was your ideal?

Guest: Yeah, I felt like I, I did everything the hard way and then I figured out the, the better way. And so will you ask that question of, you know, if you talked to a previous Jordan, what would you say to him or counsel? I feel like I'm talking to previous Jordans every day. Every time I talk to a self funded searcher or prospective self funded searcher, a lot of them are coming from the same mindset I had back in 2016 or 2017 or 2018 and thinking that they can just figure it out themselves and go with themselves. And I just look at that and I say, are you ready for this? Do you want to do potentially two and a half years? Maybe you'll be faster. Right. But the inertia and the history, the track record of searching of how brutal it is says you probably, probably are not going to be, you're probably gonna have to learn it the hard way because that's the only way to do it. If you don't take outside counsel, you know, if you don't take outside guidance. Yep, that's what I did.

[1:21:06] Host: Jordan. I, we gotta cut it there just because we, we've gone over time but I feel like there's, you're a great resource and yeah, somebody who went through their own very painful search and then as you said now is talking to other searchers all the time. You just have really deep perspective on, on self funded search. What's the best way for people to reach out to you?

Guest: Yeah, you can just check out our website, search invest group.com okay. There's all sorts of great info there. And then recently got on Twitter. So Jordan P. Carter.

Host: Okay, Jordan P. Carter on Twitter.

Guest: All of these links you encourage me to get on Twitter so I joined.

Host: Great, great. How are the followers?

Guest: Oh, I don't think I've, I've probably got like 20 at this point but plan on putting out some good, good content. And really the reason we started SIG was to help other people help my former self really. And I hope some of that stuff is helpful too. We can put out some good content.

Host: Well Jordan, thanks for coming on and sharing your story. That was a really great deep dive into, into a painful search and it seems like kind of another, an earlier, an earlier time in search because as you said, a lot of things have changed since, since 2016, 17, 18. But you have, you have scars from the experience. But you're obviously very, very wise about, about the whole process today. So appreciate you coming on. Sure. I'll have you back again at some later date and until next time, thank you very much, sir.

Guest: Thanks again. Will was always good to be with you. Cheers,

Host: Sam.