Host: You've probably heard that it's better to buy no business than the wrong business. You've also probably heard that at some point when evaluating a business to buy, you can't diligence away all the risk and just have to take the leap. Well, you may notice the contradiction in those two maxims. We're basically saying small businesses are messy and emotional and you'll never get perfect information. But by accepting that, we're accepting that some number of acquisition entrepreneurs, despite best efforts, are just going to get burned. Today's guest, Jud Larson, went through such a crucible. He followed the best practices. He diligenced the business he bought, he showed it to his experienced investors who also liked it. And yet still shortly after getting into the CEO seat, he realizes, uh oh. The painful fact of Jud's story, other than the guy's suffering, is that I'm not sure what the lesson is. He seemed to do everything right. If I missed it and you see it, please let me know what that lesson is. And if you otherwise get value from this story, let Jud know he's earned it. Here he is. Search Survivor Jud Larson. 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. 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 and 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 Judd Larson thank you for joining me sir, on Acquiring Minds.

Guest: Good to be here.

Host: Really pleased that you said yes to this interview, Judd. It's probably going to be A bit of a roller coaster. I'm going to ask you to relive your experience, of course, buying a business. But in your case that was a pretty fraught experience. But it is a story that is deserving of all of our admiration if it didn't quite turn out the way that you probably hoped that it would when you first set out to buy the business. So without much more intro, let's just get into it. Jud, why don't you start us off with a bit of your background.

[3:19] Guest: Sure, yeah. So I grew up in north central Pennsylvania. That happens to be where I'm sitting at today. So my life has kind of come full circle in a number of ways. But I grew up here on a farm. First generation college graduate, went to Drexley University to study engineering down in Philadelphia. During my time there, decided that I didn't want to be an engineer in the traditional sense of the word after having done a few kind of full time stints in the co op program that they offer as an engineer designing cars out in Ohio for a Honda, working for the Philadelphia water department, et cetera. So I got a pretty good idea of what engineers do on a day to day basis and I was looking for something kind of a bit more hands on and with some more leadership opportunities. Initially ended up taking a year off of college, doing a gap year before the cool kids were doing it. I didn't know that that's what it was at the time, but I just needed some time to kind of figure out what I wanted to do next with my life. That ended up being joining the military and serving our country in the submarine force. So I ended up going through the Navy's nuclear power program and serving on board nucle powered submarines. It was great experience. Did it for almost eight years, was four deployed and spent a lot of time overseas, but got a really great leadership experience out of that and kind of started to open my eyes to some different types of opportunities that I didn't, wouldn't have, wouldn't have realized existed when I was growing up. So did that for, for almost eight years. And then my wife and I, who I'll mention throughout this interview, we had not yet decided to start a family and we were looking to kind of settle down a little bit more. And that can be challenging to do in the military when you're gone a lot and you're, you're bouncing, you're bouncing all over the place at the, at the whim of someone else. So I decided to get out. I'd done it long enough to kind of get the T shirt as I say, but not so long that I was closer to getting that 20 year retirement than I was from doing something different. So I ended up evaluating different opportunities to use the GI bill to go to graduate school. Had always been interested in kind of business from an early age. So I ended up getting an mba, went to Yale SOM and got my degree there. And while I was there I found out about acquisition through entrepreneurship, which put kind of some, it put some infrastructure and kind of like words and idea behind something. I had kind of contemplated myself kind of running a business. Like that was the point of going to business school that I wanted to, I wanted to own and operate a business. I thought that kind of meant raising money or doing a startup. But when I found about ETA and started digging in, it really kind of really made my aspirations come to life. So I ended up doing that after, after business school.

[6:48] Host: You and the startup path, raising money, doing, starting from scratch, that was what you envisioned entrepreneurship being and it didn't, it didn't appeal to you, that's why ETA did grab you?

Guest: Yeah, I think so. And I guess there's another point to make. There is, I don't know, like I had done these, these kind of hard things to that point. Like I left home, I joined the military, I was deployed overseas and had all this kind of responsibility and I felt like I wanted to do something that scaled to that, to that set of experiences. Right. So the idea of kind of like just returning home and like owning kind of like the small business, like didn't make sense to me at the time, which is kind of ironic. Right, and, and like at the time, right in the, in the early 2010s, right. Like it's just like all about venture backed startups and how big they got, like how that was, how that was the way to kind of take your ambition and match it to an opportunity. Right. And I'd never really kind of scaled that to a small business where I could be, be like the primary owner or like have a really big opportunity there on the smaller side of things, which is frankly like where my background and experiences and kind of interests lie. I just didn't know that that existed.

Host: So acquisition, entrepreneurship, what you liked about it was that it actually kind of kind of being in small business did kind of fit you culturally, but it just seemed a little under ambitious until ETA showed you that there you could buy a small business and there really could be this ambitious path behind it. Do I have that right?

Guest: Yeah. Yeah, exactly. I think it kind of this, the scaled opportunity was there. Right. Even though it wasn't $1 billion startup. Right. Like the opportunity to own, to own a piece of or Most of a $10 million business was more than I had ever dreamed was possible growing up in Central pa. Great.

Host: So you, so you learn about it at Yale School of Management. And what do they have one class on E or is there more than one? Just tell us real quick.

Guest: Yeah, so when I, when I was there, I graduated in 2017 and midway through my experience was when I started to really push the ETA button, there weren't any classes. Even though a lot of other peer schools had a dedicated program, there weren't any classes. There wasn't like an instructor or any mentors, etc. When we get further along in the story here on how I made my selection, some of the facts on the ground at Yale that there just wasn't a whole lot of infrastructure there helped inform that choice. But anyway, there weren't any classes. I had the good fortune of meeting a professor who I'd call a mentor and a friend at this point, AJ Wasserstein, who's well known in the ETA circles, who happened to live close to New Haven in Connecticut and be at a point in his life where he was ready to kind of dig into his next project. So I introduced him to the faculty at Yale and he ended up joining and teaching the first class that I was involved in as a. I didn't even get the chance to go through it as a student. I just started as the teaching assistant. Cause this was the first iteration of that. And at this point, I mean, he does a ton of writing. I collaborated with him on the case note that we're kind of talking about today. But he releases, he releases new stuff kind of on a, on a, on a monthly basis and he teaches a handful of classes at this point at Yale. So there's a, there's a, there's a ton of, ton of ton of academic infrastructure that, that's been built there by, by him over the past, past number of years.

[10:38] Host: I saw A.J. wasserstein speak at, in Orlando. He was at SM Bash in January. Awesome. Yeah. And really told, told his story, really dynamic speaker. Okay, so you're teaching, you're the teaching assistant and in your second year at the MBA program. Your second year at the MBA program, right?

Guest: Yeah, exactly.

Host: Yeah. Yep, yep. Alongside AJ and you're basically. You've decided this is going to be your path, so you graduate, then what?

Guest: Yeah, and, and maybe Just back up for, for a second the. That part of the purpose of that kind of second year and teaching the class, like, it wasn't just all altruistic, like, let's get a class for SFM because they need one. It was like, well, what can Judd get out of this? Right? And I had the opportunity to work alongside of AJ as he stood the class up, but also like meet a number of people, guests that he brought to the class to kind of try and hit that number of like talking to a couple dozen people to really kind of fully inform the choice. Right. I'd say for me it was a little bit harder than for other people. And 20, circa 2017, that like went to a school where they had like 50 alumni that like, had done the thing, right? Like Stanford or Harvard or even even Booth or North Northwestern. Right. But that was, that was kind of my. Between the first and second year I decided that I wanted to. And then the second year I was trying to decide how.

[12:09] Host: Right.

Guest: Like, how should I go about doing this? So I had decided how before I graduated. So I used that second year to kind of evaluate the different options. Right. Self funded search was, was. I don't even know if it was a name thing yet. It was just kind of becoming like this nebulous idea of something that like, certainly people did, but like starting to call it self funded search. So I evaluated that a little bit. My wife and I had. She had a good job and we had enough resources where we felt like that, that on paper it was a viable option. Right. And as I looked at the other two models, if we say that there are kind of like three general paths, self funded, accelerator backed and traditionally funded. I, for whatever reason, didn't. Didn't want to do the traditionally funded path. Right. I think it was a combination of nobody at Yale except for like one guy had kind of done it and he searched in the Dominican Republic. So he's kind of like off, off on his own journey. I didn't feel like I. Despite the fact that I knew A.J. and he had invested in a ton of these things, like, he didn't, he didn't necessarily push me in one direction or another. Certainly I think I could have raised the funded search, but I was kind of like looking for hacks at that point. I was like, how can I stack the deck in my favor to increase the chance of success? And I was defining success at that point as the opportunity to run a business. Right. And I felt even though accelerators are fairly new at the time, that that Cohort, cohort based learning environment and the resources that they were communicating, that they would bring to bear would give me the best chance of, of successfully acquiring a business. Right. And not making kind of a, not making a mistake with, with all my own money, which is what it would have boiled down to as a self funded searcher. Because I had some leadership experience, I felt pretty confident that I would, that I would understand how to operate inside of a small business, having kind of come from that environment culturally growing up, plus serving in small kind of specialized units on a, on a submarine. But I didn't have finance experience, I didn't have deal making experience, I had never done diligence on a deal. All those things were or fairly nebulous foreign topics that these days I tell, I tell aspiring self funded searchers like you can figure out it's fine, it's not rocket science, but at the time like I felt like it was an insurmountable kind of wall that I didn't want to take the risk of kind of climbing by myself.

Host: So you so self funded you just felt like you'd be kind of flapping in the wind. So you liked the infrastructure around the self funded, excuse me, the an accelerator model. And in terms of. But, but you had said on the economics piece, in fact you could have gone self funded, retaining much more equity, but you wanted the infrastructure around you which you thought an accelerator would provide. And these accelerators generally the economics are the same as with a traditional. Right? So you're looking at max 25% ownership.

[15:21] Guest: Exactly. They're, they're very similar. They have kind of similar vesting schedules, similar, similar overall economics. Each one has their own unique kind of twist on things, whether it's a preferred return or a shared equity pool with your cohort or a piece of the overall gp. All of them have a different way to skin the cat, but at the end of the day they're all very similar to traditionally funded economics of 25%. A third, a third, a third.

Host: And so even though you could have afforded a self funded search, it didn't bother you that you were going to be giving away a large chunk of the economics to do, to do the accelerator route. 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 oberly-risk.com ob e r l e-risk.com link in the show notes.

Guest: No, again I'll go back to like I really wanted to, I wanted a chance to operate a business that was, that was where my primary motivation was. And I didn't, I didn't think about the economics maybe as much as I do these days. Right. And maybe I was, I was certainly less experienced. I was maybe a little bit naive and how I looked about these things and kind of evaluated the differences. I wasn't like sitting around with, with a spreadsheet trying to model out like the overall upside and the opportunity cost to it all. It was more of a qualitative decision making process in a quantitative one.

Host: So you, and so you proceed with, with one of the accelerators and, and with you know, kind of the promise of, of handholding for lack of a better word, infrastructure support, you know, not you know, guardrails maybe is a better way to put it so that you don't make a terrible mistake. And so how does that, how does that go?

Guest: Yeah, no, I, when I look back at it, what I remember the most is the opportunity to work in a cohort based environment, which I didn't. That's, that's not, wasn't the primary, the primary driver for kind of selecting the accelerator, but it was ended up being the value that, that I got out of it. Right. And for whatever reason I don't know that this kind of cohort has been recreated since. But it was four guys, right? I mean there happens to be a lot of men in the space, right. So it's four guys, right, looking for, looking for a business to buy. And we all happen to have some sort of connection to the state of Pennsylvania or Philadelphia more particularly. Right. So we just kind of like rallied behind that commonality and really kind of joined together. You would, you would think that like hey, these are all type by people that are trying to buy their own business. So like throwing them together in one environment, like is that going to create some like uncomfortable competitive dynamics? But I think we all like signing up for, for an accelerator. Like you're kind of agreeing to check your ego at the door a little bit and you're signing up for some of the camaraderie to, to help Rally yourself when you're at the lows and celebrate the highs together when you're at the highs. But we all, we all just quickly gelled, right. And we ended up adding a lot of value to each other's searches. And we continue to this day to stay in close touch and add value to each other as we operate businesses for the other three we all ended up acquiring. Right. So if you look at the Stanford study and say, well, 25% of people don't find a business, we beat that as a group. I think that had a lot to do with it. Right. So 100% of us acquired a business. The other three are still operating. I've since taken a step back that we'll talk about here in a bit. Right. But I got a lot of value out of that and I continue to get value out of it. That's a public service announcement or disclaimer. Right. Like you're not guaranteed to have that experience if you go to an accelerator, but there's a chance that you will and that's going to be invaluable.

[20:02] Host: Yeah, yeah. Well it reminds me what people say about a lot of different educational institutions. It's like the people you meet there, your comrades while you're there, it's actually the most valuable thing. Yeah. Okay. Yeah.

Guest: However, at a search accelerator, the sample size is so small. Right. Like when you're at a college, right. Or a business school. Right. Like you've got a couple hundred people and you can sort through them to find your tribe. Right?

Host: Totally.

Guest: But yeah, you got lucky. Everybody is self subscribed to like looking for a business. But the, the way in which we got along, interacted with, interacted then and continued to interact. I think is, is particularly special and I'm thankful that I, that I had that.

Host: Yeah, yeah. How fortunate. So you, you go through the accelerator, you embark on your search. Actually let me just pause to say you, you mentioned a few minutes ago the note that you co wrote with AJ Wasserstein. So that's how we met. There'll of course be a link in the show notes to this. But this whole, your whole story, you've put pen to paper and alongside AJ you know, published this great case study about it. So a lot. So that's how I found you and your story and a lot of this conversation is going to be based on what I read there. So just that that's some context for people that I failed to mention at the outset. One of the things that you mentioned in there is, is you were really Rigorous in your, in your search, the number of kind of industries that you, that you researched and, and, and really kind of kind of stress tested and then within those industries, the cold outreach that you were doing. So talk us through what that looked like. I was, I was impressed by some of that process, sure.

[21:44] Guest: I mean, I think my approach was, you hear different people talking about maybe the rifle versus the shotgun approach. Mine certainly was more the shotgun approach. Right. I didn't have any particular professional expertise in any particular industry. Right. So I went, I went into search knowing that and just kind of embracing it and trying to apply, apply where I thought my skill set and interests would, would, would serve me best in, in the most, the most types of situations or industries. Right. So I picked a handful to start. Right. And then from there, kind of using what I'll call the aisle over approach, right. You'd learn about something interesting in fire protection. You'd look at one of those businesses, you'd look at their P and L and see where they spent money, what they spent money on, and that would inspire you to kind of look at something a little bit different. Right. So I had an industry based approach to kind of to cock the shotgun and shoot it as many times in as many different directions with as widest spread pattern as possible. And some of the infrastructure that the accelerator built really facilitated that. A lot of traditionally funded searchers kind of built this for themselves and even self funded searchers at this point. This, this wide, this wide funnel where you're, where you're essentially finding the emails of as many business owners as you can and pushing that forward. One other thing that I, I don't know if I talked about in the note or not, that helped inspire some ideas was running very narrow searches on what I'd call kind of third tier geographies where I had a connection to where you could go and pull a list of all the businesses that met your kind of overall size criteria in that geography and just emailing them all to see if they'd be interested in a sale. And through that you ended up having a lot of conversations because you'd say, hey, I grew up here, hey, I've lived here, I know somebody that lives here. You could create a really authentic story for yourself to break down the barriers that business owners often put up for some of this cold outreach. Right. And that also, not only did I get to see some interesting businesses, but it inspired some ideas for some other industries that I wouldn't have initially considered because you're kind of, when you're running a high volume search or a shotgun based approach, you're always trying to fuel the engine with new ideas of different things to look at. And that's one way I found, found valuable to, to find, to find examples of businesses you would have never heard of.

[24:23] Host: And you did that in central Pennsylvania,

Guest: I assume where you're from, did you

Host: do it in other geographies?

Guest: Yeah, I picked a number of geographies where my wife and I, we would like to live or had a deep and, and had a deep personal connection to. Right. I mean when you look at the scaled approach, yes, I had different geographic hooks for like every, all 50 states. But like these campaigns were a little bit different. Right. Like they were like I went to Williamsport High School. Right. Like I lived in Goose Creek, South Carolina for a year when I was in the military. Right. So like being able to have a, a more specific hook helped increase some response rates.

Host: Sure.

Guest: And prompted more conversations.

Host: Sure. In the note you talk about, I mean it sounds like you really did a good job at this outreach because there were days where you just had back to back calls. Like you were really, you were really quite successful at filling your funnel, correct? Yeah. No.

Guest: And you, I think you use the words kind of successful and, and rigorous. I, I'd use the words bull in a china shop. Right. Like I wanted to buy a business. Right. Like I'm kind of an introvert. I'm not a natural sales guy. So I was just like trying to find ways to push forward and to use kind of like simple disciplines to keep the volume high with the expectation that if I did that, right. Like it's a numbers game at the end of the day. And if I did that and I was able to build appropriate screens, I'd be able to sift through the volume and shake the one out at the bottom within the time frame of search. And I think that's generally speaking at the time I was doing search, that's how most other people were kind of approaching it. I know there have been some different, different philosophies that have emerged since, but that's the way I went about it. And I just kept, kept pushing forward, kept charging. Right. Like every day, every week. And yeah, some days, I mean I would be talking, talking on the phone for like 10 hours a day. Right. At the end of the day, like I was, even though I sat in a chair all day, I was completely exhausted because I'm not, I'm not naturally inclined to do that left to my own devices. But I knew that's what needed to be done to accomplish the, the goal that I'd set out to do. So I did it.

Host: The. And you actually some of these conversations really bear fruit. I mean you submitted offers, so talk us through some of these, these broken deals and weave in, you know, the conversations when you, when you have, you know, something that looks like you're going to make an offer on or maybe even have made an offer on how you interface with your investors on, on that front. And the investors, of course, are the folks at the accelerator.

[27:03] Guest: Sure, yeah. Yeah. No, I use the, the example from the note where I had this. I mean the accelerator is working Wednesday in Boston, right. My wife is living in Hartford. I, I ran kind of a geographic campaign in the great for Hartford area because staying put had high value to us, especially since like I'd been in the military. We'd been bumping around all over the place and like we were looking to start a family and like develop roots in the community. So anyway, long story short, I developed a relationship with a, with a small growing IT MSP in the greater Hartford area and had gotten to the point where I requested a bunch of information. It was a proprietary deal off market. This is probably the first time or the second time the owner had thought about selling his business. But I was, I was on paper the son he never had, right? Like I went for a business, took me for a ride in his Tesla, right? Like it was, it was, it was kumbaya around the campfire, right? So anyway, I ended up having conversations with, with my investors about that business, right. Reservations about maybe the geography it was in the. If this was the best opportunity that I was, I was going to see because it was fairly early on in my search, within the first six months or so we talked through those. It had high. I was kind of anchored to it from a personal standpoint because again, like my wife and I, we went out to dinner with the seller and his wife, right Before I kind of submitted the formal offer to buy the business. I'd used a two tier kind of offer system where I submit an indication of interest or an IOI to kind of make sure the, that there was some formal agreement on price expectations and then request some additional accounting and other data to formulate a former letter of intent to get signed. So in between that initial offer that was accepted and before I kind of submitted the loi, I had met with this guy four or five times, right. I had met with his control, his retiring controller to go over some of the financial information my wife And I had gone out to eat with him and his wife and at a West Hartford restaurant. Right. And like, it was, it was like, all good, right. I mean, you've heard these stories before, but until they've happened to you, you don't like, know how the, how it's going to end. Right. So I ended up submitting the loi. My wife and I became very anchored to it. Right. Like, it was a reasonable opportunity, but, like, it was really, really good for us and what we wanted to do. Right?

Host: Yeah, yeah.

Guest: On the investor side, it was like, well, is this really the best one? Is it, is it big enough? Is it growing fast enough? There are 7,000 ISP or MSPs in the U.S. is this, does this rise to the top? Right? Is it the, is it the cream that rises to the top that makes sense on making investment? I don't know. That's kind of tough to say. But anyway, I submitted an offer and it fell through. So those conversations, both with my wife on, like, us getting super excited about an opportunity and kind of being on an emotional high to going in the complete opposite direction and, and some of the friction with, with, with the capital providers and whether or not this is going to be the best look, I was going to get, it kind of subsided until it was on to the next one.

[30:23] Host: Okay. And is there any takeaway for, for people who have investors or are going to do a traditional search or an accelerator on working with investors? I mean, were your, let me ask this more simple, simply, were your investors correct? Like, in retrospect, do you think that they were right to interrogate your, your interest in the business or, or is there something, something else to be learned from your disagreement with them on your interest in this business, in this MSP in Hartford?

Guest: Yeah. No, I think that's the role that they serve, right. Is to be, to play the devil's advocate, right? Especially for, for I think, young, aspiring entrepreneurs, right, that have a bias towards action, right? Like, that's the reason why we're going to be successful ultimately in the things that we choose to do. So I don't think it was incorrect for them to really kind of pressure test the opportunity and how I was thinking about it, etc. It's tough to tell if it was the right decision at the end of the day or not. Right. We'll go through the rest of the, the rest of my story here, and the outcome wasn't as I would have hoped it would be. Right. And I oftentimes think about what my life would have Been like, had I had that offer accepted and was able to get the support to buy the business, how things would have turned out. Right. We had the pandemic, we had all these other things that I think all else equal have been tailwinds for a business like that. Right. Was it geographically constrained? Sure. Could Have a smart guy like me figured out some, Some, some ways to expand it and grow it? Probably right. Yeah. An interesting anecdote Here is AJ's most recently released paper is about a competitor to this business in that market. Right.

Host: Really?

Guest: They've done quite well doing some consolidation, et cetera. So

Host: a competitor to that business that a search funder acquired, it was never.

Guest: No, it was run by a local CEO. Right. I happened to meet the guy, so I know him. I tried to buy his business too, but he wasn't. He was just curious about why this, why this guy from Yale, like, was sending out all these emails. Right. So I had the opportunity to meet with him. Right. Like, maybe he's bought the business. I don't know. He's. He's run a consolidation play.

Host: Yeah.

Guest: He's partnered with some other folks to run a consolidation play to roll up some MSPs in the Connecticut region and beyond. So.

Host: Okay. Okay. Well, Judd, we still haven't even gotten to your actual acquisition, so take us there. Unless I'm missing anything between this point in your search and finding the business that you do buy.

[33:07] Guest: So I, I ended up finding the business that I was looking for through a, through a pretty interesting, interesting way that I'll, I'll. I'll tell you about. So I ended up searching for a list of just businesses that didn't fit into other NAICS codes. Right. So just a miscellaneous, Miscellaneous industry list. And I can distinctly remember one of my interns pulling up the website of the business that I ended up acquiring and asking me like over his shoulder, like, hey, Judd, does this look interesting? I was like, yeah, like it's related to real estate. It looks to kind of be of the right size. Like, let's find the, let's find the owner' information and reach out to them. And then I would oftentimes do kind of a quality control check of the information that my interns were putting together on a weekly basis. And I can remember having the email sequence for this miscellaneous industry search. And usually we'd send out like maybe 10 or 12 emails over a couple of months. And the. But I continuously do this quality control process and I can remember misspelling the owner's name for the first couple of emails that was sent to them. Right. So that the owner's. One of the owner's names had a, had a misspelling in it and I ended up correcting that. And that was the first email that the owner ended up opening. Because you can see with the email program like what you're sending, what's opened, what's not. So like maybe it went to a spam the first couple or he just gets a lot of emails and he never opened them. But for whatever reason, the first one he opened was the one that I had made that the change to like spell his name correctly. So the business owner responded, we started the dialogue. The business was located in Florida and I was in Boston. So I ended up trying to do a lot of kind of preliminary, preliminary diligence and data requests over email and over the phone. Did that over, over, over kind of a month long period. Came to general terms on, on price and was getting to the point where I was getting ready to, to, to submit a letter of intent. Flew back and forth to Florida a handful of times to, to meet with the owners. Always met on site at the business, which in retrospect I think was an interesting choice for them because we would kind of be alone in the conference room all day and I can only imagine that their employees were having kind of questions arise who this guy was, why he was there. They used the premise of I was a consultant there to kind of help evaluate the business. Some people talk about whether or not it's a good idea to do that. I think he's changed a little bit. I submitted to it at the time because again, this is my first rodeo and I was just trying to get the thing done month. Right. But in retrospect, I think I lost a little bit of credibility with the team when my. The pretenses under which I met with the owners and then ultimately them before I closed was not entirely accurate. Right.

[36:21] Host: Yeah.

Guest: So I don't know, maybe I have more confidence or just the ability to, to kind of be okay, missing out on opportunities, but being kind of more. More straightforward and forthright in my interactions that when I do it again, if I do it again, when I coach and advise others, I encourage them to kind of bring the fullest version of the truth to the table right from the get go. Because you never know if you're going to be ultimately become the leader of that organization or those people's boss. Right. And when they say, well, wait a minute, you told me you were an advisor and now you're telling me that you're my boss and the owner, like why should I believe you? Right. Anyway, so ended up getting that.

Host: It's a great point.

Guest: The letter of intent and the sellers accepted. What I should also mention is intermixed in this, in this professional version of my life. In the background, my wife and I were getting ready to have our first child. I was training for an ultramarathon race that I was going to run that summer. So I, I often tell people that I signed the loi to buy the business that I bought in May of 2018. And my life has kind of been in disarray ever since because after that, before we closed, like I was training for this race, we had my son and I was trying to like put together a multimillion dollar buyout deal to buy a small business. Right. And ultimately move across country with my young family and try and wrap my arms around a business in a place that I had no connection to in an industry that I had no experience in.

Host: Well, before we get into all of that, tell us just a little bit about what you liked about this business and what it and what it did and any size, employees, numbers that you can share.

Guest: Sure. It's around 20 employees, 5 million in sales, a couple million dollars in profit when I identified it. And the business model was a third party debt collector that collected past due assessments for HOAs, condos, POAs, etc in Florida and then had just started its initial expansion into Georgia and the Carolinas. The interesting thing about this business is the fact that I didn't really look extensively at debt collectors, but when I found this one and I understood the business model, I really got excited about it because it had operational leverage so the business could operate from its operations center in South Florida and serve multiple geographies from the same place. And this was even kind of pre pandemic, pre remote work. The business is remote at this point. It didn't start that way, but it has, it's a laptop and cell phone business. Right. So you kind of do it from, do it from anywhere. At least the operation side, the sales side again had that those aspects of operational leverage where you can hire a salesperson to cover a particular geography of territory and they can go out and conquer that territory and bring back, bring back business. Right. And there's no reason that the business can operate kind of in all 50 states of the current model that it has. So that, that was part of the reason that I excited. The other part was the underlying debt or assessment that was being collected was backed by real Estate So dissimilar to other forms of consumer debt, like student loans, I guess student loans can't be discharged in bankruptcy, but all over all of their student debt can be discharged in bankruptcy. And it's not backed by an asset. Right. But assessments, they're backed by the asset, the house. Right. You have the ability, each state is a little bit differently, but you have the ability to file a lien on that property if the folks are behind on their HOA dues and ultimately foreclose upon that lien. Right. And you're kind of third in line behind the bank and the tax man. Right. So you have these high priority liens that you can place on real property and you can give people a lot of incentive to make good on that debt. Right. So it was a very particular unique niche business model. Again, one of those search businesses that you would never know existed until you started bumping around. And it also had the, on paper, it had the ability to kind of scale.

[41:07] Host: Yeah. Well, it's sure a big market. I mean every HOA in the country theoretically is your, you know, your timing.

Guest: Yep. And it started in Florida in the coming out of the last recession. So like that's how a business like this was, was born. And Florida has the most HOAs in the U.S. right. California is number two, Florida's number one. Right. So it's a really good place to start.

Host: Yeah.

Guest: For a business like this. Yeah. And to your point, right, like there are, there are 350,000 of these things across the US so you have the potential to have 350,000 clients served like only like a thousand of those in its whole lifetime. Right. At any given time it has like a couple hundred active clients. Right. And it's served maybe let's call it a thousand. But the tam is 350k. Wow. It's huge.

[42:03] Host: Huge. And how competitive was the space? I mean, is this a space where it's a young industry? I mean, obviously debt collection isn't, but debt collection targeted at hoas and, and assessment fees.

Guest: Yeah. I think the, the innovation of this business model or it wasn't a regional or small law firm doing the work. There wasn't a ton of competition there. There are a few other kind of like size or smaller collection agencies that operate in the state of Florida. And then your, your main competition was small single person law firms that have a relationship with the board president. And you're trying to displace that person because you think you can do a more effective job.

Host: Yeah.

Guest: So the primary it was competitive in the sense that you're competing against kind of every lawyer and their brother. Right. But it wasn't competitive in the sense that there were other kind of scaled sophisticated operators out there trying to do the same thing.

Host: Right. That's great. It sounds great. At least we're about to find out how great it actually was.

Guest: They all do, Will. They all do.

Host: And Judd, I gotta ask this. You know, debt collection as, as a service, debt collection as a thing, you know, obviously it's not the most pleasant place to live. You know, the people you know, you know, debt collectors are. It's not some, it's not the call anybody ever wants to get. It's not, you know, you're basically dealing with distressed situations all day long. Consumers in distress, or maybe not always totally in distress. Maybe they're just somewhat negligent. But I mean, you see where I'm going with this. Did that, did that give you pause to be, to be in a space where there's just, you know, it's kind of dripping with anxiety and desperation?

Guest: I don't think it did. I mean, I come from a. Come. I guess maybe I come from a background and I have a personality of, of just like being firm and fair. Right. So I brought that to the business. Right. That we're just going to be firm and fair about this stuff. Yeah. So like going in, I think that's the approach that I took. Like, I didn't have a problem with the services that the business provided. Somebody has to do it, so it might as well be us. And we can do it. We can do it in an efficient and a fair way that creates value for all stakeholders. And I'm really proud of the business that'll come become and the business that it continues to be at this day. I think the, the question that you didn't ask but is worth answering is kind of how do I feel about it today? Right. So I, sometimes I tell people today, like there are easier, like other, other, other searchers, people that are looking to buy businesses. Like you hear people say they're like easier ways to make money. And I think debt collection is one of those industries that would fall in the bucket of like a hard way to make money. Right. Like it's fraught with some of the things that you suggested. Right. It's very emotional. Right. Like it's a grind. You're, you're, you're kind of intertwined with the legal system at any given time where you're, you're getting soon by consumer protection attorney or you're having kind of other kind of challenges with regulators, et cetera. And that's just part of the, that's part of the game. And for me, even though I'm kind of firm and fair, I take everything, like, very personally and very seriously. Right. So that aspect of the business kind of ground me down a little bit. And I don't think I would do it again on purpose. Right. Like, even though I've gotten this great experience in the debt collection space, like anything beyond kind of like an advisor or a consultant, like, I'm not necessarily like, itching to go and get back in the trenches of, of one, of, of a debt collection business. That makes sense.

[45:46] Host: Yeah. Well, that aside, certainly, yeah, it does just kind of on paper, look like a great business. You said $5 million in revenue, a couple million dollars in profit. So that's not, you know, 40 margins are, you know, give or take, phenomenal margins, recurring revenue. I mean, you've got these relationships with hoas who need collection service done month in, month out. So, you know, and $2 million in profit, that's a, you know, that's, that's a lot bigger than most searchers get their hands on. Of course, you were following a traditional model, so you were looking a little bit bigger, but it's got all those appealing characteristics, so no wonder you, you ran at it. Okay. So, and oh, and by the way, how did your investors feel about this one?

Guest: We were all, we were all excited. Right. I had one of my investors come down for one of the site visits that we did. We met with the, we met with the owners and, and we're really kind of evaluating the, we were really trying to stress test the scalability of the business model. Right. And again, on paper, before we got in under the hood, everything kind of checked out. Right. Like, the business model has the ability to scale.

Host: Okay.

Guest: So, yeah, we were all excited about it.

Host: Great. Okay, so you buy it. Unless there's anything in the transaction itself you want to talk about, I suggest we just skip into you being in the seat.

Guest: Great.

Host: So what do you find? What do you find? Because things kind of get real interesting and nasty real quick, as I understood from the case note.

Guest: Yeah, no, it was a challenging situation. The business had. The business was an innovative business model. Right. So, like, it wasn't something that we could necessarily benchmark or hire, hire a consultant that has experience doing this exact thing and tell us kind of like what to look for and how to look for in diligence. Right. Like we did, we did everything that we could do. But ultimately that effort fell a little bit short. And I identified a few things came to the surface through some. Some folks that worked for the business kind of pretty quickly after me buying it that people were. Had questions about or were uncomfortable with. And they. I came in kind of very directly being the firm and fair person that I am and the high ethical standard that I think that I hold myself to. And I came in letting people know that, like, I was excited about being there and I wanted to kind of grow the business in the right way. And I was quickly. There were some things that were quickly brought to my attention that I made the determination that I didn't want to keep doing things that way. Right. And that put me at odds with the sellers of the business and required me and my investors to kind of really buckle down and address a lot of things very quickly. Right. We had to make some changes to the business model. We had to layer on some additional costs that we didn't anticipate in an attempt to stabilize the business and solidify the business model. In short, up from. From a legal and a regulatory standpoint. And because that put me at odds with the seller's take on this. And again, it's kind of. There's. Everybody is entitled to their own opinion, right? They had theirs, but mine was different. And I was now the owner of the business, so I wasn't able to rely on them to kind of help ease my transition. You hear these stories about, like, don't change anything in the first 90 days, right? Like, spend the first six months, like, learning the business. I didn't have that luxury, right. And not only did I.

[49:27] Host: Because you, You. You felt that it was urgent.

Guest: I felt, yeah, I felt strongly correct to make some changes quickly, both from a legal and a regulatory standpoint, but also from a cultural standpoint, right. That, like, if I was going to put my mark on this business and we were going to proceed forward in the. In the direction and the vision that I had for the company, we couldn't just kind of like, wait and see, right? We had to. We had to take some of those actions pretty pretty immediately. And because of that, right. Not only did I. Not only did I have to, like, make some changes, I didn't have that soft landing that people talk about where they had a great relationship with their seller and they were there alongside of them and kind of helped them with all these problems, right. Like, I had some. I had some kind of business model and strategy issues and then I also had these cultural issues and the sellers were antithetical to what I was trying to accomplish. So this is, this is quickly at odds.

Host: Yeah. Just remarkable. So you get in there, you say that you're. What is your, what is your phrase? Fair and fair and firm.

Guest: Firm and fair.

Host: Firm and firm and fair. You communicate. Firms are consistent, inconsistent. That that's going to be the culture under your leadership. And I guess a couple people in the organization kind of quietly raise their hands or take you aside and say, you know, we're doing the way we do business over here is like maybe a little bit, you know, might not meet. Might not meet the standards of firm and fair. And so you, you realize that the kind of. The entire business model, while quote, unquote, innovative, is actually maybe taking advantage of whatever. It's not, it's not. Regulators wouldn't like it.

[51:11] Guest: Or it couldn't be scale, right? Yeah.

Host: And, or, and it couldn't be scale.

Guest: Okay. I mean, you can look at the, you can look at it from a lot of different. You can look at it from a Right. Wrong lens, you can look at it from a scalability lens, you can look at it from a risk reward lens. But ultimately, like, I was the guy in the seat and I took the action and told my investors why I took the action and we just moved forward. Right? But it was ultimately, at the end of the day, it was just, it was going to have, it was going to have impacts that we couldn't even measure or understand, but it was that important to just make the change, right. And we started to layer on some compliance infrastructure that we knew we needed before I bought the business. But we started to press on that kind of like a little quicker and a little faster, right. And we knew we needed to implement some, some operations infrastructure that, that was kind of like independent of all the other stuff that was going on, right? So, like, that was going like those were going to be our big things, right? But then there was, it was, it was, it was within this, this kind of this, this environment that we didn't anticipate, right? It was just kind of super challenging. It was, it was kind of rolling the punches and to add kind of insult to injury, right? Like, I was at odds with the sellers. I was trying to transform the business on the ground level. And then we were getting demand letters and lawsuits on almost. It felt like a daily basis. It was more like maybe a monthly basis. Right. But they were for some of the issues that the, that we were trying to fix. Right? So it was like I, like, I took all that really Personally, Right. It kind of ground me down. It's like this wasn't me, Right. Like I'm. I'm trying to change things here. I'm trying to do things a little bit differently, but I still got the same name out front, right? So even though we did an asset sale, we did musical chairs with the LLC names and my LLC ended up being the same, even though I had a different ein. It was the same LLC name as the prior. The prior owners, right? So, like when you try and show that to even like we were in a particularly complex legal case where we were in front of a judge, like, trying to explain to them, like, how these leverage buyouts work, and he's just like, I just don't get it. I understand. Like, this is really, really complicated, right? Like this is a judge, like, trying to make decisions on where the liability lies. Right? So just imagine trying to explain that to an HOA president or a homeowner that way back when, five years ago, resurfaces and discover something that they don't think is fair, they don't think it's right, and they want to have, they want to have a conversation about it, right. Like, we had to, we had to clean a lot of that stuff up just because we had reputational risk on the line. But there was the liability and it fall with us. And we were trying to put it on the parties and the entities that you did. And that was, that was like a full time job in and of itself. When, when I had this full time job executing on the thesis that I knew that I wanted to execute on before I bought the business, right. Layered on top of having some cultural issues that I wanted to address, et cetera. So it was, I don't know, it was, it was, it was hard, Judd,

[54:19] Host: the, the hostility that you have now with the sellers that you're experiencing with the sellers. What about with the employees? Are there employees who are loyal to the sellers or loyal to the way things were? And I mean, how is this. Yeah. What's it look like between you and your. And your new employees?

Guest: Yeah, no, I'll. I won't answer that question directly, but I will say that we, as we started to execute on our thesis and our strategy, we grew from, let's say 20 people at the start was just a few over a handful over 20 to, to almost 45 over the next two and a half, three years. We had, we quickly had more new people than we had old people. Right. So like when we were midway, let's call it midway through that transition at 30 people, right. Like 15 of those people were new and less than 15 were the 15 of the original 22. Right. So there were, there was a fair bit of churn that, that, that we went through as we tried to scale up to meet the opportunity and to. If you can't change the people, change the people. Right. So we, we ended up changing a number, a number of folks out, but we were still able to retain some, some of the legacy employees and they've grown in their careers and, and, and, and grown as managers and leaders in the company to today. That again, I'm super proud of that fact that they, they were, they were on Team Judd pretty fast. I mean, their, their, their livelihoods depended on it to a certain extent, but they, they, they just kind of left their egos and, and the old ways at the door and picked up the new ways kind of almost overnight. Right. And it was, it was pretty amazing to see that not everybody did that. And there were some challenges both immediately and then kind of along that, along that timeline spectrum to the point where we got, I don't even know how many out of the original 22 that are still there. It's got to be less than, it's got to be single digits.

Host: Wow. So in addition to hostility with your seller and monthly lawsuits and going in front of judges and changing the business model and layering in new operations and layering in tech, and you're also dealing with churn and people leaving. I mean, you're trying to completely change the culture. Unbelievable. And, and so, Judd, then the other kind of obvious question is, you know, just to put it very bluntly, why wasn't this, all of this stuff caught in diligence?

Guest: I mean, I asked myself that question or I have asked myself that question a lot since I, since I closed some of it. Like you just couldn't catch unless you knew like what question to ask. And you never would have known what question to ask until you like have operated a business in this space for a period of time. Right? And because I alluded to this before, like we even hired attorneys to help diligence the business, right. And offer an opinion on the business model. And they did in the typical way, typical non committal way that attorneys do. Like, yeah, like this is on the spectrum. Like these are, this is, this is permitted, this is not permitted, etc. But the way in which these guys were going about, going about what they were going about, it was, I don't know, like, could have I caught it. I don't Think so. Right? Yeah. But as I, as I look forward to kind of continuing my career, I learned a lot from it. Right. And I think I've got, I think I've got ways to, to, to, to ask different types of questions or maybe, maybe a different way to answer your questions. Like, could have you caught it or not? It's not the right question is. The right question is, were there other signals. Right. That could have alluded to the fact that something wasn't quite right? The answer to that was yes. Right. In every single business. I mean, I invest in, I invested in small businesses myself. Right. And I saddle up alongside entrepreneurs and try and help them understand the opportunities that they're looking at. And what do people say? Like, every deal has hair on it. Right? So, like, there is no perfect acquisition opportunity. But hindsight being 20 20, and when you look back at the opportunity that I had, there were some other, there were some other indicators where there was smoke. Right. And we, we justified those, we dismissed those, we found ways to, we felt to address those. But when you look at the picture more broadly at a later date, you realize that those were just symptoms of a broader underlying problem that we hadn't discovered.

[59:03] Host: Yeah. So, so difficult. And we haven't even touched on the fact. Let's, let's do that now. What's going on in your personal life? So you also, you, you're doing, you're conducting your search from Boston. This business was in Florida. And you move your family to Florida? Sure.

Guest: Well, my wife was living in Hartford. I was searching from Barcelona. We were switching weekends. We had an apartment both places, so we were switching weekends back and forth. And I alluded to this before, like, we had, we had my son in June of 2018. I had signed the LOI in May. Right. And then we closed in November. So we were new parents. And my wife at that point, like, she was on maternity leave and she had, she had moved into my 300 square foot studio apartment that I had my bachelor pad in Boston. Right. That I was into the accelerator offices out of. Right. So we had our son, we had 300 square feet, right. Like, whoa. I was working 80 hours a week trying to, trying to, like, close this deal. And she was trying to, like, figure out how to be a new mother. Right. Like all at the same time. Time. Right. And it was kind of like we were getting to the point, well, like, if this doesn't work out, like, what are we going to do? Are you going to, like, quit the accelerator and come to Hartford? Because, like, I still have a job there. And we were just trying to like stiff arm a bunch of those conversations and assume that the business was going to close and we were going to ride away into the sunset and move south to sunny Florida right in time for the winter. Right. Which ended up being what happened. But there were a lot of kind of underlying conversations that were, that were happening about a lot of change that happened in our life. Right. And when I reflect on the experience, I think a lot about like I, I was, I was becoming a different person, right. Like, and I couldn't anticipate some of those things when I was contemplated search, when I was contemplating search, when I started search, right before I bought the business and then as I started to operate the business, like, and I think this happens to everybody naturally. But I don't think a lot of people necessarily try and anticipate some of those changes are as thoughtful as they, they might be able to be with, with the benefit of kind of hearing someone like to me tell my story and be like, oh yeah, you're right, like this is a, this is a 10 year commitment and my life's gonna look a lot different 10 years from now. Right. So like as you start to project and think about these things in the future, you can hopefully maybe learn from my experience when I articulate that, like I started out, we were married and like dual income couple, right. And like we went along this spectrum where we had children and we moved and, and Judd got punched in the face at his business. Right. All these things were kind of happening. Background.

[1:01:39] Host: When you say you were a different person or becoming a different person, you know, all these external things are happening. But can you, can you put some color to that? Like how you're, I mean, I assume you mean your actual perspective and personality was, was shifting.

Guest: Yeah. No, I think priorities is a good way to think about it. Right. So like you can't, you can't know how your priorities are going to change. Like before your parent, after your parent, right. Like, I mean we didn't, we didn't like meet each other and get married. We had been married for quite a while. So like my wife and I, we had a nice life. We really enjoyed our relationship. And then, and then my son Logan came in and blew all that up for us. Right. We had another human being to care for and we had to, we had to figure out what that meant. And I think like some of my ambition and aspiration like at the beginning of search was like more self centered that I wanted to do this for Myself and I wanted to scale the opportunity that I was pursuing to like the capabilities that I felt that I had. And then as, as, as my son came into the picture, it was more about like, how do I support my wife and my family. And that was quickly came at odds at like what was required of me as a fiduciary, right. And as the CEO of this business were not only that I had these new priorities in my personal life, but like I had 20 plus people that scaled to 40 plus people that depended on me on a weekly or bi weekly basis to like make sure they got a paycheck. Right. And then I had investors and limited partners that expected a return on their investment. Right. And I had the same, like I was, I was invested, right, Both my personal money as, as, I mean I invested personal money in the deal alongside of my investors, plus I had carried interest on the line, right. So all those things kind of, I don't know, they came, they, they started to come to a head, right? Because it's just a lot, right, to have on your plate all at once as you're, as you're evolving, as, as your personal, as your personal life is evolving.

[1:03:40] Host: Well, it would, it would be a ton to have on your plate even if acquiring a business went well.

Guest: Yeah, sure.

Host: I mean it would be a huge amount to have on your plate even if it is acquisition was going well, but yours was a calamity. So that's, I'm just, I'm over, I'm getting anxiety over here just like thinking about it and putting myself in your shoes. Okay, so, so you start, but you do start slowly, painfully making the needed corrections to the business. So kind of fast forward a little bit. And what did the Note say? About 18 months later you were starting to see a light at the end of the tunnel in terms of getting the business on sound footing and being able to be positioned then to go attack the opportunity properly.

Guest: You know what, Like a year and a half from November 2018, you know when that is, right?

Host: March. March 2020.

Guest: March 2020. Right. So felt like things were settling down a little bit. Right. Had settled the indemnity claim, had kind of, had kind of addressed a lot of the legal matters. We're well on our way to implementing the new technology stack and had grown the headcount and brought in some new people, new leaders, managers, etc. And my birthday is in March and I can remember being out for lunch with my wife in Florida. Right. Right before the world came to a screeching halt. Feeling like More optimistic than I had in a while, right? And then. And then Covid hit, which kind of put me back into that cycle at the business of a ton of stress, right? For very different reasons, right? It was more like, well, how do we. Are we an essential business? Are we not an essential business? How do we operate remotely, right? Like, what impact is this going to have? What. What macro economic impact is this going to have on the business, right? And initially it was like, well, the stock market crashed, right? Like, it looked like we were. We were headed for a recession very quickly, and that was going to have a lagging tailwind benefit to my business because we're a debt collector, right? And then. And then what happened? Right? The government printed trillions of dollars and injected it straight into the real economy. And that's where my. My debtors, right? Or future debtors buy, right? They were all sitting at home watching Netflix on their couch, not forgetting to pay their HOA dues anymore because, like, that's their sanctuary. That's the only place they got to go, right? So our. Our sales funnel, it didn't take like, a nosedive, but it kind of like, flatlined, right? Like, all the growth and the infrastructure, the growth infrastructure that we invested in was like, just wasn't bearing fruit for. For kind of like 12 months or so because the. The environment was just so challenging, right? So it was like it was entering this after. After the initial, initial phase that we talked about the first year and a half or so, right? Like, I was headed into this. This next phase, which ended up being just as challenging and stressful as. As the first phase. And it wasn't. I don't know, it led to the point where it just wasn't sustainable, at least for me personally.

[1:07:02] Host: And so what does that mean? What. What. What were you considering? What. What did you do?

Guest: Yeah, so let's call that that second phase. The, the second year and a half, my wife and I were continuing to have these conversations about expanding our family. She ended up getting pregnant again. So we were about to have another child, and we were living isolated in South Florida with no community, right? So, like, during the first year and a half, it was so challenging that outside of a few people that we had met at our church, like, we just didn't know anybody there, right. We didn't have any friends or family around. And then the world shut down. You kind of like, just had to keep to yourself. And we were just feeling. I mean, my wife had lost her husband to this business, right? I was just kind of either Thinking about it or there all the time. And she was still working part time and raising my son. And then we're about to have another baby. Right.

Host: How old was your first. First son at this point?

Guest: Yeah, so he was born in the middle of 2018, so he would have been going on two years old. Right. And actually when the pandemic first happened, it was like really great for us because we got like a reprieve, right. Like, I didn't have to be at the office because there was nobody there, right. And we didn't have child care because the daycare shut down. So like, I had to come home and be with my son so that my wife could, could work her part time schedule, right. So I would come home, I would go to work in the morning, work out of the empty office just to have the silence to be able to get some work done. And then I come home at 1 or 2 and my wife or my son and I take him in the stroller and we go on. Like, I can literally remember the, the route of the run that I would take them on. The six, six mile run, like every day for like 21 straight days was crazy, right? Like, it never had that consistent of a workout schedule since I bought the business. But like every day that's just kind of what we did. And then I would plug back in and keep working after my wife got done. Right. But like, and, and at the same time, like, we're, we're like thinking about expanding our family and we find out like, this joyous thing that we're gonna have. We're gonna have a daughter to ask to the, to add to our, to add to our family. But it felt like hollow and empty, right? Like I'm just working all the time, right. We're not spending a whole lot of time with each other because either one of us is with the kid or the other is with the kid. And when we're not with the kid, we're working. So we decided to. I decided like, that was the first, the first point where I decided, like, I really need to make a change here. And like, there's no. It's nonsense for me to go work from an empty office when I run a, a business that you can run from anywhere with a laptop and a cell phone. So I made the decision that it would be best for my family, for us to return to Central pa. North. Central Pennsylvania, where, where we grew up and both sets of grandparents were to get some, some support with my son and to help with my daughter as she was Going to come to the world at the. At the end of that year. She ended up being born in December of 2020. So that. That fall, we moved back to Pennsylvania. I was commuting back and forth. I'd go back to Florida a week or two each month and then return to Pennsylvania. And when my daughter was born, this was in the height of one of the second surges of COVID So, like, we just kind of, like, stayed put for, like, three months or so.

[1:10:20] Host: Yeah, December 2020, that was. That was delta time, as I recall. And so did this move to central Pennsylvania with the two sets of grandparents, did it help your family life?

Guest: It did, but it was a band aid on something that needed surgery, if I'm being honest. Right. I mean, it was. It was nice to be around, to be around our families. Unfortunately, this isn't really in the case note, but it's kind of like an aside. Like, I hadn't lived in this area of the country since I was 18, right. And I had kind of changed a lot, but everybody here stayed the same. And that created some friction. I mean, if you recall, it was like the election cycle and. And Covid and vaccine and misinformation and all this stuff. So, like, there was some, like, some underlying friction that I didn't anticipate. I just thought it was. It was be this, like, pan of, like, wonderfulness that, like, I got to be back around my family. And what I realized is, like, I was a bit different, and I was, like, stressed out and working a lot. So, like, it didn't. It didn't manifest exactly the way that we anticipated, but it was. It was a benefit to us. Right? And that benefit was. But it was ultimately a band aid on something that needed some more. More dramatic action than I ended up taking.

Host: And what was that dramatic action?

Guest: So I caught, like, a year or so into that. Into that experience of being back here in Pennsylvania for six months or so. The following spring after my daughter was born, it got to the point where my wife was diagnosed with postpartum anxiety and depression. I was having kind of my own mental and physical struggles with some different stuff and wasn't getting kind of, like, any different or any better at the business. Right. It was just kind of like, continued to be. It continued to be a grind. And I can distinctly remember going out for. For. For a run. And I often come up with some of my best or wildest ideas when I'm out. When I'm out in the mountains running. And I came back and I told my wife I was like, I just, I gotta find a way to take a step back. Right? And she was in the deepest, darkest days of, of her depression, so she just kind of like shrugged her shoulders and was like, yeah, makes sense.

[1:12:51] Host: Right?

Guest: So I kind of like, I, I felt I, I got to the point where, like, I was living with this person that was my best friend, right, and my partner in life, and we had gotten to this, this point of like indifference right, between the two of us. And it just became super clear to me that like, I needed to, to have the courage to take action, to frankly save my marriage and, and, and make sure I was living the values that, that I thought I espoused, right? Of being, of being a good father, of being a good husband. Right. While also making sure I fulfilled my responsibilities to my investors in the business. Right.

Host: Well, it sounds like obviously this whole story is pretty brutal from the moment you acquire, but it sounds like your actual decision to take action was. It was not brutal. I mean, it was, it was kind of, it was kind of like an epiphany on this run, or do I have that wrong? It was, it was, yeah, it was a flash.

Guest: I mean, yeah, I mean, it was, it felt like the right decision. It felt like kind of like an easy decision to make because I just didn't. I mean, what were the other choices? Right? Yeah, like just, just keep going, like, take all this risk. Etc. That being said, like, executing on that decision is an entirely different story. Right? Like, it's hard to approach business partners and say, like, I just can't do this anymore. Right? Like, it's hard to. Especially when, when, when I would say, like, your life is not on solid footing to like, think clearly about the situation and make sure you conduct yourself in the best way. I was fortunate to have like the cohort of CEOs that, that I grew up with, that being able to kind of interact with them and get some advice and having them help level set me. Right. But it was still a really hard experience to kind of go through and relay the information and start to come up with the game plan and know that it wasn't a light switch. Right? Like, I wasn't, I'm not, I wasn't then and I'm not now the type of person that's just going to drop the mic and walk out of the room and say, like, go figure it out. Right? Like, I had, I had responsibilities there and I felt, I felt strongly about making sure that the business would have the best chance of continuing to, to succeed without Me. Right. And that meant that it was going to take a while. Right. And when I approached my investors, I was like, I mean, things are. I've got to make a change personally. Right. But I recognize that, that it's not going to happen overnight. Right. So we've got to start working on this together. So ultimately it took. It took almost six months to transition out of the business. And I'm still involved today, just not in a day to day operating capacity.

[1:15:53] Host: And was it a lot better? Was it a hard sell, for lack of a better word, to your investors? I assume you've been communicating with them all the while. So this might not have been completely out of left field.

Guest: Yeah, yeah. I don't think it came completely out of left field. They'd be the only ones who could answer that question. But I don't think it was a hard sell in the sense that, I don't know, for better or for worse, maybe I didn't conduct myself the way I should have, but I kind of bared my soul a little bit. Right. And was open with them. As open as I was in the case study, as open as I'm being with you and your audience right now, this is really hard. I had a tough thing going on. I wasn't going to be so non humble about it to just try and pretend like there wasn't a problem. Right. So like I, in pretty explicit terms, like, said there was a problem. Right. Also said that I wasn't running away, that I was willing to kind of continue to kind of take the personal risk to have there be a time period over which we kind of figured this out. It wasn't an immediate thing, but it was urgent. Right. And it was something to be needed to be addressed. And fortunately, we were able to identify a leader inside of the business that was going to be suited to take over as CEO. So from a change management perspective, the employees didn't have to deal with an external entrant. Again, what was a critical time for the businesses, they're trying to continue to navigate the pandemic and find ways to ramp up and scale up the sales process. Right. So we had an internal candidate come in and take over. And I had the opportunity to provide a lot of support and do a warm handoff over a period of months, frankly, to make sure that that went as smoothly as possible.

Host: Yeah, that's good. Happy occurrence in the story. Judd. You know, you, you're, you are an ambitious person. You, you said earlier how you, you know, you look to do hard things, you look to you know, to do things that are, you know, make an impact.

[1:18:09] Guest: You.

Host: So typically somebody like that has an ego. You know, probably all, all people who buy businesses and I certainly include myself here. We, we have egos and our, our professional success is an important part. Did, was your, was your ego. How did your ego deal with all of this happening?

Guest: Yeah, I don't know. It's a good question. I think that, I like to think that, that I'm able to check my ego at the door, but at the same time, right, like it was, it was like bruised and maybe it's still a little bit fragile to this day, right? Like writing, the writing the case note was therapeutic in nature, right. It was one of the, one of the personal selfish drivers to do it. The other was like, this stuff's hard. Like other people need to know about this. Like, I, I feel like I can add some value to the, to the community by putting this stuff out there, but you have to be willing to kind of humble yourself a little bit to do that. Right. And I'd argue, right. That I don't know. My, my lesson in humility may have been extreme, but don't go down this path if you're not prepared to be humbled because it is going to happen, right? Like no matter what your outcome in no matter what type of business you buy is, no matter how much money you make or don't make, right? Like you're going to be humbled many times along the way and if you're not prepared for that or that doesn't sound like fun, then like you should like run the other way and not do this because it's definitely going to happen, right? So yeah, I don't know. I think my, I think, I think I'm a low ego guy to begin with, which is why I'm so open to kind of discussing this stuff and sharing it. But I think that, I think you kind of have to have that mix of confidence and humility, right. Like in most things in life, but maybe in this space more than, more than most, where you have to be, you have to be a type A go getter bias, right, for action kind of guy to get anything done. Because sometimes you just got to put the weight of the world on your shoulder. But if you don't have an equal or greater part of your, of your Persona, that's, that's humbo and humble and low ego, like it's going to be challenging, right?

Host: Anyway, yeah, well, I, and to that point of, of all of the kind of all that Happened. You know, I guess. I guess the question would be this. This stuff that's hard, you know, what about. I guess what about your search is in kind of. Sorry, your story is intrinsic to search.

[1:21:00] Guest: I can reflect on both during the search and then during the operations phase, complaining about how hard it was to, like, some of my mentors, right? Like Jim Sharp's a friend and mentor of mine, AJ as well, where we would stay periodically in touch. And I often found myself complaining that it was, like, hard to get an LOI accepted or it was hard to buy a business. And then when I was operating, talking about all the hard things, and I can remember getting, like, a little bit of pushback from them. Like, well, what did you expect? Right? Like, this stuff is hard. And not only that, AJ in particular, I can remember a conversation with him where he's like, well, you think it's easy to become a partner at McKinsey, right? Like, do you think it's easy to, like, rise up the ranks at Goldman? Right? Like, most of the things that the NBAs choose to do, ambitious MBAs choose to do are hard, right? And I think your question about, like, what is intrinsic to search? Right? I think. I think the. The thing that. I think the thing that's intrinsic to search is maybe how personal it becomes, right? Or how personal it can become when you're. When you're undertaking some of these kind of responsibilities, right? So, like, I can imagine. I mean, maybe you get really personally involved on the. On the partner track at a consultancy or in high finance, right? But, like, at the end of the day, I feel like you can probably be, like, a little bit more dispassionate about your employer or whatever, right? Like, at this point, like, you are your own employer. Like, certainly you have stakeholders or bosses or however you want to think about them, but it just becomes so personal so fast, right? And I think, like, the. During the search and in the operating phase, you have, like, all these ups and downs, right? But, like, what makes it so hard is, is that it becomes so personal and so fast. And if you don't have, like, a good support group or a network, that. That just even magnifies that even further, right? So, like, I mean, it's still hard to dampen those things with a peer group or YPO or EO or vistage, right? But those things help. And I think people. People should do those if they can't, if they can't create it themselves. But it's just. It just gets so personal so fast. Last question for you.

Host: Judd. And before you tell us where, how people can reach you, you do see a future for yourself. And you said you'll probably be in small business from here on out, despite the fact that you've got, you know, broken bones to show for your first experience. What, what is it that keeps you addicted?

Guest: I mean, I think it's a, a good use of my experience and skills and aspirations. Right. I just, I don't know, like I grew up in, in an area that like there are only small businesses here, right. Like that's what the economy, the entire economy is made out of, right. Like even like the garbage collection, there is no waste management. They don't come here, right. Because it's just like too small of a market. Right. So like the fabric of the society in which I was raised was composed of these. Right. And I've got many family members that are, are, are entrepreneurs. Right. And that's, that's something that just like resonates with me in a huge way. Like when you go to business school, you get caught up in, in like working for the big company and having stable job and getting the stock options and those kinds of things. And I certainly got caught up in a little bit of myself but like I quickly pushed it aside and I was just like, that's just not me. Right. Like I'm not going to be happy then there. Right. Like anyway, so I, I imagine that I'll always be involved in, in the small business world. And I think after a bit of reflection, I operate at the highest level and the best and I sit in somewhere in between like a purely passive investor and a purely operational day to day CEO. Right. So I'm trying to figure out exactly what that looks like moving forward, but it'll be, it'll be trying to operate there is as often, as frequently as I can.

[1:25:17] Host: How can people reach out to you?

Guest: Judd? Yeah, sure. So as mentioned, I have invested in a fair number of search deals. So if you're raising money for a deal, certainly reach out to me. I also do some paid coaching and advisory work for, for CEOs. So if you're interested in having a periodic touch point with me and you think I can add value, hit me up on LinkedIn or just send me an email. It's easy. Judd. My first name.my last name Lon gmail.com.

Host: great Judd, thank you again for coming and sharing this, this extraordinary and difficult story. I, I, I, I. You know, it's important that stories like these be told and that they're not all happy stories which, you know, acquiring minds, probably 95% of my stories are are that way. So it's important, you know, to have ones like yours aired as well. So thanks for being transparent. I think this is going to be super valuable to folks, and I imagine you'll hear from a lot of them. So and congratulations on surviving. As I said at the top, I think your your story is worthy of a lot of admiration. I mean, what an incredibly difficult situation. And you survived it. And I think with your your your family and your values intact. And that's about, you know, that was what was at stake.

Guest: Yeah. You learned the most from the hardest the hardest experiences. So, yeah, thanks for having me. Will appreciate it. I really enjoyed it and hope this is helpful to your listeners.