Host: Did I get your attention with that number in the headline? As you'll hear, today's guest, Sandy Page is a humble guy, so I had to twist his arm a bit to be able to put that number all over the episode. But it is such a staggering sum, how could I not? This is the remarkable story of a guy who started a traditional search fund at age 48 and went on to deliver record breaking IRR to his investors. Now, even if you're not considering a traditional search fund, and most of you are not, there is a tremendous amount to learn from Sandy's experience. My favorite takeaway is simply that Sandy didn't fit the mold and that made raising money hard. But he persisted, eventually got his search funded and then hit a grand slam. So this one is for all of us in our 40s, 50s and beyond, without MBAs from Harvard or Stanford, and for whom our biggest wins are yet to come. Please enjoy this conversation with Sandy Page, former CEO of Explora Biolabs. Welcome to Acquiring Minds, a podcast about buying businesses. My name is Will Smith. Acquiring an existing business is an awesome opportunity for many entrepreneurs and on this podcast I talk to the people who do it. You already know that business owners are making amazing use of virtual assistants, often based in the Philippines. And while virtual assistants are helpful, virtual professionals are transformative. More Staffing is a boutique agency that hires a players in the Philippines not for simple tasks but for deep competency work. Think operators, supply chain managers, controllers, Moor staffing de risks your engagement with a 12 month guarantee to you and they provide coaching for six months to their talent. When an engagement begins, that means your hire is coached in the background, no additional cost to you so that your working relationship flourishes and is as successful as it can be. Global staffing is increasingly the norm and building the muscle within your business to take advantage of it will be crucial in the years ahead. Speak with More Staffing about the pool of capable, affordable managers they can connect you with. Check out MoreNow co. That's MoreNow Co. Sandy Page welcome to Acquiring Minds.

Guest: It's great to be here. Well, it's funny because I often will listen to you on my morning row and now here you are in person. We actually do exist. I can actually see you.

Host: Yeah, there's a face behind that voice. Sandy, great to have you because this is going to be quite a spectacular story. Last year you exited a business that you'd bought using the traditional search fund model. The growth and exit of your search fund is one of the great outcomes in search. In recent Memory and probably ever now. Despite that it was actually difficult for you to raise money initially for the search fund. You were unconventional in a few ways, so you had to kind of overcome not fitting the profile. We'll get into that a little bit, but we're going to hear the entire saga and story start to finish. Sandy. But as always, let's begin with some backstory. Who are you? Where does this all begin?

[3:43] Guest: So I'm just a guy who grew up in Maine, the youngest of four boys. And Brunswick, Maine was where we grew up. And I went through sort of K through 9 there. And my older brothers, you know, all were sort of local and went off to college and I was quite a bit younger than my next brother up, sort of the oops, baby, if you will. But so I had a little more time kind of at home alone with my parents. My father was the CEO of a local bank. His father had been CEO of the family run woolen manufacturing company. So there was sort of a, a story and narrative, if you will, of, of running businesses, although none of my brothers sort of went in that direction. But it, it stuck in my head as something I wanted to do. Went to college in Vermont at Middlebury College and then returned to Maine and did a range of different things, but starting with working in politics. I worked for now Senator Angus King, but at the time he was just a no name running for governor in the state of Maine. And he ended up winning. And that was kind of the beginning of, if you will, an entrepreneurial journey, taking some chances and working with really, really high quality people who are just good human beings. And I've been lucky to do that sort of all the way along.

Host: And then. So how did this dabbling in politics get you into entrepreneurship proper?

Guest: I don't know that the doubt he had. Well, the candidate, Governor King at the time, Senator King, now had been an entrepreneur himself and had been very successful later in life as an entrepreneur after having been a sort of a lawyer up, up, through. And so he and I spent a year and a half together as you do in those campaigns. I was his driver and his personal assistant and, and so we became good friends and close and, and remain that way. And you know, I watched him take a risk while he had his kids in college that changed the trajectory of his life and an entrepreneurial risk. And so I certainly watched, watched a man and heard the story of a man doing that. But I, I almost think more importantly, what I learned from him up close and personal was a lot about management and communication just how you, how you can speak and convey a message. And in a way, the process of, of raising votes is not unlike raising money. It's important that people like and trust you. And so I, so some of those seeds were planted for me at a rather early age. Watching a, you know, a magician do it, he was, he was remarkable and continues to be.

[6:34] Host: Well, it's, it. The observation about communication is one I've thought about before because we look at politicians not saying anything about your colleague and friend, but we look at politicians and we say to ourselves, there's a lot of repetition. And you, and we all say to ourselves, you know, why, why can't we have higher quality, quality politicians? And then you hear from new CEOs about how difficult communication, getting a message, traveling through the layers of an organization is and what they learn, often the hard way is repetition, repetition, repetition. I mean, if, if you're not sick of hearing yourself, if you don't think that your employees are making fun of you behind your back for saying the same thing too many times, you haven't reached the level of repetition you need to, if you know, and then simplicity and then just keeping the message super clear. So I guess the politicians know what they're doing when it comes to, when it comes to, when it comes to communication.

Guest: The good ones do, that's for sure.

Host: Yeah.

Guest: Yeah.

Host: Well, you end up at business school, which is, as I recall, your first exposure to search and search funds. So let's, let's go from there, right?

Guest: I was a, I was a perfect setup for business school as a medieval history major in college and a, and a classics minor went off and got some experience and then an MBA at Babson. And in between the first and second years, like many people, I did an internship, and in this case, I did it with a gentleman who was based in London who was one of the early, early adopters. This we're talking about, this is going to date me for your team, for your viewers. But this was in 2002 when I got out of business school. So he was an early adopter of searches and search funds and an early investor, one of what we affectionately call the original search fund mafia. And many of them are still out there, although unfortunately he's not. And he encouraged me to go do it right out of Babson. Just as soon as you graduate, go buy a business and we'll invest in you. And I thought it was the dumbest thing I'd ever heard. I'd never managed a P and L, I'd never managed a person. I don't think I had any direct reports at that point. And the prospect that somebody would give me money and somebody would sell me their business in that circumstance just seemed absurd. Recognizing this was pretty early too in search. There probably were 10 or 15 searches going on annually at that stage. So there wasn't, there wasn't any coursework or really very much I could look to, to give me support. So I said thank you very much, I'd love the idea. I do think I'm more of a corporate entrepreneur than an actual sort of creation, zero to one entrepreneur, but I'm going to go get some experience. Important to note too that I was, you know, as I was coming out of B school, I, you know, had a two year old son and a pregnant wife and the prospect of, of doing what you have to do to do search back then on my own, within that circumstances just, I wasn't willing to take that chance. It seemed like hubris.

[9:42] Host: Yeah.

Guest: Went off, got some experience, five or six years, returned to search, got ready to do it. I may have drafted the ppm and at that point my wife ran into it with some health, a real health issue. And we put a pause on it, said now's not the time to go take a big risk like that. Let's, let's get this under control. And I buckled back down to, to get some more operating experience, which I did. And it was. And I did other things that I'm really happy to have done and, and did build my operating resume.

Host: And Sandy, by operating resume you mean you're working in corporate. Essentially corporate jobs.

Guest: Corporate. Corporate jobs. Beginning to be a general manager really of lots of different kinds of industries, lots of different kinds of roles, some finance, some sales, some, some pure operations, raising some money. So I sort of touched on all of those things.

Host: Yep.

Guest: And I felt good about it again. You know, the bug was in me. I returned to it again. My wife got well, we moved out to California, returned to it again and just as I was raising, getting ready to raise her cancer actually returned. And, and so we put a pause on it and unfortunately I ended up, we ended, me, my children and I ended up losing her to cancer. And so that, that, that sort of from my perspective put a, you know, put an end to probably what I, what I thought was going to be a search journey. But as I put my life back together post losing my first wife, I stumbled into a new relationship and a few years later was married again to a woman who was a former CEO and an MBA and was really Tired of hearing me whine about search. And no kidding, I think she actually did say, sandy, it's time to shit or get off that pot. And you're 48. You're not going to do this when you're 51, so either go do it or stop complaining about it. And we were able to because she was working full time and we had at that time together 44 teenagers in high school. So it wasn't really the kind of situation where you would just go, you know, with a high deductible health plan or something and take your chances. So we were able to move on to her health insurance and I went out to raise a fund.

[12:04] Host: Great. So let me stop you there, Sandy. I got some follow up questions here. How many children did you have with your first wife?

Guest: Two.

Host: Two. Okay. Well, I can only imagine what that was like. Rewinding further now to this gentleman who is in the original Search Fund Mafia.

Guest: A couple.

Host: Do you want to share his name?

Guest: Maurice Pinto.

Host: Maurice Pinto. And so for people who know their Search Fund history, is that a name they'll recognize?

Guest: I think the folks in London at LBS may recognize him, but again, you'd have to go back 20 years to see when he was really inactive and terribly active and an advocate. But yeah, the original Search crew, the Bill Egans of the world, some of those guys all certainly remember him as was very involved.

Host: Okay. And we hear Search Fund Mafia, but I've never actually pressed somebody for the definition of that or who is in this, this shadowy mafia. What does it mean exactly? Who are these characters and why are they, why are they so such a cloistered kind of.

Guest: Yeah, they're not at all cloistered. And it's, it's a name I think we give them just because it's a chance to poke them. You know, actually to the contrary, the Search Fund Mafia is the group that, that puts out this data every two years. Search fund performance. And it's actually the opposite of being cloistered. It's here we are, here we're publishing our returns.

Host: Yeah.

Guest: And have been doing so for, for many, many years. And I don't think there's another sector or a slice of private equity that's quite as transparent and honest about its returns. Search Fund Crew is so certainly it's the year of Grossbeck, guys, going back to the early HBS days and the Stanford GSB days when that was 95% of who the searchers, where the searchers came from, sort of cherry picked out of those two schools and, and Many of them are still active. Many of those early invested dollars are still, you know, obviously the assurian dollars are still fueling and have fueled searches, you know, across the US and now internationally too, for two decades.

Host: Thank you for that. Maybe I should do an episode just on, on the kind of the full history and the, in the big names going all the way back to the 80s be kind of interesting.

Guest: Yep.

Host: And then Sandy. So, so when, when Maurice first said go do you should go do a search fund and you, so, so you, you were kind of ambivalent. First of all, risk wise, you had a two year old, I think you said at home wasn't the right time. Also it was such an immature space, it seemed crazy. Hubris was the word you used. But at the same time you did kind of like the idea of some version of entrepreneurship that was not zero to one. So I guess you, you were drawn to it, but not the right time. But clearly then over the intervening, what, 10, 15 years you became enamored of it. Is that, is that kind of the right progression? What changed that? Made you like it more and more and more? Or was it just, was it just kind of one of those bees in your bonnet and eventually you just got to do the thing and the longer it goes, the more it, the more you know there's an itch to scratch.

[15:27] Guest: Yeah, I think it's the latter. It was a BMI bonnet and I kept, I mean by, in fact it's a good segue like how, how did I raise a fund as a 48 year old guy, I think I was the oldest guy out there trying to raise. And the answer, I think the people, the few people who eventually did invest in me and believe me, I tried everybody, all the other people said no. I think part of what they saw was somebody with a fair amount of management experience in general manager legs who just kept coming back to search. I kept trying and bouncing back. And one of the things we all look for now as an investor, I look for some sign of resilience, some really, you know, deep seated sign that you've gotten through some hard stuff and because this is going to be hard and, and I think they may have seen that in my story. I had been knocked down a few times and gotten back up and each time I kept returning to search, trying to find a time to make it work. And so, you know, I guess that's, that's the short answer. Um, it's also true, just from a sort of personal story line, I, I really felt I didn't have any. I'm not particularly imaginative. Um, I'm not a real 00 to one entrepreneur. I don't think creating something from scratch would be something I'd be all that good at. Um, but I did at that point in my career, I had had 10 or 15 years of, of, of general manager roles in a bunch of different industries. So it's kind of a perfect setup if you allow it to be. You can look at it either way. I had one guy who said, no, thankfully, I don't remember who it is because I probably would name them. They said, okay. I try to invest in searches that are really the top decile of the people who are out there and available. Seems to me at 48, if you were top decile, I think he used the word. If you were worth a shit, you'd have made $10 million by now.

Host: Wow.

Guest: And wow. You know, talk about having to get back up and show some resilience. There's, there's sort of a time and so that wasn't the fit for me. But, but it's a fair point. Like you have to have an answer to that. What are you doing at 48 when everybody else doing this is 33, 35. And so that's where you tell your story, right? That's where your communication comes in.

Host: Totally. And I was going to kind of flip it that we might have just gotten a crass version of the answer. I was going to kind of flip it and say, why is being 48 raising a traditional search fund? This thing that needs to be explained away? Why is that age considered a liability instead of this incredible asset? You have more experience. One of the things that we hear time and again about the challenges of search is that, you know, all these young bucks and buckettes have no experience and they're, you know, it's like you said, that's where the hubris comes in, right? It's like, who do you think you are to go be CEO of a company with, with all you got is your MBA and you know, a couple of years is doing X or Y. Meanwhile, you had 15 years of experience. So, so, and I, so I guess, I guess the answer would be, well, you know, if you're 48 and you're not already wildly successful or wealthy in some conventional sense in business, you know, it means that you're, you're not a good jockey. I want to share an update on the acquisition lab. As you know, the lab is a highly vetted cohort based accelerator and community for people serious about buying A business. After going through the Lab's month long intensive, you have ongoing access to almost daily Q and A sessions with advisors, regular live deal reviews with Walker Deibel, author of Buy, then build potential deal team introductions and a very active slack group with other searchers on the path. Well, the update is that the Lab recently passed 60 businesses acquired and for well over $100 million in aggregate transaction value. Also, all members now enjoy lifetime access to the Lab. Because when you buy a business, it's often just the first of many and the Lab wants to support you in every deal, not just your first. Lastly, check out my recent interview with Shane Ursum, episode 105. Shane acquired a business with over $1 million in EBITDA in just six months. And he attributes a lot of his deal success to what he learned in the lab. Check out acquisitionlab.com or email the lab's director, Chelsea Wood.

[20:05] Guest: Chelsea@buythenbuild.com I think it comes down to a couple things. There is a perception, which is not wrong, that there's a level of grind and kind of nuts and bolts involved in a proper search that an older guy later in his or her career wouldn't want to do. Like there's no HR department to call, there is no finance department to tell to run that spreadsheet, and there's nobody to call to ask how your CRM setup is going or whether your website is ready. Those are things you gotta do and it's kind of boring and ugly. And working interns is not any fun necessarily. And finding them and getting them to work for pizza or minimum wage, you know, isn't glamorous. And a lot of folks who are in their, who are very successful and in their late 40s, that may be viewed as a pretty nasty step back. Yeah, and I think that's, that's real. I do remember feeling like, why am I setting up a website here when there's 75 other searchers doing the same damn thing? Like, isn't there just one place I can go to have this done? And, and there are. Now they're called incubators. Right. Or accelerators. Um, they'll, they'll do a lot of that for you. Some of the larger funds will, will help set that stuff up for you. I didn't exist so much and it certainly the accelerators and incubators were not proximate to where I was, where I was going to be based. It's important to point out that my, my struggles in raising the search weren't just about my Age.

[21:43] Host: Okay.

Guest: I was also, as I said, I had four teenagers at home. I was doing a geographic search. I was simply not going to pick up and go anywhere in the US I tried to make a case that Northern California is a pretty big economic unit. And it is. It's. You know, the state of California alone is bigger than India by itself. And. But people don't like geographic searches for roughly half the search investment community. I would say that crosses you off the list. And then finally I went to Babson, which is a fantastic place, but it's. Didn't. It wasn't the gsb and it wasn't. And it wasn't Harvard and. And there are others that. That are perfectly and very good, too. But put those things together and it was sort of like three checks in the wrong box right out of the gate. And that's what made it a little bit more of a struggle. So it took me pretty close to nine months to raise, and I was working for six of those nine months full time, but managed to finally get it closed in the fall of what would have been 2017. I think I closed. Did a cash call on December 15th of 2017, and I think most of those folks were skeptical. There were a lot of half units in my search, and there weren't a lot of people saying, hey, give me two or three units. A lot of people saying, well, just. I'll just try that guy and see what. What comes up. So that was December 15th. And on February 5th, six weeks later, seven weeks later, we had an LOI for the business we ended up acquiring. So I was kind of the oldest guy and I did one of the quickest searches, which either means I said yes to the first thing I could find, or I got really lucky, or both, which is probably more the case because I would have been honest truth, I probably would have been a terrible searcher. Not because I didn't have energy, but just because I watch how these guys do it now and they just know so much more about how to shake deals out of trees and run email campaigns and all these things I'd never even heard of, partly because I was older.

Host: Well, they all learn it, Sandy, and you just hadn't had a chance to learn it yet.

Guest: Thank you. Thank you. That's a nice. That's a nice way to. I still think I would have been terrible at it. Okay. But I knew that the part I would be good at was the part where the value gets created. Yeah, value gets created in running and operating something. And. And so that's what we did and we happened to stumble into something that was exactly what I had been doing for the previous decade with.

[24:19] Host: Well, let me, let me stop you there, Sandy, because as I recall from our pre call, you, well, you ultimately bought a business in an industry that, that search investors don't like that is not very search friendly, which is biotech. But you didn't, you didn't go out announcing that you would do that because that would have been yet one more box that you didn't check to the investment community or did.

Guest: You know that's right. In fact, I think if you look through my sim, you'll find I excluded a few industries, biotech being one of them. I'd come from life sciences and I think I may have been so silly as to say, you know, there are some things we're never going to buy for five or six times ebitda, if they have EBITDA at all. And clearly biotech's one of them. And I also. So there. So there was going to be no biotech and it was going to be a regional search. And the ultimate acquisition was in a biotech services company in San Diego, which is where the headquarters was. And does I live in Northern California. So it wasn't exactly regional. That was maybe one of the harder conversations with my wife was, hey, I think we found the business that we should buy. I know how to run this thing. That's the good news. If the price is right, it's got a great seller, some really interesting dynamics to it that make it worth owning. And then you have that sort of pregnant pause and there's like, okay, but what's coming next? Right, but the headquarters is in San Diego now. It had an operating presence within the circle that I had drawn my geographic search in San Francisco. So I was telling myself and my investors and my wife the story that I could move headquarters sort of over time to San Francisco and that would be fine. We never did that. And I got on a Southwest Airlines flight every week to go to San Diego, which was actually rather easy to do. I could be, I could leave my house here in Davis, California in the morning and be at my desk in san Diego at 8:00am Wow. I rarely did that, but I could do it at a very low cost on Southwest and have actually a good time to myself. I would sit on the left side of the plane and watch the sun come up over the Sierra. So I became a commuter, which I'd always been anyway. I'd been a road warrior for most of my career. And so that part wasn't a big change for me or my family, but I certainly wasn't CEO of a locally found geographic search company. And even had I been, you want these companies when you're doing de novo growth, you want to go national as quickly as you can. And I would have been away anyway. So I don't think it made a big difference. But it, you know, you, you have to be willing to pivot and break the promises you've made yourself if something smarter or better comes along. We all did that pretty well.

[27:20] Host: Well, I want to hear, of course, how you found this business since you weren't doing the traditional, sending out thousands of emails. But I, I, before we get to that, you haven't told us why you decided on a traditional search versus self funded. Was it just having the, you wanted your search to be funded, the, the actual search piece?

Guest: Well, I guess I skipped over that. I had done a self funded search for a year in between jobs earlier in my career, quite probably five, six, seven years after getting out of business school, and it had been a really good experience. I'd gotten two deals to a closing table. I walked away from two closings the night before the transaction was to close because of diligence findings that sort of showed up at the end and were dumped on the table. And, and those were, those were really good learning experiences for me both in terms of what to do and what not to do. And it taught me something about the size of what I could do. I didn't really have any capital to work with and I was trying at the time to buy something that I could just buy myself with a little bit of bank or SBA debt. And the things I was seeing where I was located, which at the time was Maine, were going to be okay, but pretty limiting and certainly wouldn't have been as interesting as what I've ended up doing. So there are just a lot of twists and turns in a life and in a career. Sometimes they work out better for you than they would have if you sort of done everything you wanted to at the time and you just gotta roll with it.

Host: So did your quote unquote negative experience doing a self funded search then inform why you wanted to do the traditional.

Guest: It did. Thank you for following up. Yes. I mean, what it taught me, two things. One, I, I needed a team. I needed a team of people who had closed a deal before and I needed more capital.

Host: Yeah.

Guest: And I didn't, you know, even if I'd wanted to do a search deal at the time, at 48, whatever your net worth is, are you going to commit at all when you got four kids within a few years of college? That probably wasn't a bet I was able to make at that time either. And so the traditional search for me was just a perfect fit and I was able to make a little bit of an income while, you know, while I was doing it. And more importantly, when I got time to look at deals or a deal in particular, there were three or four people I could call and talk to who were going to be investors, who were unbelievably valuable and without whom I could not have closed my deal. There's no doubt about it. It was a bigger deal, it was a little more complicated. It had some hair on it. And I just needed the sophistication that came with people who do this, you know, who have a muscle that flexes every day on this space. And I am forever grateful to all of them for their help.

[30:15] Host: Well, there was a little anecdote that you shared with me on a pre call, which I'm going to draw out of you. But first was also part of the reason you wanted to do traditional search because you just. So you needed more kind of bigger capital going into it because you weren't, you didn't want to necessarily risk everything with four kids on their way to college. But was it also because you wanted to shoot bigger and aim for a bigger pie? So smaller size of a slice of a bigger pie? Sort of thinking, yeah. Which is of course what exactly would happen.

Guest: It is, although, although let's put a pin in that one. Because the, the deal we bought was right in the middle, in the midpoint of search acquisition sizes. It ended up being a bigger outcome. But what we bought was exactly right in the middle of the average. But because I was doing a geographic search, I, I knew I was going to do a geographic deal. I wanted to have the flexibility to do something bigger if I came across it. I mean, when you're, when you're limiting geographic, you have to sort of broaden other pieces of the filter to allow yourself the chance to succeed. And I was making the case that I, you know, I, this isn't my first rodeo. I've been a GM before. I sort of know what I'm doing. I might be able to come across something great that has a little more hair on it. Maybe it's also a little bigger. All those things just called for a traditional model. And yeah, I wouldn't have been all that good holing up in my office and just being A solo, A solo guy. I probably would have done a partnered search if I'd had the chance or I'd had the right partner. I probably would have done an accelerator based or incubator sort of deal if those had existed nearby. Now they're virtual and maybe I would have tried that. But the way it turned out, I'm glad I didn't because I sort of kept all the goodness for myself. But you know, you don't get everything you want to sort of make do

Host: and go, thank you for all this back this kind of leading up to the acquisition. So you finally do the raise the money, but just by the skin of your teeth. Even the investors that did put in only put in some of, only put in half units. But you, within very short order you have a business under loi, although it's in the industry that you promised yourself and your investors you wouldn't look at. So how did, how did this business be? How did you discover it?

Guest: Discovered it because I was making some calls to former clients actually of mine from my previous job, cold calls. And this one came up because I'd been working with one of my investors. Some of the partners at Housatonic Partners had asked for some help from me for what they tried, they're trying to do in healthcare. And we'd sort of created a list of companies on a whiteboard and this one went on one side because it was too small for them and a few other names that I'd come up with went on the left side that were big enough for them. And I chased down the ones on the right and they chased down the ones on the left. And I called this guy the seller and he wasn't a seller at the time, it was a proprietary deal. And we had a chat and he said, you know, sort of the timing is right, happy to have a conversation with you. And, and we had a couple very quick conversations and then we met actually at the JP Morgan conference in the first week of January and very quickly got to terms. And there was. So that's kind of part one. Part two is what I recognized in his business was that it wasn't exactly what I had run. It had an element to it that was much more facilities management, it was much more search like it had a source of recurring revenue that was bulletproof, one to two to three year contracts and those typically don't exist in the biotech services space. And this had a built in financing source that we can talk about that proved to be extraordinarily important to our growth to our equity efficient growth and just a whole bunch of things like that that seemed like there was a lot I could work with even if while I was closing the. By no means did our, for example, our best case look anything like our outcome. Our outcome was in orders of magnitude better than anything we could have hoped for. But it was largely, you know, we saw potential, we saw a twist to the model that could be with a little bit of gasoline could, could maybe really explode. And, and as much as anything you're, you're just trying to get a deal closed that where you can get in the seat and then go make something happen. Yeah, yeah. And this was a good fit.

[35:00] Host: So fortunately and so the end kind of the thinking was it was a good enough fit and it had all these search friendly characteristics that, that overcame the fact that it was in this industry you didn't want to touch initially.

Guest: Yeah. And it wasn't so much that had a problem with the industry, it's just that they didn't. That industry even today doesn't have a lot of search like characteristics. You know we like generally capital light. Well biotech and anything sciencey is typically not capital light. We like recurring revenues. Like I'm talking real recurring revenues, not repeat revenues that we hear people talk about now people try to recast repeat revenues as recurring. They're two different things. Repeat revenues can be great but I'm a fairly strict constructionist in terms of the definitions of recurring. It had really good recurring revenues. It had strong EBITDA margins in the low to mid-20s and a history of growth in the industry and in the company. And those are sort of. That sounds very searchy, doesn't it?

[36:01] Host: Yeah, exactly.

Guest: And if you can get your hands on something like that, that's the goal. That's the nature of this thing. Nothing needs to be perfect but you do sort of need to be true to those kind of magic five things that make search hum. And I think it, it was icing on the cake from my investor standpoint that this was something I'd done before.

Host: Yeah.

Guest: And as a result I think we, we didn't have a gap. We were over subscribed from existing cap table and we're able to get it closed pretty well.

Host: Well that's the other thing. Even though it's in this industry that maybe traditionally isn't one that has these nice characteristics this particular business did and then the CEO, you searcher is somebody who is very experienced in the industry. So that, that certainly is attractive from the investors perspective in yours. Well, let's tell people what Explora Biolabs did.

Guest: Sure.

Host: What is the business?

Guest: So in the world of, of life sciences or drug development specifically, this is the sector called preclinical contract research. So it was what the industry knows as a preclinical croat, that can mean a wide range of things. In this case it was what we call in vivo research. In vivo meaning Latin for in life research, animal research. We're talking about rodent, mouse and rat drug testing. And that's the world I'd come from. I'd worked at the Jackson Laboratory for a decade in some fairly senior roles, delivering mice for research to the world. And we had. The Jackson Laboratory has been doing that for 80 years and more than 80 years now, almost a hundred. And we're. I had, you know, deep experience. That's one of the most respected institutions in that space. And so that was the reason why the seller who had received other calls from searchers and he'd never returned one, why he returned my call was I had come like, you know, he knew my name, he knew where I came from and that was worth at least returning the call. And so what Explora did at the very early years was different than where it ended up. But we did contract research studies and along the way, the entrepreneur, the founder, Dr. Richard Lynn, who might today count as a very good friend and is one of the best human beings you could ever come across in this space, had pivoted a little bit and increasingly started to rent what is now known as vivarium on demand space. So if you're trying to create, think of it like wework but for contract research in animals. And that just didn't exist, frankly. And in areas where there's a lot of biotech density like San Diego where he started, it made sense for these biotechs to not have to build their own vivariums, but just to go next door and rent a 300 square foot room and do their research there. He would provide the room, the equipment and the labor to do most of the work in a one, two or three year deal. Today it seems like not all that innovative an idea at the time. It was very unusual. And he had five or six of those facilities in San Diego and two in San Francisco when we acquired it. So seven, I think in all. And when we sold it, we were, you know, it was de novo expansion. So we, we just sort of punched out new facilities across the U.S. i think we had 18 operating in a, in a, in a path to 25 kind of under development, but most of those were pre sold capacity. So by the time our beginning and an end happened and we sold on forward earnings against 25 facilities because they'd already been filled effectively before they'd been opened and that was a big part of the business. That piece when we bought it was maybe 30 or 40% of the total revenues. By the time we sold it it was probably 70 or 80% of the revenues and, and just a high quality revenue at that.

[40:22] Host: Yeah. And, and so it really is like we work because these vivariums on demand, you're outfitting space for this particular need of these drug clinical tests or drug manufacturers doing tests.

Guest: Right.

Host: Probably tripping up on my vocabulary here. And but you are not landlords really or maybe kind of. But you don't own the buildings, you don't own the real estate. You're a sub, you are, you are renting it from the landlord and then you are outfitting it with everything that needed to convert it into a vivarium and then sub leasing that to your clients. And that's what wework does. Wework doesn't own its property as I understand it either.

Guest: That's right. And so the difference, I mean I think when wework out fits its space, it spends I'm going to say 200, $250 a square foot in tenant improvements in the capital to build a vivarium. It can be 7 or $800 a square foot. So it's very expensive infrastructure to build. It's basically a clean room, class 100 clean room when it's done properly. And that has big H vac requirements that need to be, you know, backed up and access requirements that are quite different, floor and wall materials that are quite different, lighting and equ. Quite different. And so it ends up being very expensive space. And if you're a biotech with a series A round raised and you've raised 25, 35, shoot. Now people are raising $100 million. It really doesn't make sense to spend, you know, five or $10 million if it's even, even that much on tenant improvements. I mean taking, there's an asset mismatch there of, of taking expensive private equity or venture and putting it into real estate. Those two things just don't match. And by the way, the smart landlords, the big ones like Alexandria and Biomed, Longfellow Breakthrough, they don't want you sticking a small vivarium in the middle of one of their floor plans because chances are that you're going to be gone as a biotech in three to five years anyway, because most don't succeed and so they don't want that thing that the next tenant may or may not need stuck in the middle of their floor plan. So there was a lot about our model that we were able to develop and teach the landlords that in fact we think of us as an amenity. If we are an amenity to your development or your building, you should put us in your basement, you should finance our construction and then we will run it. And you don't have to mess with the other six or ten floors above us by sticking two or three vivariums in terrible places from an engineering perspective or a future perspective. And we ended up knowing more about, I had to become a real estate expert, a commercial life science real estate expert. We ended up knowing more about the clients, sometimes the tenants, than the landlord did. And we often were the first to hear that there was a change coming. And so it became this very useful two sided marketplace. We would build a facility for sure, we'd sign a long term lease, 10, 12, 15 years with the landlord, but we would get paid by the client for using the space. We'd also get paid by the landlord in the form of loading our lease with tenant improvement capital. And so they were effectively providing relatively low interest, non recourse. Junior highly subordinated off balance sheet debt through our leases. And they were bolted onto our leases in a way that you really couldn't shake it if you wanted to, but it wasn't debt. And that changed somewhat over time as the gap accounting for leases changed, but it still wasn't debt. Now the banks recognize a lease when they see it. And when they saw lease obligations of our scale, by the time we had some substance, they were very afraid to loan to us. And so we really needed that landlord channel of capital to be, to be humming. And I spent in truth, because I had built a great team right out of the gate. I probably spent 75% of my time managing the real estate pipeline and managing the relationships at the CEO level with Alexandria and Biomed and all these other life science real estate firms so that we were getting access to the capital we needed in order to grow at the rate that we thought we could.

[45:06] Host: Well, that was a great summary, Sandy, of how you kind of kicked off this explosive growth. Let's, let's rewind just a bit to when you bought the business. How, how large was it, how many employees, revenue, ebitda, if you can share that. And then I'll have a follow up question.

Guest: Sure. I mean it Was, I think it was 25 or 30 people. It was roughly $10 million in revenue. It was roughly 25% EBITDA margins in the first, in the 12 months prior to acquisition. But it was at an inflection point. At the point we bought it, there was some facilities that had just opened and that were filling pretty rapidly. So we saw really rapid month over month gains. In fact, I think for the first, for the years that we owned it, I think I, I'm comfortable saying this. We had month over month, consecutive month revenue gains every month except for April and May of 2020, when Covid hit. By June of that year, we were back to where we were in March and the rate of growth continued on. And so while we bought something at traditional search fund multiples, two and a half million of EBITDA roughly, we were very quickly ahead of the game and we were very quickly onto something that we felt like if we just continued to step on the gas here, we would be creating a lot of value. And we were, we started at two and a half million and what we sold was basically 18 million of EBITDA on a forward multiple of. If you, if you buy at six, six and a half and you sell at 17 x 17 times 18 is a, is a bigger number. The ultimate selling price was $295 million.

Host: And did you hear that, audience? $295 million. So as I said at the top, one of the great search outcomes ever. Sorry, Sandy. Just had to, just had to make sure that people's attention is trained on that number.

Guest: It's a big number. And it also happened, that happened in three years and 10 months. So kind of what has to go right? Everybody's like, oh my God, what has to go right? Well, a lot of things have to go right. And guess what? Not all of them are in the CEO's control. In fact, frankly, most aren't. There's a lot of, a lot of people out there listening who are a hell of a lot smarter than me, who work a hell of a lot harder than I do, and who aren't going to deliver that kind of result despite the fact that they're better at what they do than I was. There was a lot that had to go right. There were a couple things in particular, one or two that I. Decisions I made early on that ended up being really just fundamentally crucial to the, to the outcome. The most important of which is I. It wasn't my first rodeo in hiring a senior team and I was able to hire the right three, four Five senior leaders really quickly and not have to replace and try again. As I learned how to hire senior folk, I got really lucky, clearly. But I also had done it before, so I had confidence in my decisions. And the board importantly knew they weren't dealing with a first time CEO. I was showing them, by the way I was performing that I could handle these decisions. And they were testing me for sure. But they, you know, they didn't get in my way and they.

[48:53] Host: What do you mean they were testing you? They were stress testing the decision.

Guest: Absolutely. Yeah, yeah, yeah. They were stress testing the decisions, asking why this is the right guy, offering to interview as well, which, which I took advantage of and some cases and you know, those, you know, original kind of five, they knew, they know who they are. The Todd, Brandy, Tiffany, Wendell, Charlie's of, of the explorer story, all were there and there was no turnover there. They, they stayed and they were the ones who did all the work. Now you don't, you don't do that kind of, I'm here talking to you, but they're the ones who did all the work. Right. Because there's no way one person's responsible for that kind of outcome. And even giving them all that credit, a whole bunch of other things needed to be going our way. And a lot of things did. We were good at what we did for sure. Our competition happened to be a little slower and a little more corporate and a little more bureaucratic and a little more indecisive. So that was great to run against that kind of competition. And then the whole industry was with that much venture capital getting put to work in biotech at the time as it was filling with just tons and tons of crazy money. The only way for them to get started quickly with their preclinical pipeline was to use our space. So we were very often filling spaces before they opened and pre selling. You know, we often wouldn't sign a lease unless we had an anchor tenant for the space. So we're able to kind of de risk our growth in that way.

Host: Well, Sandy, it sounds like a great kind of picks and shovels business. There's this gold rush going on and you're not, you're not competing in the gold rush. You're selling the, the tools that are necessary for those who are competing in the gold rush to do their thing.

Guest: That's exactly right. And that's a great place to be. I just, it sounds, I hear myself talking whenever I tell this story and it sounds so simple, but I have to convey kind of the terror I felt every time I signed a lease, I mean, you're signing these leases that are 15 year lease that starts at $90 a square foot and escalates at 3% a year. I mean, you're just not getting out of that long term contractual obligation. You better have it full. And you know, those were none of these, not none of these. Some of these were slam dunks, but some of these were, these were, this was really hard work. And it felt like we were way out on the tip of a spear on a new industry. And many times we were putting a facility where none had existed and we were creating the demand because people didn't even know they needed this. So it, you know, it definitely felt like we were taking a ton of risk. Easy with retrospect to say we weren't.

[51:49] Host: But Sandy, let's linger on that for a couple reasons. First of all, when you say 15 year leases, so you're, you're literally, I mean you're, you're recognizing that this industry is white hot, that there's venture capital pouring into it. But you also know from your years of experience that no industry, however hot, it won't remain that hot for very long. There's only so much capital that can go into a super hot, super expensive industry. Venture capital wasn't going to continue to pour in for 15 years. I mean for five years, let alone 15. So.

Guest: And it stopped. It has stopped and it did.

Host: Right. And it stopped shortly thereafter. So. But you must have, you must have known that, that, that. So, so how are you convincing yourself to do fit? Were were you kind of thinking you'd kick the can a little bit?

Guest: No, I think that's why the board and we as a board member, we decided we would force a lot of discipline on us in terms of what le to sign. And if we didn't have 20, the rule I, we tried to stick to was if we didn't have 30% of the capacity pre sold for, for half the term of lease. So let me say that again. 30% of the capacity of the facility pre sold for roughly half the term of the lease, then only then would I sign the lease. So I would typically negotiate it, get it all queued up, and then sit on it until we had sold pre sold that capacity. And those were contracts that were take or pay. If somebody signed a deal with us for five years for three rooms, that's $75,000 a month for five years that they owe us. As soon as they move in, it's not like they can step out after one, there's no exits. So you felt like if you could do that, you had a contract to cover roughly almost the equivalent of the rent dollars over the whole term if you take away some of the escalators. So we were very disciplined about doing that. There was one case where we, where we took a chance and did something sort of on spec because we needed to move so quickly. We weren't going to, we were actually going to be able to sign the lease faster than we could probably get the clients to sign the contracts. And we did that. But it was a very small space. It was 5,000 square foot feet and we had at that point 100,000 square foot space in operation. So we didn't feel like we were taking that big of a, of a risk. And it was South San Francisco, lots of reason to think we could keep the space full. So you know, the way you point out a really good point, which is in a cyclical bubbly sort of industry, how do you, how do you know how far out in front of the market to get? I think the truth is we were about as far out as we were comfortable going, as far I was comfortable going. And we were going to be pulling back in the subsequent couple years had we not sold it and pulling back meaning we probably wouldn't have expanded at the same rate and we probably would have gotten into different aspects of the services that can be provided to vivarium tenants as well. And we might have grown through additional means. But yeah, as I watch what's happened in the last 15 months since we sold, there is a supply and demand imbalance I think in the product that we created and the competitors and our acquirer have, are now in the process of rationalizing kind of the, the go forward capacity for this product in the areas of biotech density. And so I'm glad not to be a part of that. That would have been, that would have been really uncomfortable.

[55:27] Host: Yeah. Well, you know, one of the interesting things I'm hearing out of you, Sandy, is that you are on the one hand you're saying how disciplined you all were, which I, I'm not being skeptical of. But on the other hand, on the other hand, you're characterizing your moves as tip of the spear, really more aggressive, more fast moving than your competitors. So, so on the other hand, there's definitely an aspect here of having a high risk tolerance. Even though you're being disciplined, you're threading a needle here. But, but, but complacent. You aren't. I mean you, it seems like and now this. I'm going to tie this back to giving you and your team some credit for a spectacular exit. It seems like you saw a window of opportunity and you just went balls to the wall. And that's often how fortunes are made.

Guest: Yeah, I don't think that's wrong. It's also a little more clear eyed than it was at the time because you're in the middle of something moving that fast year over year growth of 40%. You're just trying to keep your head above water and you're trying to come up with a strategic plan for the, you know, you don't do a five year strategic plan when you're growing at 40%. You're just trying to make sure you're not going to run out of cash or you're going to, you know, you're not going to step on your air hose and be late on, on a bunch of projects. And so yes, while we were trying to go as fast as we could to stay ahead in particular of the strategic and make sure we were getting all the best locations, we were also terrified. I was terrified that, that all it takes. I mean think about it. Some of these rent, rent bills were $130,000 a month.

[57:17] Host: Yeah.

Guest: It doesn't take many months of an empty facility at $130,000 a month to start really ruining, burning some cash. So we were watching Occupancy, you know, weekly, almost daily and being just, we had fantastic data on our business that, that just gave us insights that, that I think even the current owner probably doesn't have. So I, Your comment, your comment takes me back. As I mentioned earlier, I went to Babson which is rated as like number one in entrepreneurship. And I remember one of the classes and one of the professors was talking about how entrepreneurs are this funny mix of, of the most risk averse people you've ever met. They just, entrepreneurs hate risk. And so you have this sort of inherently risky enterprise being run by somebody who is constantly trying to manage risk. And that's kind of, that tension is what makes it interesting to study and terrifying to do and exhilarating when it goes well.

Host: Well, as I hear about how everything you just said and you know, these leases that you're locking yourselves into and you know, one missed month could mean a, you know, $150,000 bill you can't pay. You know, it's just, it's, it's reinforcing the fact that this is basically real estate dynamics.

Guest: Yeah.

Host: And, and you know, real estate has, has destroyed as many Fortunes as it's made. And so, you know, this feels like a class. If it hadn't. If you hadn't timed it right, and if it hadn't gone well, it feels like a classic story of real estate where you're overextended on your real estate obligations. You know, rent demand dries up and then. And then just, you're just collapse under the weight of your obligations.

Guest: They call it lease overhang is what they call the space. And, and I think the, the exhibit A for this is obviously we work. And I'm the guy, I'm actually the guy who wrote a sim who said, this is the we work. The we work of, of the mouse research industry. Because at the time, that was a cool thing to say. And about six months later, I wish I hadn't said it, but fortunately we'd closed the deal and I never really said it again. But what I did do is we went back through all of WeWork's filings, and WeWork is really good at a number of things. They knew data better than anybody. And so we learned a ton from how they went about choosing their locations. We mined their data analytics. We borrowed as many of their good ideas as we could get our hands on. I spent time talking to one of their CFOs, and it was a lot about what they did that was fantastic. The lease overhang is obviously a real risk, and we were determined not to. Not to. Not to be in the same position. And a lot of that just has to do with rate of growth. I mean, the WeWork concept isn't bad. I mean, that's why Regis. Regis has hump chugged along and is as good and better at it than they are and makes money. It's because they didn't get as far out in front of their skis as WeWork did. Yeah, and we were, you know, determined not to be. Not to be. That. Yeah, our clients were doing different. I think important to note our clients were doing different things than WeWork's clients or WeWork's client, you know, has an alternative, and that's to go sit at Starbucks for free and use their Internet. They don't get free Kombucha, but, you know, you can go sit at Starbucks and put your headphones on and get some work done. Our clients were locked in a room. We had the key. Their IP was being generated in our rooms. And their next round, or even milestone in their current round of funding probably relied on the data coming out of the room that they were getting from us. So There is a level of stickiness to that relationship and the contract that comes out of that that was very

[1:01:20] Host: different than we work now that's such an important point, right? Wework at least, at least to like an individual user. I know they sign, they sign leases with longer term folks. But part of the we work value prop is for kind of the independent contractor type is flexibility and so you could, you know, month to month contracts that we work are a thing. Well, I, I just still trying to tease out how, how a searcher, all my searchers can, can make $300 million themselves.

Guest: I did not make that by the way. That's. This searcher did not make $300 million, I promise.

Host: No, no, I, I know but can. Million dollar exit. Sorry. 295 million. The seller rolled some equity. There were investors, but there's still, there's still a lot of pie to go around there. So yeah, headline number, let's just call it 300 for shorthand. You're so, so you get into this. So rewinding now to when you get into this business, it doesn't sound like you had to pay much of a premium in terms of multiple, even though this was a growthy business. Why not?

Guest: Well, I think if you were to ask our seller, Dr. Lynn that question, you probably say we should have now, but it wasn't worth at the time a premium. To be honest. It, you know, my argument as a buyer was you have lots of lease overhang, lots of lease obligations that are effectively debt. You've got some growth, but your margins are impacted by the growth. So I can't tell you what the true margin, steady state margin really is because the growth has probably been knocking it down. You're really just air quotes here. Just a facilities management company, if that's what you're interested in, was the vivarium on demand piece. But the preclinical drug efficacy CROs didn't trade don't and still don't at huge multiples, particularly the smaller ones, because there's often key man risk associated with them and key person risk associated with them. And they're not contractual revenues. Right. They're very project driven and sources of funding kind of rise and fall with the client's interest in particular areas of research. So they're relatively low barrier to entries. The small preclinical in vivo CROs are. And we were able to get it at a reasonable discount. You could argue it was worth a turn or two more than we paid. But there wouldn't have been any proof to point to that there were companies of this size being sold for a lot more than we bought it for at the time. As you, as you gain scale and your ebitda goes from 2 to 5 to 7 to 10 to 12, the market, obviously demand increases, but there just aren't a lot of buyers and there weren't then of the smaller ones because it's really hard to know what you got and whether it's sticky.

[1:04:34] Host: Well, okay, second point, perfect segue. When you got in there and you saw under the covers what you got, you had said, I think I heard you say that it was, there was a mix of services being offered and the revenue that ended up being the real driver that you poured gasoline on was what? Like did you, didn't you say 40, 40, 50% of the business?

Guest: So I think that's about right, yeah.

Host: So was it, was it an insight on your and your team's part that oh, this is where the real opportunity is? Was that a big strategic decision to say this, this is the 50% of the revenue that we want to double down on and not the rest?

Guest: Yeah, I mean it's, it's a combination of things. I mean, just from the crudest perspective, you're listening to demand signals. What are your customers asking for?

Host: Yeah.

Guest: What are you selling? That goes most quickly. And you know, by the way, we did that growth largely with one salesperson. Wow. And so she's coming in saying, I've already sold out the new building, you know, and, and just by answering the phone and as we tell her to go, go sell the other stuff, she's like, I've got to go work hard to sell that stuff. And so that, you know, it doesn't take an MBA or any. As I said, I'm not particularly smart, but I do listen. And, and so off I went to find some more space and build some more buildings and get her to go fill them up. And it was sort of an all hands on deck at that pace. Everybody's involved in selling the VP of ops, she's involved in selling the cfo, he's involved. Everybody's sort of trying to keep things going and fill the space. But one of the beauties of the product at the time we were selling it was the landlords really wanted the facilities in their buildings. And so they were a channel, a distribution channel for us. And that's the beauty of our model. The two sided marketplace really was both sides of the marketplace had demand and one side, the landlord was eager to send qualified leads our way. And they were Often very easy to close. I mean really easy to close. And when you did, you're selling a three, a three year contract, so.

[1:06:49] Host: Yeah, but Sandy, why, why is the landlord sending you leads since they've already leased it to you so their, their income is assured? Why do they care whether or not you're. I mean, they want you to survive, I guess. Is that simple as that?

Guest: They certainly want us to survive. But there's. So imagine the hypothetical five story life science building. Pretend it's 50,000 square feet in, you know, per story. A landlord doesn't want a vivarium on each floor. You know, they just. Because the vivarium demands for H Vac, for engineering, for electricity, airflows, all those things and proximity to the elevator are very unique and it influences how the rest of the building gets designed and adds expense. Much better for the landlord to put us in the basement because then they can go to the tenant who comes and says, hey, I want the second floor, I want to put a vivarium in the middle. The landlord goes, no, no, no, no. Guess what? You can just rent some space in the basement from Explora. Let's get your space designed upstairs in a way that's cheaper for you. And tenants would say, great, show me where. Don't tell me who to call because I don't want to come to your building until I have my vivarium Problem solved. They would call us, we'd give them their contract, they'd sign it, then they'd go sign the lease. I mean it was this, this truly virtuous cycle where everything just had momentum and we were often getting signals of demand from, from clients about where they wanted to be before the landlords even knew somebody was in the market. It was, it was wonderful.

Host: Right, Right. Yeah. So I guess I. What I missed what you. Well, you'd said earlier that essentially you're, you're amenitizing, you're providing this incredible amenity to the building. So the landlord loves that. But I guess I also didn't realize that. Yeah. So the, the vivarium is just one, one part of an office area of a tenant space. So they'll have the offices above and then they'll just. And so there's still more to rent. So I'm thinking that the vivarium is the whole space. But no, that's just. No where they go do, you know, three rooms to do their lab work, but then they've got the back office or whatever.

[1:09:02] Guest: Well, and the, and the landlord, remember who's putting a fair amount of capital into Any life science lease, in addition to our own, they would put a few hundred dollars into a typical lease. They're very concerned that, that, that they not have to rip that out three, four, five years later. In fact, I think Alexandria even had an internal metric called the reusability of their ti investment. Somehow they tracked how long their investment would be able to be monetized. In other words, when this biotech runs out of money and goes belly up because their drug doesn't work, can somebody else step into that space and reuse it as is, or do they need to rip out a vivarium and stick it back in? It's very similar, the dynamics. And some of our investors recognized it's very similar to the Data center story 20 years ago of how data centers operated. And everybody used to, you know, you build a new, a new office space, you'd put in a 5,000 square foot data center. Right? Everybody did that for a stretch of time. Nobody does that anymore. You just put in a big, big fiber optic pipe and you go get it from Amazon or somebody like that. It's sort of the same idea. It's a little different because people like to be close to their animals in the animal research space for good reason. But a lot of the business dynamics were really rather similar.

Host: Well, Sandy, I want to wrap up the story here and then just ask you some kind of bigger picture questions. So you told us the headline number. You had this exit. You grew revenue. Excuse me, you grew EBITDA to 18 million from two and a half million when you, when you bought it. So that's what you grew at seven times profit. We're talking earnings. And, and how many people? It was 25 to 30 when you bought it. And then how many people was it when it was 18 million?

Guest: Yeah, we did one acquisition. I think by the time we ended it was 125 or 35 people. So it's on a revenue per employee basis. A very strong number because largely because of that sort of inherent rent that's bundled into the work, there was a lot of rent buried in our revenue. I put air quotes around rent because it wasn't a true rent. It was a management contract, service contract. But yeah, that was. By the time we sold it, we quadrupled the labor.

Host: And who did you sell to and why did that transaction occur?

Guest: We sold to Charles River Laboratories, which is the largest. I think their market cap is $12 billion today. They're people I knew because I had been in the space previously. They were in this particular vivarium on Demand space sort of chasing us and they'd been in it for some time and had. They had actually, I learned later, they had actually looked at Explora prior to us buying it, but felt it was too small and not worth buying. And they just keep an eye on it. And so I was just barely smart enough to keep thick lines of communication with them open throughout the whole operating period because I knew while there were a lot of different prospective buyers, they were certainly going to be on the list of people who might want to own us. And they're an acquisitive company for sure. It was important that we stay ahead of them, that we end up being a thorn in their side, that we steal their best people, that we steal the best opportunities, that we, that we steal contracts from clients they thought were, were always going to be theirs and, and we were, we turned out to be pretty good at that. So they ended up being the buyer.

[1:12:44] Host: The top line number, which I won't repeat again, I've said it enough times and I think it makes you a little uncomfortable every time I say it. But there, but there is a. The IRR of this acquisition, growth and exit, which is of course one certainly investors treat it maybe as the most important metric of an investment. The IRR of performance of your search what complete that sentence for me.

Guest: Yeah, it was really, really high. I don't know, I don't actually know what the number is. I haven't ever dared look at it. But, but because that you ended up with a multi moic, a multiple of invested capital that was sort of in the 27, 28 range, within, you know, under four years, three years and 10 months, you end up with a. Just a sky high irr. And then there was, there was even a dividend sort of early on that helped goose out a little bit. So yeah, I mean it ended up being a number you'd be. The MOIC is one you'd be happy with probably over 10 or 15 or 20 years. But it just all sort of by contracting it into less than 4, drove the IRR through the roof.

Host: Now, well done.

Guest: It's important again to say it was an equity efficient growth model. And what I mean by that is we didn't have to keep raising any equity as proven by the fact that we paid a dividend because the growth capital was provided largely by the landlords. Clients when they signed a contract with us would also front end some of the money. They were sitting on a big fundraising round. They would, we would ask if they wanted to buy down their rate a little bit by providing some upfront money. So we were often sitting in a very good cash position all the way through this period of growth and. But we would not have had that sort of multiple. It wouldn't have taken much actually to have to have driven, cut that multiple in half. That moic, if we'd had to provide any of that growth capital from equity, it would have been a quite a different story.

[1:15:00] Host: Yeah, for sure. And when you did exit, why you had been keeping the. You had been staying very much on the radar of Charles river, stealing their customers, keeping the lines of communication open. Yeah, they'd been interested in the business before you bought it. But did when it actually came time to do this deal, did they approach you or did you approach them?

Guest: They approached us. And I had, I had had a sense that there was a change coming, that there was so much life science real estate that was going to hit the market that the hockey stick of venture capital into biotech could not continue and that our strategic, who had an enormous balance sheet and an actual real credit rating was getting more and more convinced that this was a space they wanted to be in. And if you put a landlord, any decent landlord in the position of renting 20,000 square feet to Explora or to Charles river, they will take the credit of Charles River 10 out of 10 times, all other things being roughly equal. That's just, they have to do that. They have their own covenants that call for that. And as also Charles river would sign a longer term lease than we would, they would provide all of their own capital for the TI's and we were asking the landlords to front it. And I just had a sense and it started to happen where there were some things we had started, opportunities we had seeded and germinated and developed, where we were starting to find ourselves competing against the balance sheet of Charles River. And I just knew that we were going to start losing at a higher rate and we were going to, in the best locations get crammed down and we would have ended up in second tier locations. There could have been a really terrible thing that would happen to pricing. It could be out of our control. If Charles river really wanted to do that, they could have afforded to do that. So the world was sort of closing in in that sense. Having said that, nobody on my cap table wanted to sell. This was the best performing asset in all of their portfolios. Like why would we sell now? The whole point is like long term hold and compounding, Right? Yeah. And so I had to work fairly Hard to convince people that now that was the right time. It was made a little easier by the fact that I was by then in my early 50s. And you know, if, if we screwed this up and didn't get the next move right, I did. I wasn't going to be at this for another 10 years to try to, you know, get back to that kind of valuation. And I think if I had been 40, though, I might have actually said, all right, we'll just double down and throw, leave all our bones on the table and see what we can make of this. So some of it had to do with the fact that I was a little more risk averse, just having been around the block a few times and I think others there were. When I, when I laid out the strategic situation to my board, they got it, they got it, they understood. But you know, you never want your best performing asset to stop performing. And there's a way to avoid it. You, you look for it.

[1:18:06] Host: Who knows if you probably can't say what went back and forth, but that call from Charles river to you could have been kind of like something in the movies where it was kind of, it's kind of like you will either sell to us or we will destroy or we will destroy you. Because there are.

Guest: That was never said. That was never said. And I know they're listening right now. That was never said. I definitely felt that though. Yeah, I mean, they, you know, I know how capital allocations work at large companies and there was capital allocated in that direction one way or another. So they wouldn't have been, I don't think they would have been that predatory. That's not in their style. They're good people and it wouldn't have been good for their own business to have been predatory. But they were going to get into the space one way or another in a much bigger way than they had been. And that was going to be mostly at our expense. So there was a lot of kind of rationalization that had to go on around that understanding and sort of socialization of that understanding amongst our board and cap table. And in the end everybody was fine with it, obviously. And then there's sort of a point where you start tipping and nobody wants to sell and then you agree to go sell and everybody's like, okay, how much? How much? Yeah, and as soon as you get into the process, it's like, when am I going to get my return? Nobody, you know, they sort of like, they put up, they dig their heels and dig their heels in and then it's it's okay.

Host: And then, and then the greed takes over like once they've opened their minds.

Guest: Yeah, I totally, which is completely rational. I don't blame anybody. I'm shoot, I'm now sitting in their shoes. So I get, get it never happened to me yet.

Host: I want to ask you about now being an investor, but first I want to close out this, this topic of age. So we've, we've, we've talked, we've touched on it now multiple times. Is there anything more to say about doing this when you did it at 48 and maybe more specifically? There were, are definitely going to be plenty of people in their 40s, maybe 50s, maybe older listening to this. So I, you know, I resist the, I resist kind of the, the idea that the profile of, of all my listeners are you know, 28 year olds. Especially, especially because acquisition entrepreneurship is actually a wonderful path, particularly for somebody mid career, particularly for somebody with executive experience. And you know, your exhibit A, I mean one of the things that you yourself said was that one of the kind of big strategic decisions that you made that was so meaningful was you came in, you hired a great team, people you knew from years of experience. You knew how to be, how to, how to recruit them, how to bring them with you and then how to unleash them and guide them as their leader. And that's all. And as you said, like the, the, your investors kind of stress tested your decisions but saw that you were a capable leader and trusted your decisions in a way that they wouldn't have if you'd been a 20 or 7 or 28 year old. So, so you really are exhibit A for the value of doing this as a mid career person. So I really want to encourage this path for people who are mid career, a little bit older than, than the avatar suggests. So all that, with all that preamble, what would you say to my 40 and 50 year old listeners?

[1:21:27] Guest: I think if this is particularly, if this is something you can prove to me that you've been wanting to do for some period of time, get on it, there's just no better time than now. And understand that the pressure test you're going to get from the investor is sort of proved to me that it's like you couldn't become a CEO through your current path. So you're going to try to sort of buy your way into it with my money as an investor. Now I want to know that there's more to it than that. Right? You got to have a degree of hustle for this to Work, you've got to have an appetite for some risk for this to work. You've earned, if you're good in your mid-40s, the right to try some hard stuff and to try maybe some stuff that's a little hairier or a little uglier or a little more interesting. But boy, you better have a plan going into that right? You better have a team to do the work because you can't do it by yourself. And what I would say to people who are, and I talk, believe me, anybody over 45 looking at search gets sent to me these days just like anybody looking at life science gets sent to me these days. I talk to everybody and I tell everybody the same thing. You've got to go do this. And one way to find out whether it's for you is to go try to raise a traditional search. If you can talk 12, 15, 20 people into filling out your cap table, then you get the first step done. That's how you can do it. Or just like maybe more of your listeners, if you've accumulated some degree of wealth or even not go do it some other way. Like if you can't do or don't want to do traditional, do it, just do it. Because there's no greater wealth creation than sort of small business in America, right? And this country is not perfect by a long shot but I think it's still pretty damn good place to be an entrepreneur and to prove the capitalisms again a very imperfect but good way to build family with family wealth.

Host: And Sandy, just to tease out a little bit stuff I just heard you say, if you're say talking to a 40 something or 50 something mid career person who wants to go down this path is one of the, one of the things that you look for or hope that they have access to a team like you did. So, so it. Would that be one of the things that they should lead with? Look, it's, it's me you're investing in, but I know all these people that you know for the right acquisition I bring with me. Is that part of the pitch?

[1:24:11] Guest: I don't think that's directly the pitch, but it does. You know, for example, if, if somebody comes to me and they've been at, I don't know, at, at IBM at Intel for 10 years, for example, you know, then I'm going to want them right out of the gate to look for good search companies that service intel, right? Use the skills you've got and don't, don't you know, work for Goodyear for running supply chain for, for the last five years and come out and sell me. You're going to go buy a SaaS company, maybe you will, but you're going to have a much higher hit rate on phone calls returned or emails returned by dealing in the supply chain or in the world that you've come from. By necessity, the people I end up talking to are people who have mid level or upper mid level careers and aren't coming and they're not typically coming out of Bain or McKinsey or BCG in their late 40s. Usually those are folks who have. The consulting folks are coming sort of right on mba, haven't consulted before or gone back to consult for a few years and decided that they wanted to get into search. But it's usually operators who are mid to late career searchers I think and I hope. Well, I think it's too soon to tell whether I'm a how big an aberration I am. I accept that I was really lucky and I was a. An outlier for sure in a lot of ways. But I'd like to think that in five or 10 years we can look back and say the search community has broadened and we're by the way for the record, hope we broaden it and more than just with respect to age. I hope we broaden it with respect to gender, I hope we broaden it with respect to race and ethnicity. I hope we broaden it with respect to industries and find ways to sort of get into new industries as I did that that are good for everybody, for the whole ecosystem.

Host: And I don't want to belabor this question of self funded versus traditional but just because it was a big decision for you, you tried self funded then ultimately which went traditional. And I think I just heard you did. I just hear you kind of suggest that traditional seems like a more obvious path for somebody who's mid career or just two case by case. Not necessarily at all.

Guest: It's case by case. Okay. More what I was trying to say is it's more important that you do search than that you get traditional versus self funded. Right. Whatever is the one that's going to get you searching most quickly is the one that's right for you.

[1:27:04] Host: Yeah.

Guest: And fair enough to say also the one that makes that you feel where you'll be the most successful. But frankly getting on the field as quickly as possible and actually searching and talking to sellers is really the only time you end up buying anything. You don't buy any. You don't buy anything. Thinking about it or complaining to your wife on a Friday night.

Host: Yeah. So you're invoking your, your wife's do your business or get off the pot people.

Guest: Indeed I am. I will. She's, she's the reason I'm here today, for sure.

Host: Anything else, Sandy, that you would impart, and especially now that you're an investor, you've just been giving us a window into your own kind of what you tell prospective searchers who call you. Is there anything more that you want to tell them? Any mistakes you see people make other than inaction? Any. Anything else that I didn't ask.

Guest: I think, I think mainly it's just a really remarkable group. Both the traditional and the self funded world. I'm sure they're out there, but I haven't met any jerks yet. You know, there's just, there's a level of transparency and collegiality and collaboration that goes with this section of little slice of private equity that doesn't exist in the rest of private equity. It doesn't exist in venture, it doesn't exist in hedge. It's a really unusual little niche we've all stumbled into and it's not going away. I mean, as you know, you built a really successful business here around talking about it and this transition of the baby boomers who are running their businesses still needs to happen and it's going to happen slowly. And there's still hundreds of thousands of businesses that need to be bought and carried forward. And, you know, I just, I think it's a fortunate place for me to have landed. I'm really glad I got that burr in my saddle early on. And we'll thank Maurice Pinto for having put it there. And just anybody who's stubborn enough to keep listening to you every morning or any number of times should, should spend half the time listening to you and the other half getting on the phone and calling sellers and going, making it happen.

Host: Yes, well, against my own self interest, I will, I will, I will support that advice. Stop listening to podcasts, everybody, and go out there and take some action. All right, Sandy, if people want to reach out, how do you, how do you like for people to do that?

Guest: LinkedIn is a good way to get to me.

Host: Okay.

Guest: And I'm pretty responsive that way. And yeah, LinkedIn.

Host: Great, great.

Guest: P A. My last name is spelled P A I G E. P A I G E. Sandy Page.

Host: And you might have more success searching for Nathaniel Page, which you and I talked about. Sandy, is where you go back. Well, Sandy, thank you very much for coming on and sharing this epic tale of search and all the interesting wrinkles and. And how you took a while to get. Get. Get cracking, but once you did. Boy, that was a fast. A fast and spectacular success. So, catching up for lost time, I guess?

[1:30:19] Guest: Yes, indeed. Yes, sir. Thanks, Will.