Host: Yes, buying a business is difficult. Yes, it's messy and you get beat up a bit. But sometimes, sometimes it goes smoothly. Tyler o' Connor loves golf and on a whim Tyler searched for golf related businesses on BizBuySell. Wouldn't you know it a really interesting one came up. A golf school with relationships with beautiful golf courses around the country and old golf pros who provide the individualized instruction. A good sized business from a revenue perspective and great margins to boot. And Tyler bought it and now owns it and it's pretty great. I'm really happy for him. As you'll hear, Tyler is a man of energy. He was preparing for the two year search grind. So I have no doubt that Tyler would have been successful even if things didn't end up breaking his way as they did. It is a fun and hopeful story and Tyler's a fantastic interview. Here he is. Tyler o', Connor, owner of Bird Golf Academy. 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. 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. Chelseieve.com Tyler O', Connor thank you for joining me today on Acquiring Minds. Tyler, you're the owner of Bird Golf Academy, a golf school, so it's a really neat business even for those of us completely ignorant about golf. But for people like you who are golf enthusiasts, I imagine it's a dream. So this is a great story, one that I think is going to cause a little bit of envy because quite a bit broke your way during this acquisition. But we'll get there. Start us off, Tyler, with some background on you.

[3:10] Guest: Oh, thanks, Will. Well, first off, let me say it's a pleasure to be on your podcast. I've been listening to you since I got into the world of search, and it's been a. It's been a real. It's a great tool for me as a searcher, and I certainly recommend everyone else to listen to this as well. So anyways, thank you. Myself, I kind of come from an entrepreneurial family. My dad was an entrepreneur and I knew that I always kind of wanted to get into this space and do my own thing. I think everyone's dream is to be their own boss. My background I did my undergrad at Arizona State University. I immediately commissioned as an officer in the army, and it was an active duty for six years with a couple of deployments to Afghanistan, a Stint in Washington, D.C. when I got out of the Army, I finished my. I did my MBA at George Washington University and immediately went into kind of government consulting from there. And funny enough, my concentration during my MBA was entrepreneurship and sports management. I, you know, this now, years later. It's funny how things kind of come full circle and those two are actually kind of relevant, you know, unlike my bachelor's degree in political science. So, yeah, I did. I was in consulting for about four and a half years, and I think by the end of it, I was quiet quitting before quiet quitting even was a thing. I was just so bored and not interested and was kind of. I thought that I had built up the necessary skill set to kind of go out and do something on my own. And that's, that's when I started looking for a business.

Host: Now, Tyler, I recall you not being that familiar or familiar at all with the idea of search search funds, what have you, and you kind of hearing about it, kind of overhearing a conversation at a conference or something. How did you discover search?

Guest: Yeah, that's right. I was at a work conference and I was talking to a couple of guys that were, frankly, they were a lot younger than me and they were getting ready to go into business school. And they were talking to me about the traditional search fund model and how they were going to go do this and then start a search fund and someone was going to pay their salary. And that's what a traditional search fund is. I think that folks that listen to your podcast probably know what that is. And I started asking Questions, well, what if I wanted to do this myself? And they said, yeah, that's called self funded searching. And all these light bulbs started going off in my head immediately. And I got back from this conference and I was so energized and so excited. And I immediately kind of went to my wife and I said, listen, I've got a plan, I've got a roadmap. I know how to do this, I know the steps involved, and I want to do this. And that's kind of what started my path. I think that for people that are looking to do this, it's fun to say, I'm going to do this someday. I'm going to do this someday. What you really need is a roadmap, or you need a plan. You need someone to show you the necessary steps to get there. And that's what these guys did for me with this conference was they told me, listen, there's a way to do this. You don't have to be the next Steve Jobs. You can go and buy a business and be your own boss right away.

Host: Yeah, yeah. And was this a conversation over, like a single conversation over lunch, or was this a. A longer conversation? Because the way you're making it sound is like they really, you know, kind of laid it all out and there's a lot to lay out there.

[6:11] Guest: It was like one of those, like work happy hour events. And, you know, we were probably a couple drinks in, and so I was asking all kinds of questions and you know, what turned into like a conversation over a beer ended up being a two, two and a half hour conversation, followed up with emails with all these HBR studies and things of that nature. So, yeah, that's kind of how it kind of came to be.

Host: And you went on to read the books, I imagine, and of course, check all those boxes.

Guest: Yep, absolutely. Yeah. The hbr and, and buy, then build. Those are like the Bibles. I tell everyone that is interested, like these. This is where you start. And, you know, read those right away, immediately. And started to kind of get educated between those books, different podcasts like yours. I'm a huge advocate for the Twitter community because you don't even have to participate. Just by following and reading these tweets that these professionals and these people are putting out there, you're going to see ideas that you didn't think of, different strategies that you didn't think of. And now you can kind of come back to that and be like, wait a minute, I saw something where this guy put a deal together and he used very Little or none of his own money to buy a business. And just kind of being in that space, you're going to see things that you wouldn't have normally thought of.

Host: Yeah, for sure. I second your. Your enthusiasm for S and P. Twitter, the. So. So where are we now? So you've come back from this conference. You're already. You're already kind of disillusioned with your consulting career or current job, at least. What year is this and what happens next?

Guest: This is this year. So you and I are talking on December 19, 2022. This was in end of February, beginning of March 2022. So about nine, 10 months ago, I came back from this conference and I knew the kind of. The first step was figure out how can I quit my job and start searching full time. And probably the hardest part is how am I going to convince my wife to let me do this? As you can imagine, we had a pretty comfortable lifestyle. I had a very comfortable salary. And we were accustomed to, like I said, a certain lifestyle. And so to convince my wife that let's give this up and go buy a business. Because my argument to her was that I've always wanted to do this. I will always want to do this, be an entrepreneur. We don't have kids yet. Let's do this now before we have kids. We're very stable in our professional lives or in our financial lives. So we can afford to take a risk right now, because once we have kids, it's probably not going to be the case. And once I got her on board and I kind of showed her the path, I said, listen, this is the plan. This is how we do this. This is very tactically how we do this. She came around. And then once she was on board with the idea, the rest was easy.

[9:07] Host: And was the perceived risk just in striking out on your own and becoming a business owner and all the obvious risk that that entails? Or was it. And. Or was it the time, the time of your search where you weren't going to have an income and you were going to be depleting savings until you found that business?

Guest: Yeah, yeah. The perceived risk was giving up a salary to go full time. We had at the time, two mortgages. And so how are we going to financially make this work without having a salary? And so what I decided to do was sell our. We had an investment property in Phoenix, Arizona. We were going to sell that. And now looking back, we literally sold at the top of the market for Phoenix, Arizona. I mean, so many things that this story is just like so kismet or, you know, it's amazing all this came together when it did.

Host: Luck.

Guest: Just call it good luck. Yeah, honestly. And so we literally sold at the top of the market. We've got this cash from the sale of the house that is going to finance our lifestyle for the next two years. You know, we're going to do 24 months to find a business. And if that didn't work, the plan was to go back into consulting.

Host: And were you going to reduce your spending, your personal spending, household spending in, during those time, during those two years?

Guest: Yeah, absolutely. I mean the good thing was like, if you take, if you're a W2 employee and you look at your paycheck and you see that you have all this money going out for in your taxes and your FICA and your Medicare and your Social Security and then your 401k contributions and your IRA contributions. But if you're paying yourself, you don't have that. So if I'm just paying myself and my salary, I'm not paying taxes on that. So I was kind of able to show, okay, this is what we take home and every month from our W2. Well, this is what we would take home if we were living off of our savings. And the difference was, was almost minuscule. Basically what I was telling my wife is like, listen, our, you know, your day to day lifestyle really won't change that much. You know, we'll cut back on a couple of vacations here and there. Yeah. But generally speaking, like, you know, we can do this based on the amount of money that we have in the savings and, and you know, basically following this formula.

Host: So, so it's like if, let's say you're making 100 grand a year in salary to, to replace that, your actual take home what goes in your pocket, in from your savings, maybe in your savings, you only really need 70 grand. Yeah, that 100 grand on your W2.

Guest: Exactly. Yeah. You know, and you're, you're basically what, you're, what you're giving up is the 401k contributions. You're giving up your IRA contributions every month. But in the grand scheme of things, you know, one or two years of IRA contributions and 401k, you will hopefully make that up in the equity in your business down the road once you find something.

Host: Yep, sure. Okay. So we're in March Marchish when you, when you do this?

[12:05] Guest: Yeah, it was, yeah, it came up right around March. We kind of, once, once my wife had agreed, my next step was to kind of start that the, the tactical steps of becoming a searcher. You know, you get your email, you get a website set up. You know, you just kind of start reaching out to brokers. I did an LLC for my search. Looking back, I don't know if I really needed one. I think it's kind of 50, 50 on that. If you're going to do like this long, prolonged search, it's probably a good idea to have one. But yeah, once. Once we set that up, it was kind of off to the races.

Host: And. Okay, you were gearing up for a long search. I mean, as long as two years. And so you were kind of mentally prepared for that. But so, okay, so tell us what happens as you, as you start searching and.

Guest: Right.

Host: And that kind of fateful, quick search that led to something amazing.

Guest: Yeah, this is, this is actually kind of the fun part. And now as I look back on it, okay, I had a very specific plan. This was. Now we're at March, right? My wife is on board. We're going to do this search thing. I had some military commitments that I had to do because at this point I was in the Army Reserves. And that's a, that's a story for another time. But I had some army commitments in July that I had to do. The plan was to kind of get everything set, get my LLC going, get everything ready, and then go do my military commitments in July, come back, quit my W2, start full time in July. And now we're in eight April. And I'm just kind of, you know, every night, you know, you're kind of looking at biz by sell, or you're just kind of browsing and seeing kind of what's out there. And I happened to come across this golf business. And I had, I had, I had seen some other things too. I had sent out some feelers to brokers, got some sims looked at, like some construction things. And obviously, like, every searcher wants the H Vac company. Right? I mean, that's like, that's, that's the dream and that's kind of what I was looking for. And every time I told someone that I was going to quit my job and buy a business, I would always use the words like, I'm going to buy a boring business and I'm going to freaking love it. You know what I mean? And it's Easter weekend. I said, mom, I'm going to quit my job and I'm going to buy a really boring business. And I'm going to. That's what I'm going to do. And I thought that she would say, you know, you've got this great job, you've got a stable income, make sure you want to do this. But it really wasn't like that. She said, tyler, you've always been successful in everything you've done. Just do something that you're passionate about and don't do H Vac or don't do small manufacturing or whatever. And I had never even thought about that. I had never once thought, like, let me do something that I really love. So I get back home and it's a Monday night at like 10 o' clock at night and I'm on biz myself. And I just happened to, let's just do a search in the golf industry. I loved golf. Let's just see what's out there. And it was a lot of golf courses and real estate for sale. And. And then I happened to see this golf school, no picture, very brief description of the company. And so I emailed the broker, I said, let's just see what this is. And again, this is. Well before I had planned to go full time in the search. This is back in April. We weren't planning on going full time until July. So I get the sim from the broker.

[15:17] Host: This is you just poking around biz by sell on the heels of a conversation with your mom, who is like, hey, I endorse you quitting to buy a business. But don't buy something boring. Buy something that turns you on. And you're like, okay, let me just see what's out there. And yeah, exactly.

Guest: And if you would have told me, like, you're going to buy a business in the golf industry, like, that's like me telling you I'm going to be an astronaut when I grow up. Like, okay, cool. Like, I know you love the golf, but like, let's be real here and come to find out golf is like this, like luca their industry. So yeah, we start talking to the broker and things are just looking like really, really good. I mean the, we've got the financials. I see this like massive tailwinds in the industry and the numbers from 2020 to 2021 to 2022, practically doubling year after year. In 2022 is projected to be this like banner year for this company, right? And they were going to do mid to low seven figures in revenue. So I was really excited. But at the same time I kind of knew. Well, all the stories I hear about searchers, it generally takes three. Lois. That's kind of the rule of thumb is like, you know, you'll close in your business on your third one. It's never the first one. So I was waiting for the house of cards to fall. I was looking for, waiting for the red flags to show up. And every time I saw something that may have been a red flag, it actually was the opposite. It was almost a moat. And it was almost like, this is a pro, not a conversation.

Host: Yeah.

Guest: And can you, can you give us an example of one of those main golf course that we used accounted for a significant portion of the business. And to me, I thought that that was a obviously, like, you know, like if you have all your customers in like one segment or, you know, that's a risk, you know, because what if you lose that one golf course and you lose like this all, you know, a significant chunk of your business? So I thought, well, if we lose this one golf course now, we're going to really be in trouble. But it's not really the case. Like the, it's in the golf course's best interest to have us there because we're bringing in this one golf course, we're going to bring in over a million dollars of revenue for them. Between hotel rooms, spa packages, restaurant tea times, they want us there more than we need them. So if we would have lost that golf course, you just go to one right down the road and say, hey, listen, I just brought these guys a million dollars a year. Do you want this business?

Host: So it really wasn't because they're also a vendor. They're not, they're not a customer. Right. The golf courses are your vendors. Yeah. Okay. Yeah. You're paying. Yeah.

Guest: Yep.

Host: Yeah.

Guest: Yeah.

Host: Well, Tyler, let's back, let's back up a little bit just to fully understand the business more. Yeah. So. So, so what did you find on this biz by sell listing? And once you got the same, like, what's this business all about?

[18:04] Guest: So the business offers three, four and five day golf schools, one on one and two on one golf schools at these beautiful resorts and beautiful golf courses all around the country. 20 plus locations from Florida, California, Arizona, Vermont, Pennsylvania, Oregon, you know, all over the place. And there's a stable of, you know, 14, 15, now 16 instructors that travel around and they do these golf schools.

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Guest: they were doing in revenue projected for 2022 was mid to low seven figures in revenue and the profitability and was roughly 30 to 35% profitability coming off of that, of that revenue number. Does that help?

Host: Okay, so, so that's, so that's a low to mid. Yeah, low to mid seven figures. So let, you know, let's, I don't know, anywhere from whatever 3 to 6 million, let's call it in revenue and then 30, 35% margins. So that's a, not only is it, you know, in your, the industry and in the sport that you're so passionate about, but that's a, that's a size of a business that is really hard to find for a searcher. I mean, that's, you know, that by, by my math that, you know, that gets in, gets you to, you know, just below or just above a million bucks in, in, in ebitda. So that's, we're all, that's what we're all looking for.

Guest: It's important to note that obviously the SBA will loan on tax returns, right? So remember where we are. We're back in April and May of this year. And this is, this is projected for 2022. This is, it's a, it's a cyclical business. So we knew at this point roughly what 2022 was going to be. But I couldn't depend on that number when I went to the sba because they're just going to tell me, okay, well, show me the 2021 numbers. Show me the last three years. Well, when you go back and you look at 2020, 2020, when they had to shut down operations in the middle of their busy season and 2019 was nowhere even close to what we're doing in 2022, I mean, if you would have used those numbers, there's no way that we would have gotten this deal done. So the seller wanted to sell the business based on the value of the 2022 sales, which I completely understood. But I had to kind of, I had to be creative in how we were going to structure that, get him a number that he was comfortable with and try to incorporate the 2022 while still protecting myself and still getting a number that the bank was going to be comfortable with, using the previous financials that were, that we were going to use the tax returns on.

[21:49] Host: Well, and I mean, that's the thing, Tyler, is that, yeah, the sba, I mean, you doesn't like actually to see, doesn't like to finance business that are seeing a ton of growth because there's, there's less predictability there. And while that can be a drag, it's also can be a good backstop because it should force you, the buyer, to ask yourself like, well, yeah, I mean, is this, is this growth, you know, an aberration or is it sustainable and when's it going to stop? And, you know, especially the growth you're seeing doubling year over year. So how did you get comfortable with. Because it sounds like you were comfortable. You just felt you needed to convince the sba. How did you, internally, in your own mind, get comfortable with this? You know that you're going to buy a business whose valuation is based on, you know, future earnings this coming year. Right.

Guest: Well, I, I think that my personality, just who I am, I'm, I am willing to accept a little bit more risk than some other people would, generally speaking. So I kind of was okay with it myself. I, like I said, I, I golf all the time. I'm, you know, I saw what the industry was doing and how Covid gave this, gave golf a huge bump. I didn't think that was going away anytime soon. So I was kind of okay with it. The way that we talked to and talked to the bank about it was that we did get a Q of A quality of earnings. And for those who aren't familiar with that, that's basically, it's kind of like an audit, but not quite as in depth. They're basically confirming the EBITDA of the business of what's being reported. So it's their job to go in and say, yes, this business is doing the amount that they have reported on, and that was done by a third party. So once the QV was done, then the bank was a little bit more comfortable. We saw what the trailing 12 months was for 2022. We had a really good understanding of what the year was going to end up at. And once we had that, we were kind of able to go to the bank and structure a deal that actually worked.

Host: Okay, and I want to get into that a little bit, but a few more contextual questions on the business. First of all, cash flow cycle of this business is awesome, right? Because the, the students pay up front and then all of your expenses are paid later. Right. So that's good. The, you know, you're talking about the doubling year over year. And if you look back at say 2019, like revenues are way less than you're projecting for 2022 and basing your valuation on how old is, is this business?

[24:14] Guest: So we're 20 years old. So started in 1999, first school was sold in 2020. So yeah, it's just then, then the seller's life work, he's done a fantastic job building this, building this company up for over 20 years all across the country. Some of these instructors have been with the company for, for, for so long, you know, 17, 20 years, you know, and they've had more, they've had more employees, they've lost more employees due to death than they have to quitting or firing anyone, you know. So when we look at like the turnover of your employees, I would much rather have something like that than something in tech where they're going to go to fang when they get a, when they get an offer that's in the hundreds of thousands of dollars for a salary and you have so much turnover. So that was kind of another one of the, like, the red flags that I, that I saw was these, these instructors, you know, what happens when you lose one or two of your instructors? Well, frankly, like, if you look at the history of the business, they don't leave and, you know, we take care of them. The salary of a PGA pro, I think nationally you could probably look it up. They're. The average salary of a teaching pro is probably somewhere in like the 60, the low 70,000 number range. We have some instructors who will do so many schools this year, they'll make over a hundred thousand dollars this year, you know, so they can make the money. They're all independent contractors. They work as much or as little as they like. And so once I realized that that wasn't quite a red flag either, that made me even more comfortable with it.

Host: And the red flag, to be clear, was also that the kind of the average age of your instructors is, you know, maybe more approaching retirement, at least more so than you might be comfortable with at first glance.

Guest: Yes, it is. They are on the older side. But now that I've come to work in this business for six months or so, the majority of our clients are of that age. They're retiring baby boomer generations who they want to get out and play golf. I have more people ask me, how old is the instructor? We want someone older, you know, than anyone asking for younger. So it's, that's another thing that's like, okay, well, we're okay with this because they're older themselves. They want an older instructor. And we have more than 50% of our business comes from repeat students because they have developed such a great relationship with their instructor.

Host: Yeah, yeah. And Tyler, so about just going back to the growth in the age of the business. So, you know, it sounds like an, like a 2022, this banner year, really impressive business. But was it a pretty small business for the 2010s and early 20 teens? Because, you know, if it's doubling year over year, you know, if you divide 2022 by two and then 20, you know, 2021 by two, you get to a pretty small business pretty quickly. So, you know, did you have insight into those financials and just. Yeah, kind of, kind of 20 year old businesses can. Can. That's a long time. So how did you get, how did you wrap your head around like the age of the business and the size that had it had grown to over those 20 years?

[27:23] Guest: Oh, yeah, I mean, absolutely. You know, back in the earlier years, you know, I have numbers going back to the formation of the company and you can see year over year that number of schools that they're doing. So by no means was this like booming operation for the past 20 years and this guy's sitting on millions of dollars. It's not like that. You know, this seller, there were years when he wasn't paying himself at all and he was taking all this risk. You know, it's very much like a startup. You know, it took a while to get where he is now. There were years where the business really suffered. And one example of that, I think was in the early teams, Google had changed their algorithm and they were basically blacklisted from Google search and they had to spend hundreds of thousands of dollars to undo that. You know, so they saw a huge drop. And that's a risk that, you know, business owners need to be willing to accept and kind of have a plan to get through.

Host: Yeah, yeah. Okay. And then last question on the business itself. So you as a golf enthusiast was this. Are there like a lot of businesses out there like this where did you see this? And you were immediately familiar with, like, oh, yeah, I've seen courses like this for sale. I understand this business just, like, immediately, or is this kind of some niche that even somebody who's. Who's an avid golfer like you, you know, it's like, kind of like news to you that such a business existed?

Guest: No, I mean, I had taken golf lessons, you know, from individuals before, so I always knew that this was a thing. I always thought that the golf instructor was paired to a certain golf course, and that is very much the case. And there's big names out there like Jacobs school or the Pells short game or Butch Harmon school out in Vegas. So you have some of these big names in golf that are instructors, and those schools are tied to those individuals. So I certainly knew that these were out there. But the beautiful, beautiful thing with this one is that, you know, there's. There's 20 plus locations around the country. We partner with the golf courses we have. If you were to look at the resumes of our instructors, you know, you could put up. Put us up against any of these schools. And I think that, you know, we would have, you know, our bonafides would. Would match up with any of those big names, hands down. We've got, you know, former major champions. You know, dude, real, real professional instructors.

Host: And so some of these instructors would be brand names again, for people who know the sport of golf.

Guest: If you're old enough.

[30:00] Host: You know what I mean?

Guest: You know, if you're old enough, you certainly remember them playing on tour. Yeah. Okay, great.

Host: Okay, so. And one other question for you, Tyler, because it does seem like just a great business. Why do you think that nobody else had scooped it up? Why hadn't he sold to one of his competitors? You know, it's. It's. I mean, there's also. There's the remote angle. You know, he's. He's diversified across all these different courses, all these different markets. Lends itself very well, as you said, you know, huge tailwinds in golf because of COVID like, and. And just great cash flow. So it seems like there's everything to love about this business, and yet it was just sitting up there on biz buy, sell. Why?

Guest: That's a great question, and I wish I had, like, a hard and fast answer for you, but basically, what I can tell you is that I know that they had, you know, between 25 and 35 people reach out for the sim sign NDAs. But the seller told the broker, you know, anytime somebody kind of came close he said, no, you know what, I really want to sell to Tyler. And we just kind of developed this relationship over time where we became comfortable with each other. He didn't want to sell to a big management company like a Golf Tech or a Trun or whoever. I think he wanted to kind of keep it personal. You know, he wanted to sell to an individual, a person who would take this, this company forward for the next 20 years. Not necessarily a corporation. So I think I had that going for me. He, he appreciated my background, he appreciated the intensity and the love of this business. I found this business. I absolutely loved it. I. When we were waiting, we weren't exclusive when, when I had the LOI signed. We were not exclusive until I had the letter of commitment from the bank. The bank would not give the letter of commitment until we had the, the Q of E done right to confirm the, the EBITDA. So that was about two months between the LOI being submitted. No, I'm sorry. About one month, about 30 days. I was so nervous, so nervous that someone else was going to come in and take this deal from under me after I had put out all these deal costs, you know, paying for the qob, paying for the lawyers, paying for all this stuff out of pocket. Someone could have easily come in and given him, offered him full price. And he just, you know, see you later, Tyler, and I'm out of the money. I stayed up nights sweating, thinking that was going to happen. Thankfully, it never did.

Host: Yeah, and how much, how much had you invested at that point? What were your deal costs at that point? To give people a sense,

Guest: probably close to 20 grand. I think I was probably committed roughly. I don't recall exactly. The one awesome feeling was when I bought the Q of E, we did pay half up front and then half when it was finished. And so at this point, we were selling the investment property to pay for all this. And I had all this money coming out of the bank account to like, you know, painting the house and listening to how, you know, all the, all the costs associated with selling a house and then buying a business at the exact same time and all these. So anyways, fast forward. The Q of E guy comes back when I'm about to write this check when it's all done and emails me. He says, tyler, I normally wouldn't do this, but this is a golf thing. How about you save the money and give me a golf school once you guys close? I was elated. I was like, oh my God. At this point I kind of knew that the stars were aligned. I immediately emailed me, I was like, hell yeah, absolutely, man.

[33:32] Host: That's super cool.

Guest: And just the fact that he was willing to do that also kind of told me, hey, I've seen the numbers of this business. I believe in it. It's going to be around. He's not going to go out of business. He's going to get. So at that point I was so energized. I was so excited. And it saved me a couple thousand dollars at the time when cash flow was really something that was on my mind.

Host: Has he booked his course yet?

Guest: He took his lesson. I think it was late last month. And we spoke afterwards and he had a great relationship with the pro and we wanted to take care of him as best we could. So he really enjoyed himself. Yeah.

Host: Awesome, awesome. Okay, so. And let's just get into the mechanics of the deal a little bit. So you just alluded to not offering full price and finally getting the bank on board. I know you had investors involved, so lay all of that out for us.

Guest: Okay. So we originally proposed the deal with 15% seller financing. And then there were a couple other things involved on top of that, like 100k for like non compete and consulting fee. For the first six months. My equity injection was going to be about 400,000 and then the SBA was going to cover everything else. So the SBA, I don't know, whatever that came out to be, 75% or something like that. And then the working capital, we would figure that out later. What ended up happening was we got everything done, everyone was on board. We had to change the non competes and the consulting fee and kind of wrap that up into the seller finance bit. And by the end of it, he ended up with roughly 20% of a seller note. And part of that was a seller standby note. And I'll get into that here in a second. So by the end it was roughly 20% seller finance, 75% with the SBA. And then I came up with the other 5%.

Host: Okay, and your 400 equity injection, was that all you Tyler out of his pocket or did you, you had equity investors?

Guest: I had, I had investors. I had. Well, we originally were going to go with myself and four other guys and we ended up with myself and three other guys. The fourth guy was, he was going to come in with the most 175,000 and in exchange for that, I was going to give him something like 7 1/2% equity. That's not necessarily what the math kind of works out to, but I was Going to give him extra because he was coming in with the most money. So here we are, I've got all the money lined up, I've got all my investors lined up. The one guy who's going to come in for the most is going to invest through his self directed pension plan because he's an entrepreneur, he owns a very successful business himself. Wanted to get involved in the golf game. Good friend of mine, we met on the golf course and the bank is telling me, okay, this is fine, this is good, we're going to close. We're about to close on a Friday and it is now Thursday, the day before the. Now the Wednesday prior, day before that, the bank, or I'm sorry, the Fed, had just raised rates. So we're like, I got to get this thing done, you know, know. The banker calls me on Thursday and he says, listen, this deal, if we go, if he invests through his pension fund, not an individual, his pension fund, it's going to have to go up a higher level to like SBA proper to get approval or whatever. You know, so. And he's like, you don't want to do this. This is going to open a whole can of worms. This deal might not get done. And I was like. And I'm thinking to myself, well, the Fed just raised rates. We're already razor thin on the debt coverage and everything like that. If we have to go back and get this reapproved, there's no way it's going to make it out of the approval committee. So I had to call this investor who was willing to stick his neck out for me and put his money on the line and say, listen, I'm sorry, I cannot take your money. And that was a really difficult call to make. But he understood. I told him why. I said, frankly, it's just not going to happen if we use the pension fund money. So here we are, 24 hours before the deal is about to close. I'm actually driving. I live in D.C. i'm driving down Rock Creek Parkway. I'm coming up next to the Kennedy Center, I've got the Lincoln Memorial on my left hand side. I call the broker and I tell him I'm kind of keeping him in the loop on like how I'm financing this thing, how we're doing this. And I tell him the situation. I said, listen, the bank is not going to accept this guy's money. I've got to come up with $175,000. Here's what I'm willing to do. We're going to take. We had already worked out the working capital. I said, let's go back on the working capital number, and if the seller will take this 175,000 as a second note on standby to. On standby to the SBA loan, then, you know, we can possibly make this thing happen. And by the way, now that he's going to do a second standby note, I get to keep that extra seven and a half percent equity. And I get a call back ten minutes later. Yep, yep. I get a call back ten minutes later and say, okay, you know, the seller's on board with, with that. And, and so.

[38:53] Host: So blessing in disguise. Huge blessing in disguise.

Guest: Huge, huge blessing in disguise. And I think that that just kind of comes back to the fact that the seller and I had such a good relationship together and he was willing to work with me. He wanted me to be the owner. We were going to figure out a way to do this together. He knew I wasn't trying to screw him. I would certainly never try and screw him over and vice versa. And by the time I got home and the deal was, was basically back on track.

[39:21] Host: That's amazing. And you were 7.5%, you know, richer.

Guest: Yeah.

Host: In the, in the black. And so, and so, Tyler, just give us a sense. I don't usually get into this, but I think it would be helpful for people like, so 400,000 equity now, I guess it's down to what, 317525 in equity and, and split between you and two others.

Guest: Myself. Three others, yeah. Well, yeah, it's. It's kind of tricky. It's kind of confusing. So it was 225 total coming in for the cash injection. And the. One of the guys was 75,000. Another guy was 50,000. And then the third guy, one of my very good friends, my college roommate, he was going to come in for 50 and I was going to do 50. But he is involved in some real estate in LA and he's doing this renovation on his house. And, you know, he's got to pull the money out, refine all this stuff, right? So he didn't have the 50k liquid. But, you know, this is like one of my best friends. You know, I want him in the business with me. I want to. I want to make all these guys rich and we're going to get rich together and we're going to do. This is the first of many deals that me and my buddies are going to do together. So I wanted to find a way to make this work. So I, I was going to come in with my 50. I fronted his 50,000. So now I'm technically in for 100, but he owes me the 50 back and he's a partner on the deal. You know, like I think that's such an important thing for searchers to understand is like, yeah, you can go out and get, get investor money but at the day it's so much better to do with like your buddies, man. Like let's make each other rich, you know. And like I said, buddies of yours.

Host: Are these buddies of yours, business people and entrepreneurs. I mean I love to make my buddies rich but I also, you know, know, you know, you want to bring in people into your deal who can add value other than just cash.

Guest: One, one guy is very successful. He works for like a, he sells cybersecurity tools but he's also invested in a food truck in San Diego and they're about to open a brick and mortar. So he's had success there. Another guy actually does. He's a director of M and A for an insurance company. It's a, it's a publicly traded insurance company. He's the director, one of the directors of M A for them. So he's, he does deals like this all the time. And again like, you know, having him look at the, look at the numbers and getting comfortable with it just kind of reaffirmed that this is a good, a good business. And then the third guy, the, the real estate dude, he obviously is buying and flipping these houses in LA and, and, but you know, it's, it's like I said, it's more important to me to have buddies in your corner who are going to look out for you. You're going to look out for them. I would, I want to, I want to make them successful. They want to make me successful. Let's have a beautiful relationship. And this is kind of the first of, of what I think will be many.

[42:10] Host: That's great Tyler. I love, I love that approach. I love the long term nature of it. The. Yeah, just think you're just thinking like this is the first of many, this is because I think a lot of, a lot of searchers, I mean most searchers are of course long term oriented. I mean they're buying businesses that are going to be, you know, have 10 year loans attached to them. They're, they're thinking about these things in terms of years for sure. But I just love how you see your career as doing multiple deals over the span of your career and, and bringing in kind of people that you'll, you'll will participate with you on that. So quick math. If the business sold for low to mid seven figures and you know, you, your original 400,000 in equity, you were going to originally have 400,000 in equity. And so knowing the SBA, that could be, I don't know, 10, 15% let's call it, yeah, I don't know, three to five million dollar sale. In that range, two and a half to five, six million dollars. You. And ultimately yes, you're lending your friend 50,000 to get into the deal. So you outlaid a hundred thousand. But at the end of, at the end of that, just to net it all out, Tyler brought $50,000 of his own money to the deal plus your deal costs. And so what were your all in deal costs?

Guest: Oh boy, now you're really testing me. I have no idea. Probably between, probably around 30,000.

Host: Okay, all right, good enough. So $80,000. Yeah, go ahead.

Guest: Yeah, I guess if you include the SBA fee, it's probably closer to 100.

Host: Call it 80 to $100,000 to of your own cash to acquire a business that, let's call it a, you know, two and a half to five million dollar business. So anybody listening to this is already going to understand the compelling economics of acquisition entrepreneurship. But I just wanted to call it out that here we are again. And, and what percentage the equity that you've, you've given to these, your other buddies and investors in the deal or what percentage will you did you retain of the business?

Guest: Just over 90. Between 90 and 91%. So they own 10% basically. Great.

Host: So you're, you're 90, 90% owner of a business that's worth 3 to 4 million bucks and you had to bring a hundred grand to 100 grand ish to, to this transaction. Really, really, really remarkable. Tyler, you had told me about, you actually did a the Pursuant Capital boot camp in Tampa with Sam Rosati and his in his gang. Talk about that and about the folks you met down there who will be. Some of whom will be familiar names to the audience.

Guest: Yeah, so I had seen the deal. Sam had posted this thing on his website or saw. Yeah, I think at the time I saw on his website and I had. It sounded great. I mean I was in the, at the time, I was in the very early stages of searching so I wanted to sign up. And again it goes back to that education piece. How are you going to educate yourself on how to do this? I knew that if I went to this thing, this boot camp, it's just three days. They're going to walk you through, step by step, exactly how to do it. You're going to meet the key players that you need to know. You're going to hear success stories of other guys, how they did it. Highly, highly recommend this program. I met my banker there. I met my QOV guy there. I met, you know, all these different people that I ended up using for my lawyers. So in. And then also you get the added benefit of being in a cohort of other guys that are doing the exact same thing that you are so you can bounce ideas off of each other. We have a group on LinkedIn that we share deals and sims and it's, it's, it's relatively, you know, it's not crazy expensive. So if you're interested in, if you're in the early stages of search, I highly, highly recommend getting involved in that boot camp. You're going to meet your entire deal team and not to mention, you know, other investors or whoever at the same time.

[46:04] Host: But in fact, you're, you didn't use any of the investing capital available to you via pursuant. You raised your own money from your friends. Okay. And do you want to call out any of the names there? The lender, Q of E people, legal team? Feel free if you'd like.

Guest: Well, yeah, the first guy you got to call out is my lender, Bruce Marks and First bank of the Lake. The dude is phenomenal. He did such a great job. Met him at the, at the boot camp and I was able to kind of walk him through the deal in person. And frankly, I don't know if he would have done the deal if I didn't meet him in person and kind of showed him my thinking. He's not a golfer, so he didn't like, understand or he wouldn't have known about the tailwinds. But just being able to be there in person and meet with him and show him and having him, he always says, you know, you trust the jockey, not the horse. So being able to show him who I was, I think really, really helped. And you know, shout out to Bruce, go, go to Bruce for your SBA banking needs.

Host: Great, great. Okay. One of the other players in your deal, Tyler, that you told me about during our pre call, that was really helpful to you and you've already hinted at it was the broker. And I just want to give you an opportunity to talk about that a little bit because brokers are often a little bit beat up as a category, probably unfairly, but great brokers are great. For a reason. Tell us about that.

Guest: He so obviously met him through the biz by sell. We started communicating when I found the deal and I emailed him and just kind of right away we really hit it off. And he normally deals with buying and selling golf courses, not necessarily a golf company like this, but regardless, we were talking multiple times a week. So by the end of the deal we were kind of joking that the broker was almost more of my broker than the seller's broker. Now obviously that's not the case, but that's kind, kind of the relationship that we had. We had and I don't know why brokers get such a bad reputation because I had such a great experience with this guy and, and once we closed the deal, you know, we kind of had one last call over the, over the phone as I was at the airport going to meet the seller and he said, well, you know what I'm going to do now? I'm going to go out and look for all the different golf schools that are for sale. So I'm hopeful that that's, that's going to be a relationship that I definitely keep around. And not to mention, you know, he's got contacts at all these different golf courses around the country. So when I'm ready to get into new markets, he's going to be my first call.

[48:34] Host: Yeah, for sure. Another thing I wanted to, to highlight is as we covered like you weren't kind of really, really like ramping up your search. You were just kind of doing a offhanded like, oh, let me see if there's any golf related business on biz by selling. And so I want to tie in something that Jesse Sundquist who was on a couple of months ago said, which is like just start your search. A lot of searchers like put all the pieces in place and the LLC and make the website perfect and the brand name and this and that and, and while some of that as you said, like you go 50, 50 like LLC, like yeah, could have some value, but maybe not. So not to say that you shouldn't do any of that, but there is a, an inclination and I've heard it from others than Jesse, where to just like over prepare and rather than just like start, start requesting sims, start talking to people. And the way your deal came together I feel like is a really good example of that because you kind of weren't expecting to really get going and all of a sudden you find your swept, you find yourself swept up in an acquisition that is a total dream. So can you weigh in, on, on. On Jesse's exhortation to, to sell suits to searchers to not over engineer their search.

Guest: No, I agree 100%. I mean, I'm. I'm chuckling to myself because, like, as you say that, I remember the first couple emails I had with the broker. I was sending it from my personal Gmail. And then, you know, a week or two into the deal, now I start sending him emails from like my, my searcher email, you know, Camelback Capital llc. So, and he's like, respond. He's like, what email am I using here? I was like, okay, we'll use the LLC one. And it just, it just gets back to the point. Like, don't wait. Like, there's no. Why wait? Get it done. Now. One of the things that I see on Twitter a lot is like, I think some of these guys think that being. Quitting your W2 and becoming a searcher is like, that's it, that's the end. I've made it. It's not like, it's not. You're not even close. Like, the goal is not to be a searcher. The goal is to be an operator, right? So you should, you gotta, you gotta just get through it, man. You should want to be the searcher for like the shortest amount of time possible. But like, don't. There's no reason to wait. Just get into it, get started. Who cares about your. What email or what your website looks like? If you see a deal, you like, you got to go after it.

[51:01] Host: Yeah. Yeah. And any thoughts on Biz by Sell, given that that's where you found this deal and it turned out to be just such a. Such a strong one. But that, that original listing sure didn't inspire confidence. But you kind of, you kept, you kept pressing ahead. Any thoughts there?

Guest: I mean, I had a very limited experience. I mean, this is like one of the first deals that I found. I didn't even really get into some of the other places where you could. Where businesses are listed. So, you know, all I can say is I had a great experience with this By Sell. I encourage, you know, other people that I talk to. I say one of your first things you do is just to kind of get on there and thumb around, see what's available, see what kind of prices. There are different multiples, things like that. So great experience. Biz by Sell, highly recommend. Great.

Host: And as we wrap up here, Tyler, just tell us what it's been like post acquisition. How has the transition been? How did the. These instructors who'd been working with with the founder for some of them. 20 years, 17 years. How's all that gone? Just tell us. Share with us what you can.

Guest: Yeah, no, the transition's been great. I mean, the. We've got the office staff in Arizona. We were able to hire a couple additional operations folks as well. We brought in another instructor for, for this year. So businesses ramping up. It's great. We didn't lose anyone. We were able to give everyone bonuses this year and an increase in their, in their rate, their instruction rate. So being able to kind of provide them with that has been phenomenal. It's been excellent. One of the more difficult things that just happened, right. Less than. We closed on August 8, and less than three weeks later, I was on an airplane to come to Arizona to go to our biggest golf school. And my brother had just died. And so here I am, this brand new owner of this business. I'm trying to run a business here. And now I've got this like this catastrophe in our family that I'm. That we're working through. First thing, one of the first things I did was call the seller and I said, listen, this just happened. And he was just, I mean, the wave of emotions at the time, literally like I had just found out and I spoke with him then within a couple hours, and he basically said, tyler, don't worry about a thing. Just go be with your family. I will keep the business going. I'll stay on. Basically, I'll stay on and you just take care of your family and we'll talk again in a week or however long it was. And I'm like, I'm so grateful for that. And like I said, I just had such a good relationship with him that he was willing to do this. I feel not only because of that, because of many different things with the deal and the financing and everything like that, but that especially I owe him more money than I could than the sale figure represents, if that makes sense. Like, I feel like I owe him so much more and we've got such a great relationship. Even to this day, we still talk and I bounce ideas off of him all the time. And I'm glad that he's been able to retire and he took a vacation to Hawaii and I'm just so happy for him. He's happy for me and the transition's been great and having him help me with that was just a blessing.

[54:13] Host: That's. Yeah, that's just wonderful. What a, what a harmonious relationship. The guy sounds. Sounds great. And the have the 2022 projected numbers come to pass.

Guest: They are very close. They. I would say they're not quite as high as what we initially projected, but probably within the margin of error. I would, I would say, yeah. And the only other thing that I would, that I wanted to point out I just thought of is the seller. You know, they always, there's this big saying or joke or whatever you want to say in the SMB space is like you buy a business where they're using a fax machine and then, you know, you go buy that. Like that's like almost like literally what, what this. The seller was. He had 15 instructors and he had big butcher block calendar, paper calendar, and he would mark out the three four, five day schools with colored pencils and each instructor got a different color pencil. And that's how he's keeping track of $4 million worth of sales. And he's doing this, he's selling schools over the phone. And I just thought to myself, like, there's gotta be a better way to do this. So that was like one of the first things we did during the transition was kind of start to digitize and automate some of these things. And it's really been working out well.

Host: Well, it sounds like he was at least a little bit online savvy, given that he got hit by Google back in the early teens. So the web has been instrumental to his business from at least 10 years ago.

Guest: Between that and having him take pictures of the closing documents and sending them to the bank with his signature, we'll meet somewhere in the middle.

Host: Yeah. And what is 2023 looking like and what do you see the growth potential for? Are there states or golf courses where their, you know, new resorts, new golf courses, new states, and you can just very kind of incrementally build the business that way or what.

Guest: Yeah. So in terms of the growth, I think there are some things like internally that we can just do with our existing operations. You know, for example, you know, he, the seller would set the prices for the school for the whole year and that's done in October. So the 2023 prices were done in October. But there's no reason that you should have a school in Phoenix, Arizona in August be the same price as it is in March. And what I'm talking about is dynamic pricing. So yeah, one of the first things that we're doing once we launch our new website is to incorporate some dynamic pricing. And that does two things. Obviously it helps our bottom line, but it also provides our students if they want a cheaper option. Well, guess what, you Know, if you're willing to work with us on the dates and go during a slow period, I can give you a better deal on your golf school and that, that helps everybody, you know, so there's internal operations, things that can, that we can do to kind of increase our bottom line. There's other markets that we can get into. We really want to get into Texas, Napa, Tampa, there's a couple other domestically. And then third, one of our instructors is, is coming over from England. He did some schools here last year, but his family's from, from England. They're making the move in January. So I think that long term I would love to kind of expand internationally. The home of golf Scotland. I mean England, come on, like Great Britain. There's tons of great golf out there. And then third or kind of another long term project I see is there are so many golf apps where with golf videos of your swing and your instructors have these portals and we use a lot of that. Each instructor has, uses a different app because the students get video analysis with their, with their, their school, but they're all different. So we can kind of consolidate that and kind of create our own app. And you know, that's free for the students for however long. But then if you get the premium option, you know, you're going to get access to all these golf instruction videos. You want to hit a high chip, low chip, you want to hit a draw, fade, cut, slice, whatever, you know, then you can go to this app and it's like these are common in the golf industry. You know, we, we can, we can incorporate those into our business. And so long term, I think there is a lot of room for growth. I'm really excited about it.

[58:30] Host: And you, in terms of the remote aspect of the business, you're, you have, I mean, you're connected to Arizona anyway. And that also happens to be where you have this really big, this, this vendor that represents 40% of your, where 40% of your courses or at least revenue comes from, you're still based in D.C. so talk to me a little bit about the remote nature of it and how you're managing things and.

Guest: Yeah, yeah. So my wife works in, in government and she's a lobbyist for a, for a nonprofit veterans organization. And so that's kind of why how we ended up back in D.C. but the remote, the remote factor is really special. I mean, it is just, it was just an added bonus that this business could be run remotely. It wasn't necessarily something that I was looking for originally, but once I found it, it was like, God, this is awesome. You can kind of live wherever. And I think eventually down the road, my wife and I will pick out a location that we both really love when the business is able to kind of support both of us, and we'll move to wherever the hell we want to live, and that's where we'll run the business from. And I'm really looking forward to that. Yeah.

Host: And. And in the meantime, you'll be able to expense all these incredible trips to, you know, pursue your favorite hobby.

Guest: I'll tell you what, when we were doing the due diligence, we were looking at the depreciation schedule, and the seller had an odyssey putter on the. That they were depreciating a putter. And, you know, immediately my mind just like starts going crazy. Like, oh, my God, I can depreciate my golf clubs over so many years. And I, you know, so there's so many. You go to these, like, gorgeous golf resorts and they, you know, we bring them so much business, so they're willing to kind of comp the rounds and they take such good care of you. And being in an industry that you love, obviously, and having those little perks is not. It's not a bad thing.

[1:00:23] Host: What, what an acquisition, Tyler. It just, it just seems like a slam dunk on many levels. Just. Just numbers wise. I think it would make many searchers salivate. But then all of these additional benefits, the remote nature of it, the fact that it's in your. In your passion, right down the middle of your passion, down the fairway of your passion, I should say. There you go. I mean, it's just. Yeah, and it's growing. A lot of, A lot of obvious ways to grow. The fact that it was your first loi. The fact that, you know, you basically start to finish. This was a, what, four, six month process? Just really, really a slam talk.

Guest: So.

Host: Congratulations, Tyler. It's. Yeah, I'm thrilled for you. How can people get in touch with you if they want to follow up?

Guest: Tylerdgolf.com that is probably the easiest way to remember it. You know, I'm also on LinkedIn and everything, but I'm certainly willing to help and mentor anyone who's interested in it. I mean, I've just done the one. It's not like I've got a whole exit or anything like that under my belt, but I can certainly tell you about my experience. I have one guy that I mentor and I showed him the book, the Harvard Business Review book, and he's gone on to purchase a franchise. I've got some other folks I've been talking to, and just this morning I had another buddy of mine reach out and he requested his first sim from a broker this morning. So I'm happy to answer questions and mentor those who are looking for that. My only ask would be that, you know, you read the HBR book first and the buy, then build and you get on Twitter and you start following some of these people that in the SMB space, you listen to these podcasts and if you do that, I'm more than happy to help you along your journey.

Host: Cool. And you're also active, at least somewhat on Twitter.

Guest: What's your Twitter handle? TM in the dm. There you go.

Host: That's right. That sounds familiar.

Guest: Very good. Hit me up.

Host: Tyler. Yeah. Thank you very much for, for coming on Acquiring Minds. Congratulations again. What a story, what an acquisition. And look forward to checking in with you and in a year seeing how things are going. Thank you, sir.

Guest: Thanks, Will Appreciate it, man.