Host: Talk about turning crisis into opportunity. Will Wright bought a big event rental business in December 2018. 12 million in revenue, 100 employees, one of the biggest such operations in Texas. But we all know what happened 15 months later. About the very first thing that Covid crippled was events bookings at Will's business collapsed 90%. Well, three years later and Will and his team had not only survived but doubled revenue. He exited the business to a strategic that fall just a few months ago. This is the story of how he grew an events rental business through Covid. Listen for the moments where Will really felt the difference between having done a traditional search fund versus a self funded search. The incentives, the presence of investors played a big role at inflection points along the way. Please enjoy this conversation with Will Wright, former owner of Peerless Events Intense Quick Announcement Next Thursday is the third webinar in our series with Sam Rossotti, this one on raising equity to buy a business. We're going to walk through how to raise money from investors for your self funded SBA acquisition. There are norms to working with investors a process information they'll expect and packaged in the way they expect it. And the more you demonstrate you know what you're doing, the more likely they are to invest in you. And of course questions like how much money do you raise? How do you decide what percentage of the business that money is worth? Lots to cover here. It's going to be an education and you'll leave with templates for an investor, NDA investor Teaser and Term sheet. The webinar is next Thursday, February 22, 1pm Eastern. The registration link is in the show notes. Look right at the top where it says register for the webinar and if you can't make it next Thursday for the live webinar, you can register anyway to get emailed a link later to the recording. If you don't know Sam Rossati by now he has seen the back and forth between searchers and investors on many deals, including his own, including those he's invested in himself. He also maintains a list of SMB investors. This list has emerged as a really valuable resource for the ETA community. So come learn from Sam how to raise money from investors to buy a business. Thursday, February 22, 1pm Eastern Registration Link at the top of the notes. 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. Will Wright welcome to Acquiring Minds.

[3:05] Guest: Thank you Will. It's great to Be here. Great to hear your voice. And you know, I've really enjoyed listening to your podcast since it was introduced to me three or four months ago. So it's an honor to be on.

Host: All right, well, thank you for, for saying that. Glad to have you on. You bought a business directly tied to events and you bought it before the C word, before COVID You emerged from the pandemic in an events business not only having survived, but grown. And then that led to a successful exit. So we're going to hear all about it and specifically how being a traditional search fund was strategically crucial at points along the way to get us started. Will please give us some background on you?

Guest: Yeah, happy to. So born and raised in Fort Wayne, Indiana. I'm based in Austin today, but a Midwesterner at heart. Grew up in a very middle class family. Father was a residential real estate agent, my mother was an art teacher and wasn't sure what I wanted to do growing up in a small town, but went to Indiana University and quickly realized while I was at Indiana that the smartest and most successful people in the classes ahead of me seemed to be going into investment banking. That was the competitive path and most competitive path at the time. For perspective and timing. I graduated college in 2009. So out of undergrad, went into. Yeah, got to see. Good timing. Very good timing. I interned on Wall street in the summer of 2008 when Lehman Brothers collapsed, which was a pretty wild thing to see, but great time to start a career at the bottom, I guess so was one of the very fortunate few to land a job in Investment Banking in 2009. Worked in an M&A group for two years, then made the very standard path to private equity. It was a small private equity group out of Chicago called Frontenac Company which I bring up the name because it comes up a bit throughout kind of the search fund ecosystem. But I worked at Frontenac for three years focused on tech enabled service businesses. But really we were a generalist looking at a variety of things. But that was back when that would have been 2013 to 2011 to 2014 I suppose. And that was my first introduction to search funds. So what's fascinating is Frontnet Co. Actually purchased a business called Behavioral Health Group, which was Andy Loves, the founder of Aspect. That was his business that he had search funded right out of school. So that was my first intro into search funds, was being on the buying end of a search funded business. And shortly after that my vice president, guy by the name of Parker Davis, who was very Much a mentor to me at the time. He left Frontenac to go do a traditional search. And shortly after that, one of our managing directors left Frontenac to start search fund accelerator. So it was pretty wild back then. It felt like the peak of search funds. But at that point I was not familiar with all the different models that were out there. Traditional was the only one that I had been introduced to and I had to go to business school to follow that path. So I ended up going to Kellogg 2014-2016, but was the only individual in my group of friends who actually went out and did he or she wrote their essays about. So I wrote that I was going to, I wanted to do a search fund and I stayed the path and interned at a search funded business after my first year and then left and you know, after graduation and launched my

[7:26] Host: traditional search and just this. Frontenac. I don't know the name. Am I saying it? How is that spelled? Frontenac. Okay.

Guest: Frontenac. Yeah, Frontenac.

Host: Okay. And so your boss, and then, and then you said one of the firm's partners ended up, your boss went off to do a search fund. And then you said one of the firm's partners is actually a co founder of search fund accelerator sfa, which is one of the most well known and probably oldest or original search fund accelerator.

Guest: Yeah. A guy by the name of Jeremy Silverman and he would have launched that, I'm guessing probably 2015. So after I had, after I had left to go to business school, but kind of right around that time, and

Host: you said that it felt like peak search fund, all these people around you doing search funds. But in fact, as you told me from the pre call you get to Kellogg. And I think we should also highlight the point that in your essay, your application essay to Kellogg, you are explicit about what you're there to learn. You go in deciding that you're going to pursue eta. I heard that right?

Guest: Yes, that's correct.

Host: Yeah. And then in your first year at Kellogg, as I recall, you're telling people about this around the bar, your, your fellow, your fellow MBA pals and like it's not a thing. You're kind of people are like, what are you talking about? Give us more color there.

Guest: It was so fascinating seeing and reflecting on the evolution of search between 2014 and 2016 when I entered Kellogg, no one had heard of it. You know, everyone. What's a search fund? Why would anyone want to go do this? Why would you want to go run a, you know, small janitorial business, why not go work for bcg? So it was a definitely unique concept at the time. I would say in the first year, by the second year, groups like Pacific Lake, large investors, were coming to campus and the rooms were packed with people. The idea of search fund totally changed and took off during that, during that period.

[9:37] Host: And so you credit that to the Pacific Lakes of the world, kind of promoting it on campus, essentially raising awareness, coming to campus, talking, giving presentations, brown bags, whatever they're called in business school. And that really kind of catalyzed awareness

Guest: and interest that definitely started it. I think in 2014, 2015, a group called the Zell ETA Club within Kellogg launched, which there's the Zell Fellows. Used to be focused purely on startups, but they created a New Group in 2015 based on acquisition and ownership, and that also helped spur that interest and drive. And you start hearing people talk around the hallways about being a CEO or being their own boss at a business school, and it becomes very appealing.

Host: Great. And so speaking of the appeal, what was it that appealed to you? I mean, you didn't learn, as we've said, you already went to Kellogg knowing what you wanted to pursue. So it was hearing about it from your boss, from Jeremy Silverman's efforts, that, that you learned. But what was it that grabbed you?

Guest: Yeah, you know, I think at that point in my career, prior to business school, I saw myself as an investor going down a very traditional financial pathway. And I saw there being less and less opportunities on the, you know, on the backside of business school or exiting business school to stay in private equity and be differentiated at all as an investor. What I had identified from talking to mentors and starting to explore different pathways is if I could be an operator or gain my stripes operating for a period of time, that would only make me a better investor, better board member, better mentor to those in the business world around me. So early on, I guess in my later stages as an associate before business school, I had identified, all right, want to get operating experience at a very high level at and at a larger scale, which could be differentiating for my career. But the other thing that I realized in my second to third year in private equity was I really wasn't motivated. I was no longer exclusively motivated by a paycheck. I started to yearn for ownership and responsibility that, you know, I knew my hard work going into it would be building something greater on the back end. So as I was entering business school and thinking through the different paths, at the time, startups were very common and very popular. And people were going out and making, you know, a lot of big stories about successful fundraisers and seed rounds. I realized that having some of that ownership was exactly what I needed to, I think, find my own true potential. But I quickly realized the going from zero to one with a startup and needing a creative idea, which I had none, was not as lucrative of a path for me. Thinking from a risk reward standpoint versus taking it from 1 to 10, 1 to 10 was what I had seen successfully accomplished in private equity. And that's what I wanted to learn and apply within my career. And you know, going forward.

[13:17] Host: That's great, Will. And it's interesting to hear that you really kind of came at this, your career you saw as a, as an investing career, you kind of self identified as an investor. We're going to probably circle around this theme over the course of our conversation. But just jumping ahead, do you still, now that you're on the backside of this really deep operational experience, entrepreneurial experience, how do you self identify these days?

Guest: It's tough having people ask me, what do you do for a living? I mean right now I'm on sabbatical. I don't, I don't know. Podcast? Yeah, exactly. I don't, I still don't know what I want to be when I grow up. Well, I think I certainly know. Five years, two years of searching, five years of operating has caused me to see things differently and to value elements in business differently than I did purely as an investor. But given my background, the way I think, I've always been a very calculate, identify the risk, figure out how to value the risk, how to mitigate the risk. I still think like an investor and whatever I go do in the future, I hope to successfully apply both lenses to. I think that there's a benefit to having both sides of the equation.

Host: Yeah, of course. August Felker is a two time successful searcher. First with a traditional search fund. The second time around he did a self funded search. Today August runs Oberle Risk Strategies, an insurance firm with a dedicated practice group for searchers and acquisition entrepreneurs like you. If you've got a business under Loi, Oberle will provide complimentary due diligence on that business's insurance and benefits program. A great no risk way to get to know August and team. They love helping searchers. They've worked with hundreds. Oberle is a specialty insurance brokerage for searchers by a former searcher. Check out oberly-risk.com O B E R L E hyphen risk.com link in the show notes. Well, when you decided that you would go down the path of search, you and you were thinking about it from the perspective of like a career as an investor. Build my operational chops, that'll make me a better investor over the course of my, my career, that will differentiate me. And so in. So at least then your thought was that you'd circle back around to being an investor. You get back into private equity proper after your search adventure.

[16:02] Guest: Yes, that was the original, that was the original thought was, you know, then I can go join a fund and having successful operating experience will only differentiate me as a candidate. You know, that, that I think, I think that path and that realization quickly changed in my first two years of search. But originally that was the logical path.

Host: Oh, okay. Well can you tell us what changed without us jumping into the story? What changed in the first year or two?

Guest: Yeah, I think. Well and I tell, I tell searchers that these, the search process itself. There are people who find businesses at any stage in the two year process. But mine fortunately or unfortunately was about a two and a half year search. But I would say after about the first year it all clicked for me of what I was doing, what I was trying to accomplish. Suddenly having a good deal under LOI and getting interest from investors and starting to receive commitments, the light bulb went off in my head that I am the private equity fund. I can do the deal myself. I don't need the backing of a large fund because the hardest part is getting the sellers to the table, getting the lenders to the table. Capital is easy if you can solve the other pieces. The capital is the easy part. What I went through in my search process was really this beautiful independence that I had never felt before. Not just independence in wanting to be a search fund operator, but, but really, you know, as I saw my career in, you know, in a longer duration into the future, I can do things independently. I can always go do deals and raise capital. It was such an exciting revelation that I didn't realize would be the case going in. I don't think it had to do with my background either and happy to get into. I know a number of searchers that think, well, I can't do this because I didn't work in private equity, I didn't work in finance. I don't think that that skill set is necessarily relevant to be a successful searcher. In fact, I think there's many areas where maybe it's, it's, it's a hindrance, but, but that realization of me and that independent was A huge surprise in my search process and something that I think will continue to be career defining for me in the future.

[18:37] Host: And, and so to be absolutely clear about this, what that meant for you was that you looking forward in thinking about doing deals, buying other businesses, you could do that in, in all manner of formats. Independently, independent sponsor maybe becomes the path as opposed to needing to return to a private equity fund and become part of a larger team to do deals. You, you realized, hey, I can do, I've, I can do this as a solo, in some solo form for the duration of my career, should I choose to.

Guest: Yeah, in private equity I would go to, in management presentations and I would be the junior guy in the room and I would maybe be there to ask some of the lingering questions. That stuff we didn't cover that the senior, the principal hadn't covered in diligence. I had seen the mechanics of the deal process and I understood how a deal worked, but I'd never quarter backed the deal. So suddenly now in search, I'm going into management presentations where there's an investment banker and the sellers are represented and, and I'm just by myself and it's on me to perform and answer all the diligence questions, sell myself as a competent buyer, someone with the capital to close the deal. And I was finding that, you know, they were, they were picking up what I was throwing down and it was nice, I was getting, I was, I was getting interest from, from sellers and investors were clamoring to learn more about these opportunities that I was bringing in. And it was a very exciting time to realize that the traditional structure of private equity and what I thought I needed to be a part of in order to be an investor or be a private equity professional was actually not the case. It's only something that you would realize, I think going through the search process just, you know, jumping into the deep end and, and learning how to swim.

Host: Fantastic. Well, this, this revelation and your kind of conf. Discovery of confidence and, and really starting to assemble a deal also feeds into your decision to do a traditional search fund. So we haven't talked about that. You went the traditional route. Of course. Let's, let's hear it. I always ask traditional search fund guests why they went that way and not self funded. So we're kind of, I think we're already there. So tell, let's, let's address it directly.

[21:20] Guest: Yeah, happy to. When I graduated business school, I guess it would have been in my second year is when I raised my traditional fund. And to be quite Honest. I think the concept of self funded in 2015 was very foreign. I don't think it had been really demonstrated. I know it was a concept out of HBS at the time, but how to get there in my mind at that point in time was very challenging. One, I had exhausted all my savings in business school, so I was coming out with student debt. I wasn't married. I didn't have a situation that I could lean on anyone. So I needed to earn a paycheck really quickly. So that was one. Just reality.

Host: Yeah.

Guest: But I, you know, as I think about traditional search and the value of traditional search, there were other paths I could have taken at that point. There were accelerators. There was a kind of newer entrepreneur in residence concept which Alpine investors Graham Weaver was starting to do and they were interviewing on campus. There were apprenticeship type models that were very common within the Kellogg ecosystem where you go apprentice with a CEO and then maybe go out and buy your own business after. But the way that I was thinking about this path and it was, a professor of mine at the time had asked me in early 2015, well, why do you want to be an entrepreneur? Do you want to be your own boss or do you want to be a CEO or do you want to be an owner? How do you value those three things? How do you think about the scale of the business? Do you want to run a giant business? Do you want to run a small business? Do you want to run something thinking about duration? Do you want to build something you can pass on to your children? Or do you want to build something that you can exit and look like very private equity? Like. And finally, how do you think about support and the value of support through, through your, your journey? And, and those are questions that I pose to any prospective searchers when I talk to them because I think that every path is different and what individuals are after in their careers are all very different. And I think there's a number of different formats to ETA, as we call it, that can accomplish what people are after, whether it's traditional or incubator or self funded. For me, I would say I had seen the private equity experience and we had talked about wanting to build on, wanting to gain the operating experience to become a better investor. So a large scale business was enticing. Being a CEO, answering to a board, which is something that you see in traditional private equity, was very enticing. And I had identified that I needed that support network. I wanted a strong board, I wanted a board of mentors that could help me through and Investors that have been through the process and I had learned and started meeting individuals within the search fund traditional search community and very much wanted to be a part of that community. It's a great group of like minded individuals that are focused and tend to think very similarly about value investing. And I had identified that your first acquisition isn't your only acquisition within traditional search. There's a career here and that was very much important to me.

[25:00] Host: One of the knocks, if you will, on traditional search is that it can feel, or maybe explicitly kind of is elitist in the sense that it's very connected to the business schools, to the most prestigious business schools. It's not the only way in, but it's probably the most common path in. So if you're a mid career, somebody listening to this and you're long since out of, out of, you know, maybe you never went to business school or you didn't go to one of the fancy ones or regardless, you're just long since out of that, away from that ecosystem. You know, getting funded as a traditional searcher is going to be unlikely, whatever is what it is. But I and I brought this up to you on our pre call and you said something really interesting because the how just goes to show how perspective matters so much. You are coming from the traditional PE world and found the community, the traditional search fund community, not elitist at all. Just the opposite. Please elaborate.

Guest: Well, jogging my memory on kind of where those comments came from, I think I find the community itself is a great group of individuals with a variety of different backgrounds. They don't all have private equity experience. It may be people who grew their own businesses and then found the search fund community and have become active investors in that space. What I, you know what I think on kind of in reflecting a kind of lessons or inspiration for people who may think that they need an elite business school background to do traditional search. I don't think that that is necessarily accurate. I think there's several things we're seeing take place right now within the traditional search community. One of them though is a real influx in capital coming in so investors have more capital to invest in backing searchers and trying to put more capital into deals, which means that there's likely going to be a shortage of traditional searchers coming from elite business schools. I think what investors are seeing is that the most successful searchers and most successful operators are likely individuals who come from relevant operating experience backgrounds. I don't know that traditional private equity is the best, although I think it works. I think really what investors are looking for. It's not having the elite business school background. I think what they've leaned on for business school is to use that as the filter so that they don't have to go through and measure aptitude of everyone who would apply. But at the end of the day, it's really hard to buy a good business. You don't learn anything in. I can't say you don't learn anything in business school that helps you, but business school doesn't prepare you for everything that's going to come your way when you're searching and when you're operating. What it takes is grit. I think it takes grit for an entrepreneur to want to do this and to be persistent. And that persistence is what investors would look for. What I would look for if I was backing searchers is someone who's got some sort of relevant, interesting industry experience and grit and desire and drive to go out and acquire a business. And I think that listeners would be selling themselves short if they think that they can't do a traditional search because they don't have a business school backing. I don't think that that's necessarily relevant today.

[28:51] Host: Great. Okay, well, encouraging words. Also, let's just highlight what you said, that operational chops in a particular industry may well be more valuable than, you know, a fancy business school degree or time in private equity. So anybody out there listening who wants to buy a business in their own industry and has kind of deep industry experience, contacts, but might not have even an mba, you may well be very well positioned to raise money in a traditional search fund context. So keep that in mind. Listener. Okay, you are a year into your search and you, I guess, take us through the search process because it was kind of a mental trajectory for you, as we've been talking about directly, but also you were doing the whole outreach, proprietary outreach, as expected from traditional search. So a lot of that. So just kind of give us a picture.

Guest: Yeah. So, you know, I think there's no right way to do the search process. I think everyone has their own path and strategy. And for me, I quickly realized a focused targeted strategy was something that I was. I was losing interest in really quickly. I needed more action, I needed more emails coming in. I needed to feel like, I guess I was being more productive. So.

[30:22] Host: And you mean. And by focus targeted, you mean industry thesis? Industry specific?

Guest: Yeah, what you mean certain industry specific. There's, you know, 500 targets, and I'm going to spend two years trying to nail one of these targets. For me, I had spent a Little time dabbling there. Quickly found industries that, you know, you know, I didn't have any buyers that were interested in selling. Timing wasn't right and suddenly I'm twiddling my thumbs trying to figure out a new industry thesis. Quickly learned that, you know, obviously time is the most valuable part of your search process. How do I get as many at bats as I can in this short a period of time as possible? Well, I'm going to reach out to thousands of business owners and I'm going to keep it as broad as I, as I need to. Let's call it business services in this certain geography. And I'm just going to do blast outreach and phone calls and screen the responses coming in to see, all right, is that business actually of interest or is this sub industry something that could be of interest now that I know I have a seller that's interested in talking to me. So it was just slightly different. Again, I don't think there's one right or wrong way to do it, but I, at least it was, it was a more enjoyable experience for me going into work each day knowing I had, you know, 100 emails to get through and look at. Who do I, you know, which sellers do I want to talk to today to figure out if there's kind of interesting, unique thesis to be made here.

Host: Interesting that 100, I know that was a kind of random number you pulled out of the sky, but to even suggest that you were getting 100 responses to outbound goes to show the difference between doing this back then and doing it today. I don't think any, anybody doing proprietary outreach today is seeing that quite that response rate. Even granted you went kind of industry agnostic, or not industry agnostic, but very broad with B2B services. But still, it sounds like you were shaking the trees, a lot of trees. And it was, and it was working well.

Guest: I reached out to 20,000 businesses over the course of two years. I, I tell friends in the, you know, who own their own businesses down in the Austin community that if you owned them in between 2014, 2016, I probably emailed you. You know, I don't know that that approach necessarily works today. I think it may have even been waning a bit during my search. But today I tell searchers I get so many email blasts and the same tactics that I used five years ago, you're seeing more of today. I think the environment today is such that you really need to get in front of sellers, you need to go to the conferences, you need to be more hands on and probably more tailored than you needed to be five years ago. That said, I think in the proprietary outreach, five years ago, seven years ago, at that point in time, most business owners, it was not a novel concept to sell it to value your business and sell the business. There were so many business brokers reaching out, everyone thought they knew what their business was worth. And there were also interesting opportunities coming in through brokers. So there's so much talk about proprietary and that's the only way to go in the search world. I found some great deals through brokers. The deal I ended up landing on came through a river guide. I would say broker, very focused within the rental community. But while I spent so much time focused on proprietary, I think that keeping some irons on the fire with brokers is certainly helpful. I would think probably more and more deals will come through the broker community going forward, just given kind of the dynamics at play in the market today.

[34:27] Host: So you actually found your deal despite the 20,000 emails that went out, despite the fact that anybody, any B2B services business owner in 2016 would have heard from you will it came from a broker or. Yeah, a river guide, as you said. And by the way, if you'd also define river guide for the audience. So two questions there.

Guest: Yeah, so. Well, I first defining river guide as someone who can guide you through the river of the industry and show you the path to different, you know, movers and shakers, business owners, people that you should meet. Developing the relationship with the river guide has been a, you know, traditionally and within the traditional search world has been a. One of the best ways to find deal flow and lead to a good deal within or kind of thinking through. Yes, I found my business as, you know, through a broker. But what's interesting, reflecting on the proprietary outreach that I had done, many of the brokers or river guides that I would connect with only came from the proprietary outreach. So I would have phone calls with business owners through proprietary outreach. Maybe we would find that it wasn't good timing, they weren't ready to sell, wasn't the right size, what have you. But they would say, you know, if you're interested in, you know, pest control, you've really got to meet this person or this broker who only does pest control. And where I found brokers to be so helpful were the ones that you. It's not the, the ones that work for the giant show to 50,000 buyer type firms. It was the mom and pop individuals. There was one I remember working with, still had an AOL email account. He was going out to his small community of identified buyers. And I think finding those types of individuals, they don't have websites. You're going to find them at industry conferences or you're going to find them through these phone calls, conversations you might have with proprietary owners. You find that that industry is so niche and you can start navigating your way through it.

[36:46] Host: Great. And this concept of a River Guide is do people self identify as that or is that just kind of a search world term for such a person?

Guest: I don't, I don't know where it was originally derived, but I'm only familiar of it, familiar with it through search. So no, they would not identify it with it. But I think there's a natural tendency for people, you know, as they find success in life and get, you know, later in life, they, they want to give back, they want to share. And in the instance with this river guide in the rental sector, to him, he saw his friends were all older, you know, rental CEOs or business owners who did not have a succession plan in place. And there was not any young blood coming into the rental industry. And so he was excited by the fact that there's someone like me interested in. He called me a rental man. Seeing a rental man and meeting a young rental man, it's so rare to meet. And I want to introduce you to people. So I think you'll find that dynamic in many industries typically kind of an age, you know, an age thing perhaps.

Host: Well, and just to, just to highlight the point you made previous to that where it's a, it's a great point because I often tend to, I don't knock proprietary search, but I call out the fact that a lot of this, you know, multi thousand, these email campaigns, even for those searchers who go that path, often the business they find doesn't even come from that. But, but, but, but to your point, there's actually that's not, that's the sole KPI. Sometimes the proprietary outreach indirectly leads to opportunities. So it's not just did you email the owner whose business that you then you then ended up buying, but did some kind of this flurry of activity of outbound that you were creating, did it, did it maybe indirectly lead to something and then it kind of can, can justify itself. So I'd never actually gotten that nuance. So thank you.

Guest: In this, in this instance, I had visited my first event rental from a, from proprietary outreach. Like I, I first saw the industry and thought okay, there's something interesting here, and then went down that, that wormhole. So I, I, I do think that proprietary is beneficial even if it doesn't lead to the ultimate transaction.

[39:17] Host: Great. Well, I said you had an events business and you're calling it more of a rental business. It's an events rental business, but maybe the dynamics of it are more rental than events. Anyway, we're going to get into it, so let's hear about the business that you ended up buying.

Guest: Yeah. So you know, like I said, when I did, my search wasn't solely focused on one industry, was looking all over the place. But I think I tended to find myself gravitating more towards my investor called investors, called it rusty. Rusty businesses. Your equipment repair and maintenance, landscaping, home services. Um, at that point in time I found, I had found that you could get them at a relatively inexpensive multiple and there was some interesting characteristics with your local regional type businesses. So I wasn't exclusively looking in event rental, but I had started in visiting and calling on event rental businesses. And there was definitely an interesting dynamic with understanding the revenue model of event rental businesses where you would think it's probably all B2C non reoccurring, but the reality is many of these businesses, depending on how they're established in the community, their clients are corporations, nonprofits, universities, venues, coordinators, caterers, people that use them week in and week out for events that take place. So thought, okay, this is interesting. There's a relationship nature to this. It's actually significantly more challenging to service the customer successfully than you would think. And the end product is mission critical. The event's happening at 7pm on a Friday and everything the tent needs to be set up before anything else can get done. So it's not a commodity, completely commoditized service that the cheapest provider is the best provider. And once you have the relationship with those customers, they're going to rely on you. And in some instances their careers are on the line with whether or not you prefer, you know, you can provide successfully serve the client. I also thought what was interesting with event rental was one in every market I looked at, extremely fragmented in most instances, typically mom and pop players throughout the market. And the other was you walk into the warehouse and there's thousands of SKUs and things moving all over the place. I mean it's an assembly line and as you look at the processes in place in several event rental businesses I visited, it wasn't yet technologically advanced, it wasn't yet professionalized. Many of the things that were being done were only being done because that's how we've always Done them. And so I thought, well, this is interesting. There's, you know, when I walk into the warehouse, I just see opportunities for data collection and information and you know, changing systems and driving operational efficiency, bringing in technology to maybe bring this industry into the 21st century. So I thought that was all interesting. A downside that I had identified with event rental is it's capital intensive and you're, you know, to scale the business, you are buying equipment. So trying to wrap my head around capital intensity was certainly a challenging part of the diligence process. But there were enough interesting pieces to this business and the business model, I thought, all right, I'm gonna, we'll spend some time poking around this space now for Peerless itself and giving you kind of a background on how I arrived at that and how I got a deal done.

[43:18] Host: What was it called, Will? What's the name of the business?

Guest: Peerless Events Intents.

Host: Peerless Events Intents. Go ahead.

Guest: I want to be very clear with, with any listeners within the traditional search world. Event rental is a very challenging business to get done in the traditional search ecosystem. I think there's certain elements that could be wonderful for a self funded searcher, but to hit the returns threshold that traditional investors are expecting, it's an incredibly capital intensive business that's very, very difficult to scale. The reason we got our business, we got our deal done and this was a successful traditional search endeavor was we identified the regional market that we were operating in and the thesis suddenly became, all right, this is in Texas. So peerless events, intense with operations in Dallas, Houston, Austin, San Antonio. This is a good, not great business model, but in a white hot market. And there was also a very interesting element at the time where our largest competitor was a pretty well known private equity roll up that was struggling and was starting to see customers churning out. And if we could go into this white hot market and capture some of the business from this struggling competitor, that growth is going to capture, that growth is going to come to us. All we need to do is perform. So that certainly made it very interesting. There were other elements too. Again, Ben, in Texas, we were the only player. And when I found the business, it was the only player with operations in all four metro markets, which was again, interesting business with a lot of horsepower under the hood. So to my investors this became a, this is bet on Texas, you know, opportunity, right?

[45:18] Host: And by the way, pre Covid, we all know post Covid that Texas is the, you know, Texas and Florida are crushing it, but I'm not sure. And Texas, of Course has been growthy now for 10 years or more but it, it, it wasn't maybe didn't get the headlines that it did until after Covid.

Guest: Yeah, I think you know the day I closed the business, Apple had announced they were moving a massive headquarters to Austin. There was, there were, there were definitely I think Tesla had already know stated that they were building their facility there. So I think there was already kind of for those in the know now a number of my investors are from Texas so I had like the Cambria Group and aspect. There were a handful that were based in Texas and the prospect of investing in the Texas business, they, they could see the opportunity there.

Host: Yeah. Well, I want to highlight something here Will, about your thesis about this business about peerless, which also really gets at one of the fundamental differences between traditional search funds and self funded. You know in, in a self funded business you, as long as you, you look for kind of enduring, not kind of, you look for enduringly profitable businesses. And with an SBA loan the economics are such, the leverage is so high. The economics are such as long as it, you don't screw it up if the business doesn't grow or just grows modestly say along with gdp, you can have a really strong outcome. With traditional, you need. There's much more of an expectation of growth. It's much more traditional private equity where you're buying something to grow and exit it. So your filter and your or your lens is very much like what is the, what is the, what is the. The growth thesis here? And I just, I just want to highlight that because self funded folks don't necessarily have this quite the same lens there anything to add to that?

Guest: No, I think that's important to highlight. I think as I would produce base case and investment case scenarios for the opportunities I was bringing in, I've got to show greater than 35% IRR. Typically investors are looking at these opportunities and asking what do we need to believe to get to a 5x return on this. So many businesses that you would look at under the lens of a self funded. Yes, you're absolutely correct. I don't know that it would work in traditional unless you were bringing some playbook to the mix that you thought you could grow, that you could grow greater than a traditional business might typically grow.

[48:02] Host: Tell us a little bit. Just some numbers around peerless revenue employees. You've already said it's active in the four big Texas markets. What else can you tell us kind of quantitatively around the business?

Guest: Yeah, you know, quantitatively when I bought the business, it was doing 12 million in sales, around 100 employees, $2 million in EBITDA and the business itself, just to give you an idea, so we did tent rental and then we rented everything under the tent. Tables, chairs, linen tabletop items we would rent to. We had some really respectable blue chip customers, including the Dallas Cowboys. So everything for the Dallas Cowboys, quite a bit. For SMU in Austin, if you've been to ACL Music festival, we did the craft brew tent that you could literally put over a football field. So this is large scale structure tenting for large festivals and events, rodeos around Texas. It was a number of events that happen year in and year out despite economic circumstances or cyclical economies. These are events that have been happening since in some cases World War II. So as we're diligencing the revenue model in the business, it seemed to be, while it's a very seasonal business, a pretty regular and predictable business, which I would say is also something that's important as you're looking at, I would say even self funded businesses, predictable businesses are important for anything you want to put debt behind. So yeah, those were the numbers we acquired the business for. I think it was a little, it was right around five times ebitda. We put two turns of debt of senior debt on the business and a half a turn of seller note.

Host: Mm, great.

Guest: I'm trying to think of what else would be helpful to share there.

Host: I think that's great.

Guest: That's great. Oh, one other element I would say I would add to the business and another reason why, you know, helping us getting the deal done. There was an aspect of the business that was very abnormal for traditional event rental businesses where this business provided disaster relief services. So tenting for hurricanes and tornadoes and, you know, major disaster events. This business had a team of, I would, you know, I always called it like the Navy Seals of tent installers that would dispatch and deploy in the middle of the night and driving into a storm and set up for the disaster responders to come in and work on or bring systems back online. That was an aspect of the business that had always performed pretty well and was a part of the business that we completely removed from that underlying 12 million in revenue, 2 million of EBITDA. But it was just the icing on top as we kind of played out well given climate change circumstances and starting to see frequency of major storms increasing. This could be an interesting upside here that we're not modeling in, but you know, could certainly impact the bottom line. Great.

[51:28] Host: And just to circle back on you know, recurring versus repeat. There's kind of, kind of a hierarchy of desirability with recurring being at the top and then, you know, reoccurring or repeat below that. But in between there I guess is where you set where if you can have repeat revenue, but it's also scheduled. So these annual events that, that happen, you know, even, you know, regard, regardless of any externality, these events happen and they're, you know, big predictable events. That's kind of not just repeat revenue, but that's kind of like very predictable, you know, when it's going to happen, you know that it's going to happen. Revenue. So even within repeat revenue, there's kind of, there's kind of a spectrum of quality there. And yours was sitting at the high end of that spectrum.

Guest: Yeah, I mean, I think just generally, well, if you take one customer and you look at the business that that one customer brings in and the timing of it, it can be they may do an event every single year, but the magnitude of that event could vary. So it's very hard. Like is the event outdoors or is it indoors? You know, does it require a tent and H vac and flooring or, you know, is it just tables and chairs? So on a smaller scale business, a smaller scale, I think it's probably going to be a bit more volatile. I think there's also a dynamic within any regional business where for the service provided, how is that regional business situated competitively in the market? If it's the number one or the number two player, then all customers requiring the service are going to call them first. But as those 1 and 2, as the 1 and 2 player gets capped out on utilization and has no more capacity, then the number three and the number four player get phone calls. So where you're situated within the market can determine, you know, where you're positioning within competitors can determine your seasonality as well for how, you know, the volume of calls that you're getting. But generally speaking, with the scale of this business, they would receive a high volume of phone calls or events and most frequently from repeat customers. So we found about 80% of the business was coming from customers that the business was serving on a regular basis. Now, I didn't know if we were the number one provider or the number four provider to these customers, but we were, you know, supporting those customers regularly year in and year out. It's definitely not the same as a, you know, contractually reoccurring revenue. With some instances and some customers, we had service agreements in place. I think service agreements are Commonly found in businesses serving customers on a repeat or regular basis. But I think we sometimes maybe miss making the distinction that a service agreement sometimes probably isn't contractually obligated. It's more of a, you know, all right, we will provide these services at these prices, and we've signed, but there's no guarantee, so there's no true guarantee to the revenue we had coming in. But just looking on a historical basis, it was pretty predictable. And we thought in this market, we figured in this market, every spring and every fall, there will be a lot of business, you know, to be had in the Texas market.

[54:53] Host: Yeah, well, even at 12 million, I mean, 12 million, that's. That's a lot of revenue. 100 people. That's it. That's a good sized business. And that's what you had wanted. You had said at the top of, at the top of our kind of talking about your. Your desire to get into search to begin with, that operational chops was something that you were desiring and, you know, at a meaningful scale. And this certainly checked that box, I take it?

Guest: It was. Yes. I think as I was looking at opportunities, this one quickly became the most appealing given the scale of the business. That was something that I was after. Four locations, moving inventory between locations, 100 team members. It was certainly a very operationally intensive business and something. I don't know that I was even totally prepared for how complex and challenging operationally these businesses are. But yes, that was certainly something defining as I was looking at opportunities.

Host: Is the scale great, Will? Well, I'm watching the clock, and we don't have time to go through every step of the story, but there are some very key moments in this particular story. So let's get. Let's. Let's kind of learn about this whole experience of what you learned through hearing about those experiences. But before we hear about the fire, which I think is the first experience, what. When did you acquire when you close?

Guest: Yeah, we closed December 2018.

Host: December 2018. Okay, you buy December 2018. You're based in Austin and the business is headquartered in Austin, or is it headquartered in one of the other locations

Guest: it was originally headquartered, I think technically in Dallas. I was searching out of Chicago. I was open to living in probably either Dallas or Austin, but quickly realized Austin was a major growth opportunity and being central to the other cities, it was logical for me to live in Austin and be able to travel to the other three locations easily.

Host: Right. Right on.

Guest: Okay. Austin's just an awesome city. So I was going to say, all

[57:05] Host: right, so I guess tee up kind of what happens in your first year. Ish into the business here.

Guest: Yeah, you know, I don't know that there's anything you can do to prepare for becoming the CEO of a business of any scale at a young age. And so, you know, jumping into Peerless, it was one year of just, I think, trial by fire. You know, I think that my hopes and plans for. I want to work in every role in the business and I want to spend time to learn and I want to, you know, get to know all the people. That is definitely the right strategy. That was not the strategy I was easily able to deploy at Peerless. The environment when I came in was. And a little background on the sellers and the dynamic when I bought the business was it was two founders or two owners, 50, 50 owners who had grown the business to a point where they were ahead of their skis and needed help. They had built. The culture at the time was. It was completely autocratic. Had to go through the every, every decision had to go through the owners. I would also say the culture at the time was, it was, it was not a great culture. I think that there was, you know, I guess for. I would describe it as toxic in many ways where if something happened, if an accident, you know, if there's a mistake in an order, you know, we need to figure out who's responsible and heads will roll. So it was definitely a culture of finger pointing and sweeping things under the rug. And so you can't grow in that kind of environment. So coming in, autocratic culture, trying to change the culture. I immediately was just so overwhelmed with the work and everything that was on my plate. I am getting calls from general managers that, you know, issues with jobs that I need to get out and go help out because the customer is yelling and screaming at them and I'm out setting up tents until 4 in the morning. It was, it was a brutal first year, but incredibly eye opening to see, okay, like here's what we're working with. It's, you know, it's going to be a steep hill to climb, but what we have here is a culture issue. And this is going to become a cultural transformation that we need to accomplish in order to get to where we want to go. So that was really year one. And then I think getting to kind of where you're going next is the phone call I got in February.

[1:00:00] Host: And just before we get to that phone call, Will, did you feel after the first year, the drink it from the fire hose year, you actually being part of the service delivery at times, including in the middle of the night or 4am did you feel after that year that you'd gotten your arms around things that you could, that you successfully transitioned and you were going to be an effective leader?

Guest: You know, I think, I think I had gotten my arms around the business model and you know, my role and purpose within the business was becoming more specifically defined. But I wouldn't say that. I think one year in, I don't know that I had the buy in and respect from my team yet. I think with most industries, and especially niche industries where it takes a long time to learn the ins and outs, they're very resistant to outsiders coming in and knowing all the answers to things. And that was something that I was very aware of and trying not to make too many changes in the business or too many decisions without bringing in others to help decide with me.

Host: Okay, this phone call.

Guest: Yeah, it was early February of 2020. So I had been running the business for about a year and a few months and I received a phone call at it's like five or six in the morning from my general manager in Dallas sharing that there was a small fire overnight in the Dallas warehouse. But rest assured, everything's okay. We're getting the trucks out on time. On that day we had 50 some deliveries for Dallas county elections. So it was definitely a logistically intense day, but totally underplayed it. Okay, well, my response was just send me some photos of the damage and let me get our insurance broker on the line. So he sent me photos and I'm quickly realizing this is not a small fire. It was an electrical fire that started in the conduit, I believe, somewhere in the building. And it got so hot that the roof came in and the sprinklers turned on. It melted a block of our white resin chairs so hot that it was covered the entire room with black soot. Once, once the sprinklers were going. So I get up to Dallas and you know, walking the floor and quickly realize, you know, this, our warehouse is not operational. Our inventory, which Dallas is our flagship facility, about half of our inventory resided in Dallas. I would assume probably 70 to 90% of that inventory was destroyed. And we are, you know, about five to six weeks away from being into peak busy season. Wow.

[1:03:06] Host: So if you'd been waiting for a fetal position moment, you got one.

Guest: Yeah.

Host: This is definitely February 2020. Little do you know what is waiting for you 30 days hence. But how are you feeling just at this point, this pre crisis to the big crisis? What's it like?

Guest: You know, what's interesting is there's nothing that can really prepare you for a moment like that. But I actually look back at my time as CEO at Peerless and I see that as being one of the defining moments where I found my place and my purpose within the organization and quickly became what I would call probably a wartime general or a wartime president. You know, where this is now, the project that we have to overcome. And this is how we're going to shift resources. We're going to start moving inventory from our other three locations and labor from our other three locations to supply Dallas. We're going to set up a tent in the warehouse parking lot to start moving usable inventory into and stage a kind of mock warehouse there. And we're going to communicate clearly to our customers that, you know, everything is okay, business as usual. We've had a small fire, but you have nothing to be worried about. The last thing that I wanted was a bride to be to see some headline that, you know, her tent provider was on fire and, you know, the March wedding that they had scheduled, do they need to switch providers? You know, that there was some real value destruction that could come from not providing the top notch service, from just rumors getting out in the Dallas market that we were closed for business. So suddenly I found this was, you know, and it was certainly not something that I realized at the moment, but looking back on, you know, people rallying behind this central mission and what we were trying to accomplish. And so, you know, we hit the ground running in, you know, trying to think, bring things back online and operate while the Dallas warehouse was essentially having to get completely renovated and fixed before we could move back in and operate.

Host: Yeah, it's, but it's, it is so telling how a crisis really kind of trained your attention. Maybe you weren't sure exactly where, you know, as you were a new leader, where to allocate your time and attention. And this certainly gave you, gave you an answer and, and, and a ral and a rallying cry.

Guest: It gave me a rallying cry. I, I think, you know something, while I was in business school, I got really into sailing and I was, I went all down this, this, this wormhole of I'm going to become a charter skipper and I'm going to take crews out. And I went and got my, it's called my yacht master coastal license so I could be a charter skipper and teach people, you know, how to sail out on these large vessels. And at the time, you know, it seemed like such a, you know, just A random business school hobby. But I didn't realize that it's probably the best leadership experience that I was getting when sailing into a storm or under conditions where people were fearful. I might have been fearful on the inside, but it was very important that I couldn't show that to the crew. As soon as I showed any sort of fear or uncertainty or nervousness within the crew, then I would lose everybody. And what I found in going through the crisis with the fire was I think that learning came to be. I needed to be steadfast and decisive and calm and we would get through this and demonstrating that through the fire and through other crises that may have popped up while operating the business really helped us accomplish and get to the other end. But I think it also helped build confidence in me as a leader for the team to see that.

[1:07:01] Host: Yeah, well, it sounds like you came in with kind of not realizing it, some. Some leadership experience and training already so that you didn't have to have a freak out in front of everybody for you to learn the hard way that that's not the right way to lead. It sounds like you were pretty well prepared to lead properly with the. With the characteristics you just described basically, namely kind of decisiveness and calmness like you knew you had. You had that built that muscle already.

Guest: I guess I wouldn't have known that I. That I had that, but that's certainly, I guess just what came out in the moment and on. It was certainly an important, important factor that I think led to being a better leader over the next four years of operating the business.

Host: And then What Happens in March 2020 after your. I guess after three or four weeks, I assume you feel like the fire situation is at least somewhat under control.

Guest: Yeah. So we, we were now operational in Dallas, but there was a lot of work that needed to be done in the Dallas facility. March 2020, you know, obviously the world comes to an end. I wish I could have diligence Covid back in 2018 for the impact it would have on event businesses. You know, no one saw it coming to the magnitude that it did. And over the. It was about a day or two. I remember it was Friday the 13th of March was really when it feel. It felt like it officially hit. We lost millions of dollars of revenue reservations over April and May that we had to refund to customers. And at that point in time I called my banker. We used Texas Capital bank, which was a great partner for us through this process. And I called them and drew down our entire revolver revolving credit facility. So we, we had adequate cash to write out the next few weeks with payroll. But it quickly became apparent that, you know, the staffing and headcount that we were scaling up for, for busy season was not going to be something we could endure and we would have to go through a round of layoffs. So it was that following Monday or Tuesday, I want to say, like March 15th or 16th, that we went through and ended up terminating. I would, I think it was about 30% of our team at that point. 30 or 40% of our team. Now a major benefit with the fire up in Dallas was we were putting people to work on restoration and we needed people to help in cleaning the equipment, the. Any stuff that wasn't damaged. So much of Dallas was safe, but the other three locations, we just, we couldn't cover the, the payroll. Yeah, so.

[1:09:56] Host: So you got to go through making that decision. I mean, it's Covid, you know, people, the world is ending. So. So maybe given the context that everybody in around the world literally is kind of freaking out, maybe it made the decision to take drastic action, namely laying off 30 to 40% of your workforce more easy. Easier if I can use that word. But still, you know, first time CEOs often one of the hardest things they do is making these really, really difficult decisions like that. What was it like for you?

Guest: That it was incredibly difficult. It was the hardest day of my professional career. I think we, when we made the decision, we were certainly, I think the earlier companies to do that. I don't think that it was totally obvious yet. So when we announced it to the team, it was very shocking. Like they weren't even aware that Covid was impacting business. It was still very new. I would assume maybe later that I think coincidentally that day or the next day, many of our competitors made layoffs. So I think quickly it became well known. But at the time, going into it and doing it, we were the bad guys and you know, we. I don't know that I did it the right way or the wrong way, but I could only be in one location at the time. And we needed to do layoffs in all four immediately or three immediately. But I went to our biggest location that wasn't Dallas and rounded everyone up in the warehouse and made the announcement. And you know, we basically had to send most people home. You know, looking back, certain things that I'm very grateful for that we did in the moment. One, everyone who was staying and many of our salaried managers were staying. Everyone took a pay cut. So salaried managers, I had it somehow if you were making more than I want to say 50,000, you were taking a 25% pay cut. Myself and one of the founders of the business stayed involved and was still involved in the business and was leading the sales team. So myself and the founder took, I think it was maybe a 35% pay cut. But that was asked in the meeting like how is this impacting you guys? And I couldn't have slept at night had I not also been sacrificing. I think another important takeaway from it is I could not have imagined going through multiple rounds of layoffs. I think if you're going to go through a round, do it once, you know, cut probably deeper than you even think you need so you don't have to do it again. And when, you know, once you've come out the, you know, we finished the round of layoffs, you can tell the team that was our round, let's go back to work. You're safe. The last thing you want is people fearing and losing productivity that, you know, fearing a second round of layoffs and questioning their likelihood. So fortunately we only had to do one and thankfully the PPP loan for us, I mean it saved us. Our revenue went down. I think it ended up being 40% for the year which there were things that we did and got scrappy to make it through 2020 and make it successful. But with a 40% decline and really 90% decline in the spring of 2020, there's no way we could have gone without another round of layoffs had we not received our PPP loan which we did I think in May of 2020.

[1:13:38] Host: And referring back to our pre call, this is also where having done a traditional search fund became quite valuable. How?

Guest: Yeah, I think two things. One, the support of my investors was paramount in my success and and successfully navigating this crisis management situation. So I have a terrific board search fund partners aspect several Brown Robinson several known groups that were providing me resources and help through the process. One other call out I would give was to a group called feudalufu, David Dodson. He was providing these great bulletins on like Liquidity, Liquidity, Liquidity. Here are the things you need to be focusing on. He had hired a consultant to help all of his operating companies navigate the PPP process. And at the early days in March of 2020, or maybe it was probably late March of 2020, I mean as an operator of business trying to figure out how to get in line for the pp. I mean, you're losing sleep, I'm sitting up at night reading, you know, Senate hearing minutes to figure out what the next step is going to be because it's inexcusable if you miss this window. So having a consultant help, you know, help prepare things, go over things, analyze your numbers, help you process your application, it ended up on the back end being, you know, the PPP process ended up being a lot easier for owners. But in those early days and very, very terrifying moments of running a business, that support was, I mean, just totally made, I think, the outcome what it is. Trying to run the business, being on my own in the dark and I think adding to it, I think we had talked about under self funded and the personal guarantee. I saw the moments of potentially taking this business to bankruptcy and was so thankful that I didn't have a personal guarantee on the business that would be taking myself into bankruptcy as well. I think also one defining difference with traditional search versus self funded is your risk appetite. And at that point my back was against the wall. I still needed to hit an outsized return for my investors. And rather than just battening the hatches and writing it out, we drew down our revolver so that we could keep the, you know, most of the institutional knowledge within the business. And then we quickly got very aggressive with hiring some of the best talent in our industry. I would say from May until probably mid-2021, when many of our competitors terminated 90% of their staff, we were hiring managers, we were hiring tent installers, guys and gals who were the best at what they do because we started building this platform where we were going to go take over Texas. And that I think process and angle was only possible through a traditional search. If I had done self funded and my entire nest egg was in this, along with my, you know, financial stability and potential bankruptcy, I, I know I would have been significantly more conservative. And you know, I think there's different, you know, strategies for different outcomes, but the conservative approach here would not have gotten us to the outcome that we ended up getting with this investment.

[1:17:29] Host: Well, it's interesting because it's kind of like you had two incentives pointing you in the same direction. Both a pull and a push, or maybe a carrot and a stick incentive. So you didn't have a pg. So that allowed you kind of lowered your, your risk aversion. And yet you also had the stick of your investors, as you said, investors expecting an outsized outcome. So you needed, even though it's Covid, you still needed to grow this business and, and really, and, and really push the, push it so that you could ultimately have a, a liquidity event and a good return for your investors.

[1:18:07] Guest: Yeah.

Host: And so, so both of those would be, would have been different in a self funded situation. You know, I recall you, one of your investors actually telling you like you also I think that really important to highlight here is your psychology and the, in the mental burden of facing potential catastrophe or bankruptcy. Didn't one of your investors say you may well be a bankruptcy CEO?

Guest: Yeah, I remember the call. I remember exactly where I was sitting and the day and it would have been in sometime in mid April that he said it was. One of my board members said there's a good chance that we won't be along for this ride when the equity gets taken out. And you know, there may be a career for you as a bankruptcy CEO because most likely the bank isn't going to want to take over this business. They're going to need someone to run it. So suddenly I've got to get myself excited for the fact that you know, I've got a different career path potentially than what I had expected. Something that's outside, totally outside the traditional search search world. Not, not an exciting path. But in moments like that you're looking for anything to just try to keep you engaged and get you through the day.

Host: And you know, for, for the self funded searchers out there, if they were in a situation like this or any, any kind of crisis situation where they're facing, they've got the PG etc and they don't have a support system behind them all those things, you know, they might find themselves in the fetal position at 2am on their bathroom floor certain nights going through this. You're being told by one of your investors that this just may be a bankruptcy. And you know, here's a career path that, that that could lead to. How bad do you, do you have fetal position moments? How bad does it get psychologically in, in the kind of the darkest moments

Guest: here you, you know, I, I always just called them my sleepless nights. I think as I look back at that period in 2020, it was many nights just pacing the house and sitting at the computer and just getting work done because I couldn't sleep. Understanding and thinking through the lives that were at stake the business. I think at that point in time I was still very I guess focused on trying to return capital to my investors. And I felt genuinely terrible for potentially not being able to return that capital. And so those were the types of things that just were keeping me up

Host: so well, what I'm also kind of trying to Tease out here is how dark it got. So, so. And not to at all minimize the sleepless nights, the pacing, the being kept, kept up. But I feel like there's, there might be a difference between the terror that a self funded person in this situation might have felt and what you were feeling.

[1:21:23] Guest: Yeah, I mean I think that that's certainly fair. Many sleepless nights, it was scary. But seeing others go through others who had done self funded, who had the PGs completely shut down their business and have to rebuild from scratch or potentially face personal bankruptcy, that's something that I never had to consider and knew that with the capital backing and at least with the bank I had in place, they needed me to run the business. They weren't going to take it over and kick me out the door at some point when Covid would go away. We had a service that was necessary for society and needed in society and we were starting to develop the perspective that it's probably going to come back with a vengeance. We just don't know when. So seeing the other side of it without a personal guarantee I think probably led to better, maybe more restful nights than some self funded individuals in my shoes.

Host: Yeah, well, and, and so that's great. Thank you for that, Will. And I'll also. Let's use that as a segue to hear more about seeing the other side of this, knowing that if you can just hold on, it's the market's going to come back, as you said, with a vengeance. And so in fact this blood in the streets moment, it is a blood in the streets moment, which I said, I don't know if it's Warren Buffett, but you know, this is if you can hold on and even if you can double down, this is an opportunity, this is an opportunistic moment and to kind of start buying and going after market share where all of your competitors are hunkering. You've already touched on it a little bit, but give us more because this is really the turning point in the story.

Guest: Yeah, I mean this was the turning point. I think we had several dynamics at play. One internally within the, the culture of the business. Now having this new team in place and I can get to that in a minute. But then there was the all right, hiring and scaling quickly in that moment of crisis and going kind of, I would say mid-2020 was really when again thinking through wartime president kind of mindset, my searcher tactics kicked in. And so I start cold emailing every director of health, every hospital administrator, every public safety individual trying to Relay that we have tents and we have staff to put up for outdoor extra capacity. COVID testing. I'm reaching out to university administrators because I'm reading in the journal that schools are trying to figure out how they deal with classroom capacity. So I immediately. And again, there's not a lot of work to be done other than just sitting around thinking about what you could be doing at this point. But I started trying to develop different business models and things that we can do to put our inventory to use and more importantly, to put our people to work and keep people coming in and keep paychecks flowing. So we end up landing on a few grand Islam opportunities throughout 2020 and really throughout 2020 and kind of early 21 that, you know, ended up being long term tent rental, highly profitable business, things that we were out helping society and helping community for where we became an essential business. And you know, that was the, that was the let's survive process. Then through that and with the funding that we had coming in, we were able to start recruiting some of the best people in the industry. And we're pulling in managers, operators, people from around the country who wanted to move to Texas, which by the way, I think is something very important to think about as you find a regional business and recruiting into that market. Fortunately, coming to move to a state with no state income taxes and a desirable place to live was certainly critical in trying to bring in talent. So a lot of our talent are key. You know, guys and gals we brought in were coming from other players in the industry and typically even from other parts of the country. And the goal was, look, when things do come back online, we're looking at our competitive landscape. They're not going to be prepared for this. They're going to be basically starting out fresh with all new hires. We're going to bring in all the talent and industry experience that we can to be ready for when events do come back. At the same time, this is a phenomenal opportunity to focus on building a new culture. We had gone from this autocratic society, toxic culture, environment. We're going to roll out our new mission, vision, values. We are going to hire people based on those values and we're going to build something completely different than what anyone seen in the rental industry previously, including how people are compensated and incentives for continuously improving and growing your career and developing. So it was a very unique and interesting time to kind of rebuild the business in the way that I had envisioned the business eventually developing. We were able to do it faster and we were motivated to to do it faster so that we were ready when things come back.

[1:27:09] Host: Wow. So you emerge not only as I, as I said in the intro, not only having survived, but stronger with more. Stronger internally because you have a new culture, new people who are signed on with the new culture in new markets with new customers that you've very scrappily. I mean you were, you were basically out there doing sales yourself. Emit cold emailing people up and down the state to. To offer your services. So new customers, new cohort, cohorts of customers and your competitors meanwhile have been hunkered down so they're all themselves weaker. So you're kind of doubly stronger because you're stronger internally, but then also stronger with respect to all of your competitors who are weaker. So pretty good place to be. So put some numbers behind that. What does 2020, 2021, 2022 look like?

Guest: You know, I'm just jogging my memory, but there were very few rental companies in the industry that grew in 21 and grew in 202022 over what they did in 19. And I was so proud of what we were able to accomplish from a sales standpoint and the growth we were able to achieve. I want to say in 2021 we maybe did 15 million in sales and in 22 we might have done. No, I'm sorry, we did 18 million in 2021 and in 22 we did 22 million in sales. And by 23. I haven't seen the final numbers yet, but when we exited the business, I think we were right around 24 million in sales.

Host: So to refresh the listeners memories, this was a $12 million business when you bought it and year of exit it's a 24 million. So you doubled revenue in an events rental business. Post fire, post Covid. Pretty, pretty wild.

Guest: Yeah. And to. To do that this was, this is a business that's not the easiest to scale. So it required really doubling our warehouse capacity. Over that period we relocated three of our four warehouse facilities to much larger facilities. We added a significant volume in inventory and the headcount had grown to 225 team members, which meant really building out the org chart. We added layers to the org chart. We changed incentives along the way. This ended up being really an operating journey and pure operations. Because the event rental business, when you're multi location, we're really a logistics business moving inventory between locations. So to double that logistics. Yeah, it was a pretty wild endeavor looking back on it and certainly more complex than I had ever imagined getting in. Um, but our Strategy, as we were going through this was realizing, all right, the demand, let's just assume that's going to be there. We just need to build and grow to support the demand. And how do we do that without affecting the quality of service and execution for our clients?

[1:30:32] Host: Um, so yeah, well, you said incentives a couple times. You know, this is probably pretty basic for HR savvy people, but you know, we, we hear a lot about aligning incentives and giving and giving a workforce proper incentives. Can you give us two minutes on an incentive structure or two you put in place and really spell out to the naive among us, like why it's so powerful.

Guest: Well, there was a book that I read early on that one of my board members, a guy by the name of Chris Cook, had recommended to me called Everybody Matters by, I believe the guy's name is Bob Chapek. And this book, it was about his story of taking over a manufacturing business and gamifying all the roles within that manufacturing business. So I wanted to replicate what he did. But how would that look within event rental? How do we gamify within the hourly or blue collar roles, the salary roles? How do we make this fun and engaging and make sure that we're aligned with the key KPIs that we've got at a high level? So from a sales standpoint, it's bringing in commission structure which they had never had before. From an operating standpoint, we totally changed how our hourly team members are motivated by paying them based on their capabilities and creating a badge system that they can earn badges and you know, and with each badge they can increase their pay. So now we suddenly have, this isn't just a dead end hourly job, this is a career path. And here's how you can grow to 24, 25, $26 an hour. Then within the salaried operation side, what are the KPIs, how do we incentivize them through monthly or quarterly bonuses? And we even went as far as taking some of our key hourly role players and making them salary and changing their incentive which then totally remotivated the staff that reported to them. Because you have in every blue collar business and many service businesses or any business where you have hourly and salary employees, you really have two buckets of workforce that have opposite incentives. The hourly team only get the more they get paid is based on how many hours they work, right? So they want to work and get as many hours as they can, which can commonly motivate them to work as ineffectively or slowly as possible, if not managed Closely. Well, suddenly that creates a pretty bad culture. It can create a bad culture if you're micromanaging them or just pushing them to work harder. So how do we get them focused on working harder? And how do we build a system where we can compensate them for that hard work in less amount of time? And so that's what we were focused on. And I think what we ended up rolling out was, while maybe not perfect, was incredibly powerful for our industry and for unlocking kind of the holy grail KPI for us, which is labor as a percent of revenue. You know, we're only as profitable as the effectiveness of our labor. So if we can gain that alignment within all ranks of the organization, we can unlock earnings potential.

[1:34:01] Host: That was great. Thank you, Will, for that. Okay, we're going to start wrapping up here, but so tell us the end of the story. Tell us about the exit, why it happened and what it looked like.

Guest: Yeah. So it's funny, in year going into year four, as an operator, I was ready to run the business for another three or four years. I was modeling out what that would look like and present it to the board. And then suddenly in year four, we start getting unsolicited interest from strategics within our industry and outside of our market. Strategics being some large competitors in the country, the writing is kind of on the wall that Texas is a. A very desirable place to operate one of these businesses. And our goal all along was to build the logical platform for anyone who wants to operate in Texas. It was never to grow outside of Texas, but it was to really capture and dominate this local market. And so, you know, hence, you know, the strategic started calling. But I realized at some point these large players are going to enter our market. It is going to look. The landscape is going to look quite a bit different. And maybe it's worth getting off the train here and starting to entertain these conversations. I had also realized that some of these strategics have phenomenal experience in things that I don't have and in areas where they could grow and add resources that could actually really help our team and provide for even greater career opportunities for them. So one of the partners that, you know, the strategics that approached us was actually a group that I had known for the last five years and an operator that I had been introduced to early on in my operating, in my operating days. So it was a relationship that was already established. And I was confident we had built a great culture, and I was confident that this, of all the suitors out there, this would be the right group to exit to in the culture that would fit best with what we'd created. And they had a, you know, they also had a structure in place that they had someone selected who could take my role, which I had quickly identified. Now going down this path, I'm probably not going to make a very good employee. I joke with potential searchers, like once you go down this path, you're really unemployable once you get the taste for that, independent. So finding someone that didn't need me to continue at the helm for another four to five years was also important. So they, you know, we started discussion. It was a, I think four or five month deal process. It was, we ended up closing in early September of 2023 and it ended up being a great outcome for our investors. We ended up close. We'll end up doing just over 4x MOIC return and I think that's right around a 38, 39% IRR over the five year period.

[1:37:17] Host: Congratulations Will. It's pretty phenomenal story and outcome.

Guest: Thank you.

Host: 38, 39% IRR over, over five years. You know, those are the kind of eye popping numbers that attracts all the capital to search. I have to ask though here, Will, I heard you say earlier, which is, you know, you were just kind of repeating what is industry knowledge among search fund investors. They need to see a path in businesses that they invest in or that their searchers buy to mid-30s IRR over, over this, about this timeframe. And so, you know, you move heaven and earth through Covid, through a fire and make this, this happen. You make these big strategic bets on, you know, being coming out of COVID you know, really strong, where all your competitors have been weakened, et cetera, Everything we covered in this story and transform the culture, go through these painful layoffs, then transform the culture, put in new incentive structures. So, and, and, and then do in fact get this phenomenal return. But when I hear what you say they need to see and kind of 30s, mid-30s IRR and you get that plus a few points. 38, 39. Are they thrilled or are they like, yeah, that's what we need you, you know, thanks, that's what we needed you to do. Do you see what I'm getting at?

Guest: It's like, yeah, no, I think so. I would say in these circumstances, the feedback that I've gotten, they're thrilled. I think many investors had written this off in 2020. So to get to where we ended up was nothing short of amazing. And it came from the team that we had built and the culture that we had created and the support that I received from my board and from my investors along the way. But I think going into this investment this, this investment was not middle down the fair, middle of the fairway for traditional search. This was not easy to envision what a 5x outcome might look like. But I think it's important to highlight there is a place in traditional search for businesses that are just steady eddy and very stable. And all you have to do is kind of keep doing what you're doing and it's a 2 to 3x and then here are the opportunities and the levers to pull to get bigger. And one of the things that I liked about the event rental industry in general is it's kind of tough to kill these businesses. I mean they've got inventory in a local market that's needed year in and year out and all you need to do is continue performing under this capital structure and you know we're going to get at least a 2x return in the market that we're operating in. So I had sold this look very low downside type of investment opportunity in a great market. But there are levers that we can pull to get a much higher return. Now it certainly didn't end up looking and the numbers didn't pan out year for year like I had in my investment case. But you know, I think getting to the forex outcome it thrilled investors who mostly had probably written us off at some point.

[1:40:49] Host: And just to wrap up now will, let's just kind of revisit your personal transformation and kind of put this now in the context of how you see search, how you see being an investor or not, how you see entrepreneurship. So maybe to tee it up just you, you now see that a finance background is not relevant might even be detrimental to somebody getting into to, to buying a business. So you had, you had said that in passing earlier in our conversation. Elaborate on that.

Guest: Yeah, I guess you know where my comments coming from there when I worked in private equity and you, you're looking through a sim the team and the values page was something or culture page is something that you would just like flip over, just gloss over in any labor intensive business and I would argue most businesses I've learned as an operator the culture is so critical and the quality of the people that you can recruit in and motivate is the difference between a good and great outcome or a bad and great outcome. So I learned through the operating experience just the value of creating a strong culture. And I never would have appreciated that when I was in private equity. So now, as I've exited peerless and no longer earning a paycheck, have time to do great podcasts like this. I'm reflecting on what I want to do next and where I want to take my career. And I think we've identified within the traditional search world, there is a, I think a lack of recent operators, searchers with operating experience who can step in and mentor the new searchers, help them see around the corners and maybe avoid some of the pitfalls that I landed into. I got to deal with a number of crises. We didn't even get through the cybersecurity breach that, you know, I received a phone call from the FBI figuring out all these things you never could have prepared for that, you know, I'm excited to give back. I, over the course of my search, I would typically take, I would say, one to two phone calls a week from interested searchers, prospective searchers, or active searchers. And I always loved those moments. I love kind of helping them out and learning from them as well. And so my desire at this point is to kind of follow the proverbial path, I think, of exited operators and start giving back and becoming a more active participant in the ETA community. My focus right now is in the traditional world. I believe in the traditional structure in the community that it's fostered and the people that operate within it. And. And I'm starting to talk to and help and support active or prospective traditional searchers as they go down that path. My belief for the search fund ecosystem as a whole is, look, there's more searchers out there than there ever has been, and the tactics of traditional search may need to change a little bit. But at the end of the day, there's hundreds of thousands of small businesses and business owners who may not have a succession plan in place, may not be the right size or the right dynamic to sell to traditional private equity. And I think we have a wonderful system in ETA to put people who desire to be operators at the helm and learn some of the wonderful things that, you know, I've at least tried to learn or face over the last seven years.

[1:44:40] Host: Great, Will. That was great. Let's leave it there. How can people reach out if they want to ask you a question or otherwise get in touch?

Guest: Yeah, happy to help. I'd say LinkedIn's the easiest way you can find. I'm probably one of the many will writes on LinkedIn, but you'll see Search Fund in my title, and that's the one.

[1:45:03] Host: And we'll link to you in the show notes.

Guest: Okay.

Host: Will, what a story. Congratulations again on being in the events world during COVID with a Fire, with all of the other travails you experienced and and still delivering in spades for your investors and and and doing right by your team and just really quite a story. So congratulations. Thanks for sharing it with us.

Guest: Thank you for having me. Sa.