Such a great visual. Also, so true.

He is playing SimCity or Civilization with the world. I'm a fan boy

If you're starting or buying a business. Remember these four letters. QSBS This stands for Qualified Small Business Stock, and you can save millions in taxes if you do it right. You get up to 10M-500M in tax-free gains. I've used this before and here is why I love it👇

The price is the price...the seller is not willing to have you examine their books. Just trust us.

Do you want to know one of the best feelings in business? Its when you hire someone & they come out of the gate like a rockstar (A Player) Just hired someone 2 weeks ago as a "Business Development Associate" Here are 3️⃣ way you can tell if you hired a A player 🧵👇

Advice We just lost a 4.3M EBITDA exterior home services type of platform yesterday b/c I was not flexible with NWC. Seller did not understand it or trust it, and we held our ground. Seller went with an offer that had a more simple structure...keep the cash / AR / pay payables. Sometimes it makes sense to go simple to get the deal done. Simple is better often. Could also apply to other aspects of the deal process. Was told they would have gone with us, other than the NWC. Retweet this and DM @WillDATX , if you want our NWC document...the one that confused the seller:)....I guess we need to update it:)

I am happy to announce that we just sold our commercial HVAC/Plumbing platform Flow Service Partners to Quad-C. Flow tripled revenue from when we formed the platform in 2021 through organic growth and some strategic acquisitions. Some lessons learned below: 1. Thanks: First, I want to thank the three guys pictured here, who, without them, Flow would not have happened: Ryan Lewis, Chip Alstadt, and Daniel Youman, who were instrumental in building Flow. Ryan & Chip owned the initial two businesses we invested in and served as the platform for Flow, and Daniel was the CEO. Daniel was a former member of @lpfirstcapital , who left to become the CEO of Flow. We are excited for all of them to continue to execute on the Flow growth story. 2. Start with a thesis: We were not just looking for companies to sling LOIs at. We had a thesis around commercial HVAC. Remember, this was 2020, and we thought, let's find a fragmented industry with essential services. We felt that we had that in commercial HVAC and plumbing. 3. "Plant Seeds/Shoot Shots/Be Authentic": We had commercial HVAC on the whiteboard to do a thesis in 2020. So, we started to look for opportunities. I was talking with a sell-side advisor and was looking at a different opportunity, and I mentioned to him that "we were looking for commercial HVAC founders that wanted to build a platform. So if you find someone with a little sparkle in their eye, keep us in mind b/c we would love to build around him". A month later, the broker called me back and said, "I think I found your guy," and I said, who? He said, "The guy with that sparkle in their eye". He was referring to Ryan Lewis, who was pictured here. As simple as this sounds, Flow would not have happened if I had not mentioned to the broker that I was looking for someone with a sparkle in their eye...it sounds silly, but he remembered it. It turns out we had two guys with sparkles in their eyes b/c Chip was just as impressive as Ryan. "I'm sure they will debate this". They were both childhood best friends and lived next door to each other when they were 5 years old. 4. Focus on Service, and the growth will come. Flow did a great job of focusing on service and providing value to customers. Ensure you maintain and improve your services after buying a business. I know that sounds simple but sometimes people forget about it. 5. It's not all sunshine and rainbows. I had to fly out to deal with some chaos with another platform company the day we closed on Flow...so could not even celebrate. They say you make your money when you buy, but often, it's what you do after you buy that moves the needle. Stay stoic and build a great team. This is more in-general advice. I just want to highlight that not all things are up and to the right. I'll post more thoughts on this soon, but I must run to catch a flight. Why the picture of the coffee shop...we used to stop there at the airport each time we flew to Nashville for meetings and board meetings...everytime I will walk past that in the future I will think of Flow! We are looking for companies to join us in the following spaces: 1. Commercial Landscaping 2. Electric Utility Services 3. Residential HVAC/Plumbing 4. Collision 5. SFR Property Management 6. Non-Title IV vocational schools 7. Restoration (not closed yet but working with someone with a sparkle) We are looking for someone with a sparkle in their eye in the following spaces (new platforms). 1. Non-Hazardous Waste 2. Data Center Services 3. Paving 4. Anyone that has big dreams, owns a business and wants to take some chips off and 3x-10x the size of the business. Often, it's not what but who, so reach out if you want to build a company to 20-40M of EBITDA. We would love to explore a partnership. Also, a big thanks to Nigel Howard at RLJ Equity. They were our capital partners in the deal, and we could not have done it without them! Also a big thanks to Quad-C, I wish you the best with Flow and the great team there! Link to the press release below

If you are buying or starting a business, try to do it in the teal areas.

Small Sign of EQ 🧠 I always think it's a positive when someone suggests a time for a meeting & they throw out the time in your time zone. Does not count if there is a ton of people on the invite. For example, they are East Coast and they throw out a Central time. Small thing, but shows EQ in my book.

One of the top questions of 2023 for me is... What will Brad Jacobs do next? He is one of the most prolific dealmakers out there...would classify him as the most successful independent sponsor. He has built 6 different billion+ dollar (revenue) businesses Has raised over 25 Billion in Captial I love that he does not think like typical PE. He thinks how can 10x+ my initial capital base and build an enduring great business. His holds are over 5 years. He dreams big. He recently stepped down from XPO Logistics. Whatever he touches next will turn to gold..mark my word. I'm an independent sponsor and raise money deal by deal like him and very much look up to him. Will be studying his next move.

Wanted to share a killer infographic of Finance KPIs that @BoucherNicolas shared on Linkedin. Good stuff Its a good assortment of possible KPIs to track. h/t to Nicolas

Term Sheet Tips for Independent Sponsors Just gave this advice to an Independent Sponsor partnering with one Institutional Investor. These tips are for when you are at the investor term sheet phase and in regards to what to ask for in your term sheet: Closing Fee: 2-3% closing fee of the EV (enterprise value). -2% closing fee for add-ons. This is very important to start to support a larger team and I think its required to do a buy-and-build. It's a lot of work finding add-ons, and you need additional funds to support the growing organization. -Roll 100% of the initial fee into the deal. Share this with your team. Take the 2% add-on fee as cash to help support the organization. Management Fee: 5% EBITDA with some type of floor for a management fee. Example 5% of EBITDA with a floor of 150k. -If they (investor) are taking a financing fee, try to get that also. Example 1% fee, try to get 1% also. Carry: This varies a good bit for us. If you have one investor, we have structured win-win arrangements where we get a higher carry % in return for a waterfall that is win-win. -We have gotten as high as 30% carry with a GP before, but we have also taken less than 20%.  Big array of waterfalls. Broken Deal Expenses: If you are signing up with one institutional investor, then try to get them to take on 100% of broken deal expenses. Especially if you give them exclusivity. Equity Commitment: For us, if someone is willing to commit 100M+ to the deal in equity, that gets us excited. We like buy-and-builds so more equity the better. I believe it's much easier to use a good bit of equity on the front end and get to over 10M of EBITDA, at that point, it's much easier to raise debt to execute the roll-up. Who to Choose: We usually go with the group that we like the most, that we think we can learn from, and gives us the best gut feel.  Very similar to sellers choosing the right buyer, they don't always go with the highest offer. We have gone away from higher offers in the past.  I think this has worked out well for us. Leverage: Try to get multiple term sheets and try to keep the exclusivity to them under 45 days or 60 days at most..so they are marching to close and not wasting your time.  If you have other term sheets you have some leverage if they are dragging their feet, and you can throw down on them at the end if they are killing the deal and not moving forward. We have luck in the past as we have chosen wisely at the term sheet phase. But have had in our minds, that we are not going to close on X date, we had Y option behind them. -Note, it's better in many cases to not just have one investor and have more of a syndicate. In one deal we have 36 investors. If one backs out, you have a waiting list behind them. Advisors: Try to time delivering the APA or SPA before signing the term sheet with them so you some leverage to continue to use your legal provider...if they use theirs, they might take too long. Put it in the term sheet ideally. We bent one time, and used our investor's legal firm, and they turned off the seller and we lost the deal, and we now will only use our law firm. Can't let the tail wag the dog.   Getting 100% broken deal coverage and also having your lawyer run point on drafting is a best-case scenario IMO when working with other big investors. Hope this helps any new independent sponsors out there. H/t to A Simple model for this image, swiped it off google. I want to give a shout-out to them...they do a good job in their content.

For those wanting to know about non-recourse loans (NO PG) , this newsletter by SPP is a good monthly overview of what is market of what is market in the LMM This is useful for SMBTwit to understand as eventually you need to bring on some debt to grow with no PG Few ideas 👇🧵

Some say the Silver Tsunami is not real. I don't see how it is not real. Millennials own only 7% of all small businesses, less than previous generations when they were that age. ...tweet continued 🧵👇

We need to go nuclear. It's the only viable option. No need for batteries. It has the smallest amount of waste, and is the "greenest" option. Yes, more than Solar and Wind. It is also the most stable "Highest Capacity Factor" which means its producing max power 92.5% of the year. Driving down the cost of electricity is a competitive advantage and drives the wealth of a nation. It also is important if we want to restore the manufacturing base. Would love to see more nuclear and our politicians cut the red tape for it. Also would love to see some more movement on Thorium reactors.

This is the cost of a QoE we are going to do on a 27M deal, has 10 locations. Some may ask, why is it so much? We have found that when the EV is over 20M, you need to use a big firm to do it, if you have 8 figure equity checks. Helps out with the money raise. This is from a top 50 firm. They also move fast. We are getting another quote and expect it to be around 60-70k. Might go with them. I'm sharing b/c many have asked me how to do above 20M EV SMB deals...this is a part of that equation. FYI, I've used @ElliottEHolland , before and he is great. Would recommend him. Great product at a fraction of the cost.

Data Center sectors, along with market leaders. Are there any good SMB Data Center thesis ideas for Searchers, entrepreneurs, or independent sponsors here? Any thoughts?

Level Shifts: Thoughts on scaling a SMB👇 When you are growing, oftentimes new people will join the team and there is not clarity around a role, clarity around company best practices/principles, and clarity around core values/vision. You see this more when a company goes through a level shift. These transformational changes happen at predictable points. What worked at one level, won't work at the next. This causes frustration with new team members b/c the clarity is not there , and also existing team members b/c what used to work does not work anymore. Much like a video game, it's a different game at each level. I think it's a different game at each level and you have to expect a change when you buy a business when you level up to the next level. Nothing formal here and its just an observation (that a mentor told me about in the past) Here are some levels in which the company shifts: Level 1 : 0-10 Employees (Nimble Phase) Level 2: 11-30 Employees (Foundation Phase) Level 3: 31-100 Employees (Scale Phase) Level 4: 101-300 Employees (Fly Phase) 1️⃣ Level 1 (Nimble Phase): 0-10 You can really just freestyle it with the team as the leader. Picture a pickup basketball game where as a team, you communicate and give each other feedback. During this time, if actions and activities do not align with the plan, you can clarify it. 🔵 EBITDA Margins will be high when you approach 9 team members, b/c you don't have a built-out leadership team. So if you are buying a business that you want to scale with 9 employees, expect to add positions that don't generate gross profit and burden you're SG&A going forward. 🔵This phase is super fun b/c the team is small, and you are in the foxhole together building something special. 🔵IMO, it's more efficient to communicate organizational structure and standards during this phase vs. spend time writing it down. The reason is there are going to be many changes as you work things out to scale. IMO, don't over-systematize in this phase. ⚠️ Beware of the HUSTLE Leader, with a team of helpers in this phase. Sometimes this leader gets the team up to the next level. This is a big risk in buying a business when this person leaves. I call it hustle b/c the owner is Hustling..doing everything. We call it a reverse Hustle addback...its costly to replace an owner that is a beast. 🔵 You can get by not defining and creating clarity on paper b/c as the leader you can keep tabs on the team, and the critical drivers, and have one-on-one conversations on the way things should be done b/c you are less than 10 people on the team. 🔵 Define Style = Heavy one-on-one communication with limited writing down. 🔵 When you have 10 people, 3 people are key. Prices Law: square root of a domain is responsible for 1/2 of the output 2️⃣ Level 2 (Foundation Phase): 10-30 In this phase, an owner/CEO can't do one-on-ones with everyone. You have to start to build some leaders around you b/c you can't juggle all the balls. 🔵 New people coming on may stray from the way things are done and this could cause some friction b/c things are not written down. When this happens, its an opportunity to document 1. Best Practices 2. Roles and Responsibilities 3. Core Values...etc. The initial tendency is to correct and give feedback...but you are not freestyling anymore, so you need to turn that effort into documenting the former 3 things and also provide clarity. You need to also turn your attention to getting in getting the 5 people (see Prices law below) in this phase cohesive and aligned. 🔵 Read the book "Advantage", get the leadership team cohesive. 🔵You still know everyone's names but you can't lead them all. 🔵 When you have 30 people, 5 are key. Who are your 5. Prices Law: square root of a domain is responsible for 1/2 of the output 3️⃣ Level 3 (Scale Phase): 31-100 🔵 What worked at Level 1 for sure not work at the end of Level 3. You can't keep pulse on everything and you have to empower your leadership team. 🔵 Read the book "Traction" ..about EOS 🔵 Setting up a Goal system is key. We like OKRs. Rocks in EOS are good also. Same thing essentially. 🔵 Knowing the critical drivers (leading indicators) and tracking it via a scoreboard is key. Tracking the lagging indicators (results) are key also. 🔵 When you have 100 people, 10 are key. Who are your 10? Prices Law: square root of a domain is responsible for 1/2 of the output. 🔵 EBITDA Margins might go down b/c of the SG&A increase as you put in the structure and also bring on those 10 key leaders/individual contributors. 4️⃣ Phase 4 (Fly Phase): 101-300 🔵 This is when you realize the value you have created. 🔵 Read the Great Game of Business ⚠️ The important thing in this phase is to not get bureaucratic. This is hard b/c as the founder / CEO, you can't spin all the plates. You have to trust your leadership team. 🔵 You won't know everyone's name and how many kids they have. 🔵 Try to simplify the elements of EOS and equip everyone to make decisions and produce the activity to drive value. 🔵 Try to set more "meta" systems in this phase. Don't over SOP it and over do it. Make business a game. People love to play games and they want to win. Embrace this core truth throughout the organization. 🔵 When you have 300 people, 17 are key. Who are your 17. Prices Law: square root of a domain is responsible for 1/2 of the output Takeaways: -Each time you hire someone, you get the ability to "raise your average". This means the "3" when you are 10 employees, don't have to be part of the "17" when you are at 17. -That part of continuing giving verbal feedback after the level change when 1. Best Practices 2. Role and Responsibilities and 3. Core Values are not documented and there is not cohesiveness amongst the leadership team is very important. You can't freestyle it anymore and you need to create clarity. Use energy to create that clarity vs. playing wackamole with giving feedback. Work on building the machine. -Part of the game at each level is finding the right key leaders for that level. For example, who are your 5 when you are 30 employees. You need to establish a cohesive team. You need to overcommunicate clarity. - If you are trying to scale from 1 to 300 employees. I like to think of it as: Level 1 : 3 Cohesive Leaders (Nimble Phase) Level 2: 5 Cohesive Leaders (Foundation Phase) Level 3: 10 Cohesive Leaders (Scale Phase) Level 4: 17 Cohesive Leaders (Fly Phase) Let's say, you are looking at a company that has 30 employees. One of my favorite questions in due diligence is to ask is tell me about your top people in the company that you could not lose. Before asking the question I would have figured out in my head what the square root of the total employees were. In this case I would have guessed that he would say 4-5 names (b/c the owner is 1). Spend time understanding who those people are, what they do, and what their limits are. When you have a collection of leaders there that would be the leaders when the company is 100 employees, you have a 💎 Big Takeaway = 1. PEOPLE MATTER 2. A COHESIVE TEAM IS THE SECRET 3. PEOPLE WANT TO WIN GAMES Any other takeaways here that you have in going through different growth phases..comment below RT if you like this

When you buy multiple companies and make decisions on the fly. It helps to be able to quickly model out in your head what the MOIC and IRR is for investments. Here is a printout that I have memorized a few so I can quickly model things in my head. 3 Takeaways 🧵👇

Business Buyer Beware: When you buy a business, always be prepared for sellers to retrade you on price at the last minute. Often this is b/c EBITDA has trended up, or maybe they are having cold feet. Here are some tips we have used buying 31 businesses to fight it 🧵👇

Some businesses capture demand. Some businesses have to create demand. Part of due diligence is understanding if you are in the capturing demand business or in the creating demand business.

@ShaanVP , dropped a 💎 on the @myfirstmilpod about a two types of viewpoints that help define people. 🪟 window vs. 🚪door mindset I’ve noticed that this explains why some people smart people don’t reach there potential and others go on to massive success. Difference 👇🧵

Anyone interested in a Plumbing business that is doing 1.7M in EBITDA (proforma and according to broker)? Its in FL and is residential It does have some construction exposure and we passed b/c of this. DM and I'll give you the details

Bud Light has had a rough couple of weeks. Much deserved, in my opinion. Many don't know who the main owner of Anheuser-Busch is, and that's Jorge Paulo Lemann co-founder of 3G Capital. He is one of the most interesting billionaires in the world. Here is his story 🧵👇

One of the businesses we purchased was answering the phone less than 50% of the time, from the hours of 8-5 EST. We started to track it and now its at 85%. Goal is to get it 98%+ I'm very high level here and don't have the details, but the moral of the story is to track it

I-35

Any recommendations for a pragmatic website developer. Looking to spend less than 3k. Ideally Wordpress It will be for a consulting firm website and a marketing company...helping out a friend.

Wanted to give a big shout-out to the team at United Land Services, which is a portfolio company of @lpfirstcapital. United was just ranked the 3rd fastest-growing landscape company in the country for the 2nd straight year. Revenue went up from 88.7M to 153.1M, and is now ranked the 20th largest landscaping company in the USA per the Lawn and Landscape report, lawnandlandscape.com/page/to…. The reason we are growing fast is b/c we are providing value in creating win-win's for owners and also focusing on the team/customers plus the amazing team. We are looking for other landscaping companies to join us. If you know of one that could be a good fit, please DM me....even if your an independent sponsor or searcher.

Curious about what a cold calling funnel looks like for a BD guy trying to buy a business in a buy-in build? Here are the results of the first 2 months of activity. 876calls +235emails (he does a good bit of research before outreach to personalize) ⬇️ 32 Owner meetings ⬇️ 16 NDA's Sent ⬇️ 9 executed ⬇️ 6 Financials Received ⬇️ 0 LOI's ⬇️ 0 Businesses purchased Although no success yet..I'm happy with the activity and feel that its going to pay off big dividends. If you want to do this for us...let me know

Just had a great dinner getting to know @jd_foote . Such a nice and smart guy. He is starting to invest more in the USA and traveling to show the USA to his daughter. He is going to be buying some 🇺🇸businesses over the next few years, so he would be a good guy to get to..

Missionary vs. Mercenary When hiring, I like to go with missionaries over Mercenaries. Missionaries: People who are passionate about the mission of the company. How they do it. Why they do it. The culture. The Why. The Game. Helping others win. Being the best. Setting the standard. Mercenaries: If someone is all about what's in it for me. Very transactional. What's in it for me. Here is what I can do. I don't like that as much. If someone wants to take the ring to Mordor , even if they are not as attractive on paper, I tend to believe in the missionary.

I've heard people say its depressing seeing it. But we are all going to die and it makes sense to make the best life we can live.

This is a good thread on getting an independent sponsor deal done. What it is like jumping off the cliff and growing your wings as you fall. 👇 @PseudonymBear is also a very smart, personable guy IRL with a good background....and has a good partner...and good structure on the deal. Not doing it solo, which is even more challenging. I've talked to many searchers that want to move up to being an IS, and often they want to do it b/c of reduced liability and no PG. There are some real expenses you rack up doing an IS deal. You must also be prepared to turn off management fees if the business needs to invest in other avenues or support debt. I often say that management fees are a wet-weather creek. Try running a firm if you have no income coming in. Yes, if you have multiple deals, it evens out but don't model out what it hypothetically can be and take that to the bank. It's not contractual like a 2% fee for a fund. If you have never purchased a business before or at least owned a business, it might be best to not do a IS deal at first. Anything is doable but I have seen and heard of many strikes on getting a deal done. I've had an uptick in IS's reach out recently for advice. Also been seeing an uptick in threads like this. I was thinking about doing a workshop for a day for experienced independent sponsors, and also, newer ones could share notes. DM if you interested, both experienced and new. No cost, and no selling courses or programs or anything. Just sharing notes, and I'm sure we will all learn something from each other. Just a little about us for those that don't know us to help stimulate involvement in the offer above. I'm the founder of a firm called @lpfirstcapital . Prior to starting LPFC I was an entrepreneur and had a holdco with multiple businesses. LPFC has completed 14 platforms and an additional 50 bolt-ons, with our first exit last fall when we sold Flow Service Partners. We focus on buy-and-builds in service-based industries. We have a range of capital sources that are mostly focused on family offices, SBICs, institutional LPs, other PE firms and non-bank lenders. We just got nominated and are finalists for "Independent Sponsor of the Year" along with "Deal of the Year" by iGlobal. There were not any resources to learn from when we started, and I would like to make something so there is an easier onramp for capable independent sponsors. DM if you want to be part of that "sharing notes conference/workshop"

1. You are willing to take action b/c you know that you don't have many weeks left. Why not make it the life that you want to live. .....

ChatGPT does a good job of giving you an overview of the activity in an industry. See how quick you can pull 30 comps on a platform idea we had on Retirement Planning...almost as good as pitchbook and better than google IMO

Rereading 100 baggers. Great book The concept of building 100 baggers is very fascinating to me I think this chart is a good one to memorize as an investor. 14% will 100x in 35 years 16.6% will 100x in 30 years 20% will 100x in 25 years 26% will 100x in 20 years 36% will 100x in 15 years What type of businesses or investments today could grow earnings at 20% for 25 years?

4. You think in decades vs. months. People often overestimate what they can do this year, but underestimate what you can do in a decade.

Jack Welch said this. I think these are three wise things to track if you only have 3 things to track. “If I had to run a company on three measures, those measures would be customer satisfaction, employee satisfaction, and cash flow.” h/t the simple model blog

If you're doing a buy-and-build strategy One of the first things you need to consolidate is accounting. Be ruthless in doing that fast. Move it away from the branches / op-cos ASAP Just a quick thought

Hiring a CoS (Chief of Staff) at @lpfirstcapital. @girdley 's post on CoS inspired me to hire one. I think this is a great job for someone that wants to get some business experience Some things about this role, myself & @lpfirstcapital 👇1/3 bit.ly/3VhaQ5j

The biggest opportunity is at the bottom of the pyramid.

3 tips to do to get more off market deals from former owners👇 One of the most productive ways to find off market add on opportunities in buy-and-builds is get them from former owners that sold to you. Many of our 63 acquisitions as an independent sponsor have come from former owners connections. Many of our best deals have come from this source. It’s almost impossible to make those type of relationships that owners have in an industry…so it makes sense to leverage those relationships. Here are some best practices: 1. Ask the owner have any relationships that they feel could be a good fit for the platform. Put that on a spreadsheet. 2. Ask the owner to make introductions to those on that list if they are interested. This has a higher hit rate than anything else b/c the owner that just sold to you may know others. Big tip, tell the owner that even if they say they are not ready yet, push for an intro call so we can get to know them. Tell them we are okay making a win-win now or 4 years from now. Also remind the owner that each purchase increases the value of their rollover dollars. 3. Set a reminder to go back to that spreadsheet once every six months. Often the first pass is not 100% effective of course…it could be that they are not ready, and it could be that they want to do it next year. It could be that they want to hear about how we as a buyer behaved the first year and if we are good to work with. It’s key to keep on following up b/c that list is gold. 4. Also ask the owner who the best competitors are , or if they know of any other players in other markets that they respect a lot. Put that on a list. You might have to reach out here. Tip, ask the owner if they know anyone that can make an introduction, such as supply reps or any other 3rd party rep to make an introduction. This is better than reaching out cold. Set this on a reminder also. You can ask around the team members and former owners, and often someone will have a route for a warm intro. 5. Ask the owner of all the supply reps, industry consultants, industry contacts, if they know, and put that on a list. Ask the owner to make an introduction to them. Then talk to those reps and offer finders fee on deals they send to you that close. You might put that on a reminder also, but we have not done that in the past. 6. Make video testimonials and other marketing material from owners. Use this on outbound info to any lead for is thinking about selling. It will increase your effectiveness on converting any lead. Hope that helps anyone thinking about doing add-ons to their existing company. I’m sure there are other ways you can leverage existing networks and relationships for more add-ons…any other ideas to add here?

4 Simple Axioms to know after you purchased a business: 1. Give, Give, Get One of the biggest risks of buying a business is losing key team members. The first month or so after the purchase is the most critical. Everyone is hyper-aware...looking for some blues clues to make their first impression. To combat this, it's good to find things to "give" to the team so you can convey a positive first impression that things are only changing for the "better". A common give is to offer better health insurance than they are currently getting or add it if they don't have it at all. There are many other gives. I just left seeing a company we purchased about 90 days ago. This business had no health insurance prior to purchasing it. It was amazing to see the productivity increase and also the appreciation in this business. If you give, then you can get. 2. Do No Harm Never let people go after purchase. Be very slow to change things even if its common sense. Picture driving a car down the road at 70 miles an hour. No sudden movements. If changes are needed, try to get to the change through the Socratic method and let the management team or other leaders arrive at the answer so you are not the one suggesting the change. 3. Play a game People love playing games. They don't want to show up to work and punch a time clock. Look for a game. It could be , lets see if we can hit X this month , and if we do , lets do Y. For more elaboration, read the great business. 4. Keep Score No one will watch a football game if there is no score and there is no winner or loser. Start to track a weekly scoreboard and also a monthly scoreboard. The weekly are inputs that drive the business. These are critical drivers. The outputs are more your lagging indicators , such as monthly unit total or the 3 financial statements. Just some quick thoughts on some Axioms during the first 90 days of owning a new business.

Went to @joshuamschultz 's Austin SMB meetup yesterday. Great event, and he makes a great french toast. Thanks for hosting Josh If you could not attend, here are 8️⃣Takeaways that you might want to know if you want to buy one or more businesses this year. 🧵👇

Worm Farm for sale 🪱 1.45M SDE for 1.79M This seems like a great opportunity (despite being in CA) for someone wanting to buy their first business. There are riches in niches I remember seeing this business on CNBC Happy 4th🇺🇸

2. You are more grateful for the moments you have with family. Put down that phone when your on vacation as you see when your kids graduate in not that many boxes head, even though they are little now.

I've noticed a correlation that is common with the best CEOs that we have worked with. I call it the "Strech Goal Mindset 📈🎯" Here is what it is, and why its something that can help you grow to your potential. 7 Takeaways below 🧵👇

Contrarian take: when your investing , the time you spend investing in the talent business is more important than what company you buy. Find and invest in the right people People > Capital

Wait for the advertisers to come back. All going to fall to the bottom line

Great post👇 Read the journey from @MikeBotkin_ , must read. We decided to join forces yesterday and inked the deal 5 mins. before the wire cutoff. United Land Services is very lucky to get to partner with @MikeBotkin_ and @Adrian_Pinto2 . Now with them on board @ ULS, I estimate we will be the fastest-growing landscape company in the country this year (was 3rd for the past 2 years). This partnership makes gives us deep capabiliites in the Orlando market and also helps us expand up to GA via Geordiascapes @Adrian_Pinto2 . Bob and the team are so excited to work with you! X is an amazing platform

Driven people always want to keep on driving

Grit > Pedigree If someone has a history of winning, likely they will continue to win.

Good thread on being an independent sponsor. It took us 2 1/2 years to close our first deal so I can relate. That said its very possible to find success if you keep on working hard, have a stoic mindset, and build a good team. Things get easier overtime but this is a good thread that talks about challenges many independent sponsors face. A good read for anyone considering doing it.

e = mc² for business e = earnings m = management c = character

Headed to Capital Camp , DM me if you want to hang. Also going to talk about rollups as an independent sponsor, any topics I should cover that people would like to hear? @tsludwig is moderating …looking forward to it

Beware of Hidden Labor Reverse EBITDA Add-Backs One thing to watch for if you are buying a business is Hidden Labor Reverse Add-backs. Here are a couple of examples. 5 Examples Continued🧵👇

The most important asset in buying a business is the people. The crown jewels are when you have a dynamic founder that wants to partner with you to build something bigger. Can't put a price on that.

An interesting mental model is to imagine your playing sim city, capitalism 2 , or civilization but in the real world. For those that played computer games in the 90's early 2000s Makes you think bigger

3. Motivates you to be healthy as you want to make it to 90.

Got to tour my first Data Center yesterday.  Here are some takeaways from it.  Note, I’m not an expert in Data Centers and these thoughts are more from a curious investor standpoint.   First off, special thank you to Allison Boen and Shell who was kind enough to host myself, Zach and Joe during the lunch and learn session with industry leaders from Green Revolution Cooling, Supermicro, Shell and AMD to name a few.. The data center we went into was a Shell Data Center.  It’s their largest.    With our HVAC background, and our recent exit of Flow Service Partners, our first thought on data centers was, let’s dig into the cooling side of things.  Here are some takeaways. 1.  Immersion cooling is a need, not a want. The rise in kW per rack and TDP due to the growth in AI and GPU processing is resulting in rack densities that are simply too hot to be cooled through computer room air conditioning ("CRAC" - i.e., traditional AC).  For those that don’t know, this is when you cool the server racks in a dielectric fluid that is safe for computer components.  Picture attached.   2.  Companies should be excited about this! Immersion cooling has immense benefits - decreasing total cost of ownership, increase in computing densities, decreasing failure rates and increasing hardware lifespans, and increasing the number of racks able to run at once due to less space needed for cooling tanks. The dielectric fluid Shell is producing is recyclable and environmentally friendly. And don't even get me started on the noise factor of CRACs vs. immersion cooling tanks.…the sound would make you go crazy if you stayed in there there too long.   3. The current resistance and hesitancy to adopt immersion cooling techniques can be boiled down to two factors. One being the capital outlay needing to retrofit facilities (this will become less of an issue as new data centers are built to be liquid cooling friendly) and the other being the lack of warranties offered on some of the chips. Some companies currently offer product warranties, but most do not. Once more warranties are offered, I think the floodgates towards liquid cooling adoption will be opened. 4. Some hyperscalers and operators are currently utilizing immersion cooling for ~30% of total cooling efforts. If a data center is already hooked into the grid and can draw a predefined amount of power, then immersion cooling is the only way to get more density without generating a higher level of draw from the grid. This could result an additional 35% of total power usage that goes to conventional HVAC systems switching over to cool racks. 5. All this boils down to I think the industry will more and more shift towards immersion cooling.  There was even talk of combining direct to chip and immersion cooling.   From an @lpfirstcapital  standpoint, we left less bullish on finding a pure play service company to focus on immersion cooling.  Just not many service opportunities on them.  The manufacturers such as GRC will handle service in house, or existing service providers that have relationships with get certified through GRC or Submer to service the immersion cooling tanks.   It is one thing to read about the developments in AI and how they are impacting the growth and exponential trajectory of data centers, but it is another thing to see it first-hand. The presenters noted we are currently in the "early adoption" phase of immersion cooling. In my opinion, the sooner companies adopt these practices, the better off they will be. If you are looking for an investment in the data center space, would love to chat.

Dream Big It costs the same to dream big and to dream small

🤣👇

I would ONLY live in these states:)

Advice to any Independent Sponsors out there choosing a capital partner. The most important thing to evaluate when selecting capital partners is a combo of: A. How are you going to work with them as a partner. B. The certainty of closing and the speed they will work at it. It's not the carry %, management fee or how much your closing fee is. My advice is to think about those two items solely when picking partners as long as the other core three items are in market.

🐊 Hunting The closest you get to a live dinosaur. Best hunting experience I’ve been on 10 Foot 2 inches

5. You stress less, as you see you have a long life ahead and you don't get too tied down to the current moments.

This image (ad) is a perfect example of good management. Make business a game, keep the score, give the team a stake in the outcome. If you measure it, you can manage it "Druker or someone said this" Seeing dashboards on the wall turns me on:)

One of the best questions in DD is "When was the last time you raised prices"? When you find a business that has not raised prices over the years...especially over the past few years. I LOVE to hear "we have not raised prices in 5-10 years".....assuming that there is price elasticity in that industry

A quick thought/tip to searchers or independent sponsors out there. Don't put the max EBITDA as a smaller number. Like if you said the max you would buy is 1.5M of EBITDA. The reason is, be open to 2M+ EBITDA deals as often those are better IMO. Even if you don't have the capital to buy it , you could connect with someone that has purchased bigger deals and can get it done. Don't use your Gmail. Make a new domain and engage with a broker from that and not your Gmail address Don't rely on just emailing brokers your deal criteria. Set up calls and talk to people (TTP). Tell them your "why" and what you are looking for. Create a thesis rather than just looking broad. Be very authentic in your branding. A company to model against is Garden City Companies. @MikeArrieta, did a great job there that is true to his "why" Just some quick thoughts....gave this advice to someone today and wanted to share to others.

If your are stuck right now , there is something that you are doing that is holding you back. You might have to give something up You might have a limiting skill, belief, or drive We all have invisible weights around our legs, and the goal is to find the constraint

Met some very interesting people as they traveled to Austin this week. @chrisxmunn , @NickButton10 , @HockJohannes and his partner Bennett If your ever traveling to Austin and want to pop into @lpfirstcapital/ share notes , would love to meet you SMBtwit is amazing🙏

There are no rules in the world All the rules were created by people like you, therefore, you can create the world you want Live your life to make your 90-year-old self proud of you today

Heart of Gold ❤️ Whether you are: 1. Bringing on new team members 2. Buying companies 3. Bringing on a new partner Try to bring people into your life that have a heart of gold. What does this mean? People with a Heart of gold have the following characteristics: 1. Happy and Authentic 2. They Believe in others 3. They want the best for others 4. They think win-win 5. They Love one another 6. They don't talk negative about others 7. They forgive others 8. They aspire to greatness and want to bring out greatness in others. Want to win and have fun doing it. 9. A force for good 10. They think in abundance and not scarcity This seems common sense, but wanted to share. B/c I have found that you accomplish more with positive people around and also some of the best companies we have purchased had founders that stayed on with these characteristics. I have also seen negative effects when you bring people into your life, through team members, companies you acquire, or partners that don't have that positive vibe. Negative energy is contagious. Part of the leader's job managing this energy in others and making sure you bring on good people. Don't work with people who talk negatively about others, and who always take a pessimistic point of view. Life is too short and they will take your energy away.

It's good to: "Think in abundancy and not scarcity." "It's always better to enlarge the pie vs. fight over the % of your slice"

One Law you need to know to scale to over 50M in revenue. 💡👇 "Packard's Law" “No company can consistently grow revenues faster than its ability to get enough of the right people to implement that growth.” – Dave Packard, co-founder of Hewlett Packard

I have a friend who owns a couple carwashes in Knoxville. He found a couple killer spots for some new locations in nearby areas. He is looking for a partner or group to back him in helping him expand. He thinks win-win and is flexible with different structures. Let me know if you're interested....DM me and I"ll connect you with him so y'all can talk.

This the greatest county on the face of the earth that has produced over 1000 trillionaires. Anything is possible 🇺🇸

Homeruns⚾️ and Value Traps 🪤 with buying a business The quality of the company is often directly correlated to the quality of the owner/leader. They are the gift that keeps on giving. Value Traps 🪤: If a seller ever gives you bad vibes, don't do it. You might find a business, with a good multiple and a seller with a questionable vibe. If the leader is giving you this vibe, often you get to find surprise after surprise in the company. Homeruns⚾️: On the flip side, if you find a dynamic owner/founder, that wants a partner to build something best in class. This is the biggest correlation to value creation in the LMM. I've been blessed to work with some owners like this and when you find it, you should count your blessings and partner. What is amazing is how these leaders attract great people around them and lift everyone up to their potential. Even if the leader/owner leaves, you often inherit a great team, with customers that are loyal. Good begets good. Value attracts value. As an investor, I think you are mainly investing in people and not just in businesses. QoEs....EV/EBITDA multiples....CAGR growth rates...service mixes...yada yada yada....they all matter but first...find the right leader and invest in them...thats the secret.

6. Tips. Put your age on the left hand column so you can associate your age with future years. Its nice to know that in 2042 I'll be 61. I make choices today that will be better for my 61 year old self.

Some people are too afraid to fail , too smart for their own good. I've noticed that many people that build great things have a tendency to shoot first and then figure it out on the way. "jump and build the plane as you fall" I'm in that camp

7. There is a good blog post on @waitbutwhy page on it. Its a good mental model to have in your brain. Get the poster and frame it in the office.

So happy to see Mass Timber come to Austin. It think it makes sense on so many levels compared to steel. Greener + Cost Effective + more beautiful It's also very interesting is that it sequesters a high level carbon at a high level. The crazy thing is its better for fires....also it will look so cool from the inside since you really don't need to finish and add drywall.

Speed is one of the biggest advantages with buying a business. When your starting out , you don’t know how much of an advantage you have bc you have full bandwidth and speed is on your side. Sometimes , slowness is and advantage , namely when the price is not right, wait

This is such a great quote 👇

Peace

Buying a business is not all sunshine and rainbows. This is a great thread on how to overcome a toxic culture and how to rebuild a company. Very authentic and real story . Experiences like this really grow you.

Greenland: 1. Arctic rights with shipping lanes 2. Nuclear defense 3. Rare earth minerals 4. Should be not that expensive compared to other countries

"A wealth of information creates a poverty of attention" - Herbert Simon Summed up: As John Paul DeJoria says something like "Make sure you track the vital few and disregard the trivial many". We like to focus on Critical Drivers over Results. If you can dive down to the few Critical Drivers that matter...you are on the right track. Critical Drivers: -Leading Indicators -When: Track it Weekly -Try to Distill it down from Company to Department to Job -Make it a scoreboard -Make it a game Results: - Lagging Indicators -When Monthly / Qtrly. / Yearly / TTM / YTD - Try to Distill it down from Company to Department to Job -Make it a scoreboard -Make it a game (h/t Michael Simmons Newsletter for the image and quote and he credits Mark Shafer)

2. Winners love to keep score, even when not asked After the first week on the job, I get this email with a weekly tracker. I was so happy to see this. Why? We did not ask for or train him on this. He is a winner, and winners want to keep score.

Follow the money ..schools conform to get government loans (title 4 loans). I founded and sold a company with over 100 trade schools (non-title 4)...also own one for HVAC training now. Happy to chat. There needs to be more of an apprenticeship/Hands-on model in the USA

Any Independent sponsors interested in off-market 2.5M EBITDA 3PL business? The seller wants to roll and build something big. We know of another 5.5M similar company, and that would put you at around 8M EBITDA if you can get both. DM @TyAndersonATX if you want an intro.

Dopamine over Dollars..... In today's competitive work/inflation environment, try to solve for raises in dopamine vs. raises in dollars. -Show Appreciation - Make business a game ex. The Great Game of Business (book) - Lead and Inspire Daniel Pink said it best in his book Drive What people crave at work is 1. Autonomy 2. Mastery 3. Purpose Bring on winners💪 that have a high ceiling🚀, create a game🏈, create a scoreboard🔢, give them autonomy, push for mastery, and give them purpose.

Elastic Capacity ⌛️ When you are buying businesses, improving them or scaling the business you founded. Try to build in elastic capacity in your organization via additional resources and team members while being aware of bottlenecks. If fixed capacity is defined by rigidity, elastic capacity is defined by flexibility. Elastic capacity is the ability to stretch capacity at a low, incremental cost to meet changing demand. -forbes There are 5 ways to increase elastic capacity in your organization is and they are: 1. Do not become a bottleneck as the leader 2. Remove bottlenecks 3. Deputize multiple people to perform high-value tasks. 4. Rethink decision processes and encourage a culture in which the organization can react. Research the OODA loop on how good pilots react and decide (Observe, Orient, Decide, Act) 5. Encourage team members to Act, and don't become a bottle neck. 6. Add in capabilities/resources to your organization to handle surges in demand. Speed is a competitive advantage IMO, and with that, if you find a good opportunity, you need to be able to get on a call with the broker/owner fast. Get out to see them fast. Don't make yourself the only bottleneck. Enable your team or other resources to help out b/c time is ticking. For operational improvements, add capabilities to your team , through new team members or resources (consultants and remote hires via sites like Upwork) to execute those projects. Often times existing management does not have the bandwidth b/c of other fires and you need a swat team to execute or provide a helping hand. For example, rolling out a ERP , building a PowerBI dashboard, or implementing a new type of contract throughout the org for customers. I'll post some examples at another time, for examples of elastic capacity. Elastic Capacity is very important for SPEED 🏎 . Are there any other ways to add some elastic capacity to your organization? Thoughts? If you like this, can you share, comment, or retweet? I would appreciate it. This will help with the X algorithm

Came across this interview with @elonmusk. Thought it was informative, especially the 5 requirements at the bottom. He are some notes: Q: Everyone is Wrong, do you believe that? Everyone is wrong some of the time, it doesn't matter who you are. The most common mistake in engineering? Optimize the thing that should not exist. Why would they do that? Everyone has been trained in high school and college that you have to answer the question. It's convergence logic. You can't tell a professor that's a bad question b/c you will get a bad grade. You have to answer the question. Everyone, without knowing it, has a mental straight jacket on. They are optimizing the thing that should simply not exist. The Right Way for Manufacturing (did not hear this question, but from context, I think it was this) Step 1: Question the Requirements First, make the requirements less dumb. It does not make sense who gave you the requirements. It's a particularly bad problem if a smart person gave you the requirements b/c you might not question them enough. No matter who you are, everyone is wrong some of the time. Step #2: Remove unnecessary Process Steps Try very hard to eliminate the part of the process that is unnecessary. If you are not occasionally adding things back in that you removed, you are not removing enough. The bias tends to lean towards, let's add this part of the process b/c we might need it. You can make case arguments for so many things to add unnecessary things. Step #3: Optimize and Simply Only the 3rd step is to optimize or simplify. This is the 3rd Step, not the First Step. Step #4: Accelerate Cycle Time If you're moving to slow go faster. Don't go faster until you worked on the other 3 things first. Step #5: Automate This is the last step The Wrong Way Do these steps in reverse. 1st Automate 2nd Accelerate Cycle Time 3rd: Optimize 4th: Remove Unnecessary Process Steps 5th: Question the Requirements h/t for @pslohmann for sharing this video