B (4:28)

My name is Will Smith.

A (4:30)

Acquiring an existing business is an awesome.

B (4:33)

Opportunity for many entrepreneurs and on this.

A (4:35)

Podcast I talk to the people who do it. The team at Aspen HR recently published a short white paper targeted at searchers Entitled A New CEO's Guide to Human Resources. It lays out the key items you should be thinking about as you transition into CEO and owner of the business you bought. The link to download it is in the show Notes. Aspen is a professional employer organization, or peo, run by a searcher for searchers. Search fund veteran Mark Sinatra runs the company, which provides HR compliance, flawless payroll, Fortune 500 caliber benefits and HR due diligence support for your acquisition, all for.

B (5:18)

A fraction of the cost.

A (5:20)

Go to aspenhr.com or contact Mark directly@markspenhr.com.

B (5:29)

Brian Boland Onu Okba welcome to Acquiring Minds.

C (5:34)

Thanks for having us.

A (5:34)

Hey Will, the two of you are building HTL Freight into a leader in the freight brokerage industry.

B (5:42)

We're going to learn what that is.

A (5:44)

And of course the story here you started modestly with an SBA loan buying a quite small business with five employees. So a key theme to this journey is is how to build a roll up, starting with an SBA loan to buy your platform acquisition.

B (6:04)

That was also of course Brian, the subject of an Acquiring Minds webinar that you co hosted back in May. We will link to that in the.

A (6:11)

Show notes, but let's get to the story.

B (6:13)

Let's begin with the background on HTL and your partnership and the two of you. How did things come together in the first place? Onu, why don't you take us away?

C (6:24)

Yeah, I mean I'll start with my personal background. I I'm from Lagos, Nigeria. My family and I moved to the United States When I was six, with one thing and one thing in mind, coming to have the best quality education to give us an opportunity to have the best chance at life. So fast forward, you know, like my dad, he was a cpa. He was also an entrepreneur. So growing up, all I knew was entrepreneurship and accountant. So I did my undergrad at Georgia Tech with the focus in finance. I also played collegiate football there. Upon graduation, I got my first opportunity in industry working as an accountant for the Home Depot. And I realized quickly that pushing paper wasn't something I wanted to do for the rest of my life. So I quickly pivoted to entrepreneurship by way of happenstance. A friend of mine, his uncle was a truck driver, just got laid off. So I had some money saved up, saw it as a business opportunity and, you know, asked him to be my driver and he taught me everything I knew about the logistics industry. So fast forward, you know, we grew that business. We did well, we had some contracts with some key customers and we ended up exiting that business. I got back into industry, working back in finance. And the company, what they did was they sold Class 8 trucks and parts and services. They're doing north of $200 million in top line revenue. And that company got purchased by a private equity firm. And I was close in getting that transaction over the line. So that was my first real exposure to structured finance and M and A. So I realized this is what I want to do, actually, I want to get into the deal making business. So I decided to go back to school. I enrolled at Ghostweather Business School to focus and study M and A. The intent was to graduate and go work for a big private equity fund or investment bank. But that didn't work out the way I, I thought it would, which that was a blessing in disguise. You know, had a course in ep, you know, partnered with Brian Boland, who's also our cfo. And you know, we set out to go do M and A deals ourselves. So I remember, you know, we called an emergency meeting, you know, December in 2018, and you know, we said, hey, like, we don't have to go work for a big investment bank or private equity fund. We can do deals ourselves. And two months later we were on the plane, you know, sitting across from a potential seller trying to buy their business. It took us about two, two and a half years to find the right deal. We wanted to transact, but we wanted to make sure that we're transacting with the right people, with right partners. So it took us some time to find that right Opportunity and fast forward. We did our first acquisition in 2021 and we've done five acquisitions to date. So we are growing a platform called htl. We have a brokerage division. We also have a managed services division. And what we do is we help manufacturers and distributors move their products from point A to point B. You know, cheaper, faster, and more efficient.

B (9:47)

That was great. Thank you. Onu and Brian, I'm going to want to hear from you, but a couple quick follow ups on you. An emergency meeting. So were you guys already partnered? What do you mean? You called an emergency meeting? In what capacity?

C (10:04)

Very good question. So we were in the same classroom, like we had the same cohort in business school. So we, you know, me and Brian, like, we weren't the best of friends in, in business school, but we had shared interests. You know, we, we were both entrepreneurial and we both like taking risk and we didn't think the corporate world was where we wanted to spend the rest of our lives. So we had, we had the shared interest. So we, you know, we became relatively close and just talking about what we want to accomplish post MBA program. So we had the same class, the EPE class, the entrepreneurship through acquisition class. And I remember it was like yesterday, it was like one, like it was a key class. It was a key session that just lit a light bulb in our heads and we looked at each other and you know, I went home, I thought about it and then I sent the text and said, hey, let's meet at my house and let's have a conversation. I think there's an opportunity here. So he came and we talked about, you know, potentially going out to do this thing ourselves. And I said, hey, like there's this website called Biz by Sell where you have an opportunity to go out and find businesses. And you know, we were just amazed to see the plethora of businesses in different industries all on this website that are looking for, you know, new owners. So that was where that was the start. And you know, it, it sounded good to him. And we were off to the races. Myself and Brian, we, we have a bias towards action. So like I said, two months later, we're literally, literally on the plane. We were still in school, by the way, and I, I, I think, you know, we, we, we got the flights in New Jersey and we had class like on Monday or something like that. It was something ridiculous. But we flew up to New Jersey, we had a conversation with the, with the potential seller, first conversation with a seller. Like we didn't know what the hell we were doing, but we, I guess you call it fake it so you'll make it. But it was a good conversation and we continued getting reps and we just continue filling up the pipeline for, you know, potential acquisition targets.

B (12:13)

Great. And you said that your exposure to an acquisition in, in your earlier career turned you on to the idea of doing deals and you, you knew that that was the path you wanted to go down. What, what about doing, what about doing deals turned you on so much and.

C (12:33)

Yeah, well, really it was the economics of it.

D (12:38)

Right.

C (12:39)

So it was a family business that it was, I think three generations and they were looking for growth capital. And like I said, I was involved in getting the deal across the line, but I saw their economic outcome for exiting their business and it wasn't a hundred percent buyout, it was a partial buyout. So seeing the economic problems there really got my attention and I started talking to people in the space. I have some family members that have friends that are in private equity. So I started having conversations with them about that and they, you know, mentioned it was really lucrative, especially if you're in the right space. So like that's, that's the reason why I wanted to go work for a private equity firm.

D (13:27)

Right.

C (13:27)

But again, everything happens for a reason. And I'm glad I didn't get an opportunity to go work for private equity equity firm because the, the better economics are when you actually own the company outright.

B (13:39)

Right.

C (13:40)

Versus you know, being an independent sponsor or what have you. So like that, that was where that came about.

B (13:47)

You know, it's funny that there's a pattern that shows up on this podcast where people working in private equity, private equity will see a transaction or you know, be around the table of a transaction and see where the real dollars, where the center of gravity of those dollars really is. And, and it's, it's in the owner of the business. It's not actually the principles of the private equity firm. And it'll, it'll be that epiphany that makes them want to go out and, and build a business, leave private equity and go and be the operator or owner. Because as much money as you can make in private equity, it seems like the, the real smartest ones in the room are the ones getting paid. Who are the owners.

C (14:25)

Yeah, and, and, and I like getting my hands dirty.

D (14:28)

Right.

C (14:28)

And, and, and doing, you know, acquiring a business and, and being an operator was something that was just, that was also appealing to me right now. Know, like myself and Brian, like we have that, like I said before, bias Action that we want to get our hands dirty. We want to roll our sleeves up and actually add value.

D (14:46)

Right.

C (14:46)

You know, we just, we just don't want to be the guys that, you know, fund the deal and we're in the background, you know, on the board, you know, wait, waiting for, for a quarterly report on every. Every 90 days. We wanted to be actively involved, we wanted to roll our sleeves up and we wanted to add value to actual businesses that we're buying.

B (15:04)

Great. Brian Boland, get in here. Let's hear your side of events.

E (15:10)

Some great memories there, Will. Yeah.

B (15:12)

So.

E (15:12)

So my background, I'm Brian Boland, originally from Ireland, a small town called Tullamore, where Tullamore Jew whiskey is distilled. About an hour west of Dublin in Ireland. Spent the first 17 years of my life there and then 10 years in Dublin, where I went to Dublin City University. Played some collegiate golf with some much more talented folks than myself, but was maximizing my potential just to be on the team as walk on. Major in accounting and finance at Dublin City University. From there, worked with KPMG in Dublin in the consulting arm and then worked for a big building materials company called CRH PLC in Dublin for four years. And they sent me to Atlanta in 2012. So been in the US now 13 years. Worked for CRH there in a number of different roles across the finance function. Did my MBA at Coswetti University with ONU in 17, 17 through 19. I had come originally from a family of entrepreneurs. My parents and grandparents were entrepreneurs, so I've been around that a lot. And a lot of the. My parents hadn't had a traditional education, so they always promoted going to college and getting the best education and doing as much as you could before stepping into that entrepreneurship. So by the time I felt I had maximized all my learnings, I learned a ton at consulting and learned a ton at crh. They went around buying family legacy family businesses in a very fragmented space in the building materials world. So learned a ton there about the financial discipline through M and A and how that could be successful successfully rolled up. And it was when I sat in that entrepreneurship through acquisition class at Emory at the famous entrepreneurial private equity with class bass and class backs and David Panton. Twenty minutes into the class I was like, this is what I am going to do. I cannot believe you can. You can take the. You can flip the 90% risk of failing as a startup and flip it into 90% success if you just manage the free cash flow appropriately. So I immediately was. Was very attracted to the proposition and I only mentioned, you know, we gelled from, from mutual interests. We both wanted to, we bought interest in the entrepreneurship world. We bought like the ETM model and we both had logistics experience. He had it on the carrier side, I had it on the customer side. We had that collegiate sports background, that competitiveness, the bias to action and then just very most importantly, we had very shared values, very similar values in life, very family focused, very goal orientated and I think we spent within a few weeks of working together. I remember when Owen called that meeting. I had a very busy Saturday when he called that meeting late Friday night and I rescheduled a lot of things to be there because it was like this is the conversation I feel like I need to hear and, and the rest is history as they say.

B (17:59)

I love the emergency meeting Anu. And really that was just a text to some buddies or to a 2A buddy. I'm going to use that in life. I also I wanted to underline something you said onu about your discovery of Biz by Sell. I've said this before, but Biz by Sell can get beat up on a little bit. It's not the most modern site, it's been around forever but, but it does the trick and it is the aha moment for many people in this world. If you haven't seen it before and you don't realize this universe of businesses for sale that are that owners are looking for you to buy them exists, Biz by Sell can provide that aha.

C (18:43)

Moment and it's really mind blowing. Yeah, it's really, it gets you started.

E (18:48)

Will it get you momentum points on the board? Right. I think we've evolved significantly since then. But you have to have those get started moments, right? You have to start somewhere and then yeah, you evolve from there.

A (19:00)

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B (20:11)

Well let's here now about getting started. Onu, you mentioned your trucking business. I guess traditional trucking. Like you had a truck driver who was working for you and you touched on logistics. We know that you guys are in a logistics business now. So was this a thesis driven project from the, from the get go or what? H. How did, how did the business that you're in, the industry that you're in, what you're building today, how did that particular, how did that come to come to be?

C (20:47)

Great question. And like I said, it took us two and a half years to find the right deal. And, and I would say when we first got started like we knew we wanted to stay in logistics and transportation in some capacity. We weren't as focused to start we're looking at warehousing, we're looking at asset based companies, we're looking at third parties. So like it's, it was very, it was a very broad based search within that industry. But as time went on like we found it more beneficial to focus in a specific niche in a specific space which was non asset third parties. So like once we honed in on that, our success, we became a lot more successful in finding like the right opportunities versus just having more broad based search. So to answer your question, it was a thesis within logistics and supply chain but we, we didn't really focus in on the non asset side until later on in our search.

B (21:45)

So you knew you were going to do logistics because you guys had this experience in logistics.

C (21:48)

Correct, correct.

B (21:50)

And, and, and you. And also it was I guess pretty fragmented there, there, there must have been also characteristics of. It's an enormous category but characteristics of this whole category that you liked or was it just the fact that it's what you knew?

C (22:04)

It's what we knew, but it's ripe for what we were trying to accomplish which was do multiple acquisitions within the space.

D (22:11)

Right.

C (22:11)

To your point, it's very fragmented, a lot of small players. Nobody really has a lot of scale except for maybe three or four organizations within a space. So we felt with our operational background and using an M and a strategy, we can get scale relatively quickly by going into this space.

B (22:32)

Great. Brian, did you want to add something?

E (22:35)

Oh yeah, I think ONU covered it very well. Will. You know like we evolved the thesis as we went. We narrowed down to logistics Covid happened in the middle of our search time. So like that made us Very, very micro focused with the opportunity to do some really good industry analysis around what worked well in Covid type cycles where you had economic disruption and focusing on areas that you knew really really well was important. Coming out of that research that we did, we had some interns working with us. So that was a crucially important point. So we got a search focused logistics firm to help support us. We just went very micro and as we evolved from there, we continued to become more micro focused and it allowed us to be very good competitively in such a micro focused space. And that's just a common theme in our story.

B (23:24)

Yeah. And great.

C (23:26)

I'll.

B (23:26)

I'll want to hear about that. But first tell me where what the the kind of final super dialed in thesis was. Explain that thesis and kind of what you saw the opportunity to be the industry dynamics that that gave you this opportunity.

E (23:41)

Yeah, typically logistics, it's like I said, it's a very wide, wide industry. But there's lots of different niche, niche, niche areas of logistics. So there's like moving companies are niche area of logistics, not our area. But it's a totally independent area of logistics. There's areas of logistics that move heavy equipment, there's areas of logistics that move commodities, they move frozen foods, they move LTL packages. There's all sorts of different dynamics. So our initial focus was to acquire into a specific niche, something that had the defendable niche. Those are typically higher margin and an area of business that was more harder to step into or to start up. Typically you know any. Anyone could start up a freight brokerage tomorrow, right. And start to price out commoditized types freight. But our entry points and it's, it's difficult, right? You gotta acquire customers and you don't want to be the lowest price in the market. But we were very intentional on picking very, very niche businesses that had a niche knowledge. So our initial, our initial acquisition was in the flatbed industry. It's a very niche area freight. It moves building materials and oversized type products. So it's typically higher margin is typically more more expertise. Our initial thesis was to build a portfolio of flatbed brokerages from there. And we found that that was just incredibly hard to find that specific niche again. But what we learned as we looked for more acquisitions was there was tons of different niches that we could acquire into and there was a lot larger pipeline around that. So the thesis then evolved to acquire into these different niche areas, acquire all this expertise, piece in that niche and then scale that to a full service firm. And that's Essentially what we did, we bought five different niches in the five different acquisitions. Each different one tucked in another area of expertise and expertise, staff expertise in that space, carrier networks in that space, customer relationships in that space. And then we've been able to get some synergies and a lot of cross selling opportunities within that. So, so it's a very unique thesis that where we ended up but it's certainly evolved on the way I always tell people Amazon started as a book company and we know where they are now. So, so you start, you start with a thesis and evolve from there. And I would say it continuously evolves but those niche areas have become, have been you know, very, very attractive to us as we, as we've built up the portfolio.

B (26:04)

And so the, the series of acquisitions that you've done just to make sure I got it, have added service lines essentially so that now put it a full suite. You're kind of a full suite solution. You can offer multiple services to your same customer set. So you can, you've got cross selling, upselling and you become kind of more of a single point one stop shop. Right, well thank you. Exactly. You become a one stop shop.

C (26:30)

Yeah, yeah, so, so we do full truckload, ltl, Drage, hazmat, the whole nine yards. So the thesis has evolved to Brian's point and I think generally speaking in business you have to go in and test, test, test, test and see if it works. And you have to, you can't be too rigid and you have to be able to pivot when needed. And to piggyback on what Brian was saying earlier, initially we wanted to be the biggest flatbed brokerage in the United States. But we found it very difficult to find other flatbed specific third parties to go acquire.

E (27:07)

Well one other thing to add will on the geographically diverse as well. It was important to us so that we had, we had lanes and we had carrier networks in different parts of the country. So we've been intentional on. We've done two deals in North Carolina, we've done one in the Northeast, we've done one in Chicago and we've done one on the west coast. So we've been, it's been important to have geographical diversity as well from logistics perspective to have stuff going out of the northeast, stuff going out of North Carolina but also coming into North Carolina and then going west to east Coast. So that's, that's been an important part of that as well.

B (27:35)

Great. Well one thing that struck me from the pre call from your story guys is that you did have A rather long search, partly was that Covid happened in the middle of it, but it was a 2 ish year search.

A (27:46)

In the business that you ended up.

B (27:47)

With, though, your platform, as I said at the top, is actually quite small. So it's a little counterintuitive because you'd think for people searching, searching, searching, searching, they're looking for some. What they finally end up closing on is going to be, you know, a million and a half dollars of SD or something. But this business doesn't. It felt like it was pretty small and therefore I would, I would have thought maybe not so rare. So why was it the needle in the haystack that you've been looking for?

C (28:17)

So for us, we've bootstrapped this thing between, you know, me, Brian and we have a third partner. This has been 100% bootstrapped. So we have, we, we didn't raise capital until our fourth deal. So consequently, the first deal, it was literally like our personal assets that we had to bring to the table to get the deal closed.

D (28:39)

Right.

C (28:40)

So in order for us to accomplish that and retain 100% of the ownership on the outset, it's. We needed to use our financing that we personally raised, you know, with, you know, from our bank accounts to close the deal. So we started off small for that reason.

B (28:57)

Can you share kind of what your budget was for that first deal?

C (29:02)

Oh man, it's, you know, five deals. That seems like so long ago, but it was, I think it was a $1.5 million transaction.

B (29:08)

Okay.

C (29:09)

If memory serves me.

E (29:10)

Yeah. And we had the ability to go, to go higher than that will if we needed to because it was an element of opportunistic nature of what the deal came up in the ranges. So we had looked at acquiring capital as well. We'd looked at raising capital. It was just expensive for, for rookie entrepreneurs. Right. And that makes sense, right. When you didn't have a track record. So to owner's point, we made the decision that if we can find a deal in that right sweet spot of range where we can have 100% of the equity and build a track record, that the equity will become a lot cheaper over time. And that worked out as expected. Once we were able to show a three year track record and three deals, we were able to raise on totally different terms than we would have starting out. So that was a focus. But the right deal has to be there within that range too. And I think we were very patient to find a really good platform in the right range where we could retain 100% ownership and roll the dice post acquisition.

B (30:13)

This point about equity becoming less expensive as you build is such a good one, Brian. And for finance people it may be self evident, but for the non finance people it's just kind of theoretical numbers here. If you had raised equity going into the project, you know, unproven, without even your first acquisition or trying to get your first acquisition done with some outside equity, maybe you would have given up 20, 30% of the business, maybe more and, and for not very much for you know, maybe you know, a hundred thousand, two hundred thousand dollars effectively that the, that the investor was giving you and instead you now when you, I don't know, you probably can't tell us what, how much equity your outside investors own of the business, but you basically sold it for. You got a lot more cash in exchange for a percentage that might be directionally similar to what it would have otherwise been. In my theoretical example, how did I do it?

E (31:19)

Explaining that yes, I was like really good. I mean you think about it like, like what we raised eventually after three deals was probably close to 10 times what we could have raised at the start for the same equity dilution.

B (31:36)

Thank you.

E (31:36)

Much cleaner because there was just so much value put on the track record and three years of financial statements, you had three acquisitions behind you, you were used to it and the track record was there. So you know, investors get a lot more comfortable in that situation. So, so yeah, it's totally different but there is a track record there. Right. And investors realize how hard operating a small business is and it is hard and all your, all your skills are tested and you have to develop more skills and it's great to be able to do it with a partner that has, that has different skills and is running at the same pace, but investors really value that, the ability to do that because it is hard.

B (32:19)

Well, but this thing about raising money at the outset versus later when you're, you're proven and you basically raise money for a tenth the price of what you, what you otherwise would have. I just don't hear, I haven't heard that from other self funded searchers. It's so logical. So it's just, it's a really good, a really good call out for people to understand and think about themselves. Of course a lot of this presupposed that you were going to be building aggressively and doing a consolidation play.

D (32:49)

Right.

B (32:50)

So maybe for the self funded searcher who's just trying to get into a single business and you know, who knows what after that it may not be as Much of a factor. But you guys were full throttle, big vision from day one, right?

C (33:04)

Yeah.

B (33:05)

100.

C (33:06)

And this from a principles perspective, we weren't 100 comfortable raising money and putting investors cash at stake without, you know, proven the thesis and proving what we wanted to go out there and do.

D (33:25)

Right?

C (33:26)

So, so for us it's, you know, if, if, if this didn't work out, we were on the hook, right? But we didn't want a situation where it didn't work out and we had investors capital on a hook as well. And that, that, that can burn bridges for forever, right? So we, we wanted to come out, you know, get a track record and prove the thesis that it works. And it does work.

B (33:50)

Great. Okay, so this business that you found, what about it did you like so much? Why was this the one? Or tell us about the business, please. Specifics about it.

C (34:02)

Okay, specifics about the business. From a geography perspective, it was because myself and Brian, we, we were originally in, in Atlanta, Georgia, so North Carolina, Charlotte, North Carolina, specifically, it was close to home. So like for us, when we first, you know, did the deal, we were commuting back and forth for a year, right? So like, literally, like we had a consultant lifestyle would, you know, drive up on Sunday and we'll head back to Atlanta on Friday. Right? So from a geography perspective, it made sense.

B (34:33)

Wait, sorry, owner. That doesn't sound close to home. That sounds far from home.

C (34:39)

Well, it's better than Minnesota, right?

B (34:42)

Okay.

C (34:43)

It's better than doing a deal in New Jersey. It's better than doing a deal in, on the West Coast. So it was driving distance, right? It was driving distance. And if my wife called me and said, hey, we have an emergency, I can get in the car and be home in three and a half, four hours.

B (34:56)

Okay. Okay, great.

C (34:59)

And also, you know, this deal that we, we got there is again, a small business, you know, half a million in, in Ibit. Da. It had some hair on it. You know, it was, it was a, it was, it was an owner with two, three other people, right? So it was, it was, it was, he had a job. So like for us it's, it was small enough and it had enough hair on it, and we knew exactly what to, to increase value immediately in a business. They were very, very archaic from a process perspective. Literally were still using pen and paper for everything, right? Like they had stacks and stacks and stacks of paper as everywhere. It took them, you know, you know, 30, 40 minutes just to set up a vendor in the system. We came in and we turned that from you know, 30, 40 minutes to 30 seconds.

D (35:56)

Right.

C (35:56)

So we're able to incrementally build customer service and use value within the organization relatively quickly. And another thing that a lot of people skirt over is the working capital opportunity within the business.

D (36:12)

Right.

C (36:14)

A lot of small businesses, they're receiving their receivables in 30 days, but they're paying their vendors in 10 days. So there's a huge working capital benefit there if you can. Right size, right size, that, that formula. So we set an opportunity early on and, and, and, and, and Brian, he, he's always on that.

D (36:34)

Right.

C (36:34)

Once he sees a working capital opportunity, it's, it seems like a great deal for us because we're able to get that cash on the balance sheet and invest more in the business.

B (36:43)

Excellent. Working capital is a theme that comes up time and time again. It's such an important feature of small businesses. It's so often misunderstood. Sounds like you guys understood it really well. Can you be more specific about how, how you, how you change the, the payment terms, both money coming in and going out to your advantage?

C (37:04)

Sure, I can touch on that.

E (37:06)

Onu. There's a really good case study actually out there Will, on, on from Yale on this that I read subsequently after doing a couple of deals to help fine tune this. But essentially it talks about stress testing both sides of that. So on the AR side, getting invoicing out as quickly as you as you can, offering small discounts for early payment where possible, having regular collection checks and figuring out, you know, stay in close, close contact with your customers on those dynamics. But really on the payable side is where I've found that that's typically in freight. You've got a wide range of payables. You've got tons of large carriers, small carriers, there's factory companies are quite popular in the space and all of those different vendors have different payment needs and payment requirements. So typically stress testing the payment days, adjusting them over time, gradually changing them over time, evolving from checks to electronic. We're all electronic now, but we'd inherited a legacy business that had a lot of paper. So there's lots of different dynamics around that. Um, but when we saw the working capital opportunity in the deal and we also made sure we got an express line of credit with the SBA loan like that was then a lot of liquidity to go and do another deal, it was more liquidity than we had at the start. Right. Even by the time we got through all that. So it allowed us to get velocity and do another deal within, within nine Months. But working capital execution is, is like, it's, it's, it's, it's like hand to hand combat, right? It's, it's hard yards on the ground. It is working through the specific details of each vendor, researching the vendors on their size, understanding their payment dynamics and stress testing how far you can press that and optimizing it right at the optimal line right before they're reaching out. You've got them paid and on the AR side just getting to an invoicing position as quickly as possible and making sure that you're motivating employees to do that at scale. So when we started out we had a lot less velocity of amount of loads. We've got over 10x the amount of loads now. So even at now at this level, it's nearly a daily focus on the working capital and staying on top of guys and making sure that there is no log jams in the process and that working capital is as optimal as possible. And then as you evolve and you work with a bank in the industry, you've got a line of credit with a bank in the industry and you're reporting to them and you're reporting against competitors. We have our bank come back to us all the time to see how far ahead of our competitors we are. And on reporting and our working capital metrics then I always tell the staff that and it gets them very excited. So it's, it's, it's. There's no classes on working capital in school. Right. There's, there's very, there's very limited information out there. The Yale case study is probably one of the best I've seen that's been done on it. It's probably one of the single most important dynamics of small business and so many people go into deals not understanding it. So I'm hoping, hoping in the future, in a future life I can maybe give back on this topic because I feel it's so important and if you don't know the working capital dynamics of your space, you can get post acquisition in trouble quickly because you don't have many liquidity options for a little bit of time after you do this right now. Luckily it was a focus for us going in, but I see many folks lack of focus on that and it's a very important component.

B (40:24)

Well, and of course working capital matters more in some industries than in others. And in yours it matters a lot. Maybe now would be a good time to track a dollar through your business to really understand what freight brokerage is. Please.

C (40:38)

Yeah. So let's Take it from the top. You have manufacturers and distributors that want to move their widgets from point A to point B, right? A lot of those manufacturers and distributors, their core competency is manufacturing products and distributing products, right? It's not transportation. 96% of the carrier base trucking companies in the United States are small mom and pops, right? So you have five trucks or less. Those manufacturers and distributors don't want to work with a hundred different trucking companies. So what they do is they partner with a company like us that access that intermediary and we facilitate everything. So a customer would call and say, hey htl, we need a full truckload of XYZ move from X to Y.

D (41:32)

Right.

C (41:33)

We will now reach into our carrier network and connect the right carrier for that shipment. Right? So like we're like a matchmaking service, right? So the Shipper, we negotiate $1,000 for a particular shipment, we negotiate with the carrier to move it for $900. And as the intermediary, we keep the margin, which is $100 for our services.

B (42:01)

And the carriers that you're using to get, to get your customers widgets from point A to point B are our third parties. But it's, but really they're not so. Well, I guess they are subs. But the point is that spread that hundred dollars that you're taking, you're responsible ultimately for the widget. You're not, you're not just a, a middleman, you're really the service provider. You just happen to be outsourcing the actual.

C (42:30)

Correct.

B (42:31)

Transportation.

C (42:32)

Correct. Correct. Yeah.

B (42:34)

And I would. Please.

C (42:36)

And, and like I said earlier in the call, we have two lines of businesses. We have the brokerage business and we have the managed services business. So the managed services business, like we look at us like supply chain consultants, right? So we partner with shippers to help streamline their supply chain transportation logistics. Because a lot of manufacturers and distributors, they don't look at transportation logistics as a computer, as a competitive advantage. What we do like we think it should and is a competitive advantage for a lot of the manufacturers and shippers out there. So what we do is we partner with them to unlock the competitive advantage by, you know, helping them move their products cheaper, faster, more efficient.

D (43:17)

Right?

C (43:17)

So, so we dive deep because most of the time when there's an issue from a transition perspective, there's something, you know, upstream that happened that caused that issue, right? So maybe a manufacturing line was down and it was late. So now we have to get a, get, get, get a, get a trucking company to move it just in time.

D (43:37)

Right.

C (43:37)

Which increases cost. Right. So we're able to dive in deep with the customer to assess those issues that might be happening within their four walls that may not have anything to do with transportation logistics. So that's the other side of the business that we that we also own and operate.

B (43:52)

And how does that break down in terms of percentage revenue, the consulting versus the actual brokerage?

E (43:59)

It's about 80, 20 will. So about 80% of our business is brokerage. In about 2020 is is consultant. We've acquired five brokerages and one of those brokerage had a big managed services business. So but the up there's a lot of opportunity for growth in the managed services is actually quite an attractive area in the industry because it's. Even though it's consulting it tends to be recurred quite a lot because you tend to be helping them through problems and you tend to get contracts for a number of years. So it's actually a very interesting segment in the space and something that we see a lot of growth opportunities in.

C (44:34)

As consultants we're implementing technology within their ecosystem, we're augmenting their labor. It really spans the gamut From a support perspective.

A (44:46)

You know that one of the most common levers to pull in a target acquisition is technology updating the systems of a business that may still be running off a spreadsheet or even pen and paper. But tech is complicated with tons of solutions out there. So choosing the right cloud platform, CRM, telephony, compliance and cybersecurity, not to mention implementing all that is a job in itself. Acquiring Minds Guest Nick Akers knows this firsthand. As a former searcher who now owns Inzo Technologies, Nick has seen the tech challenges searchers face when acquiring businesses. His team at Inzo regularly works with searchers and their acquisitions, offering a complimentary IT audit of the target company. Nick takes a personal interest in all their searcher clients. Drawing from his own experience in the search phase, Enzo dates back to 1989. So this is a company that has managed the tech for hundreds of small businesses over decades. And one last thing, no long term contracts with Enzo. A big differentiator. Check out inzotechnologies.com I N Z O or email Nick directly@nicknzotechnologies.com and don't forget to tell them you're a searcher.

B (46:09)

Guys, back to the the freight brokerage business. This seems like the sort of industry dynamic that lends itself well to a winner take all online platform that is, you know, 25 years ago there would have been some tech platform that allows manufacturers to put up jobs and mom and pops to grab them and to cut out guys like you. It doesn't exist.

C (46:36)

It's, it's been tried multiple times. Convoy was, was a huge example there then and they were in financial distress and I believe they were financial distress, but they were sold off. Uber Freight, that's another one that tried the digital brokerage deal where it's. We have a platform and we effectively are a marketplace for shippers and carriers. Yeah. But the, the big thing and, and the big unlock as to why that model is difficult to execute because there's a huge service component that's missing with of marketplace like that.

D (47:18)

Right.

C (47:19)

Customers still want to talk to their dedicated account executive, hey, like what's happening with this? So that's the big piece that has been missing from that side. So like we don't, we don't believe the digital marketplace. And again like there are some customers that, that, like that model but the vast majority of the customers out in the United States from our, from our experience, they want that service and they want that human to human touch.

E (47:45)

Especially in the niche, in the niche areas. Will like we're focused on these areas. We're not, we're not moving commodity type freight that's, you know, anybody can move. You're moving complicated stuff. You're working at the port on three edge loads, you're working on complicated machinery. You're working on refrigerated frozen type products that are time sensitive. All of that. Most of the time the customer wants to make sure that that arrives at their customer in a timely manner. Right. So they want to make sure they're maintaining their customer relationships and if it's just handed off to anybody at the lowest price, most of them have tried that and the service level is just not there. So we tend to not come up against that a whole lot just by the nature of the freight that we're moving and we feel that the nature of the freight that we're moving. It's going to be very late in the process. Before they were one of the last dynamics. We have a good digital platform, but there's just a huge customer service element that we don't feel is going away anytime soon.

B (48:42)

Great guys. Okay, let's, I'd like to, I mean we, we're not going to have time to go hear the story of every acquisition. So let's just do it this way. Let's hear a little bit more about what you did on the other side of your first acquisition. We've heard that Brian really optimized working capital and I guess he never stopped, he continues, continues to do that. What else did you do in that first acquisition? And then let's, and then let, then we'll quickly go through all the four others that you've made.

C (49:16)

Yeah, so the first one, it was streamlining operations, right? So like digitizing. Yeah, just, you know, putting together a proper translation management system. Like the old system that they had was literally an access database that only accommodated one person in the system at one time.

D (49:37)

Right.

C (49:37)

So as you can't scale that.

D (49:39)

Right.

C (49:39)

As you have multiple people in the system. So we upgraded the technology suite, we professionalized the business. We implemented simple things like monthly business reviews with our customers.

D (49:51)

Right.

C (49:52)

Like just little things that we added that kept the customer happy and, and, and created more of a, a tighter relationship with us and the customer. A lot of small businesses, they, they like to work with whoever it is that they're, they're, they're, they're receiving the freight from.

D (50:14)

Right.

C (50:14)

Like the, the logistics coordinator, et cetera, et cetera. But what we did was we wanted to take the relationships up a notch. So we were going to the director level, VP level, those as executives because like that's where the relationships are form and that's where you can really drive strategic momentum forward in getting more business across those organizations. So for us it was, it was really, it was the little things that a lot of these small businesses don't do on the outset that we focused on. It's not, we're not splitting atoms here.

D (50:49)

Right.

C (50:50)

It's the basics. And we came in and we did the basics and, and we were able to, to, to reap the benefits from it.

B (50:57)

Guys, you. So you said it was a half a million dollars of sde, so your SBA loan probably ate up half of that. So you have 250, call it of earnings to split between the two of you and reinvest in the business. What did, what did kind of earnings in cash look like in that first year or two? Were you, were you just basically putting everything back into the business? Were you paying yourselves full salaries? What, what did, what did that look like? Because, because you're building a platform for a roll up, but without much oxygen. So how did you manage that?

E (51:33)

Yeah, well, I mean, certainly the first, the first year or so was definitely tight. We took pay cuts to do it and we were, we were happy to do that. There was talk about one of us, only one of us going into the operations and we had a conversation and both of us wanted to go in, so we just said, okay, we're both willing to, to, to, to, to sacrifice what we needed to, to do that because we both wanted to be in the operations. You know, you're, you're, you're doing an SBA loan, you're signing a personal guarantee, right? Like, you're, like. We were both, like, we're going to be on the ground and we're going to make sure that, that this works. So, so we were commuting to Charlotte. We had an apartment in downtown Charlotte during the week that, that we stayed in. We took pay cuts the first year to do it. We did have, you know, a nice working capital coming through the business. So we had a little bit of a buffer the first year. And, and within nine months, we were able to do another deal to give us a lot more space. When we did that without the need for any external capital, we were able to do that with cash that we had generated from the business and a seller note. So we were able to size up quite quickly. But yeah, those first nine, ten months were certainly relatively tight, but most entrepreneurs experience that. And, and there's all the hard yards that we're doing. But I think without doing that, like the velocity of the two of us on the ground, only focus on the operations. You know, I was focused on the back office and digitizing that piece of it and focused on M and A and focused on cash flow generation. So just the velocity and speed that we were able to move with two of us on the ground just paid dividends, paid absolute dividends during that period of time.

B (53:05)

Brian, you said that those first nine or ten months were tight, but that, but around that time or, you know, and just thereafter, you actually, because of the working capital and just more cash coming through the business, you had enough cash on the balance sheet to then be the equity plus the seller note, enough equity plus the seller note to buy a second business in much bigger.

A (53:31)

Business or bigger business.

B (53:32)

Did I hear that right?

E (53:33)

About the same size. Well, so if you think about it, we had an SBA Express line of credit going into the deal. So we had a cushion there that we wanted to make sure that we had given. The two of us were going in at the size, and we also had a working capital opportunity that we knew was significant. So, you know, between the working capital opportunity, we were able to put free cash flow on the balance sheet. We had the SB line of credit. So when you put both of those together, we actually had significantly more equity to put down on the second deal than we did on the first. If you think about it, the way the SBA is normally structured, you only need to bring 10% usually. So we actually had a nice bit of firepower to go and do another deal. And so we were able to leverage that with a down payment and a seller note over a period of time to acquire that business. So we were able to nearly double up in size within 10 months. And that gave us quite a nice cushion from a cash flow perspective. And we still retained some of that cushion that we had. So that gave us a lot more room after nine or 10 months. And then with that cash flow, we were able to generate and do another deal about nine months after that. So. So within 18 months we've done two more, all, all from cash in the balance sheet. And we leveraged an SBA loan for, for the third one because we were in a position to do that. So we were able to, you know, it was very important that, that free cash flow generation that we got early in the process, having that cushion allowed us to be able to do that second deal.

C (54:51)

Yeah. In a short period of time.

B (54:53)

Yeah. And that was faster than you expected. I assume you weren't thinking that you'd be have 300 acquisitions under your belt in the first 18 months or maybe.

E (55:01)

No, and it probably was faster than we expected. Like we had a thesis, but we had to go in and figure it out and it kind of became opportunistic. We had someone in the space, a coach that, that was working with us that was specific to the space and he had someone in his network and they were in an acquisition process and he thought an introduction would be helpful right in the middle of that process. And we were able to beat out the other vendor in that process as we had a very good relationship very quickly. You know, he liked us, we liked it, we liked him, and it was really, really, really good fit. And all the deals subsequently came to, you know, tip normally through those industry type connections. It's so much easier to do deals when you're in the space.

B (55:40)

Yeah.

E (55:42)

And people, it's easier to have those conversations with owner operators because you have a business and you're operating business. Absolutely. Bond on that.

B (55:49)

Absolutely. It's such an important pattern that comes up again and again. And what about the. So financially we understand how you pulled it off, but what about just like.

D (55:58)

The.

B (56:01)

You know, your attention span, your ability to juggle a second and then third business, how did you think about that? Because it, you know, it feels like you probably hadn't even finished digesting that first acquisition. Just move fast, move fast and break things sort of thing.

E (56:16)

Collegiate sports helps here will like you move, you know, you have muscle memory to, to, to move quite quickly in that, in that space. So the, you know, the discipline and speed of collegiate sports I think helps. ONU has some very good habits and they rubbed off on me too that, that helped as well. So you could, I mean I could tell stories about getting up at seven, you know, get leaving for the office at seven, getting back at nine and then going to the gym at nine o' clock at night and then doing the same thing again for four days when we driven home on Friday. So like it was all business. We were at the stages in our lives, young families, a level of maturity that was more mature than earlier, earlier stages in life. And it was just all business and we were able to operate at that speed together. I think the folks around us struggled with that. You know, people in small businesses that were not used to that speed really struggled with that and we noticed that, that having more people to be able to operate at the speed that we like to operate, we've got more collegiate sports background folks in the organization now, which really helps. So I think it was, we were, we were tag teaming it really, really well where it was relatively comfortable. But you're talking to folks that are used to operating at that speed.

C (57:32)

Yeah, it's, it's the acquisition like the second acquisition was very opportunistic. Again, it was just knowing the right person and the right time, right. The stars aligned and when those type of opportunities come, come, come along, like you have to seize it, right? We could have said hey, like we're not done perfecting this yet, so let's wait. And that opportunity never comes around again. So again it's, it's, it's, you know, we, we had our mind set on we're going to grow this thing as big as we can get it. And we were eating, breathe in the business, right? So we're moving at, at, at a very, very fast, fast pace. And to Brian's point, like the biggest challenge was is currently bringing up people along on the trajectory that you're going. Because if you think about it like most small businesses, especially at that level, it's typically a lifestyle business, right? So you know, within the business, the, the previous owner, they have a certain lifestyle, they're comfortable, the employees are relatively comfortable. Some might want more but you know, the, the, the, the, the, the vast majority of them are just good where it is. So when you know, you have, you know, two young guys coming in and we're talking about growth, growth, growth, growth, growth. I mean, that could be intimidating for some, but for us, I mean, I think what's been incredibly fulfilling for us is to see a lot of the folks that we like, the initial acquisitions, to see that they have rose up in the ranks within the organization and they're able to grab the bull by the horn and keep up at the pace that we're going. And they've been rewarded with that mentality and their dedication to the organization.

E (59:25)

That's a great point there. I mean, a lot of folks, we didn't necessarily do it for the value that that gives you, but like seeing people grow and able to see their careers develop responsibilities, develop income, income increase along with, with what we're doing, it's very rewarding and very fulfilling. And I don't think, you know, you start out without that goal, but that becomes a super important part of it and why you enjoy it so much is you see those folks grow. Very fulfilling, Very, very fulfilling part of the journey.

B (59:54)

It's funny, Brian, I've, I've heard, I've heard that pattern many times that you don't. Business buyers don't realize the gratification that's going to come from the relationship to employees. It's not, it's not why they do this, but it ends up being one of the most gratifying aspects of this journey. I did hear you guys say on the pre call though, that despite, you know, the collegiate, the, you know, the collegiate athletics background or whatever, that you've had to stretch yourselves, that this, that you've grown a lot. As people say more about your personal journeys here, your, your own growth journeys.

C (60:34)

Well, yeah, it's, it's, it certainly have, has been a stretch. You know, it's the first time we did an acquisition.

D (60:41)

Right.

C (60:41)

So that's, that was the first. There have been multiple firsts, right. And anytime you hit a first, you have to adjust as, as a person, you know, the, the CEO I, I am today. It's, it's requires, it's, it's, it's something different is required of me today than it was four years ago because we're just a smaller business now. We have, you know, 70 employees across the United States. We have satellite office in managing Columbia. So it's, it's, it requires a different person.

D (61:09)

Right.

C (61:09)

So we, by extension, we all, myself and Brian had to grow personally because if we didn't, then the business wouldn't grow. And as we continue to grow ourselves, then we keep on elevating the business over and over and over again. But frankly speaking, it's a lot of it is, is, is. Is by force. Because as we're going to continue growing and as we get bigger, we have bigger issues that come up that we have to solve for.

D (61:35)

Right.

C (61:36)

So we're. We're always thinking about, like, how do we upgrade. How. How do we upgrade our people, how do we upgrade our networks, how do we upgrade our systems, et cetera, et cetera, because we. Everybody has to elevate in order for us to get to the next level.

E (61:52)

Yeah. One who brings up some great points. I think you become a lot more disciplined in order to get more out of your day. You've got to be a lot more focused. Areas that you know, you have to be an expert in, and you have to know areas you don't know. And getting the right expert experts around you, our level of, of consultants and vendors is just at a different level now than it's been at the start. You make a lot more healthy choices because you're onu. Made the point. You're forced to.

D (62:19)

Right.

E (62:19)

You eat better food. You don't eat certain food. You exercise regularly. You just stay on top of yourself. You got to manage your time better. A lot more demands on your time. We're trying to get on your calendar so it becomes a level of discipline that becomes forced upon you. But I think it helps make you a better leader and a better example to your team. And we've got young families at home that at the end of a long day, whether it's a long day in business or a long day on the road, you know, they. They require and deserve your energy when you get home. Yeah. So you have to make sure that you leave as much room in the tank for that as you leave on the field in the business day. So to be able to do something like this just requires a growth mindset. And I think, you know, I've been very fortunate to find a business partner that has a growth mindset on a daily basis. And I think we feed off each other as well. And we both have hoops on our arm now. We're measuring our recovery, performance and our whoop age. I'm down to 39.5 years, Will, so I'm very happy with that. Back under 40 again. But if the whoop is good enough for Ronaldo and Rory McIlroy, like, it's good. Patrick Mahomes, it's good enough for us. So those types of Dynamics again, just, we build momentum off each other on, on the healthy lifestyles and that helps hubs on the leadership styles and just, you know, helps with, with everything that we're trying to achieve.

B (63:39)

ONU When I was Googling both of you for your linkedins etc, I found your, your Instagram and you have a reel talking about being bad at something for a period of time and needing to become comfortable with being bad at things as, as part. For somebody who wants to grow. Say more about your philosophy there.

C (64:05)

Well, kudos to you for, for investigating and searching the Instagram. But no, I think that's a, that's a, that's an incredibly important topic because in order to be good at anything, you have to be that first. And I think, I believe a lot of us never get great at anything because we, we don't want to be bad first.

D (64:29)

Right?

C (64:29)

So for me it's, and I have to work on this.

D (64:34)

Right?

C (64:35)

But, but for me is, is putting myself in situations that I may not be the best at. But you know, just getting those reps and it might be bad, it might not look good, but it's going to get me to the point where I'm great at something.

D (64:51)

Right.

C (64:52)

The first meeting we had in New Jersey with the first potential acquisition target, it wasn't the best call, right. But as we got reps, so I'll consider us bad on that first call. But we got more reps, got more reps, got more reps and we would prep so much for these calls and you know, year, year and a half, two years is we would have a call and we would get on a call with no prep because we just got good edits.

D (65:20)

Right.

C (65:21)

So it's, it's always getting the reps and being comfortable being bad and not letting being bad stop you from moving forward.

B (65:29)

Yeah, it's so simple. But I just, it's, I love it. It's such an important message because I think, I mean, I think the key part of the message is, is that you might not even realize it but because you're, you're afraid of being bad at something, you don't even attempt it. And so you're, you're creating, you're creating limits around yourself and you in subconsciously and you might not even realize it anyway.

C (65:54)

Absolutely.

B (65:54)

I guess, I guess there's. I relate. Okay, guys. Well, we only have a little bit left, a little bit of time left and we're really only halfway through the story, so we're not gonna spend as much time on kind of the back Half. But let's hear about acquisitions 4 and 5 and specifically now your decision to raise money. Let's do that first. Why was this the moment to raise money from those investors?

E (66:22)

Yeah, well, I think this brings me back to when we met in Dallas at a conference at that time and we were raising at that time. So we were at a point where we had a really, really good deal for our fourth deal. It was a white glove freight brokerage and a managed services business. And the managed services business was a totally new line of business for us. We'd find a really good opportunity. We actually had that in our pipeline. We had another deal that had fallen through, so we had gotten, we had recontacted, we were under ly. When we talked to them, we said, hey, we'll come back to you when we finish the acquisition and when we've integrated it. But we actually made a phone call three months later. It was one of the only deals that we didn't get the close. So we got six Lois and five closes. But that's what it was. Very opportunistic because the fourth deal was actually a better deal in hindsight for us. And when we looked at, we agreed a price that was fair and the structure of that deal required us to max out our sba. But the cash we needed to bring to close there was a massive gap there between what was maxing our XBA going to the max 5 million that you've got available there and the required cash close. So we needed to raise, and we'd never raised money before, so we certainly went into it relatively green. We went out to the self funded search community and it was very interesting. We got incredible feedback from the self funded search community and we really adjusted our terms because I think what we got from that reach out initially was we were focused on how much equity we wanted to give up and we were focused on us versus focused on the investor and the return that they needed versus other options they had in the market. So it focused us to look inward and really focus from an investor perspective. So that was an incredibly valuable feedback. But we, we, you know, we didn't get much traction on what we initially put forward. And the second piece of feedback was the traditional search, self funded search market. They were used to dealing with first time CEOs and so they had a set of terms that were a little bit more restrictive than we were comfortable with in relation to like stuff that you would want to have control of running the business given your track record that we had. And some of the Terms were of the more sophisticated investors were a little bit restrictive on that side. And then the dilution that they wanted to give up, it was a sizable raise. It was a significant raise on the larger side.

B (68:42)

So can you share how much it.

E (68:45)

Was upwards of 3 million. So it was a significant raise. And so, so that was obviously going to require a number of different parties to come to the table. So we went back after a number of weeks, after we talked, we went back and we looked at our, at our model and we put together a very attractive, a very attractive return portfolio for a percentage that we were comfortable with. And we actually went out to our private network. So we had been in Atlanta, I'd been in Atlanta for 10 years. Owner had spent the majority of his life there. We had a significant network in that, in there and an MBA network. So between our personal and professional networks, not friends and family, more on the professional side, our Emory network and the logistics industry, we got about 30% for each of those areas and raised a full sum with an SBA loan and a seller note and some equity from us that we put in. So it was really a transformational moment for us. And the thing about the money we raised too, we got what I would call smart money. It was very important for us for the checks that we were taking, that we would be getting value for folks that would be coming in and writing significant checks. So we really were selective in who we went after. So we brought in a logistics focused expert that had done what we were trying to do, that had ran and sold a managed services business. We brought in a former executive from the company I used to work for who'd done multiple acquisitions, over a thousand acquisitions in a fragmented space across his career. So this was real value add. Gave up a couple of board seats, but we were really happy to do that, to bring those folks to the table. And actually some larger investors opted not to have a board seat because we had really good qualified people to do that and they agreed with that. So, you know, for us, ONU brought the point at the start when you go into your professional network and folks that, you know, for that, that's just, there's a lot of, you know, for us would be pressure that we're going to deliver there. So we were really happy to be able to give them a really good return and bring folks in on our network. So that all happened quite late. You know, we had a three and a half month diligence and it all came in quite late. We, we pivoted halfway, we adjusted our model. But once we started to get one or two key people in, it flowed well from there, but really only probably one key, you know, key investor from the self funded world. The rest of them was private network, Emory, you know, our alumni network and folks from the space. So really a broad unique raise for sure.

B (71:28)

And do you think that, that your first is also your last time raising or as you continue to grow, you might need to raise again for much bigger acquisitions?

E (71:37)

You certainly wouldn't, wouldn't rule it out. You wouldn't rule it out at all. We, you know, we've obviously we've got a lot of capability within the business. Like we did our recent, most recent fifth deal. It was a refrigerator deal on the west coast with a couple of former collegiate athletes. So that was a really good fit and they rolled some equity in and, and, and you know, became business partners with us. But we were able to do that all with our balance sheet, all with, you know, we're cashing the balance sheet. So we'll do as much of that as we can. Now we've got growth and scale, but we, you know, for the right opportunity you got to be opportunistic in this world. If the right opportunity comes in front that we just feel is an incredibly good fit for, for our business, we would certainly be open to that. I think we'd be better equipped than we were. You know, we signed the LOI and then started to, to try. That's not the way to do it right. We, we learn quickly. Within six, eight weeks of no real progress. We're obviously under a lot of pressure. We've built but we got it done. I mean it's like anything with the sports. You know, you, you, you got the result. The scores on the board, they don't tell you how, how the 10 was got right or, or, or they just, you just see the end result, you just see then the end scorer. It could have been under pressure for 90 minutes and got, got a last minute winner. But that doesn't, that doesn't get out in the history books on the story. But now I think we'd be much better prepared. I think, you know, we've built relationships with folks in the space. We've got a longer track record. I'd be hopeful some of the folks that have been with us on the investor journey would stay with us based on their experience working with us. So we'll certainly, we'll be opportunistic when we need to be and do what's best for the business. And if a Big deal comes up and we feel it's a good fit and we need some capital. We'd certainly, certainly look at that.

B (73:17)

How do you guys think about when the timing is right to refinance out of your SBA loan so that you can get out from under the personal guarantee?

E (73:26)

That's a great question, Will. I think it's when it's best for the business. Like you could do it now, but out of terms you're going to get better for the business than what you have. So I think there's an inflection point of when that comes up and I think if we put what's best for the business first, that will naturally occur. We feel confident that we'll be in a position to do that at some point. But it has to make sense on the cash flows of the business because if you're putting something on the balance sheet that's takes more cash flows out of the business, that's just going to take away from the returns you can get. But I do believe at some point that that opportunity will be there.

B (74:03)

Brian, you, a minute ago you said how your f. The first time you went out to the self funded search investor world and, and then didn't raise and then this time when you went out again for the raise that you did complete, one of whom was from the self funded search world, you had the, you there was this shift in perspective. I guess you, you were kind of empathizing with investors more this time around. Say, say more about that. What did you learn there? What shifted?

E (74:31)

So I think there was a couple of key investors that, you know, we put forward an initial proposal, turned it down quite quickly, even though they liked us and they liked the deal. And, and I was just open about getting feedback. I was like, we got on great. You like the deal. How come, you know, you're. And they just said the returns are just not, they're not compelling enough versus what else I have on my table. And I just unpacked that and a couple of people were very gracious to give me that feedback and they may not even remember, but it was just, you know, me and owner in the office next door and I would just pop in and say, hey, like we're not, we have to think about this a different way. We have to put the investor hat on and reverse back into the equity that we need to dilute to make it a compelling return. So we totally changed flip the Apple card versus focusing on the equity that we wanted to hold on to. Versus. Okay, what return do we need? To give the investor that's compelling enough, how do we flip that back in to. And then what equity is that worth? They just total 180°. But it was really feedback from sophisticated investors in the space that were, you know, gracious enough to give me that, to give us that direct feedback.

B (75:42)

That's great, Brian. And was, and if I could venture some numbers, was this the sort of thing where the first time you went out you were showing returns to them of I don't know, 20s and then that wasn't enough for them because market is higher generally in search land. And this time when you went out it was more like 30s and, and you, and you, you and Onu say okay, we need to, we need to show that we can deliver our investors. Call it 35 IRR. How do we back into that?

E (76:15)

I think both of the scenarios were showing good irrs. It was just different assumptions to get there. So by the time we got to that 30, 35 IRR, it was very conservative assumptions to get there so you could get a lot more comfortable. And it just, but it required more equity off the top end because of the more conservative nature of those assumptions.

B (76:38)

Great, great, thank you. Stepping back a little bit, but one thing that we talked about in pre call, we still haven't talked about that I think is important is the, the quality of the first business of the platform business. Small though it was, I keep emphasizing it's, it's small size, but it was also a really good business. It turned out correct and, and, and say more and why, why did that set you up so nicely?

C (77:07)

It, it was a good business because we understood if there was a, like when, like when we were doing diligence, number one, it's, it's, it was two and a half years in and it was good.

D (77:19)

Right.

C (77:20)

So like we didn't want to extend our search for three, four, five years.

D (77:23)

Right.

C (77:25)

So again, timing wise it was, it was, it was, it was, it was a good fit. We, we got along well with the, with the seller and then there was a lot of untapped opportunity within the business that we knew we could extract in short order.

D (77:43)

Right.

C (77:44)

More specifically, the working capital piece was. Okay, what was a big jump enough point to Brian's earlier point, the working capital conversion that we were able to accomplish helped us do the second deal without raising any equity. We just used our balance sheet to do the deal.

D (77:59)

Right.

B (78:00)

Okay.

C (78:00)

So seeing things like that is really what piqued our interest and said hey, this could be a deal that could, you know, take us to that next level, even though it was, it was relatively small.

B (78:13)

Great. And that is what you meant when get, when, when we talked in the pre call about getting the first deal. Right.

C (78:20)

If we would have done the first deal at that size and there weren't any real opportunity for us to add value, then we would have been stuck in that area for a while.

D (78:35)

Right?

C (78:36)

Yeah. And we, and we knew we didn't want to be at that size for a long time. So, so, so we knew we needed to find something that could help us. You know, we can, we, we can come in, we can add value and we can organically, you know, either grow the business or convert the working capital into cash on a balance sheet to do the next thing.

B (78:56)

So guys, net it out for us again the trajectory here. Well, and let, let me, I'll start. So you're now 70 employees, five acquisitions revenue of your first acquisition. I don't think we got, we knew, we knew you bought it for a million and a half, but I don't think we heard revenue of that first business.

C (79:17)

It was about, about 4, 4 and a half mil.

B (79:20)

Yeah. Well just under 5 million in revenue. In revenue today.

E (79:26)

Total employees.

D (79:27)

Yeah.

B (79:29)

What's that?

E (79:30)

Close to the size of employees. So in the freight world, you know, a person per million in revenue is usually good angle. So when we started we had, you know, just under 5 million revenue with 5 people and with close to 70 people. Were pretty close to that on the, on the revenue side. So it's usually a person per million in revenue. And it's a, an old metric that carries, carries, carries well in the, over the test of the time.

B (79:53)

Great. And are there any rules of thumb related to margins in this world?

E (79:58)

So I mean we've been in brokerage. I mean the, the, the margins in the space with the bigger competitors are, are, are mid high single digits with more on the mid single digit EBITDA dynamic. I mean we've got a niche, a niche group of businesses. So we would operate at our size ahead of that, ahead of those bigger guys in the space. But that's very, that's typical for that's typical space.

B (80:23)

Well that's, that's remarkable guys. And so how do you think about the future? Are you guys building indefinitely? Are you building to a particular number? You don't know. You'll consider options as they come.

C (80:36)

We're, we're having way too much fun right now. So we're, we're just building. I mean I use this saying all the time. We're chopping a Lot of wood. And we're just chopping. We're chopping, we're chopping, we're chopping. And like I said earlier, it's as we get to the next level there are different challenges and man, that's just incredibly fun for me and Brian. So as far as like, what's the next thing we want to build a really good business, right? A really good business that we can be proud of, our employees can be proud of, our investors can be proud of. Like that's really the big focus for us right now.

E (81:11)

Yeah, lots of opportunities still out there. Will and only made the point where we're enjoying it a lot more now, where you've got scale and you've got a lot more people, you've got a lot more scale. So I think we've got a long Runway here and really enjoying the process. And it's nice to have a team of people where you can focus more on the business and on those strategic initiatives to really help drive the business forward. Because for those initial years we were in the business on a daily basis. So it's really nice to be able to step out and work on the business and all those important strategic priorities that are going to drive the business forward.

B (81:51)

You said earlier how your inorganic acquisitions, your inorganic growth, your acquisitions were about kind of filling out the portfolio of offerings to your customers. Are you done? And is there any part of you that is interested in continuing to acquire for growth's sake as opposed to having new offerings?

C (82:15)

Yeah, that's a very good question. And we're always looking for like anytime we get a deal across our desk, like the ones that really pique out interest are the ones that have a niche offering.

D (82:25)

Right.

C (82:26)

So we're going to continue looking at those offerings. And again, we've always been opportunistic. So if there is an opportunity that is closely aligned with one of our current offerings, then we may do that deal. But we always look for other segments of the space where we can add to our portfolio so we can continue cross selling within our customer base and.

B (82:53)

Does growth with excellence. And, and, and, and the intensity that you guys are treating your business does organic growth, is that pretty much, I don't want to say happen naturally, but is there a good path to a lot of growth purely organically here?

C (83:13)

Yeah, 100. I mean we have a, a very functioning sales engine here. You know, we have a pretty good sales team and for us it's, it's, we, we like going after small to medium sized businesses because as those businesses grow we grow with them. So like, that's also a key strategy for us is latching on to the right partners that are growth seeking like we are. And oftentimes as they experience growth, we also grow as well.

B (83:46)

Great guys. Last question. As you reflect on how you built this going, you know, from a smaller acquisition with an SBA loan, still have the SBA loan, maxed it out, brought in other equity as we've covered, do you w would you suggest that format of building a rollup like you've built to other searchers? Do you feel like it was a, a good way to approach that? And you know, you think it's a formula that those listening might follow.

E (84:20)

So I think it worked for us well and I think each searcher will have their own unique dynamics and set of goals. So I think each searcher has got to assess what their motivations were and are at the start and what's important to them. For us, it was really important to have full control of the equity and to build a track record and very fortunate to have a great partner to run with and run at speed. Certainly doing this on your own at the speed that we, that we. I certainly could not have done it on my own at this speed, at this velocity. There's just so much ground to cover. So I think if folks are thinking about a roll up at this scale, you just want to have the right team around you and you want to be very confident in how much that's going to take. But I think each path is unique to the individual searcher or searchers. But for us, it's been, it's been, it's been a very, it's been a very compelling journey. And it's, it's, it's, it's, you know, it's gone well for four and a half years. Overall, it's gone great. But certainly there's been many, many, many challenges on the way and you don't want to underestimate that how difficult entrepreneurship is. It is, it challenges every skill set that you have and makes you develop others and it's very rewarding. They say hard times make strong, strong, strong people. It's true. Yeah, it is definitely true. Certainly feel just a lot more seasoned and experienced having come out of the, you know, at this point in the journey.

B (86:02)

Onu Any final thoughts?

C (86:05)

I mean, I would echo what Brian just said. It's, it's, we've grown a lot over the last four and a half years and it's the people around you, right? If you have good people that are equally as dedicated to the mission. I mean, that's half the battle, right? And we have been able to cover a ton of ground because I believe it's, it's, you know, me and Brian, like, we, we have our, our, our, our, our areas of expertise and we, we really, you know, lean into those expertise. So I think we've been able to run and cover a lot of ground because of the partnership. So my recommendation to, you know, future searchers or whatever the case may be, it, it really all depends on how far you want to go. Like, if you want to buy a small business and keep it relatively small, you, you get a good lifestyle and great. But if you want to grow something of massive size, then I think you have to arm yourself with the right people around you. And I'll end with this is don't go into it if you are, if you are going to partner, don't go into it with just a buddy, like, hey, I know this guy. He's my buddy. We have, you know, a great time at the bars, whatever the case may be. It's. Find somebody that complements your skill set, right? So like, like, for instance, like, like Brian, like one of the best CFOs that I've come to know, right? So like he's been, he's been able to drive that piece of the business, like drive the acquisition piece of the business. So it's, it's. You want to find somebody to partner with that complements your skills to help you guys cover a lot more ground. Rome was built in a day, but it wasn't built by one person. It's always, always a team effort.

B (87:59)

Excellent, guys. Congratulations on how far you've come, what you've built so far. Look forward to seeing how, where, where you continue to take it. Brian Boland, Onu Okba, thank you very much for joining me.

C (88:13)

Thanks Will. Thanks for having us.

E (88:14)

Thanks will you. It's a pleasure.

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