B (3:43)

Anya Alev, welcome to Acquiring Minds.

C (3:47)

Thank you so much for having me. Really excited to be here.

A (3:50)

Anya, you bought a business that you might call the perfect searcher business and you fought very hard to make it happen.

B (4:01)

Today you are sitting in a promising position.

A (4:05)

The story is still unfolding of course.

B (4:07)

But the future looks bright. Let's get into it with some background on you, please. Anya.

C (4:13)

Awesome. So I started my career on an institutional equity sales and trading desk. I was an institutional equities broker specializing in technology and healthcare, but was a generalist. So I knew nothing about what I was signing up to do really. Was just out of college looking for a job and they were looking to hire someone from Trinity College, which is where I went. The managing director happened to go there and just really wanted to give back. And so the job sounded interesting. We hit it off and so I stepped into a really interesting role where I got to learn a lot about different management teams and also a lot about people, but also about the investment world, which was a really great experience. But I always was kind of looking for something else. I always was very entrepreneurial.

B (5:01)

Can I stop you right there? Because despite your saying it was a great experience, I remember from the pre call that you were also exposed to business people that you admired and those that let's say you admired less and that helped inform your kind of next chapter. Tell the audience what about that.

C (5:21)

Yeah, so a lot of my job was dealing with public company management teams. So we would set up these roadshows for them, non deal road shows where they would go and meet with the buy side clients like the hedge funds, the mutual funds. And so we were doing multiple of these a week. So over the course of a couple years I got to see hundreds of different management teams and so I got to see management teams that I thought were fantastic and then on the flip side some that I didn't think were so great and after a while it got really easy to pick up on those traits and I think that also helped me inform a lot of how I wanted to be as a manager and a leader because you would see certain groups that might not be exactly like forthcoming with the investor base or not exactly as honest as they could have been and, or you would see groups that would be totally honest and extremely open. And I, I've been in. I had been in meetings where one management team told investors that they literally shouldn't buy their stock at all. They're like, you shouldn't buy our stock at all right now. There's not enough liquidity. I can tell you're really interested, but don't buy, hold, wait. Whereas other people obviously would be like, yeah, yeah, yeah, buy as much stock as you can. And then obviously they know that the stock's about to plummet. So.

B (6:41)

So being exposed to these, like, less, less honest, maybe less transparent people did what for your path?

C (6:52)

It made it really clear to me that I wanted to cultivate an environment that was positive. 1. Not that that environment wasn't positive, but again, like, I think it really does trickle down from the top, right? So how you are as a leader really impacts the whole organization. And I could only imagine how people inside of those organizations felt if this is how their leadership team was behaving. And so I really just wanted to create spaces where everybody felt comfortable and a place that I could obviously be happy that I worked.

B (7:24)

Great. Well, you decide you don't want to continue in that particular world. And you, you were about to say, I think that you go to business school to help figure, figure out what's next.

C (7:34)

Figure out the entrepreneurial path. I had dabbled in starting my own business. I started a really, really tiny business and then ultimately went back to school and didn't know if I was going to keep working on that. Raise another, do a startup, join a startup. And then that's when I learned about search funds, my first year of the mba. And at first I was like, this sounds really crazy. So all these people are going to support me and like, help me find a business and give me money to go out and do that, and where's the catch? And so I was really skeptical about it for about a year, but I knew I wasn't going to go back to corporate America. So it was definitely something I was considering. And so I made a deal with myself that if I was still thinking about search after the first summer, so the one summer in between first and second year that I had to go search. And so I just remember still thinking about it the entire summer and the what if? I just felt the what if, If I don't do this now, am I really going to have the courage to go and do it later? If I go back to corporate America, am I going to leave, like a really comfortable job and do this, or should I just do this now? And so that's what I Did.

B (8:49)

And, and we're talking about the traditional search fund.

C (8:52)

Exactly.

B (8:53)

Model here. I heard you say that investors are gonna. Or somebody's gonna pay you to go search.

C (8:58)

Exactly.

B (8:59)

That would be the funded bit of this, of the search. That is the traditional search fund model. Were you exposed at all to SBA style, self funded style search? Did you consider that path?

C (9:09)

I considered it a little bit. I went to Tuck, which is Dartmouth's business school, and eta, or entrepreneurship through Oxygen. It definitely was something that was talked about. We had investors and different people coming to Tuck, but it wasn't. It's not like a Harvard Business School or a Stanford where you got, you know, 20, 30 people searching a year. It would really only be like 1 to 2.

B (9:35)

The partnership aspect of this. Now you don't mean, you don't mean having a partnered search. You mean actually the relationships with investors say just a little bit more about the appeal of that. I'm not sure that. Well, I guess people do say that from time to time, but say more, please.

C (9:51)

Yeah, so you're right. Not in the sense of a partner that is in the day to day with me. But I really just wanted to build this really great council and I felt like it would be really difficult to get that without traditional search. I know, I know you can do it, but I just felt like I didn't have these. You know, I always got to know the investors, but it's not like I had these like 10 year long deep relationships with people who had run businesses and would just help me just, you know, out of the good of their heart or I didn't know what kind of business I would acquire. So obviously I know sometimes you can give a little bit of equity this and that. So, um, I just wanted to set it up that way from the beginning. So I felt like we had kind of like a vested interest together there. Obviously want to make sure I do well. But beyond that, I really was stress testing the relationships I had with investors while I was picking my cap table because as one investor put it to me, some of these relationships last longer than marriages. I'm married, I obviously hope I'm married for a long time, but we all know the rates, the divorce rates and everything. So one of the investors really early on was telling me, pick very carefully because, you know, you're going to be with these people for a decade and they care about you as a person, they care about the company and they're going to be there for you whenever you have questions. And so that's really what I was looking for and why I wanted to build a traditional search. And I've truly gotten that out of my investors, their families. Fantastic. I text with several of them anytime I have a question and they always get right back to me, which has been really great.

A (11:35)

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B (12:36)

Tell us what your search looks like. You, you wait until you graduate Tuck, we assume, and then you proceed.

C (12:43)

Yes. So I raised my search during my second year at Tuck. I started raising it in the winter, I think wrapped up in about six weeks or so. And so headed off on spring break all excited, you know, ready to relax, knowing that I was going to launch my search, that is draw the first dollar in July. Well, I found out I was pregnant, so that was fun. And so I built my entire broker channel before I started in July, just so I had that going. And then July hits. So my son was due to be born in November of 2023. I'm thinking there's no way something crazy happens. I'm going to have my son right around the holidays. He was due right around Thanksgiving. I knew from my past life on the institutional sales and training desk that, you know, that time between Thanksgiving and the new year is really dead time. Everybody's kind of winding down, spending some time with their families. So I was like, nobody's gonna want to sell their business in between that time. I'll just kind of stay up on things. But I ran a geographically focused search and so I was really focused on the northeast of the US Primarily in Boston. The reason I did this was my husband spent a decade building his own career and he's a trader. So it's not a, an institutional equities trader. It's not a very mobile job. You can't just like up and move to Wyoming or wherever it is, and go find somewhere else to trade. You're really tied to your region and your relationships there. It's a relationship based business. So I felt like I couldn't ask him to give up his career so that I could have mine. That's not fair. That's not a partnership. So I was like, I will do everything I can to find any business in Boston that meets the search criteria. I did tell my investors, like, I would commute anywhere in the northeast of the U.S. i think I said, I'll go like as far as like Florida up. Right. So drew like a line there. It was just, I have to. My criteria was there has to be multiple flights back a day to Boston just in case there's an emergency. But I was totally fine commuting like a consultant. I just didn't want to be going like coast to coast. But.

B (14:59)

So you were willing to look in, let's say, Miami. Yeah, or Atlanta. But why, But. But you were going to remain living in Boston.

C (15:08)

So I was going to fly back.

B (15:09)

And so you're going to fly back and forth? Yeah, yeah. Okay.

C (15:12)

Which I'm lucky that have to do that, but I'm crazy enough that I would have done it.

B (15:19)

Okay. Your outreach you were telling us to owners was very personable, very not stiff. Take us back to that, that point in the story.

C (15:32)

Yeah. So I just felt like nobody's going to care that I have a finance background. Nobody is going to care that I went to a cool business school. Like, who cares about that? Right? Like, that's. That doesn't define who I am as a person. The right person is going to want to know who I am. Who's Anya? Like, who is this woman that I'm speaking to? And I felt like a lot of their other outreach would be like, that they would be receiving and be like, hey, we're this like big private equity company and you should sell to us because we have tons of money. So I really wanted to be different. So my outreach was a lot like, hi, this is me. I grew up in this town. I still live in the same town. I'm super pregnant. Your business looks cool. No idea if you want to sell your company, but I'd love to just talk to you. And by the way, here's my dog. Maybe I'll see you around or something. Right. So more people answered me because they were like, okay, you sound like a human and I want to talk to a person, not a robot. Right. Who's just going to read me their credentials and why they think they can run a business. And to the point that I made earlier, I actually think this is one of the hardest things about running a business. Like, it doesn't matter what your credentials are because you could step into an organization and it can just reject you because your people don't care that you used to work in finance and that you went to some nice business school. Like, they, they don't. They do not care about that.

A (17:10)

Yeah.

C (17:11)

And so at least I don't think that's what my team cares about. They care that, you know, I'm doing right by the company and all of that.

B (17:18)

One reason that we can be so stiff in business is because we, we err on the side of professionalism. And of course, professionalism is important and has a big place in the environment of business. And so the danger and your approach would be to come off as unprofessional. And obviously this was a calculation for you. So how did you hit the sweet spot without. You must have asked yourself, like, is, you know, is the dog picture too much or is the sharing that I'm pregnant too much? Like, how did you arrive at this sweet spot that you did?

C (17:54)

Yeah, so I think that's a really great point because yes, I do agree that like, some people might think like, oh, this is a little bit unprofessional, but sometimes I think we air too much on the side of too much professionalism and you lose like, the human element of it. And great businesses are great businesses because of people. They're not great businesses because of. I mean, obviously there's systems and things that help make. Ensure that it's great, but they're not robots. And so people don't want that. And so I really felt like the right person would get it and the right person got it right.

B (18:29)

Well, and so that's a great point. It's kind of like it's its own filter. It's this idea that like, put yourself out into the world the more rather than trying to sanitize yourself and just be same samey, put your real self out into the world, which, yes, will turn off, alienate some people who don't. Who, who don't like what they see but will attract more. More the people, the right people. And it's better to really attract a smaller group of people who really like you and have an affinity for you and, and repel the rest than it is to kind of be so bland that nobody has a reaction to you one way or the other. Which, by the way, that that is kind of the reflex of so many of us is to just blandness, safeness. Let's hear about your discovery of the business you did buy.

C (19:14)

Yep, exactly. So I reached out. Like I said, I wanted to turn over every stone in Boston before I started funneling outwards in my search. So the seller of LSS responded to my email, um, because he grew up in the town I grew up in and now lives five minutes away from where I live. So he was like, I'll talk to you. And we got on like a house of fire on fire. We spoke for the first time in August and it took a long time to get to where we got to, but there was a lot of back and forth. And so he was not really looking to sell his business. He was talking to a couple other folks. Because our industry is really in a point of consolidation. There's probably only about 30 companies that so much as Touch AED is. And then what we do is super niche where we actually service and maintain the ads through an on site service and maintenance program. So we have technicians that go out and touch these things. And so that was even more niche. So people had been approaching him, but he wasn't really sure that he wanted to sell. And so he wasn't really prepared. He was kind of like, do I want to? Do I not want to? And here I am like seven and a half months pregnant in late August, early September, being like, dude, I'm really pregnant. I'm doing this. It's now or never.

B (20:45)

Hold on a sec. What you just said there, that was actually the encapsulation of a lot of back and forth. And eventually you kind of had to be like. When you said, dude, it kind of like had to be like, listen, I, like, I, we got to do this or. Or I got to move on.

A (20:58)

Right?

B (20:58)

Not an ultimatum, but just kind of like laying the chips on the. Or the cards on the table. We got to move if we're going to do this. Right, Exactly.

C (21:05)

Because I was like, hello. I'm very like, you can't see this, but I'm pointing at my stomach. I'm not pregnant now. But at the time I was. So I was like trying to use that as like a hello. Like, do you want to do this or not? Like, I kind of have some other things going on in my life that are going to start to get in the way of us moving this along in a timely manner. So with the idea that you would.

B (21:27)

Close before having the baby, like, yeah.

C (21:29)

Or like be close to. So we'd just be Doing legal. But of course we negotiated the I for about a month, so we lost four weeks there. But yeah, there was, there was a moment where we were going back and forth so much because he was so. Do I want to? Do I not want to? Obviously selling your business is a huge decision and so I could tell that he was serious, but he was wrestling with it. Right. This is his family's business. He's been running it for more than 20 years. Like, is it the time? Is it the time? I get it.

A (22:01)

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B (23:14)

Again just a little bit in more detail what the business does.

C (23:17)

Yep.

B (23:18)

And what is even an aed? Start there.

C (23:21)

Yeah, okay, great question. So an AED is an automatic external defibrillator. So what that means is if you have something called sudden cardiac arrest, not a heart attack, which is common and has no warning signs, unlike heart attacks that can happen to you in public. So more than 250,000 people suffer from this a year in the United States. And AEDs are what you need put on you in the first three minutes of sudden cardiac arrest occurring in order to help save your life. Because every minute is a 10% decrease in your survival rate. So average EMS response time is 8 to 10 minutes. That's an average response time. So if you're somewhere that's a little bit further out of a city, in a town, you might be looking over 10 minutes for an EMS response time. So presumably somebody would be dead by then. Right. If you're using the 10.

B (24:20)

Yeah.

C (24:21)

10% mark. So these things are really important.

B (24:24)

And what does it look like? You said put it on you.

C (24:27)

So it's a device I'm trying to explain the best way to look at it. Have you ever seen like on the shows where someone's coming into the ER and they put these pads on you and then your chest, you know, kind of goes up. So it's not a hospital grade version. So it's like a step down for public access use. But it's a plastic device. There's like a shell and then you take off the COVID depending on the unit. And there are pads inside and so you would open the pads and there are pictures on the pads that kind of tell you where to place them. Even if you place them wrong, it's okay, just put them on someone. If you ever find yourself in this situation and then you turn it on and the device will start screaming at you what to do and it will keep repeating it until you do it. So it will tell you to do cpr, it will tell you when to give breaths and then it will read and analyze the person's heart and deliver a shock if someone needs one. You can't force it. This is a really common misconception about AEDs. You cannot force an AED to give a shock unless a person needs a shock. Like I could put an AED on myself right now and I could press the shock button 100 times and it would never shock me. So people are always really scared to touch them because they don't want to get electrocuted. Psa, you cannot get electrocuted. So if you're ever around someone who collapses, is unconscious, you should get an AED on them and definitely press the shock button if they need it. You won't get hurt. So that's what they do. And so our company is one of the only companies nationally that goes around and helps make sure that these devices are actually working properly. Because a lot of organizations and communities, they just purchase a device and it's not their fault. There's not a lot of regulation laws around them today and there's not a lot of literature out there on how to properly use them. They will buy them and place them into their communities and organizations and then they'll just forget about them for years.

B (26:36)

New slash where they go like by the, by the fire extinguisher or in a closet somewhere. What are they in there? In a carrying case of some kind of.

C (26:43)

Exactly. You should have them out and there's usually like a sign that will say AED over it on the wall. They're usually near fire extinguishers, but a lot of places just put them, you know, locked in A closet. And nobody knows where they are, unfortunately. And then something happens and nobody knows where it is. And unfortunately people pass away. So part of what we do too is to help like raise awareness about where to put them and help make sure that everybody knows where they are. So we also do CPR ad first aid training to help make sure that people inside of these organizations and communities actually one, know where their AED is, two, know how it works and can actually help, you know, in event of an emergency. So that is what our company does, which is a little bit different. We also sell AEDs, but as I alluded to, there's not a lot of companies that actually focus on on site service and maintenance, which is our niche.

B (27:38)

And, and, and these are in public spaces. So in hotels and, and schools and.

C (27:45)

Hospitals or whatever, transit systems, grocery stores, your place of work. We do a lot of businesses, a lot of big businesses, small businesses. So really anywhere that the public congregates outside of your house, you should have an ad.

B (28:03)

And you guys are. So say again what the business model is. You sell these, you service these. Say more there.

C (28:10)

Yeah, so we sell the actual aed, but then we actually service and maintain them. So that's the biggest piece of our business is the actual on site service and maintenance. So we come out and we inspect the defibrillators, we run them through tests, we cover all consumable parts. So AEDs have pads and batteries that require replacements. AEDs need to be run through self tests. And you know, we do software updates as well, we do emergency services. So if somebody uses their aed, we'll be right out there as soon as we can after notification and we'll get the AED back up to working condition and get it back out for them. So that is the biggest piece of what, what we do. And there are a lot of folks who, when we first talk to them about it, they think we're selling them like some software subscription package that we hope that they'll forget about and like just continue charging them for forever. We all have those, but it's really different. I can't tell you how many people come back to us after a period of time and they're like, you guys weren't lying about this service plan. This is, we need this. We just had an incident. Thank God everybody's okay. But it made us realize that we weren't actually properly maintaining this device. And this is like a very valuable resource.

B (29:29)

Well, right, Anya. And so we're going to hear like why the business model is so compelling. But if I had to, if I had to press on a weakness of it, it would just be the awareness of aed. Yes, I didn't really know what they know, not that I didn't really, I didn't know what they are. And so the idea that know a lot of people aren't even going to know what they are, let alone what they do, let alone think they need to buy one, let alone, you know, then you buy one and you forget about it or you know, somebody in the, you know, the janitorial staff bought one some point sometime it just seems like a lot of people are going to feel like this is a nice to have, not a need to have sort of thing. So. But that this is the value of buying an existing business. The proof is in the pudding. There's already millions of dollars of revenue here. So obviously there are institutions that buy this and use this and need the service and so on. It's one of those where it's like, because it already exists as a business, it's an, seems like an incredible opportunity. If some startup brought me this idea I'd be like, there's not going to be enough demand for that. No way.

C (30:30)

You know, yeah, it's, it's interesting because you're right, there's not a lot of regulation around it, but I think because these are critical in terms of saving someone's life. How pissed would you be if something happened to your loved one at like school or work and you were asking like, oh, why didn't you have this piece of life saving equipment that's around a thousand dollars to buy and to service and maintain it annually, like a couple hundred bucks a year and you just didn't do it because you didn't want to do it because you weren't required to do it and your loved one passed away. Right. Like you'd be pissed.

B (31:06)

Yeah.

C (31:06)

So I think it's really hard to justify against it once people understand the purpose and the low cost of maintenance for it. But that is some of the challenges that we encounter of people being like, well I'm not, I'm not required to do it. So therefore I'm probably better off if I don't do it. And I'm like, trust me, you're not better off if you don't do it. Because when somebody's loved one passes away in your school or bank or grocery store, one that's going to be, that's terrible. Someone lost their life. And also, you know, it's a lot of negative attention for your organization. That you probably don't want and could have avoided.

B (31:46)

Yeah, absolutely. The device costs a thousand dollars in.

C (31:49)

What'S the service, give or take? Yeah, the service plan's a couple hundred bucks a year. So depending on what you get, ranging from like 300 to $500 a year.

B (31:59)

And you one of your technicians goes to service the device. Did you say once a year we.

C (32:06)

Do semi annual inspection. So we'll come out. This is like what we start at is semi annual. But for some customers we come out quarterly or even monthly. It really just depends. Our inspections are way more intense than just like a monthly visual check. So some people are like, oh well, I need to look at it monthly. It's okay. You can walk by it and like make sure that it's flashing green or has a green check mark. You don't want to pay us to come out and do that. That's not worth you spending your money on. But when we come out, we're actually taking, we're running the ad through a lot of tests. We're taking everything out, putting it back together, making sure that all the components are still functioning fine. So there's a lot more that goes into it than just visual checks.

B (32:55)

Great. Okay, well, we're actually going to return to unpacking the business model a little bit more, a little bit later because that's in flux. And it also, what you know that your business model really differentiates you guys the, the scope of your service. But we'll get there. Okay, Anya, back to just. You're buying the business. You had mentioned that the owner was aware that there was acquisition activity in the space and that has, that of course is now a feature of your story that there's. You're the owner of this business. So this was, this is a case where he really cared about who the buyer was. He wasn't just trying to optimize his own outcome because he chose you over what probably would have been, you know, some private equity firm that was or a strategic buyer that probably would have paid more. Fair.

C (33:50)

Yes, very fair. Very fair.

B (33:53)

Okay, there is some, some stuff to be learned here from your diligence process. Tell us about some of the things that happen during due diligence.

C (34:02)

Yeah. So this is where it really starts to get unhinged. So we signed the high on 30 October. I gave birth on 14 November. My husband is convinced that I like sent myself into to labor because I showed up not to for everyone. But the tail end of your pregnancy, you start going to the doctor every week. And so I was working like crazy after we signed the loi because I was like, I'm going to have this baby around Thanksgiving. Like, I need to squeeze everything in as fast as I can. It's my first child. Everybody's telling me I'm going to lose my brain for six months. I'm not going to be able to think straight after having a baby. Um, so I was, I was petrified. I was like, I got to get this done. Like, I can't be getting all these tough questions around diligence. Um, apparently I'm. My brain's going to stop working, so I need to figure this out. But.

B (34:59)

So Anya, you just wanted to get the deal done by before having your child, but you weren't worried about then transition overlapping.

C (35:06)

That was going to be, that was going to be the next problem. But okay, solving one problem at a time. We certainly, I don't think we're going to get the whole deal done. But I was hoping that we would get the toughest part out of the way because I was like, okay, we'll have a month. We should know by then if we still want to continue forward. We'll be pretty deep into it. We'll be like negotiating finalized, you know, documents and working towards that. Well, no, I decided that I wasn't going to happen because my son needed to be induced and come out because I went for my 38 week appointment and had developed preeclampsia. My blood pressure was through the roof. It was like 210 over 150. They sent me home because our appointment, my appointments were always first thing in the morning. They're like, do you need to test that again? And if it's still high you need to call us in the middle of the day. So that's exactly what happened. And they were like, you need to come back to the hospital right now. And I knew that meant we were having this baby. So I was like, I got some stuff until 4 o'. Clock. We'll be there at 4 o' clock and we're like getting everything together. I called the seller on the way to the hospital. It's like 10 minutes from my house and I pass his house in between. And I was like, don't worry about it, but I'm going to have the baby right now. I'll call you after. He was like, okay, well what does this mean for. I was like, don't worry about it. So I was getting induced. Inductions take a long time. So. So I was like, I'm bored. I'm gonna work. So I was emailing my hospital. Yes. While I was in labor, and then people were yelling at me. The investors were yelling at me to cut it out. They like, you're literally having a baby. Like, you need to focus on that and not the deal. So ended up giving birth to my son on the 14th, which was a Tuesday. They sent us home on Thursday. And so, by the way, this was.

B (37:04)

A case where you were literally with your laptop open.

C (37:08)

Oh, yeah.

B (37:10)

Hospital bed, doing your.

C (37:11)

Yeah, yeah. My husband was, like, rolling his eyes like this.

A (37:15)

And what were.

B (37:16)

How are the nurses and doctors reacting?

C (37:19)

Some of the nurses and doctors got. Some were like, your blood pressure is really high. And I'm sure this is, like, contributing to it, even though this is important to you. But in my head, I was like, well, you already have me on all these, like, medications and drips, and so, you know, what's. What's the difference here? What's the harm? But eventually, like, I did end up putting my stuff away, but people were in support. Some people were in support of it. They were like, do what you gotta do. Because as we kind of talked about before, you know, it may seem crazy, like, why am I doing all of this while I'm having a kid? But. But it seems counterintuitive, but the reason I did this all was for my family. This is the perfect business for me. I really wanted to do something mission critical, and to be able to quite literally be helping save people's lives every day is something that's so meaningful to me and makes me so excited to go to work every day. And beyond that, it was like 10 minutes from my house. I had an amazing relationship with the seller. And so in thinking about, like, what that would mean for my family going forward, that's a lot of flexibility. Right? Like, to be 10 minutes from my office, that's really easy for me to drop my son off at school and then. Or daycare and get to work or if, God forbid, like, I need to sneak out early because he's sick and somebody needs to pick him up. Like, that type of flexibility, which is so important, me and my family and to be able to have a career that, you know, I felt like I would get so much fulfillment out of. So that's why I was doing it. But, you know, I said this to you when we spoke. I felt like I will be damned if this falls apart because I had a kid and not that having a kid is a small thing, and it's a super important Thing. But I felt like people have children every single day and push through crazy circumstances. Like, I can close a deal from my house, working from home. If I need to lay in a bed to get it done, I will do it. Um, and so that's really just. That was really my mentality. And I think people scared me so much into thinking I would lose my brain for six months that I was also so determined to, like, not have this crazy brain fog. Um, so I was really thankful for that because now looking back on it, I do think I would have more brain fog if I wasn't like, trying to, like, will it out of my head. But I was so hyper fixated on it that I was like, I won't have any brain fog. Like, I won't make any, you know, like, dumb mistakes like that. Everything's gonna be really sharp. And so I think I kind of, like, talked myself out of it into.

B (40:02)

Great technique because, yeah, mom brain is a thing that I've experienced firsthand.

C (40:07)

I. I had afterwards, like, so much mom brain. So much mom brain after we close the deal and everything. Less. Today he's almost two, but I still get it sometimes. So I think I've really just like, so hyper focused on it that I willed it out of my head.

B (40:26)

This image of you working with an open laptop as you've been induced and are starting to go through labor. I think for some people, they could be like, oh, my gosh, give it a rest. Like, you know, you're. You're going through labor for the first time. And by the way, not my reaction. I'm just invoking other, other people. And I think you so eloquently explain why it was absolutely worth it. I think I'm gonna, I'm gonna gender. Genderize this. I think men often are driven by glory in their ambitions, and they'll say they do it for their family. And of course, many men do do it for their family, or at least partly for their family. I think I believe you more when I hear you. You basically, you're just connecting dots. It's like this, this. If I can buy this business, it will be so impactful for my family that in fact, going into labor and working on your deal at the very same moment almost is just two sides of the same coin. They're not, they're not in conflict. They're actually in concert. So I, I just thought, quite touching. And. Yeah. And only a woman could. Could really, you know, have such an experience. Obviously.

C (41:44)

Yeah. No, but it was. I joke all the time that Whenever we have another child. Like I will not be as crazy with work. Like I will try to take at least some time. Like I will not be answering emails from the labor and delivery room. Um, so I, I joke about that all the time. Like I think I earned it for the next one. That's always the joke.

B (42:08)

Yeah, yeah. Something tells me though, Anya.

C (42:11)

Yeah, something tells me that's like not how it's gonna work out. But I just tell myself that so that, you know, at least I can feel a little bit better about it.

B (42:22)

Since we're on the topic of gender, we also talked a little bit about pattern interrupt that you're a woman in, you know, not encountering many women in this industry and going down this whole path. Say what you told me about the pro here and not the con because it's often positioned as a negative that you're going to have to over overcome. And I, I feel like your take is different.

C (42:48)

Yeah, it was something that really attracted me to the business as well. So it is very, very male dominated business. In terms of the other owners in the business, obviously there's some female owned businesses as well. I'm not, I don't want to say I'm the only one. I'm definitely not. But primarily a lot more men. And so I actually was really excited about that because a lot of the folks in the industry have grown up together. So this is a very niche world, AEDs and it's not like this massive industry. Right. Everybody that ends up in this industry always ends up staying in this industry somehow. That's kind of how it's worked over the past 30, 40 years. That ads have been around since the 80s. So everybody kind of knows each other and I knew nobody, I knew nothing about ads when I bought the business. I mean, obviously I learned more during diligence and a great relationship with my seller who help me get up to speed really quickly. But I knew nothing other than like I remembered as a summer camp counselor that we had to do ad CPR trading. And so I was like, yeah, that thing that if somebody collapses, like I need to find it. Like that's literally the extent of what I knew. And so I was really excited about that because I was going to make my own opinions and I was going to see my own patterns in the industry and be able to form new opinions. Whereas a lot of people who are already in the industry and have been for a long time, that's obviously that knowledge is super valuable but when you see things one way for a while and you're around people who sought the same way as you because they grew up the same as you. Career wise, it's harder to do something a little bit different. And so I was really excited about it because it's like, well, I know nothing. And so I'm going to make my own opinions based on the information and data I see. And that's how we're going to grow this business. And it's been something that has attracted more people to me because they like that I'm different. And they're like, yeah, you're the newest person around and everybody else has been here for 40 years and I'm excited to see somebody new and bringing new perspective to the industry as opposed to all of us just kind of doing our same thing in different corners of the market.

B (45:15)

You had also said that the manufacturers. So the lay of the land here is that there are these manufacturers, I think you said there's four of them who make AEDs, the manufacturers, and you all have these tight relationships because you're distributors for them and then of course service their equipment. They were excited to see some young blood because you're eager to grow this business, which means, you know, pull through demand for that.

C (45:38)

Yeah, exactly. Yeah, they're really excited about it because similarly to what I kind of said earlier, we have a really unique corner of the market where we're actually servicing and maintaining these things on site. And that is the biggest part of our business. And that's also the most expensive type of business to prop up. Right? It's really expensive to have people driving around in cars and touching things. It's expensive to hire people, it's expensive for maintenance. You got to make your costs back. So it's a really tough business to start building organically. And this business has been around for almost 50 years, so it's just been able to get to the scale it needs to get. So the manufacturers recognized how differentiated our model is, because other times when something goes out for like an rfp, right. Everybody else, you're just competing on the actual widget itself, the aed. But if you have this other component that you can now sell on top of it, that's extremely differentiated and you can offer this to this customer. And to the point of the conversation we were having earlier, people don't really understand they need to maintain these things. So now you've planted a seed in their head like, oh, wow, like I didn't think about this. Somebody's going to have to take care of this. You go and you ask the Other people that have put bids in like okay, what can you do? And they can't do on site service and maintenance for you or if they can, it's, it's different, maybe they can't get to your region, etc, things like that. So it really just depends. And so we have this piece that makes us really unique and helps us win a lot more frequently because not only can we sell the actual widget, we can sell you something else that you're really going to need.

A (47:20)

So Anya, at lss, you have people.

B (47:25)

All over the country who do routes to service these aed. How do you have the, the reach.

A (47:33)

And the, do you have the reach.

B (47:34)

And the density that you cover everywhere or just like major metropolitan areas or, or, or how, what's that look like? I mean do you have people in Alaska servicing these? No.

C (47:46)

Well, we send people to Alaska. Yes. So we, the best way to think about the business is we have people in different corners of the country. So we have a chunk of the country pretty well covered. And then 95% of what we do is preventative. So we build routes and we just go out and we're servicing along the routes and so we can plan, we have our routes planned like a year in advance practically. And so we know what part of the country we're going to be in each month. And so we will just deploy people for months at a time to go out and we'll send the parts that they need to different places that they're going to be. So say someone is in Denver, we'll send all of the parts that they need for their routes to Denver and they will just drive around and do them and then they'll.

B (48:41)

But the person lives in Denver is based in Denver.

C (48:43)

You're not, it depends. And we don't have somebody in Denver particularly. So we'll deploy people out from different parts of the country though. So we'll send people from Boston, we'll send people from the Carolinas, we'll send someone from California. And so that's how we build our routes and we'll just send people around and you know, once we hit like a certain level of density, some will place one person like in a certain region full time.

B (49:11)

And so how many regions do you have somebody full time on the ground?

C (49:16)

We're up to three right now. And it covers like a lot of the coasts and so like the middle of the country is the toughest part right now I'd say like the Montana's Wyoming. Right. Like where there's just not a lot of stuff. But we still go out there, we're out there multiple times a year. It's just, you know, it's on our routes and if we ever have a deployment in between, we, you know, figure out the fastest way we can get somebody out there in the quickest way. Wow.

A (49:44)

What a.

B (49:44)

So this, and this is, we talked about, I said at the beginning why this is kind of the perfect search business. We haven't underlined why that is, but here's, here's one reason, as you've already pointed out, to build that from scratch would take, in fact, it has taken some decades by the, by the existing owner and, and you get all of that built infrastructure. This, this route, this blanketing the country, these routes blanketing the country with your acquisition. And, and, and it's, it's unique, almost unique to your business. Your competitors don't have that. They're just distributors of these AEDs. They just sell them. They're just a selling channel. They're not also a service channel. So I think you said the, the closest thing to competition in terms of this, on this service piece is Cintas, right. The, the giant company that does like uniforms and fire extinguishers. They, they do, they're kind of do everything. What does Cintas do? Their, what does Cintas do?

C (50:42)

Yeah, so they also have an on site service and maintenance program. Right. But it is a small, the AED piece of their business is a small sliver of their business. They're also focused on first aid. They're focused on fire extinguishers, they're focused on uniforms, floor mats, everything. And so I don't know that, you know, growing. I'm sure they're, they want to grow their AED business, but I'm sure when their senior leadership team sits down that I'm sure AEDs probably aren't one of the top things that they're talking about growth channels for. So it's just, they're the competitor that we run up against the most. But I would say, you know, it's not even like we need to beat Cintas to grow. Right? There's so much opportunity in the industry. The industry is still so young. I don't even think the whole industry across the country is 20% penetrated. So it's not like anybody has to push somebody else out in order to win business and grow their business. There's lots of open opportunity for everybody. So occasionally we run up against them. But by no means are we like chasing after anyone and focused on, you know, Trying to displace anybody. We're really just trying to grow our own share.

B (51:52)

Yeah, Cintas is a huge company. People who, who know, know Cintas. It's a big name, a big kind. The scenes name and ob would be an obvious strategic acquirer for you. You can, you can answer with no comment, but they would just, just plug, plug right in. You'd plug right into their solution offering. Obviously they already are offering it, but it's. But weekly and, and you could be this amazing just plug and play solution for them.

A (52:22)

Anya, why else is the.

B (52:23)

Was this such a good search business? Recurring revenue. I'm sorry, take the words right out of your mouth. Recurring revenue. What else?

C (52:31)

Industry. Industry selection. So this is a super fragmented industry. I just kind of hit on it. The industry is probably only about 20% penetrated as a whole, which means you don't have to displace somebody else to grow market share. We're all of us are growing our businesses. And that's great because you don't want to win. I mean, it's fun sometimes, obviously, to compete. I'm a competitive person. I played college sports. I played Sports Force my whole life. Like, don't get me wrong, I love, I love a good, friendly competition, but you don't want to always be winning because you beat somebody else out, right? Like, yeah, you want to win because there's so much Greenfield opportunity and that's what this industry really represented, which made me excited because I didn't feel like, you know, I had to do everything just right. Obviously, we hope we do everything just right, but there's humans involved in this. No business is perfect. Nobody's perfect. Mixed mistakes happen. And I didn't want to feel like if we made, you know, one wrong move, we would implode accounts and not be able to grow the business. So that was something that really excited me about this opportunity also. Great team for this business. A lot of the people that have been with LSS have been with LSS for more than 10 years. And so I acquired a team that was extremely knowledgeable and are just, just fantastic and amazing at what they do. And so I felt like, you know, I was not only was I buying great business, I was buying a great team. And that really excited me because, again, I knew nothing about the industry, so I needed to have this strong team that would help me get up to speed and would be okay with that. And they were fantastic with that at the beginning and they still are. I say all the time, like, I don't know, ask so and so. Right. Like they're, they're the boss of that department, not me. I don't know the answer for, you know, the specific number of jewels one AED goes up to at the second shock. Right. Like, ask them. They know that way better than I do. So that was another really appealing reason why I wanted to buy this business.

B (54:41)

You seem to have no problem admitting you know what you don't know. A lot of people, you know, kind of people who might be listening to this podcast, who are types of people who buy businesses don't like that feeling or just they don't like the feeling of not knowing. They don't like to admit that they don't know. So there's partly ego, but partly, there's a. There's also a practical question of this ties into the kind of professionalism versus not thing that we were talking about earlier, where at some point people are going to expect you to know and it's not going to be okay not to know. And so, and so you feel like, you know, in the early days it's okay, I assume you correct me if I'm wrong. In the early days, when you're new and everyone understands that it's okay not to know and just don't hide that eventually you will be expected to know and. And you fully expect that you will over time as you accumulate information.

C (55:31)

Exactly. Exactly. But I actually think there's nothing wrong with obviously over time. Like, you don't want to always be saying I don't know. Like, if you're always saying I don't know, like, that's not a good thing. Right. But there's always going to be things that you don't know. I always strive to be the dumbest person in the room. So whenever somebody else likely could answer something better than me, I'll always give them the floor. Right. And this is actually one of the first things that I learned working on the trading Institutional equities. Trading desk was on. I think it was like my first roadshow. I think it was actually the first one, my managing director. He pulled me aside. I hadn't even. Nothing had happened. It's not like it was like a conversation. But he said, the one thing you need to drill into your head about this industry and this job is management teams and investors are going to ask you questions and you are not always going to know the answer. Do not, do not try to make up an answer or whatever you think is the right answer. Just say, I don't know, but I will get back to you. And then get back to them when you find the answer. It's as simple as that. As simple as that. And so I took that and I was like, okay, that's right. If I don't know the answer, why would I pretend?

B (56:44)

Anya, your point about the industry being young, actually, you put it. Even though it's 20 years older, it kind of got going in the 80s. Young in the sense that there's still a lot of market share or market to be had. But it's probably not a growth industry or grow. It's probably not growing a lot.

A (57:07)

So.

B (57:07)

So it's an interesting. It's Maybe this gets to my earlier point of, like, the. There's probably a perception that it's like a nice to have, not a need to have, where there's a ton of market to grab. But it's not like everybody's growing tons year over year. Why don't you start with what does industry growth look like?

C (57:25)

Yeah, so it's double digits.

B (57:28)

Oh, well, it is growing nicely then.

C (57:30)

So it grows double digits every year. It's great. But I will say that I think we experience a lot of that because we have, like I said, this other piece that not a lot of others have in the recurring services. Right. Whereas some years you can have really down years with AED sales, particularly if you're much larger. Right. You have to move a lot of AEDs in order to get to that same number year over year. And that's hard sometimes because I think one of the manufacturers was telling me that 95% of AEDs that are sold are a 1 or a 2 AED deal. So small, you have to sell a lot of ones and twos to hit your number, right?

B (58:14)

Oh, yeah.

C (58:15)

And so, because if everybody's chasing after that 5%, obviously everybody wants it where there's more than two ATS to be had. One, it gets more competitive there. And two, those deals don't always go out to everybody, so you have to find them. And usually they're passed down through the manufacturers. So it's about relationships. So it can be hard sometimes to grow. And some of our competitors definitely have experienced lower growth rates than we have. But like I said, people are buying AEDs and they don't always buy them from us. But sooner or later, somebody walks by and is like, what is this thing in this closet that's big beeping at me? Right? Like, what am I supposed to do with this? And then they find us. Because there's not that many companies that do what we do, and they're like this thing has been screaming for two years. Can you come fix it? Right.

B (59:03)

So it audibly beeps when it needs service.

C (59:06)

Wrong. It can also not beep if something's wrong with it. Like it could just be dead, but it will start beeping at you first. So sometimes people ignore the beep, sometimes people hear the beeping and then just take the battery out, which is really great because then somebody else grabs it to go use it. And it sounds like what I do.

B (59:26)

With my fire alarms.

C (59:28)

Yes, exactly.

B (59:29)

My smoke alarms.

C (59:30)

Yeah, exactly. So it really just depends on what you do with it. Right. So people find us even if they don't buy the AED from us, because like I said, there's not a lot of people that do what we do. Um, and so they're looking for help with this thing that they bought years ago and Joe Mo was supposed to take care of it and Joe Schmo didn't. And so now we need help. So we get a lot of that growth.

B (59:57)

Anya, to the point of the. Or to the industry itself. Again. So we, we have this picture of an industry where there's a lot of market to build and to, to grab because there are a lot of people who don't have ads. And yet, and we've heard you say that LSS is pretty differentiated, nearly unique in its service, service offering, that it offers servicing of the, of the equipment and, and then it's fragmented, you said.

C (60:28)

Yep, extremely.

B (60:29)

The, the of course is a feature of an industry that we love. But do you see acquiring other businesses as having that much value? Because often acquisition makes the most sense where there, where it's a so called red ocean, that it's already a saturated industry and the only way you grow is by out competing or gobbling up existing players. How do you think about acquisition? Is it, is this even a part of the play for you?

C (60:58)

100%. So acquisitions are interesting. We just did one that closed almost a month ago and we bought a smaller company that was also in our region. They weren't doing servicing, but you know, they have a lot of customers who are constantly buying from them. That's the other thing that I didn't mention when you asked me about why I picked this industry. It's so sticky. Once you buy AEDs from someone, you are not calling up somebody else to buy AEDs unless they do absolutely the most horrible thing in the world to you, like insult your family or something. Like you could mess this up so many different ways and they would still buy from you. Not saying that we do that. But, you know, I've definitely seen it where people continue to buy from the same vendor even though they're doing a subpar job because it's just easier. And so for us, when we think about it, it's really interesting to think about customer lists because although they're not engaging in service, they're likely just not engaging with it because that business didn't want to build a service infrastructure, which was exactly what happened here, and that they would be interested in it should they learn about it. And beyond that, all of the new inbound leads that you're getting through there, you can attach your service rate onto. So we, I think our attachment rate for new customers coming to us, when they come to us just looking to purchase, they don't really know much. They've just been given our information. Our attachment rate is over 70% with service.

B (62:33)

Wow.

C (62:33)

Because once we start talking to you about service, you're like, yeah, why don't I want this thing? Like, you're gonna make sure this thing works for me and do all of the maintenance on it and the inspection logs. And God forbid something happens, like, you have to show why you are not liable. And I'm not, you know, obviously not, like, fully off the hook. I don't want to be out here saying that you can go and like, smash your AED in between, like, service visits or something and, like, we're going to take the heat for it, but, you know, off the hook in the sense of like, you did your part, you hired us, and yeah, we're going to show that we did our job in the maintenance. Right. So people are like, sign me up for that. Like, I don't want to deal with that. So it's interesting because if you can take that and then apply the attachment rates and go through the install base and even convert like 20 to 30% of that install base to service, you know, you're growing way faster than low double digits on the ARR side. You're growing much faster, which is exciting.

B (63:37)

Absolutely. And we're going to hear about your change in pricing model. I heard you say ARR, which of course is annual recurring revenue.

C (63:45)

Yes, which.

B (63:47)

And a higher quality revenue. And exactly the. So these other competitors of yours, where they sell AEDs, there is. There is reoccurring business. People will buy more than one, like a. They'll come back for other AEDs, they'll.

C (64:01)

Buy the consumable parts from you. Because AEDs require updated consumable parts every few, few years or every use. So they'll just go back and they'll buy them from them. You know, there are other providers out there who have like software services for checking your AEDs, but you know, it requires you to go around and like take a picture of the AEDs. And so if you have one or two AEDs, that's probably fine. If you have like more than 10, 20, 30, you do not want to be doing that. So that's where someone like us really comes in.

B (64:35)

Great, Anya. Well, I'm just watching the time and we're getting close to the end here, but there's a few key things that we still haven't touched on. We'll do the pricing model and how you've changed it in just a sec. But first we, we don't yet have a sense of the size of this business. What can you tell us?

C (64:54)

Yeah, so we're obviously still in the hold period. We, I haven't obviously exited the business yet and planning to hold for a while. So a little bit more vague than I think what you normally would like. But what I will say before I get into this is anybody, any searchers or operators who, it might be helpful to get a little bit more color. Like please, please just do reach out to me. You can just find me on LinkedIn. I'm, I'm normally very responsive and if for some reason I miss it, just send me another note. Sometimes mom brain does get in the way. So seriously, just reached out to me. I love, you know, helping people as much as I can with that stuff, but thank you. The business itself at Time Vaccine was within the range of a traditional search in terms of EBITDA targets, but you know, could have been done, probably could have been done with an SBA if you really wanted to. And the revenue was in the mid millions, single digit millions and we've since doubled in size in just about 18 months. So I raised, as I kind of alluded to it was a little bit smaller. So raised all equity at first when we first bought lss. But I knew that I would correct the capital structure at one point, whether that be through doing acquisitions or, you know, just a recap. Obviously it's not advisable to go into deals having 100% equity. I did have.

B (66:27)

Let me, let me pause you, Anya, a few follow ups. First of all. So on size you said maybe stretching, it could have been an SBA deal, but within range of a traditional search kind of search deal. So probably a little bit on the smaller side of traditional search fund size type deals, which if I'M being super annoying and picky like that might be, quote unquote, another weakness. Because I'm only saying that.

C (66:55)

Yeah.

B (66:55)

Because at the top I said how perfect this business was. It's a little smaller, it's maybe a little bit 100%.

C (67:00)

Yeah. That was something that people were.

A (67:04)

I.

C (67:04)

Don'T want to say like, concerned about because we all were like, this industry is fantastic. There's an opportunity to do acquisitions. You know, we can be bigger than it was. Just something that could have not gone our way had we been wrong about a couple other things.

B (67:21)

Great. Okay. And you, so you bought it with all equity. So that means that typically the acquisition of a business is some combination of debt alone and equity. And like SBA is very heavily leveraged. A lot of it is debt generally in a self funded deal, much less so in traditional search deals. But usually there's a significant debt component and in your case it was 100% equity. So your investors basically just stroked a check for the entire thing. This is rare.

C (67:54)

Yeah.

B (67:56)

Partly because it's what we would say is it's not capital efficient. It's, it's, you know, you're, you're not getting your capital to go as farther by not using leverage at all. So is that what you mean when you say you were going to correct it? You were going to make the cap table later more capital efficient than it, than it seemed at the start when it was just 100% equity?

C (68:14)

Yeah, exactly. So just to make it like, you know, a little bit more balanced, I think is kind of where we're at today because we have a better, I think, capital structure than we did a year ago. It was just something that. Okay, you know, we really feel strongly about this business. I feel strongly about getting this done. We didn't have, I don't want to say the finished or bad, but it wasn't the cleanest. Right. Because we were going from cash to accrual and there were some question marks around, like we could be really wrong. And so it might have been tougher to get a lender around it, like as fast as we wanted to move. And so for a lot of reasons it just made sense to go that way. But we were all caught kind of always in agreement that at some point or another, like we would have to introduce debt.

B (69:10)

You'd have to introduce debt, and you can do that on the other side of the transaction.

C (69:14)

Exactly.

B (69:15)

And, and, and, and one of the benefits of using all equity to your point here is speed, because there's a whole obviously as listeners understand, there's a whole process of getting a loan and like lenders doing their due diligence and needing to see all of your diligence and so on. But when you just write the check out of your or your investors bank accounts moves quick. Another point here about size is they only because it was a smaller deal, were they willing and prepared to do that if you had bought a $50 million business? Nobody's buying that with 100% equity. So in fact, the small size enabled this decision to go 100% equity.

C (69:53)

100%. And that was another reason too. Right. I wanted investors to feel like they, you know, wanted to sit on the board and be engaged and all of that. And obviously, like check size does have to do with that. Right. If you write like a tiny check, you're not really wanting to sit on the board. I mean, maybe sometimes, but I didn't want people to feel, you know, disinterested in the business. And that hasn't been the case at all. I think everybody's really interested in the business, which is great because I get a lot of support. So that's been a nice, you know, feature of that.

B (70:27)

Great. And okay, so you're. This acquisition that you've done, was this opening to recapitalize, re redo the cap table and do this correction that you talked about. So how has that played out? What does that look like? Exactly.

C (70:40)

Yeah. So as we were considering, you know, this acquisition, we obviously had to think about how we were going to do this, right? Are we going to raise more equity? Are we going to introduce debt? And so as a traditional searcher, every time you draw equity, it's the most expensive form of capital that you can get. And so knowing that one, we had no debt at the time and that we likely wanted to do it. And also, I don't want to set myself up further down the hole of all equity. I was really keen to introduce debt. And so we were able to work with a lender. And luckily we had kind of already started this process in the spring because regardless of the acquisition or not, we were discussing should we do a recap and pay some of the preferred down? Right. So it was a discussion that was already being had. So we were already moving with a couple lenders and getting term sheets and then we got the acquisition under LOI and we're able to move a little bit faster. But as with every deal, you know, there's always something. And the going back and forth with the lender was the something in this deal. But we were able to get everything done really fast, honestly, probably six weeks. So it wasn't.

B (71:56)

And you bought it with 100% debt. Right, so the lender paid for the whole thing.

C (72:01)

Exactly, exactly.

B (72:03)

You said you have doubled, that is, in terms of revenue, ebitda.

C (72:09)

Yeah, Everything we had, obviously, as you kind of alluded to, we shifted our pricing strategy a little bit, which in the short term impacts ebitda, but in the long term it's great. So we shifted our.

B (72:24)

Let's hear about that. Anya, this is, this is quite strategic decision to execute on. Tell us, take us through it, please, and then we'll start closing up.

C (72:35)

Back to the business model. Right. So our business model affords us the opportunity to be able to do this. We had always been selling our service on top of the actual AED sales, and we were never discounting the price of the AEDs below, you know, kind of what anybody else is doing, because we always wanted to make a small margin on the aed. It's the biggest ticket item. Why wouldn't we make margin on it? And also our service price has been unchanged since 1999 prior to this. So we were in dire need of some new pricing. And we did almost a year of pricing experiments to come to this model. But we're selling the AEDs well below cost as long as they're purchased with service and for a minimum of two years of service. And we know that our customers, if they stay with us for at least two years, we know that they stay for an average of 10. But we actually have a lot of customers that stay with us longer than 10. So that's just, you know, businesses close down, businesses fail, businesses go hybrid, go remote. Right. So that's just an average of our over. I think we're over 5,000 customers today. So it's just an average over the lifespan. So we know that they're likely going to stay with us longer than two years, but we've recouped the cash within the two years, so it makes sense. So we elevated the price of the service a little bit from our historical rates and lowered the price of the aed. And we can do it because we have this whole other piece of our business, which is the service component, which not a lot of other companies have.

B (74:15)

So this is incredibly powerful. I was going to say, like, how did you have the confidence to make such a big strategic decision? But it really, it, it really sells itself.

C (74:24)

Right.

B (74:24)

So allow me to distill it again for the audience. The. You have this service component which your Competitors don't have. It's kind of like a giveaway, give away the razor, sell the razor blades thing.

C (74:35)

Exactly.

B (74:35)

They don't even have. Your competitors don't even have razor blades to sell. So they can only make money on the sale of the razor. You under, you're selling the, the razor. Sorry, I'm going to beat this metaphor or whatever to death. The, you are underpricing the razor so you're selling it at a loss. Let's say undercutting all of the competitors with the commitment by the new customer that they'll do a two year plan. You know from your own data, your all your cohort analysis that your customers to stay, if they stay with you for two, they stay with you for 10. So they think they're signing up, signing up for a two year commitment. But in your own mind it's kind of like we're getting them, we're likely, yeah, we're likely getting them for many more years than that.

C (75:21)

It's ours to lose.

B (75:23)

And, and so the, the lost revenue and EBITDA from now from the, the less money coming in from the sale of the AEDs is made up after year two.

C (75:37)

Yeah, we actually make a small margin in year one, but it's, it's really thin and it really depends on the aed. Right. Um, I guess the best way to think of AEDs is kind of like cars. There's basic eight versions of AEDs and there's AEDs that are more sophisticated where they have one pad for both adults and children. They have screens like really sophisticated pieces of equipment. So you can imagine the range is a little bit different in terms of the cost to us. And so depending on the unit we sell, on average we make a really small profit in year one. So obviously this is the first year we've implemented it. You know, there's a little bit of compression but as we model it out you see what happens in years two through 10 and it just helps grow ARR faster.

B (76:31)

So in models in years two through ten, the ultimately the, the overall lifetime value of a customer is going to be higher.

C (76:39)

Exactly.

B (76:40)

With this model. And the quality of revenue is going to be higher. Is better. So you're getting, you're kind of double dipping on this. You're getting actually you're getting more revenue per customer over time and it's higher quality revenue because it's, it's, it's recurring.

C (76:56)

Yeah. And through our pricing experiments we learned that the price we ultimately ended up at people are still getting a better deal than what certain other people are charging based to do, you know, work that is not like ours for onsite service and maintenance. So they'll come out less frequently or they'll do less of the AEDs and they're charging more than we still are. So I think it's really, like I kind of said, it's ours to lose. Right. If people don't see the value in what we're adding after two years, like, then we didn't do our job. But I mean, obviously it's early, but I think it's going to be really rare that that happens because our team is phenomenal. The technicians are phenomenal at what they do and they really showcase their value every time they show up. So it's really hard to say no to continuing a service that in the grand scheme of things isn't that expensive for most businesses on their P Ls and it's helping keep their employees and community safe. It's. Yeah, it's ours to lose.

B (77:55)

Anya. The. The revenue mix today between sales of new AEDs and in service is what. And what do you expect after this pricing? Pricing change takes root over a few years to. Would it to be on the other side of that?

C (78:10)

Yeah, good question. So obviously we have, you know, existing customers that are expanding their fleets of AEDs and coverage, so we don't really introduce the new pricing to them because nobody wants to have service contracts that have dramatically different prices. That would be really weird. We did try it. People hated it, so we killed that. We took that one out back and shot it. So it's only for net new customers. And so I. 100% of all net new customers get this pricing and uptake on it. Like every time we've had someone who's really serious about I'm buying an aed, they've never said no to this. Obviously you get people who are like, oh, I'm just like dipping my toe in the pond and I'm thinking about it and sometimes things happen there and sometimes they don't. But it's really rapidly on the rise. This between service and AED sales, that's almost like 80% of our business. So. And over 50% is service. So that's all those business lines are growing at 10% a year. So more and more, you know, is coming from net new customers. And all of those are taking the new pricing.

B (79:29)

Sorry. So Service is about 50% of revenue today.

C (79:33)

Yeah.

B (79:33)

Okay. And so as the uptake. As it. There's uptake, there will. That number will grow.

C (79:39)

Exactly.

B (79:40)

Yeah.

C (79:41)

Yeah, it was. It was a higher percentage of revenue prior to the acquisition of this other business. About a month ago, it was over 70%, but obviously they didn't do service. So, you know, we expect that number. I don't know if it will get back up to 70%. That 20% gap's a big gap to fill, but it's certainly going to be a lot higher than 50% as we start getting like more and more conversion from their customer base onto ours, which we've already seen on the service side.

B (80:10)

But in fact, when you bought lss, just, just the platform, not the acquisition, it already was 70% recurring revenue, service revenue.

C (80:18)

It was like 68%. So 7. Basically 70%. Yeah.

B (80:22)

And so your pricing model change was less about increasing recurring revenue because you already were substantially a recurring revenue business. It was more just about increasing lifetime value.

C (80:33)

Yeah. And winning more net new customers. Because we didn't, you know, there were opportunities that we would lose, particularly in for really big contracts. Right. Because bigger industry players can go down a little bit more on their price. But, you know, we just hadn't thought of it. I actually hadn't thought of it. It was one of my board members ideas and it was a fantastic idea to do this. We just had never said, like, let's sell the AED at a loss, but tell them they have to get service. And now every time we do it, people are like, yeah, why wouldn't I buy this AED for almost free? And then these people are going to come in behind it and like, take care of it. And it's still going to cost me less than if I bought the thing outright. Like, no brainer, sign me up. So we started doing that a lot more.

B (81:28)

Anya, you are a guest speaker in Mark Andereg's course at your alma mater of tuck.

C (81:34)

Yeah.

B (81:34)

Mark Anderag's episode just aired on Thursday. Actually, his interview for the audience who don't remember the name, he was. Mark was the one who bought the child care centers in your market there up in little sprouts up in Boston and then throughout New England. What are the kind of. What's the big question that you get from students when you host that class? Is there anything, any topic that they care about that we haven't covered here?

C (82:00)

Yeah. So I'm excited to go back for the second year this year. So we'll see if there's different questions. But a lot of people, I think their questions are really similar to a lot of people that I tell about what I did who know nothing about search funds or AEDs, because nobody knows anything about a team. People just kind of look at me and they're like, aren't you scared about the liability aspect of this business?

B (82:24)

Didn't even ask that good question.

C (82:26)

That is the number one question that I get. And the answer is yes and no. I mean, I think every business should always be a little bit worried about the liability aspect, especially when you're servicing and maintaining life saving equipment. At the end of the day, like, we're not robots, we're. These pieces of equipment are touched by humans. We have a really rigorous, you know, program and you know, inspection log that they follow. But again, like, people make mistakes and that can happen. So that certainly is something that makes me nervous. But at the end of the day, on the flip side, because we have such strict logging and a really tight grasp around what's happening, it actually doesn't make me as nervous because unlike some other businesses that might not have great record keeping, I think we'd very easily be able to showcase that. We, we did our part right. But at the end of the day, like, it, it's definitely a risk for this business. Unfortunately, like something can happen. Something can go wrong with any business. Um, I had another searcher who told me about a time that one of his workers was driving home from work in a company vehicle and the son was like glaring in his eyes and he accidentally hit a person on a motorcycle. And that was terrible obviously for his business for that time. But again, like, it was not intentional and it was just an accident. So anything can happen.

B (83:56)

Anything else they ask.

C (83:57)

A lot of people get really hung up on the whole fact that there's not, you know, that I'm not constantly having to displace someone to grow our business. That seems to be something that people really struggle with. They're like, I don't understand how you're not constantly having to like push somebody out in order to grow your service business. Or why are you guys not competing against so many people when you're speaking to customers? And again, that just goes back to how early we are in the life cycle of this industry.

B (84:30)

And. But what are they confused about? Does that make them feel like the industry is too small or there's not enough demand or something?

C (84:38)

No, I think they just, it's just so uncommon. Yeah, they just can't understand how in 2025, like we're talking to people about maintaining life saving equipment and how has like somebody not figured out how to do that better yet? Right. It just seems so hard to reconcile. And that was something I was really skeptical of in the beginning. I remember in the early days talking to the seller, I was, like, beating it into his head. I was like, who do you compete against? Like, who keeps you up at night? And he would laugh in my face and be like, nobody. And I was like, you're delusional. And then I started operating, and I kind of get it right. Like, we're competing. Sometimes we compete against others, but really we're competing with ourselves. And we can win. And everybody else can win, too.

B (85:26)

Well, careful, Anya. Even though this is an ETA podcast, if you make the market opportunity seem too enticing, somebody's down to start one of these.

C (85:35)

Yeah, exactly. Well, I mean, I would probably be good for the industry, but it takes time to build it up. It's hard.

B (85:42)

Of course. Of course. Last question for you, Anya. I heard you say the phrase hold period earlier, implying that at some point you will look to exit. Of course, that is baked into the traditional search fund model. You are a traditional searcher. How do you think about exit? And maybe this is also where you tell us about how hot this industry's become.

C (86:05)

Yeah. So I love the century. And when we initially bought the business, I think we were all really on the same page that we want to hold for a long time and longer than the traditional search time frame of five to seven years. And I think that still very much is true. I would love to be operating this business for decades. There's a lot of Runway still to be had. I don't think we're anywhere near what is even like 10% of the potential for the business, but there's a lot of, you know, consolidation happening in our space and some strategic acquirers, and it's interesting to watch what happens as, you know, certain businesses disappear and it becomes more and more fragmented. But like I've said, we're really one of one in terms of our service model, which I think makes our business really interesting, and something that, you know, doesn't necessarily make me nervous because I have something to sell other than an aed. And so even if I don't sell another AED ever again, which would be crazy, we still have a whole other business that is functioning and thriving. So it doesn't. The consolidation doesn't make me as nervous.

B (87:19)

Great, Anya, leave. Congratulations on this business. It's a great. It seems like a great opportunity, and as you said, it just seems like a. A really fun place to sit in a great industry. Congratulations on pulling your deal off while going through labor that's really an impressive story. Having been through two of those myself, or I should say witnessed two of those myself, I can't imagine doing anything in during the labor time or after, let alone after. So very impressive. And we'll include LinkedIn, your LinkedIn contact information. You generously offered to talk to people, so we thank you for that as well.

C (88:01)

Yeah, of course.

B (88:03)

And really appreciate you sharing your story with us today.

C (88:06)

Thank you so much for having me. And again, yeah, don't be shy to reach out. Like I said, if mom grain kicks in and somehow I miss it, just send me another note.

B (88:15)

Great. Thanks Anya.

C (88:17)

Awesome. Thank you.

B (88:18)

Hope you enjoyed that interview.

A (88:20)

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