First-Timer Buys 8-Figure Business 4 Hours Away

Summary

Podcast Summary: Acquiring Minds – "First-Timer Buys 8-Figure Business 4 Hours Away"

Podcast Information:

• Title: Acquiring Minds
• Host/Author: Will Smith
• Episode Title: First-Timer Buys 8-Figure Business 4 Hours Away
• Release Date: December 30, 2024
• Description: Buying a business is an amazing path for many successful entrepreneurs. Learn how to buy a business from the entrepreneurs who have already done it. Twice a week: stories, insights, & valuable advice about acquisition entrepreneurship. Hosted by Will Smith, who is on his own path to acquire a business.

Summary:

1. Introduction

Will Smith opens the episode by introducing today's guest, Mark Sinatra, a seasoned entrepreneur with a remarkable track record. Mark shares his extensive experience, including multiple business exits and taking a company public at the young age of 29. Despite his wealth and success, Mark sought new avenues to channel his entrepreneurial energy, leading him to explore Entrepreneurship Through Acquisition (ETA).

2. Mark Sinatra’s Entrepreneurial Journey

Mark delves into his entrepreneurial background, beginning his first venture at 19 years old. He recounts building a cell phone business from the ground up, expanding it to 289 stores across the U.S., and successfully taking it public with Merrill Lynch and Solomon Smith Barney before selling it to Nextel (now Sprint).

• Notable Quote:
  • [07:28] Mark Sinatra: "It was an amazing journey... Watching myself, somebody that grew up very middle class, flying around in private jets, doing roadshows and pitching investment bankers. It was surreal."

3. Discovering Entrepreneurship Through Acquisition (ETA)

After several successful exits and moments contemplating retirement, Mark discovered ETA through Walker Deibel's book, Buy and Build. The concept of acquiring established businesses at low multiples intrigued him, presenting a compelling alternative to starting new ventures.

• Notable Quote:
  • [12:00] Mark Sinatra: "I had no idea that you could actually buy businesses at 3x or 4x multiple. That's 30, 25, 30% return without any leverage."

4. Defining the Search Criteria

Mark outlines his "buy box" criteria for selecting a target business. His focus was on property management companies generating between $1 million and $2 million in EBITDA, with a robust management team in place to ensure smooth operations post-acquisition.

• Notable Quote:
  • [16:51] Mark Sinatra: "I wanted a business that had a solid number two... I didn’t want a business where the owner was going to stay on board because that never works out."

5. The Acquisition Process

Mark shares his swift acquisition journey. After purchasing Buy then Build by Walker Deibel in April, he quickly moved to identify and evaluate potential targets. Within two months, he secured an LOI for an established property management business in Minneapolis with eight figures in revenue and seven in EBITDA.

• Notable Quote:
  • [25:55] Mark Sinatra: "The more I looked at it, the more I could justify the higher multiple. I did end up at 4.3x."

6. Deal Structure and Financing

Mark details the financial structuring of his acquisition:

• Equity Injection: 10%
• Seller Note: 20%, partially forgivable based on client retention
• SBA Loan: 70% from US Bank at a competitive rate of 6.5% fixed for five years, adjusting to prime minus two thereafter.

He emphasizes the importance of using a loan broker, Heather Anderson from Viso Cab, to secure favorable loan terms.

• Notable Quote:
  • [59:08] Mark Sinatra: "It was the easiest decision I made throughout this process is to go with the loan broker."

7. Ensuring Strong Management and Culture

A critical factor in Mark’s acquisition was the presence of a dependable second-in-command, Matt, who had been with the company for 14 years. This ensured that Mark could operate the business remotely without being the day-to-day manager.

• Notable Quote:
  • [84:08] Mark Sinatra: "Matt has been there 14 years and was being groomed by Mark the seller to take over the business."

8. Transition and Remote Ownership

Mark narrates the smooth transition process, highlighting the strong bond between the seller and the employees. Day one involved meetings with senior management and the entire team, which was well-received. Mark maintains regular communication with the management team through weekly calls and occasional visits to Minneapolis.

• Notable Quote:
  • [73:00] Mark Sinatra: "Day one was phenomenal... It was touching to see the bond Mark had with his employees."

9. Strategic Vision and Future Growth

Mark outlines his vision for the property management business, focusing on a buy-and-hold strategy with opportunities for growth through bolt-ons and acquisitions within the same industry. He plans to preserve the company’s legacy while fostering further expansion.

• Notable Quote:
  • [86:25] Mark Sinatra: "I'm very bullish on the property management space... We're six weeks into this, just figuring out which way we want to go."

10. Insights and Advice

Mark shares valuable insights for aspiring acquisition entrepreneurs:

• Listen More Than You Talk: Understanding the seller’s priorities is crucial.

• Build a Strong Offer: Including elements like a forgivable seller note can align interests.

• Leverage Experienced Teams: Utilizing brokers and other professionals can streamline the acquisition process.

• Preserve Company Culture: Ensuring the existing culture and team are respected fosters smooth transitions.

• Notable Quote:

  • [34:09] Mark Sinatra: "A good salesperson listens more than they talk... Position yourself by understanding what the seller truly needs."

11. Conclusion

Will Smith wraps up the interview by commending Mark Sinatra for his strategic acquisition and maintaining the integrity and culture of the acquired business. Mark expresses his eagerness to mentor and support other entrepreneurs, highlighting his continued passion for building and sustaining successful businesses through ETA.

Final Thoughts:

Mark Sinatra’s story is a testament to the viability of Entrepreneurship Through Acquisition for seasoned entrepreneurs seeking to expand their portfolio without the inherent risks of starting from scratch. His strategic approach, emphasis on strong management and culture, and effective financial structuring offer a blueprint for successful business acquisitions.

Relevant Links:

• YouTube: Acquiring Minds YouTube Channel
• Episode Summaries Signup: acquiringminds.co
• Mark Sinatra’s Contact:
  • Twitter/X: @NickMolinaETA
  • Website: endangeredinvestmentsplural.com
  • Email: [e-mail]

Sponsor Mentions:

• Aspen HR: aspenthr.com – Professional Employer Organization providing HR compliance, payroll, and benefits for search operators.
• System 6: system6.com – Outsourced finance team for SMBs, offering a free review of your books and Financial Ops.

Notable Sponsor Quotes:

• [02:17] Will Smith: "Aspen HR... provides HR compliance, flawless payroll, HR due diligence support for your acquisition and Fortune 500 caliber benefits... contact Mark directly at mark."

• [17:27] Will Smith: "System 6... understands firsthand the challenges... provide time back and improve your financial operations... check out system6.com or email [e-mail]."

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This comprehensive summary captures the essence of the podcast episode, highlighting Mark Sinatra's journey, strategies, and insights into successful business acquisition through ETA. The inclusion of notable quotes with timestamps provides authenticity and depth, making it a valuable resource for listeners and those interested in acquisition entrepreneurship.

Transcript

[Will Smith]

Today's guest didn't need to buy a business in his 50s with a decades long resume as an entrepreneur and multiple exits including taking a company public at 29 years old, Nick Molina had already built wealth, but he knew about himself that he needed action, as he put it. So he was looking for some outlet for his entrepreneurial energy. And when he discovered entrepreneurship through acquisition, his eyes lit up at the low multiples that small businesses transact for. There is magic in these multiples, to borrow a phrase from Rick and Royce, the authors of the HBR Guide to Buying a Small Business. That was April of this year, April 24th to be exact. This was the date that Nick bought Buy then Build by Walker Deibel. By June 18, less than two months later, he had a deal under LOI and a nice sized one for a self funded search. Eight figures in revenue, seven in SDE. It was a property management business in Minneapolis. 95 years old, Nick is in Miami and we spend a good amount of time on how he thought about buying a business that he did not intend to operate himself. As you've heard me say, and will continue to we're not big advocates of self funded searchers thinking they can buy a business with an SBA loan and have an operator run it for them, let alone run it from the other side of the country. But Nick has deep operational experience and a strong model. Listen for our discussion of that and much more. This was a fun interview with an inveterate entrepreneur, a guy who can't quit the game of business and is channeling that passion into our model of entrepreneurship through acquisition. Here is Nick Molina, owner of Kleinman Realty. Welcome to Acquiring Minds, a podcast about buying businesses. My name is Will Smith. Acquiring an existing business is an awesome opportunity for many entrepreneurs and on this.

[Nick Molina]

Podcast I talk to the people who do it.

[Will Smith]

A PEO run by a Searcher for Searchers if you're running a company with less than 100 employees and providing health insurance to them, you may secure better benefit plans at a 15 to 30% discount through a professional employer organization or PEO. Aspen HR run by search fund veteran Mark Sinatra understands the needs of search operators and provides HR compliance, flawless payroll, HR due diligence support for your acquisition and Fortune 500 caliber benefits, all for a fraction of the cost. And tis the season to evaluate your employee benefit plan. Most new clients reach out to Aspen 90 days before year end or their renewal date. So before they get slammed, check out aspenhr.com or contact Mark directly at mark.

[Nick Molina]

Aspenhr.Com Nick Molina, welcome to Acquiring Minds.

[Mark Sinatra]

Thank you. It's a pleasure to be here, man. Big fan of the show, longtime listener, and I'm actually honored to be now a guest on your show. So thank you for that.

[Nick Molina]

Thank you for having me, and thank you for saying that, Nick. You fell in love with ETA when you heard about it just earlier this year, as I believe, as I recall, you dove in, found a business very quickly, a large property management business in Minneapolis, while you yourself are based in Miami. So lots of great angles to this story. Let's get into it. Nick, as always, some background, please, on you.

[Mark Sinatra]

Yeah, So I am, I guess I'm what you would call a serial entrepreneur. I started my first business at 19 years old, my first real business at 19 years old. And I've exited six different businesses. One of them that was, that first one was an ipo. And you know, being, you know, the first business was in the cell phone space in the very early days. I was. 19 years, grew that to a chain of 289 stores throughout the US all company owned, and wrapped that up with an IPO with Merrill lynch and Solomon Smith Barney. And then we ended up selling it to Nextel, which became Sprint. So if you're in a mall and you see a Sprint store, there's a good chance that that used to be a. Let's talk cellular store.

[Nick Molina]

Well, well, Nick, obviously that, that ride is a podcast episode unto itself, but we got it. We got to get to see here a few more details because that sounds spectacular. This was when the 90s.

[Mark Sinatra]

This was 1989 is when we started that business. It was just me and my partner at the time.

[Nick Molina]

And when did you go public?

[Mark Sinatra]

98. At the end of 98.

[Nick Molina]

Wow. So that was. Right. So I assume you were benefiting from the Internet mania at the time, even though this wasn't an Internet business, it was a brick and mortar business.

[Mark Sinatra]

Yeah, no, we weren't. We didn't get. We did. We had launched a website, but it was so early in that time and. And by the time when we went public, this was not an Internet play. This was not. We didn't get any kind of lift from the Internet. If anything, the Internet put pressure on us as a potential competitor to our 289 stores. It was a different world back then. Right?

[Nick Molina]

Yeah, yeah, yeah. And you. And when you say you went public, you said with Morgan Stanley and Solomon.

[Mark Sinatra]

Is who it was with. Merrill lynch and Solomon Smith Barney.

[Nick Molina]

Yeah, Merrill and Solomon. Of course, Solomon Smith Barney's not a name. You hear about anymore. But at the time, it was one of the, you know, one of the marquee, white shoe, Wall street firms.

[Mark Sinatra]

It was the real deal.

[Nick Molina]

And just indulge me. Did you become a paper multimillionaire overnight?

[Mark Sinatra]

I did. I did.

[Nick Molina]

How was that? What was that, like? Not yet 30.

[Mark Sinatra]

Not yet 30. It was. It was great. It was. It was. It was an amazing journey. I mean, you know, we. That was always the dream, you know, is to take a company public. Taking a company public. It's not how I feel about it now, but at the time, maybe being a little naive, I thought taking the company public was the culmination. And it was. It was very good for me, you know, financially. It was great. It. It gave me a great head start in my career, as you can imagine, and it allowed me to parlay that into future successes. But it was amazing. Yeah, it was an unbelievable journey watching myself, somebody that grew up very middle class, flying around in private jets, doing roadshows and pitching investment bankers. Not my private jet, by the way, Merrill Lynch's private jet. Um, but that whole idea was just kind of surreal to me, and I'm just like, what am I doing here? Like, how did I get here? This is amazing. It was. It was a great moment for me and. And for my partner at the time.

[Nick Molina]

Wow. Well, there's a book in. In that. In that story, Nick. The. And you started at 19, so were you in college or had you gone to college? You were in college, so you started it as a college entrepreneur story.

[Mark Sinatra]

Yeah. So I met my partner in English class at the University of Miami, and my dad had restricted me from working. Like, I was not allowed to work. You know, I was living on campus. I was not allowed to have a job. I had a $20 a week allowance. $20 a week. And so on the side, I. I asked my partner, who was working at a health club, hey, can I get a job there as a personal trainer? And he got me a job there. And I quickly saw the money they were making on the sales side, and I was like, I want to move over to sales. And so I had tremendous success there in sales. So much so that they changed the comp plan. And so I ended up leaving and starting and working for a cell phone company doing sales. And then that's what led me to see the opportunity in cell phones at a very early, early stage of its development. And then I reached out to my partner. I said, hey, I got this great opportunity. Let's do this. You and I together, the same Guy that got me the job at, at the health club. And so, yeah, we started selling phones out of the back of a van and ended up at 289 stores ten years later, man. Yeah.

[Nick Molina]

And what of your dad? Wait, what was the relevance of your dad saying you couldn't get a job? Because it sounds like you happily went off and got a job.

[Mark Sinatra]

Yeah, my dad was, it was an immigrant and so, you know, he clawed his way to middle, to the middle class and upper middle class, I would say. And he was just all about education, education, education, no distractions. You're going to school, you're going to be a lawyer. You're going to be a lawyer. You're going to be a lawyer. And you know, I realized that that's not what I wanted to do. So I think that him putting those restrictions and guardrails on me of you can't work is what put me in this position that I am today. Right. It launched me on that journey because.

[Nick Molina]

Because you becoming an entrepreneur was some kind of rebellion against your dad?

[Mark Sinatra]

I don't think it was a rebellion. I think it was out of necessity. He gave me $20 a week, Will. You can't do a whole lot with that, you know.

[Nick Molina]

I gotcha. Okay. Yeah, okay. Maybe he was playing 4D chess and he wanted you to be an entrepreneur so he underpaid you your allowance.

[Mark Sinatra]

You know what, I've never thought about, about it that way, but yeah, it could very well be.

[Nick Molina]

And then when you say you sold to Nextel, that is now Sprint, what does that mean as a public company?

[Mark Sinatra]

It was a public company. As a public company, it was sold. It was sold to them. That's right.

[Nick Molina]

Okay, well, congratulations. A good whatever. 25, 20, 25 years later, that's, that's quite a story. We're not going to be able to hear the other five startups, but, but maybe is there, are there morsels in there? You want to share that, that help point in the direction of today's story?

[Mark Sinatra]

Wow. I, I, yeah, I mean, I think, yeah, you know, so one morsel that, well, we'll get to that a little bit later, I'm sure. But I, I think it just, you know, I, I, I rolled that into kind of, you know, the natural evolution of the Internet. And I, and I got involved in a couple of Internet based businesses. It's just, you know, I built up a war chest of confidence, you know, some liquidity after that ipo and, and, and, and I was still hungry. I was young. You know, I did think that after every now, after that IPO and after we sold to Nextel, I thought, okay, well, I'm going to go ahead and retire, right, at 30 years old. And so that lasted about three or four months. And then I got involved in something else. And then when I exited the second one, after every one of those exits, I really thought, I tried to convince myself that I was going to retire. And you know, after my last exit, about seven years ago, I was smart enough to realize that, you know what, I am not capable of retiring. I still need that action, that entrepreneurial action. But I also knew that I didn't want to do a startup because startups come at a tremendous price, right? I mean, it comes at a cost of family time, cost of doing the things you enjoy. It's all consuming, especially for somebody like me. I mean, it's all I think about all the time. And so I knew I didn't want to do that anymore, but I knew I still wanted to be in business. And so I made a pivot and started doing some angel investing and investing in early stage companies, in entrepreneurs that were young, ambitious, smart, resourceful. And I did pretty good with that. I made a couple of deals that were really great. And then I stumbled upon ETA and I started looking at the valuations and I was like, wait a minute, you can buy a business for 3x, for 4x, 2 1/2x. I mean, you know, as part of the cell phone roll up or cell phone model, that, that company that I had, let's talk cellular, we did some roll, some rollups and we were paying double digit multiples of companies. All of my exits were in the double digit range on, on a multiple side. And so I'm like, I can buy a business for 3, 4x. I mean, that's 30, 25, 30% return without any leverage. And you throw a little leverage on it and then, you know, the, the return on equity is tremendous. And so I, you know, I was hooked at that point. I had no idea that you could actually buy businesses at that valuation. I had no idea.

[Nick Molina]

You know, it's so funny, Nick. I feel like the people who fall in love with ETA do it for the two big reasons that jump out. One is the obvious one. It's like, oh, I didn't realize. I want, I have an entrepreneurial, I have entrepreneurial drive and energy, but the media, you know, I've just picked up that you got to be Elon Musk or Mark Zuckerberg to go, to go be an entrepreneur. And I'm not That, so I guess I can't be an entrepreneur. Wah wah. And then discovering ETN is like, oh, there's this other amazing path to being an entrepreneur. So that's group A, which is probably most people, but then there's also the crowd like you, who learns about the multiples. And, and it's the multiple because they have, you know, these are people who, who have something to anchor that number 2 and appreciate just how magical 3 and 4x is compared to almost any other context. And actually Rick and Royce, the, the authors of the HBR Guide to Buying a Business, when they learned about ETA and it set them on this path to become educators and authors in this world, that too is what Hook hooked them. The, the magic is in the multiples. They is their kind of phrase. And then there's any, you know, people who have worked in, in public equities and then of course private equity who come to this world understanding that multiples for bigger companies are so much larger. And then they see that 3 or 4x number and they're blown away. So it's just interesting that, that how compelling to a certain crowd, how irresistibly magnetic that 3 and 4x number is. So anyway.

[Mark Sinatra]

Yeah, but what about, what about Nick.

[Nick Molina]

The other thing of just buying an established business and, and the fact that so much of it, you know, has already been done, that, I guess that goes without saying that that was also appealing to you.

[Mark Sinatra]

Well, that was, yeah, I mean, that was, that was part of the appeal. If I, I'll be honest with you, at the stage of my career that I am right now, if I had to go in and start from scratch, you know, and get from 0 to 1, even if I was going to get that kind of return, I wouldn't do it. It's not, it's not what I wanted to sign up for. You know, the idea of an established business with earnings, you know, startups are hard. I think people, you know, people don't really realize how hard that, you know, they, they are. I mean, it's, it's, it's a personal drain on yourself. But even just from an execution perspective, it's hard. And this is coming from someone that was, I was pretty good at it. Right? I mean, I had a pretty good record at it and I, I still thought it was just way too hard to do, to keep doing it again at this stage of my life, you know.

[Nick Molina]

Great. And so when are you learning about eta, Nick? When is this?

[Mark Sinatra]

So I bought Walker Dibel's book Buy and build.

[Nick Molina]

Yeah.

[Mark Sinatra]

On April 24th is when I went on Amazon and ordered it. So I guess it arrived probably April 25th because they're so good with logistics. Right. So I bought that book on April 24th of this year.

[Nick Molina]

So that's seven months ago almost to the day.

[Mark Sinatra]

Yeah.

[Nick Molina]

And here you are already deep into a sizable acquisition that we're about to hear. Yeah, that's moving quick. Okay, so you read Walker's book, your Love at first sight. You know, for those who aren't watching this on YouTube, you're wearing a baseball hat that says ETA on on it. So you are a true believer. The.

[Mark Sinatra]

So tell us about it actually says the ETA guy. Oh.

[Nick Molina]

Oh, I didn't see the V in the guy. Nice.

[Mark Sinatra]

Yeah.

[Nick Molina]

The search itself. So what give us what does that look like for somebody like you who has a balance sheet, you're likely not going to buy a low SDE business. Correct me if I'm wrong. What were your parameters?

[Mark Sinatra]

So my buy box basically was a business that was doing no less than 500,000 and up to $2 million in EBITDA. And then I started inching up or inching up that 500,000 number closer to a million. The more I learned and the more I saw what was out there and the more I saw multiples and how they were behaving as that number went up. So at the end of the day, I think I ended up at between a million and 2 million is kind of what I was looking for.

[Will Smith]

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[Nick Molina]

Was the insight that you had? How did multiples change from 500 STE to a million?

[Mark Sinatra]

Well, they didn't change too much. That was it, right? It was the lack of change that made it a no brainer. It's like, okay, well you know, I've got the balance sheet, right? I've got the balance sheet. The multiples aren't really changing. I'm going to get more meat on the bone with a million dollars in EBITDA than I am at half a million dollars in EBITDA. Because another, another check mark for me had to be an established team in place. I mean I was not buying a job. Right. I wanted a, a business that had a solid number two. Right. I didn't want a business where the owner was going to stay on board because that never works out. Right. I've sold enough businesses and I know that the day you get your wire, you know, even if you've got an earn out and you're going to stay for a while, you're, you're not there at the same level that you were before you got that wire. So I, I wanted a number two somebody, a business that had a solid number two that can slide into the number one. I can give them some kind of equity component and we can talk about that later. And, and so that was another big part of it for me. I wanted a low capex business. Right. I didn't want to have to deal with that. Recurring revenue was obviously something that was high on the list. I don't know that it was a 100% requirement but it was something that, that obviously was very attractive. And I was pretty agnostic in terms of industry and in terms of geography. My industry focus shifted and became a little bit more narrowed as I got further down the search. But initially I was open minded and I was just kind of looking and looking at all sorts of things.

[Nick Molina]

Well and just to leading question here, geography in Miami as I said at the top. So where were you looking? Where were you looking?

[Mark Sinatra]

Anywhere. Anywhere. Anywhere except California because. Well, because it's California and they got to figure things out over there. It's, it's a very difficult state to do business and they're not very pro business and you know, and I've been in businesses, I've been in Internet businesses where we transact in California. My, my, my cell phone business, we had stores in California. It was always the most difficult store or state to run in the least profitable. And so if I had the ability to carve that out now, then I was. And so California was out. Yeah.

[Nick Molina]

Wow. This bit about a. You wanted it established. Not only did you want established management or managers, you wanted a number, an obvious number two who would upon Your buying the business become number one.

[Mark Sinatra]

That's right.

[Nick Molina]

That. That's actually in. In. In. In. Spoiler. That is exactly what you got in. In an amazing way, which we'll get into. But looking forward, you actually wanted that.

[Mark Sinatra]

I did that. You saw that.

[Nick Molina]

Because that's a very particular. That's a very narrow criterion.

[Mark Sinatra]

To be honest, that was a deal breaker for me. If, if that was the first question that I asked when I did my. When I found the business after I signed my NDA, that was the first.

[Nick Molina]

Question I asked is who's the number two and can they lead this thing?

[Mark Sinatra]

Yeah. If the SIM didn't cover the management team and have an org chart, then that was my first question to the broker or seller. Yeah, yeah.

[Nick Molina]

And how often did you find that the answer was yes, that there is. That there is somebody who is equipped to lead this business from your day one. Because again, it just seems like you'd like to find that it's not unheard of. But a lot of times you don't find that. And, and actually, as we'll get to in your story, such a person, if they're so equipped to run the business, the owner probably would like to just sell to that person anyway to have them be the buyer.

[Mark Sinatra]

So.

[Nick Molina]

So how often did you. Did you find that. Yes, we have somebody like that?

[Mark Sinatra]

I would say less than 10%, probably less than 5. I didn't measure it, but you know, my gut, based on my gut, I'm going to say definitely less than 10% of the time, maybe even less than 5% of the time. Was there somebody in place that could be a number? A number one?

[Nick Molina]

Yeah. So it is. It was as hard to find as it sounds.

[Mark Sinatra]

It is rare. Yeah.

[Nick Molina]

Yeah. Well, happily for you, you didn't have. You were geographically agnostic. So your deal flow was the entire continental 48 minus. Minus the state that shall remain nameless. Or you've already. You've already named it though. All right.

[Will Smith]

And then.

[Nick Molina]

And then just curious on the potential to share equity with that person. I don't know if you went down the road on that, but how did you envision that and not just a number like how much equity, but how are you going to structure that? And was there investing, Was it phantom equity or real equity? How did you think about that?

[Mark Sinatra]

Yeah, it was phantom equity. It's phantom equity, which for those that don't know it, basically. I mean, you could structure it the way you want to structure it, but the way that I structure it is it's exactly like real equity, except it's non voting. Right. And it doesn't go with you when you leave the company. Right. Even if it's been vested. So it was, I was looking at a phantom equity component that vests over a short period of time and, and has immediate vesting in the event of a subsequent liquidity event.

[Nick Molina]

So they, so in other words, it doesn't give the person power that typically comes with equity ownership power. It, but it does entitle them to the profits to whatever, whatever pro rata share of the profits there are. Yeah. And in the, in the event of an exit, a liquidity event, they, even if they're on a vesting schedule, it immediately fully vests and they get there, say, say it's 10%. They would get their 10%. That, that, that's right.

[Mark Sinatra]

And you know, so if, if there's a $100,000 in distributions and they've got 10%, then they would get 10% of that. Right, right. And in terms of power will, I think, I think that's a little, you know, on a deal like this, obviously the, the, the phantom equity is going to be minority amount. And so at the end of the day the voting power doesn't really mean much because they're going to be outvoted by me, which is the large, you know, the majority owner anyway.

[Nick Molina]

Yeah.

[Mark Sinatra]

So the fact that it's not a voting stock I don't think really is relevant in a case like this.

[Nick Molina]

Okay.

[Mark Sinatra]

Yeah, yeah.

[Nick Molina]

Oh, you know. Right. And, but what is relevant is that if they leave that, that's actually a huge point because one of the, the real perils of providing equity to anybody is that it's forever. Equity is forever and you can't get it back from them really. So this is. If they leave, they, they leave the equity. If they leave the business, they leave the equity.

[Mark Sinatra]

That's right.

[Nick Molina]

Yeah. Yeah. So that's, that's a huge, huge point.

[Mark Sinatra]

Yeah.

[Nick Molina]

Okay, this is, this is great, Nick. All right, so tell us what you found, what you started seeing in your deal flow.

[Mark Sinatra]

So I, you know, the, the first deal that I, that I found and kind of like really my first LOI was actually 3 weeks after I got the book from Walker. Thaibl was another property management business in the state of Oregon and checked all the boxes. You know, it had a solid number two that was there since their founding, profitable recurring revenue had I believe it was about 2,500 doors under management. So it was a nice size business. And you know, I went in and started, you know, Digging in and digging in. And, and, and so I found out that there were two other private equity potential buyers, allegedly potential buyers looking at the business. And so the, they had, they had a ton of interest. They took it off of biz by sell right away. And, you know, I was told that the owner was going to make a decision in the next seven to 10 days. So I jumped on an airplane and I just flew out there and I got in front of him, spent a day with him, and by my return, I was told that I was, he was coming, he was going with me, and so started moving and peeling the onion on that deal, moving forward and peeling the onion on that deal. And then that was on five. That was probably like May 20, May 21, something like that. On May 31, which is a Friday, I saw I still had my deal flow kind of coming in, and I got an email on a property management business in Minnesota, in Minneapolis. And, you know, it sounds corny, Will, but the minute I saw it, I'm like, this is the one. I'm, I, I, I knew it was the one. It was double the size.

[Nick Molina]

More than Oregon, Better than Oregon, more than Oregon.

[Mark Sinatra]

And it was double the size. It just, I just, I just knew that it was a good deal. So I signed the NDA on 531. I got the SIM that same, that same evening, and I literally stuck myself in the office at home, and I just worked on it. I told my wife, I'm like, I got to dive into this deal. This, this, this is the deal I'm going to buy. And I knew I was going to buy the deal. And so, you know, I devoured the sim, analyzed it on my own, and just, just, really just, just, just I kept checking boxes and checking boxes, and they would check boxes that I didn't even know I needed checked. And so I got an owner meeting with the, with the seller of that business on June 12th on Zoom, and on June 13th submitted an LOI, which was, which was subsequently signed on June 18th. And so the question now, at that point, my idea was I was going to buy them both, right? I wanted to buy both of those businesses. And the first one fell off because they had some issues with the way they were reporting their financials. And if you want me and get into that, I don't know if it's significant or not, but it was a really good business. It still is. I'm still hoping I can go back to it, you know, next year once they're, they're, you know, their, their reporting is kind of resolved and buttoned up. But you know, for a while there I thought I was in mind both and, and then that one, I, you know, that one fell off and I decided to focus strictly on, on Minneapolis.

[Nick Molina]

Great. Some follow ups here, Nick. So on port. On. Sorry, it was in Portland. Portland, Oregon.

[Mark Sinatra]

Portland, Oregon. Yeah.

[Nick Molina]

Did you uncover the books, whatever in inaccuracies, imperfections, whatever you didn't like doing your own due diligence or were you having a Q of E done on it? How did those reveal themselves?

[Mark Sinatra]

Yeah, I, I didn't, I hadn't gotten to the QOV stage yet. I had interviewed some QOV QOV providers but I hadn't gotten there yet. I had started speaking with my, my loan broker Heather Anderson over at Viso and the, the issue that we saw that we had there was his numbers were good and they were well maintained and there was no issue of not recording revenue or any, any concerns with integrity of numbers or anything like that. But this was a business that he was, he is a contractor, developer and builder that had his own properties. He wasn't happy with the property management services he was getting so he opened up, he started managing his own properties in house and then did such a good job of it that built a property management division and grew it really, really well. And so he wanted to sell just the property management division. The problem is, is that his tax returns and his financial reporting weren't bifurcated. And so everything was kind of pulled together and so there's no way that a lender was going to be able to even though he could internally bifurcate tax return was not. And so there was no way that the lender was going to be able to trust what he was saying. He's got, you know, they didn't have bifurcated returns. So I went back to him and I said, listen, I said go ahead and get your, your 2023 file or 2024 filed separately bifurcated. Right. And then let's, let's revisit this deal once we file those returns because then I've got something that I can show.

[Nick Molina]

The, show the bank and that's still, that's still where things are. You're still open to that conversation?

[Mark Sinatra]

It is. I haven't spoken to them in a while, but I touch base with the broker every now and then, let them know kind of where I'm at and what's going on and just checking in, I don't know if that's going to materialize or not. I'd Love to revisit it. It was a good company. Yeah.

[Nick Molina]

And Nick, when you said that you were in the running against two other private equity firms for that Portland, Oregon business, why do you think that they picked you? What did you say when you got off that plane?

[Mark Sinatra]

You know, I think it was. It was my. So it was a couple of things. Number one is he wanted to protect his team, and he knew that somebody like me was not going to go in there and break it up and tear it up and roll it up into some, you know, some of their other holdings. And so he had a lot of confidence in my ability to. Or my promise to not do that. He also had a lot of confidence, given my history and my ability to scale businesses before that I could continue to grow this business. He wanted to roll some equity. He requested to roll some equity.

[Nick Molina]

He.

[Mark Sinatra]

That was part of the deal. Actually. One of the reasons that he went with me is because private equity wouldn't let him roll equity, I guess. Or actually they did. Actually, they. They required him to roll equity. I didn't require him to roll equity, but he said he goes, I want a second bite of the apple. And I guess he had more confidence in my ability to scale it than in private equity is about to scale it, which I'm not sure how he got there, but. But he did. And so. Well, you did.

[Nick Molina]

You did grow a. 290 cell phone stores. There was a time. So you have a track record. Go ahead.

[Mark Sinatra]

Yeah, so. Yeah, so. So I just think that him and I hit it off, you know, I think it was just a chemistry thing. I think the fact that I jumped on a plane and just flew out there without being asked to, I think that went a long way with him, and I knew it would.

[Nick Molina]

Yep.

[Mark Sinatra]

Yeah.

[Nick Molina]

Do you consider yourself a good salesperson, given that you told us that that's your first jobs was in sales? You're smirking.

[Mark Sinatra]

I sold. I sold memberships in the health club business, which was. I was taught by a couple of women that manage that club to sell, and I am forever grateful for that to them. I mean, they taught me how to sell. Rhonda and Nora, if you're out there, I'm eternally grateful to you guys. Yeah.

[Nick Molina]

Okay. Is there any quick. Any quick tip that you see people.

[Will Smith]

Do wrong in sales?

[Nick Molina]

Sales.

[Mark Sinatra]

I think depending on the.

[Nick Molina]

Let's. Let's frame it for this audience. You've listened to a bunch of interviews. Can you hear in some of my guests how they haven't sold themselves well, to. To. To Sellers whose businesses they want to buy. I'm really putting you on the spot here.

[Mark Sinatra]

No, no, I. Look, I think it's a great question. I think. I think a good salesperson listens more than they talk. Right? You have to listen. You have to. You know, what does this person need? What does this person want? What's important to them? Right? You know, like, like the first question that when you're on an owner call, one of the first questions should be, what's important for you in this deal? How does this deal, right? What matters to you the most? Is it getting the highest price? Is it making sure your team's protected? Is it, you know, being able to grow the business, maintain the legacy? You got to listen to what, what, what. What's important to them, and then you make sure that, yeah, okay, I can deliver that and then convey that to them. Right? Yeah, right. Position yourself. Because if you're pitching yourself on stuff that doesn't matter to them, then. Then it's not you. You're not going to accomplish anything. Right? You're not satisfying their. Their. Their needs.

[Nick Molina]

And so maybe to. To make that even more concrete, not to say that searchers necessarily do this, but just to add some color, like, you know, the searchers will often say, I'm going to continue your legacy or what have you. And that sounds good. And kind of at first blush, that. That probably is good in many cases, but maybe don't. Maybe just wait to hear what the seller actually cares about. If they don't once talk about their legacy, don't become a broken record and just say, I'm here to continue your legacy. Let them talk first. Listen, as you said, I love that.

[Mark Sinatra]

Y. Y.

[Nick Molina]

The thing is, is that's easier said than done. I think that that's, that's the trick actually, is to take. Is to actually take and act on your advice. Okay, Nick, there's what. Let's see my. I want to circle back 15 minutes just because you. You had this big insight that is just worth highlighting for people, going all the way back to how your floor was 500 in SDE and then you moved it up to a million SDE. Because what you learned is that the MO. You're getting, you know, a business that's generating twice as much revenue, but you're not paying much more for it. If. If anything at all. That's a. That's a huge insight. So everybody, Everybody listening, or many people listening will know that, that, you know, the bigger the better. If you can find a million dollars in SDE go for it. And that can be hard to find. But it's also, you know, one other reason for that is because you don't actually pay necessarily that much more if you can find a million dollar EBITDA business versus 500. From a multi perspective. From a multiple.

[Mark Sinatra]

From.

[Nick Molina]

Sorry, yeah, yeah, from a multiple perspective. You said about the Minnesota business that it was, it was as you, you know, feverishly went through the sim, that it checked all your boxes and it was even checking boxes you didn't know you had. What, what were some of those? What, what did. Other than the obvious. What did you learn that you loved so much about it?

[Mark Sinatra]

Well, I mean they're so, they're the average tenure of their employees and there's 275 employees. The average tenure of their employees was 13 years. There were employees that were there 47 years. There were, you know, some of the senior management was there 25 years, 23 years, 22 years. You know, somebody that was there five years was considered a rookie. And so that spoke very loudly to me. Yeah, it talks about the workforce in that area. It talks about the, you know, the culture of that company. Culture. Culture was very, very evident to me just, just from looking at the SIM without speaking to anybody. I was like, this company has an amaz. Amazing culture. And I didn't have to speak to anybody to see that. And so, you know, I literally have 275A players at that business.

[Nick Molina]

Wow.

[Mark Sinatra]

It's crazy, right? I mean all, all the admin employees, all the corporate employees I've met, I've spent considerable, a decent amount of time with all eight players. All of them.

[Nick Molina]

Remarkable. And the business itself is how old the business is.

[Mark Sinatra]

95 years old. It's so cool. 95 year old business. That was the, that was another one of those things. Thanks for, for pulling that out of me there. That was another box that, that was checked that I didn't know I, I wanted checked. But you know, but you know what with that, it also made me a little nervous because that, that's a tremendous responsibility. You, you're, you're taking over a business that's been around for 95 years. You know, tremendous amount of responsibility comes along with that. Right. To make sure that you can preserve that.

[Nick Molina]

That's true. For sure. It is that that's truly. You really feel like you're a steward of something when you buy something that old. And you can always kind of also ask the question, although I, I'm not sure how strong this is, is why isn't It a bigger business if it's had nine and a half decades to grow, especially, you know, property management is something that is, that is kind of an internally needed. Internally. Yeah, it's demand for this that doesn't go away.

[Mark Sinatra]

Yeah.

[Nick Molina]

Is that, is that a, was that a question to apply to this business or how do you answer it?

[Mark Sinatra]

It was, it was a question that I asked it. You know, it was a business that was family owned. You know, it was owned by a family called the Kleinmans, and the person that I bought it from was not part of that family, the person I bought it from. So the climbing switched hands three different times within the family. And then the last time there was a tragic event in the family and the person running the business decided that he needed to focus on his family matters and wanted to exit the business. There was nobody within the family to take it, and so they sold it to the person that I bought it from, who was an employee of the company at the time for like 20, over 20 years. And so they, you know, he was that number two that was kind of there. And so he slid in and he bought the business from, from the family, from the Kleinmans. And, and, and so now, you know, now he's retiring and I'm next. So. Yeah, so, so, so to answer your question. Well, I'm sorry, I kind of didn't really directly answer the question. I think I did ask myself that question and I think that the reason the business did grow, but, but obviously for a business that's been on for 95 years, not at, not, not, not at the level that you would think, but I think that was, that was by choice. I think that the business and the company and the owners made the decision to, to stay within a certain, certain parameter in terms of growth and in terms of scope and size. And I respect that. I mean, you know, consistent results, consistent profitability, some ups and downs, I mean, they were, they, they went through the tail ends of the Depression, the Great Depression. This is a company that's weathered quite a bit.

[Nick Molina]

Yeah, yeah, yeah. No, I, I think it's, I think it's a, I think it's a question worth asking, but I don't think the answer has to be a damning one. There, there is to build a business that is so old, 275 people, really high quality people and culture and, you know, generating a really nice living for the owners that, you know, why give that up for growth, for the sake of growth? You know, I'm, I'm as much guilty of this as anybody of being so focused on growth. But I think we also, all, also all realize that growth, growth, growth, growth, growth and our fixation on it can be, can be a negative, a net negative to, to companies and to the economy overall.

[Mark Sinatra]

Yeah. And you know, it's hard for me to put myself in, in those prior generations mind. I mean, you know, what were their drivers, what were theirs, what was their motivation? Right. I mean it doesn't, growth isn't for everyone. It's not something that drives everybody. A lot of people just want to make a good living. They want to provide, you know, put food on the table for a lot of their employees and, and you know, and take care of their clients. And that seems to be the case in this situation. And you know, regardless of that, you know that's, that's, that's before, before my time there and you know, I, I'm comfortable with, with the size of the business. It's not a small business, it's a sizable business and, and there's opportunity for growth if that's what we want to do.

[Nick Molina]

You know that.

[Will Smith]

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[Nick Molina]

Let's hear more about it. Kleinman is what it's called Kleinman Property Management, Kleiman Realty.

[Mark Sinatra]

But yes, it's climbing. Property management. They've been in property management since day one.

[Nick Molina]

Okay, so 275 employees average 10 year average tenure. Now 13 years across 275 employees. A 95 year old business. There's employees have been there almost five decades. Minneapolis based, Deep roots locally. What else is there to say? What can you share any numbers about the, about revenue, etc.

[Mark Sinatra]

Yeah, so when I closed on the business, we had 5,500 doors under management. Units under management. The company focuses on large multifamily residential properties. We don't own any of our own real estate. It's, you know, our clients own the real estate and we service them. The. They don't do commercial. They stick to larger properties. You know, properties that have 2, 3, 400 units, even though they'll do a cluster of 30 or 40 or 50 unit buildings if they're owned by the same owner or if they're, you know, kind of close together. So they're, they're very selective. They. We are very selective on the clients that, that we bring on board. We say no to a lot of people because it needs to kind of fit our, fit our, fit our, our buy box. Right. We've added some units since the acquisition, which was, we closed about a month ago. The business does eight. Eight figures in revenue and seven figures in ebitda.

[Nick Molina]

Eight figures in revenue, seven in ebitda. So you got, you got to your, you got to your floor. You got beyond the floor as well.

[Mark Sinatra]

Beyond the floor. Okay, seven. Yeah.

[Nick Molina]

Okay, well, I want to hear about how you structured the acquisition, but first, why did you think that you were a good fit? I mean, you, you have said that you were, you were agnostic about industry, although I think, I think you also said that you got a little bit tighter in your, in your, in your criteria there on industry over time, which by the way, over time I don't think we've made clear that you basically, you basically from, from Walker, from cracking Walker Dibel's book to being under LOI in less than two months. Less under LOI on that, on that Portland business in less than two months. So it's not like you're somebody who had this long evolution of a search over two years. This, you're moving fast.

[Mark Sinatra]

Yeah, yeah, yeah, yeah, yeah. Absolutely, absolutely.

[Nick Molina]

Um, but, but why. So anyway, property management. Why did you think you were a good fit or how did you position yourself to the climate management as a good fit?

[Mark Sinatra]

One of the things I didn't talk about when I kind of introduced myself was that, you know, as I built my personal balance sheet, I invested heavily in real estate, both residential and commercial. And so I have owned real estate since I was 20 years old. And I'VE added continually, every year, additional assets to my portfolio. And I hired a lot of property management businesses and I eventually started bringing in a lot of the property management in house for some of my local properties. And so I understood the business, I understood the business from the owner side, the client side very, very well. And I also understood it from the management side because I self manage with the small team in house. We self managed our own properties. And so I just felt comfortable there, you know, I just did. And, and you know, to go out and get into, you know, all the talk about H vac and electrical and plumbing, you know, of course I looked at all of those initially, but you know, I don't know what the hell I'm doing there. You know, it's just, it's just not that I need to know. Clearly there's a lot of people without, without a history in that, in that space that have done very well with it. But for me, it's just not something that is second nature to me where real estate management is really a second nature to me. I get the business and I get the needs and I get, and I, and I understand the value that we bring as a property management company.

[Will Smith]

What was your vision here?

[Nick Molina]

Actually, we haven't, Maybe we should. I should have gotten this when you considered search. So you've already talked about, you're not buying a job. You're not going to be the operator. You are at a phase of life and of career where you don't want to be super active. So is this buy and hold, Buy and grow. Buy and what was the, the plan?

[Mark Sinatra]

Yeah, it's, it's, the plan was buy and hold.

[Nick Molina]

Okay.

[Mark Sinatra]

You know, I was looking for cash flow, looking for return on equity. Right. I mean, I've got my portfolio, I've got stocks, I got bonds, I got real estate. And so, you know, this, this is just another asset class for me, but one that is more fun, right? That one that I enjoy when that, that, that fuels my entrepreneurial spirit. I'm not involved in the day to day, but I provide strategic oversight. I provide, you know, mentorship to leadership. I provide growth strategy. Right? Because, because I do want to grow this business more than it's grown historically. And so, so that, that was kind of the vision, right? And you know, it's not, you know, people look at my, my history in there, it's you know, oh, six exits, he's gonna buy, he's gonna grow, he's gonna sell it. That's not what this is about. I, I love I have fallen in love with this company. I've fallen in love with a legacy value that it has. Yeah, I would love to see my kids in this business. Yeah. I'm not going to force them. Right. They got it, they got to want it. But I mean, I've, you know, I look back at my career and I've, like, I've, I've had, I've had all these exits and, and the success, but I don't have anything left from what I've created and built. Right. There's no, like, I, I admire businesses that, you know, they're, they're, they. This. The founder turns it over to their, to their kids and they turn it over to their cause. I mean, there's, there's, there's, you know, romance to that. I love that. You know, I love that feeling. And I never had that. And I always, you know, that was always in the back of my mind. I'm like, ah, you know, maybe I should have kept this one. Maybe I should have kept that one. You know, and so here I have an opportunity to do that because that, that is kind of the objective here. I don't. I'm not looking for an exit here at all. I'm looking to just grow this and continue the legacy and hopefully get my family involved at some point. But if not, there's a great team there already.

[Nick Molina]

Yeah, yeah, just a point on that, Nick, because it is, it is such a romantic notion and we're now talking about this from, from both sides. We were talking about it from you now owner of this business, and the kind of fantasy that you're nurturing of, of having your kids involved and it travels through the Molina line for generations. But, but then, and then, of course, we also saw it on the, on the other side as acquirers of such a business because that's what this Kleinman business itself was. Was. But how do you. But a big part of this whole ETA opportunity is because a lot of people have built a business and their kids bl. Often in a blue collar trade Z business, their kids don't want to buy it because their kids are now professionals and they're, you know, they did become doctors or lawyers or whatever, or they're working in tech or corporate and they don't want to, they don't want to inherit the family business. Just cur. There's purely personal question. How do you think about that? You've already told us that it'd be cool if your kids.

[Mark Sinatra]

Yeah.

[Nick Molina]

Were interested, but from somebody who's maybe closer to that than some of the listeners. How do you think about that whole theme?

[Mark Sinatra]

I think that's a good question and I have thought about that and you know, the answer is simple. I mean this business, remember I'm not buying a job. I'm not involved in the day to day. We have a very capable team in place already. And so my kids don't have to work in the business to still own it. Right. To keep the business in the family. Right. They could still continue to just provide strategic oversight like I'm doing now, or maybe even less so. Right. Maybe you know, involved existing management a little bit more, you know, from an equity perspective there at that point, you know, the options are there. The idea I guess is to have optionality know. But right now that's the lens that I'm looking at this through. Right. Is, is to keep this business. I don't plan on going anywhere anytime soon. Knock on wood. Right. And, and so if it just throws off a ton of cash for the next several decades, then, then great, I'm, I'm good with that. And let's grow it and let's create more jobs and let's feed more families and let's give back more to the communities that we're in. You know, there's a lot of good to be done here that, that don't. That doesn't require my family stepping in and keeping this going from generation to generation.

[Nick Molina]

Great. Thank you Nick for that. We want to hear. So a lot more to go. We want to hear about how you structured it, how you bought it day one. Lots. So lots more to come on the plot. But tell us first just about. Let's learn a little bit about the property management business and industry. You looked closely at two property management businesses, both of which you liked. We've already heard why you didn't buy Oregon, although maybe you will in the future. And you fell in love with Minnesota and bought it. What makes a good property management business? Because you seem to have found two good ones. Yeah, it's a notoriously, it's. It's. It's superficially very appealing. Often business to business revenue, recurring revenue necessary, you know, an essential kind of not going anywhere, not going to be disrupted. Hyper local, fragmented acquisition opportunities all over the place seemingly. But those who have been in the business will warn you that it's a, it can be a brutal, unforgiving one. So what makes a good property management business?

[Mark Sinatra]

Yeah, three things. The way I see it. Number one at the very top of the list is the people. Right the people that are there are the business. Right. There's no intellectual property. There's no, you know, proprietary assets or anything like that. It's, it's, it's the people number two and number three are kind of linked and that is the properties and the clients. Right? So the clients are super, super important. We want the right clients, all right? We want clients that are going to make the necessary investments into their assets, into their assets so that we can manage them properly and so that we can provide safe homes in a safe environment for the tenants that are in there. So, you know, that's why, that's what Kleinman has figured out. Right. I mean a lot of property management companies want doors, right? Picked up a 50 doors, picked up 20 doors, picked up 30 doors. You know, they got to be the right doors. And the right doors aren't just necessarily the right property in the right neighborhood, it's also the right owner attached to those properties. Right. And so yeah, I think that's really what, what, what makes a property management company set itself apart from others. A successful property management company set itself apart from others that are maybe less successful. Look, we're in the business of putting out fires.

[Nick Molina]

Yeah, it's, it's, it's.

[Mark Sinatra]

We do the work that nobody else wants to do. If it was easy, then the owners would do it. They'd self manage. Right. And a lot of owners try that. And then, you know, a lot of owners, look, I brought, I self managed the properties that I had because I couldn't find a property management company that was good enough for me. The guy in Oregon started a property management business because he couldn't find somebody that was good enough. Our clients at Kleiman, don't worry about that. We're really good at what we do. We're really, really good at what we do. And the reason we're really good at what we do is because of the people that run that business every single day and that have been there for that long. That's why we're really good at what we do. And so there's no reason for any one of our owners to self manage their business. It would cost them more to do so.

[Nick Molina]

Yeah, yeah. And they probably wouldn't do it as well. Well, and, and that, that thing about that these, proper, these, you and, and Portland, Oregon started self managing or in his case started a property management business because you couldn't find good property managers. You know, my own experience with property managers has been negative, but that, that is evidence of just how hard it is it's, this is, this is a, this is a hard business. And so I think part of the reason you see such low quality quality in property management services around the country is because it's a hard business.

[Mark Sinatra]

So I think, I think that's where the 95 years comes into play too. Yeah, when you do something for 95 years, you probably get pretty darn good at it.

[Nick Molina]

Yeah, yeah.

[Mark Sinatra]

You know, you put systems in place that, that make you really good.

[Nick Molina]

Totally. But, but your, your insight about having the right clients too is such a good one. You know, it's not all about just growing, it's about, it's about choosing the high quality clients. And to be clear, in the, in property management, real estate world, high quality clients, like the, one of the, the key indicators that you said is that they invest in their properties.

[Mark Sinatra]

That's the thing.

[Nick Molina]

They're willing to spend money on their properties sort of thing.

[Mark Sinatra]

That's right. The owner, the owner, the owner makes a good property. It's obviously you got, Geography plays a role, right? Geographically you want to be a good property, you want to have the, the right bones, but if you, if you have an owner that isn't willing to make the necessary investments to, you know, and we're not saying that owners need to throw tons and tons of cash because it's all about return, but you got to have a certain level of reinvestment into the property to maintain it. Right?

[Nick Molina]

Yeah. So you had mentioned you used a loan broker to buy this business. So you did go the SBA route. Why, by the way? Why'd you use a loan broker as opposed to shopping it around yourself?

[Mark Sinatra]

I, you know, I, I'm, I'm a big believer in building solid teams around me. You know, loan broker does nothing but source loans for SBA every day. I've never sourced a loan for an SBA leading up to this point. Right. And so why would I be be arrogant enough to think that I could do this on my own? Right. And so it's, it's honestly, it's honestly a no brainer for me. You provide a service better than I can provide it to myself and it cost me nothing.

[Nick Molina]

Yeah. And oh, by the way, you don't eat the cost. Yeah, yeah, I can move quicker.

[Mark Sinatra]

I mean, yeah, I mean, it's. Right. That, that's probably, that was probably the easiest decision I made throughout this process is to go with the loan broker.

[Nick Molina]

And so obviously reflecting back now on the other side of your transaction, it was the right choice. You, you think loan brokers are it.

[Mark Sinatra]

Was recommended, you know, recommendable. You got. Make sure you pick the right one, right?

[Nick Molina]

Yeah.

[Mark Sinatra]

And. And luckily I did. And you know, if it's okay, I'd like to plug Heather Anderson over at Viso. Viso Cab.

[Nick Molina]

Yeah, yeah, yeah. Heather's a well known name in our space. Been at it for a long time. Formerly at Live Oak. What did the deal look like? What are the terms in your deal structure?

[Mark Sinatra]

Yeah, so. So my LOI included a, my LOI included 10% equity injection from me. It included a 20% seller note and amortized over 10 years. I'm sorry, amortized over five years. Initially ended at 10 years, which started at five years and then a 70% SBA loan.

[Nick Molina]

And your SBA loan was pretty attractive as well, wasn't it?

[Mark Sinatra]

I got a good one. I got a good one. Kudos to Heather. You know, I think. I don't know how much of it had to do with my balance sheet. How much of it had to do with Heather. It's probably a combination of both. But I got a, I got a, an SBA loan through US bank at six and a half percent fixed for five years. And then after that it adjusts to two under prime.

[Nick Molina]

Two under prime?

[Mark Sinatra]

Under prime, yeah. So prime's eight now. It would be six right now. When I closed, prime was eight and a half. And so that's how I ended up at the six and a half.

[Nick Molina]

Wait, and so am I.

[Will Smith]

Have I missed something?

[Nick Molina]

Aren't loans all, you know, the, the rates always prime plus something?

[Mark Sinatra]

Yeah.

[Nick Molina]

So why. I, I'm just wondering why they were so generous. They probably could have just given it to you at prime or at prime plus something negligible and you would have grabbed it. Why did they have to go under prime or why did they offer you such generous terms?

[Mark Sinatra]

Well, I think this is another reason to go with a broker. So we, you know, Heather shopped it, she sent it out to four or five lenders. They saw my credit worthiness, they saw the structure of the deal, they saw my ability to pay, you know, to be able to guarantee this loan is fully collateralized with my balance sheet and my personal guarantee. And so they wanted the business and so, you know, offered you aggressive terms. Yep, I've got, I mean, we had multiple offers and I don't think any of them were over prime. Maybe one, maybe one of them came in over prime. But like marginally over prime. Cause usually the market's about two over prime. US bank has very tight underwriting guidelines. It wasn't easy. You Know, but, but it was worth it, you know, to get it. To get a rate that was probably two points on the market.

[Nick Molina]

Yeah. Well, it's interesting when you say that they have really tight underwriting and then ended up offering you something really aggressive, it actually reminds me of a characterization I heard of Live Oak, which is, as I said, Heather's old bank, where Live Oak is known for being conservative with their SBA acquisition loans. So they have tighter on. They have pretty tight underwriting. They'll, they'll reject a lot of deals and a lot of searchers, but when they underwrite it, when they want a deal, when they've decided it passes their underwriting, they're very aggressive and they'll, and they'll, they'll beat everybody. So, So I don't. Maybe that's. Maybe people in SBA lending world know this, but seems like there's the, you know, at least in United, in Live Oak's case, there's this, there's this pattern where if they say yes to you, it's hard to get them to say yes, but once they say yes, they're going to fight tooth and nail to get your business sort of thing.

[Mark Sinatra]

Well, that, that's what Heather said about U.S. bank. See, they were, they were the last ones to come in, and they were asking a lot of questions before committing and giving, you know, to the loan and giving us a rate. But she was like, believe me, it's worth it. It's worth it. It's worth it. If they say yes, this is going to be a good one for you. And so, sure enough, yeah, yeah, great.

[Nick Molina]

And this is minor, but why the, the 20% seller note, that's, that's a little bit bigger than we typically hear. 10.

[Mark Sinatra]

That was, that was my requirement. I wanted, you know, I wanted to make sure this, you know, this is a business that's 95 years old. The seller had been in the business for 30 years, 30 plus years. The clients, you know, their clients that have been there for. There's one client that been there for 40 years, another one that's been there for 20 years. And there was a little bit of client concentration. Not a ton, but, you know, we had, we had, we had a handful of really big clients, and I wanted to make sure that that didn't go anywhere. I wanted to make sure that he was vested in. So half the notice is forgivable, actually more than half the notes forgivable. So, so there's, there's, it's about 80% of the note is forgivable based on client attrition. And, and so, yeah, I wanted to make sure that the seller was vested. Now, let me be clear about the seller. The seller is a super, super high integrity guy. I mean, my God, you know, like, like, honestly, just. And he showed it. I felt it, you know, in the early stages when we were negotiating, I felt it through the closing process. I'm feeling it even more now post close, like really super high integrity guy. But you still have to put the, you know, the tools in place to make sure that, that, that, you know, you're motivating everybody the right way post transaction and that you're minimizing your risk. And you know, he understood that. He understood that what I'm buying here is the book of business. Right. To some extent. Right. Part of the asset that I'm buying is the book of business. And if that book of business leaves because he's leaving or he sells, then that directly impacts the value of that asset. And so he understood that and he was willing to put his money where his mouth was and it was an integral part of the deal. The deal wouldn't have happened without that.

[Nick Molina]

Yeah, yeah, no, it's a, it's a great instrument and actually to the point about customer concentration. Yeah. I would imagine in a, in a super local, in a, you know, super local property management business with decades of experience and a property management experience that as we've talked about is selective in who they work with, that they, that there would actually be more concentration. I mean, I just look around Arlington here and you know, there are, there are big owners who own a lot of the doors and I would just think that a 95 year old business would have a bunch of those types of owners who would represent a thousand doors, two thousand doors even then.

[Mark Sinatra]

We did. You do, I mean, okay, so you do have one owner. We got one owner at 1200 Doors. We got another owner at, you know, just under 800 doors. And so, yeah, you know, you've got, you know, 20% concentration on one, 13% on the other. So it's, Yeah, I mean it is something that we, you know, interestingly, a lot of those owners, when they started with Kleinman, didn't have that concentration. They just started buying additional properties and growing with the company. You know, when you've got a good property management, a good property manager, it's easy as an investor to say, oh, I'm going to pick this one up and they're going to run it for me because they already know that this isn't going to be a headache for them and so they're able to scale their portfolio quicker. We're partners with our clients.

[Nick Molina]

Yeah, it echoes ETA Land, where if you, if you could just solve the operator pipeline and you just have all these operators, you know, you could just start buying lots of businesses and putting in operators. Yeah, of course we know how dicey that is, but that's going to be a theme that we close out on here in a minute. Nick, but just one more thing. On the partially forgivable, can you. So 20% seller note, what did you say? 8, 80% of the 20% was forgivable? Is that what you said?

[Mark Sinatra]

I'd have to go back and look at it, but maybe 70 to 80% of the 20% seller note is forgivable. I mean a lot of things need to happen drastically wrong for that to happen. But I also gave him some upside. So if we grow, then there's upside for him and the rest of the team.

[Nick Molina]

Can you say anything more about that? How do you that that sounds Earnout? Ish.

[Mark Sinatra]

The corporate team. Several of the members of the corporate team were contracted with stay bonuses. And there's two types of stay bonuses. There's one where it's strictly a stay bonus. You stay for 18 months or whatever, whatever we agreed to. Then this is this, this is how much you get. If you stay an additional 12 months and we have this many units under management, you get this much. And so that is for the team that's remaining for the seller. Yeah, the seller. The seller has the forgivable note, but then he also has an incentive program where if we grow the number of units under management, then remember he's. So we didn't really touch on this, but the seller signed a 12 month employment agreement. So he stays with us for up to 12 months and if we grow certain units within that time, then he's got bonuses as well. And then to talk and to show you how high integrity this guy is, he took two thirds of that bonus that he's getting and he had me distribute that or allocate that to employees.

[Nick Molina]

Phenomenal. Yeah, network. We're starting to understand why the culture of this place is so strong.

[Mark Sinatra]

Yeah, yeah. He didn't have to do that. Nobody would have found out. Nobody would have known anything. He didn't have to do that.

[Nick Molina]

By the way, all that structuring the incentive plan, the bonus structures that you just talked about, the forgivable note, did you get it? Was there people on your deal team.

[Will Smith]

Helping you with that stuff or did.

[Nick Molina]

You Figure that just. Were you leaning on your years of experience or how did you, how did you structure all that? All from your brain or where or what?

[Mark Sinatra]

Yeah, I mean, it was all for my brain and for my years of experience. I mean, you know, you analyze a business, you, you, you identify what the points of failure, the potential points of failure are. And, and, and you try to contract and paper and incentivize around that.

[Nick Molina]

Yep. You know, make it sound easy. The. Now another thing here, Nick, is, is we, we talked a little bit pre recording about this. I had been under the impression that if you have a balance sheet, that the SB, an SBA 7A loan is for people who can't otherwise buy a business. Not to say that it's targeting, you know, low income people, but just that if they, if they can buy a business outright, the SBA loan product isn't for them. And in fact, you know, you can't get an SBA loan. Now, I may have always been mistaken about that. But anyway, did you bump up against any of that? Because you could have in theory bought this business outright. You had the business, you had the balance sheet to do that. Did you bump up against that?

[Mark Sinatra]

I did not, actually. I had read about that and that was one of my concerns early on. But I learned that the SBA modified some terms, I think around 2023 or around that time. And part of those changes were to open it up to people that had stronger balance sheets. I think one of the things to keep in mind is that the SBA program doesn't only benefit the buyer, it benefits the seller too. Right. It opens up the buying pool quite a bit and can drive imagine what the multiples would be if there was no SBA program. Right. They'd be pretty compressed. So I think it was the right decision on the SBA's part. Obviously I might be a little biased, but yeah. So I did not have any issue or bump up or pushback at all regarding my balance sheet and my ability to qualify for this program.

[Nick Molina]

Well, if you're talking, if you said 2023, that change that I'll have to bone up here on my knowledge, but that probably refers to those rule changes that happened in 2023. And we, and we usually hear about those from the perspective of the partial ownership, partial buyouts that it now enables. But this may be another one of the details of those rule changes.

[Mark Sinatra]

And 2023 may not be the right date. I was just pulling that out, you know, because I know there was a rule change in 2023. I don't know if that was part of that or not, but I was told that that used to be the case with the SBA and that they've changed that. When that change happened, I don't know specifically. I was guessing 2023.

[Nick Molina]

Okay. Yeah, I, I think, Nick, we'll, we'll start closing up here. But two little, two big topics I still want to hit first, day one in the transition, and then two, the whole picture of the fact that you're owning it remotely, the operator, the number two. We're going to circle back to that. So first to day one in the transition. You and I first connected. You actually emailed me, I think from the plane. You were off to Minneapolis for your day one speech. You had just listened to Justin Willis's painful episode where Justin, Justin bought the business only to have it just practically go to zero. And so that was just a month and a half or so ago. Anyway, update us. How did day one go? How has the transition gone?

[Mark Sinatra]

Day one was great. Day one was phenomenal. We brought the employees in in groups, senior management first and then, and then know middle management, you know, the seller, Mark, disclose his name. Mark. Mark. He's a special human being and he's got a special relationship with his employees. And you know, I saw him pacing up and down the room before the employees came in and like, you look a little nervous, Mark. He goes, nah, I got this. I've done this a million times. I got this. And 30 seconds later we had waterfalls, you know, so it was, it was touching. It was great to see that, that bond that, that he had with his employees, it just again continued to, to. Not that I needed any more affirmations, but it continued to reaffirm that, that, that, that, that, you know, climbing was a special place and that he was a high integrity seller. And so it went well. It was well received. I spoke to the team, he spoke to the team. He answered questions. Funny story, actually. So literally, like 45 minutes later, or it could have been the next day, all the employees line up outside his office. I'm in Mark's office and we're chatting. All the employees are lined up, waiting to come in. And I'm like, oh, all the employees are there. What's going on? And you know, it looks like they want to talk to you. So I thought they were coming in to quit.

[Nick Molina]

Yeah, yeah.

[Mark Sinatra]

It happened to be National Bosses Day and they were all coming in to give Mark a card. My heart skipped a beat, as you can imagine.

[Nick Molina]

I bet.

[Mark Sinatra]

Yeah, yeah. But it's been great. The transition has been great so far. Mark is working with, with the number two there and continuing to transition a lot of his daily duties and weekly and monthly closeout duties and stuff like that. Really just, you know, whatever was left. I mean, this is a person that the number two been there for 13 plus years or 14 years now. And so he understands the business is kind of who they go to anyway. But there's some things that Mark kind of reserved for himself to keep himself. And so now we're transitioning that stuff over. You know, I check in, we have two calls a week. I have a management, a leadership call one day and then I have a transition call the next day. You know, we exchange emails and we do some zooms here and there in between, but for the most part those are our two standing meetings. It's, you know, I've flown up to Minneapolis a couple times. I just came back last week. We were there for the holiday party. We do our holiday party early. So.

[Nick Molina]

Yeah, the Christmas party before Thanksgiving.

[Mark Sinatra]

Yeah, yeah. So I was up there for that for a couple days. I'll be taking. It was great. It was great. I'll be taking my family up there next week. My wife, my son, my daughter. We're going up, we're going to spend Thanksgiving week, the entire week in Minneapolis just.

[Nick Molina]

Oh, great to do that.

[Mark Sinatra]

We're going to go to a Vikings game. You know, one of the things that, that I got with this company is, you know, the company owns 22 Minnesota Vikings season tickets and the owner, the owner has always gotten those for the employees to give away to employees. And so, yeah, maintaining that tradition. And I'm, I'm going to one of the games and spending Thanksgiving up there really. You know, so in the, the time and culture, even, even deeper.

[Nick Molina]

Yeah. And. And what about the fact that this is such a, you know, decades of experience in decades of roots in Minneapolis and that you are not a Minneapolis native. In fact, you're, you're a. What is it, three hour flight away? Two and a half? Three, probably three, four. Is it four from Miami to Minneapolis? Yeah, four hour flight away. Very different part of the country. This was, this was a, you know, such a high quality business. We actually didn't get into two multiples. We, we should get a little bit into that before I let you go, Nick. But this was a high quality business, priced reasonably. And why did they choose you? And was a competitive process. Was private equity looking at this one? We had heard that they were looking at Portland.

[Mark Sinatra]

What about this One, it was, it was looking at this one. So it was between me and two other people. One of them was a local Minnesotan from a wealthy family.

[Nick Molina]

You beat out a local, a local.

[Mark Sinatra]

From a wealthy family, you know, that didn't have a lot of business experience but had a lot of money. And then the other one was a private equity, was a private equity outfit that had other property management interests. And I think, you know, when I got on that zoom with Mark, I think, you know, I, I, I asked him what was important to him. I saw that it aligned, you know, you know, his people and his clients were the two most important things for me. Wanted to make sure they were both taken care of and, and that aligned perfectly with what, with my, with, with what my goal was. And, and he saw that, right? I mean, private equity doesn't have loyalty there. Right. They're going to try to be synergistic and, and merge operations and, and, and scale back expenses as, as, as, as much as they can and become more efficient. And the local Minnesotan didn't have the operating history, I don't think, to make, to make him comfortable that his employees and his clients were going to be safe and well taken care of. You know, I think Also the, the 95 year legacy, you know, he wanted to make sure that that remained in place. I mean, if he sold to private equity, there's a good chance that, that, that went away. And so it was a competitive process. I did have to bump up my price to, honestly to full asking price.

[Nick Molina]

Can you share what the multiple was?

[Mark Sinatra]

Yeah, the multiple that we landed on based on trailing twelve months was 4.3, 4.3 times. My initial offer was under 4. And so, so, you know, I just, like I said, the more I looked at it, the more I could justify the higher multiple. And so, yeah, he picked me. Luckily, I'm fortunate enough that I was the one that he decided to go with. I think him and I just hit it off. And so you ask about the clear differences between Miami and Minnesota, even just from, not just geographically, the weather, culturally, you know, you've heard the term Minnesota nice. Yeah, yeah, there's just nice people up there. Right. And so I feel very welcomed up there. You know, I think they bring out the best in other people. You know, I think more people from Miami should spend some time in Minnesota. I think it would do wonders for Miami, you know, if we can, if we can soak up some of that Minnesota culture. So yeah, it's, it's been, you know, there's, there's clearly differences will and, and how things are viewed and, and, and the way we do things on a day to day basis. But you know, it's, it's, it hasn't been a problem. I respect their culture, I accept their culture. I want to feed that culture and, and nurture it and preserve it. And so I think they see that from me, you know and I think that they appreciate that. And so you know, you know, post acquisition I think the employees see that I think the clients, I haven't gotten to meet the clients yet but I'm starting to set up those client meetings. But you know, the employees have certainly I think bought into me as the new owner and you know, have rid themselves of their, the anxiety that usually comes with an acquisition and a new owner. And so I'm very grateful for that. And you know, now we need to do that with a client, clients as well.

[Nick Molina]

Well, let's close out on this theme of not being an owner operator, but just an owner. So for a lot of people, just to some, some context that will be familiar to regular listeners. For a lot of people there is a fantasy about buying a business and not actually having to be the operator. It does happen. We of course the whole independent sponsor model is sort of that private equity. This is the model. But typically for an SBA loan size business in the self funded search and traditional search world, the expectation is, is not that you're just going to be able to put in an operator, but that you're going to operate it yourself. You're going to be the owner operator. But you, this now this was a.

[Will Smith]

Bit, this was a bigger SBA deal.

[Nick Molina]

But you are not doing that. You are a remote, not only not the operator, you're a four hour flight away. You had this really interesting criterion for all the businesses that you looked at where there needed to be a clear number two who could step up when the owner vacated as you became the new owner and run the business. So, so this business must have had that, let's hear how you're making it work. And then I want to just ask you, does that, what do you tell other people? Should they aspire to what you've done here or do you agree that most people should know they should be the operators? You're in a different phase of life, you have more experience, you have a bigger balance sheet to perhaps absorb some fluctuations. I don't know. So I put all that at your feet. Nick.

[Mark Sinatra]

Yeah, so I think that, I think that it depends, right? The short answer is it depends. It Depends on a lot of things. I think that it depends on the company and the team and what's in place. But I also think it depends on your experience. Right. You. The buyer's experience as an operator previously. Right. So I have extensive operating experience. And so having that extensive operating experience gives me the ability, a better ability to manage existing operations remotely and from afar. Right. With limited contact, I'm able to analyze and understand systems and making sure that those things are in place and evaluate talent and their abilities and their weaknesses, understanding their weaknesses and how to build around those weaknesses. So I think that, I think it depends on the business. Well, so it depends on the business itself. What are you in the business of doing? It depends on the team that's at the business. And I certainly would not, you know, there's a lot of young, inexperienced searchers out there. When I say inexperienced and experienced from the operating standpoint, that I would not encourage to try to buy a business like this absent an independent search model, you know, where you place, you know, there's an operator that's embedded and that you're putting in. I would not encourage you to try to run this as an absentee business. Try to run any business as an absentee business. You've got to have operating history yourself, I think, to really understand the nuances that, that, that that are, are part of running a business or operating a business. Does that make sense? Does that answer your question?

[Nick Molina]

Yeah, yeah, it does, absolutely. And, and, and then. So your experience is a big enabler of this. The other thing is going back to your, you know, finding businesses that have a, have a really strong number two. Can you say what it looked like in, in the case of climate?

[Mark Sinatra]

Yeah. So the number two there is, is a gentleman named Matt, and Matt has been there 14 years, and he was actually being groomed by Mark the seller, to take over the business, potentially buy the business. Right. You know, buying this business wasn't in the cards for Matt. It's not something that he was comfortable with doing in terms of leveraging up. And, and, you know, it's, it's, it's not for everybody. Right. And, and so the other option for Mark at that point was to let Mark continue to run it. And, you know, he just kind of do what I'm doing. Right. But I think, you know, I think that was his safety net. I think his, his, his ideal plan was to, was to pull out his. To become liquid. Right. And so that's, that's the opportunity that that presented itself for him. And he was able to successfully sell his business to me. And so, so that's, that's how we ended up where we are. But, but, but Matt is somebody that was there as his right hand for 13 years. Right. Didn't start as his right hand, but through the years, you know, started in at a very low level position and grew within the business much, much like Mark did when he was working for the Kleinmans. And so, you know, I just got to the point that where it was time to have a succession plan and, and you know, it wasn't, I wasn't in the cards for Matt at the time. And so, you know, you know, this is the next best thing for, for, for Matt and, and, and then for the company and for, and for Mark.

[Nick Molina]

And does Matt have the phantom equity structure we talked about?

[Mark Sinatra]

He does.

[Nick Molina]

Fascinating. Nick, I, I love what you've done. I love the, the sound of this business. All the characteristics of this business that we've talked about. What a neat story. Anything that we didn't touch on that you want to make sure listeners here.

[Mark Sinatra]

What I'd like to put out there is that I'm still very bullish on the property management space. I am interested in growing this business whether that be through roll ups which I've done before in the cell phone space or whether that's through bolt ons in the markets where we are operating property management businesses. You know, those, those are our vehicles for growth for me. I mean my, my buy box now has narrowed even even further to, to basically property management businesses or bolt ons within which. And the bolt ons would be geographically limited to where we're running property management businesses. Yeah, yeah, but property management acquisitions are in, are geographically agnostic minus the state out on the west coast.

[Nick Molina]

Well, if you find bolt ons in Minneapolis for Kleinman, it feels like it might be tricky because so much of what makes Kleinman strong, the super selectivity of their customers, the culture of Kleinman, those two things in particular, you could see those being quickly diluted by bolt ons who are probably not going to be so selective in their customers or have the same quality of customers. And good luck finding a culture as strong as climate. So obviously the hope is that you import the, or I should say export the climate culture into the bolt ons.

[Mark Sinatra]

Yeah. Yes, that, that the bolt on would have to fit those criteria, which is going to make it hard to find. It's going to make it hard to find. But you know, and maybe I use the terminology wrong as well, but it's not just, I'M not only looking to bolt on other property management. Maybe it's called the tuck in. I'm still learning the language by the way. But, but you know, we have a lot of vendors, you know, where we provide maintenance services, whether it's apartment turnover business, whether it's plumbing, H vac, it may make sense if there's, if there's a provider out there for us to bring that, you know, to acquire business like that, continue to run their business independently, but also, you know, give them the business that, that we have at Climate as well and provide services for our clients. So it would, it would actually help our clients because we'd be able to reduce the cost to them by doing that. So again, you know, we don't have a very clear cut, definitive roadmap. Roadmap right now. I mean we're six weeks into this thing, maybe less. And so, you know, we're just, we're figuring out which way we want to go, but we definitely want to grow the business. And I'm very bullish on property management, residential property management, potentially even commercial property management. No interest in the HOA property management side of the business. That's something that I'm interested in. And yeah, so that's, that's the plan.

[Nick Molina]

Well, thanks for coming on Nick and sharing this really great story. How can people reach out if, if they have questions?

[Mark Sinatra]

I am on. I'm newly on X Formerly Twitter at, @ Nick Molina. ETA. That's N I C K Mol I N A ETA. My website is called Endangered Investments. Endangered E N D A N G E r e d investments plural dot com. And you can email me at [e-mail] Great.

[Nick Molina]

And is there any particular type of, type of profile or type of topic that you're, you think you're best suited to talk about Property?

[Mark Sinatra]

I think, I mean I think your listeners have, have heard my story. If they feel that they're, that I can add some sort of value. I do a lot of mentoring. Currently I'm part of Endeavor, the Endeavor Group, which, which does mentoring to young entrepreneurs and startups. You know, I've taken a lot will from, from, from. From your guests and your pod. And so I feel compelled, willing and eager to give back in any way that I can. Whether it's just straight up, you know, just chatting, seeing if I can help you out a little bit or if you want to talk to me about maybe even getting involved in a deal. Either way.

[Nick Molina]

Well, Nick, that really generous of you and you've already given back a lot by coming on and being so transparent about your story. So we thank you for that, Nick Molina, and look forward to hearing how it goes with climbing.

[Mark Sinatra]

Thanks, Will. Have a good day. SA.