From Frustrated Searcher to $3.5m Owner to Holdco Builder

Summary

Acquiring Minds Podcast: From Frustrated Searcher to $3.5m Owner to Holdco Builder

Host: Will Smith
Guest: Simon Plummer (owner of BT Engineering, cofounder of Arbor Permanent Owners)
Date: December 23, 2024

---

Episode Overview

In this episode of Acquiring Minds, Will Smith sits down with Simon Plummer, whose journey in acquisition entrepreneurship weaves through unique challenges and innovative solutions. Simon's story spans building Australia’s answer to BizBuySell out of necessity, growing a manufacturing business with passionate clientele, professionalizing and internationalizing its operations, and now founding Arbor Permanent Owners—an Australian permanent capital vehicle, inspired by Berkshire Hathaway and Constellation Software.

This dialogue provides a rare window into Australia’s ETA (entrepreneurship through acquisition) landscape, including financing quandaries, seller psychology, and the nuances of blue-collar business stewardship. For operators, searchers, and global dealmakers, this episode brims with insight, candor, and strategic takeaways.

---

Key Discussion Points & Insights

1. Early Career & Realization (04:52–13:04)

• Background: Simon discusses growing up in a family split between business owners and academics (“I come from a family of small business owners… inherited more of my dad’s side, that sort of small business entrepreneurialism.” – Simon, 04:52).
• Academic Struggles: He describes himself as “top of the bell curve,” not particularly distinguished academically but strong in leadership and soft skills.
• First Step into Business: After an ill-fit stint at Deloitte, he finds his calling at Johns Ling Group, a high-growth insurance repair specialist.
• Rapid Rise: With leadership and turnaround success in subsidiaries, the company’s owners offered Simon 2.5% equity at the HoldCo level—“I was only 25… set me off on a different trajectory for the rest of my life.” (11:30)
• Life-Altering Choice: Exited before public listing, leaving an eight-figure sum on the table—motivated by “entrepreneurial freedom”: “I keep reminding myself there’s nothing more important… than my own entrepreneurial freedom.” (13:54)

2. The Origin of Resolve.com: Australia's BizBuySell (18:01–24:33)

• Search Frustrations: No centralized platform for business sales in Australia; brokers controlled fragmented, opaque deal flow, and rarely took young buyers seriously.
• Solution: Together with his brother and a friend, Simon built Resolve.com—Australia’s BizBuySell. “We’ll help them sell their business by listing it on resolve.com... two years later, we’d listed 100 businesses, and we were able to cherry-pick the very best one.” (19:46–21:31)
• Innovative Tactic: This approach gave Simon first access to deal flow and visibility into the entire market.
• Broker Pushback: Brokers were initially resistant—“the analogy is real estate agents… see the writing on the wall,” (22:11) but necessity and execution won adoption.
• Outcome: Resolve became the dominant platform for small business sales in Australia, and is still in use (“The Australian search fund community… uses resolve to find businesses to buy.” – 24:10).

3. Acquiring BT Engineering: The Beloved Niche Manufacturer (27:08–36:20)

• Acquisition Story: BT Engineering is a ~60-year-old manufacturer of brick- and masonry-laying tools, with a “cult status” in Australia (“Bricklayers talk about BT Engineering the same way computer boffins talk about Apple.” – 27:08).
• Deal Terms: Purchased for ~2x EBITDA (~$1M price on $2M revenue, 20% EBITDA margin), using a mix of ~$300K cash, $450K bank debt, and $450K seller finance (“In Australia… businesses typically sell for 3–5x EBITDA. So two, it was cheap.” – 28:49–31:56).
• Move to Operate: Relocated from Melbourne to Sydney to run day-to-day operations.

4. Operating Lessons: From the Factory Floor to International Markets (41:52–56:40)

• Transition Shock: The first year was a rough hands-on learning curve: “Literally on the machines, making widgets day in, day out… not doing the things I should have done. It was the best MBA I could have asked for.” (41:52)
• Professionalization: BT had outdated systems (“Every widget had a pencil drawing and bill of materials, still in imperial.” – 41:52)
• Growth Moves: Simon focused on modernizing operations, setting a strategic goal to launch in the UK and direct-to-bricklayer online sales. “Two to two and a half years in, we successfully launched in the UK and now sell direct to bricklayers in the UK, US, and Canada.” (47:35)
• Go-to-Market in the UK: Personal cold-calling and influencer partnerships (“Signed up a bricklaying YouTuber, Charlie Collison… he’d say ‘these tools from a random Australian company… you should all go out and buy them,’ and we sold out of stock very quickly.” – 55:26, 56:40)
• Leadership Transition: Hired a new CEO, George, reflecting that his goal had been to “build a business to a point where I could take a… modest salary but not be working in it.” (57:46)

5. Reflections on Small Business Ownership & The Realities of ETA (61:52–65:51)

• Stress & Survival: Simon is candid about the “DNA-altering stress” of small business. “Waking up at 2am thinking you’re going to vomit from the stress of making payroll… that’s the sort of stuff you get in small business world.” (61:52)
• Culture of Grit: Success requires tenacity: “For every me, there’s another one or two that it didn’t work out as well.” (62:10)
• Value of Community: Most impressive people are fellow small business owners, not corporate superstars: “It’s the community of small business owners… the niche ones that dominate a market, companies you’ve never heard of.” (66:08)

6. Insights for Australian Searchers/Buyers (67:43–71:08)

• Market Idiosyncrasies: Multiples for SME deals stay low, even at $5M+ EBITDA.
• Financing Hurdles: “Australian investors want property or blue chip stocks… no SBA loans, only four conservative banks.”
• Cultural Fit: Authenticity trumps credentials—“Leave your intelligence at the door… They need to see the authentic side of you... If you position yourself as a micro private equity firm, you just won’t get access.” (67:43)
• Youth in the Market: Brokers care about speed and certainty, not youth; but direct rapport with founders can bridge age gap: “Explain to them… you’re well intended and your only goal is to continue the legacy.” (69:51)

7. Arbor Permanent Owners: Building Australia’s First True Holdco (71:17–82:24)

• Vision: A permanent equity vehicle to hold and grow Australia’s best SMEs—not private equity, modeled on Berkshire Hathaway, Constellation Software, Chenmark, and Scandinavian serial acquirers.
• First Deal: Closing on a $5M+ FCF business in the material handling sector.
• Structure: Single capital raise (over $10M); future acquisitions funded from group cash flow and modest debt, not periodic fundraising.
• Decentralized Model: Lean HQ, “set up to buy the best businesses and let them go doing their thing… very unique in Australia.” (74:18)
• Talent Development: CEO school—grooming operators by placing young ambitious professionals in sidecar roles, then into CEO seats.
• Grand Aim: To harness the wave of boomer-owner retirements and “be the proper custodian” of 3–6M EBITDA businesses overlooked by PE and inaccessible to most investors.

---

Notable Quotes & Memorable Moments

• On Leaving a Fortune for Freedom:
  “I keep reminding myself there’s nothing more important… than my own entrepreneurial freedom… more money in the bank would mean staying years and years longer—and I just couldn’t bring myself to do it.” (13:54 – Simon)

• On the Australia ETA Market:
  “There’s no funding… Only four banks… These businesses are too big for solo buyers and too small for private equity. So there’s a gray zone where 5 million FCF businesses have no obvious buyer.” (36:20 – Simon)

• On Resolve.com’s Success:
  “We were able to cherry-pick the very best one that we wanted to buy… that is just so cool, and it actually worked.” (21:31 – Will)

• On Small Business Ownership:
  “It’s like juggling 10 hot potatoes… if you drop one, you don’t have time to pick it up again, it just becomes a self-fulfilling prophecy of pain.” (43:52 – Simon)

• On Brand as Moat:
  “They’re not hard to replicate, very simple tools. But you can’t replicate brand loyalty, the feeling of ownership… It hits at the hearts of your customers.” (48:53 – Simon)

• On Transition to CEO:
  “My answer is always the opposite of what people expect: I couldn’t wait to step away… It was sort of a goal for me.” (57:46 – Simon)

• On Stress of Entrepreneurship:
  “Waking up at 2am thinking you’re going to vomit from the stress of making payroll… It’s DNA-altering stress.” (61:52 – Simon)

---

Important Timestamps by Segment

| Topic / Segment | Timestamp | |------------------------------------|------------------| | Simon’s Background & Johns Ling | 04:52–13:04 | | Why Buy (Not Start) a Business? | 18:01–19:45 | | Building Resolve.com | 19:45–24:33 | | Acquisition of BT Engineering | 27:08–36:20 | | Transition & Professionalization | 41:52–43:42 | | Internationalization & DTC | 47:35–56:40 | | Hiring a CEO | 57:46–59:59 | | Reflections on Difficulty/Stress | 61:52–65:51 | | ETA Community in Australia | 66:08–67:06 | | Advice for Australian Searchers | 67:43–71:08 | | Arbor Permanent Owners & Closing | 71:17–82:24 |

---

Final Thoughts & Contact

Simon invites listeners interested in his CEO school or in learning more about Arbor to reach out via LinkedIn or by Googling “Arbor Permanent Owners.”

---

Summary Takeaways

• Solve your own searcher bottleneck creatively (e.g., Resolve.com) for deal flow advantage.
• Australia’s SME landscape provides unusually attractive multiples and low PE competition, but financing is a hurdle.
• Operating experience is essential for long-term holdco success; hire against gaps, not just for financial smarts.
• Permanent equity models—owner-operators buying, holding, and compounding cash-flowing businesses—are now gaining ground in Australia.
• For aspiring ETA entrepreneurs: authenticity with sellers — and real grit in turbulent operational times — are the keys to entry.

---

For in-depth episode summaries, sign up at acquiringminds.co.

Transcript

[Will Smith]

Finding a good business to buy is one of the most difficult steps toward

[Phil]

entrepreneurship through acquisition, so much so that

[Will Smith]

this path is sometimes referred to as simply search. And you've heard all the different ways searchers tackle this challenge, from spamming owners to handwritten letters to showing up in person at places of business. But the tactic in today's interview is easily my favorite. It was 2016 and Simon Plummer was living in Melbourne looking for a business to buy. There was no Australian equivalent of Biz Buy Sell at that time, no central repository website where all the businesses for sale in the country could be found. The business brokers were the gatekeepers and you had to go from broker to broker, asking what they had. This is inefficient, but worse, as in Simon's case, if business brokers didn't take you seriously, you didn't even get to learn what businesses were for sale. So Simon, his brother and a friend decided to solve this problem by building the equivalent of Australia's Biz Buy Sell. That way, brokers would share their listings with him and he would then pick the business he liked most from all those submissions. The scheme worked beautifully. They built the site and Simon bought a business called BT Engineering, a manufacturer of a product beloved by bricklayers and masons that he then took to the UK, US and Canadian markets. In three years he grew the business from $2 million in revenue to $3.5 million and most recently hired a CEO so that he could move on to his next project, building a permanent equity vehicle to acquire beautiful businesses in Australia

[Phil]

and hold them forever. It's quite a story.

[Will Smith]

Here is Simon Plummer, owner of BT Engineering and co founder of Arbor Permanent Owners Note. Unfortunately, Simon and I had some technical difficulties, so you'll hear the quality of the sound shift at around minute 20. Please excuse that hiccup, but Simon sounds a little less like himself in the

[Phil]

back hour of the interview.

[Will Smith]

Welcome to Acquiring Minds, a podcast about buying businesses. My name is Will Smith. Acquiring an existing business is an awesome opportunity for many entrepreneurs, and on this podcast I talk to the people who do it. What do the following Acquiring Minds guests

[Phil]

all have in common?

[Will Smith]

Doug Johns, Morley Desai, Tim Erickson, Chirag Shah, Shane Ursum. They all went through the Acquisition Lab, the accelerator in community for people serious

[Phil]

about buying a business.

[Will Smith]

But they represent just a sliver of the lab's success stories. The number of deals across the lab's cohorts now stands at over 120, with over $300 million in aggregate transaction value. The Acquisition Lab was founded by Walker

[Phil]

Deibel, author of Buy, Then Build, the

[Will Smith]

book that introduced so many of you to the very idea of buying a business. The Lab offers a month long, intensive, almost daily Q and A sessions with advisors, live deal reviews with Walker, Deal team introductions, and an active community of serious searchers. Check out acquisitionlab.com, link in the notes or email the lab's co founder, Chelsea Wood. [e-mail]

[Phil]

Simon Plummer welcome to Acquiring Minds.

[Simon Plummer]

Thanks very much for having me. I'm, I'm really pleased to be here. I've been listening to your podcast for a long time and happy to be one of, if not maybe the first Australian on the podcast.

[Phil]

Not the very first Australian I've had. Pete Seligman sure, of course, early days, early days. But let's, let's put it this way, the first Australian, at least in it, in at least two years.

[Simon Plummer]

So fantastic.

[Phil]

And maybe the second ever. So there you go.

[Simon Plummer]

Fantastic. Well, I apologize to any of your listeners if you can't understand me. You might have to listen to the podcast a little bit slower.

[Will Smith]

Good.

[Phil]

Well, I, I need a reason to slow down. My listeners, they, they probably otherwise put me on 2x so, so they'll have to be on.5x for this one. Well, your story is a fun one, Simon. How you found your first acquisition is probably my favorite bit. But how that acquisition has gone well and of course what you're building now, which is doubling or quadrupling down on, on this path for you. Let's get right into it. How about some background on you, please, Simon?

[Simon Plummer]

Yeah, sure. Well, you know, I think being a small business owner was probably what I was always meant to do. Looking back now and trying to join the dots and you know, it's funny though, for most people, I think in their small business journey, it's never really clear and people sort of tend to feel like they fell into it somehow. And I felt that way when I was younger. I come from a family of small business owners. My dad's side has been a small business owner for some time. My mum's side are all wildly intelligent educators and scientists. I think I probably inherited more of my dad's side. That's sort of small business entrepreneurialism. And I never really knew what I wanted to do. I think looking back now, I, I wasn't that good academically. I was absolutely top of the bell curve, you know, as opposed to my brothers who were both super smart software and civil engineers, I had more probably just inherent leadership Capability, more of the soft skills, you know, able to stand up in front of people and inspire and motivate but never really was that good academically and never really had any particular interest in school or study when I was younger. But that being said, I, I, not knowing what I wanted to do, I just did what everyone else was doing, which was went to uni, I studied accounting, got a job at Deloitte and very quickly learned that that was my big career mistake. I had absolutely no interest and no desire in being an advisor. I wanted to be out in the world helping, growing, building, doing something with my hands, being on the factory floor, all those sorts of things, head down on a computer, looking in a financial model. It was not for me and I was going to be any good at it. So I quickly realized that was my big career mistake. I, I started pounding the pavement looking for a business where I might be able to get equity in and eventually found this wonderful high growth business called the Johnsling Group in Melbourne, Australia.

[Phil]

The John Sling Group.

[Simon Plummer]

That's right, yeah.

Okay.

American companies like Belfor, they're insurance repair specialists. So when a cyclone moves through a city or a town, it's their job to move in on behalf of the insur insurance companies and rebuild the city on their behalf.

[Phil]

Okay. And so it sounds like kind of general contracting but at a pretty high level. But it was a high, high growth. I don't think of construction and high growth typically in the same paragraph.

[Simon Plummer]

Yeah, no, it was definitely high growth and that was largely because of its the person who bought the business, a guy called Scott didier who in 2005 bought the business. It was turning over about 30 million and today it's a publicly listed business that has reached almost a $2 billion market cap. I think at the moment trading maybe one and a half or a little bit less than that. It's an incredible Australian success story of employing young people, giving them equity, training them on what being a small business owner is and then really just letting them loose and being there to support and guide and train along the way. And that's what attracted me to it. I was introduced to John's Lean through my local Aussie rules club, Australian Rules Football that is. And I joined with a hope that of the 30 subsidiaries I had that maybe I could get 2 and a half or 5% equity in one of the subsidiaries. And after a couple of years of some success I was really fortunate that the owners of the company, Scott and his business partners said we don't want you in one of the subsidiaries, we'd like to give you equity in the entire company, which was incredible. I was only 25. I, you know, I had enough money in my pocket to go to the pub that weekend and that's about it. But it really, it set me off on a different trajectory for the rest of my life. And so I'm incredibly.

[Phil]

Simon, why, why did they bestow such a compliment on you? Why did they give you equity or offer you equity at the, at the Holdco level as opposed to one of the subsidiaries?

[Simon Plummer]

Yeah. What have you done to.

[Phil]

So impressive.

[Simon Plummer]

So I first joined. There was one subsidiary that I was performing really badly and in about six months to a year I managed it, turn it around quite successfully. I was then tasked at moving on to another subsidiary that had the same set of circumstances, turned it around and I think they realized that I could have a far greater impact than across all the subsidiaries and rather just being focused on one niche subsidiary in one geographical part of Australia. It was right place, right time. I could work hard, fix things. I could lead and inspire people right at the, a moment of time in that business that I really needed it. So, you know, luck definitely played a, a really crucial role in, in landing that.

[Phil]

And, but Simon, what, what you, how you turned them around, these subsidiaries, do you think other people could have done that or was that, did they see something special in you that you were able to pull that off? Was that, was that the aforementioned soft skills, leadership skills at work there?

[Simon Plummer]

Sure, yeah. Like definitely other people could. It is difficult though, trying to find someone with that sort of well rounded commercial knowledge that's able to apply it into the small business world. And many of your listeners would have experienced that, that you can be highly educated, you can have deep technical skills, but it really counts for nothing when you get onto the factory floor in front of a dozen or two employees and have to inspire them to do something differently or improve the way they're going about. It's. I think I've always found that my secret sauce is probably a unique blend of white collar and blue collar that I can genuinely relate to general staff and. But at the same time, you know, have, have an eye on the cash flow of the business and understand more technical and commercial matters like that.

[Phil]

Great. That's fantastic. Well, I think that's a. I'm not sure I've heard that that, that needle that you've threaded in your particular skill set be articulated, but it's probably the secret to success of a lot of acquisition entrepreneurs who buy into kind of blue Collar businesses that they can, that they can kind of straddle the blue and white collar. Anyway, carry on. So you find yourself at the Holdco level or equity at the Holdco level with the Johnson Group and it continues growing. Pick us up from there.

[Simon Plummer]

Sure, yeah. So I was fortunate. They offered me 2 1/2% of the company. My buy in was almost $400,000 and like I said, I had no money in my bank. I was only 25 years old. And so they vendor financed the entire thing for me and my dividends just paid off the loan until it was extinguished. At that point the business was probably turning over a bit over a hundred million dollars and making low single figure EBITDA levels over the next four years. We just, we went on a tear basically and by the time the business floated it was turning over about 400 million. Much more profitable, much more well rounded, much more resilient and listed on the, listed on the ASX and, and the rest is history. I actually sold my share of the business and exited prior to the, the listing on the, on the ASX though, which often surprised people about why I didn't stay. And the first thing I tell them is, you know, don't feel sorry for me. There's no need to get the tissues out. I was, I was 29 years old, my share's worth about a million dollars. I, you know, had had my life in front of me, everything was totally fine. I, I, I definitely was very impatient. I definitely had a naive sense of optimism. I, and I definitely wanted to go out into the world and create something for myself. And so with those things said I decided there's no time like now before I went, before I had kids and I started my search to actually buy my own small business.

[Phil]

So you, so okay, so the John Celin Group was on a clear trajectory to go public. You had equity and most people are going to be holding onto that equity waiting for that moment when it goes public and they see know what their, their paper worth be actually becomes or maybe that's not the right way to put it because it's still just paper worth until you sell it. But what those stock options are worth, what their equity is worth and on the, on a public market. So there was, there was almost a, a certainty that those shares would be worth something, maybe more than what you sold them for. But you didn't want to wait for that. You want it because you notice you were just trying to grab the money and put it in your pocket because you wanted to actually put that Money to use in your own entrepreneurial venture, namely buying a business.

[Simon Plummer]

Yeah, absolutely, that's it exactly right. I, I left a significant amount of money on the table. Probably, probably eight figures. Low, low eight figures. Seven or eight figures which is absurd to think a lot. Absolutely absurd. And don't worry it, when I got a little older and wiser I, it took a little bit of time to make peace with it. But you know, I keep reminding myself that there's nothing more important to me than my own entrepreneurial freedom. I, I wanted to be able to retire one day and sit back and just know that in my heart of hearts I did everything I could to create something of my own. And staying at John's Ling, to just get that more to, to have more money in the bank essentially meant I had to stay for years and years longer. And um, and I just couldn't bring myself to do it. So all's well that, that ends well and it's, it's ended. It's, so far it's, it's worked out well for me but.

[Phil]

Well we talked about this a little bit on the pre call Simon, but it's one of, one of these situations where you, I mean I guess you probably didn't know looking forward that your options or your equity were going to be worth eight figures but maybe you had some sense and the calculation was simply are how many years save another five years of my life worth this money? So you kind of have to do the math around what is a year of my life worth? Very hard of course to quantify such a thing but that was really the decision you were confronted with and you chose that the years of your life were worth more than a whole lot of money. Which probably looking back will have been the wise decision. No matter how this pans out. It, it's probably, it was probably the courageous life affirming decision.

[Simon Plummer]

I, I think so. Yeah. I, I, I'm proud of myself now. I sit here, I'm comfortable and it, it doesn't bug me at all. So yeah, fingers crossed in another 10 years. I feel the same way.

[Phil]

Yeah. Well, well good for you. By the way, just to, just to return quickly to what the, to give people the, repeat the numbers of the rocket ship that you were on single digit ebitda. So those are, those are, that's a business of a size that, that we'll talk about here on Acquiring Minds is a small business doing less than 10 million in EBITDA to a 400 million. Do you say a 400 million revenue business sure, yes.

[Simon Plummer]

Yeah.

[Phil]

And in three or four years and you. And you were on that rocket ship.

[Simon Plummer]

Yeah, that's right.

Yeah.

[Phil]

Crazy. That's quite, that's. That's like tech industry growth.

[Will Smith]

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

[Phil]

Simon, you know that you want to buy a business. Why that path of entrepreneurship versus something else? When you decide to take your ships off the table, do your next thing. Why is it ETA versus 0 to 1 entrepreneurship?

[Simon Plummer]

Yeah. So the way I ended up buying a business, I actually got a little bit of a taste of both. So it was about 2016, about the time that Stanford put out their first search fund report. And I just couldn't believe what I was reading it. It was like this was like a whole new world. And you know, it's typical America for Australians that everything new and exciting happens in America and then finally it lands in Australia probably five to 10 years later. And so I was reading about search funds and I just knew that the Australian investor community was never going to be ready for this in on my timing. And we don't have the same funding structures in Australia, so we don't have SBA loans. There's no, you know, government backed debt that can help you acquire these businesses. You just have to go to one of the four banks that we have in Australia. And typically in Australia banks are extremely conservative. They want property backed security, they will lend no more than 50%. It's extremely hard to buy a small business if you don't have a network of capital to call upon. So I was weighing up, you know, how can I buy a business or should I start a business? And I started going out, meeting brokers and accountants and lawyers. And at this Stage I was 29, you know, I had a million bucks essentially to spend, but no one would take me serious. It was extremely hard to get deal flow. I could barely get my hands on any IMs. And so a friend and myself and my brother actually sort of put our heads together to figure out how we could creatively solve this. And what we ended up doing was launching a website called resolve.com which is essentially the Australian version of, I think you call it Biz Buy Sell.

[Phil]

Yep.

[Simon Plummer]

It's the online platform where all small businesses trade on. And so we didn't have that illustrator at the time. We thought we will go out and build this ourself. We'll go back to the same brokers and lawyers and accountants that wouldn't take us seriously and we'll help them sell their business by listing it on resolve.com and so my little brother, who's a software engineer, he built us the platform. And my friend Ed and I, we went out and started meeting with all the brokers and you know, two years later we'd listed 100 businesses and we were able to cherry pick the very best one that we wanted to buy this wonderful business called BT Engineering and started our small business ownership journey. But what I took from that, you know, essentially bootstrapping us.

[Phil]

Simon, wait before you tell me what you did because I got to ask some follow ups and I also want to just make sure that the audience understands how cool this is. What year is this when you, when you come up with the notion 2016.

[Simon Plummer]

Yeah.

[Phil]

So just to be clear everyone, there's no, there's no equivalent of Biz Buy Sell in Australia at the time. So there's no, there's no platform where you can go see all the businesses listed for sale.

[Simon Plummer]

That's right.

[Phil]

And you guys are having, you're having a hard time getting any deal flow. No one will take you seriously. And so you come up with the idea of doing this Buy Sell a market. The, the Australia. I mean you basically, it's a land grab because nobody's doing it. Build the, Build the Biz by Sell for Australia. Not because that is the opportunity, but because it will give you. You will become the funnel through which all listed companies, all for sale listings pass.

[Simon Plummer]

That's right.

[Phil]

Is so. And Then you could just pick whichever one, whichever one you want. That I just, I just love that fact that you did that and that it actually worked. That it actually worked. It's just so cool. So, so just, but just real quick, I mean, I don't want to spend too much time on it, but really

[Will Smith]

there was, there was nowhere.

[Phil]

So all the business brokers just whatever, had their own websites and so to find a business for sale you went from broker to broker.

[Simon Plummer]

Okay.

[Phil]

And when you came to them and said, we're centralizing these listings, put them here, did they get it or were they resistant? I mean, what was the, was it.

[Simon Plummer]

Yeah, was that like initially very resistant? I mean, you know, the analogy is real estate agents and properties going from the shop front window onto the Internet and they could see the writing on the wall. And so why would they want to list these businesses on the Internet and essentially do away with their Rolodex and they lose their value proposition of having a network of buyers to lean upon. So it was difficult to start with and we probably wouldn't have if we didn't have the youthful optimism that we had at the time. We probably would never have done it. But we got a few listings, we, we started really small, we thought we'd solve a problem really well. And it lends itself to its name. Resolve.com. at my time at Deloitte, I worked in insolvency and restructuring and those practitioners were always trying to sell distressed businesses. And so I had a network amongst that insolvency community and the idea was to originally help insolvency practitioners sell distressed businesses because they had no, no efficient and effective means to do so. They were putting them in newspapers, in the corner of a newspaper. So Resolve was meant to resolve the trouble that they had selling these distressed businesses. And then eventually the idea was that we'd pivot to a more, you know, profitable SME selling website, which Ed has since now done. And it, and yeah, it was, it was difficult. I, I, to be honest, like I didn't enjoy the whole 0 to 1. It's not for me, boring. Cash flow is king for me. And so when we eventually found BT Engineering, I decided it would, I wanted to sell my shares back to where he could have the whole business and, and do with it what he wanted to do. So, you know, Ed and I are still business partners in BT Engineering, but Ed owns and operates Resolve himself these days.

[Phil]

So Simon, what has become of Resolve now? Whatever, eight years later?

[Simon Plummer]

Yeah, so Resolve is still a very successful platform in Australia. A lot of the search fund community in Australia would use resolve to find businesses that they can buy. It's got a good range of small businesses to buy. I'd encourage everyone down under to go and have a look if they haven't already. And.

[Phil]

Yeah, is it. But is it the dominant platform to.

[Simon Plummer]

Yeah. For small businesses? Yeah, it is. Yeah, for sure it is. It's still growing. You know, the market still needs to adopt it a little bit more. But you know, the wave of small businesses that are coming for sale in Australia, no doubt the same as the US is increasing pretty rapidly. So there will always be a big need for this website to get through the mass market.

[Phil]

Yeah. That's so wild, Simon. But I just want to. It is an interesting point of business history that we all now take for granted, real estate listings online. You know, here in the US the big names would be Zillow or Redfin. And we look back at that and just see it as inevitable and that the same thing would happen with, with business listings. But we forget that a big part of the supposed value proposition of agents and brokers pre Internet was that they were the gatekeepers of what was for sale and, and making and putting your listing for sale and getting your listing out into the world. So it was very threatening to them when that value proposition was taken away because everything was just going to become the, the mls, the multiple listing system, what we call it here in the states of basically the centralized directory of all the real for sale real estate listings in a geography when that was just going to be plopped online and everybody could do it from home. And sure enough it was transformational but it ended up not doing away with the real estate agent. But, but we forget how just how threatening that was. It sounds like business brokers experience that or kind of had the same pushback when Resolve came along trying to do the same to the small business for sale market anyway.

[Simon Plummer]

For sure. Yeah, for sure. But you know, you do a really good job for them and they see how successful it can be for them. So then it really becomes a race to who adopts it the quickest.

[Phil]

Right, Right.

[Will Smith]

Make.

[Simon Plummer]

Right.

[Phil]

Makes sense. Yeah. They, they go from fear to realizing that the marketing potential of this channel is going to be enormous. And then it's a land grab and they run after. Okay. All right, Simon, so your technique works. It's so cool. As I said at the top, probably my favorite part of the story. Although there's a lot more great stuff to come because you buy a business that you love. Let's hear about. Let's hear about the small business that you found when you basically had your pick of the litter in Australia. This was the one you chose. You've mentioned the name BT Engineering, I think. Tell us about it.

[Simon Plummer]

That's right. So BT Engineering, just such a fantastic little business. It's 60 years old, founded by Bruce Thomas, who is BT pass it on to his son and daughter Jeff and Vicky. And for 60 years they have been the dominant manufacturer of bricklaying or masonry power tools and hand tools. And the way I describe the business to people at a barbecue is to say bricklays in Australia talk about BT Engineering the same way computer boffins talk about Apple. There's this sense of camaraderie that they help build the business, that the customers and the business are one and the same. And the truth is that BT really did invent dozens of really effective hand tools and power tools for bricklayers in Australia. So it's got a cult status, extreme loyalty, very low customer concentration, very low product concentration and just renowned for its old school quality in a market where most products are made internationally and are inferior quality and are usually sort of more or less used on one job site and throw out and buy again. So it's a proper old school manufacturer. We get lengths of steel delivered every single day. And we have robotic welding solutions, we've got CNCs, drill presses, lathes, every piece of post war machinery that you can think of in the tool shop BT Engineering has and it's got the skilled tradesperson attached to it that is essentially their own craftsman and build the tools from scratch.

[Phil]

Okay. And give us some of the bullet points on the business. So you find it in 2018.

[Simon Plummer]

Yep, that's right. So Jeff and Vicky didn't have any family members to pass it on to and so they were really looking for someone that would look after their staff, protect their legacy and just essentially make sure that the business was going to continue on its same path for another 60 years. And it was really attractive to other tool manufacturers within the industry that just wanted to bolt on a small business. But none of them could look the owners in the eye and promise what I was promising, which is I will look after your staff, I won't offshore the manufacturing and and I'm going to do the right thing by you and your family's legacy. So we were able to buy the business on much more favorable terms than they would have offered it to more traditional financial buyers or other industry players. And we bought it for about two times ebitda which is extremely low in any circumstance. But a bit of context, particularly for your US listeners in Australia, a business doing anywhere between 500,000 to 5 million or maybe even a little bit more in earnings typically sells for between three and five times ebitda. Three is sort of the rule of thumb. Four, you've got a pretty special business. Five is, you know, wow, incredible business. You know, few and far between at that sort of price point. So two, it was cheap, but it wasn't. It wasn't, you know, cost price or anything. You know, it, it was a. It was a fair price for a healthy small business. We.

[Phil]

And how big. And how big was it?

[Simon Plummer]

Yeah, well, about $2 million, employing about a dozen people. It was making healthy margins of around 20% EBITDA. And we, we paid for it by putting down only $300,000 in cash. Another $450,000 we managed to get off one of the big four banks, and we got about $450,000 in vendor finance from the owners, where in 18 months, over 18 months, we paid off a set amount in equal installments, which was very helpful.

[Phil]

Vendor financing, of course, is the Australian term, and I think the same in Canada for what we would call here is just seller financing or. No, in Canada, it's vendor pushback. Vendor.

[Simon Plummer]

Yeah, sure, something.

[Phil]

And so the 400. So. So 450 plus 4. So 12. So 12.

[Simon Plummer]

1.

[Phil]

1.2 million, basically.

[Simon Plummer]

That's right. Yeah. We had about $150,000 working capital facility in there. The business was. The purchase price was essentially a million dollars. And then we got a working capital facility on top from one of the banks, as well as some extra money to pay for the bond for the property and a few other bits and pieces along the way. So essentially a million dollars and 50% of that was debt is around numbers.

[Phil]

Well, much more than 50%. 450 was seller debt and 450 was bank debt.

[Simon Plummer]

Sure. Sorry, you're right. Yeah, yeah, I forgot the vendor note. Yeah, yeah, yeah. $500,000 bank debt.

[Phil]

That seller note, though, was just 18 months. That's a pretty short amortization.

[Simon Plummer]

Yeah, it was, yeah. But, you know, we got the business at a really cheap price, though, so we're happy to deal with that. And, you know, we had a little bit more money in our bank, so I just wanted to smooth out cash flow, but I didn't want it to drag on for too long. I just wanted to help out and move on.

[Phil]

Yeah, yep. Great. Okay, fantastic. And it was based where?

[Simon Plummer]

In Sydney, Australia.

[Phil]

And were you in Sydney?

[Simon Plummer]

No, I was living in Melbourne at the time. So my wife and I moved to Sydney and I jumped in hot seat to operate the business for about three years in the end.

[Phil]

And how far in Melbourne and Sydney from one another?

[Simon Plummer]

Two hours on a plane.

[Phil]

Two hours.

[Simon Plummer]

One hour on.

One hour on a plane. Sorry, one else.

[Phil]

Okay. Okay. Is that so? That's probably not, that's not too big a move. And that's probably a move that a lot of Australians have done between those two cities.

[Simon Plummer]

Yeah, absolutely. Yeah. Yeah.

[Phil]

Okay. But, but it was a move and so you were, you were picking up stakes for this adventure.

[Simon Plummer]

Yeah, that's right. But you know, we're 29 pre kids. We had no responsibilities. It was, you know, Sydney is an incredible city.

It was totally.

It was as much a holiday as it was moving to to run a business. There was, you know, absolutely no sacrifice involved in that decision.

[Phil]

Totally. Yeah. I mean a lot of people would, would just, I mean, yeah, Sydney, what a wonderful place to live. Okay, the. Now we'll probably return to this when we talk about Arbor, but the cost of small businesses that you just outlined for us, that you can find, you said from 500 EBITDA up to 5 million EBITDA, you can, you can find businesses of 2 and 3 and 4 and $5 million in earnings that don't trade for more than 5x4 or 5x. That's remarkable. I mean when you, when you say, you know, the typical business is 3x that is a little bit lower here than here in the US where probably a similar business is going to be 3 and a half to 4x. Things have, you know, those multiples are inching up ever so slowly as this space becomes a little hotter. But it feels within the same ballpark. But once you get into larger businesses, 2 and $3 million of earnings, the, the multiple goes up quite a. You know, starts, starts going up, starts moving up. But it doesn't sound like it. It sounds like it barely moves between a million and 3 million in Australia. A million and 4 million. So you should really be buying 4 and 5 million earnings. Businesses, I guess is the is. Is the future looking plan.

[Simon Plummer]

That's exactly right. And that's the one of the thesis behind Arbor Permanent Owners is essentially in Australia you can buy businesses that generate more than $5 million in cash flow for four times. And that's what we found. Our first acquisition is exactly that. And we know that there's many more out there at the moment. And with the retiring baby boomers there's many, many more to come to market. So the market is vastly different in Australia. One of the primary reasons why businesses trade at a lower multiple is there's no funding. Australian investors, equity investors, they want property, they want blue chip stocks, they want yield. They don't really have any interest in, you know, small, sort of clunky manufacturing businesses, despite the fact that they generate so much cash flow. And we don't have SBA loans. So you have to go to what, we only have four banks in Australia. You have to go to one of them. And they're extremely risk averse. So it's difficult. You know, it's. These businesses are too big for opportunistic solo investors, but also too small for typical private equity. So there's this gray zone where these businesses make 5 million in free cash flow a year that essentially don't have an obvious buyer. And that's what we're trying to solve for other permanent owners.

[Phil]

I'm surprised. I mean, one of the things that we hear here is that private equity has come down to $2 million in earnings is always what you hear. But you'll hear other people say there's private equity activity well below even that. So private equity in Australia doesn't look below 5 million. You don't think that's too small?

[Simon Plummer]

Too small. Their incentives aren't aligned to buy businesses that are generating that, you know, that low earnings. But also the main reason, and the main reason I decided to partner up with Jason Andrews and Rowan Grant at Arbor was that you need an operator's perspective. You need to have run a small business before to understand what small business world is. This is not private equity where financial engineering and turning up to a board meeting once a month and pointing fingers is what generates returns. You have to be down on the factory floor talking to staff, hearing what customers are saying to build a business. And it's messy and a bit clunky and a bit dirty and private equity don't have those operating chops to be able to effectively do it in small businesses generating that little earning. So, yeah, the team and I at Arbor are all business owners. We're not private equities. We've built our own businesses, we've been in the trenches, we've done personal guarantees. We know what it's like as a small business owner and that's what gives us the best position possible to be able to acquire these great Australian SMEs and grow them for many decades to come.

[Phil]

Yeah, well, it does sound like you're, you're very well positioned. Simon. One thing on the challenge being as attractive as these, the price point is for so many of these SMEs as you call them, of course in the States we call them SMBs in is the lack of financing or the difficulty of coming by financing, which we have the SBA here. My best comparison, which you've already heard me refer to, is Canada, which of course is not Australia. So forgive me if I'm acting like the whole world is the same. But in Canada, you know, in my, in my interviews with Canadian guests I, I've asked about the lack of SBA and how do they get funding. And in Canada they're the big five, I guess in Australia they're the big four. In terms of the banks, you know, it's a, it's a, it's a, it's an oligopoly there as well.

[Will Smith]

But at least two of my Canadian

[Phil]

guests, I may be forgetting somebody actually had a lot of success approaching the banks, got very favorable terms. I can't quote you the numbers but, and I'm not sure they were, it was as little as like the SBA and it enables us to put 10 down. I'm not sure it was that generous in terms of how little my guests had to bring to the table, but it wasn't much more than that. And the point is that it seemed like at least the lenders that my guests found within the bank were starting to, or already did appreciate kind of this, this, this, this trend of the younger generation buying the businesses of the old generation and getting in on that, facilitating that. So, so I was really shocked from both of those interviews that oh, like actually a Canadian can go out and do this and, and you know, just as easily as an American, even without the sba. Do you want to respond to that? Is, is it possible that that could be the case in, in Australia or do no such lenders exist?

[Simon Plummer]

They exist. It's extremely difficult. But the banks are starting to turn their minds to it essentially because they're forced to. There's 50,000 plus small businesses in Australia that are owned by business owners greater than 60 years old. And so they have to figure out how they can fund the next generation of business owners because otherwise what are these businesses going to do? It's the engine room of our economy. So it's possible what a searcher will need to do in Australia is really convince the bank why they're the best person to operate that business. A fancy three way model, a slick slide deck, it'll count for nothing in front of a big four bank in Australia. You need to be able to explain what you're going to do to this business and why it's going to continue generating the earnings that it has. And if you can't demonstrate that, you'll have a very, very difficult time.

[Will Smith]

August Felker is a two time successful searcher. First with a traditional search fund. The second time around he did a self funded search. Today August runs Oberle Risk Strategies, an insurance firm with a dedicated practice group for searchers and acquisition entrepreneurs like you. If you've got a business under loi, Oberle will provide complementary due diligence on that business's insurance and benefits program. A great no risk way to get

[Phil]

to know August and team.

[Will Smith]

They love helping searchers. They've worked with hundreds. Oberly is a specialty insurance brokerage for searchers by a former searcher. Check out oberly-risk.com O B E R L E- risk.com link in the show notes.

[Phil]

Well, before I let you go Simon, toward the end of the call we're gonna, we're going to just talk more about what you might want to tell would be searchers or searchers in Australia about you know, the market there and it's, it's, it's idiosyncrasies. Okay, but let's return to bt. You acquire the business, you and wife moved to Sydney. What's the transition like?

[Simon Plummer]

Transition was reasonably straightforward. You know, I definitely went into it more ignorantly than I should and you know, that was due to my youthful optimism I had at the time and you know, anything was possible. The first year was pretty tough. I underestimated how hands on small businesses are and I found myself quite literally on the machines, you know, making widgets day in, day out and not doing the things that I should have done. It was the best MBA that I ever could have asked for and I'm extremely grateful that I had the opportunity to operate it myself for a number of years. Things that I found difficult, you know the business was very unprofessionalized on a front in its back end. So we every single widget had a pencil drawing and bill of materials that was still all in imperial despite the fact Australia moved to metric many decades ago. It's very unsophisticated in terms of pricing systems, customer management. You know, the fax machine was still in use. All those sort of good old school SME things were still in play. So it took much longer than I thought and it was probably a great test. My Patience. Learning that in small businesses, when you don't have scale operationally, financially, everything takes much, much longer than what you think it's going to be. When you just don't have money in the bank or people to go off and do things for you, it's really just you. And when you're stuck on the factory floor or, you know, busy doing other things, dealing with HR issues, everything is slow and it really takes time and you really have to focus on the things that matter to move the needle.

[Phil]

And so when you were on the factory floor, you literally found yourself being one of the crew from time to time to pitch in or say more about that?

[Simon Plummer]

Yeah, absolutely. Like, more often than not, I would find myself, I would go and see a customer and sell them the dream and get a big order and then realize we didn't have enough manpower on the factory floor to make it. So I'd jump in and make them myself. And, you know, I studied accounting. I had absolutely no idea what any of the machines were. And so the guys, the tradesmen on the floor had to just show me like I was essentially apprentice and make the widgets myself. So, yeah, it's manufacturing in particular, but small businesses in general, it's like juggling 10 hot potatoes and you really don't have, if you drop one, you really don't have time to pick it up again. It just is a bit of a self fulfilling prophecy of pain. So you've got to make sure that you just keep juggling everything at all times.

[Phil]

And were you disappointed? Did you have fetal position moments during this, this period when, when things are going more slowly, when you're actually becoming a guy on the line, like, what's your emotional reaction to all of this?

[Simon Plummer]

Yeah, I mean, when you buy a small business, you want to get in and you want to take over the world and it's frustrating when it doesn't just unfold that way. It was never panic or fetal position. It was more just general frustration. I never really questioned if I'd done the wrong thing. I always felt like I'd still done the right thing, but it was just a learning curve and it was steep and it was just a bit like getting punched in the face every day. But it was all sort of part of the fun in some sick and twisted way. I suppose there was a moment where I pushed cash flow too hard that was probably my second biggest learning. Cash flow is just, you know, I studied accounting. I'm no schmuck with numbers. But when you're managing cash flow in A small business, it's extremely difficult, no matter how much you understand, to read a cash flow statement or even build one yourself. Actually, managing in practice is just a totally different story. And I push cash flow pretty hard. I had a couple of hairy moments that I never want to go back to, but other than that, it was just a bit slower and more painstaking than what I thought.

[Phil]

And how did the team respond to you? What did you do to bring them into your way of seeing the world and what you were going to do with this business?

[Simon Plummer]

I basically explained to them on day one. I said, look, what you have built is incredible. You are the dominant manufacturer of tools for a huge community of tradesmen in Australia and they love you and adore you. My job is to not change anything that's been working. It's really just to help support you and keep empowering you to keep doing what you're doing. I'm not a tradesman. I don't have the skills you have, but I can create it. I can create a team, I can set goals, I can help supercharge the business. And I'm always going to listen and be open to everything that you want to tell me and how we can make the place better. And I. I set them a goal that we wanted to launch the business in the UK and that I wanted to make the business a successful Australian export story. And so we really set about trying to transform the business from the back end to create a platform that could scale and reinvigorate the brand. So we could launch in the UK and sit back and be proud of what we've achieved. And probably two to two and a half years in from ownership, we successfully launched in the uk. We sell directly to bricklayers in the UK and the US now, as well as throughout Canada.

[Phil]

So selling direct, you mean. You mean you have a website where an individual bricklayer will buy a tool for themselves?

[Simon Plummer]

Exactly. Yes. Yeah, yeah, it's it. We're really proud that we service bricklayers and masonry contractors essentially all around the world now from our little humble base in Sydney, it's it. We're really proud of what we've created.

[Phil]

And what are the products exactly, Simon, for those. And obviously speak to those who don't know the first thing about bricklaying and masonry.

[Simon Plummer]

Yeah, brick cutting machines. So brick paver and block cutting machines and hand tools that help a bricklayer lay more bricks more efficiently. So not the trowel or the string line, it's a series of clamps and brackets that help them Set up a bricklaying job to lay bricks more efficiently.

[Phil]

And why is this going back to the merits of the business? So you said that a key point here was the passion, the following that the products have. Why are they so hard for the Chinese to replicate, for example? Why hasn't this just been competed away?

[Simon Plummer]

Yeah, they're not hard to replicate, they're very simple tools. But what they can't replicate is brand loyalty, the feeling of ownership within a small business. A lot of the tools are for any more technically minded people out there. It's essentially a piece of flat bar with some screws and washers in it that hold up a profile and very simple. But Australians, and I imagine a lot like a lot of US masonry specialists, they like to buy American because they like to support their local manufacturers. The quality is different. But in widget making, no matter what it is, there will always be people that can manufacture a product that very similarly, it really comes down to, does your brand differentiate itself? Do people feel a part of your brand? Does it emotionally hit at the hearts of your customers? And if not, then of course the manufacturers in Asia are going to come in and clean you out. So you have to stay focused on the customer and the brand.

[Phil]

And you know, it's so interesting that of course it's a Warren Buffett ism, his appreciation for brand and I think Coca Cola is his sort of canonical example. And, and it is, it is a competitive differentiator, obviously. I mean, sort of by definition and it represents a moat and so on. But it's also unlike so many other things in business that can be kind of reverse engineered. It's really the, it's really the, the one that's hard to, hardest to kind of get your hands around.

[Simon Plummer]

The.

[Phil]

It's, it's so emotional. It's, you know, it's not like, it's not like, you know, doing the latest and greatest in manufacturing processes or whatever. So how do you steward something so delicate?

[Simon Plummer]

Yeah, it's like the first thing that you need to understand, I suppose as a small business owner, is that you have to live and breathe a small business. There's no pointing at board meetings, there's no transitioning in and out of the company. You need to be there living and breathing it and looking at the customer feedback that comes through the emails and those, you know, types of channels. You need to be in the minutia to really understand it. And so starting with that, you know, all, all important decisions really ultimately come from the customer. And it's never anything you know, it's not anything a big giant consulting firm will tell you. It's just a lot of really, really small things that you have to keep improving day in, day out over a long period of time. And so there's no real secret sauce to it except that that is a secret sauce. It's difficult to explain. No sort of, you know, McKinsey blog or, you know, article or blog on the Internet is going to tell you what the right thing to do is. It's the customer will and it presents itself in very small and, and often niche circumstances.

[Phil]

But, but, but maybe, maybe in the case of, in your case where it's a, it's a product and there are people using the product and you know, to make their living to, to earn their livings. Unlike Coca Cola where it's consumers, it's basically just being hyper attentive, hyper responsive to their needs. Just really kind of customer service and satisfaction and just over delivering there and which also on paper sounds pretty straightforward but really inculcating that culture is, is the hard part just getting all of your people to, to constantly over deliver in every little mini interaction with a customer.

[Simon Plummer]

Exactly. Exactly right. Yeah, you said it much better than I.

[Phil]

Fascinating. Okay, so it was, it was a $2 million business in. When you bought it in 2018, you did direct to consumer DTC website launches in the UK, in the US, in Canada. Take us up to what? That took you about two and a half years. Take us up to three years in what it, what did, what did it look like?

[Simon Plummer]

Yeah.

[Phil]

Are you still on the line using the machines yourself?

[Simon Plummer]

Thankfully, thankfully not.

[Phil]

How long did that last, Simon, by the way?

[Simon Plummer]

That particular 18 months of on and off the machines. I think defect rate tripled while I was on the machines.

[Phil]

But that brand loyalty really collapsed when Simon was out there making products.

[Simon Plummer]

Yeah, exactly. So three years in we professionalized the back end. We probably increased revenue to about three and a half million dollars. But you know, by changing the channel to market in overseas market, we were getting a little bit more margin along the way. You know, we never had plans on being a super high growth story that, you know, was going out to challenge the Husqvarnas and other big brands of the world. We just wanted to dominate our little niche. And so the total addressable market of bricklaying is fairly small. So in Australia we were encroaching 80, 90% market share. There really was not much juice left to squeeze and so most of the additional growth was coming from international markets and the UK in particular. We were fortunate that UK bricklayers often come to Australia on working holidays. They end up joining job sites here that are using BT Engineering's tools and then would eventually go home to the UK talking about the way that bricklaying is done in Australia. And so we had a head start launching in the uk. And so, yeah, what I did was I flew over to London, I rented a van, I loaded a back full of tools and I just started cold calling people and just turning up, essentially.

[Phil]

And cold calling who, Simon?

[Simon Plummer]

Retailers, distributors, individual bricklayers, almost anyone that I could go and speak to to get some feedback about the market and, you know, give them some freebies. And ended up landing two retailers, spoke with dozens of individual bricklayers on big building sites and most importantly, probably signed up a YouTuber, a bricklaying YouTuber, a guy called Charlie Collison, who at the time he had maybe 20,000 followers on YouTube and he just filmed himself bricklaying all day. He's probably. He's got over a million followers these days. And we just rode his growth on YouTube. Essentially it was like free tutorials. He would just get on and say, look, I got these tools from this, you know, random Australian company. I'm going to use them today. And at the end of the video, he said, wow, they're amazing. You guys should all go out and buy them. And we sold out stock very quickly. We were frantically trying to air freight pallets over. It was. It was like incredibly busy and stressful, but also probably the most exciting period of my life. Staying up late 2am, doing phone calls with people in overseas markets. It's. Yeah, it was terrific.

[Phil]

Yeah, yeah. And had you. Were you sponsoring him or.

[Simon Plummer]

No, just giving him free tools? Yeah, I think we gave him a discount code. Yeah, we did. We gave him a discount code and said, you know, for your listeners, you can get 10% off. And we gave him a few percent as well. So it was pretty immaterial, really, for the marketing that we were getting from it. And, yeah, so these days BT in the UK is, you know, reasonably successful, was still growing. So I decided that the time came that it was time to employ a professional manager and came across a young gun called George, who now runs the business for Ed and I. And we catch up with him and support him where we needed, but gave me time to sit back and think about what I'd learned and how I buy more businesses like this, but at scale. Great.

[Phil]

Well, we're gonna, we're gonna get to that in a second here, Simon, but Tell us more about putting in a CEO or putting in. Is that his title? CEO?

[Simon Plummer]

Yeah, that's his. Yeah, that's his title. George? Yeah, he, it. I've been asked the question a lot, and I think most people think that they. My answer will be that it was stressful or hard or difficult to, you know, extract myself from the business, but it was really the opposite for me. I couldn't wait. Like, I. It was sort of a goal for me to build a business to a point where I could take a, you know, a small, modest salary but not be working in it. And so that's essentially what we achieved. I just, I used a recruiter to find George. I was attracted to him because he was mid-30s. You know, he wanted to be the master of his own destiny. He was showing all those entrepreneurial attributes that any small business owner wants in their CEO and he was technically minded. So being a manufacturing business, it was important that we had someone that understood how things are made. And George is a mechanical engineer and an industrial designer. So he was well placed to not only manage the manufacturing of the widgets, but also had that in sort of entrepreneurialism to want to grow the business.

[Phil]

And why were you so eager to go move on to your next project? Simon, I understand that your, your project, your goal had been to kind of have a business that. That pays you something, maybe not even a full salary, but something every year without requiring too much of your time. So maybe that's the answer. That was your goal and you achieved the goal. And so then it was time to figure out how to buy another business.

[Simon Plummer]

Yeah. And, you know, I was just young. I just wanted more. I just wanted more. More, more. Not. Not in a capitalist sort of materialistic sense. I just wanted to be exposed to more businesses and meet more people and try new industries and. Yeah, you know, working, you know, is, as a small business owner, working, it's basically a hobby. You know, I just, I love it. It's all I think about. I don't really do much else, so I just wanted to move on and, you know, see what else was out there.

[Phil]

And when you hire George, how much are you. Sorry, your partner's Ed. Your partner in BT is Ed. How much are you and Ed able to take out of the business for yourselves?

[Simon Plummer]

So we actually, we don't take out much. We want to reinvest as much as humanly possible. So we've kept. We take out small amounts each year, probably, you know, up to $100,000 each, but really not much. It keeps A few things ticking over in our personal life, but we're still young. We want to keep growing the business. We want to keep compounding it as much as we possibly can. So if the business is compounding at an acceptable rate, why would you take it out? Assume you don't need the money to live your life, keep it in there and keep trying to grow it.

[Phil]

And how old are you now, Simon?

[Simon Plummer]

36.

[Phil]

36. So we are going to start wrapping up. I want to hear of course about Arbor, which we've teased. I want you to speak to Australian searchers. But before we get to those last two topics, you, you have made this feel easy, Simon. And I think I said that again because I think in the pre call you did the same thing and then at the end you said but I just want to, I want to be clear how hard this has been. So, so it feels like it's been not that hard. I mean you told us about how you were figuring out, figuring it out as you went. How you actually had to learn to use the CNC machines yourself. Like there was a, there was a steep learning curve there, but that you were also kind of having a blast. What's the, what's the net netted out for us here? How, how should we see your journey as just a party with some, some hard spots or where was or what? I mean why, why shouldn't everybody listening just want to do what you did or should.

[Simon Plummer]

Yeah, I, I, I, I apologize if it came off across that I was saying it's all too easy. It might be my Australian, she'll be right way of talking about things. Yeah, like I would highly recommend that people just don't jump into small business ownership. It is extremely difficult, extremely difficult and stressful and you know, DNA altering stress along the way. You have to be a particular type of person and have a particular makeup to just get a ticket to the game. And then when you are in the game it's still very hard. Waking up at 2am Thinking you're going to vomit from the stress of making payroll. It's a feeling that you wouldn't wish on anyone. That's the sort of stuff that you get in small business world and the constant long term anxiety you deal with, particularly being a smaller business where you think maybe today's the day I wake up, I open Instagram and the billion dollar competitor has replicated all my products and I have to shut the roller door today. Like it's a, it's an everyday ongoing anxiety that you need to learn to Live with. But yeah, ticks the boxes for me. As sick and twisted as it is, you know, it's. I suppose on one hand it's easy for me to say because everything's ended up okay. So, you know, listeners should just note that there is a significant amount of bias, of survivorship bias coming through and everything that I'm saying, for every me, there's another one or two that it didn't work out as well.

[Phil]

Yeah.

[Simon Plummer]

So go out. My advice would be go out and talk to some small business owners and ask them some really detailed questions about what their life actually is like beyond the facade of what it appears. Because I guarantee there'll be stories of great sacrifice, of stress, of hardship, of anxiety behind that success. And it needs to be taken into account before you think about it. I think these days there's so much talk about buying a small business and the search fund community. And it's almost like people are saying working in a corporate job on a good salary is almost a bad thing. Like, why wouldn't you want to go out and buy a small business? Well, let me tell you, there is absolutely nothing wrong with a great job, paying a great wage that supports a family that you can more or less switch off at 5pm on a Friday night. That is a fantastic outcome. And do not ever let anyone tell you otherwise, because small business ownership, it's, it's frankly hard and it's, it's not for everyone.

[Phil]

And, and what about you? Simon is specifically is sick and twisted that you, that you prefer this life?

[Simon Plummer]

I think I'm just so hell bent on just being content in having a go and seeing if it works out. It, it's, it's hard to articulate, but, you know, I just, I want to be the master of my own destiny and be proud of what I've achieved. And it's difficult to achieve that in a corporate setting, but for better or for worse, in a small business, it's within reach. So it's. Yeah, I mean, small business owners, we sort of have this. It's a bit like a, A badge of honor, you know, it's like a, it's a community that we all sort of, you know, are proud to be in, but some days wish that we weren't, but it's important to that sick and twisted sort of box in our head that needs to be ticked.

[Phil]

Okay. Okay, great. Now, what would you say to. Well, first of all, is there kind of a. Is there you referred to community? Is that a community of small business owners or specifically searcher now owners. Is there an ETA community you're part of in Cindy?

[Simon Plummer]

There's a growing ETA community in Australia. Very, very small. Very, very small. So your former Australian guest, Pete Seligman, he's you know, the sort of the unofficial guru of search funds in Australia. It is growing but you know, the number of searches in Australia would be less than 50, you know, so very, very early days. It's more of just a community of small business owners in general. It doesn't need to be the, you know, ex consulting searcher that is trying to find their first business. But really, you know, through that community is, you know, how I've met the most impressive people in my life. Not because they're, you know, running the biggest companies or the most impressive companies. It's the smaller companies, the niche ones that dominate a market here and companies that you've never heard of that are wildly successful in their own right. That's the community I'm talking about. They're the people that are most impressive to me.

[Phil]

Great. Anything you would want to tell Australian searchers or would be business buyers who you know about maybe about the idiosyncrasies of the Australian market? Let's pretend that such a person is listening to podcasts and hearing a lot of stories from the US and from elsewhere. So maybe they, they, maybe they don't know how such those stories or how those markets differ from their own. If, if there is a significant difference. We've already talked about access to financing, but anything else.

[Simon Plummer]

Yeah, I, I'm not, I don't think it would be specific to Australia. Maybe it is a little bit more. But in Australia I tell people that you can leave your intelligence at the door in an SME landscape. In Australia, people in a small business don't care that you're ex consulting or investment banking or a lawyer or an accountant or wherever you come from. It's completely irrelevant. They need to see the authentic side of you, the down to earth side of you, the humble regular old Australian you and particularly the vendors throughout the process. If you position yourself as a micro private equity firm, you just won't get access to the right business owners in Australia. There will just be a huge amount of resistance to anything that looks and feels like a corporate finance suit essentially. Yeah, the advice would be to just almost forget what you know and forget what you've been trained and just be you and be authentic and try and convey that as best as possible. And if you do that, you'll find the best businesses and the staff will really Engage with you and you're more likely to be successful.

[Phil]

And what about Simon being somebody who's probably going to be a little bit younger, maybe if they're a searcher than a traditional business buyer in Australia. How do owners react to a 30 something? How do business brokers react to a 30 something saying that they want to buy a business? You, you, you found yourself bumping up against of basically a bunch of rejection, which is why you launched resolve. So are 30 somethings, who are, you know, searchers or 40 somethings, whatever, going to still experience that or have our business sellers, business owners and sellers, business brokers more used to that profile?

[Simon Plummer]

Business brokers are a little bit harder to crack. Business owners, I found actually if you position yourself in the right way like I described before, business owners, you know, they want to send the elevator back down to the younger generation and they can typically see themselves in you 20, 30 years younger. So business brokers are getting more used to it, but definitely they don't want to waste time. They're looking for the fastest way to commission. And the fastest way to commission is someone who has lots of money in the bank account and can settle as soon as humanly possible. And that's typically not a young person. So I'd highly recommend trying to get in front of the vendor as quick as humanly possible and explain the vendor being the seller. The seller, yeah, yeah. And you know, explain to them you don't know. You're not a guru, you're not an expert, you might not be a tradesman, but you're well intended and you appreciate that this business has been successful for many decades before you and your only goal is to continue it. And they'll appreciate that and understand it and be more endeared to you and be more likely to sell your business over someone who might have all the money in the bank and be ready to settle.

[Phil]

Great, Simon. Well, round us out now by telling us about Arbor. Tell us more about what this project is. What are you building?

[Simon Plummer]

Yeah. So Arbor will be what I'm sure will be my life's work. It's a culmination of owning and growing small businesses by myself and by my business partner, Jason Andrew and Rowan Grant. Jason Andrew is well known in the Search Fund, our searcher community in Australia. His financial services group does all the buy side financial due diligence for almost every searcher here. So listeners will probably know him. And I'd encourage listeners to look up SVO Financial or Assurity or Rowan's part of the business Arva Capital, which has a highly impressive venture capital fund behind it. We joined forces because we're both business owners and we both saw the opportunity to buy these wonderful Australian SMEs at a fair price and just continue to own them for many decades to come. So we're not private equity, we're not looking to rip and strip over five to seven years. We're looking to be almost Australia's first Berkshire Hathaway Cross Permanent Equity Cross Constellation Software, which doesn't exist here in Australia. Like I said before, everything comes later down under. So we're really the first people trying to replicate that. And we've, we're just two weeks away from closing on our very first acquisition. A wonderful business in the materials handling sector. Been established for 40 years, generates more than 5 million in free cash flow a year, services all Australia. And, you know, once we get our feet under the desk, we'll be looking for more materials handling businesses in Australia that we can add into the fold. So we've, we've managed to do that. We really kicked off in, in March or April this year and we're settling in a couple of weeks. So it's been a busy couple of months. But it, it's super exciting and I think this is the future of, you know, entrepreneurship through acquisition. This size business that we're talking about. There's just a tsunami of businesses that will be coming to the market in the coming years and particularly in Australia, there's no obvious buyer. And so Arbor Permanent Owners is positioning itself to really dominate that sweet spot of probably 3 to 6 million dollars in earnings a year and be the proper custodian of them and continue to operate them successfully for years and years to come.

[Phil]

Simon, you said that there's nobody filling, there's a market gap here, that there's no other kind of group that has assembled, bought a portfolio of businesses with the idea that they would just continue them on and not try to take a more private equity approach to them. I'm surprised to hear that there are, there's no rich family or rich person who's ever attempted this. There's no, there's no holding company, there's

[Simon Plummer]

opportunity, opportunistic investors and maybe the odd family office that have bought one or two businesses like this. But they've never really done it in scale and they've never really done it in the purest sort of permanent equity style sense that where we're intending to do it on. So, you know, in the Berkshire model, it's extremely decentralized. You Know, there's a very lean head office. They're really set up to buy the best businesses and just let them go doing their thing. That's essentially what we're replicating in Australia, and that's very unique to Australia. So we're in a way breaking some, you know, you know, uncharted territory. But we believe that it's the right way to buy these businesses. It's the most sustainable. It's what's going to ensure their success for a long time to come. So, you know, Jason and Rowan are incredible people to partner with and, you know, as a team of small business owners within our own right, we're pretty well positioned to find them and operate them.

[Phil]

And have you raised money for this project?

[Simon Plummer]

I assume we did, yeah, we raised, we just. Well, at the first, the first acquisition, I should be careful what I say we raised. We raised. I'm not sure I can say more than $10 million is what I'll say to acquire the business. And then we got some debt from a big four bank as well. But a very modest use of debt, a very modest use of debt is the way we're acquiring the business.

[Phil]

And so are you raising deal by deal? How is the structure going to be?

[Simon Plummer]

Yeah, so we're structured as a company, not a fund. So we have no end life. We will not be raising capital ever again. The capital raise is over. We will be harvesting the cash flows from the business and using a modest amount of debt to acquire more businesses. And eventually, after about year four, five or six, the cash flow wheel really kicks into a gear. And that's when we'll start to be able to buy two, three companies a year. And so, you know, inspired by companies like Tiny and Constellation Software, who raised about $20 million in the 90s and they've compounded that to tens of billions of dollars, we are trying to do the same thing, raise once, harvest cash flow, compound the capital, acquire more businesses and, you know, create a, A, a big group of the best SMEs in Australia.

[Phil]

I love that, Simon. So. So just to be clear, you raised something over 10 million. You have to be vague about what the fir for your company. Your, you know, if this is a startup, if you will, not startup in the traditional sense, but. And you use that for your first acquisition and you probably will have some leftover for subsequent acquisitions and then you plan on all future acquisitions, essentially, or most of the future acquisitions just being paid for out of the cash flows of the earlier acquisitions. So. And this is an environment where you can buy a business generating $5 million in cash flow in earnings for 4 or 5x. Really, really compelling, really compelling multiples for some serious earnings. At least compared to what we're used to hearing about in the stories of individual acquisition entrepreneurship. You know, you know who this parallels most closely is Chenmark. Have you heard of Chinmark?

[Simon Plummer]

Yeah, yeah, yeah.

[Phil]

So go ahead.

[Simon Plummer]

Interestingly, if you've come across serial acquirers in Scandinavia, in Scandinavia we take a lot of inspiration from the Scandinavian market. It's a well trodden path for the last 20, 30 years of industrial serial acquirers. Technion is a good example. They there's some fantastic case studies out there that I'll share with you after the call. But these businesses are focused on buying boring industrial cash generative businesses at fair prices and holding them forever. And the capital compounds at an extraordinary rate. And it's a really compelling and inspiring way to acquire business.

[Phil]

And, and I'm sure there are just people salivating listening to this Simon. I mean it's really a compelling prospect. You have said that part of your edge, you're in your partner's edge is that you are small business operators yourselves, that you have the chops, the operational chops. So I guess the. I can probably answer my own question here, but you do feel like you probably needed to go through the BT engineering experience before you could build arbor. And so for the person listening who has yet to buy their first business, would you suggest they do that versus start, you know, just basically, basically try to skip that and do an arbor?

[Simon Plummer]

Yeah, look, I think you'll have a really hard time. Look, if you raise other people's money, you're going to have a really hard time managing their money in the small business context without having some prior experience as a business owner. So yeah, I'd say start smaller, not too small, but just smaller and get some time in the hot seat running a small business. Because the first thing they need to figure out is that small business world might not actually be for them. And that's a very realistic outcome for many people that they find out that it actually it is difficult, frustrating, stressful. You know, typically these people come from, you know, very high performing teams and big consulting firms and they get out into the real world and they realize that they're not surrounded by these, you know, highly driven A types anymore and they don't get the same energy and the same inspiration from their work and as they once did and they realized that actually their corporate job was fantastic and they loved it and there was the obvious downsides of a corporate job, but it was better than the alternative. So they first need to figure that out, and then the second is that they need a track record of growing a business in the real world, a small business. And, yeah, so I'd highly encourage them to do that. The only other option that might be there for them is what we're looking to provide is saying, look, being a searcher is difficult. Arbor Permanent Owners is going to be building out a CEO school. We're going to be looking to drop young, ambitious people into our portfolio companies to become CEOs one day. Come and have a chat with us and we can drop you in as a chief Commercial officer or chief of staff or some sort of sidekick role within one of our businesses. And we can train you and you can get a feel for it and you can see if the SME world is right for you and if Arbor is right for you. And then, if so, great. Well, you'll be next in line to be the CEO of one of the businesses we'll buy. So, yeah, it could be a good avenue for people out there. And if so, please drop me a note.

[Phil]

And on that note, Simon, how do you like people to reach out?

[Simon Plummer]

Just LinkedIn or Google. Other permanent owners? Yeah, either or. Happy to have a chat with anyone and, you know, answer any questions that they might have in more detail that they've heard today.

[Phil]

Well, fascinating story, Simon. From building biz by sell in Australia to buying a beloved manufacturing business, to putting in a CEO, to now building a permanent equity company. Really, to be clear, not. Not a fund. Anything that we didn't talk about that you wanted to say?

[Simon Plummer]

I don't think so. No.

[Phil]

Good.

[Simon Plummer]

Been a terrific chat. Thank you very much. I appreciate it.

[Phil]

Well, congratulations, Simon. What a fun run you've had since, I guess, eight years, 2016, but so much more to come. So, really eager to see what you do with Arbor. And, yeah, congratulations. Great conversation. We'll be in touch.

[Simon Plummer]

Thanks, Phil.

Cheers.