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- [00:00]
Will Smith
Today's guest was vacationing in Hawaii when he received an ominous request from his office. They were asking him to, quote, hop on a quick call. He knew what it meant. He'd been on the other side of those calls before. And just like that, a 10 year career at SAP came to an abrupt end for Sean Lindley, victim to the layoffs sweeping tech in 20, 22 and 23. Well, after some soul searching and reflection, Shawn decides on buying a business for his next chapter. And today he owns forklift repair business R&R lift. Decades of history, great margins, B2B, essential service, combination of recurring and repair revenue, more demand than he can handle and last but certainly not least, a glorious 1990s vintage website. You can hear my enthusiasm for this business. Two key features of Sean's story to call out. First, how he initially lost the business to a competing buyer. Happily that deal died and it came back to Sean. We discussed the importance of hanging around the hoop. Second, how Shawn leaned on an experienced business buyer and former Acquiring Minds guest for counsel and coaching through his search. Now of course, many searchers ask for help, but Sean formalized the engagement and volunteered to pay his coach for the time. The model worked well, we unpack it. Here is Sean Lindley, owner of R and R Lift Announcements M and A Launchpad is back for its spring show. M and A Launchpad is a one day event that brings together searchers and independent sponsors, seasoned business buyers, owners and private equity investors to go deep on buying businesses, finding financing and closing acquisitions, meeting investors and lenders, learning value creation from those who have done it. These are just a sampling of the workshops and panels that are packed into a very full day and that day is May 3rd. The show is in Houston. The organizers are running a promotion just for us. $200. Off with the code acquiring minds go to malaunchpad.com and use the code acquiring minds all one word or use the link in the show notes. Also, if you haven't checked out Smith List for a while, there are some great opportunities posted, including a 120 year old manufacturing business recently acquired by a Holdco is looking for a president, a $6 million commercial roofing business is also looking for a president and an owner and investor is looking for an entrepreneurial director of operations to build and operate five clinics in a weight loss franchise system. Head to smithlist.com to check out these new roles for entrepreneurial operators. And while you're there, sign up for the alerts so that you're notified as we post yet more opportunities from the SMB ETA ecosystem. Smithlist.com Smithlist.com 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 people who do it. Running payroll, paying your bills, closing your books and producing financials. These are critical tasks every business owner must do or oversee. But spending time on them distracts you from the leadership in growth work you want to do. So let system 6 do it for you. Owned and led by a former Searcher, Chris Williams, System 6 is a leading outsourced finance team for hundreds of SMBs, including over 50 searcher acquired businesses. Chris, Tim and the System 6 team understand firsthand the challenges, the opportunities of jumping into a business as its new owner. So whether you own your business already or have one under LOI, talk to System 6 about how they can give you time back and improve your financial operations. Mention Acquiring Minds and they'll provide a free review of your books and financial ops, a $500 value. Check out system6.com, link in the show notes or email helloystem6.com Sean Lindley welcome to Acquiring Minds.
- [04:58]
Sean Lindley
Thanks for having me.
- [04:59]
Will Smith
Wal Sean we were connected by former guest Mike Loftus, whose role in your story we'll get to, but Mike thought that you had some great experience to share. I agreed. Let's get right into it. Sean I guess the story proper begins on the road to Hannah on Maui.
- [05:20]
Sean Lindley
Yeah, yeah, absolutely. It's, it's something that changed the trajectory of my professional career and why we're talking today. Just a quick background on myself. I, you know, professional career wise. I had worked for an SMB marketing company and in the last 10 years I worked for a big global tech company called SAP. Rose the ranks through there. I started out selling SAP Solutions, had what some might call a successful sales career. You know, won rep of the year a couple times. I moved into leadership and started leading direct sales teams and had a lot of success there and then was a became an RVP there for SAP. I love my colleagues. I was so grateful and thankful for the life that had helped me build up to that point. And yeah, so you know, as some of the listeners may or may not know, 2023, 2024 layoffs had started to occur and so I had heard rumblings about it. But you never think, oh, it's going to be me based off of the career that I had had and the relationships that I had built and my career trajectory. So I was especially sales Yeah, I.
- [06:41]
Will Smith
Would think that, you know, revenue centers of an organization are going to be kind of the last to be touched.
- [06:49]
Sean Lindley
Yeah, yeah. That I felt the same way. And so, yeah, I mean I have a story of. It was December 30th of 2023 and I was in our hotel room getting ready to take a much needed vacation to Hawaii. And I was helping our sales teams knock out deals with CFOs at 5:55pm, you know, right before, right before New Year's. So got on the plane, went on a much needed vacation to Hawaii. At the time I was really excited. I had, it was going to be my 40th birthday. I had a baby on the way, which we were really excited about and we were going to go have a, have a nice vacation. And so January 2nd, I was on the road to Hana going for a nice little drive and I got the Microsoft Teams message saying, hey, can you hop on a quick call? And I knew what it was about because I had had to unfortunately deliver the same message and hopped on the call and was let you know was they basically informed me that my position was being eliminated and it was obviously a big shock and kind of like, what the heck do I do? So took the rest of the vacation. I was like, well I'm gonna enjoy it because I don't have to show up, show up. I think one of my friends texted me, there's a line in Friday, they're like, how'd you get fired on your day off? And I didn't get fired, but yeah, I got laid off. So no, no ill will. I still talk to a lot of my, my colleagues, but, and Sean, just.
- [08:33]
Will Smith
For a little more context, in my understanding is that an enterprise software sales you can do very well at, at the upper echelons. Am I right?
- [08:44]
Sean Lindley
You are correct. Yeah. Enterprise reps, they're, they're making well into the six figures. When you get into leadership, they provide a great quality of life. I, I was very comfortable in what I did. I, salary plus commission plus equity in the company which ultimately ended up helping me in the long run to acquire the business that I acquired. You can build a very nice life. So I naturally, after you get over the shock, you start making some phone calls, talking to people, seeing what's out there. I was fortunate enough to get a severance package which helped me in my ETA search. And I'll talk a little bit about why that was important to me to be able to dive in head first into one thing instead of trying to search on the side While I was employed. But I needed time to clear my head and so I ended up taking a three week trip with our, with our dog. We went down to Mexico and rented a house and kind of just did some soul searching on what was next. It was, I felt it was a big pivotal point in my Life. I was 40, I had a baby on the way, and I needed to decide if climbing the corporate ladder was going to be for me or if I was going to go back into eta. So if you take a step back into my. At the start of my professional journey, I had done ETA before I even knew what ETA was. I had worked at a franchise restaurant while in college and I ended up buying that business from the owner who wanted to get out. And I was 23 at the time. I had no idea what I was doing, but went in there with grit and owned it for three years and ended up selling it. And I saw, you know, we made a little profit on it and it kind of changed my mind on what the power of ETA was. But at the time I just wanted to go into corporate and do sales. So I ended up being stuck in corporate for 14 years.
- [10:53]
Will Smith
But, but was that a good experience or, or an experience that wet your appetite for more small business or the opposite or what?
- [11:01]
Sean Lindley
It was a great experience. I, I didn't graduate with a four year degree, so I just went to community college. And so for me, I felt like I got an MBA in how to run a business, payroll, hiring, being a leader, all the things that come with owning a business. At the time I just was not really wanting to be in the restaurant industry. And I know a lot of guests talk about the pros and cons of restaurants.
- [11:27]
Will Smith
Yeah, well, and I recall from the pre call you saying, you know, it basically came down to the daily grind of managing what like college kids or whatever, teenagers at the pita pit at a PETA Peter shop.
- [11:43]
Sean Lindley
Yeah, yeah. Leaving 18 year old stoners was, it wasn't for me. I wanted to work with a higher caliber of first people.
- [11:52]
Will Smith
Okay.
- [11:53]
Sean Lindley
Yeah.
- [11:53]
Will Smith
But still it didn't completely turn you off to small business, just that, that category.
- [11:58]
Sean Lindley
All right.
- [11:58]
Will Smith
And so you're in Mexico and at this pivotal moment in your life. And yeah, basically what I did is.
- [12:06]
Sean Lindley
I created some might call it a pros and cons list, but I created all of the things that were really important to me and went through a life exercise and placed a value in what, what I value. So with having my son on the way, I knew that spending time with him was Gonna, was gonna really be the most important part of my life. I, when I was at SAP, I spent a lot of time on planes. I was two to three to four times a month traveling on planes. I'd come home after a business trip, leave my suitcase in the corner, and then just throw my clothes on the floor and turn around the next day and do it all over again. So I didn't want to miss, I didn't want to miss a lot of those key growing moments in his life. And so I really started talking to my network about getting back into entrepreneurship. And I just basically made a decision that I was done with corporate. I didn't want to be, I didn't want to have to climb the corporate ladder. And I also use this analogy a little bit too, but sales is kind of like the NFL. It's a young man's game. And you don't see a lot of 60 year old, 55 year old leaders, sales leaders out there. You know, at some point they make a pivot. And so I wanted to take more control of my life. I wanted to be in a position where I could actually have an impact and not be in the middle management role that I was in. So I dove head first into eta. The first thing that I did was I'm going to give you a plug. But I listen to every single Acquiring Minds podcast show that I, I could, I listened to two to three a day. And the community you've created is incredible. And it's just, it's really inspiring to see all of the, all of the guests and all of their different paths and their journeys, how they came about, how they source deals, how they got creative in funding them, the stories they have when they operated the business. I have a few of those myself. So it's, it's just extremely helpful and it's full circle to be sitting here with you today. And I know other guests say that, but I'm going to say it as well because it's true. Because this time last year I was gearing up to go to Mexico and now I'm a hundred days into owning a forklift business.
- [14:39]
Will Smith
Amazing. Sean. Well, I never tire of, of, of hearing about these, this full circle from, from listener to, to guest. It's really, really meaningful. So I really appreciate you saying that. And it's always, you know, it's always to the guests credit. I mean, you, you know, yeah, I'm, I'm out here interviewing the people to tell the stories, but you guys are the ones who actually went out and really did the thing, it's, it's no small thing to buy a business as we, we all know too well.
- [15:08]
Sean Lindley
Yes, great.
- [15:10]
Will Smith
Well, I appreciate it, Sean. Carry on. So, so, so you're binging Acquiring Minds and saying this could be it. This could be the thing.
- [15:16]
Sean Lindley
I'm binging acquiring minds. I am looking at SMB, Twitter every single day. I reached out to an old mentor that I had who was in franchising. He was one of the original kind of high ups at Peter Pit Corporate and he was now in a new endeavor. So talk to him. I never really wanted to go down the franchise route for a couple reasons, but I just wanted to start getting out there. I then started to think about, okay, so let me just go out and see what's out there. So naturally I went to Biz by Sell. That was actually how I had sold. My first business was through Biz by sell.
- [16:01]
Will Smith
Oh wow. 15 years ago. Yeah. Just goes to show, man, Biz Buy Sell. I mean I, it gets beaten up, but I respect that website so much.
- [16:10]
Sean Lindley
It's staying power.
- [16:12]
Will Smith
It's, it's, it's the aha moments that it brings to people. I mean there is, there is a magic to Biz Buy Sell. No question.
- [16:18]
Sean Lindley
I think the interface is still the same as it was 15 years ago. And it works.
- [16:22]
Will Smith
I think it is. What do the following Acquiring Minds guests all have in common? Doug Johns, Morley Desai, Tim Erickson, Chirag Shah, Shane Ursum. They all went through the Acquisition Lab, the accelerator in community for people serious about buying a business. But they represent just a sliver of the Lab 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 Deibel, author of Buy, Then Build, the 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. Chelsea, Then build dot com. So what'd you say?
- [17:31]
Sean Lindley
Basically what I did is I, I just, I, I started just signing NDAs and I, before I started doing that, to signing NDAs to look at businesses, I loosely created a criteria of what I wanted to look look at. It changed and morphed as I went through the process, but I knew I didn't want to be, be Doing franchises or restaurants just based off my experience. No knock to anybody out there. They, they work for sure, but just wasn't my cup of tea. So I really was looking at the home services, business, business sector. I also looked at businesses based off of my background and looked at a couple other ones. Obviously looked at Laundromats, but I hate folding my own clothes. So I could not see myself having to go in and fold clothes on a Friday night if the, you know, person doesn't show up. Yeah, pet services and yeah, I just started, I just started signing NDAs. I started connecting with brokers. I started looking at the financials, looking at the health of the business, the criteria. And then what I started to realize is I need to get a little more structured. So I found a person, a person who had a really good spreadsheet to help me with understanding criteria. Debt service coverage ratios, revenue purchase price, just basically that I could go and plug in my, my own little model which really helped. Just kind of taking a step back as well. When I was at SAP, I spent 10 years working exclusively in finance and accounting. So I by no means am an accounting guru or anything like that. But my, I have a basic understanding how things should look. And so that was, that was helpful in my search.
- [19:38]
Will Smith
What was this? What was the end result of what this spreadsheet gave to you? It just allowed you to kind of debt service coverage ratio what you could afford, what you take home. What was the number that it calculated at the end of you plugging in.
- [19:55]
Sean Lindley
Numbers told you what exactly the first thing was. Plugging in debt service coverage ratio. So is this even lendable to a bank? Yeah, I had it kind of side by side. I had been starting to forge relationships with lenders. You know, I talked to friends who had done business deals. My lawyer, who is a good friend of mine, is in the, you know, in the, he has a good network as well, so leaned on him. I just, you know, I'm a sales guy at heart. So I just started reaching out to people and talking to anybody that would talk to me about what I wanted to do.
- [20:38]
Will Smith
And so, so you dialed in your criteria to, to what? And, and why did you, you did that? Because just this super wide net was kind of going nowhere. What was the evolution there? Because I, I think we talked about this in the pre. Call.
- [20:54]
Sean Lindley
Yeah, yeah, I, so I originally just cast a very wide net just to see what was out there and kind of formulate okay, what am I looking at? I should say along with that, that list of priorities that I had made, I wrote out things that I was passionate about and this, that's what led me down this other path, which I'll talk about. But my. For my search criteria I knew that I wasn't going to be looking nationally. I was geographically constrained to, to Austin, maybe San Antonio. But I was looking at businesses that were 750,000 to 5 million, a minimum of 350,000 SDE. The one of the biggest criteria that I personally used was I did not want to look at any businesses that were less than 15 years old. I wanted an established business that had gone through the ups and downs of the financial crisis Covid and had withstood those. And I didn't want to have an owner that was looking to sell and then possibly would want to get back into the business that I purchased down the road. So you know, for example, if it was a. We'll talk about landscaping, but a landscaping business, you know, they can sell their landscaping company but then after the, after their non compete is over, they could start a new one and possibly poach employees or you know, whatever reason I just, I really focused on retiring owners.
- [22:41]
Will Smith
Yeah.
- [22:41]
Sean Lindley
And that was also because in my personal wheelhouse, the area, the value that I could bring to a business was going to be on modern modernization, sales, energy, which is what I did with the business that I bought.
- [22:56]
Will Smith
Yeah. Yeah. Well I think that's a very strong criterion, retiring owner. And happily it's pretty common. I mean that is probably. That is, I would say, I think it's fair to say the leading reason that you see a business for sale on. On biz by sell. Maybe not, maybe not. Maybe that's overstating it. But most businesses that seem appealing seem to too often be at least more than half the time seem to often be a retiring owner. So that's good. Casting the wide net. So in fact being tighter in your criteria was better. Somewhat counterintuitive. But say, say more about that.
- [23:38]
Sean Lindley
I realized when I first started I can talk with anybody in any business, but if I was going to get anywhere, I needed to be able to speak the terminology, have a more defined criteria. I needed to build trust with the brokers I was trying to reach out to because there are a lot of searchers like me and how do they sift through? Who's serious?
- [24:02]
Will Smith
Yeah.
- [24:03]
Sean Lindley
And then I really wanted to go down and understand a particular industry or two so that I could understand metrics, market, how to drive the business forward, just all the different things. So what I did is I really started focusing and this Went back to what am I passionate about? And if you go inside my house, I have plants everywhere. I just, I love plants. I love backyards. I spent a lot of time in my backyard. I did a major backyard renovation. And so I started thinking about, you know, landscaping. It's a service, it's recurring revenue. There are some project based revenue so you can have a nice mix there. And I started really going down that avenue and doing my own proprietary search. So I created a onepage PDF letter with my picture on it. I had my own little palm tree emblem and as a picture of me and my family with our golden doodle, and just said, you know, hey, this is, this is who I am. I'm looking to buy a business and if you're interested, I'd, I'd love to talk about it. So I did, you know, nice manila envelopes, did a 150 mailers, got a little bit of a response. And how I was able to pull all that information is this is a quick plug for Fiverr, but I worked with a virtual assistant that was able to pull a set data list of landscaping companies. And I gave them all the criteria I wanted. I wanted a owner name, email address, phone number, have revenue in there if you're able to. The data wasn't perfect, but it gave me a list of 600 landscaping businesses in Austin that I could.
- [25:57]
Will Smith
600 in Austin alone?
- [25:59]
Sean Lindley
Yeah, maybe it was a little. It might have been a little, A little wider. And I think there were probably some Chuck in a trucks, but it was a large list. It was very large.
- [26:10]
Will Smith
Okay. Okay. And so you can literally mail. You can blanket all of the Austin or Austin, Greater Austin landscaping. Landscaping businesses. Okay.
- [26:21]
Sean Lindley
Yeah, I had a lot of, had a lot of return, return manila envelopes. I, I don't know that all of them were correct, but it did help me start conversations, which is what I was looking for. I was a straight numbers game.
- [26:33]
Will Smith
And. And how many did you send at the end? Did you say 150?
- [26:37]
Sean Lindley
Yeah, I was probably about 150.
- [26:39]
Will Smith
And how many calls did that lead to? Just trying to do the quick funnel conversion math here.
- [26:45]
Sean Lindley
About 10.
- [26:46]
Will Smith
10. Okay, so what is that, one in 15? So does that 7% something? 6%. 6. 7%.
- [26:52]
Sean Lindley
Yeah, yeah, yeah.
- [26:54]
Will Smith
And do you think that that was worth it? I mean, you didn't obviously buy. I know you didn't buy a landscaping business, but. But do you, for the listener, do you think that that's a technique that they, that you would recommend they try?
- [27:05]
Sean Lindley
I don't think it could hurt. I think I've listened to many guests talk about the benefits of proprietary search. I think I just listened to a guest who. It really helped him. Others said it's a complete waste of time.
- [27:18]
Will Smith
Right.
- [27:19]
Sean Lindley
In my opinion, I think if you are tapping into as many buckets as possible, that's how you're going to draw the most deal flow.
- [27:27]
Will Smith
Right. Yeah. It's so hard because it just, it only takes one. So it's hard to argue yourself out of just doing everything. But as I've said recently on the podcast, I tend to lean away from proprietary advocating. Proprietary these days just because I feel like I've talked to so many guests that said it wasn't a good use of time, but. But there are exceptions to that too. Anyway.
- [27:50]
Sean Lindley
Yeah, it's hard to, it's, it's hard to really quantify it, I think because all it takes is, it does take the one. You could also waste a bunch of time. I had a 45 minute call with a guy who owned a landscaping business who talked my ear off about his mom moving in with him. And I don't, you know, just a bunch of, a bunch of nonsense. So, you know, you can also say, hey, could I have spent that 45 minutes.
- [28:16]
Will Smith
Yeah.
- [28:17]
Sean Lindley
Networking with brokers or reaching out to accountants or going in door knocking on these businesses or what. Whatever you do in your search. So it's all, it's, it's a, it was, in my opinion, it was a numbers game.
- [28:31]
Will Smith
Yeah. And just curious, Sean, you, you mailed those out. Did you then follow up with email and email?
- [28:36]
Sean Lindley
I did, yeah. I had a, I had a sequence. So mail, email, email, follow up, text call.
- [28:46]
Will Smith
Oh, wow.
- [28:46]
Sean Lindley
Yeah.
- [28:47]
Will Smith
Okay. The 10 calls you had from the 150 letters, were those in reaction? Those must have been in reaction to your follow ups.
- [28:55]
Sean Lindley
Yes. No one contacted me off the mailer.
- [29:00]
Will Smith
Right.
- [29:00]
Sean Lindley
It was always in the third, fourth or fifth step. So persistence pays off.
- [29:07]
Will Smith
Right. Well, and this is, this is like Sales Tactics 101. So you were at home at this process.
- [29:13]
Sean Lindley
Yeah, I loved it.
- [29:14]
Will Smith
Yeah. First person on the podcast ever to say they like this part, but good, good. Yeah.
- [29:20]
Sean Lindley
Yeah.
- [29:21]
Will Smith
The salesman in you. Okay, carry on. So, so these, so landscaping.
- [29:27]
Sean Lindley
Yeah, landscaping. So, so at this point in my search, it, you know, flash forward. So probably into March, April 2024. I'm reaching out to businesses, I'm doing proprietary search, I'm spinning my wheels. Not a whole lot is happening. I'm just like, ah, man, this is tough. And there weren't a lot of landscaping Businesses that were even coming on biz by sell. So when I get going down One Direction, I'm like, I am going to buy a landscaping business. And so I listened to an episode of A Guest that you had with Shout Out, Michael Offis. He just, I listened to his story and, and just thought, this is exactly what I want to be doing. So he built a landscaping business and then started doing little, little mini M and a M and A deals after that. And I actually just talked to him before, before the podcast and we were laughing about, you know, how full circle it is and he, he still helps me with coaching and operations stuff. But I, I reached out to him and I just sent him a, sent him an email and told him, told him my story, told him what I was looking for and that I wasn't here to waste his time and I, I wanted to pay him for his time. I think that in order to show somebody you're serious, you know, sometimes you gotta, you gotta pay to play. And for me, I had, I did look at some different coaching programs and I did like them and I think they provide a ton of value. But for where I was at in my search, I wanted to go more industry specific because I was like, I'm gonna go buy a landscaping business. I need to talk to someone who's done this eight times. So I reached out to Mike, he accepted and it really helps change the trajectory of my search and helped get me focused, helped me bounce ideas off of, you know, what I was thinking looking at, looking at the actual deals and how does he look at this and what troubles would I run into down the road? And one other point I think I just want to make as I'm thinking about going through my search is we all have these network of our advisors, we have a friend who owns a business, a friend who's super successful and you can only, you know, you can talk to them and they'll, they'll give you a, give you a nice, you know, nugget or two. But no one's going to really know what you're going through on a day to day basis because it is a little bit more of an isolating journey when you're going through these, this search. You know, you can listen to podcasts and talk to people. But for me personally, the setting up with him having a weekly one hour call to go through everything that I was looking at, I would send him an agenda for what I wanted to talk about. It was incredibly helpful and energizing and just knowing that, hey, just keep plowing forward and something's, something's going to come your way and also helping you not fall into a deal because you really want to do a deal. I didn't have any sort of time limit with I need to buy a business by October 1st, you know, but you do feel the pressure when you're going through the search because it's costing you money.
- [33:01]
Will Smith
Okay, Sean, let's unpack some things here. That, that was great. So, so. Mike Loftus, Previous guest, Landscaping to be clear, Mike actually didn't buy his first business. He started his landscaping business, but learned about acquisition and has grown his business and through acquisition and in his, in his, in the ETA community as a result. But formally, he actually, he started his own business. But what resonated with you was just how quickly he was able to grow through acquisition. So, so his story inspired you not to go start a landscaping business. You still wanted to buy your way into the industry and grow from there. Okay.
- [33:37]
Sean Lindley
Correct.
- [33:38]
Will Smith
Early interview, too. I think Mike was probably in the 50s and 60s in there, I think.
- [33:43]
Sean Lindley
Yeah. Like I said I was.
- [33:45]
Will Smith
You really did.
- [33:46]
Sean Lindley
Deep, deep in the archives.
- [33:47]
Will Smith
Well, deep in the archives. And so you offered to pay him for his time. The, the, the exact figure we're going to leave out, but it was, it's a not insignificant amount. It's enough to, to make somebody, you know, commit to this relationship with you and, and treat it seriously. It's consulting. It's, it's really kind of in the consulting range. Some, you know, somebody that is really charging a professional service fee is kind of is what, what you guys arrived at. Go ahead.
- [34:19]
Sean Lindley
Yeah, yeah, absolutely. I, I'm, I'm always wanting to reciprocate value in any sort of, you know, relationship I have, business wise or other. So coming to someone and not really providing a lot of value to them was out of my wheelhouse and I wanted to demonstrate that. And second of all, to me, it was a drop in the bucket for the investment that I was gonna be making down the road.
- [34:52]
Will Smith
Yep.
- [34:52]
Sean Lindley
To make sure that I had someone who had gone through this exact path to help help guide me through, through the process. I, I had a pretty good baseline understanding because during this whole time I wasn't working, and so I was able to dive in 40 hours a week to really educate myself on debt service coverage ratio and operations and looking at financials and what the process was like with the sba. So I had a basic understanding, but I needed someone there to help me in my journey.
- [35:28]
Will Smith
Yeah, no, I, I think it's a really great model. So you offer to, to kind of basically put him on retainer. It's your, your offer to him because you want to be able to pick up the phone and have us have a, or have a scheduled hour long meeting, virtual phone call, zoom call with him weekly and run deals by him in your whole process. And by the way, Mike has now that worked really successfully with you. Mike mentioned it on Twitter and now he's got a stable of clients actually. So he's turned this into something that's great for Mike and people should feel free to reach out to Mike. But I also think that there's something generalizable here where for the listeners, if they're dedicated to a particular industry, although you didn't buy in landscaping and might continue to be valuable, we're going to get there. But if you, but particularly if you're dedicated to an industry and you've heard somebody on Acquiring Minds who bought into that industry, you probably have art, you listener probably already thought about reaching out to them. I have already. And you know, you get, they get on the phone with you for a half an hour, maybe even longer an hour. It's hard to ask them to do that again and, or, and certainly not a third and fourth time. And so if you, I think you were wise to, to propose a financial arrangement, I, and so I encourage the listener to, if they have somebody in mind, a guest in mind whose counsel they really seek on a regular deep mentor like basis to do the same. And I, and I bet Acquiring Minds guests, I'm speaking for all of them, all 300 plus of them would welcome it. I mean it really. And you know, I gu. What you're, what we're inviting here, Sean, is for a lot of people to email you to ask how much you offered because we're not going to say that publicly, but it's not an immaterial amount, but it's also not a backbreaking amount but, but it's an investment anyway. So it's a great model. So we add this model of mentorship, paid mentorship to the other options that we see. The acquisition labs that are sponsors of this podcast, the boot camps, the, the, the accelerators. So, so this is one more way to get formal education, formal mentorship through your process that you saw, through the search process that you sort of invented. So pretty cool. Pretty cool. And it sounds like again, not only has it worked for Mike, but it's worked for these other clients that Mike now has. So four and five other people have liked the model and are working searchers liked the model and are now working with Mike in the same way. So you started a trend, Sean.
- [38:03]
Sean Lindley
Hopefully it can help help somebody out there. And we'll need 5% for Mike down.
- [38:10]
Will Smith
The road for the blog.
- [38:11]
Sean Lindley
No, I'm just kidding.
- [38:13]
Will Smith
And was there an explicit accountability aspect to this? You kind of what you just told us sounds like you kind of had your own accountability. It was like okay, I have this meeting with Mike, I want to prepare for it, blah blah, blah. But was Mike also kind of leaning on you in a sort of accountability, accountability way like a personal trainer might like? Sean, how many, you know, how many emails did you send this week sort of thing?
- [38:40]
Sean Lindley
No, I, I don't. If you know Mike, I, I don't think he's going to be like how, how many push ups did you do today? That's not enough. No, it was real. The, the, it was really on me to provide, provide the whatever content or agenda and he or I would say hey, I want to pick your brain on ABC of the operations or how did you do this or how do you look at this deal? It was, it was just more for me and I used it just kind of as a second secondary like okay, I got this meeting coming up on Friday. I want to make sure I summarize all of my thoughts, get them over to him and then we can have a more of a formal discussion and he's prepared so it's not just willy nilly all over the place. Yeah.
- [39:32]
Will Smith
One feature of the, of this, of this communication with Mike that I recall is how one of your, I don't know if it was a thesis, but thoughts would, would be that you buy a landscaping business that was heavy on project and convert it into more of a maintenance business. Of course listeners will understand that that recurring revenue, what they call maintenance revenue is higher quality revenue than project revenue which is lumpy, blah blah blah. Everybody knows it's hard to find those maintenance businesses you. That are where the revenue is mostly maintenance. You're going to pay a premium for them. But there are a lot of project based ones and so if you can buy one of those with the idea that you'll convert the revenue over time. I've had many guests where that kind of is, is, is what they tried to do in their acquisition. Maybe that's an inroad into, into your dream. So, so what did that look like, that conversation with Mike look like?
- [40:26]
Sean Lindley
Yeah, as, as we were going through once, once I engaged him and we were doing our weekly meetings I, I found a, I found a business that I got excited about. It was a, if I remember correctly, it was doing eight or nine million dollars a year. It the SDE and I'm doing air quotes was around $900,000, but it was completely project based revenue. So when, so the landscaping business that I looked at and I spent, I had two three hour meetings with the ownership group to go through everything. They relied on large home builders. So what they would do is they would come in and do the landscaping after a large home builder like Lennar would build 200 houses kind of on the outskirts of Austin. So the last piece of the puzzle for building the home was going in, laying the soda, doing the, doing the sprinkler systems, irrigation and planting, planting the oak trees because we have a lot of oak trees here in Austin. So I went in and I started looking at the business and they had a ton of equipment that was not being in use, being put to good use. They had. The profit margins were very slim and they relied on these relationships. I think they had 10 total home builder relationships, but in reality it was five. And so I was looking at it and was thinking, oh man, I could get it, get my hands in this, get, get experience in landscaping and then try to start converting it over to more of a maintenance business. Because when I set out on this initial business buying criteria, I really wanted recurring revenue, I wanted maintenance. I wanted a very healthy mix of that I did for, for my particular taste. Project based revenue was, was not what I was looking to do. So I met with the ownership group and then part of what, during my deal reviews with Mike, we talked about why this may or may not be a good move for me and transitioning the company to really a maintenance business, especially on the commercial side, it was going to be a lot of heavy lifting. So I had submitted an LOI to the, to the ownership group based off of what I thought the company was worth because it was a project based revenue type company. They were not going to get the multiples that they were requesting. I want to say they were asking $3.5 million for it. And my offer was, was not going to be that just because I my. When I looked at the business and I saw these five relationships with large home builders, if I lose one or two of those, yeah, the business is crushed and there was a ton of debt because of the trucks, all the equipment that they had, then that equipment wasn't being used. So it was just too, too much of a pill to swallow. For me.
- [43:55]
Will Smith
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- [45:05]
Sean Lindley
Yeah, so at that point in my search, I still was, was going down the path, but it, we were going into month three or four and I, I understood that the process to buy the business was going to take several months as well. And I had six months of salary as part of my severance. So this whole time I, I was able to be, I was being paid. So I had the cushion of saying, okay, I'm not eating into any of my, my savings or the money money that I was going to use to invest in the business. But I was starting to feel the pinch a little bit of, okay, I gotta, maybe I gotta, I know I want to, I want to get back into entrepreneurship, get back to my roots, but maybe I should start looking a little wider. So I, I just continued on my biz buying journey and I have it written here on my whiteboard. On April 24, a deal that was on biz by selling was listed. And it was really interesting to me. It was a 31 year old forklift repair and maintenance business.
- [46:18]
Will Smith
Could, can you get any more quote unquote boring sweaty bis by selly than that? I love it. Yeah.
- [46:27]
Sean Lindley
Yeah. I took a look at it, signed the NDA. I looked at the SIM and thought, man, this is really attractive. What's the catch? And so I set up a call with the broker and told him of my background, provided my proof of funds, my just kind of quick bio. And he set up a call with the owners, the husband and wife.
- [46:59]
Will Smith
Mm.
- [47:01]
Sean Lindley
We had the call and I could tell that they had done several calls already like this and went through Kind of just the general overview of the business and why they're selling and I asked them some questions and they asked me some questions and at the end of the call I said I want to come meet you guys. So that call was on Thursday and I met the owner. On Saturday I go out, I meet the owner. He, he's been in the forklift industry for 40 plus years. He is about as straight as they come. And I will talk more about how amazing the sellers have been. I, I wrote on my whiteboard here too that seller relationships matter. The, they're these people, I can't say enough good things about them. They're very high integrity people and they've helped me during the transition. But anyways, I go out, I meet him, he shows me the operations and I like what I see and I say, you know what? I'm, I'm going to do this. So I said I'm going to submit an offer to you. Give me two days. I go, I draft, get my LOI drafted and I submit it and the broker tells me we've already accepted another offer. And I was crushed. And I just thought why did you not tell me that you were going to be reviewing offers but understanding the owners, they had been kind of down the line with another seller and they took the first offer that, that came in that looked okay. I found out later they, they had seven offers and the listing had been up for nine days. So.
- [48:52]
Will Smith
And how did you, how did you, if you were presumably checking biz buy sell pretty frequently, did you had you just not checked it for nine days?
- [49:01]
Sean Lindley
Tis it? I missed it. I, I, I just straight missed it.
- [49:07]
Will Smith
Yeah. So as fast as you act, you know, 36 hours after the intro call you, you go visit a, visit them. 48 hours or so later you submit the LOI. Still not fast enough.
- [49:19]
Sean Lindley
Yeah.
- [49:20]
Will Smith
And you're crushed.
- [49:21]
Sean Lindley
It was, it was a really good lesson and to everybody listening, depending on where you're at in your journey. I, I felt I did a pretty good job being prepared to lead myself up to the point to be able to submit. Lois. I had lender relationships set up. They knew my financial status. I had my lawyer set up ready to go. I don't think I had mentioned this, but I'd even created a website, SeanLinley.com just to send in my email signature and give the sellers of the businesses that I was looking at just give them a window into who I was as a person and what I was trying to accomplish. I just felt like it gave me a little Bit of a leg up. It was a simple whole, you know, little three page thing. It's not like, you know, Sean Lindley Capital Partners and Associates or anything like that. It was just me being re. Just being a real person. Like, hey, I'm, I'm, I'm looking to build a family business. Here's my background. If, if, if you're open, let's talk kind of thing.
- [50:25]
Will Smith
It was, I assume it was similar to what the PDF that you mailed out.
- [50:28]
Sean Lindley
Correct.
- [50:29]
Will Smith
So even with all your ducks in a row, you, you were pretty organized. You still. What, what is the, what is the learning there that still don't take in it, like, never take for granted. Urgency. Always act with urgency.
- [50:43]
Sean Lindley
I think act with urgency if you find something. I, if I'm looking back, I probably could have gotten the LOI out or came. Came with one because I knew I was very interested in it. I probably could have had one. And I just, for whatever reason waited, waited 48 hours just to do some updates on the LOI template that I had and I missed the boat. And I think if you really find something, you got to be able to act quick because this ETA community is growing and the person they accepted their offer from was out of state. They, they were not in Texas, they were not in the Austin area. So flash forward, they, they started going through their due diligence period. And I, this is another lesson. I didn't check in with the broker and I didn't follow up. I wish the seller good luck. And I said, if things change, let me know. But I never followed up after that. And I got an email about two and a half weeks later from the broker saying, are you still interested? The deal fell through and I said, hell yes, I am. Let's talk. And so then we started engaging and I submitted my loi, there was one or two small revisions, and we were off to the races.
- [52:03]
Will Smith
So Sean, on this point about following up, you. The, the expression is hanging around the hoop, right? So, so listen or hear. Hear this and hear it good. You should. If, if it's a deal you really want, you gotta, you gotta hang around the hoop and follow up with the broker or the seller and say, hey, did that deal close? Because deals die. And d that, you know, deals die three times before they, they, they happen. And so just because you weren't picked does not mean that that's the end of the story. I, I was, I was, I was listening to an interview with somebody in private equity land where deal making dynamics are frankly quite similar. And his fund had missed a deal and then the deal died. And then they got the call and they got the deal and because they were the second best. And the guy says, you know, I'm, I'm happy to be second best, you know, whatever gets me the deal. And he didn't mean it this way, but I kind of, I kind of interpreted it as, I mean, try to be the best, try to be the best searcher, listener. But if it's a competitive process, searchers are going to be at a disadvantage. You are very unlikely to be the strongest offer from a financial perspective. So it's almost like, try to be, you know, think about yourself as the second best. I don't know, I feel like I'm saying something dangerous here and I'm not even sure what I'm trying to say, but you're not going to be the first best, almost certainly. But be the second best. Be the one that they want to call when that private equity firm or that strategic pulls out. Then, then be the one that, like, oh, we got to go with Sean. He was, he was great. We liked him so much. Be that, be that guy. Be the second best. I don't know. What do you, what do you think, Sean?
- [54:06]
Sean Lindley
Yeah. No, I always try to put myself in the other person's shoes. How do they view it? What are, what are, what are drivers for them? How are they making this decision? And every single person is going to be different. And there are also a lot of parties that are involved in these transactions. Brokers, advisors to the owner, their legal counsel, their friends, whatever their wants or desires or needs are post sale. So that can also change. The same way that my journey changed or my criteria changed or what I was looking for, their criteria can change as well. They may have started out saying, I want top dollar for my business. But as they get into the transaction, a lot of these sellers, this is their first and only time doing this. And they may get in and get turned off by certain, certain deal parameters or whatever the case may be. So I think in this case, knowing the seller, they accepted the first offer and it that deal fell through because the gentleman was having some trouble moving to Texas. And the reason they came to me was because I had gone down and met the owner and I was the only person to go down and meet him face to face. And I think that did go a long way. And they got to see the type of person that I am. And there are certain things that you can't judge a person on in a zoom call or over the phone, it's, it's in person. So I think that did give me a little bit of an edge.
- [55:43]
Will Smith
And the other thing about this whole positioning yourself to be the second best or get the call when the deal falls apart, hanging around the hoop is, of course, never assume the deal is never, always act with the utmost professionalism. Never burn the boat, burn the reputation, you know, as, as disappointed or frustrated as you might be. Always, always, always be projecting, you know, that you're a competent and professional person that they'd want to do business with. So that I think that's pretty needless. Needless to say, absolutely great that you got the call because this is a cool business. Here we are 53 minutes into the interview. We haven't heard much about it. Forklift service and repair. How about the numbers of the business? First place?
- [56:31]
Sean Lindley
Yes. So it is forklift repair and maintenance business here in Austin. So highlights of the business. So in 22 and 23, the business did about $1.2 million and had an SDE of 550,000.
- [56:51]
Will Smith
So margins, we like those margins.
- [56:53]
Sean Lindley
High margin business. This particular business is extremely low overhead. It's asset light. There's really no customer concentration. So we don't have any risk of, you know, 21 customer is 25% of our revenue there. When I did the initial evaluation, we had one customer that was 6% of the revenue. One was four, and the rest is 1%. 0.5, you know, 0.01. So there's, there's no customer concentration. So if you look at the number of jobs we do, 43% of the jobs are recurring. It's, we do planned maintenance. So you think of the same thing as an oil change with your car. We, forklifts need plan maintenance. The drivers of these forklifts beat them up. They're in tough environments and they need their oil change. They need, you know, lubrication, the air filters blown out and then they also need to be inspected. And when you do the inspection, you find repairs and then we send estimates for those. And 57% of our jobs come from repairs. So it's a very nice revenue mix of some recurring. And then the recurring business gets you into the repair jobs.
- [58:14]
Will Smith
And that recurring business. Sorry, if you already just said it is lower margin than the repair business.
- [58:22]
Sean Lindley
Yeah, the, it's, it's similar margins. The, the, the maintenance, on the maintenance side, it is a little bit of a, a lower margin, but not, not by a lot. Not by a lot. The owners, I, they ran this business as well as Anybody could. It's a, it's a very, they were, were. They were really good with their money and yeah, they built an incredible customer base.
- [58:53]
Will Smith
And, and Sean, how many employees?
- [58:58]
Sean Lindley
So when. So it's a husband and wife and then there were three techs and one office person. So if you look at total, what is that? That's six employees.
- [59:11]
Will Smith
Yeah.
- [59:12]
Sean Lindley
So two office. Four. Four. Four on the tech side. So small.
- [59:18]
Will Smith
Oh, four on the tech side. Meaning the husband was one of the texts.
- [59:23]
Sean Lindley
Yes. Yeah, the husband, the husband worked in the business 40 hours a week. The wife was, ran all the office, you know, bookkeeper doing insurance, payroll, all that stuff. It was a classic mom and pop operation.
- [59:39]
Will Smith
And a million two a year. 550 in SDE. Now that, that SDE is split between two people.
- [59:48]
Sean Lindley
Well, so, so the SDE includes the salaries for the, the sellers. So they were both on salary and were factored into the sde.
- [60:02]
Will Smith
Oh, you mean. So, so after, even after paying them salaries, there's 550 left over?
- [60:09]
Sean Lindley
Yeah, no, the, the SDE, the, in the SDE, the officer comp. Was factored into that and the fact that I would have to replace one of, one of their salaries.
- [60:20]
Will Smith
Okay, okay. So. So one of their salaries. Not both.
- [60:26]
Sean Lindley
Correct.
- [60:28]
Will Smith
Because. But you're still gonna have to replace two people though.
- [60:32]
Sean Lindley
I would. Yeah, I guess you're right. I would have to replace. I, I would have to replace, replace both of them, but I factored in my particular salary.
- [60:43]
Will Smith
Okay.
- [60:44]
Sean Lindley
On top of that.
- [60:45]
Will Smith
Okay. All right. And so how are margins so strong in this business? And I guess related to that would be what is the moat in this business? It seems a little too good to be true. I mean, especially since, in fact, if it's so asset light, that means it's not like there's a lot of expensive, specialized equipment to do this work.
- [61:08]
Sean Lindley
Yeah, it's, it, frankly, I was surprised. So the, the overhead of the business is really minimal. I, you know, I, I work out of a storage facility. It's a small 200 square foot office. Our, our rent is next to nothing. They, the sellers, they had no truck payments or anything like that. The, the main costs of the business are payroll, insurance, and you know, just some other, other line items on the general ledger. But it's a really high, high dollar labor hour service. So you know, we, we, we charge close to 200 an hour. So you know, you're, it's a, it's, it's good for good on the labor side and then there's a markup on parts, we come to the customer and they just ran the business about as lean as one could possibly run it. I've been in the business now for four months and it's main, my margins have gone down a little bit, which I expected. And I'll talk a little bit about what I expected coming, coming into the business and how I wanted to grow it. But everything that they had on the SIM ended up being true.
- [62:36]
Will Smith
Meaning no skeletons. Meaning the business that you bought is the, that you thought you were buying.
- [62:41]
Sean Lindley
Is indeed the business you bought on the financial side. No skeletons. I, I have not ran into any, anything.
- [62:49]
Will Smith
And Sean, when you say there's no trucks, even so the techs don't have trucks.
- [62:55]
Sean Lindley
No, I said sorry, I meant no truck payments. So they, they owned all the vehicles free and clear. So yeah, that each of the techs, they're, they're in their truck, we dispatch them out onto the road and they go to customer, customer locations and fix their forklift on site. Some people might be wondering why that is. Well, forklifts are really heavy and in order to transport them to a shop, there are costs involved in that. And it, when a forklift breaks down, it is an emergency for most of our customers because they're moving products, they need to get products out so they can ship them that affect supply chain issues. So when a forklift goes down, they need someone to come on site and fix that forklift right then and there. So we, we go on site and fix it.
- [63:44]
Will Smith
Yeah. So is the, the, the is hiring for these, hiring the, the for the, the techs difficult? Because again, like I hear $200 an hour and I think, wow, this must be really hard knowledge to acute to, to, to, to acquire the acquirer. Thank you.
- [64:03]
Sean Lindley
Yeah, yeah. Hiring is what I spend most of my, most of my time on. It is a niche industry. So there are forklift mechanics out there, but it's not like an automotive repair place where there are, you know, thousands of automotive technicians. It is a little bit more of a specialized craft. And so hiring has been one of, one of the biggest challenges. I, I, I tweeted out the other day. I thought it was really funny. You know, I see, I saw someone talking about how hard it is to find, hard it is to find a job right now. But I think that's really pertaining to the white collar industry. I think if you look on the blue collar side, and maybe we shouldn't even call it blue collar, but if you look on the, on the trade side, the supply and demand is really in favor of the technicians. At least that's been my experience and some of the, some of my friends that I've talked to that own other service based businesses like it's hard to, it's hard to hire techs and I really think that the industry needs to come up and a little bit in terms of what pay should look like because I think just a lot of technicians bounce around because everyone's paying the exact same rate and it doesn't create, it causes a lot of turnover and it's really hard to retain employees. So what we've started to focus on is, is how can we examine and maybe eat into our profit margin a little bit and find good quality people that are going to stay with us and start to get in our program and provide our customers with the excellent service that they have been used to for the last 31 years.
- [65:53]
Will Smith
So the, the rate inflation of, of tradespeople continues. You, because you, to retain them, you got to pay them more. And so yeah, on it goes.
- [66:01]
Sean Lindley
Yeah, it's, but you know, good for them.
- [66:03]
Will Smith
I mean that's, that's, it's great. Not, not for you, but for them it's great. How does even, how does one even become a forklift technician? Is there trade training for that? It's, it's so narrow.
- [66:20]
Sean Lindley
It's, it's pretty, it's pretty narrow. So most, most of our technicians and most of the technicians that I interview have worked in some, some form of, they've been diesel mechanics, some have been automotive mechanics and they just have somehow moved over into the forklift industry. There are two, two schools here in Austin, technical schools that have degrees for automotive and diesel technicians. So some companies there, there's. Here in Austin there are really big national players and there aren't a lot of mom and pop type shops. So the big national players have programs where they bring these technicians in. They'll offer them a sign, sign on bonus, they will pay for some of their tuition reimbursement and they'll get them in and they'll just put them in their program and hopefully try to grow their career. So what our strategy is is we try to target some of those technicians that are two years out, maybe not two years out of school into these companies, maybe not making as, as good a pay or looking to grow their career. And those, those are the employees we target. We also have one certification that you have to get through the Texas Railroad Commission, which is you have to become LPG certified, which is liquid propane gas. A lot of the forklifts operate on liquid propane. You don't want a novice working on those for obvious reasons and blowing up the forklift. So you, you do have to get a certification there.
- [68:01]
Will Smith
So just to recap, high margin business, B2B recurring revenue. A nice blend of recurring and repair higher, a slightly higher margin repair revenue critical. And yes, we keep talking about how niche and narrow it is, but they're like, I mean there's got to be, you know, the, the forklifts per capita is probably quite high. I mean I'm sitting in a metropolitan area. There's probably thousands upon thousands of forklifts all around. You know, within 30 mile radius of where I'm sitting.
- [68:46]
Sean Lindley
Yeah.
- [68:47]
Will Smith
So it's a, it's probably not so narrow and, and yet I've, I've never heard about this business. What, what gives? And should other searchers be looking at them? Except not in Austin.
- [69:00]
Sean Lindley
Yeah, except not in Austin's. The owner told me and I, I think I wrote the, I think I wrote this down somewhere but anything that a man can't lift, they need a forklift. And when you look at, when you look at the industries that we support, it is, we help companies move things and we help companies keep their business running on time and that is really critical. And so warehouses, construction, you know, there's a, there's a lot of different industries that we support. The area that we have that we happen to be in, I feel really, really fortunate to be in this particular sector. So if you look at the growth that's happening in Austin, it's, everyone knows it's, it's been growing crazy over the last five years. San Antonio is a large market and we're just right outside south of Austin. We're in a city called Kyle. So our technicians can service Austin and San Antonio within an hour. And so to me, when I look at that and I look at all the, all the warehouses going in. In our particular i30, 35 corridor, we have Tesla coming in. We, we just landed a, an account that wasn't here three years ago. This business wasn't here and they bought a 200,000 square foot warehouse and they are the, one of the raw material suppliers of Tesla and they bought a bunch of forklifts and the company they bought them from, they weren't getting good service and they called us. So there's areas of opportunity like that and maybe we can talk a little bit about why I was so excited about this particular business and, but they're, they're just, there's a huge demand here. And the hardest part for my job, for my, my hardest part of my job is just finding technicians to be able to fulfill the demand. Because I think you can sell the set, you can, you can grow the business and sell more accounts, but you just need to make sure like I, I'm, I, in my old life I would just, I'm running super fast and selling accounts, but here I have to make sure that I keep our current customer base happy, that we are providing quality A plus service because we, we do a fantastic job and that's what our customers expect from us. But I don't want to grow too fast and not be able to fulfill the demand. And so it's kind of a slower pace than what I'm used to, but I'm getting used to it. And we're doing some things to build some infrastructure to be able to move fast down the road.
- [71:44]
Will Smith
Yeah. And I guess if you had to choose better to have, better to be supply constrained than demand constrained. But yeah, still, still a sticky problem. I do want to hear about why you like this particular business. I'm watching the time we're bumping up against it. I also want to hear about the transaction, the. But before that one. So, so you just, you glanced off something that we should double click on that. That the traditional source of service and maintenance for a company that buys forklifts is the very dealer that they got the forklifts from. Why does that channel not basically keep you blocked out? You. I guess you've answered it. Sometimes those dealers just don't provide good service. Like why, why is, why does your, as the, as the private equity folks will say, why does your business have a right to exist?
- [72:34]
Sean Lindley
Yes. If you look at the current model. So on the, on the new forklift distributor side, there are a certain number of players in the marketplace and they sell the majority of the forklifts to these businesses. And frankly, if I was a warehouse owner, I would buy from them. Yeah. The most of them provide one to two years of maintenance services that are included with the purchase of the forklift. And then after that you're free to go and you can continue staying with that particular distributor or, you know, company. And most of our competitors, if you look at them, it's sales service parts. Some of them offer forklift operator training. But that's, that's the model. Sales service parts.
- [73:21]
Will Smith
Yeah.
- [73:23]
Sean Lindley
And so a lot of, a lot of these companies, they are either not happy with the service or it takes a long time for them to get their forklift fixed. And I think there's such a, there, there's a, because of the lack of supply on the technician side, there is a built up demand. Sometimes companies have to wait three to four weeks to get a forklift fixed because they're waiting on parts or whatever reason and then they have to rent a forklift to keep their operations going. And those rentals are really expensive. You know, I talk, I went, I visited with one of our top customers today and he had a downed forklift that we frankly struggled finding, finding a part for. And he needed it and he paid, I think it was $16,000 for a rental for 30 months on a, you know, service that probably should have only cost them two grand. So there's real money in fixing these forklifts fast. And they, a lot of times the companies just want to work, work with someone who can get it done. And I also think too, you know, we, we don't necessarily, we do work with large players in the space and I won't name some of our customers in case our competitors are listening to us and want to try to steal our accounts. But we work with very large companies, but that's not really where our specialty is. And I think if I, when I talk with a lot of our customers, they kind of like the idea of working with a little bit of a smaller mom and pop shop. And they're frankly turned off by a lot of these big PE type companies that they work with and they like that our text, personally text them and they know the people in our office and like that smaller feel and want to develop a relationship. And I think it works.
- [75:14]
Will Smith
It clearly is working, Sean. And it's like, I mean, I think we're both really excited about the model. Yeah. But, but in, but in some ways though, just kind of analyzing this. In some ways this is, you're, you're getting the overflow of these other guys who really, they own the relationship first the distributor and then, and so you hope that they under service their customers so that those customers then turn to you.
- [75:41]
Sean Lindley
I think in the past we hoped and I think we did a really good job through word of mouth because the sellers, the seller that I can't say enough good things about has fixed forklifts for 40 years. And the guy is, he's, he's the best mechanic in the area of Austin. I'm convinced of it. So our customers like, like that aspect. But I don't think hope is just a strategy. The, what I'm really excited about with this business is, is bringing it into the 21st century. And we talk a little bit about that with the sellers. But when I saw this business I about jumped through the roof because the website was, you know, from 1999, I have a, have a tweet about it. They were not on Google. You literally could not find them on Google.
- [76:41]
Will Smith
If I googled the name, it wouldn't come up.
- [76:44]
Sean Lindley
If you googled the name, it wouldn't come up. If you googled forklift repair, Austin, Texas, it would not pop up. It did not pop up in the, When I looked at their profit and loss statement for the year, the only marketing and advertising spend in the last two years was $5,000 per year to yellow pages. So when I saw that it to, to me I'm just what a, what an opportunity.
- [77:14]
Will Smith
Absolutely.
- [77:14]
Sean Lindley
You know they built, they built this great, this great little business and this is in my wheelhouse. This is something that I'm good at. I'm not going to be going and instructing our team on day one about how to adjust the second tilt cylinder on the mast or perform a PM service on a Toyota forklift. You know, I'm having to learn that side. But what I can come in is I can bring systems and processes and basically start our marketing and advertising program. And I have to say today, 100 days in, we're on Google, we have nine, nine five star reviews. I was in the sellers are still in the business helping me with the transition. They're, that's coming to a close here in the next couple weeks. But I was in the office with, with the wife and we got two calls within 30 minutes of each other and she's writing, you know, taking their name information, their new customers calling in. And I slipper a note because we don't have a CRM yet. And I slipper a note, a sticky pad note and I say where did they find us? And both of them found us on Google. So that was a small win for us. Yeah, Mic drop. You know it's, you gotta celebrate the, celebrate the small wins. But it, but it does give me hope because I'm like, you know, you can just make these small little tweaks and that's your, that's your low hanging fruit.
- [78:46]
Will Smith
Yeah, no, this is, this is what we call a business succeeding in spite of itself. You, you love to find the, in spite of itself. Businesses that, you know, the service they provide, the demand is so strong that even though they're not doing the absolutely bare minimum of marketing, they, they, they chug along, happily chug along throwing off Cash. It's really, really a find. Really neat.
- [79:09]
Sean Lindley
Yeah.
- [79:10]
Will Smith
You haven't told us about the transaction. Would you please.
- [79:14]
Sean Lindley
Oh, yes. What do you. You want to know the structure of the deal? Yeah. Yeah. So I wanted a little bit of a skin in the game from the owner standpoint. It was really important for me, along with going back to having a coach, it was also important for me to try to find a seller that I could have a relationship with. And also they have a little bit of a. Whatever that saying is, carrot, carrot on the stick or whatever. But I wanted them to have to have to answer some of my questions or phone calls because I owed them a little bit of money. Right. So, yeah, the way I structured it was. It was. It was pretty. Pretty simple. 80 SBA, 10 seller, 10% down.
- [80:01]
Will Smith
Great. And what was the multiple on this 550 SDE business?
- [80:07]
Sean Lindley
It was a 2.7 multiple, and it.
- [80:10]
Will Smith
Was listed at that price.
- [80:12]
Sean Lindley
The listing price was a little more so it. The orig. They were. They listed it for 1.8 million.
- [80:19]
Will Smith
Okay. Okay. And why. Why do you think they chose that price in that multiple?
- [80:27]
Sean Lindley
I think they put a 3x multiple on the revenue and value, the tools and equipment and furniture at 150 grand or whatever it was.
- [80:39]
Will Smith
They put a 3x multiple on the revenue or on the. On the earnings.
- [80:43]
Sean Lindley
A point I wanted to make to everybody out there is I. I developed relationships with four lenders. So once we agreed on the deal. Deal terms and knew the multiple and the purchase price and the seller financing, I moved to the financing portion of the sba. It was really important to me, and this is something that Mike helped me with. On the working capital front, I really pushed on the banks to get the most amount of working capital that I could, and I really pushed on them to get a line of credit. The reason I did that is because I had listened to. I think one of your guests, Adrian, was talking about some of the troubles that he had got. Yeah. Gone through with getting trucks financed. And I had remembered back in my initial ownership phase when I owned the Pita Pit, that it's. It's hard to get loans right. If you haven't been in operations for two years. And in this case with this business, we did an asset sale. So for those who don't know what asset sales are, but we basically just. I started a new entity, and even though this business has been around for 31 years and the view of the lenders and the banks, I'm a new business, and so I don't have credit history. So knowing all that and knowing that I, I had these growth plans and I wanted, I knew I was going to be needing to buy trucks and possibly investing in softwares and additional salaries. I really pushed on the bank to get an additional line of credit, which I was able to secure and ended up going with Wells Fargo, which was, they were a really good partner. I can't say enough good things about them. And I was able to get prime under prime minus 2.5, so prime under a quarter.
- [82:43]
Will Smith
Oh, wow. How are you able to get that rate? Just. They, they were competing for your business. Competing because you're such a good negotiator.
- [82:51]
Sean Lindley
No, I'm not, I'm not that good of a negotiator, but I, but I, I did let them know where, you know, where the other banks stood. And I just am a believer in pushing two or three times to.
- [83:04]
Will Smith
Well, and speaking of the pushing, back to your point about working capital, they, So I assume in the, in the deal negotiation there was a working capital peg or basically working capital figure based on historic needs of working capital.
- [83:21]
Sean Lindley
Yes.
- [83:22]
Will Smith
And then there was a, a peg that you negotiated with the seller and then you said to the bank, I want more. I, I'd like more. Another, another 100 or 200,000 to, to give me. How, what was, how did you negotiate that out of them? Because you were basically asking for more than the standard.
- [83:39]
Sean Lindley
Yeah. So the sellers kept all the ar. What, what we did is, is that any. So when the business was sold, checks still come in? Yep, from the previous regime on the work that they did. So what we did is I took all of the, all of the money that was coming in. I would take the checks, I would deposit that into my account, and then I out 50% every two weeks. And what it did is it gave me a little bit of an extra float during that initial phase because I knew once I own the business, I'm going to be making payroll, you know, buying parts, all the, all the expenses and the overhead for the business. And I'm not going to have a lot of money. Money coming in from my new entity. So I, so we structured the deal that way for the accounts receivable. And then what I did with the bank is I drew up a figure of saying, hey, I, you know, I think I need two and a half months of working capital. And then, and then I pushed on the line of credit to be able to purchase trucks. And I know I'm a little all over the place here, but one thing I also want to say the reason I loved going with Wells Fargo was because when you go through the, the loans with these banks, you give them your business plan, you, you know, have the deal structure, you have the purchase agreement and then you send it off to the underwriter. It just goes out into underwriting space. And it's hard to really articulate what your vision is for the company just on a, a business plan. And so what Wells Fargo did is they put me in front of the underwriter and I was able to have an hour long conversation and they kind of met, met me and felt comfortable with my background because obviously I'm not coming from the forklift industry. You know, I'm a former corporate sales leader. And so I thought that was a, that was a big win for me and that was why I was able to get some of the working capital and line of credit that I'm going to be able to use to grow this business. Like right now I'm looking for trucks so I can hire more techs and grow the business.
- [85:56]
Will Smith
Well, great foresight on your part, Sean. Really glad to hear that there was such an actionable, you know, takeaway from, from one of the stories. And yeah, that, that was, that was Adrian Pinto from a good two years ago now probably. And yeah, he, he wanted to buy more trucks to build his, to, to grow his landscaping business and had a really hard time getting the loans to do that because his, he did an ass. His entity was brand new and he had no credit history as, as you pointed out. So I remember saying that at the time and still feel this way that I'm surprised I don't hear about that more because that is such a, the asset sale is such a common pattern. But yeah, Sean, you mentioned Mike again and helping him, helping you with the banks. So what? So working with Mike, even as you moved away from your interest in landscaping, the relationship helped. So, and, and I'm not saying this to talk about how great Mike is, although he is, but for, for listeners who might like this model, this, this kind of recruiting a mentor, as you did, a paid mentor, do they need the value of whether or not they're in the industry that the person buys it? So Mike ultimately was not in the industry. You, you bought outside of Mike's industry. How did that play out?
- [87:13]
Sean Lindley
It helped every step of the way. So if you, you know, at a high level, break it down. It's search phase, help me go through there loi. Negotiation phase, helped me go through there SVA phase, getting approved for the lending, going through there Once I was getting closer to the transition, I started to think about I need to operate this business. What do I need to prepare for? So that was really helpful to understand what I was walking into. One thing that I did that helped me out tremendously is the owners use QuickBooks Desktop. They have thousands of parts that they buy and there's this big items list and you need to be able to search for it and put it in estimates and proposals. So if I walk in with a blank QuickBooks instance on day one, we're going to have to be entering parts one by one. So what I did is I copied their QuickBooks. I worked with a consulting company to clean it up because it had 20 years of stuff in there, you know, needed to clean it up. So on day one, I was ready to walk in with a fully functioning QuickBooks of my own that I could start running my own financials with and with all the other stuff that I had going on, switching over the phones, which I think anybody who's done one of these ownership transitions is a huge pain in the butt. It is. I spent hours with T Mobile and Spectrum just trying to get phones switched over and just all the other things you got to do. Switching vendor supplier forms on, you know, meeting the team, doing a QuickBooks implementation in the middle of that would have been challenging. So that was a huge help for me and being able to walk in and start transaction transacting on my. In my company entity on day one.
- [89:13]
Will Smith
Yeah. And. And that was something that Mike directed you to. To do. Yeah. Last question for you, Sean. Then I got to let you go. B2B businesses, mission critical services. We like this for obvious reasons. High quality of revenue. I'm reminded of my interview though with Matt Bauer and Chris Hartman, who bought the scale business. The scale servicing, I guess sales probably and. But servicing, I think primarily business in North Carolina. So. So businesses that need to weigh stuff with extremely high precision and these scales are these sophisticated pieces of equipment that need servicing. And so their business was servicing these scales. Mission critical. B2B all sounds great, but Matt and Chris, after they ran it for five years, but turned out that the mission criticality of this actually kind of burned them out. Because when you're, when you're the red phone that the business calls because they're in, there's an emergency, you're the one to solve the problem at 2am or 6am or whenever. And so it's actually quite grindy and high stress to have a business where you're offering a mission critical service. Kind of by definition. And so, you know, people can go listen to Matt and Chris's interview and you know, they did run it for five years, but they were not lightweights. I mean, these were, these were vets. They were, they, they had a high tolerance for pain. And yet they still ultimately found that the business was. It was time to move on from running a B2B mission critical business. So there are parallels here with the forklift business. Are you worried about that? Does that resonate? Is it different in your case? How do you react?
- [91:08]
Sean Lindley
Yeah, just quickly on the B2B side, I am very glad that I ended up in the B2B space. I was think when you think about B2C, I was telling somebody this the other day. You know, it's a little bit of a different type of relationship when you have B2B versus when it's B2C and you step on Ms. Johnson's flowers. You know, if you're doing a home service, it's just a little, little different there. But to answer your question, we are mission, we are mission critical. But I would just say the way I believe it's important to set up a little bit of a moat around your business and your personal life, and if that means that we may miss out on a few calls, so be it. We are Monday through Friday, 7 to 5, shop. I'm okay with that. If someone really, really needs our help, you know, we can maybe talk about it. You know, some of. I'll give my phone number to some of the customers, but I am a big believer in trying to set boundaries.
- [92:13]
Will Smith
Yeah, yeah.
- [92:15]
Sean Lindley
And you don't think that will, you.
- [92:17]
Will Smith
Don'T think that that will impair the business. Because if you're offering mission criticality as a service and then you're. But you're only offering it at business hours, that value proposition, it isn't quite as strong.
- [92:29]
Sean Lindley
Yeah, well, the, the way, the, the way that the business has always been set up is it's seven to five, Monday through Friday. So all of our customers have gotten used to that.
- [92:38]
Will Smith
Yeah.
- [92:38]
Sean Lindley
And we are here to service them absolutely. Any as much as we can. But I also think it's important to. I'm in this for the long haul. I'm in this to build a family business.
- [92:51]
Will Smith
Yep.
- [92:51]
Sean Lindley
And I'm in this to stay, keep my sanity, not to not burn out.
- [92:57]
Will Smith
Well, the other thing is, and I don't know enough, but one difference might be that in Chris and Matt's case, the scale thing might be where the. A business, a client, customer, Business only has a single scale. Like they're, they're these giant things, I guess. And so if it breaks or if it's not functioning, the entire, it bottlenecks the entire operation. Whereas maybe your customers have multiple forklifts. And so if one goes down, it doesn't bottleneck the entire. I mean it bottlenecks it, but it doesn't arrest the entire functioning of the business because they've got the three other, the three other lifts or whatever.
- [93:37]
Sean Lindley
Yeah, that's, that's a good question. I don't know how many scales are out there. I would venture to say they're probably or more forklifts. And yes, you are correct. Most customers have two or more. So they have backups and close me out.
- [93:53]
Will Smith
Sean, with your vision, long term family business.
- [93:57]
Sean Lindley
Yeah, what else? Yeah, long term family business.
- [94:00]
Will Smith
Buying more of these businesses or are you going to build. Are you going to build or tell us the name? Tell us the name of the business.
- [94:05]
Sean Lindley
The name of the business is R R Lift.
- [94:08]
Will Smith
R and R Lift. So are you going to build R and R lift forever or are you going to maybe. Could you see yourself buying a different business and having some sort of family Holdco?
- [94:17]
Sean Lindley
Yeah, I'm in this for the long haul. I do want to build a family business. I want to have something that my son can ride around with me once he gets old enough to get a good work ethic. You know, long term, who knows what the future holds. I am interested in potential M and A activity in the next few years. I want to just get, get a steady, just kind of steady the ship right now and grow, grow at a reasonable rate. But I'm absolutely looking at M and A activity, looking at expanding in other cities. I think we have a great blueprint and if you look at the Texas market, there's no better place to be. So I think we could expand in other cities and you know, down the road I want to pay off my SBA loan and have a bunch of cash flow and try to. You know, I know everyone talks about hiring an operator, but. Hiring operator so I can take a little bit of a step back. I, I will be working until I'm 75 or 80 years old. I would go crazy if I didn't have something to do. I can only drink so many pina coladas on the beach. So here, here I, I want something to always want something to do.
- [95:33]
Will Smith
Well, when we got off the pre call, Sean, I, I promptly went to Google and searched for forklift repair in the D.C. area and couldn't it wasn't an exhaustive search, but I couldn't find much. There are a lot of forklift dealerships like we've talked about and so I guess similar model, they're, they're getting the repair business. But I, it didn't seem like there were any businesses that were strictly maintenance and repair, so I don't know what that means. Maybe this opportunity is so good that some markets don't even have R and R lifts, businesses that are just devoted strictly to service and maintenance. So maybe there's zero to one opportunities in the forklift, in the forklift service business. Actually, Sean, how could people get in touch?
- [96:19]
Sean Lindley
Yeah, the best way to find me is I, I'm big on X, so just find me at Sean Lindley. S, H, A U G N L I N D L E Y And yeah, I participate on X. Super. Not as much LinkedIn anymore since that's a little more white collar.
- [96:37]
Will Smith
Yeah. All right, Sean, thanks for coming on and congratulations on a really neat business.
- [96:43]
Sean Lindley
Thanks, Wal.
- [96:44]
Will Smith
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