Good Bones: Saving a $3m Business in Decline

Summary

Acquiring Minds Podcast Summary

Episode: Good Bones: Saving a $3m Business in Decline

Host: Will Smith
Guest: Hemat Singh, Owner/Operator of EPI Color Space
Date: June 15, 2026

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Episode Overview

In this episode, Will Smith sits down with Hemat Singh, a self-described "operator’s operator," to discuss his fascinating, hands-on journey through acquisition entrepreneurship. From his accidental exposure to the search fund model, to scaling a large home care business, to overcoming major challenges after acquiring a declining large format printing company, Hemat offers a candid look into the realities of small business ownership and the grind of turning businesses around. The conversation highlights Hemat’s operational mindset, the importance of fit between entrepreneur and opportunity, and the hard lessons learned from both success and adversity.

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Key Discussion Points & Insights

1. Hemat’s Background: Born Operator (04:51 – 09:07)

• Post-MBA, Hemat rejected consulting and finance roles, attracted instead to direct operations.
• Ran a chemicals turnaround in India before discovering the search fund model—ironically, despite connections at Wharton and to early search fund figures, he only "accidentally" learned about it after school.
• Notable Quote:
  “I was not even focused on making money ... I never fully understood or appreciated the monetary side of it where that can be transformational. Today I do."
  (39:41 – Hemat Singh)

2. The Search Fund Experience: Lots of Deals, No Close (09:57 – 15:29)

• Raised a traditional search fund (Anacapa Partners and others) from 2014-2016, generating 11 LOIs but never closing a deal.
• Quote:
  “I ran a traditional search fund ... almost through the end of 2016 ... I failed to close on a deal. So the search fund came to its logical end.”
  (15:29 – Hemat Singh)

3. Accidental CEO: Running Circle of Life (16:45 – 33:28)

• Failed acquisition led to an unexpected CEO role at a large Native American-focused home care business, Circle of Life, with a 3% equity stake.

• Key operator move: overhauled financial ops, implemented new billing systems, cleared family members stifling progress, quickly doubling EBITDA.

• Navigated founder death, family infighting, and eventual sale to private equity (Alpine Investors). Hemat earned a life-changing equity reward in the process.

• Memorable Story (26:53):
  Operational Fix = Big Dollars

  “Making an operational fix ... doubled EBITDA. Right. From 1.3 [million], another 1.5 [million] without net new revenue.”
  (27:45 – Will Smith & Hemat Singh)

• Reflections on being operator rather than investor; “grind” is constant in ops:
  “For me, operating means that it's always going to be a grind ... it's, you know, you never fully make it till you, you know, till you get to the other side."
  (39:41 – Hemat Singh)

4. Operator vs. Owner vs. Investor Mindset (41:18 – 48:43)

• Hemat describes himself as a hustler and intuitive thinker who relishes action and ambiguity, as opposed to (sometimes) more analytical finance pros.
• Discusses introvert tendencies despite leading large teams and building strong cultures across decades.
• Quote:
  “Good operators are actually rarer than finance people ... people who can really turn around a business and make it go ... seem to be fewer."
  (42:24 – Will Smith)

5. The EPI Color Space Acquisition: Anatomy of a Distressed Deal (48:43 – 61:13)

• In 2023, opportunity to acquire a 20-year-old $3m revenue, large format printing business arrived via a proprietary channel—strong relationship with major shareholder.
• Deal terms:
  • $500k full seller note at 0% interest, paid in $100k chunks over 5 years.
  • No equity injections required initially.
  • Required a personal guarantee—significant, but manageable exposure for Hemat.
  • Cap table was just Hemat (55%) and the existing investor (45%), with some ethical ambiguity over the seller being unaware of continuing involvement by the existing minority owner.
• Key Insight:
  “For me, effectively this was okay, I'm getting a business for free. That's how I looked at it.”
  (54:12 – Hemat Singh)

6. Early Challenges After Closing (81:21 – 87:00)

• Immediate issues: Controller quits after close; transition to outsourced accounting went smoothly.
• Planned to install GM and operate semi-absentee, but life events intervened: marriage, new child, personal injury.
• Crisis arises: top sales rep leaves (35-40% of sales), attempts to poach clients.

7. Hands-On Turnaround: Sales Crisis and Ownership Evolution (87:00 – 97:27)

• Frantic attempts to fill sales hole with industry hires failed; learned importance of project management and customer support over production background for sales roles.
• Partner dispute resulted in Hemat buying out investor at higher valuation—now 100% owner and fully focused on business.
• Realization: high-velocity, direct owner involvement was required to stabilize and grow.

8. Rebuilding and Partnership: Bringing in a Key Operator (97:27 – 103:24)

• Sought a partner/operator with path to equity; recruited Kevin Durbin via LinkedIn with a “search fund” style equity vesting plan up to 15% for hitting EBITDA/time milestones.
• Structure aligns interests and ensures motivation for high performance and possible future exit.

9. Reflecting on Fit: ETA Isn’t for Everyone (104:53 – End)

• Hemat questions the proliferation of get-rich-quick narratives in the ETA world.
• Warns would-be buyers: operations is grueling—buy for the right reasons, not passive income or FOMO.
• Quote:
  “People underestimate how much time and effort it takes to run a business. So you need to be motivated by more than just money.”
  (107:55 – Hemat Singh)

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Memorable Moments & Notable Quotes

| Time | Speaker | Quote | |----------|-------------------|---------------------------------------------------------------------------------------------------------| | 27:45 | Will & Hemat | “Making an operational fix ... doubled EBITDA. Right. From 1.3 [million], another 1.5 [million] ..." | | 39:41 | Hemat Singh | “For me, operating means that it's always going to be a grind ... you never fully make it ..." | | 54:12 | Hemat Singh | “Effectively this was ... I'm getting a business for free. That's how I looked at it.” | | 71:26 | Will Smith | “When you say good margins ... usually suggests pricing power ... but it is a competitive industry ..." | | 90:52 | Hemat Singh | “Why not? ... then I started focusing on selling myself and trying to hire somebody like myself ..." | | 107:55 | Hemat Singh | “People underestimate how much time and effort it takes to run a business. So you need to be motivated by more than just money.” |

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Timestamps for Important Segments

• Hemat’s Background and Early Career: 04:51 – 09:07
• Search Fund Experience: 09:57 – 15:29
• Circle of Life Operational Turnaround: 16:45 – 33:28
• Being an Operator vs. Investor: 41:18 – 48:43
• EPI Color Space Deal Structure: 48:43 – 61:13
• Crisis Management After Acquisition: 81:21 – 87:00
• Sales Talent Lessons & Ownership Struggles: 87:00 – 97:27
• Rebuilding with New Partner: 97:27 – 103:24
• Reflections on ETA and Operator DNA: 104:53 – End

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The Original Language & Tone

Throughout, Hemat speaks candidly and humbly—owning his mistakes (“I didn’t dirty my hands in due diligence”), emphasizing “the grind” of real operations, and expressing gratitude for key relationships and operational wins. Will’s tone is encouraging, curious, and sometimes gently challenging, drawing out tactical and philosophical lessons from Hemat’s journey.

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Summary Takeaways

• Operational focus is critical: Buying the business is just the start—the grind of making it thrive is ongoing.
• Acquisitions can go sideways rapidly: Even "great" deals require hands-on adaptation, especially when key team members leave.
• Structuring partnerships for incentive alignment is vital: Equity paths motivate top talent far more than salary alone.
• Operator personality matters: Comfort in action and chaos, not just analysis, marks successful small business leaders.
• Beware the ETA “guru” hype: Real operations demand more than financial motivation; passion for the business and its problems is key.

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For anyone seeking to buy and operate a small business, this episode is a clear-eyed, compelling, and honest look at both the promise and the everyday reality of being an operator.

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Transcript

[Will Smith]

Operator versus Owner versus Investor. These are all flavors along the spectrum of small business entrepreneurship, and today's guest falls squarely on the operator end of that spectrum. Hemat Singh always knew that he wanted to operate a business, and not because he was attracted to the financial rewards. In fact, it wasn't until later in his career that he realized how lucrative the role of operator could be when paired with equity ownership. Hemat just simply likes operations, the action, the leadership. So in addition to being a good story of acquisition entrepreneurship, today's interview also takes you inside the head of an operator's operator, and it's worth asking whether you recognize yourself there. If not, hardcore operations may not be for you. If Himad is concerned that over promises of passive ownership have accompanied the rise in eta, many people might be drawn to small business ownership without understanding its true nature. Reminds me of what you heard search investor Ned Tomasevich say in his interview last week that he sees many would be searchers interested in search not because they actually want to operate a business, but because but instead because it's a potential stepping stone to becoming an investor. Not the best reason to do a search fund Now, Longtime listeners of Acquiring Minds will have heard variations on the theme many times, but it never gets old. Really understand what you're signing up for in small business acquisition and be sure you want it. Here is born operator Himat Singh, owner of EPI Color Space.

[Interviewer]

Regular listeners of Acquiring Minds will have

[Will Smith]

heard the phrase quality of earnings or Q of E countless times. But do you actually know what a Q of E is, what it includes, or how to interpret it? Well, in a webinar this Thursday, Max Lummis and Travis Sadler of diligence firm LCS will break down the key components of a quality of earnings report. Among many topics, you'll How a Q of E analysis reveals a company's true financial story what makes revenue real, repeatable and sustainable common balance sheet risks that can create costly surprises for buyers and the role of working capital debt like items and closing adjustments in a transaction, the webinar is Understanding a quality of Earnings, what's included and why. And it is this Thursday, June 18, noon Eastern. Link to register is right at the top of this episode's show notes or on the Acquiring Minds homepage.

[Interviewer]

Acquiring Minds Co.

[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. The team at Pioneer Capital Advisory has started offering peripassu debt for SBA business buyers. That means they can help unlock up to $3 million of conventional debt on top of the $5 million limit of SBA 7A loans. So Pioneer can structure larger, more complex acquisitions. Listen to our story with Anika John from one of their clients who did just that, buying a $10 million business as a first time self funded searcher. The Pioneer team has closed more than 100 SBA loans averaging timelines well below industry standards. Founder and owner Matthias Smith and COO Valerie Stash bring over two decades of SBA lending experience. Matthias and Valerie have a full bench of analysts and associates who work your deals with them. A true deal team, not just a

[Interviewer]

single point of contact.

[Will Smith]

Visit pioneercap.com or click the link in the notes.

[Interviewer]

Himat Singh welcome to Acquiring Minds.

[Hemat Singh]

Hi Will, great to be here. Thank you.

[Interviewer]

Hemat, you are a guy that identifies as an operator. You've had a successful career as the operator for others businesses. Today you are operator of the business that you acquired and own. It's a large format printing business. We're going to hear all about it. But let's begin with some background on you please.

[Hemat Singh]

Himan Absolutely, absolutely Will. So I consider myself a hands on operator. So I have been running or operating a business ever since I finished business school in 2007 and prior to that I was a management consultant after my undergrad. So when I was coming out of business school I knew what I didn't want to do. I didn't want to be a consultant and I didn't want to be investment banker, sales and trading or leveraged finance. I wasn't quite sure how to get to the track of buying a business or operating a business. And to be honest I wasn't really exposed to it despite being an entrepreneurial management major at Wharton. So initially I joined, you know, the upside of a private equity fund but very quickly moved to industry and I got a tremendous opportunity to run a chemicals business while I was a CIO for a billion dollar company and this was in India and that was a turnaround and I did really well. I moved back home to the US and that's when I sort of accidentally got exposed to a search fund model. And I find that fascinating because while I was at I didn't know anything about search funds despite being very close as a friend with Mark Egan who was also the same major as me. We took a lot of classes and his father is one of the big original investors in this space.

[Interviewer]

Mark Egan was your friend and his father's name is what his Father is Bill Egan.

[Hemat Singh]

And yeah, Bill Egan, he unfortunately passed away last year in September. But Bill is one of the original investors who invested in Asuran. And you know, he came from a private equity background himself, had built many amazing funds. But then as most of the original investors in the search fund world, they started investing their own money into that space.

[Interviewer]

Great. So you were exposed to search funds via Mark or, or, or at being at school friends with Mark, whose father was Bill Egan. And this was what year?

[Hemat Singh]

So, so, so this, so I graduated 2007, so 2005, and I did my MBA, but I, I just wanted to clear that point. I did not know anything about search funds during my mba, despite being really good friends with Mark Egan. You know, okay, yeah, so I just went and ran a business in India, did really well, came back. I actually spoke to Bill Egan after coming back in 2010 11, saying, hey, what should I do? And he still, he didn't talk about search funds. And, and then, so like, you know, I, you know, I sort of accidentally got to know about a search fund model and I find this fascinating today when I reflect on it because it's like, despite knowing all these guys in this space, I myself did not know anything about search funds. But I, you know, I ran into somebody who had raised a search fund and got to know about the model and then ended up actually raising a search fund. And then I, you know, sort of ran a search for two and a half years, did not find a company, but did not find a company to acquire. Just to make sure I'm clear on that, I had like almost, you know, 11 Lois that I executed. There's a lot of businesses that I liked, but I, you know, either did not choose to close on them myself or for whatever reasons I found in the due diligence and so on. But there was a business that I liked a lot and we did not do a transaction together, but the founder asked me to come in, become a CEO. I had a small stake in the business and from 2016 end through the end of 2021, I ran Circle of Life as a CEO and had a tremendous run, taking it from 1.3 million EBITDA to over 6 million. Having two or three liquidity events myself during that process. So that was also an experience which I consider sort of like critical to my background as an operator.

[Interviewer]

Yeah, well, let's pause here himat because there's some follow up questions I want to ask and I want to hear in some detail about your experience at Circle of Life. This Incredible. Run not as owner, not as he, as operator. But first your observation that even having been exposed to Bill Egan via his son, having been at Wharton, coming back from India, having operated a successful, successfully operated a quite large P L there, reconnecting I guess with the Egans and, and, and yet not being told or you know, told to go do a search fund, encouraged to go do a search fund. Is there anything to that? Or it's just weird happenstance that you didn't hear about it from them?

[Hemat Singh]

I think it's, it's, it's, it's, it's sort of like it's. I think when I look at it, I think it is. It was still a very small subsection of people who did search funds. And I think the original investors like Bill Egan expected people to sort of learn about the model themselves and come out and reach out. So when, when I finally raised a search fund, the Stanford study had said in 2013 that only 150 search funds had been raised. So ever since Grossbeck came out, came up with the model originally at Stanford in the mid-80s or whenever that was, between that and 2013, only 150 search funds had been raised. So I, I think like, you know, so from, you know, so original investors sort of expected people to be really sort of knowing what the model is and to reach out to them. It was a very small sort of a club of people who were in it. And, and I, so I find that fascinating because today it's like, you know, it's, it's a lot more pervasive. The model.

[Interviewer]

Yeah. You know, well, a guy like Bill Egan who as you said came from private equity, he probably had a lot of Wharton grads reaching out to him, being like, what should I do with, you know, as the next chapter of my career? And so he probably, you know, we're, we are all very search fund focused, but he probably was looking at the, at the full buffet of possible options ahead of somebody. And search funds were still so Nichy, it wasn't his default recommendation to somebody.

[Hemat Singh]

I think that's actually 100% correct. I think you, you articulated that perfectly. Right. Because like, you know, he really did come from a private equity back crown himself.

[Interviewer]

Yeah. Yeah. Great. Now on the search itself, 11 Lois, which sounds like a painful search.

[Will Smith]

On the other hand, I also remember

[Interviewer]

you, I mean in our pre call you had said to me that you, you actually liked the search or at least getting in front of business owners. That part of the search.

[Hemat Singh]

Yeah, elaborate. Yeah. So that was there was. That was definitely something which I. And I also sort of like felt my best, you know, I would have a best chance of closing if, if, if someone wanted to sell a company, I, I always felt my best shot at it would be to get in front of the, the, the, the, the founder or, you know, whoever's basically selling and convincing them about why they should sell to me versus somebody else, either a private equity fund or another searcher and so on. But I love the fact that I was basically looking at deals and looking at companies, at how many amazing business models I came across. And like, you know, for example, I came across this lady in Cleveland, Ohio, who had built like a 2 and a half, 3 million EBITDA company doing the repair and maintenance of vacuum cleaners.

[Interviewer]

Wow.

[Hemat Singh]

Yeah. Fantastic business. Unbelievable. Great story. And it made perfect sense as you dug into her business as well. Like, you know, so she basically used to be the top salesperson for some vacuum cleaning business, manufacturing business, and she got fired. And then she basically, you know, she went back and she's like, you know, she was, she was committed in doing something herself. And then as she built out the model, you know, vacuum cleaners apparently are a big environmental hazards. So they, you know, they basically create a lot of like, you know, issues in the, in the environment, and they're very toxic. So her entire business model was this is a green play. And she would go after these big departmental stores, Bloomingdale's, Gold's Gym, you know, all of these entities which had hundreds and hundreds of stores across the nation. And then the model was don't, you know, don't throw away your vacuum cleaner. It became a recurring revenue model of, of sending the vacuum. And she tied up with a, with a school, a trade school to train the people to repair them. So, you know, that was one business. But like this, I probably sound like dozens of businesses, which are fantastic, you know, and a real testament to just American, you know, the entrepreneurial mindset which is so prevalent in the US

[Interviewer]

and himat that's a great business and story. The. You had. But when you talk about doing a search fund. So you had raised, you had raised a search fund. So all those investors, like the Bill Egans of the world, you'd gone around and done the conventional traditional search fund at this point in the story?

[Hemat Singh]

Yeah, absolutely. It's from 2014 through 2016. I ran a traditional search fund almost through the end of 2016. So it was like about close to two and a half years or so. So I raised a fund I had Some individual investors, some fund funds like, you know, Anacapa Search Fund Partners, the traditional funds. And yes, I had a combination of investors who were supporting me to go out there, buy a single company that I could go and operate myself.

[Interviewer]

Okay, okay. So you, as we're about to hear, you ended up operating Circle of Life, this home care business, but you did not buy it. So your search fund, you closed the search fund without making an acquisition. That's just to. Just to put a bow on that piece, right?

[Hemat Singh]

That is correct, Yeah. I failed to close on a deal. So the search fund came to its logical end.

[Will Smith]

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[Interviewer]

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[Will Smith]

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[Interviewer]

Okay. Himat. So let's turn to. Let's hear about your. Your circle of life.

[Hemat Singh]

Right.

[Interviewer]

Operation, Operatorship. This was a business. This was one of your 11, Lois.

[Hemat Singh]

It was, yeah. And I loved the company and I knew it was a great company, but I did not feel comfortable with the financials on the numbers.

[Interviewer]

Interesting. Okay, so it was you who pulled out, not the owner. And so, yeah, just tell the story of how a broken loi can still lead to a positive relationship and in fact an offer to run her business. Tell the. Yeah, tell us what the business is. Start there, please.

[Hemat Singh]

Absolutely. Well, so Circle of Life and Soaring Eagles Home Care were two, two separate entities. And there was actually a third one too. Circle. There was a Circle of Life, Anishinaabe Circle of Life Cola. And this was a business which was built by Pat yeager, who was 25% not a native American, you know, raised and you know, she grew up in Minneapolis. Fascinating lady. It ties in a little bit with your question about before, about these amazing entrepreneurs in the US who basically build these companies despite not coming from a very privileged background or any of that stuff. So she basically was a hairdresser and had done all kinds of odd jobs, never made it. She built this company when she was 52, 53 years old, and she'd amassed probably a 40, $50 million fortune by the time she was in her mid-60s. And so when I circle this business, she had grown it to a certain level. She was exhausted. She had a lot of her family members who were working for it and she wanted to sell it. And that's when I came in and I was actually the last person in into the deal. So Vertes, which is a healthcare investment bank, was trying to sell the company. And I remember the first call when I had with them, they said, you're too late. We're running a process and we have a lot of offers already on the table. And for whatever reason, I love the business, reading about it and like, you know, sort of, I really like the SIM that I saw. And I'm like, hey, let me talk to the founder. You know, let me just talk to her once. And Pat and I had a conversation. We spoke for over an hour. And she's like, hey, can you come and see me tomorrow? And I was in D.C. and she was at that time in Phoenix. And so I'm like, yeah, sure. So I jumped onto a plane, went saw her, and. And she basically she and I sort of like, you know, we shook hands and about wanting to do a deal together and somehow, somehow the other my offer got accepted. And from what I understand, it was not the best offer on the table. But she, when she was trying to sell the business, she was selling it as 25 million in sales and 5 million in EBITDA. And sorry to your question on what it did, it was home care services. So it was providing ADL or assisting with people with daily living conditions, either elderly people or disabled people. And to be fair, this was an industry that I was focused on. So among the industries that I was really focused on was home care services. And one of the reasons was in the year before, I'd lost two people I was very close with, including my grandmother who had basically. So I was with them till the very end. And it was an amazingly profound experience for me. So I wanted to work in home care. I wanted to. And also home care at that time did not have high multiples, so generally they were in the range of 4 to 5x. You could find a good company. So for me that was important, simple business model, but at the same time, there was no private equity in home care. And most of my investors did not really like Home care either.

[Interviewer]

Oh my gosh, how times have changed.

[Hemat Singh]

Right? Exactly.

[Interviewer]

What didn't they like about it? Just out of curiosity, since it's such a popular category today,

[Hemat Singh]

and I think it was like Most popular around 2122, right after Covid. That was sort of like my healthcare services was. I think there was a for in general why investors in. At least in the search fund world. When I. When I was looking at it, they were not too keen about it because they kept trying to push. It's not a recurring revenue model which though I. I sort of disagree with. You can have a client who can stay with you for five, six, ten years. As we had a lot of our clients doing that. And then they also. Yeah, I. I think that was the main pushback that I bought got from the investors was. But with Circular Life, they also, without digging into the details much assumed that it would have a lot of sort of like Native American sensitivities to it in terms of does it have Indian law or is it on reservations and things like that, which Circular Life did not. Circular Life operated in six or seven states and it was always off the reservations. Oh. So. But.

[Interviewer]

But it did target this community. It targeted the Native American community.

[Hemat Singh]

Yes. Almost 100%. Like, you know, like, you know, in this. It was probably. Or certainly the largest Native American focused home care services company in the country, which was something which I liked actually. I like that sort of specific focus as well.

[Interviewer]

Why? Because it gave it differentiation.

[Hemat Singh]

It gave it differentiation. It created. One of the negatives for home care services is. And I did a pretty deep analysis of the industry when I was looking into it. It was a fragmented industry. Honor was just getting started in Boston at that time, and I was looking at what Honor was wanting to do. And the tagline for Circle of life was honoring those we serve. That's a huge aspect of the Native American culture about honoring your elders. So I think it had a lot of these things which are already built into the model, which made it really unique. And it had size and scale, which you typically don't find in a lot of home care services businesses. So when. And one side, when it is fragmented, on the other side, the barriers to entry are very low. So almost any nurse or RN or anybody can start a, you know, home care services company and bring it up to 50, 75, 100 clients versus, like in our case, we had over 1500 clients. Mm.

[Interviewer]

Well, we should, we should spend some time here just because this remains a category that. That searchers are buying into. I've had many guests or, you know, the incidence of these businesses on acquiring minds is pretty high. But, and, but this isn't even the primary acquisition we're here to talk about, so we can't spend too much time on it. So I'm gonna move us through here himat. So you, you meet Pat. You, you clearly hit it off. You fly to see her. You hit it off. She likes your offer the best. Even though it's not the highest, it ends up. You've told us why your investors didn't like it. You couldn't, you couldn't come to a, an agreement, so you don't buy it. But I guess because of this rapport, she sees something in you, she likes and wants you to come run it. In fact, even though you declined to buy her business.

[Hemat Singh]

Right.

[Interviewer]

Tell us what, what she says and what the offer is. Exactly.

[Hemat Singh]

Yeah. And, and, and I, I think like, you know, and, and, and I feel very fortunate for the relationship that Pat and I had, but we definitely struck it, you know, we liked each other a lot. And she actually flew to D.C. just to convince me to come join her as a CEO and she gave me a stake. So I remember, you know, and the biggest impediment to her business was actually her, you know, was her finance and billing side. So she had a corporate controller, a lady who had her entire family in terms of five or six billing specialists who were working there. So these are the people who were basically doing all the revenue cycle management of doing all the billing and then also closing the books. And we found it very difficult, almost impossible to get basically any, you know, of the financials out of this person who was very controlling. You know, she was a corporate controller, but she, and, and so like, you know, so I was very clear with Pat that, like, look, I need to come in and I need to make this a very clean, transparent organizations. And you as the owner should have these numbers visible. You should on your fingertips at all times. And you don't have to go through hoops and somersaults to have to get through these numbers from an employee who works for you. So that was sort of the first thing I, you know, so we agreed for, for, for me to basically come and come, come on board. I had a 3% stake in the business and as a CEO, and I was always very clear with Pat, the only way I would succeed is if I had a free reign. And, and, you know, sort of like, you know, we're not going to have two chefs in the kitchen trying to make the Omelette. I'm going to be the primary person who's going to run this company, and she's going to be the founder, and I'm going to have a clear mandate of cleaning it up so then I can sell the company, maybe buy it myself.

[Interviewer]

And this mean that she was going to step aside as this, as the CEO? She was effectively the CEO in this. In her hiring. You meant she was going to step aside.

[Hemat Singh]

Yes, that's exactly. And she. And to Pat's credit, she did this like she actually literally moved out of her office. So on the first weekend I was in Minneapolis, she moved out of her office. She started only using the title of a founder, and I was the CEO. And I, you know, from day one, I had the mandate to make the changes that I needed to do.

[Interviewer]

Okay, great. This is great. Hemat. This is a podcast interview unto itself. And as I said, we don't have time, but you told us that you did take it from 1.3 million at this moment in. In. In its life, to 6 million of EBITDA, by the way, over the next six years. Give us two or three bullet points on. On how you did that. I guess one of them was you brought financial transparency. You fixed the controller issue. That was lever number one.

[Hemat Singh]

That was level one. Number one. Also tied to lever number two and three. Because not only was there no transparency, we were doing a terrible job on our billing, and we are losing probably 20 cents to every dollar that we were billing. So denials and rejections is a huge aspect of any healthcare services company. So I basically rebuilt from scratch the entire billing and finance side of it, including. We implemented this software called CareVoyant. And that was a great software. It took a little while to implement that, but effectively by doing this, we brought in about 1.5 million of cash flows to the bottom line.

[Interviewer]

Wow.

[Hemat Singh]

So that was huge. It was not like.

[Interviewer]

So making an operational fix.

[Hemat Singh]

Right.

[Interviewer]

Doubled EBITDA effectively. Right. From 1.3, another 1.5 without. Without net new revenue, without new sales.

[Hemat Singh]

Yeah. And there might have been a little bit of net new revenue. And I'm trying to make it a little more simplistic because, like, you know, as Warren System was getting rolled, Pat died and unfortunately. So, like, you know, so there was so, like, I was not so. And that's the time I sold Circle of Life to Alpine at a 7X valuation, a $21 million deal. But we were not really a 3 million EBITDA. So. So, like a year and a half into my time, I took it from 1.3 to sort of on paper 3 million EBITDA. But like, you know, Josh Greenberg from who was. Who was the top person for team their vertical and just a phenomenal person. He and I had built an amazing relationship and he sort of believed what I was trying to me and my thing that look, it's not showing right now, but by the end of the year. So 2018 is when we did that deal. It is going to be a 3 million EBITDA. And it was so like, you know, because all those changes of getting carevoyant and getting it fully baked and making sure there was working that was the biggest driver. But simultaneously to that was like, you know, a lot of the family members which were involved in the business, I took them out in. I sort of forced them out of the business and I retired them because they were impediments to the business model. And Pat could not do this on our own. But that's also a long story where when Pat died, all of them became trustees. So they wanted to get me out of the business, you know, until they realized I could help them cash out. So they allowed me to sell the business. We could never be in the same room together, but at the same time they would not sell the business to me. So I did not have that chance of buying a business that I really loved. And I basically cleaned up.

[Interviewer]

And by the way, Hemat, when Pat had hired you, had she dangled the possibility of you later buying her business. Hey, Hamat, come in here. You clean it up. And maybe after you've cleaned it up and, and you fix the risks in the business and you've. You've also just de. Risked it in your own mind because you've been inside the business, you've been running it. Maybe we do a management buyout at that point and you buy the business from me. That had. Had that been on the table.

[Hemat Singh]

That had. That had definitely been on the table and different other derivatives of the same thing. So Pat and I were not thinking of like this is our, you know, we're going to have an end to our relationship. A year, a year and a half end. After we met, we kept talking about like how all these amazing plans we wanted. She wanted to cash out and take some money off the table. And I. And those. And what I was telling her at that time is I'll be able to get some good family money or family offices in and you can cash out while I'm the. And at the same time she can still have some. You know, skin in the game and probably have a second or third bite of the apple years down the road. But yes, me being the main person and leading a buyout was always something that we wanted to do.

[Interviewer]

Well, as a quick aside on that himat, that's a model that I feel like I'm hearing about more and more in ETA entrepreneurship through acquisition, where it maybe partly because there's so many people interested in ETA now there's this perception that it's harder to find businesses to buy. And so maybe searchers are having to lower their standards a little bit. And so they might not be just like you. They might encounter a business that, that, that feels close to actionable, but they just can't get comfortable buying it.

[Hemat Singh]

Right.

[Interviewer]

But as an intermediate step, they might talk to the seller, founder, owner, and say, why don't I run your business and we'll de risk each other for a couple of years and if it feels right, goes, well, I'll buy you then. We'll figure out a way to transact then. And there's a lot to like about that model, but it, but a lot does have to go right and there's a lot of places where it can kind of fall apart. And so it feels a little bit like it looks better on paper than it actually is. But still it seems like this emerging model that I'm hearing about more and more, and you kind of lived it and you lived in fact what I'm talking about, where it was a great idea in theory but didn't come to pass.

[Hemat Singh]

Exactly. And I think even the other side that you basically spoke about, which I agree with, I think it makes a lot of sense on paper. But if I was to bet on somebody being able to basically make this happen, I think the odds are very low because, you know, to, to convince us like also logically, most founders and most people who have built these businesses to actually like, you know, for them to have somebody who can come in. And basically it's a difficult proposition for somebody to like, you know, like, it begs the question, what is this person really going to do that the founder or person cannot do himself or herself? Now, if you're going to do a transaction and buy them out, there's a monetary side to it. They're being paid to leave. But like, you know, not too many founders, in my opinion, are actually going to believe it. Like you can actually come and do something better than them that.

[Interviewer]

Well, it sounds like in Pat's case, right, she recognized that what the HR issues in the business were but because it was all entangled with her family and this controller and the controller's family, it was going to be hard for her to, to disentangle all of it because of the, because of the messiness of the relationships. So. But you as bad cop or new sheriff could come in and do it.

[Hemat Singh]

That's exactly right. Yeah. It was the good cop, bad cop kind of a thing. It was easier to shoot off my shoulder. I was the person and I do think she like, you know, I was able to convince her through a combination of explaining what my fascinating amazing turnaround in India during the great financial crisis of taking a business, doubling it, working for a billionaire at that time, I was able to convince her, look, I'm not one of the suits. I'm not somebody who's coming in from a nice private equity consulting background. I'm, you know, I live in the weeds. Like, you know, I know how to roll up my sleeves and make things happen.

[Interviewer]

Yeah, yeah. Okay. Well we, and so. So you had developed a relationship with the guy at Alpine. Alpine will be familiar to many listeners. Large private equity firm that buys in the lower middle market kind of serially and his quite large. Now you had been in touch with the guy over there within Alpine who was kind of running their home care vertical. Yeah. Is that what you said?

[Hemat Singh]

Exactly.

[Interviewer]

And, and you did a, ultimately did a transaction with him. You sold the business to him as you know, as the CEO because the family wasn't going to let you buy it because of, there was some acrimony there naturally. And then you continued with Alpine and had your own second bite.

[Will Smith]

Did you have bites at the Apple for your 3%?

[Hemat Singh]

I did. So the 3% got sold when Alpine bought the company and there was like almost seven figures at that time. And then I got a 10% stake with Alpine and it was. And we had a really good sale process where we had a couple of multi billion dollar funds including revelstoke, which is a Colorado based healthcare fund

[Interviewer]

who

[Hemat Singh]

wanted to buy us. And then we sold to Alpine, Josh Greenberg, who's actually one of the original search. It's interesting, he was one of the original search fund people himself. So he got out of Stanford and raised a search fund, bought a company I think in the early 2000s. So almost like 14, 15 years before I did it. And then he's been a successful. And I spoke with Josh recently, they had finally team has basically sold most of their stuff to General Atlantic on a 3 billion deal. So he had almost a 300 million EBITDA platform in the home and healthcare services space that he had built. But yes, I sold Circle of Life, which was a small part of his bigger pie, and then over the next 2, 3 years went from close to a 21 to over a 70 million valuation and which was mostly all organic. And when they did a dividend recap, I got an opportunity to cash out and, and you know, in two different increments and then came out, you know, when I was done with Circular Life, which was the end of 21, I moved back home to the D.C. area.

[Interviewer]

And so you're 10%, you had 10% stake in a business valued at 71 million that exited.

[Hemat Singh]

Well, you know, that would have been fantastic. Like, you know, I had to leave some money on the table because it wasn't, it wasn't a full, like, you know, but it was a dividend recap and they were not, you know, so it was an opportunity for Alpine and some, you know, a lot of people was, you know, and Josh worked with me and you know, allowing me to take money off and basically we created it into an exit for me. But yeah, I would assume it's about a 6, 7% was what the number was. And then obviously they also had leverage on the deal, unlike in the 21 million dollar deal when we sold Circle the first time. So there were. Yeah, but yes, the valuation of the company went up from like 20 to over 70.

[Interviewer]

Great. And so you walk away with a few million bucks essentially.

[Hemat Singh]

I did, yes.

[Will Smith]

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[Interviewer]

how do you reflect on it that, I mean, I just think that's such a fascinating story because you had, you, you, you, you had a wonderful, it sounds like, I mean, the way you Your tone, right. It seems like a. You look fondly back on the experience, but I'm also hearing details that are, would maybe be frustrating. All of this acrimony with the family, the fact that you did try to buy the business and had you bought the business, all, all of that cash would have, you know, there would have been a bigger pop for you.

[Hemat Singh]

Right.

[Interviewer]

Then again, if the family had let you buy the business. Same, same thing. So there might be a little bit of. Not regret, but just kind of like, you know, I missed it. On the other hand, it was this fantastic operational run, you know, just what a, what a, what an experience to have had and how proud you must be of having built that business. So anyway, but I just, I guess I just put all these words in your mouth so you tell us how you reflect.

[Hemat Singh]

I know you summed it up right in the sense like, you know, I don't have any regrets of that thing. I look at it one of the, as one of the most critical defining moments or time periods for me as an operator in general. For me, operating means that it's always going to be a grind. So what I'm doing today is, is, is, is a third run as an operator. So I ran a chemicals business during the great financial crisis and you know, in the 8, 9, 10 period, which was also a turnaround working for this amazing billionaire in India. Then I had the circular life experience where I basically grew this business, you know, but it's always a grind. It requires you, you to be a hundred percent all in. It's, you know, you never know. You know, you, you, you never fully make it till you, you know, till you get to the other side. So I love the excitement side of it as well. But I think that's, that's, that's part of being an operator. So like, you know, and I, you know, to be honest, I was not even focused on making money until like, you know, circle of life until, you know, I sort of went through that. Like, you know, I always just wanted to acquire a business, run a business and mostly just run a business. I never fully understood or appreciated the monetary side of it where that can be transformational. Today I do. Like, today I fully understand what, how you can make a lot of money doing it or make a reasonable amount, amount of amount of money doing it. And that, that certainly motivates me, but that was not my primary motivator when I was either running the chemicals business or even when I was trying to acquire circular life.

[Interviewer]

How interesting, you know, especially because in, in this world, the be doing the operations is considered, it's a grind, it's very difficult. Many people, many people are attracted to the entrepreneurship through acquisition ETA path because of the financial outcomes and they want to skip over or get through the opera. You know, it's, it's the operations are sort of the necessary evil. Right? You have to pay, you have to pay that if you want to get to the other side. That's not everybody, but that's a lot of people. And you know, of course the whole framework of buying a business and putting in an operator, et cetera, et cetera. Everyone listening, I'm sure has heard about this and thought about this. Rarer is the person who says I like operations for operations sake. Another point is that what I feel like I've come to realize is that good operators are actually rarer than the finance people. There are a lot of finance people but the people who can really get in there and really turn around a business and make it go at least in ETA land seem to be fewer than the kind of finance opera, finance oriented people. What do you like about it so much?

[Hemat Singh]

Yeah, that's, you know, I think it's taken, it's helped me find myself and, and, and, and fully knowing who I am and what do I bring to the table and what's, what's like you know, I think I've always sort of been a, a, you know, a bit of a hustler, you know. And I, what I mean by that is so I, when I say somebody is a hustler I don't mean that, you know, you compromise your ethics in any value or you're trying to cut corners. I just generally think of a hustler as somebody who's non prescriptive that, who's basically when I, you know, I do a lot of cooking, I never really follow too many instructions or a manual or like you know, I, I figure things out and, and, and, and that's sort of I, how I'm, you know, have crafted my path into a lot of things in life. I, I, I sort of like, you know, sort of get in there and, and, and, and figure things out. And I think a lot of running a business is sort of like, you know, typical of that. Like, you know, so I knew what I didn't really want to do. As I said when I was coming out of business school, it did not excite me. Financial modeling does not excite me. Looking at my, I'm not that great with Excel and I know now today we probably don't need to with AI and everything but at the same time I'm pretty intuitive with numbers Now I understand like you know, when you're running a business there's only a couple of things that you really fully need to understand. I actually have worked with, with people with a very sophisticated financial background and I find it interesting that they don't get the numbers sometimes the way I do because I'm always just trying to understand cash flows and how much money is there and what your margins are and things like that. And sometimes I'll come across people from a financial investment banking background and they sort of are more interested in the modeling and all of that stuff which, which doesn't fascinate me that much.

[Interviewer]

It makes sense. Can I offer another theory?

[Hemat Singh]

Sure.

[Interviewer]

I feel like maybe your personality type is that you're more comfortable in chaos. You like action and, and whereas others might prefer control or a controlled environment where you can control the pace of things. Not that you're not a resourceful person, not that you're not a hard worker, not that you're not you know, working 12 hours a day, six days a week but you just the messiness

[Hemat Singh]

it

[Interviewer]

might, you might even like because it's sort of action and stimulation whereas to others that messiness can be off putting Respond to that.

[Hemat Singh]

Yeah, that's, that's, that's I can relate more not so much with the messiness but the action side of it it I, I, I'm definitely a very action oriented person. I'm like, you know, I like even certain meetings I do. I sort of like, like, like a standing meeting, 10 minutes and you know, quick check ins getting but it sort of creates a certain level of energy. But yes I certainly like and, and I know when I was not operating after Circular Life and between EPI which I'm operating today and I was doing sort of like on the sidelines as an investor it was a tough period for me sort of to you know, not to not actually have been operating at that time

[Interviewer]

and what about people Hemat? Do you like them? Just kidding. Sort of. Would you consider your but on you know a big part of being an operator is the hand to hand combat of managing a lot of people and, and the unpredictability of that and sometimes I'm sure frustration of that and so that that can its own, that is its own skill set and so, so respond to that and, and maybe preface by saying are you an introvert or extrovert? Would you consider yourself you know I,

[Hemat Singh]

I, I, I'm, I'M definitely, definitely an introvert. But when I tell people that they, they, they don't actually believe it, but they don't see the life that I generally have outside of work or outside of my sport. So I actually, the sports I play and I'm pretty competitive in all of them are mostly individualistic sports. Tennis, track, you know, sort of a 100 meter sprinter and a champion growing up and, and golf. You know, I play a lot of golf and like, you know, I spend a lot of time playing alone, but I like to meditate, I like to come back and sort of like, you know, spend a lot of time myself. Friends who are close to me always say you're very comfortable with your own self. But I like people. It's like, you know, and I actually think that's a great question because I can relate with people. And I think as it's true that what I was saying before through the, through operating a company, I've got to know who I am more as a person as well and sort of like, you know, I understand what my strengths are. I play to my strengths. I also understand what I'm not good at. So I'm always sort of like championing people or supporting, you know, promoting people who are really good at what they do and pushing them. So like, you know, one of the, I actually do believe one of the best skill sets for me in life today is not only can I articulate or, you know, sort of, you know, consider I can think of a vision, but then I can actually build a lot of, I can rally my folks around that vision and actually, you know, motivate them and push them hard. And so like, you know, like this has been consistent and all the experiences that I've had as an operator, there's a lot of people I remain close with. Even like, you know, I have relationships going back to the chemicals business in India, which was 20 years ago, and people still call me and they want to talk and talk to me about that. So it's all that's one side about running a business I really like. It's all these little families that you also end up having.

[Interviewer]

Thank you. Fascinating stuff. Okay, now we got to turn our attention here to the, to the subject of today's interview, other than you, the printing business itself. So let's hear, let's hear the origin of this, of this acquisition and then

[Hemat Singh]

we'll get into it now. So epi, Color Space, this company, this transaction came to me, it's a textbook proprietary deal. And the founder, the original founder of the business told me that this was somebody who started the business in 1989, acquired dozens and like, you know, almost like, you know, like, you know, 40, 50 companies in that space or related space and then sold it to a big private equity fund. So the founder cashed out and then finally that whole business collapsed. The group collapsed in the dot com bust. And then the main operator, who was the main operator of the entire group went back to the founder who is, you know, quite wealthy and basically took money and the operator came in and now was the majority shareholder and the original founder was a minority shareholder and then they had a third investor. And then from 2003 to 2023 you had the operator who was running this business now wanting to retire and wanting to sell the business. So the founder called me and, and the founder knew me as somebody who basically had a good run with Circular Life and said, look, there's a business here locally, I know you're back. I know this business in and out. I'm an investor in it. Right now I own like, you know, almost 25%. Let's buy this business. You become the front and you own like, you know, a certain amount and I'll own a certain amount and these are going to be the deal terms. The deal terms were amazing, like, you know, off the charts amazing. So I, based on all this stuff, I didn't really do a full blown due diligence as I normally would and I was quite pressured to sell. And also at a personal level, I'd gone through a lot of changes at that time. My dog, who was my partner for like, you know, 14 years had just passed away. So I was still in the shock of all that. But the business was a good business so I agreed to buy it because it was basically an inside deal and I had an insider who had basically known the business always on the cap table with me as a partner.

[Interviewer]

Okay, hey Matt, let me, let me pause you and just. You were searching to buy a business at this time?

[Hemat Singh]

You know, I was searching sort of in a, in not, not all, you know, it was a part time search that I was running. I was, I was, I, you know, I had come back after Circular Life. I was an LP and a GP in a private equity fund which was investing in other businesses. I was looking at deals, I looked at a lot of companies, but I was not doing it the way I, when I ran a traditional search fund when I was, that was my full time job of looking for a business. At the same time I knew my dog isn't on. On, you know, living his last days. I was spending a lot of time with him. I met my wife, who's my wife today, just about the same time. And so there was a. I was focusing a lot on my personal life as well, you know, and I wanted to take at least two, three years off, but I was starting to get bored. And that's when this business came to me.

[Interviewer]

Okay, okay, so you were looking or you were open to your next thing.

[Hemat Singh]

Right.

[Interviewer]

And at this point, you're very familiar with eta. You know, it's a model, so it's probably, you know, top of mind as something you might do. Okay, all right. Okay. So, okay, so this deal comes along.

[Hemat Singh]

All right, Right.

[Interviewer]

And so, so the print.

[Will Smith]

And so you end up.

[Interviewer]

What does the cap table look like then? Is it just you and this investor?

[Hemat Singh]

Yeah, it's just the two of us. And you're right, I got familiar with the ETA model, which I was actually fascinated by because I was like, oh, my God, it's exploded in all the time that I've been basically running Circular Life. I was intrigued by all the stuff I was reading about it and all the people. I will say I was skeptical of a lot of people who were promoting it as a model, which is you can make a lot of money, buy these passive, you know, they're calling it boring businesses and stuff, which I thought is not fair, you know, labeling businesses as boring businesses. But like, you know, but. But yeah, there was a lot of, you know, just seeing all the people involved in and seeing how mainstream ETA had become was fascinating. Now for me, I did know that that's what I want to do. I want to basically acquire a business. And I was also talking to my brother, who's investment banker and he was getting off banking. So we were looking at stuff together. So there was a lot of things I was, you know, so my brother and I also wanted to buy a business together. So that's going on. I'm looking at some deals. I have some money invested in a private equity fund and I'm both a LP and a GP on that fund. The only three GPs. And I was still bored. I was like, you know, that was not exciting. So that's when this deal came to me. And yes, you know, we were going to buy the business. I was going to be a. Finally we agreed to, you know, me being a 55% owner and the other the investor being a 45% owner. And we would do this transaction. And then the idea was not for me to run the business full time was the idea.

[Interviewer]

One sec though. But you also had talked about how what a screaming deal it was. Can you be more specific?

[Hemat Singh]

Yeah. So. And I will say that I did not because it was such a screaming deal. And the fact that I had an insider in the deal who was all in the cap table with me. I did not dirty my hands in the due diligence as I would typically do. I spent a lot of time just trying to learn a business, get in there, meet with the people, literally park myself and see the traction that I basically see in a business. Who are people coming in. I want to spend months doing my due diligence. I did none of that. I met the operator once. But I'll tell you what I liked about the numbers. I looked at the numbers from 2017 to 2022 and the sales were and averaging about almost 3 million. So that's what the numbers were on the sales. The gross margins were great, 60% and the EBITDA was in the 650 to 700,000 for a five year period. And I was like, okay, those are not bad numbers. Much smaller than what I would prefer. But like this is, I can do this deal on my own. So that's like, okay, that's nice. And the terms were buying the business for $500,000 all on a seller note, 100% that you don't pay a dollar off on the first. So you pay 100k every year, 0% interest. So for me effectively this was okay, I'm getting a business for free. That's how I looked at it.

[Interviewer]

Okay. And let me make sure I got that. The business did 650 to 700 for the, of. Of SDE for the five years through 2022. So consistent. Good. Go ahead.

[Hemat Singh]

Yeah, so, so the, there's a caveat to, to that. So the last two years it had come down and I could see that. So in the last two years the STE was about 400,000 and the sales was about 2.4 million. So it came down from about 2.93 million on a five year period. If you looked at five years, it was that amount. And so there was a little bit of volatility in the business between year to year. I could see that as well. But what was clear to me was the business made money, it had great margins and the owners took all that money out of the business every year. So I was able to, you know, confirm that with the tax returns, bank statements and so on.

[Interviewer]

Okay. Okay, great. Okay. So let me, let me make sure I got it. So the business was a 3 million revenue business and it did 650 to 700 in a good year. But many years it had some volatility, it had some more recent weakness. So it wasn't going kind of, it wasn't showing recently. It wasn't quite as strong as it had been historically. But you could see the potential of how it could be a stronger business. The owners were not reinvesting in the business. So it was kind of easy to explain why it was starting to show some softness. And most of all, it was just the acquisition price was a huge de risk. So you're buying this business for 500, half a million dollars, $500,000, which is less than it earns in a good year, maybe about what it's earning now. So call it 1x100% seller note.

[Hemat Singh]

Right.

[Interviewer]

So no money in. Right. Over a five year period. And yeah, and, and, and, and, and because of that incredible entry price, you let yourself not diligence it as much, which is perfectly logical. I mean there's, you've, the price itself just de risks so much. As I recall, the one thing that was not sweet in this deal was that there was personal guarantee attached to the seller note. Right?

[Hemat Singh]

Yes. So, so, so that was, and just to you know, it was one point, the way I look at, when I looked at it, I said it's a 1.25x because the last two years the EBITDA is 400,000. So I was, and pointing that out to my partner and to the operator that look, I see a slowdown in your business for sure. And you know, so I recognize that. And now the partner that I had, I actually did raise the question with him. I'm like what, like you know, what happens if we get in. And there's a lot of issues with this business. And I remember him saying, oh, we just shut it down and that like, you know, I didn't say anything. But that did not sort of stick well with me. But then when I was, you know, sort of going, because I was the front man for the deal with the, with the operator who did not know that like, you know, behind me was the same investor that he had on the cap table before and also like, you know, was basically the original founder of the company. So you know, the operator wanted a personal guarantee. The person I was basically buying the business from. And I agreed on the spot to give a personal guarantee because I thought it was the right thing to do, it was a fair thing to do for this person because I knew it was a good deal. I was like, okay, you know, I'll give you a personal guarantee. But then I went back and I sort of renegotiated the deal terms with my partner because originally I was not a 55% owner and my partner was not going to be a 45. I think originally it was maybe like 30, 70. I'm 30 and the other guy is 70. But there was supposed to be no personal guarantee. But then I took the, you know, I made a decision on the spot to give a personal guarantee. And then I went back and I said, look, I'm giving a personal guarantee. I'm not going to take 30% on this deal. I need to be basically like, I don't know, 50, 60, 70%. So we renegotiated finally. So I had 55% and my partner had 45% and the personal guarantee was on me. That's when the deal got closed. Okay.

[Interviewer]

Okay.

[Hemat Singh]

Yeah.

[Interviewer]

And this personal guarantee, you're basically guaranteeing $500,000.

[Hemat Singh]

Yes.

[Interviewer]

In the absolute worst case scenario, the business collapses.

[Hemat Singh]

Right.

[Interviewer]

Frankly, you could absorb that. I mean, it would be painful, but you could and still have a balance sheet left over to go do your next thing.

[Hemat Singh]

That was my logic. That's exactly how I thought through. And I will say I generally think about the worst case scenario in life a lot. So if everything goes south, like, you know, what can I do? What am I left with?

[Interviewer]

Yeah, well, and I think that's appropriate, especially in the case of a personal guarantee, which is, is the worst case scenario.

[Hemat Singh]

Right.

[Interviewer]

So, but I, you know, it's just it, it's worth mentioning because personal guarantee means more to mean something different to everybody. What they, first of all, how much money you're guaranteeing and can you absorb it, obviously, and then what you stand to lose. And so this would have been a chunk of your net worth, but not even half of your net worth were absolute worst case scenario.

[Hemat Singh]

Sure.

[Interviewer]

And of course that, that suggests that you couldn't somehow resell the business in some way, that you couldn't somehow recapture some of that $500,000 to, to pay back the original stock.

[Hemat Singh]

Okay.

[Interviewer]

You, you said something himad about your investor. The, you're the person you're buying, the principal person that you're buying the business from, not realizing that the same investor is helping you buy it from him.

[Hemat Singh]

Yeah. So that was something which was the biggest thing that I had to get comfortable with on the deal myself because my immediate response to that was my visceral thing was this is unethical that the guy that I have on the deal is not disclosing himself as somebody who is going to be my partner in the deal. So he's basically, it's a transaction from one hand to the other hand. So somebody is moving from being a 25% owner to being a 45% owner of the, of the business. And the person who's selling 51% of the business does not know that, you know, one of that his partner is going to be the next buyer. So that's, that. That was something that I had to make sure was legal. So I checked into it and in fact, one of the lawyers that I was talking to, basically, he, you know, was also felt exactly like me where he's like, you know, he's like, look, it's, the deal terms are amazing. There's, you know, it's, it's a fantastic deal. But like, yeah, it is. I can see why you find this, you know, something which is like, you know, sort of just strange.

[Interviewer]

Yeah, it's, it does feel shady. And just to be clear, himat so this investor.

[Hemat Singh]

Yeah.

[Interviewer]

Was not disclosing, right. To his partner, who was the current owner, 51 owner of the business, that he was also going to be backing you to buy the business, because why he must have been there. That's a conflict of interest. But what exactly was he standing to benefit, basically, coming out ahead in the transaction, obviously. But can you be more specific?

[Hemat Singh]

Yeah, I, you know, my, my take is like, you know, he helped negotiate the terms because it was not like I decided it was 500,000, all seller notes, 0%. This was, this was decided by the two of them and so, and presented to me. And so I think he, you know, probably felt if he disclosed that he was on the other side, you know, the, the, you know, the, the old main owner is probably going to be thinking, you know, oh, maybe that's like, you know, not the best deal, like, why this guy's trying to buy it from me. So, you know, like. Yeah.

[Interviewer]

And how do you reflect back on this now?

[Hemat Singh]

I'm still fine with it. I still fine with that decision. I, I, I, I, I sort of believe in life. I remember this metaphor that somebody used in a class, you know, who's a private equity guy, who was basically saying that, like, you know, like, as an entrepreneur, a lot of times you got to play. It's like, you don't foul, but you play very close to the line. So I, I knew this was like, you know, it's like there Are things which I genuinely feel are unethical and stuff and I don't want to be a part of it. This was, you know. Yeah. At the end of the day, the person who did. Agreed to this terms, agreed to the terms of the deals and he too did not share a lot of stuff with me about the business and so on. It was not a full blown, you know, blown due diligence. So at the end of the day, I think it was fair on both sides. Nobody put a gun on anybody to do the deal. So, you know, all adults in the room.

[Interviewer]

Okay. Very interesting. Very interesting deal. Okay.

[Hemat Singh]

All right.

[Interviewer]

Anything more to say about that or about the, about the deal to, for you to acquire in or should we get into your ownership and operations?

[Hemat Singh]

No, that, that was pretty much it. And now I will say that there's a lot of things I liked about the business from the initial cursory due.

[Interviewer]

Tell us more about the business, please.

[Hemat Singh]

Yeah, so like, you know, like, I like the financials. I like the, the numbers that I saw in terms of the margins and saw the amount of cash were generating on, you know, three. I like the fact that it had been around for 20 years. I always dig in about the great financial crisis. I want to know if a business, how did they survive the 7, 8, 9, you know, 8, 9, 10 period or 8 or 9. Because, you know, I consider myself a product of that environment and I don't care how well you were, you know, capitalized, how good a business you were. Everyone was smacked really hard. And I, you know, so if a business could survive that time period, for me, that is very important to know. So, you know, so like, you know, I remember asking him that. I like the fact that the, you know, the, you know, the person who was running the business, the main owner at that time was not the salesperson, was basically or was more of an engineer himself, was a very quiet person. So I, you know, I got to study him a little bit to sort of see how he was. And I loved both the clients. The clients were fantastic and I could steal stickiness and all the clients and I could basically see my bottom line assessment was this business punches way above its weight. And it was a, it was a good business. It had great clients. The people had mostly worked together for 25, 30 years. So they went back to the legacy companies. And so I was like, the fact that they've worked, this is my biggest issue in the healthcare and circular life was not being, you know, there's a lot of movement in talent these days. People stick around for two, three years and leave. If people can stick around for so long, to me that's also a testament of a good business. So all these things sort of like, you know, came together for me. Getting excited about the business too.

[Interviewer]

And what about the industry? Large format printing? I just aired an episode with Dom Smith who bought, bought a large format printing business. I've had other guests who have bought such businesses and I, I kind of feel like. Let me, I'm taking the words out of your mouth again himat, but if you'll indulge me, I'll share my quick bullet points on how I see this industry. The, the future of printing is there. So the old school, you know, printing business cards and paper, not surprisingly to anybody is, is dying. But there is a lot of future in, in large format printing and that's where the growth in this industry is. It's still very competitive. It's highly fragmented. Right. There isn't that much or any. I'm pro, I'm sure there's got to be some. But there isn't that much private equity activity here actually. Of course there is because Dom talked about being able to use private equity decks to learn about the industry.

[Hemat Singh]

Right.

[Interviewer]

But it's not, it's not, not overrun by private equity. Right. A lot of retiring owners, boomer owners. So there's an operational for, there's, there's an opportunity for young hungry buyers to come in and, and, and bring new energy and eyes to the business and AI enhancements and so on. But, but fundamentally like a lot of, like a lot of businesses in this world in the, in the, in the lower middle market, it's a services business and therefore quite competitive and so don't expect it to be smooth sailing. Yeah, so that's my take. How do you react to all that?

[Hemat Singh]

I mean the awesome takes and I own all these takes that you just mentioned is stuff that I've come to know now. I did not know all that going in, going in. I like. So I, as a CEO, as an operator, I've always been marketing oriented. I love branding. I love creating a brand. I love and I sort of recognize that what you do as a large format printer is tied to the marketing function of an organization. So all our clients, whether it's a real estate developer or there's a university or it's like the Smithsonian Institution clients, all of those, you're very closely tied to the marketing side to it, the branding side to it. And you're an extension of that. So I like that I liked all that. In fact, if I had access to, to a wide format, a large format printing business when I was running Circular Life, I could have done a lot because on the reservations where we did a lot of stuff I used to get like, you know, we used to make our own sort of billboards and things like that and banners and all of that stuff. So I actually invested a lot of like money towards those kind of things which would have been spent a lot better or more effectively. But today all the things that you basically pointed out is stuff that I've now learned that I since I've been operating in the space that I think this is like, it's almost quasi manufacturing without the heavy capex so it's low capex but like, you know, but still it's almost like, you know, so like some of the ideas that I actually had was maybe sort of like, you know, learning to tie in with some trade schools and stuff to create a certain kind of skill set to operate the machines, to repair the machines. The installation side of it that's very hands on. So I think if we're going to be, we're going to have like, you know, tailwinds, not headwinds with AI. So it's, it's a really good time to be in this space. I also feel it's similar to how home care was in 2014, 2015 and not today where it's a lot more saturated by private equity funds. So you're right, it's a fragmented space. Older owners are retiring. But at the same time I think it's a great industry. The margins are fantastic by the way. That's the other thing. The margins are great as well and to a large extent there is a, I wouldn't call it recurring to a fully though. We are sort of starting to play around a little bit with this. But most of our clients come back with the exact same stuff almost year in, year, year out. So there's like, you know, a lot of that kind of business too. So yeah, it's, it's a, it's a good industry in my opinion.

[Interviewer]

Hemat, when you say good margins, good margins usually suggests pricing power which usually suggests not too competitive but, but I think we both agreed that it does. It is a competitive industry. You now being inside it will know better than I.

[Hemat Singh]

Right.

[Interviewer]

React to that. How do you, how do you have these good margins if it's supposedly a competitive industry?

[Hemat Singh]

I, I think just the demand is so high. So, so it's a fragmented. So unlike home care, you still you, it's, it's very, the, the, the barriers to entry are a little more. You probably need a couple of hundred thousand dol. So unlike a home care business where you don't need that much money. So there's some level of that. There's a lot of franchises in this space. Sinorama, Fast Science signs by tomorrow. You know, there's a lot of those kind of guys. So you know, and I've actually looked at some of those deals which have been on the table and we do a lot better number wise or at least by the ones that I'd looked at and so like. But you know, that's a good question. I don't know if I fully know what the answer is in terms of. But what I'll say in the D.C. market that I've seen, there's so many businesses which are out there, but there's no like we guys like our client base is amazing. We work with some of the best clients in this space and we are like, you know, sort of their vendor choice. And I'm not finding it difficult to create new clients like get new clients of scale, join us or come on board, you know, on that. So for that to me tells me there's still a lot of demand despite by the way, by the fact that like, you know, given how tied we are to commercial real estate, which has taken, which has had a bloodbath in the last couple of years, it's been a tough industry. So this is not. And I think that's what was reflected in the slowdown last, you know, when I bought the business when I went from a 650 to a 400k EBITDA. Ah, ah.

[Interviewer]

Oh, okay. Because I had characterized that as the owners being kind of, kind of pulling back and not reinvesting. But you think it was a, it was actually a macroeconomic effect.

[Hemat Singh]

Exactly. That's what I believe it really was. Yeah.

[Interviewer]

Okay. But you believe now or then and now that it was cyclical and, and that that it will stabilize and, or, or not that it actually was a kind of a secular decline. But you as operator can correct for it by going out there hustling and generating new revenue.

[Hemat Singh]

That's exactly the, the latter side of it. I, I think the slowdown still exists but that does not preclude us or prevent us from acquiring new clients because like, you know, off size and scale and, and, and, and also I think the, the tide is going to turn on the commercial real estate side too. So like, you know, that's going to be an awesome. Because then we're going to again have tailwinds from that.

[Interviewer]

And himat give an example or two of a deliverable. When we talk about large format printing, that can mean a lot of like what you produce. Send out the door to your client is a lot of different things. So give us, give us an example about you.

[Hemat Singh]

Yeah, so it's like, you know, so signage, all kinds of signage. When you look at a building, you have lit, illuminated signage on the outside, massive signs. Now that was a vertical that we did not do so much of when I bought the business. We have started to do a lot more of that. And, and, and those are relationships I built with manufacturers. And it's not like, you know, it's not that we are fabricating those ourselves. However, you know, we do all the. When you look at a building and you see like, you know, four lease or you see, you know, a phone number or you see massive like, you know, move in banners hanging off buildings, those are all the kind of stuff that we do. So generally anybody who has real estate, including universities, we do a lot of work with George Washington University. And you know, and they're constantly changing their banners. They need a lot of wall murals. They need like, you know, so it's like wall murals that can also be in corporate environments, window graphics, retail, like, you know, like, you know, so these are like, whether it's restaurants or retail, those are the kind of stuff that we print and then install, but also museums. And that's really a reflection of the caliber and the quality of the work that we do. So a lot of the Smithsonian Institution museums are clients of ours or even outside like the Phillips Art Gallery, one of my favorite places in D.C. you know, and, but they're a big client of ours. And then finally a lot of like, you know, signage inside a building. You, you, you do new construction and you create all the signage that you see from like, you know, Will Smith outside your office door or your conference room. ADA signage, braille signage, bathroom signage, wayfinding signage, parking lots. You basically, you go to a parking garage, you go to the borough, you go anywhere else. The entire experience as a customer that you have of turning left, turning right, the things, the signs all around. Everything that you see is a combination of something on the painting side or really large format printing and installation. And some of those clients can be massive, half a million or more projects. So like, you know, these are, these are large scale projects.

[Interviewer]

That's fantastic. Yeah, I find this pretty exciting. I mean, maybe it's just because you were naming some hometown institutions that I'm so familiar with. We're neighbors here. But that's, that's really exciting. I wonder if it's, I'm just thinking out loud if like there's so many public spaces in D.C. right, that, you know, this is great industry here in D.C. because there, there's just a lot of clients who are serving the public and need to have a lot of signs, basically. But that's probably, that's probably, I'm probably stretching there, but yeah, but it just to distill all signage except for big illuminated kind of stuff that looks like it needs to be manufactured, which is actually what we think when we think assigned business. Right, but that would be more assigned manufacturing businesses. You're doing the everything else. Anything that is sort of more, I want to say two dimensional, but you'll correct me, not necessarily two dimensional. You probably do stuff that does have

[Hemat Singh]

some, we do a lot of three dimensional stuff too. Exactly. But you said it right. That's when we think of signage as exactly what you said. And that's stuff that like, you know, EPI color space did not historically do do. But I changed that. I saw there's a, there's a manufacturing company in Lancaster, Pennsylvania that we have tie ups with and I would actually probably want to acquire that business. I think it's a fantastic manufacturing. They price things really good and that's allowed us to basically sort of build out this capability. And so we are doing that kind of signage as well as massive monument signs. Even those, those are the signages. When you're going into an apartment complex, they have those big monument signs. Outside of them, we do those as well. And that includes the lighting and things like that associated with them. One more thing. All of these is one vertical. There's another vertical which is a trade shows vertical. Now that's nationwide. And historically epi color space used to basically have almost a 50, 50 split between the trade show vertical and all the other signage stuff the trade shows is designing the trade show booth. So if you're going to veg, you're going to Orlando and you, you know, you're a tech company and you're going there and you know you're going to have a, a 10 by 20 or a 20 by 40 massive boots. We do the design, the fabrication, we ship them, we get them assembled, we take care of everything for that. That's a, that's a vertical we do as well. I, it's, it's a great business. And I, you know, during COVID that got killed. Like, you know, that vertical obviously got killed, but now it's starting to make a huge comeback in the last year or two. And you sort of like, you know, you have a nationwide, you know, client base. So we do have clients. We have tech companies in the Boston area that we're taking care of and we store all their trade show stuff and it's complete white glove services, what you provide to them. That is a vertical that I personally think is like, you know, it's a phenomenal vertical that I'd like to basically develop more.

[Interviewer]

You know, it's funny about that vertical himat because I, I have had a number of guests in that business. So Adam Ra in Minneapolis bought a business like that. Ivona Butcher in the Czech Republic bought. I see you writing. I can send you these, I can send you the links.

[Hemat Singh]

Yeah.

[Interviewer]

Iona Butcher and her husband bought one in the Czech Republic.

[Hemat Singh]

Wow.

[Interviewer]

And then, then, and then on the Mind's Capital podcast, we interviewed an independent sponsor who bought one. David Acharya bought one but much earlier and owned it for some 10 years I think. So, you know, I would have just thought that that was a niche of a niche, but apparently it's a much bigger industry than I guessed because 3 now 4 you guests have bought these businesses. I'm, I'm also struck that in your case it feels like a very different business. Yes, signage and printing things and kind of visual display is what a booth

[Hemat Singh]

is, an exhibit booth.

[Interviewer]

But it feels like a very different business than, than the other half of your business, which is.

[Hemat Singh]

Right.

[Interviewer]

Pure signage. Right, right. So yeah, it feels like you got two businesses under one roof sort of thing.

[Hemat Singh]

Right, exactly.

[Interviewer]

Yeah. Okay. Okay, let's return to the plot here. Not first of all, when did you close?

[Hemat Singh]

So I closed a little over three years ago. So I closed on the 10th of May, 2023.

[Interviewer]

Okay, great. So we're almost exactly three years ago. We don't have time to cover those three years. We got to do the bullet points kind of of, of your ownership and operatorship. So let's hear, let's hear here. What, what have been the key points in this journey so far?

[Hemat Singh]

So I closed the deal. The first thing that I was sort of hit by was, you know, the corporate controller of this business who had been around from day one basically said to me that I'm leaving. I, I think you're going to probably get rid of me. So like before you do that, I, I, here's a two week notice. And that was, I think the, the first Day after the close.

[Interviewer]

And so like, why was this person sure they were. You were going to get rid of them?

[Hemat Singh]

So that's what the guy said. But the more I dig in, the more I dug in later. I think this. So he had moved from D.C. to North Carolina. He had started a business on the side. So I think that was convenient for him to say so, but really he was. So these were the things that the, the person who owned the business and was running it before me was contending with. He had lost one or two people. He had one, you know, so he, he was exhausted by running this business for like 20 years and its current form and the 10 years or so before that in its previous legacy. But yeah, so this, you know, the corporate controller was working remotely. I think he, he had a business that he wanted to focus more on. But yeah, but that's how he spun it to me originally was like, look, you're going to get rid of me. And I, you know, but, and, and then I, I went back to him and I said, look, don't do this to your colleagues. Like, you know, you've been with this business for so long. Let's just do a proper transition, make sure that I'm on rock stable ground. And then I've worked with an accounting firm and I know a lot of different accounting firms which are really great. I personally have no issues in outsourcing my entire accounting, similar to what I had done with circular life accounting, billing and so on. Just have somebody who's really good at doing it. It's more transparent. You also don't have key man risk that way. And so like, you know, so we did it. We sell, saved $30,000 through the transaction. It was seamless. So this was not a tough thing for us. So we managed to do it within a month of basically owning the business. And then, you know, and then I got involved. Right. To be fair, you know, I mean, I was coming in, you know, just making sure payroll is run, just trying to basically observe the business from the side. The idea was for me to find a general manager to install into the, you know, sort of have a. Hire a general manager and then I would get $100,000 a year and I would be a 55% owner. So that was the deal terms I had with my partner.

[Interviewer]

Wait, wait him out.

[Hemat Singh]

Hold on, hold on, hold on.

[Interviewer]

You, Mr. Operator, Mr. Guy who looks at the search ETA ecosystem and sees these gurus who are selling the vision of buy a business and put it, put in an operator. You actually, that was what you thought you were going to do here?

[Hemat Singh]

I, I, that was exactly right. That's exactly what I thought. Now I, I might have been influenced by the fact that I had a lot of stuff going on on my personal side. I, I was, you know, dating my, my wife to be, you know, my, I just lost my dog. And actually in 2023 I got engaged, married and we had our first child. And I'm closer to 50, you know, so, you know, yeah, I'm not a young guy doing this. So like, you know, so I was focused a lot of my personal life. I liked the business I was going in and to be fair, I did think I, I wanted to do. And also I was doing a business with my brother, exploring a business with my brother at that time. So it's not like, you know, so I, I, I actually thought like, you know, I would be more involved with my brother's business. That was the idea at that time. And what I was doing with my brother was different, but it was a healthcare focused business. Business.

[Interviewer]

Okay. Who, who of course, Abby. That is how we met. I met him at the American Operator Happy hour and he, he connected us when he told me your story. Yeah, great.

[Hemat Singh]

Right.

[Interviewer]

Okay. So, so, so you, you thought that you would do that, put in a general manager. That was the vision, that was your agreement with your partner that we've heard about this partner investor, what happens?

[Hemat Singh]

And then, you know, we, we closed the year 2023. The numbers are pretty solid. I actually, you know, in, in preparation for this, I actually prepared the numbers and made sure I had it. We, when we closed 2023, we closed on 1.7 million of sales and 400,000 EBITDA. So if you annualize that, there was almost 2.55 sales and 600K EBITDA. So the 2023 close was better than the close for the last two years before that. And you know, and, and, and from the, from the money that we earned, we basically paid back $100,000 on the deal terms. So that was in December and the partner wanted me to do disbursements. So like I would have got money back and the partner would have got money. And when the business was bought, we did put money into the business that's just like, you know, working capital. So we did put like, you know, a couple of hundred thousand dollars into the business split between my, my partner and I.

[Interviewer]

Well, I, to, I think we should consider that purchase price part of the purchase price just, just to be totally fair. So maybe you paid more like, you know, what 1.75, you know, 2.2x. If we consider that working capital, that's actually fair.

[Hemat Singh]

Right. Yeah. In, in smaller deals, that's considered. Yeah, exactly. Then I should exact. We should consider that the part of the purchase price. Okay.

[Interviewer]

Yeah, yeah.

[Hemat Singh]

Still. Still. Yeah.

[Interviewer]

So, you know, sorry for the nitpick. Still. The point is still still a de. Risked. Great acquisition price. Carry on.

[Hemat Singh]

Right. And then, you know, end of 23, 20. Oh, and I forgot also at a personal level, I had a, I had a, I had a really bad injury at the gym, so I, I had, like, you know, multiple tears on my rotator cuff. I had damage on my c, you know, four and five on my spine. So it's, it's, it's like I literally had to get cortisone injections when my, you know, son was born because I, the pain was unbearable.

[Interviewer]

Oh, my God.

[Hemat Singh]

Yeah. And so all this is going through and I'm sort of like, you know, just keeping my eye on the business, making sure payroll is done. And then February of 2024, the number one salesperson who did almost 35, 40% of our sales quit and went to a competitor. And basically we learned in the next day that he was trying to steal our business. So that's when everything changed for me. Like, you know, so I, I, I, I, I, I, I, you know, recognize the, the, the seriousness of the issue and how critical that could be. And I jumped in all 100%. And for the next sort of like, you know, a couple of months, I was trying to replace this number one salesperson, and I was basically, I, I think hired three or four. None of them worked out. All of them came from the industry. All of them had worked at other competitors. On paper, they looked really good. They couldn't deliver. I couldn't waste any time waiting for them to deliver. And it's also a time in 2024 that I went through a very acrimonious split with my partner because I felt he was not supportive of what I was trying to do. So I did not feel the deal terms were fair any more, and I had to go all in. So when I went all in, I wanted to basically get paid more for my time and effort. And I also wanted to renegotiate the deal terms, and my partner did not agree. But, like, you know, so we went through this whole, you know, sort of process where we basically sort of, you know, agreed to, you know, discontinue our relationship. And then after a couple of months, I bought him out. Fully and I became 100% owner of the business. And that took me towards the end of 2024. And at the end of 2024, we had 2.1 million of sales and about a 300,000 EBITDA. So it was not a bloodbath. But at the same time it felt like that. And I think part of it was because like, you know, from day one, I considered it as like an existential threat to the business with the salesperson leaving. And I went all in, trying to basically save this business. And it was grueling. It was, it was extremely hard. By the end of 2024, I'd still not found a replacement, which I felt was, you know, you know, as good as what the number one sales guy was before. But I was working with a business coach at that time and a friend who suggested, he's like, you know, why don't you. He's like, you know, when he, he knew the numbers like we've disclosed, and he's like, you know, you should be able to sell that much on your own. And it's sort of like, you know, and I was like, it. Suddenly I, it dawned on me that I was like, yeah, I should, I, I, I. And why not? Like, you know, like, you know, so then I started focusing on selling myself and trying to hire somebody like myself who could be a partner and shoulder for me in this business. So I put up a LinkedIn post on, similar to a search fund kind of a model about like, you know, what I'm looking for in a person. And I came across Kevin Durbin, who's my now partner. And I created a structure for him to earn equity into the business, you know, through milestones and EBITDA sort of thresholds and as he has done and, and Kevin has been a complete game changer.

[Interviewer]

Okay, come on, there's a lot here. Let, let me, let me unpack it before. Just so we gotta, we gotta move quickly here. But, but to be. So two or three follow up questions first. So you, so your, your top sales guy quits. And not only does he quit, he's trying to now poach all your bring his clients with him. Okay, so that's a total crisis.

[Will Smith]

You hire three or four experienced salespeople

[Interviewer]

from within the industry.

[Hemat Singh]

Right?

[Interviewer]

So, so, so what, what should have been ideal type people to come way plug this hole in your organization and none of them work.

[Hemat Singh]

None of them work.

[Interviewer]

What's the learning from that?

[Hemat Singh]

So, you know, and that, that, that was the toughest part about this whole journey. Previously in any company that I've operated, I found the answers within. So I did not have to like, you know, I would basically get to know because there was more skill, there was more skin on the bones. I would be able to find talent in house and be able to recalibrate them, retool them or I would know people. I expected the people, the sales people come and tell me, you know, here, hey, this guy and this other company, he's a good, why, why don't you hire him? Let me, let me set up a coffee chat with this. But nobody, you know, from within the company came and gave me the, the, the, you know, the, the, the answers to the problem. And when I would, when I would probe with them, they would basically tell me, oh, you need somebody from a production background. Because the two top people, both the guy who had left and the person who, who was still in the company, they both came from a production background. And at first I thought that was important, but like, you know, I do think there's a combination of things going on. There was a slowdown in the industry. So like, you know, even the person who had quit, and it's a longer story to why he quit, but I do think he was, he was not doing as well as he used to and he was actually sort of double dipping between, you know, this company and the company he joined. And so like I had already, even before that person had quit, quit, I'd already opened up like, you know, the sort of, you know, I was looking for salespeople and I'd shared that with the, with the, with the organization. I'm like, look, we have some folks who are probably going to be retiring. Let's, let's, let's, let's add more people to the bench. So I'd already started working with recruiters, which is why it made it easy for me to hire people, people immediately. So I think this person felt threatened and thought he was going to be axed because his compensation structure was the best in the company, company. So he felt like he's like, I'm going to come for him. So before that happens, he quit and he went to the company he was already, but his sales were also down in the time period. And then what I realized through my learnings and all this is like, you know, more than anything else, what you really need to focus on is customer support and project management and which is something which I've already always done in any industry or space that I basically. So I think you generally need to be likable. You Know, no question about it. And you need to know the space and you need to understand. But that is not as critical because what me and Kevin have been able. Kevin knows the space a little better than I do today. And he comes from off more of an operations background in some ways, though he was never an operator before that. But I think having a project management mindset is critical in basically just running a good company because that's what clients really care for the most, that can you deliver on projects, how are your communication skills and so on. But yeah, I sort of had a lot of learnings through this exercise of like, you know, hiring people who, you know, even though they came from the industry and who were successful at some point in time, they were not successful in this new role with EPI color space. H. Yeah.

[Interviewer]

How frustrating. Okay, thank you. And then back to this split with your investor partner.

[Hemat Singh]

Yes.

[Interviewer]

So in this, the business falls into crisis because the salesperson quits. You treat it as the, as an existential threat. You get in there and you're totally now involved in the business very, very actively and trying to solve the problem. And so you say, hey, both my ownership needs to reflect that and whatever disbursements or, or, you know, yeah. You know, salary, whatever we want to call it.

[Hemat Singh]

Right.

[Interviewer]

Needs to reflect that. Both need to go up.

[Hemat Singh]

Right.

[Interviewer]

He disagree. He disagrees. It becomes increasingly tense, acrimonious. But eventually you come to some sort of uncomfortable agreement and, but you buy him out. And do you buy him out altogether? So now you're 100 owner of the business. Do you buy him out at the same valuation that you enter the business with? Probably not, because he, he probably squeezed you.

[Hemat Singh]

Sounds like a little bit. Wasn't crazy, but yes, it was, it was a higher valuation. And I, I had money tied in other investments that he was, you know, sort of managing. And then like, you know, I, so we, we sort of like, you know, yeah, and, and there was some tax implications that he said he got, you know, hit by because we, you know, we did not take money out of the business in 2023. But even though we had a, you know, we, we generated a lot of income on our books. So all throughout, yes, I, I, I got him at, I, you know, the, the total amount for me, as you noted before, even with the working capital for me, it was probably closer to a 2x deal based on all the stuff that I did.

[Interviewer]

All right, but now you're 100% owner. This is, this is exciting. And you're now all in. This is what you're doing for the next chapter of your career. Right. All of the other things, you're working with your brother a little bit, the kind of investing, it's all, now it's crystallized into this, this is, this is what you're doing as of 20, 2024.

[Hemat Singh]

Yes, absolutely. And, and, and with my brother, you know, it, it, it caused a little bit of friction because he was expecting me to, you know, sort of like be more involved in his business. And I was like, you know, everything changed. I, like, you know, I did not expect this. Now that this is what's happened, I need to be all in and you can't operate. So I, yeah, so I, I, I do still spend a little bit of time with Vital Care Northern Virginia. But you know, almost exclusively my time is here on epi Custom of space.

[Interviewer]

Great. Okay. Himan, I want to close with two segments.

[Hemat Singh]

Sure.

[Interviewer]

And the first is you've already where, where we left the plot, which is you bring in a partner.

[Hemat Singh]

Right.

[Will Smith]

What was his name?

[Hemat Singh]

Kevin Durbin.

[Interviewer]

Kevin Durbin, yeah.

[Will Smith]

Talk to us.

[Interviewer]

And, and you touched on it. But give us more detail please on this structure and how you've incentivized him and, and, and why you chose to even offer a path to equity as opposed to just, just paying him cash as a normal salaried person. Walk us through that and then we'll do the final question.

[Hemat Singh]

Yeah, no, and, and, and I know for me at least like, you know, after the own, even the 3% stake, and I talk a lot about this, the 3% to stake at Circular Life and the first transaction I had a year and a half into Circular Life was the most important amount of money I'd ever made in my life. I considered it life changing. It was almost seven figures. And, and it was like, whoa. It was like unbelievable. You know, I think I was like closer to 700,000 or whatever. So I use that as an example a lot for people to basically, you know, I'm trying to motivate or manage and tell people that, hey, you know, it's like this is what skin in the game and a good run and an exit can do for you. Because I did not quite realize that it had never happened to me before that. And, and for Kevin, Kevin, Kevin is just a, you know, so Kev, Kevin's background is he and his five of his siblings, so six in total, all went to Georgetown undergrad. He worked with Goldman Sachs. He worked with Exer, which was acquired by Carile for a 1 billion valuation. He was a global VP. He's about 10, 12 years younger than me. I think he's about 36. He's originally from Michigan. He grew up in Michigan. I have a lot of, you know, I, I love the, the work ethic of people in the Midwest in general. He's, he's a straight shooter, you know, similar to the kind of relationship I could develop with Pat Jaeger. I think Kevin and I have basically, we, we liked each other from the word go. We got, we still took a lot of time before we basically finally decided to do this. So I gave him an opportunity to come in and work for about a month, month and a half before we really, you know, shook hands and executed documents, minutes. But the deal with me and him was that it's not just going to be EPI color space, it's going to be other businesses along this way. But let's, let's use this as a case study for ourselves in building this partnership between us where we're going to take this business, we're going to grow this. And he gets, you know, a, he gets a salary which is, you know, he's grossly underpaid based on his qualifications and everything. But, but, but the real, you know, for him, he also gets to earn, earn, you know, 15% of equity through EBITDA milestones and you know, and, and, and, and being in the business on a certain amount of time. But you know, Kevin recognizes the only way he really monetizes that is if we have a transaction so our interests

[Interviewer]

are fully aligned and so his, he can earn up to 15% over these EBITDA, hitting these EBITDA goals, EBITDA and

[Hemat Singh]

half of them is time bound. You know.

[Interviewer]

And how did you, how did you arrive at the exact structure? Was there some template you used? How did you think through that?

[Hemat Singh]

You know, I, it's similar to, so I, I, I never got to the search place with search fund investors, but it's a similar structure as what like, you know, the search world has where, you know, you can get to earn a certain amount of equity. Some of it is time bound, some of it is EBITDA milestone boundaries down, you know, after you do a transaction now.

[Interviewer]

Okay, great. That structure or, or that sort of implied or, or explicit promise or path that Kevin is signing up for means that you have committed to a certain outcome, meaning an exit.

[Hemat Singh]

Right, right.

[Interviewer]

So you're now building this to exit.

[Hemat Singh]

I, that would be the, that would be, you know, to be, to be perfectly transparent and honest. I, you know, I have, I think it would be a good business to own. If we can't exit and you know, meaning we choose not to exit or we don't exit, it's still a good business to own. I think it's got some, you know, but I think in my mind there's like a plan A, a plan B, a plan C, you know, that kind of a thing. I'd ideally like to take this business to a 1.5 million EBITDA and you know, some of it organically or most of it organically, or do some add ons and, and, and build a coalition of companies that I can bring to the mix. I think it's a great space in industry. You know, the, the, the issues too. Don't, don't. I, I get frustrated a lot as an operator. It's been extremely frustrating and grueling. You know, two years in the past, I'm not being able to fix the sales issue or trying to basically deal with other issues and you know, grinding away or operating a business. And you know, I've heard my wife say, you know, at times to me she's like, you know, I don't think she understands that because she's not, she doesn't come from this world of operating. But I'm like, yeah, this is, you know, to be honest, this is what I expect going in. You know, certainly I didn't in this case because I did not expect to be operating. But yeah, that is one option. I might consider bringing in some investors like a family office and taking some chips off the table and that can fuel some of this growth quicker and it can put some money and you know, it can incentivize Kevin and me better. So that's another option. Or we might even want to basically, you know, there's a third option which I was trying to talk to Kevin about. We might want somebody who can, as a searcher or an ETA person who could come in and buy this business and we could train that person to run this fully. You know, if you, you know, I personally, I will say I would want to run a business business much larger in size and scale.

[Interviewer]

You mean than what it is now?

[Hemat Singh]

Absolutely.

[Interviewer]

Myself in a very small business.

[Hemat Singh]

It is a very small business. It is true. It's like, you know, circle of life by the, you know, was 25 million sales when I walked in or close to it, it was 23 million when I left out, it was 38 million and 6 million EBITDA. And I, at that time I, when I was working for the billionaire in India, you know, I was wearing multiple hats. But it was a large, even the chemicals business was large, you know, and the business was a billion dollar. So I, you know, personally I would like to, you know, I think as, as the skills I bring to the table and what's the best fit for me would be a business north of $50 million. Oh wow.

[Interviewer]

Yeah. Well this is, that, that does shed a slightly different light on your decision to, to go into this business. But I guess you've already explained it which is you didn't think it was going to be what you devoted yourself fully to. You thought it was going to be, be semi passive.

[Hemat Singh]

So that's how you, that is, that is correct. And, and to be honest, as part of that thing also as an opera like I think like when I, when you asked me to describe myself and I said like I consider myself a hands on operator which means sometimes life is going to throw a bunch of cards at you and you're not going to question them and you're going to make the most out of that. But I, I, I do think this, it's a good business. It's, you know, we, we've reached a good level right now. I think the future is going to be a lot better. Better. But if I could rewrite the whole script, I would like to buy a business with you know, 5, 6 million of ETA.

[Interviewer]

Great. Well, perfect segue to my last question himad on, on, on being an operator. So as you have said, you found it amusing interesting to come back to ETA after your circle of life journey and discover how much it had blown up and how popular it was. You're now engaged on searchfunder.com and, and you posted there and one, and in, in, in one of your posts or in the one that I read you talk about seeing all this interest in eta and part of your skepticism as you've already told us is a little bit the guru stuff, the overselling what's possible here and, but then tied to that is do you really want you person who's considering buying a small business, do you really want to operate? Do you truly, truly want what this life looks like? Expand on that and we'll close out.

[Hemat Singh]

You know we touched a little bit on, on this will when you were saying like you know, like when I said I wanted to operate a business even before I figured out the, the financial side of the deal, meaning how transformative it could be for me in my life and now certainly I'm motivated by the money side of, of running a business but that's not what interested me in the beginning. And I could, you know, I literally, you know, did not have $50,000 in my bank account when I went to run Circular Life. And this is despite the fact that I was a Wharton MBA who had basically been working for, you know, a pretty large, lengthy time. You know, I started my first job was after my undergrad was. Was in 2000,000, you know, pre 9, 11 in New York City. So, yeah, it's like I. But I always was since, you know, me leaving business school, I wanted to get my hands dirty, run a business, run a line of a business. That's what excites me. That's what, you know, and I have now been able to understand that is my calling. And this is what I'm best suited for doing. And I. I'm convinced I can do it for the next 10. I think a lot of people get interested in this space, and that's what I'm talking about. When I think it's. It's the gurus or the charlatans or whatever. I don't know. I've not done my due diligence on that. But it seems like a lot of people promoting it, you know, with, you know, these beautiful sunsets and family pictures, and you buy these 10, 15 different. Yeah. And I'm like, you know, what. What exactly are they selling? Because, you know, and my experience, whether it's like, you know, the chemicals business, business, you know, that I also was. There was a lot of skeletons in the closet on that circular life. I had to, you know, there was a lot of issues there. You know, this one, there's been a tremendous amount of issue. I see my brother struggling a lot in building the right team and all that. You know, it's so. I think, you know, people underestimate how much of time and effort it takes to run a business. So you need to be motivated a lot more than just money.

[Interviewer]

Perfect. Note to end on Himat Singh. Congratulations on the progress with EPI color space, and thank you for sharing all of these years. As an operator, I really enjoyed your perspective. I think the audience will too. So really appreciate you coming on Acquiring Minds.

[Hemat Singh]

Thanks. Thanks so much. Will love being here. Thank you.

[Interviewer]

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[Will Smith]

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[Interviewer]

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[Will Smith]

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[Interviewer]

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[Will Smith]

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[Interviewer]

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