The Origins and Future of a 9-Figure SMB Holdco

Summary

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Acquiring Minds — "The Origins and Future of a 9-Figure SMB Holdco"

Host: Will Smith
Guests: Gant Elmore & Matt Moldenhauer (Elmore Companies)
Date: May 18, 2026

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Episode Overview

This powerhouse episode features Gant Elmore and Matt Moldenhauer, partners at the Elmore Companies, a unique small business "Holdco" with deep, multi-generational roots in entrepreneurship through acquisition (ETA). The conversation explores the firm’s evolution from modest beginnings to its current $500M+ annual revenue across 20 businesses, all underpinned by lessons in compounding, stewardship, and operator-led growth. The interview is a candid look at what it takes to build — and patiently compound — a serious SMB portfolio, with practical insights for aspiring acquisition entrepreneurs.

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Key Discussion Points & Insights

1. Origins & Generational Story

• Three Generations of ETA:

  • G1: Gant’s grandfather began in real estate, scaled into travel companies, once closing 50+ acquisitions in a year.

    “He and his general counsel... were doing 50 plus acquisitions in a year.” — Gant Elmore [09:22]

  • G2: Gant’s father took over, grew a travel management company through acquisitions, and later diversified into non-travel sectors (education, staffing, food).
  • G3: The current generation (Gant, his sister Lauren, and Matt) began with a small SMB buyout, then gradually scaled up using the family playbook, but adding outside experiences and partners.

• Family Roots, Entrepreneurial DNA:
  Gant describes being “around it, hearing it, being around it” but not pressured to join directly. His approach: start with his sister, Lauren, to “build great companies together” as independent entrepreneurs, not heirs to a monolithic family business.

2. The Power (and Necessity) of Compounding

• Decadal Patience:
  The team’s hold periods typically span a decade or more; real compounding (both financial and operating knowledge) doesn’t show until year 7, 10, or beyond.

  “From 2 to 100 million took 10 years, and from 100 million to 200 million took a year.” — Gant Elmore [84:22]

• Hold Forever Mentality:
  Both previous generations held businesses for the long haul — and rarely exited unless truly compelled.

  “...the math never worked for my dad in the travel business... I have an annuity here, makes a million... for 20-plus years... no one's... willing to pay [an annuity price].” — Gant Elmore [16:22]

3. Operator-Led Model: Grit Comes First

• Real Operating Experience Is Essential:
  Both Gant and Matt stress building operational muscle before scaling a Holdco.

  “In our company we believe in operator-led and we're there to support and push and help our operators. We've been in that seat.” — Gant Elmore [53:31]

• Matt’s Leap:
  • Left Bain & Co. to be an SMB CEO (“Roll up potential, yes. Not simple.” [35:37]).
  • Major challenges, but the hands-on years delivered crucial lessons in managing risk, cash, people, and dealing with high-variance days (see notable moments below).

4. Early Deal Stories & Lessons

• First Acquisition (2014):
  A $2.2M “stockpile measurement” company in Texas, grown through two add-ons and survived the onslaught of VC-funded drone disruption by being “sensor agnostic” and staying flexible.

  • Key: Holding through tough years led to eventual compounding ("at year five or seven this wouldn't have looked good... at 15, 20 years later... grand slam returns" [29:47]).

• Second Major Deal: Bellwether Forest Products (2016):
  Matt’s operator journey, scaling from $2M to $26M revenue, learning key lessons about market structure, pricing pressures, and the difference between building capabilities and aligning with what the market values.

5. Building the New Holdco Vision

• "50 by 50":
  Target is 50 operating businesses by 2050.

  “Let’s get started. Let’s take a more disciplined approach... we don't want to buy a company just for the sake of hitting our goal.” — Gant Elmore [60:49]

• Bringing in Operating Partners:
  Recruit operators who see this as their life’s work, giving 15–25% sweat equity (without vesting but with a waterfall beneath family equity).

  • Family funds act as a committed, permanent LP.

  “We’re looking for humble, hungry operators... and who want a... company to make their life’s work out of.” — Gant Elmore [70:22]

• Growth & Capital Allocation:

  • Focused more on patient compounding than “breathless” near-term growth.
  • Aggressive overall portfolio growth (100% y/y in 2024–25), with organic growth at 35%; most breakout growth appears in years 5–10+ of each business.

6. Long-Term Philosophy & Its Rationale

• Why Not Sell?

  • Keeping good businesses means keeping the relationships, compounding knowledge, and avoiding the redeployment problem.
  • True to their word: operators have meaningful, lasting equity, and owner-facing roles.
  • Family office “feel”: one LP, multi-business synergy and learning, stewardship culture.

• Why This Is Rare — And Will Spread:

  • It’s hard. The model takes time, patience, and disciplined reinvestment: “all my net worth but it’s illiquid... you have to really have the mindset for I want to go build.” – Gant Elmore [93:06]
  • "Holdcos" of this type will likely proliferate as today’s ETA generation matures, but the need for permanent capital and emotional stamina is a real constraint.

7. Sourcing, Supply, and the ‘Silver Tsunami’

• Matching Trumps Macro:
  • Matt’s view: “It’s not supply/demand — it’s about matching. Anything/anywhere isn’t enough; you need to tell your story to the seller.” [97:10]
  • Gant: “Plenty of good businesses for the demand, if you’re willing to get creative, accept certain risks, and work with sellers on structure. Not enough ‘great’ businesses, but enough ‘good’ ones.” [99:08]
  • Reputation compounds too—quality buyers get called back again and again.

8. How to Join/Engage with Elmore

• Operator Opportunities:
  • Reach out by email, intro, or LinkedIn.
  • Expect to have an exploratory call, suggest/search criteria, and then remain “in the orbit” for when the right business emerges.
  • No bench-warming: rarely bring people into HQ to “wait” for a deal, but have done it in select situations.

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Notable Quotes & Memorable Moments

• On Compounding:

  “We have a lot of ten year overnight successes... Years one through seven, you get good LBO style returns... 7 to 12 and 15 is where you can have hockey stick–like change.” — Gant Elmore [31:05]

• On Operator’s Grit:

  “Most of the people that gave me feedback... were correct, it was not the best business to acquire... But had I not done that, I would never be on this path and that would be a loss for me.” — Matt Moldenhauer [35:33]

• A Day in the Life of an SMB CEO:

  “I had to terminate a maintenance manager... a call that our equipment was on fire... then served a lawsuit... that was a small business day... Those are the toughest days and... the ones you look back on.” — Matt Moldenhauer [51:39]

• Building Enduring Partnerships:

  “We’ve never gotten rid of a partner in you know, my dad’s generation, our generation, they’ve all stayed on operating their business through their desire to do that.” — Gant Elmore [104:16]

• On Portfolio Growth:

  “From last year to this year, last full year, we grew 100% at the aggregate next generation level... Organic [growth] was like 35%.” — Gant Elmore & Matt Moldenhauer [79:25; 79:52]

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Important Timestamps by Topic

• [06:18] Elmore Companies today: 20 portfolio companies, $500M+ revenue, third generation
• [09:05–17:23] Multi-generation ETA backstory; reasons for never selling
• [21:27] Early partnership/operating model in family history
• [24:09–31:05] First acquisition story: adversity, sticking with it, compounding
• [33:02–46:44] Matt’s journey from consultancy to tough SMB operator
• [53:31] 2010s—learning phase, operator-first culture
• [54:18–62:50] Transitioning to “Holdco” vision; foundation in true operator experience
• [70:04–73:55] Operating partner model, equity structure, aligning incentives
• [76:01] Approach to growth (portfolio vs. operating company level)
• [83:36–84:22] Growth rates and the “nonlinear” effect of compounding
• [94:22] Emotional and practical reason why most sell after first success
• [97:10–100:53] The “matching” question in ETA — supply, demand, and deal creativity
• [106:21] # of Operators to date and scaling toward "50 by 50"

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Takeaways for Aspiring Holdco Builders

• Compounding requires patience and permanent capital. Even the best businesses need years before explosive returns emerge.
• Operational credibility trumps theory. Operator-led experiences (especially in hard businesses) forge invaluable instincts.
• Long-term partnerships and aligned incentives are key.
• **“Good businesses” — not just “great ones”—can be excellent long-term bets, especially with creative structuring and risk management.
• Reputation, relationships, and a values-driven approach can compound alongside capital.

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Contact / Learn More

• Website: Elmore Companies
• LinkedIn: Gant Elmore, Matt Moldenhauer (links available in the show notes)
• Email: See show notes for Matt Moldenhauer’s direct email (willing recipient)

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Transcript

[Will Smith]

Today's interview is the story of a small business Holdco. The Elmore company's portfolio is nine businesses strong and does around $200 million in annual revenue. And it's run by three partners, two of whom are with us today, Gant, Elmore and Matt Moldenhauer. We unpack what they're building and, more importantly, how they're building it. A theme threaded throughout the conversation is compounding, hardly a new concept. But many investors and builders talk the compounding talk. Gantt and Matt walk the walk. Their acquisitions are forever holds. They seek operating partners who view the business as their life's work. And they've seen time and again in their own portfolio how it's not until years 7 or 12, or even 15 where the magic of compounding happens. From 2 to 100 million took 10 years, says Gantt, and from 100 million to 200 million took a year. Another key theme of what Gant and Matt are building is operations. Matt spent seven years operating a small business in a hard industry, a business that had just $2 million in revenue when acquired. Listen for how much gratitude he has for the operational chops he earned during that tenure and how he recommends a similar path to you aspiring Holdco builder. There is so much in today's interview with Gant, Elmore and Matt Moldenhauer enjoy when and how revenue is recognized in a small business is crucial to understand but often overlooked by searchers. Revenue recognition informs how much the business actually earns, how favorable or not the CA conversion cycle is, what the working capital needs look like, and more. So join Max Lummis and Travis Sadler of LLCs for Tomorrow, Tuesday's webinar on revenue recognition in quality of earnings issues that frequently surface in SMB transactions. LCS performs dozens of Q of Es for searchers and independent sponsors every year, so they are in the very business of scrutinizing the revenue quality and recognition of businesses in our market. For buyers like you. Sessions with Max and Travis are substantial, sometimes technical, so expect a meaty primer on this most important topic. The webinar is Revenue Recognition and Quality of Revenue in SMB Deals and it is tomorrow, Tuesday, May 19, noon Eastern. Link to register is right at the top of this episode's show notes or on the Acquiring Minds homepage. Acquiringminds Co. Also tomorrow Tuesday, Team Acquiring Minds is planning to release something that we are really excited about. The ETA Database. The ETA database is a searchable, filterable archive of every Acquiring Minds episode. Over 450 episodes of acquiring Minds cataloged and filterable by industry, acquisition model, geography and more. So many of you have asked over the years whether there's a way to search the episode back catalog by criteria like industry, deal type and there hasn't been. But starting tomorrow there will be the ETA database. Watch for it tomorrow. Tuesday, May 19. 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 Aspen HR recently published a short white paper targeted at searchers Entitled A New CEO's Guide to Human Resources. It lays out the key items you should be thinking about as you transition into CEO and owner of the business you bought. The link to download that is in the show notes Aspen HR is a professional employer organization or peo, which provides HR compliance, flawless payroll, robust HR technology, and Fortune 500 caliber benefits all for a fraction of the cost compared to using multiple vendors. Reach out to Aspen HR for your complimentary HR diligence checklist and benchmarking analysis. Go to aspenhr.com or contact Jenny Thier directly at jennyspenhr.com Gant Elmore Matt Moldenhauer

[Interviewer]

welcome to Acquiring Minds guys.

[Gant Elmore]

Thanks Will.

[Matt Moldenhauer]

Thanks Will.

[Will Smith]

You two are building the next generation of Elmore Companies.

[Interviewer]

Elmore Companies is a family office meets SMB Holdco. It sort of defies definition. We're going to unpack that. But today the numbers at Elmore Companies are very large. We're going to hear about that. But its origins have searchy entrepreneurship through acquisition e roots.

[Will Smith]

So there's definitely something very relatable about

[Interviewer]

the origin and even what you're building right up to today.

[Will Smith]

Speaking of today, let's start actually with

[Interviewer]

where things are in 2026 at Elmore Companies. Gant, can you give us some bullet points to level set for everybody?

[Gant Elmore]

Absolutely, and thanks for having us, Will. So for us today we're in our third generation of being entrepreneurs in the acquisition space and currently we have roughly 20 portfolio companies and over half a billion dollars worth of annual revenue, several thousand employees spread out across those portfolio companies and some of Those companies are sub 2 million in revenue and others are well into the nine figures. And so it really spans a wide range in terms of what we do from the business side and from what the size of the companies are.

[Interviewer]

Great. And you're Indiana based?

[Gant Elmore]

Kind of. I am in Indiana. I grew up in Bloomington, Indiana. My dad still has an office here, but then we are spread out across the country from both a Business perspective and our people.

[Interviewer]

Matt, where are you based?

[Matt Moldenhauer]

I'm in Milwaukee, Wisconsin. But I met Gant and the family when I was at IU in the MBA program in Bloomington. So I met Lauren, his sister, and our third partner in the current gener. And so I spent a good amount of time down there over the years and also ran a business with these folks in South Carolina in the forestry space. So I moved around a bit before I got back home. Near to home with kids in Milwaukee

[Interviewer]

right now, Elmore Companies. The audience will have heard me say family office. Matt, we noticed that your last name is not Elmore. So you enter the story of this family in the 2000s as an operator. We'll, we'll tell that story. But today you are working alongside Gantt as a, initially an operating partner, now really at the partner level. Is that a right definition?

[Matt Moldenhauer]

Yeah, that's right. I mean, I say I'm an operator by heart, not a classically trained investor or banker. But I'm now on the investment side with the team, which I love doing as well. So I think we'll get into more of that today.

[Gant Elmore]

Okay.

[Interviewer]

Over $500 million in annual revenue across 20 businesses of, of quite small, all the way up to much larger. So this is really, really a substantial operation and actually a lot. I mean, you guys are in your late 30s, early 40s, so there are, there's decades more to build here. So it's a, it's a really interesting. I was surprised that I hadn't heard about you guys before and what you're building. And so I'm glad that you raised your hand and honored that we're going to tell the story today. Speaking of the story. So this is the, what you're building is kind of the third generation Gantt. Could you give us the quick version of G1 and G2?

[Gant Elmore]

Yeah. So G1, my grandfather grew up in Anderson, Indiana, just outside of Indianapolis. And first in his family to go to college and goes to law school, becomes a lawyer and figures out, ah, it's more fun on the client side. I should go start doing that. And so he starts doing some real estate deals and then ends up in the travel space. And so he builds a tour operating company in the 60s and 70s doing a ton of acquisitions. I mean, at the, at his peak, he and his general counsel and one other partner were doing 50 plus acquisitions in a year. Um, so as a family, that's what we, my dad grew up seeing. And we got this strategy through that of building companies through acquisition.

[Interviewer]

Tell us about then how G1 became G2.

[Gant Elmore]

So G1 becomes G2. When my dad comes to Bloomington to get his JD MBA and then is deciding he wants to do something entrepreneurial, my grandfather says, hey, I've got this screwed up travel business separate from his booming tour operating company at that point, a corporate travel management company. So my dad turns that around for him, buys it from him and then goes on a building spree through buying other travel management companies and builds that out and figures out, oh, I can go diversify using the same playbook into things that aren't travel. And so, you know, one of his most successful companies ends up being a educational publishing company. They do professional development for the K through 12 space and that is, you know, it deserves its own Acquiring Minds podcast episode. They bought a two and a half million dollar revenue company back in 1998 and you know, it now does well over 100 million. Owned it the whole time. And so you know, we, we have a family history of buying a lot of search type companies and owning them for a really long time. And that's just it. I grew up around it. I've, I've seen it. As Matt and I like to say sometimes we've been doing this since before it was cool, but it's really fun that now it's cool and that there are people like you bringing it to the masses because we're passionate about it. We think this is really important for the country and for the employees of these businesses that there are the next generation of leaders coming into the SMB space.

[Interviewer]

Well, we're going to hear your thoughts on the Silver Tsunami sometime later in this conversation. And Gantt, you also teach ETA and iu?

[Gant Elmore]

Yes.

[Interviewer]

Tell me, what's that about?

[Gant Elmore]

Kelly School of Business graduate MBA program. We teach a seven week course called Entrepreneurship through Acquisition, the Art of the Small Deal. And we've been doing that for nine years now. My dad and I team teach it and we have a blast with it.

[Interviewer]

Wow, so you've been teaching an ETA class for nine years. Well, that really puts you ahead of the curve. Nine years ago. I mean now all the big business schools are teaching it, but they certainly weren't nine years ago.

[Gant Elmore]

We were there was because we looked at when we were trying to convince the business school that they should do this. At that point, Harvard, Stanford, Booth, Columbia, they all had their program and I'm not sure who else had a class but we, we were able to point to some top business schools that had it and say, hey, we should be offering this Here, it's important. Great.

[Interviewer]

Okay, well thanks for the, the history couple follow ups on that history. So this was to be clear, your father and grandfather weren't traditional private equity. They were really acquisition entrepreneurs as we now call it. They were buying these businesses with some investors, but very informally, often partners that they would go into the businesses with. This was them figuring it out as they went. And yeah, not institutional, not formal, very entrepreneurial, right?

[Gant Elmore]

Absolutely. Yeah. I mean as, as my dad says, you know, he had his first business and he was figuring out any way he could to buy add on acquisitions. And in that time period the airlines were doing commissions and they would front money if you could convert another acquisitions clients to their airline instead of a different airline. And so he used creative ways to finance those deals. And then for subsequent deals it was, hey, if I can live on 20% of what my company's making instead of 40%, I can use the other 20% to go buy the next company and keep rolling it in to future deals. And so that's how he built his Holdco basically of a bunch of different companies was through over a long period of time reinvesting the profits of his business not just into his current business, but into the next business.

[Interviewer]

One wonders why this is was so rare, why you don't hear more stories of this. We all now know what compounding means, but it doesn't seem like there are many, many stories like your dad's or your grandfather's. Maybe there are and those folks just aren't around telling them on podcasts and the like. But it sure seems like he figured out something on his own that we all see as obvious, but wasn't obvious to his counterparts at the time. And, and so again, when, when you kind of talk about both in, in both of their cases being hold coast, they were, but they were, they were very industry focused. They kept doubling and tripling down on travel. Right.

[Gant Elmore]

My grandfather was, he was travel and then got into sports and minor league baseball and those were kind of his two things. My dad started in travel but had seen my grandfather go through the ups and downs that can be in travel and knew he wanted to diversify at some point when he was able to. And so he got out of just travel and you know, he bought the education company, bought staffing companies, got into some food manufacturing, did some, did some different things to get more diversified over, over time.

[Interviewer]

And why do you think that? Maybe this goes to my earlier observation about the fact that they were just compounding, but why do you think exiting their Businesses was not part of their story.

[Gant Elmore]

One, they were both entrepreneurs. They liked doing it. My grandfather liked working and knowing about his businesses up until the very end of his life. And it was his passion and my dad very much the same way. And also the math never worked for my dad in the travel business in particular. He's like, I have an annuity here, makes a million, 2 million bucks for 20 plus years, 30 years. And he's like, no, you, no one's, he's like, I'd sell it. You just have to pay me enough to be able to go buy an annuity that's going to throw off the same million to $2 million a year. So call it a million and a half a year. And no one was willing to do that, even though people would approach him over time and he's like, I know how to run this business. It's not super challenging to keep it very consistent.

[Will Smith]

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[Interviewer]

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[Will Smith]

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[Interviewer]

Okay, Gantt. And so you grew up at your dad's elbow watching this. Was this destined that you'd get into it or where do you introduce your own interest in this and so. And exposure to this now?

[Gant Elmore]

Yeah, so I, I grew up seeing it, hearing it, being around it. You know, in a way, my dad would go into the office at, you know, early on Saturday morning and we'd come and meet him and, you know, go do stuff afterwards. But that got me initially, you know, whet my appetite on it. I was a baseball player and my dad was driving me all over the Midwest playing baseball. And so you would hear one half of a conversation on the old big cell phones in the car. I just saw that and it looked Fun and interesting. But the, the idea of coming and working at Elmore Companies was never part of the plan. The plan that was to go be an acquisition entrepreneur. And my dad always said, hey, I'll help you get started going to do this. But it wasn't to build a family office or a holdco. It was go buy a company and run a company.

[Interviewer]

So it was to do what he'd done, but not under the auspices of the family. It was just to do it independently.

[Gant Elmore]

Yes. I mean, it was.

[Matt Moldenhauer]

Oftentimes you would say G0 in a sense of start over, we'll help you get started and have the information and the knowledge, but start your own thing. There's nothing here to necessarily inherit, which I think is a great philosophy for us because we got in on the early companies and got to learn together.

[Interviewer]

Right.

[Gant Elmore]

And in a family business, we have this family business that you kind of see and hear of as Elmore Companies. But growing up, there was no single family business. There was no I want to go run that company. All of my dad's companies had a, had an operating partner with a significant equity stake who were running them. So it was not. There was never a goal of I want to run the family business. It was a goal of I want to go acquire and grow a business. And so coming out of. Well, I was still in business school and law school, but my sister Lauren had just graduated and we bought our first business in 2014, a small $2.2 million, eight person company down in Texas called Firmatech. And that was. That was our first deal. And it was never known if we were going to do more deals.

[Interviewer]

We're about to get to that. So I want to, I want to put a pin in it just for a sec. Just say a little bit more about how your grandfather, I guess more probably your dad partnered with folks because we'll use that as a contrast to how you guys do it.

[Gant Elmore]

Yeah. So my dad would find a business and go to someone he knew and say, hey, I think we should go buy this business together. It started with finding. He was pushed by a mentor to find someone to run his travel business. Who he said, hey, you've built it, but you are starting to do other things. You need to put someone in to run your travel business. And so he decided, and at the time he was like, why would I take $100,000 out of my own pocket to hire someone to do my job? Probably do it worse than I'm doing it so I can do this. But his mentor kept pushing him and eventually he did it and he figured out, oh, they're actually better at it than I am. And I have a bunch of free time where I can go out and start doing more deals and helping my other partners more and being, being available to them. And so that's what started it. And then he'd go out and buy a business, bring someone to run it, give them 20% equity kind of for free, and then they could, they could buy in up to 50. And he has several 50, 50 partners with him to this day.

[Interviewer]

So it was pretty. So the ownership of his partners would range from 20 to 50. Maybe there was some kind of vesting or earning over time, 20 to 50%. And it was just kind of all common, you know, kind of easy, super simple structure, super simple.

[Gant Elmore]

He would put, he would put debt in. So if, if he was funding all the capital, it would go in his debt. He used very little bank debt back then and he would just put the cash in his debt as they paid it. Back then they were just common equity partners. Great.

[Interviewer]

Well, how funny to hear that your dad, I mean, what a contrast to today where acquisition entrepreneurs, first thing they want to do is put in an operator and move on to the next. Your dad had to be kicking and screaming, put in an operator. But it was the unlock. It sounds like it was, it was an inflection point. Okay, okay, get. Great.

[Will Smith]

Back to.

[Interviewer]

So back to your first acquisition. You, Your dad says, I'll help you with some kind of seed capital or I'll be your lp. I'll be your investor. Yes. In kind of an SBA style deal or, I don't know, whatever deal you found. What you did find was kind of an SBA size deal. This was not a big deal. You decided to partner with your sister. So the two of you do this together.

[Gant Elmore]

Yeah, we did it together. And we decided before we found this company when we were both in business school that we looked around, I looked around and said, looking at all the best investors out there, most of them have a partner, obviously Warren and Charlie being the two obvious ones. But you look at others and lots of them have, you know, whether they're running a hedge fund and they have their number two or, you know, in the private equity side, they, they have someone with complementary skill sets to bounce ideas off of, who thinks about the world slightly differently, etc. So we sat there and said, hey, we should go do this. We got the trust built. We've, we know how to, to fight. We're siblings and we can, we we think we can make this happen. And so we set out and said, okay, want to go do. And it was, it's our purpose to this day is build great companies together. And it, this was back before we acquired our first company. It was, we set out on this mission to, to build great companies together. And that meant her and I, it meant with the stakeholders of the companies we buy and with our future partners who at the time we didn't have any or didn't know who they were going to be. But and it's still true to this day is we look at things through the lens of how do we go build great companies. And a big part of that is with this permanent hold that we have, it is focused on actually building great companies and that that are going to endure for a long time.

[Interviewer]

Yeah, well, we're going to definitely spend some time on that. And you mentioned future partners. Matt, I know you're getting itchy over there. Thank you for your patience. We're going to you here in a minute. But Gant let, let so that first acquisition. So let's, let's hear quickly the story of that. We're not going to spend too much time on it, but tell us how that went, what the business was, how you, how you bought it and then what you did with it.

[Gant Elmore]

Yeah, so it, it's about $2.2 million stockpile measurement business. So this business was in the state of Texas and a little bit in the surrounding states and had guys in trucks with lasers on the back. Yeah, kind of sounds like sharks with lasers on their heads. But lidar scanners and they would go around measuring piles of rock and quarries and doing inventory measurement for those, for those quarries. And so it was, yeah, eight people before drones. And so we went and got in, did that deal, had some bank debt, then some family capital and we said, hey, we think we can go grow this company.

[Interviewer]

So that was, it was Texas based. You guys were Bloomington based. Did you move down there?

[Gant Elmore]

My sister Lauren moved down there for the first year and a half or so in. So we bought that in 2014. In 2015, we did two add on acquisitions, both about a million and a half in revenue. Um, so in two years we had, we'd gotten it to about 6 million in revenue. And then this could obviously be its own. It'd be its own story. Then VC money comes pouring into the industry because drones become a thing. And so we tread water and we're fighting tooth and nail. Literally over $200 million gets invested in drone companies with the Idea of we can measure stockpiles because it's the easiest thing to do. With drones and 3D mapping there were times it was a little scary and a little ugly, but we managed to make it through. We ended up buying out of basically bankruptcy, one of our top competitors on the drone and software side. So that became our software platform. And now fast forward to today. You know, we'll do roughly 40 million in revenue there this year both in still in mining. We do a bunch of landfill work now and then also utility inspection work. And so.

[Interviewer]

And it's a drone company today or the drone is the vehicle used to do these measurements?

[Gant Elmore]

It is, it is. Most of our data capture is via drone today. We still have some, you know, we, our benefit from back in the beginning is we were sensor agnostic. We're going to find the best tool for the job. And still to this day that's what we've done is we have mobile mounted LiDAR, we have drone mounted lidar, we have photogrammetry on drones and we have methane sensors on drones, et cetera. So we, we're able to do a lot of different inspection and measurement work through, through that.

[Interviewer]

And Gantt, as you said, this could be its own acquiring minds case study story. We're not going to do that. But, but I am struck that that at your first attempt at this, you guys nailed it. Is it just because it's in, it's in the DNA? But I mean that, that by itself would be a phenomenal story, let alone what we're about to hear about. Elmore.

[Gant Elmore]

Broadly yeah, but we, we only nailed it because we held on for 12 years, say more at year five or seven, this wouldn't have looked good. We had to fight tooth and nail against these new entrants into the space and we were keeping our head above water, but that was it. And so if we'd been looking for a return at year five or year seven, it would have been a very, very low return. We would have gotten everybody's money back paid off the bank. But it would not have looked good. It's now going to look great with potential grand slam top quartile search fund type returns 15, 20 years later, even with the timing aspect of that. But that was not a given for a good chunk of its history.

[Interviewer]

And just to further tease the long term philosophy, here is this exhibit A that you needed to sit with this one for a while before it could really pay off or no, our thing

[Gant Elmore]

is we have a lot of ten year overnight successes. We believe just the Power of compounding that we talked about in the beginning and how it's so obvious to all of us now, but it wasn't. We actually think one of the things that is missing currently is the power of the compounding knowledge and that having an operator in the seat compounds and that years one through seven you get good LBO style returns, you do some, some good things. But where the real power comes in is all of the things that you're iterating on and learning and getting into the space where you're 7 to 12 and 15 is where you can have hockey stick like change in the business.

[Interviewer]

Matt, we are going to turn to you now. Give us a little bit of background on yourself and then, and then lead into where you enter the story, please.

[Matt Moldenhauer]

Yeah, the easy part is a lot of my background myself is now related with this endeavor. So. But I grew up in Wisconsin, that's why I'm back here. I ended up at business school at Indiana University which is where I met Gantt and Lauren and the family as we were all in the MBA program. They're JDs. I was just in the MBA program. I left from there and went to Bain and Company in Chicago as a consultant. That was my post MBA job. I never, I had a great time there. I learned a lot but I never endeavored to be kind of a long term consultant. And while I was there I was in touch with Gant Lauren and I got occasionally on ski trips in the wintertime. Little bits of detail and conversation about the deals that they were looking at that soon became Firmatech. And then after that deal got done they contacted me about possibly being an operator in Bellwether Forest Products, which was the second company that we all bought together and that was in 2016.

[Interviewer]

So bellwether forest Products, a lumber company, right?

[Matt Moldenhauer]

Yeah, not a lumber company but a supplier to lumber companies, paper mills, other kinds of fiber products. So we were in timber brokerage like sales and trading between landowners, institutional and private and big mills like lumber companies and paper companies and. But we also had the actual logging and hauling operations. So the majority of that business was really blue collar service trade in the south, out in the woods, cutting down trees and trucking them to locations. But we also controlled a lot of the transaction flow on a certain side of the business. So that was the entry point for this to this for me. And that was because I, I didn't know what ETA and search funds were. But when Gan Lauren came to me, we had developed a really great relationship through business school. Ton of Trust. I remember sitting down at a dinner in Chicago to get kind of pitched on the idea and heard the build great companies together. And I could just feel the juxtaposition of this small business world and what I would be doing versus the consulting world, working with big Fortune 500 companies and C suites. And I really wanted something that was more closer to the ground and closer to people and an opportunity to operate. So for me it felt like a great opportunity. I asked eight people at Bain that were my mentors what they thought should I do it. And I got seven no's and a maybe on the and so you knew

[Interviewer]

it was the right thing.

[Matt Moldenhauer]

I, when I sent my exit email at the firm to say that I was leaving, I got a lot of Are you okay? Did you not find a job? Can I help you? People didn't understand it at that time. Now they kind of do. So I was lucky that I had this perspective of a trust with Gant Lauren and a desire to be their partner and be the. I think you have to take a leap of faith.

[Interviewer]

What was it that you saw that everybody else didn't in this opportunity? Or is it just your weird taste in small businesses?

[Matt Moldenhauer]

To be completely honest, what I saw was. I don't think it was what I saw, but that I was naive. What I saw was the opportunity to be a leader and really get out into the world and operate a company with regular people where I thought I could make a big impact and have great economics for myself, where I'd have an ownership stake that I thought was very unique and not available to me at a lot of big company opportunities. So I saw that we certainly saw an ability to run a company that we thought was simple and that we thought had roll up potential. One of those two things ended up being true. It had roll up potential. It wasn't particularly simple, it was particularly

[Gant Elmore]

attractive roll up potential.

[Matt Moldenhauer]

It wasn't, it wasn't at times. But the industry overall was really challenging. So I think that at the end of the day I tell this story a fair amount but most of the people that gave me feedback on the business were correct. It was not the best business to acquire and it became a very challenging journey. However, had I not done that, I'm fairly confident I would never be in this path and that would be a loss for me because I love being in this path and it got me there. So it was a little bit of just serendipity to make the choice and decide to go down the, the, the, the path and then no matter how challenging it was. All the challenges now are, you know, paying, paying dividends. Because it was a lot that I learned during those seven years running the company.

[Interviewer]

And, and does Elmore still hold the company?

[Matt Moldenhauer]

So we, this is the only example in recent memory of us selling a company. And that was because of how challenging it was and an opportunistic potential where we actually had made a bunch of improvement. I should also say we, we really grew that company quite a bit. We bought it and it had like about 2 million in revenue. At its peak, it was doing 26 million in revenue. We, we added a number of people. It had 11 people at first. We got up into the six digits, a little over 100 at one time. And we had developed a lot of really interesting things in the industry. Logistics things, new strategies and how we did contracts. We had a collection of amazing people and talent in the industry. And so we got approached by a large truck OEM in Europe, Scania and one of their subsidiaries that wanted to acquire the company as part of a strategic endeavor. So it really was an opportunistic thing for us. We weren't out necessarily looking to sell, but had the feeling that the business was a very challenging one. And we had figured something out and we thought we could go a lot further, faster and maybe improve it with their kind of capital on our side. And so we decided ultimately to sell.

[Gant Elmore]

One of the things from Matt's story that has always stuck out to me because I claim getting Matt to go run Bellwether Forest Products was my best sales job ever because everyone was saying he shouldn't do it. But Matt told me, he's like, he knew if he didn't do say yes now, he was never going to say yes. It was like, you can always find something wrong with the company. It was, if I'm going to go down this path, these are the people I want to go down it with, and I just need to go do it. And the company worked. And now he is the Bain Chicago ETA OG that is still known because that. It was still at the time where it was like, that's a weird path. Yeah, yeah.

[Interviewer]

And Gantt, you and your Sister, this was 2016, right?

[Gant Elmore]

Yes.

[Interviewer]

And you and your sister had acquired Firmatech in 12, you said, or 2014. 2014. So. So to weave your own path because this is an inkling of you guys starting to build a Holdco, what, two years later you see this opportunity and so on your. What's your side of this story?

[Gant Elmore]

Yeah. So we had done the original firmatech acquisition in end of Q4 2014. We did two add ons in 2015. That's kind of going, Lauren's running that as CEO. I'm helping on the sales side and on kind of the drone side of what that looks like. And then I'm starting to go out and look for a deal. I'm graduating with my JD MBA in the spring of 2016 and thinking well I've got full time. I'd been working part time at Firmatech. I'd go to class Monday through Wednesday and then fly out. And so I start looking for a company and actually got interested in it because I had a good buddy who was running a blue collar heavy equipment company and he was the original operator who was potentially going to go run this. Luckily for all of us that didn't happen but because I ended up going starting a company with him and so one of our portfolio companies is Turner Mining Group. That's my good buddy Keaton. He and I with Lauren co founded that and it opened up the seat for, for Matt. And so because of his knowledge of the heavy equipment world is how I got interested in Bellwether Forest Products. And then as we dug into it we thought oh there's really good bones of what this could be. You know, you don't know what you don't know until you get in there. But it had characteristics that we thought were really interesting and we're two years into buying companies. We've learned a lot since then. The education continues to compound and so but that, that opened up a seat for Matt and he had always been my, since business school. You know, I'd known he's the first guy I want to go call up when I have a company that needs

[Interviewer]

an operator and, and Gant, why weren't you going to go operate it? You were already because you, because you came into this game knowing that the key to scale was going to be buying and putting in operators. This, this was the Elmore family playbook. At this point it was obvious, yes

[Gant Elmore]

I, I, I knew if we were going to continue going and not get stuck that I could be more useful helping the various operating companies. But if I got, if I got into the day to day I would get stuck and be there and not scale the way I had visions of it being possible.

[Matt Moldenhauer]

I mean like Liam Neeson Gan has a very unique set of skills. So he, but, but really in all the companies early on and even still today he's, he's like the cfo. The legal advice for us all until we had our own general counsel on the team and so and strategic advice and really, you know, everyone on this, another podcast says the in the business versus on the business. Yeah, and in these small businesses it's hard to not be in the business for quite a long time. At least it was for me. And Gant was constantly on the business. So whenever we would have a phone call, which for at least a good year was every day we talked on the phone and it was always me saying here's what happened in the business. And him listening and relating and letting me vent, but then also saying what about on the business? And so I think that's part of how our partnership with our operating partners is even still today is it's, it's our job to pull them up a little bit and, and allow them to think on the business and when they're just in the business and too busy, then we, we can think on the business for them, you know.

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[Interviewer]

and about this particular acquisition, you both kind of smirk now that maybe there was some naivete in acquiring it. What? Just curious. What did you miss about why it would be a challenging or challenged business?

[Matt Moldenhauer]

Yeah, I, I think this has formed a lot of my perspective on why. I think in the small business acquisition space being an operator is one of the best investing skill sets because it allowed you to see really on the ground how do these companies organize, where are the unique set of risks and they're not the ones that they would teach you in business school or necessarily in a banking career. So for us I think that came down to a market dynamics issue where supplier buyer power was really out of whack and there was a huge fragmentation in the industry which looked like a great roll up opportunity. And it was. But that same fragmentation created an environment whereby there was a lot of cutthroat competition and a lot of price pressure all the time and a lot of demand competition. And then on the flip side you also say, oh, there's very low regulation in the industry. That's another one. Hey, that looks good on a due diligence. You like that a lot. There's not too much? No, there was no floor for competition. There was no baseline to set to say a certain quality level is expected. So if we were to go out and perform at higher quality, which we absolutely did, we weren't paid for that. In fact, it oftentimes is too costly. Um, and so there were certain things like that that I think that played into our hands and we had a lot of customers and we grew quickly, not only because of acquisition but also because we had customers that wanted to believe in what we were selling, which was a better model, more safety, more production, more professionalism. True. Management, logistics, innovation, we did all these neat things. But at the end of the day, industries that don't have the right dynamics are constantly going to push on price. And if you're not going to get a premium for delivering those services, they're not going to last for very long. And so the way I summarize it as we built a Ferrari and the industry wanted a Pinto. And so in 20, 20 and 21, when the wood markets went crazy and everyone needed a lot, we were the only people that could service that. We were the only Ferrari in the market. But the majority of the time when they weren't like that, we wish we had a Pinto because we were just expensive. So that was a little bit of a summation of kind of why it was what it was. But we were really proud of what we built. The team was proud. It just was challenged to really get the investment to where it needed to be.

[Interviewer]

Well, Matt, just to underline what you did there, so it was very small. When you went in 2 million in revenue and you got it up to how much in revenue did you say? You said, you said over 100 employees.

[Matt Moldenhauer]

Yeah, our peak revenue was in the 20, like 25, 26 range, including a sumpage. It's, but it's, it's a, it's one of these industries where there's some pass through revenue as well because a lot of transactions for clients. But we were up in there. And so our peak EBITDA was I think just over 3 million in EBIT. Okay. And yeah, and we ended up exiting that business in late 2021 and found our way out. I think it was, I think we can report all this now. So we found our way out I think at like a 5.7x multiple.

[Interviewer]

So in a very hard. Starting from a small position in a very challenging industry, you really made something of this business. Yeah, that sure sounds like a success, a win. Maybe not what you hoped going in, but those are, those are strong numbers, are they not?

[Matt Moldenhauer]

They was a great experience. I think, you know, there's, there's such a range of outcomes in eta. It was really challenging ups and downs. Happy with where we ended at the end and super happy about what we built. I thought we built one of the best players in the industry. And what I always say now is I felt like that business was swinging a bat in the batter's circle with donuts on it. And now when I go up and look at other businesses and I get to just swing the bat, it feels easier. And so I'm happy. I got the learnings out of it. And we ended up with a great exit which, which was fortunate and we get to move on.

[Interviewer]

Great. And we're, we're now just coming up to, to kind of the genesis of what Elmore looks like today, which is going to be great. But I do just. Matt, on that experience, going from Bain to operating at seven years in a really difficult business, blue collar business, you, you must have had doubts at some point that operating was for you or. No. Even in the challenging moments you liked. You like the SMB world. I'm really just trying to tease out what a dramatic shift this was for you in, in and how, you know, all those bane. The bainies were like, what are you doing man? And maybe at some point you were like, yeah, what am I doing, man?

[Matt Moldenhauer]

Uh, yeah, I was ton. Tons of doubts. I mean I, I think there's an evolution. That first year I had a full time seller by my side and the business was somewhat simpler, hadn't grown yet, had a lot of fun, learned a lot, enjoyed the job. Year two, we had a part time consulting agreement with the seller. We had acquired some things, some of the challenges started to pile up, had a little bit less fun. By year three, I realized some of these things aren't going very well. The industry wins. Started to change. It was just me. In consulting, I say you get to recommend some things and then walk away and let them implement them and they live with the decisions. And I Don't even have to see how they turn out. Always. In these small businesses, I'm making decisions constantly, and then I don't know all the ramifications right away, but they continue on forever, and they start to just interact with each other. And by year three, I was starting to see all the decisions I made winding up together and creating good things, but also bad things. And. And so years three and four for me were just really challenging when the reality of the company hit me and I was out talking to other consulting firms about getting into their forestry practices and thinking about all these things. But ultimately, it was always just almost an outlet to know that I still had value out there, because some days in the business, it felt hard to determine where I was creating value. But I think that's where doing a lot of reading, talking to a lot of folks, networking heavily, and doing things that real entrepreneurs do, it, it. I wasn't a natural entrepreneur on day one. It took time for me to grow into having an entrepreneurial mindset.

[Interviewer]

What does that mean, Matt? What does that mean?

[Matt Moldenhauer]

It means getting out of spreadsheets and realizing that talking with people, telling stories, shaking hands, selling, watching your cash. All these things that aren't just consulting P and L analyses and org charts, like, those are the least important things about these companies, at least at the small size. The most important thing is, is building trust with customers, with employees, with vendors, and delivering something differentiated. And a story that always sticks with me is I was spending time because someone debated whether I had screwed up their paycheck one day, and they were calling me, and they were a key employee. And I was actually really worried that this person was going to leave because they thought I was messing with their pay. And I was going to go do an analysis and walk out to the field and talk to them. And the manager of that department came to me and he was like, you didn't screw with his pay, did you? I said, no, of course I didn't. He was like, why are you doing all this work? Call him and tell him that you didn't mess with his pay. And I probably would have spent a couple hours on that, figuring that out, walking out there, having all this worry, because that was my training before I got into this. And I started to realize, like, this is a small business. This is my word and his word. And if I go out there and say it with confidence, because I'm telling the truth. And he. And I did that, and he said, thanks, okay, I appreciate you coming out and let me know, you know, and I saved myself this time, and that was an epitome for me of, like, small business. Like, you need to go out there and represent good integrity and trust and build relationships with people in the field and spend less time trying to prove to people numbers and data that's that works at a billion dollars. It doesn't work at a million dollars quite as well.

[Interviewer]

What a great lesson, Matt. Any other. Any other indelible moments? I'm sure there are countless, but any. Another one, maybe?

[Matt Moldenhauer]

I mean, from a small business entrepreneurship standpoint, I would say I had one particular day that I talk about all the time, which I think is a great day where I had to terminate a maintenance manager who I had hired, which is going to be really tricky because he had keys to everything. And so I planned my whole day around terminating this individual and the moment that I terminated him. And I had all these things on my to do list for the entire day to get that done. I got a call that one of our pieces of equipment was burning and the flames were 100ft up into the air. And so I had to drive immediately out to the field. And I had committed to trade that piece of equipment for a new piece of equipment that was closing on that Friday a few days later. And so now the piece of equipment was burning, so I was watching it burn, watching the fire department hose it and calling the dealer to try to figure out a new deal. Since I could not trade in the equipment, I didn't have the cash to pay for it. So that was an interesting day. And then I rode home very tired and walked into the office. It was like seven o'. Clock. And it was my first experience ever with a bicycle messenger serving me a lawsuit for a truck accident we'd had two years prior. And I walked in and read that and then had a glass of bourbon.

[Gant Elmore]

And then I think Matt and I talked for the fourth time that day. Yeah. Late into the evening.

[Matt Moldenhauer]

So, I mean, that was a, you know, an exaggerated example, but that was a small business day where you just don't know what's going to come at you and you just keep fighting. And I think those. Those are. I miss them a lot in the seat I'm in now. But they're also. They're the toughest days and they're also the ones you look back on.

[Interviewer]

Yeah, exactly. Like so much of life. Great, guys. Okay, anything more to say about the 2010s before you get together to, you know, plot what Elmore Companies is today? Or can we turn to that segment?

[Gant Elmore]

I think the only thing I would say is they were critical that time period of learning and building our chops as operators. That we are operators first. And in our. As a company we believe in operator led and we're there to support and push and help our operators. And we've been in that seat. And that's where the foundation of what we've built is. On our time as operators, on our family's time as operators, not as investors. And that time period from 2014 to 2021 was critical for that.

[Interviewer]

Gantt reading between lines is this the admonition to other would be hold code builders that, you know, don't build a hold code before you've done some operating. Is that what I'm hearing? Not necessarily.

[Gant Elmore]

That's what we believe. That's what we believe. I think in the SMB space, I think that makes a lot of sense. I don't think you can be a pure investor in the SMB space. I think is hard if you want to be in it for the long run because you need to be able to help and commiserate on a real level with your operators. And you can't do that if you haven't lived it and breathed it. Yeah.

[Matt Moldenhauer]

To be fair as well, the end of the 2010s, we had already started talking about wanting to do more together. I think 2019 was probably the first time that Lauren Gantt and I talked about wanting to do this maybe on a programmatic basis. And we started to do some of those things, but Lauren and I were still in these businesses. That is took the majority of our time. And so we weren't really able to commit resources. And then the second piece was we had to start to build a funnel because it wasn't. It took time. So I think the end of the 2010s was really US starting to realize we were going to head in that direction at some point, but couldn't just snap our fingers and do it. You know, I'd been in the seat for three years. Lauren had been in the seat for nearly six and it still would probably be another two before we really started doing anything on an annual basis. So and that's this. This was coming from a place of having all the past decades of experience that Elmore companies kind of gives us exposure to patience is important and. And continue to work every day. I mean all the investing side is no different than operating in that way. Just little daily successes and daily progress.

[Interviewer]

It's interesting that you all were kind of still interested or gunning toward a holdco vision in those particular years, Matt, because you got. Because both firm opportunity. I mean, neither business was going particularly well at that point.

[Gant Elmore]

Right.

[Matt Moldenhauer]

We had learned a lot, but I would say both of them were in firmatex certainly at that time was probably. And for Bellwether was they were both kind of coming out of. Of a low point and getting better. But there was a lot of work in front of us to do. And so we saw the whole opportunity just like everyone else does. But. But we didn't rush into it. And, and certainly it was still like my, my primary focus in all my time. And I know Lauren would say the same is in there in our businesses. And we were lucky to have gan as our third partner that could focus on this with 100% of his time or near that. So we just. This again, is one of these together elements for us, which is if any one of us had taken this on by ourselves, I'm not sure we would have gotten here, nor would it have come together like it did. But because we had all three of us, we were able to do more than one thing at once.

[Interviewer]

And I have to ask, Matt, I mean, we, we. We've heard now how you were invited to become an operating. The operator of the, of the. What are we calling it? The forestry products business.

[Matt Moldenhauer]

The forestry forest products. Yeah.

[Interviewer]

Of Bellwether. But it sounds like at this point you're promoted even further into kind of being a co partner at this new. At this new Holdco level. Do I have that right?

[Matt Moldenhauer]

Yeah, I love to say it, but promoted would imply that, like I've ever felt like I worked for Gantt and Lauren and I never really have. That's just not the way it is. We always felt like partners. And I think it's probably hard to envision, even for me now, but those first few years when we had a, you know, owner's meeting, it was the three of us at lunch at like a small restaurant in San Antonio. And so we would just sit together and half the time we would talk about firm attack, and half the time we would talk about Bellwether. And so over a series of years, we were, we were partners. Like, I wasn't involved in firmatech necessarily. It was before me, but we all felt like we were talking about all of our issues all the time. And then Gantt mentioned our partner Keaton at Turner Mining. He kind of came in and there were four of us. But this is still a very small group. So, you know, when we started to think more acquisitively, Keaton was very focused on growing his mining business and the other three of us had more interests on. You know, we were reading the eta, we were starting to understand search funds in a more professional way. And so we, we kind of all set out together to do this and started to write up the original thought process about how we would go about it.

[Interviewer]

What was the vision then? What did you land on?

[Matt Moldenhauer]

Gantt always comes up with a big, hairy, audacious goal. So I'm sure he said like we were going to do $1 billion in five or ten years or something.

[Interviewer]

Maybe he wasn't so far off.

[Matt Moldenhauer]

That's what we always find out. I always say never trust one of Gantt's one year forecasts, but you probably shouldn't doubt his ten year ones. So.

[Gant Elmore]

Right.

[Matt Moldenhauer]

It's, I think the goals we set out initially were pretty, pretty modest year to year which is, you know, find. Continue to develop relationships with people that could be CEOs. The next me let's start to become, be in the market with pipeline building. Let's all read up on how this works. And so we started to just be out in the marketplace and look at deals. And then kind of after we got a deal or two done because we did one in, we did two in 2021 and, and then we started to answer the questions that came along with doing those after having all the experience we'd had. And those questions started to make us formalize processes and procedures. And so then we really launched into what is this really going to look like to professionalize our investor agreements, our operating agreements, the way we coach, train and develop our operators, how we underwrite deals, the kind of banking relationships that we have. And so that, that all came, I would say around 2021 when we started actually put this into action. Had to truly answer these questions for the first time in a while.

[Interviewer]

Well, and I imagine a lot of that stuff continues to iterate the kind of templates getting better every day.

[Gant Elmore]

Right. At both new. You're coming to new things. Right. The number of issues and challenges we see because we're now touching nine different operating companies on a regular basis continues to expand that pattern recognition. That is really helpful.

[Interviewer]

Matt, when you said that Gantt and Lauren and you got together and started reading up and kind of studying and talking about what, what this looks like, what, what, what is this, what were you modeling and how did it differ from what your dad had built?

[Gant Elmore]

Yeah. So it was, it was different on scale. Right. So there was three of us looking around the table and that was there. And we said, and we had, you know, more backing because we had the family backing at that point. And so we had this idea of 50 by 50. So 50 companies by 2050. This could be a really fun endeavor to go do. Let's get started. Let's take a more disciplined approach. And we set very loose goals around how many companies we want to acquire in any given year. Because, you know, we, we don't want to deploy just for the sake of deploying. We don't want to buy a company just for the sake of hitting our goal of. Well, we said we're going to buy two companies this year. Let's go. We got, we got a shot clock. No, that's not the point. But it is having the big vision and how do we go start moving towards that?

[Matt Moldenhauer]

And I'd say that that's the big vision from our whole enterprise. But for an operator, which was part of what I was doing was like, I want to recreate this experience. Because even though it was really challenging, it was foundational for me. So how do we recreate and give everybody this opportunity to be these. Now we'd say ETA entrepreneurs. I thought our unique value proposition was that we were allowing people, as we say, to be in business for yourself, but not by yourself. A lot of people want to be an entrepreneur. They want to say, this is my company. And I 100% felt like that for seven years. But I had people that could pick up the phone with aligned incentives that were cared as much as I cared about it in Gantmore and that I could have that call with. And so how can we create that at a little bit more scale? And that's still one of the biggest challenges we have today is as things get bigger, we have to make sure I still want to give that piece of ourselves to everyone we work with in a really deep way. And so it gets more and more challenging as more and more companies come in. But it's foundational, I think, to way we differentiate ourselves and what we try to provide.

[Interviewer]

And as you all were whiteboarding this, you were not starting from a standstill. So of course, you had the two generations before you. GANTT also at this point, all three of you, Lauren, who's not here, had real operating experience. Now in two businesses, you had some family capital to, to put to work. GANTT and, and what I'm trying to do here is like, so listeners will be inspired by this story, but they won't be in a similar position. So I just, I do wanna, I do wanna Understand what momentum you were starting with. Did I already name it or was there more?

[Gant Elmore]

So the. The missing piece. In 2017, Lauren I had co founded a company with my buddy Keaton Turner. And so we started Turner Mining Group and that was also having at that point the most success had gone from zero to 60 and was was making

[Interviewer]

some 60 million a year. Yeah.

[Gant Elmore]

Wow. Then Covid happened and that changed. But we had some real momentum there as well. And so it was and we took the theory was and still is taking my dad's old playbook of reinvesting the earnings. And we were on the cusp of having these earnings happen. We happened to sell Bellwether right at the time we were buying kind of our first real deal in the next generation of how we thought about structuring it and doing it and rolled a bunch of the proceeds into four days apart into that company and letting stuff continue to compound. And that company is now throwing off cash and we're able to keep going. And so we've had Bellwether. We had bought the building a little while before we sold it and had a good lease when we sold it. And so we've used that cash to go invest in in additional companies. So you know, we've avoided any crazy lifestyle creep to enable ourselves to plow money back into new businesses. And yes, we have leveraged the family capital as well, which has allowed us to move up market a little bit. We've done some bigger deals. You know, those first two deals at $2 million in revenue we wouldn't look at again, which makes me sad in some ways but glad in others. And so we've moved up market to a certain extent to get the leverage and deploy more capital. But we're still deploying our capital at a very real level in each deal because I am one of six siblings. So two of us are actively involved. Lauren and I are actively involved. But I have four siblings that I have a fiduciary responsibility to and we put our own capital in junior to the family capital on every deal at a rate that is higher than your typical PE or independent sponsor into a specific deal or specific fund to make sure we. We keep the incentives. Incentives aligned.

[Matt Moldenhauer]

And the capital money part is one thing. I think that the other momentum that we've had and it was really important is it's captive capital that with. With a reputation for doing these deals over decades and that's important in the seller process. I mean the. There's a reason everybody's the street. I grew up on capital when they're in ETA or whatever, it's, they're trying to create that, that, that, that thought that we're. I'm a credible party. It's an entity. I've got the ability to go buy your company. It's very difficult to do that. That's, I think one of the most challenging parts is to represent yourself. True Sellers is credible. We had that from the beginning. I think that was something we could always talk about our history and the way we, we would be able to get capital for the deal that it was there for us and that, that, that helps us a lot in the early discussions with, with Sellers.

[Interviewer]

Well, and so let's turn now and speak directly to the long term philosophy because that's what you're taught that you, you were able to say that to Sellers and say so credibly because a lot of searchers say it too, but perhaps less credibly. You had this track record, the family had a track record. And, and, and so you know, people will know we've already said the, the C word many times. The value of compounding, not only financial compounding but what, what did you say again? Experience compounding knowledge. Compounding that, that some of the best performance doesn't happen until the middle or out years. So it years one through five you're just, you're just at the, at the flat uninteresting part of the compounding curve and the inflection point doesn't happen until later. What else, if anything about why you wanted to take a long term approach? Or did I, or was that it? It's a lot.

[Gant Elmore]

No, I think the what else is finding good companies is hard and why get rid of them? We have the knowledge we've created, the relationships with the employees and the other stakeholders and we view our jobs as to be stewards of these companies. Companies, they're not ours, they're ours to be stewards of. And so as long as we feel like we can still be a good steward, there's no reason to get rid of it. And the compounding that happens year over year over year, both from a learning perspective, from a financial perspective and then not having to go redeploy, there's a big element of keeping that capital working in illiquid small to medium sized businesses that you know really well and have a great partner, it really works. And I think that's part of it is also, you know, we make a commitment to our partners when we go into business with them. That is hey, we're getting married and we're in this with you for the long haul. As long as you want to keep doing this, we're going to keep doing it with you. If and when you want out, we will figure out what's the best way for you to get out is that we hire a, hire a professional manager to come in and run this company. We buy you out, we go sell together like we're, we are operator first and that operator led is we're going to defer to our operators and then, and help them figure out what makes the best sense for the company, for their family and for us.

[Interviewer]

Well, so let's also hear more about the operating partner model. So when you were describing the structure of this whole project, what was the vision there of the operating model? What, what are the terms there? You've just started on it, but give us more, please.

[Gant Elmore]

So the, the, the overarching theme is, you know, we're looking for humble hungry operators who are values aligned with us and who want a operating company to make their life's work out of and that that's going to be their thing. And so with that we, our model has evolved somewhat from the way my dad initially did it, but not overly so. You know, we in general give 15 to 20% or 15 to 25% of the equity in the business to the operators. Sweat equity. We have senior debt that comes on the companies and then we put in preferred equity for the Elmore family capital. So there's no vesting on our operators equity, but there's a waterfall in terms of, you know, the initial payouts before the common has, has real value.

[Interviewer]

And so Gantt, the operators that come in earn their equity after the preferred, their place in the waterfall immediately. It's not based on vesting, it's not based on performance. Correct, correct.

[Gant Elmore]

It is.

[Matt Moldenhauer]

Which is with everybody else within in common.

[Gant Elmore]

Yeah. So very aligned with Matt and I and Lauren and our fourth partner, our general counsel, that we're right there with them. We're not making money if they're not making money. And yes, the family gets their money back. But other than we're all aligned on that economic aspect of it, a lot of our partners buy in additional equity as well so they can buy in right along on the same terms that the partners buy in on.

[Matt Moldenhauer]

And just relative to, sorry, just relative to the traditional eta, I mean we're trying to buy companies bigger. So you know, we've, we've had folks that are considering both paths that want to consider ours and at the end of the day that makes A lot of sense if we're, you're getting a lot of talented partners and an ability to think we can grow at a bigger, a higher rate. But we're also buying a company that's probably bigger than you're looking at if you're buying it by yourself within an SBA loan. And so by that time that equity becomes really meaningful. And then I consider that part of one of my jobs. As someone that did this model, I know that motivation on the ground is critical to the success of the company. If at any point we think those incentives aren't interesting to the operator, we're all in trouble. So we have to keep them really interesting and make sure that, that there's enough in the game for them to

[Interviewer]

go chase and that 15 to 25% of the business is the 25 call. It is akin to is is right at what a traditional searcher would make if they hit their performance hurdles and likely wouldn't and you know, and likely wouldn't see it would all be working toward an exit. So it would be more of a private equity playbook where they're buying, building and then exiting. In your case, you use the phrase life's work. This is a long term play. How does it different what is that 25% worth to somebody? How is it better or worse than a traditional search fund where this will be a five or seven year journey? Elmore, it's an indefinite life's work journey.

[Matt Moldenhauer]

Well, one of I just start with one of our values is ownership enables choice. And so the partner becomes an owner and it is their life's work. But that does not mean that their life is spent as CEO. If it's a really interesting job and it grows and that's their passion. It might be, but if it is, they get to a point where they say I'm not the right person for this business anymore. I'm a little bit burned out. They're an owner and they have a choice and we all discuss it and they can move into other pursuits. But of course at that time likely a lot of their net worth and their interests are tied up in that business. So we would hope that our incentives are aligned and they're going to make the right decision for the company and for themselves in coordination. So I think that's one of our first principles about it is it doesn't mean you are in the seat for the rest of your life. It could if you love that. But it could also mean it means you're an owner and you need to care about this company for the rest of, for the rest of our investment period, which is forever. So that's the way we think about it. More so than just the CEO forever.

[Gant Elmore]

And practically what it looks like is we pay down the senior debt, usually we reload with a little bit more debt, pay off the preferred equity and then we start doing dividends and we conservatively manage the cash that's needed in the business, even the dividend side of it. Very much. Operator led around. Hey, here's what, you know, we're looking at this and saying here's what you might want to think about. Here's where if you want to put a little bit more debt on this business, we could do, you know, depending on how you're feeling about things, where you're at with certain clients. And then we're saying, yeah, we think we should do this, or they're coming to us and saying, hey, sitting on cash, let's do a dividend. And they just become a long term owner of the business. And all the benefits that come from operating a business well over, over decades.

[Interviewer]

And how do you guys think about growth? I'm hearing the word dividend a lot. How much do you lean on your operators or when you're having the initial negotiations with them or trying to run, recruit them or evaluate them, whatever. Is this about growing the business as much as possible? It sounds like it, it's, it might not be super breathless, aggressive growth. Correct me.

[Gant Elmore]

We, I mean we love to grow our businesses. It, that's. And it, it also very much depends on the individual business. So if we're buying on the smaller side, it's because we believe there's a ton of growth. If we're buying a more mature business and you're buying it at a attractive valuation, that doesn't necessitate a lot of growth. We still want to go grow it and there's still plans to. But it could look different, right? So a $2 million EBITDA business that we want to go buy. Our plan. Plan is loose term. Our goal is that in 10 years we will have 5x that business. So if we're going to go buy a $2 million EBITDA business, we want to have a reasonable goal that we see a path to it being a $10 million EBITDA company in 10 years it could be, that's 2-223-333. And then it gets there. But we want to have this idea that that's the scale we can get to because the brain damage and work that goes into the $2 million business is a lot and we don't want to just take that to four. That's not, it's the opportunity cost. I mean our biggest thing is it's a high level of opportunity cost. When you're saying I want to go own this thing for forever. And yet Matt and I, we have a limited number of years that we're going to be actively doing these deals. It's not short, don't get me wrong, but it's not infinite. And so we have the opportunity costs associated with anything we go do. And using that operator for that company is something we take very seriously when we're asking them to sign up for. Hey, go put a good portion of your prime earning and working years into this company.

[Matt Moldenhauer]

But we're not pressing growth in the first year or two necess. Typically we will, we seek it, we still go pursue it. But we are learning. And it's different if we're in a industry we know a lot about or if we're doing roll ups and the growth comes in organically. But in typically in these companies, if you're trying to push the envelope too hard in the first couple years in these small businesses, you're just as likely to break them as grow them. And so we're pretty careful and cautious in understanding that we have to have a high, high level of confidence to make a big growth decision in the first couple of years before we really, really understand the, the business. So that's, yeah, we're certainly more patient.

[Interviewer]

Well, and of course you are growing aggressively at the holdco level. So 50 over 50, that's where, that's where you're seeing tremendous growth. So each individual track or meaning company maybe doesn't have to grow as much for you still to see in aggregate

[Gant Elmore]

very high growth at our level from last year to this year or so, from 2024 to 2025, last full year we grew 100% at the aggregate next generation level of our portfolio companies. So we are actively pursuing growth, both inorganic and inorganic. Organic was like 35%, is that correct? Matt?

[Matt Moldenhauer]

Organic growth last year is 35% and inorganic was 100, including both.

[Gant Elmore]

Yeah.

[Interviewer]

Right. So to my point, yes, 100 growth.

[Matt Moldenhauer]

But that growth was, it's all these G2 companies, these, these nine companies we're talking about that growth, the organic growth was disproportionately provided by the companies that are five years or older. And that's sort of the point I think we're trying to make.

[Interviewer]

So going back to how Elmore companies Doesn't really. It's hard to define what about it makes it a family office versus versus just a Holdco or more cleanly a Holdco. There was the early family capital involved so. But a lot of Holdcos will have investors and so you could just say that the family capital was the lp. So. So what about it is. Is. Is family office ish in its operations or in its vision structure?

[Gant Elmore]

I think there are two main things. The first being it's a family that's a single LP and that lends itself to a family office in that we don't have multiple stakeholders, we have the partners and we have one capital base. And yes you can go to a Holdco and raise but you still are then managing stakeholders to a certain extent. And the other being we have this family of companies that we get to draw from that are previous generation. We've got that knowledge sharing that happens across those companies and just good relationships that help drive not necessarily synergies but people that have been there and done that on an operator level through lots of different economic cycles and they've been doing it for 30, 40 years as entrepreneurs, acquisition entrepreneurs and we get to benefit from that because a big part of what we're doing here is building a community of operators which we could do that it'll hold co but there's also a legacy element that we believe is important to sellers. That my name's on the door and I take it very seriously that someone entrusts me with their company and their employees and that becomes a big important part of what we do day in and day out about how we think about stewarding the businesses that we're entrusted

[Interviewer]

with and 4G2 so the, the three of you, the two of you plus Lauren where you really kind of whiteboarded out the next generation, the new generation of what you build back in 2021. Can you get. Can you. Can you carve out that and give us a sense of what that revenue growth has been from then till now?

[Gant Elmore]

So yes, 2021 might be a little bit hard but.

[Interviewer]

Or may or maybe going back to when you. Or maybe that's the wrong starting date. Maybe it's firma tech to now the

[Matt Moldenhauer]

nine companies that are in the full G2 that we manage is the doubling and 35%.

[Gant Elmore]

So from last year to this year from the.

[Matt Moldenhauer]

From 2425. So over the full time though we've roughly 5x from where we were in 21 to where we are today.

[Gant Elmore]

And we started in 2014 with a $2 million acquisition and last year we were over 200 million.

[Interviewer]

Wow. I remember when we, when we talked about the growth, that particular growth in this last chapter of this latest generation Gant in the pre call you were saying. But just don't just you really underlined like this hasn't been linear growth. Just heard it again that you guys doubled I guess over the last, from 24 to 25. So anything to say there or is this just yet again the effect of, of compounding that it's taken this long and now it's starting to accelerate that or what?

[Gant Elmore]

It's the effect of compounding and it's the effect of learning. And I think we will see it continue to accelerate as more of our companies hit the 5, 6, 7 year windows where we see the effects of the way we operate really take off. You know it's from, from 2 to 100 million took 10 years and from 100 million to 200 million took a year.

[Matt Moldenhauer]

Yeah, a little over a year.

[Interviewer]

And you guys think this is generalizable to a portfolio of small businesses? It's not just the flukes of what happened in your case. I mean not saying that every case people are going to grow to 200 million but this, this, this kind of how the, the story of compounding has been so stark in your, in your story.

[Gant Elmore]

I think it is very true because we have seen it in a group of 20 companies from my dad's generation and our generation. This, the story of the difference that happens between year 5 and year 10 is repeated over and over and over again. Now it's not that every company has this incredible breakout between year five and year ten, but a high percentage of them does.

[Interviewer]

And how do you guys think about portfolio management essentially which, which is capital allocation? We've heard you say that you partner with, with your operating partners. It's a, it's a true partnership and it's for the long haul and you're going to support them and you're, and you're really disposed to hold on business to businesses and not exit them. But eventually or if not already, you're going to have some stars in there that outperform. You know, you're going to have the power law effect. And so one or two or some small handful of the businesses are going to be outsized in their importance. How do you then kind of, how do you think about that? Because you've in some ways because of your philosophy as much as I, it resonates with me personally and it does. There, there are capital allocation counter arguments to it, which is that it's not the, you know, it's, you're, you're, you're painting yourself into a corner a little bit by, by committing without knowing who your winners are going to be. Your big winners.

[Gant Elmore]

Right.

[Matt Moldenhauer]

I even think though that we, all these companies, because of this model at reasonable valuations can recycle their capital. So whether they get really big and recycle it incredibly fast, or maybe it gets big and recycled it in the future or they're small, that capital isn't just sitting there. We still hope to return it over some duration, even though we want to hold the company for a long time. So then what we're really deciding is and we hope that a lot of the growth can be funded through operations. If you get something really exciting, you might need to fund additional capital into the business to go pursue that. And that's where I think it's actually a great thing to have this portfolio because we always have lots of options and opportunities to think about where to go get capital, put it into the good stuff. We even have operators that are participating in multiple investments because they bring expertise into the investment and they have their business and they had free cash flow in their business. And now, hey, I want to put some of my free cash flow from my business, which is maybe slowly growing into this thing that's quickly growing. And so there's opportunities where we can do things that the family's capital or our products partners capital. And so there's, there's a lot of opportunities for us to kind of look across the portfolio and get cash where it needs to be. But, but in general, you know, I think we're always putting focus on our winners. But I'd also tell you like we care about all these people and we want them all to be together. And sometimes the smaller ones to g point a $2 million EB company sometimes is the most of our headaches. And some of the big ones are just so smooth and running that they actually need less effort at that point because they built their own internal team and they're, they're self sustaining. So it really is kind of an interesting effort versus capital dynamic.

[Gant Elmore]

And with the stars. I would be more concerned about what do we do with them if it weren't for the fact that we've built this machine to go deploy capital into new other small businesses and create the next star. And so those help continue to fund the flywheel as we accelerate it to instead of doing one to two deals, do three to four, five to six and at the same time, as Matt mentioned, you know, part of, as we've said multiple times, right. Our relationship with our operators, our operator experience and thinking about how are we helping our operators create wealth for their families, both in their business, but also having access to. Once you've started it working, let's get you diversified just like we are. I don't want you to be just tied to your business that in any small business things can go wrong. We've seen it, we've lived it, both ones that come back and ones that don't. And so we want to have opportunities to help our partners also diversify into other small businesses where they can, you know, come along for the ride on outsized returns that we believe are, you know, very available in this space.

[Interviewer]

Guys, the, the other, the. What I keep being reminded of as I hear your story and structure is Chenmark, which is a big name in ETA land. Different origin story, but at this point a serial buyer and, and holder, indefinite holder of small businesses. You're, I know you guys are aware of Chen are. And, and for many, they're kind of a, a fantasy. People want to build their own Chen Marks. People used to say, I want to build a mini Berkshire. Now they say I want to build a Chen Mark. And maybe after this interview they'll say I want to build an Elmore. Are there.

[Will Smith]

Why isn't this more common?

[Interviewer]

Maybe you're, maybe you're plugged into this shadowy world that I don't know about. And in fact there's a lot of, a lot of Elmores.

[Gant Elmore]

Are there?

[Interviewer]

Are there not? If not, why not? The model just makes so much sense.

[Gant Elmore]

I think there aren't more because the model takes time, it is not a fast thing and it takes the right group of partners that you have to, we believe you have to start from the operating side and then you have to build the muscle that is the deal side and the scaling side of it. And that takes time. And this wasn't super popular 15 years ago. So I think we will see more of them. I think we're just the people who are building still early are still early. They're still operating their company. They're exit or either either exiting or they're moving out of operating their company. I think also structurally a lot of the people who got in, in traditional search, they have to decide, am I going to go back and do it again? What am I going to do? You have a lot of some of the good search outcomes obviously then starting fund funds to invest in searchers, which is A different model, but a take on it. And so it's a unique way to allocate capital and a unique way to compound returns. But it doesn't lend itself as easily to having a bunch of LPs who want their money back.

[Matt Moldenhauer]

I completely agree that we'll see more of the Holdco over time, especially as it takes time. But I think that the permanence of the hold will be tested because everyone with these businesses, if they're going really poorly, you'll be challenged to start a holdco. If they're going really well, you'll be tempted to not have it be permanent because there is always that potential exit. I mean we own all of these companies within the family and they could be listed for sale at any time. And so there is that temptation for the new folks. And I think, you know, one thing I've thought a lot about is that long term hold takes patient investors and patient capital. And patient capital comes from patient investors and those are very rare. So most investors aren't particularly patient. And that's why the family office model is one model that gets you there, especially when it's a single family office. So you're incredibly aligned. Most people I would expect out there, if they're not bootstrapping like a Chenmark, they maybe had to go to multiple sources and then that becomes a very difficult thing to do. And so I think that's one of the hangups of doing it. But that's a natural one. And it's not to say one model is better than the other, but we certainly love doing it this way.

[Gant Elmore]

And the liquidity constraints become real of oh all my. I supposedly have good net worth but it's all tied up in this business and we take below market salaries of what we could do other places and. But we don't see a lot of liquidity because we're reinvesting and growing and doing all those things. So you have to really have the mindset for I want to go built.

[Interviewer]

I'm reminded Matt of something you said but to this point Gantt, you said Matt, in the pre call that, that just a lot of people in their careers they, they, they need to get that first liquidity event there. There's this, this strong pull two on the board and so if they have, if they bought an SMB that is generating free cash flow that could could be sold for 3 million or $4 million, they're very tempted to do that just to, to, to.

[Gant Elmore]

To.

[Interviewer]

To. To what? To what? Why, why, why wouldn't they do what your dad did, Gant, and be like, I don't want to sell this million dollar annuity ever. Nobody can pay me enough. Why not do it that way? Why. Why is the temptation so hard to get 3 million in the bank versus 1 million in perpetuity?

[Gant Elmore]

Just as my dad struggled and needed someone to say, go hire a manager, they don't, they don't think about, I can do that and then I'm going to go reallocate my time and, and work that way. That's a hard, it's hard to give up control of your small business that you've taken from the owner that you bought from and grew it and made it better. Like it's, it's emotional. Just like it's emotional for sellers of the businesses that we and your listeners want to acquire. It becomes emotional for, for the buyers afterwards once they've been running it. And it's really hard. It's one of the hardest managerial things to do, I think, is hire someone to run your business and step back and actually let them run your business. There's a huge learning curve there because you've been doing it, they're going to do things differently. The culture's going to change somewhat. It doesn't matter if you actually empower them to run your business, which if you actually want to step out and go do other things you have to do, you can still have levels of interaction with them and guide in a lot of ways that we do. But it is hard to actually step out of that business and keep that million dollar annuity and think of what else am I going to go do and the pull to say, I've got $3 million in the bank, the level of safety there, I'm incredibly blessed. I had a huge benefit of a safety net right there were these businesses. If I fell flat on my face, you know, I was gonna be okay. I knew I could go get a job early on. Like, yeah, I, I had a backup plan and that made it somewhat easier versus notching that first win that says, ah, I can take a deep breath. I am, I can, I can provide for my family, no questions asked.

[Interviewer]

Yeah, we're wrapping up here, guys, but I did want to hear your thoughts on the, on the supply of these businesses versus demand. As, as we all know, demand meaning the would be buyers, the searchers, people listening to this podcast has surged and it's hard, very hard to find a great small business to buy. Despite all of the headlines around boomer demographics and the silver tsunami. What's your take on all that, I

[Matt Moldenhauer]

absolutely think that demand surged multiples over the last decade. My feeling is still that the supply is greater than the demand out there. It's just you got to know where to look and you got to be active about doing it. I personally think there's been a lot of work over the years into these proprietary cold outreaches, thinking that there's some magic to be had there. And I think that that's a little overrated. There's good stuff out there. It's just at the end of the day, this isn't just a supply demand equation because there's all sorts of different types of buyers and different types of sellers. It's much more akin to a matching equation. So to look at the macro isn't quite right. It's about matching and the broader your ability to match and the more things you're interested in, the higher probability you're going to do. So whenever I meet someone that's going to do a geographic search for a small services company in a highly populated area that I know is like, you know, it's, hey, this is going to be really tough. You're probably not going to succeed. And I mean, somebody that says I'll do anything anywhere, you know that their chances of success are going to be higher. But even still, I'd say, well, you need to make sure you have the right story. Anything anywhere doesn't sound great to the seller. So what is the, you know, how do you match anything anywhere, which gets you a wide net with a really thoughtful idea of why you're going to buy a specific company and ability to tell them about that. And so yeah, I, I think that those things become more important than the macro dynamics. Even though I still think that overall there's, there's plenty of supply out there for, for who's.

[Interviewer]

I, I take, I take your point about the matching and I really like that, Matt. But I, but I let me just press on why you think, think to the, to the macro point about in fact that the supply there is, there is still a lot of supply, a lot of businesses to transact. That's actually a little bit of a, of a counter take to, than what we're hearing these days. Why do you say that? Just because what you guys see out

[Gant Elmore]

there, it boils down to how you define the question. And you said great businesses. I don't think there are enough great businesses out there for the demand that's come into the market, but I think there are plenty of good businesses out there for the demand that's coming to the market and you have to be willing to understand the risks that you're taking on to understand how can I work with the seller on structure of the deal and trade offs to manage that risk. Such that sets me up for success. Every business has issues in this market and part of what enables us to do what we do and make sure we're buying a couple of businesses a year is we're willing to get comfortable with risks that lots of people aren't. We bought a business with 50% customer concentration and most people would think we're crazy. They might be right, but not because we did that. You know, we were able to dig in and we, we got very comfortable with that customer. And so but that, that was not a great small business, but it was really, really good. And so widening the aperture of how you think about the quality of the revenue, what risks you're willing to take, how you're willing to think creatively about structuring a deal that is the right amount of trade off between risk that you're bearing as the buyer and risk the seller is willing to continue to bear as you do work through a transition can make a above average to good small business into a great ETA purchase.

[Matt Moldenhauer]

Can I add one more thing on top of that? Because you hit really well on the difference between great and good on the business side. And I think you have to think really thoughtfully about great and good on the buyer side as well. Because if you are a great buyer and show yourself to be a great buyer, you get involved in more look backs and more second chances and more callbacks the next year after they said no a year prior than you would if you're not a quality buyer. And so if you're really committed and in the game and have integrity and you're thoughtful and you're not just in it for the quick wins or the financials only, you get yourself into a position where broke we have to be told, you know, we say no to a broker and they say are you sure? Or we're in a bidding process and they say you're actually not within the threshold. We want to have you but we really like you guys so come along and see what you can do. People that say, hey I'm not ready to sell today but I'll call you in a year. And those are the things that really they compound over time but they also for us expand the market size to the point where those are the things that I look at and say I'm never, you know, it's A minority of deals where we say, oh, there were five bidders and you were three third. You know, I think that's a pretty small portion of what we work on. Usually it's, we're in a process where it's a small group, they really like us. Doesn't mean you don't have to pay, you still have to pay. But, but, but you get yourself into a set where you're differentiated, just like a business.

[Interviewer]

Well, at the risk of beating the word to death, another example of compounding. So we've got financial, we've got experience, we've got knowledge, and now we've got reputation. But that one, that one is, is, is really a, a, a powerful thing. Mr. Buffett will talk about that one a lot. So, and that's a great example of it. Just, just be well behaved in your market and present yourself as a high quality buyer and you're, and you're bound to reap, reap what you sow there in a, in a good way. Going to close this out here, guys. For people who are interested in the operating partner opportunity with Elmore, how does that work?

[Matt Moldenhauer]

We would love to get emails, introductions, LinkedIn, whatever channel works, and we can provide those. I think, think where the way we run the process is we will always, anyone who's interested, we will take a phone call. In fact, if we can, we meet in person. But often it's the phone call and we'll take a phone call and we get to know you and then put a little bit of work back on you to send us a criteria of what you're interested in to help us define that net that I was talking about before. And then we're just very transparent that we, if we have something right away, of course it's going to come to fruition. We know other people out there that we can introduce you to. But also the most likely outcome is that we then have that in our kind of understanding of who you are and what you're doing. And when we find businesses, we always are looking then at everyone we know. Our favorite kind of operator is a friend or a friend of a friend, someone we've met just like this, that we already have a relationship with, established before the opportunity that we can call when the opportunity comes. That's right. And in that way we kind of limit the opportunity cost because you get to keep doing what you're doing to make it money. And we do all the work and the digging and then, and we'll give you a phone call when, when the right thing presents itself.

[Interviewer]

Gotcha. Okay. And so that answers the question I was gonna ask next which is unlike a say chenmark in many groups you don't bring people into the Elmore corporate. I know you're not corporate Elmore central and kind of expose them to the Elmore and then and have them on the bench for when an opportunity comes along. You do not do something like that yet.

[Gant Elmore]

We have, it is not currently part of our day to day operating but we, we have brought people in before actually we have a software business that one of our partners, he was at Next Gen Growth Partners in Chicago didn't, didn't get a deal done and then came on with us and six months later he was running a business. And so we, we have done that. We will, we'll. We evaluate doing that on you know, unique situations and it might be part of our go forward growth strategy at some point but it hasn't been to date. And we spend, we're never going to be because of how we think about the business and the values alignment and you know, getting into business with a partner and we've never gotten rid of a partner in you know, my dad's generation, our generation, they've all stayed on operating their business through their desire to do that. And so we spent a lot of time getting to know who we're going to operate these businesses with. Whether that is someone we're introduced to meeting, you know, kind of somewhat randomly or you know, introduction from a friend to a friend. And then as we, as we move through the process, really spending time together to make sure there's, there's values alignment and that we're gonna be a good fit for them.

[Matt Moldenhauer]

We don't have like a factory like approach to any of this or a system necessarily. But we will insert in addition to bringing someone in, we'll insert someone into a company if they were interested in a high level role to be understand small business. We've done that as well. So and then those folks maybe they, they're getting itchy and they want to run a business. We're obviously in touch with them. So there's a lot of ways we think about it and we're willing to listen to anything but we don't have a, have an approach in place.

[Interviewer]

And how many operating partners have you partnered with to. To go acquire business?

[Gant Elmore]

What we have 20 businesses. So 20. Matt was, was one at one time. So 21. Roughly 21. I think there's maybe one or two others that no longer exist anymore that either got shut down or Sold at one point, so call it 23 or 24.

[Matt Moldenhauer]

And one of those partners was in a business that we acquired as a leader and came to be the leader of that business. Another one of the partners was an executive in another business we had and transition out to lead a business that we started. So the majority of them come through traditional organic. They've joined us as the CEO, like an ETA scenario, but there's other paths that exist as well.

[Interviewer]

Gantt, do the math for me. Are you on track to do 50 by 50?

[Gant Elmore]

Yes. Assuming you think compounding is a thing and that our flywheel will compound in terms of the number of deals we do between now and 2050.

[Matt Moldenhauer]

Because we're in year five right now, so we're about to hit the best of it ourselves.

[Interviewer]

Yes, exactly. But wait, but you only need to get 30 more in 25 years.

[Gant Elmore]

So. Yeah, to be fair, we weren't counting my dad's generation of companies in that 50 by 50. So we're at 9. 9.

[Matt Moldenhauer]

Yeah.

[Gant Elmore]

So we got to pick up the pace a little bit, but that is not something I worry about.

[Matt Moldenhauer]

Up.

[Gant Elmore]

Yeah.

[Interviewer]

Okay, guys. Well, we could keep going, but at some point, I got to let you go. And so that point is now. The. We will link to your LinkedIn's El. The Elmore company's website. Is there any other place that I should send people, or is that. Will that do?

[Gant Elmore]

I think that'll do.

[Interviewer]

Okay.

[Gant Elmore]

Yeah.

[Matt Moldenhauer]

I mean, I. I'd be happy to throw my email in there if we wanted to.

[Interviewer]

Sure. Give it to me. I have it.

[Matt Moldenhauer]

I'll.

[Interviewer]

I'll put it in there.

[Matt Moldenhauer]

Okay.

[Interviewer]

You. You two can't.

[Gant Elmore]

No, thanks.

[Interviewer]

No.

[Matt Moldenhauer]

And. Yeah, I knew you were gonna say that.

[Gant Elmore]

So the jerk who won't respond. He's much better at it.

[Matt Moldenhauer]

Yeah.

[Gant Elmore]

Essentially. Do it. I'll just forget. And then.

[Matt Moldenhauer]

And then you said the website as well.

[Gant Elmore]

Yeah, yeah, it's great.

[Interviewer]

Great.

[Matt Moldenhauer]

Yep.

[Interviewer]

Okay. Gantt, Elmore, Matt Moldenhauer. Great interview, guys. Really fascinating, what you're building. Impressive, of course. Lots of great philosophy underneath it and certain to be an inspiration. Glad you're kind of telling your story out here for the ETA community more. I. I expect you'll see a lot of inbound, and from this interview, I. I certainly hope so. So, thanks, guys.

[Gant Elmore]

Thanks for having us, Will.

[Matt Moldenhauer]

Thanks, Will.

[Interviewer]

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[Will Smith]

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[Interviewer]

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[Will Smith]

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[Will Smith]

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