Jace Renneveld (2:41)

I know. I was like, Dan, I don't know if you've seen my books lately, but there's a lot of capital expenditures, especially when you're building. So it's humble. Humble Beginnings.

Dan (2:50)

Well, I will say that all of my businesses, all one of them are profitable. So looks like I am the subject matter expert in the room. You're welcome for having me here. So, so one thing I wanted to talk about is just the building of institutions as a philosophical idea. You know, we've talked a lot on the King's hall especially and Breit Harth about building the institution of the family, sexual piety, right order in the home, disciplining children. We've talked a lot about churches kind of where the church has failed and giving a positive vision for churches. What we haven't talked about quite as much is really building businesses. And so that's, that's why we have David here and, and Jace is because both of them have built businesses. And David is actually doing something very interesting with giving investors the opportunity to participate in the building of businesses and actually getting businesses that are more than just a startup, which there's nothing wrong with startups, but getting businesses that are potentially even positively cash flowing already and purchasing them and giving investors opportunities to actually be participants in the success of those businesses. So I was wondering, David, if you could just talk me through a little bit about what is, you know, what is Reiss Fund and what do you do in that and what is it trying to accomplish?

David Reese (4:11)

Yeah, thanks, Dan. So basically Reis Fund, what we do is we look for small businesses to acquire. We have management that we're either plugging in or that we're working with that's already in there. And then we're also trying to pull together the deal, the capital for it. So the three major activities are finding deals, having good management to be able to run businesses and pulling together the capital for those deals. And so when you're dealing with a deal, the idea of deal flow is sort of the big thing for thinking about finding opportunities. So what you're doing is you're networking with business owners, you're dealing with business brokers, you're talking to investment banks, you're just. And you're trying to interact with people who are dealing with stuff. And as people get to a place where they're kind of reaching retirement age, those become sort of prime target for us because our goal is typically to buy businesses where they're. There's somebody who has had conservative and Christian values, they've been applying in a business, but they kind of don't have a successor. And so they're looking for how can I give this over to somebody who's going to be a good steward of it? And they're not going to just kind of hand it over and turn it into like, you know, part of the WOKE apparatus, but instead that this is going to be something where there's a continuation of those values. And a lot of the time we've found that there's a lot of guys who are, who are retiring, having built up some business and, and they kind of got it to have some level of institution and it's their baby. They've poured their blood, sweat and tears into building something and they're kind of like, what am I gonna do here? And so many of these firms are looking for something to buy, to strip everything out, get rid of all the people that the owner cared about, come in and basically try to do stuff to jack up profitability in some sort of a three to five year period of time and then sell the business again. And the reason they do that is because if you take a business that's making like a million dollars or $2 million a year and you can get it to 5 million, when you get to that 5, not only do you get an increase in terms of the amount of money that people are making from just going like, oh, it's five times as much or whatever, but a lot of times you get like a $5 million point or $10 million point and you can resell it for an increased number of multiple. And so that so many people are trying to go that way. And so we have devoted ourselves to doing is to looking for stuff that we can buy and hold. And I have so many people that just say like, you know, that would throw institutional money at us. That's big numbers, easy to access cash if we would just do the buy and flip as a thing. And. But our desire is to pour our energy into buying and holding and having long term cultural impact. So our goal is to have a explicitly Christian mission for the business. To have kind of the handbook and policies, reference scripture and have that the idea that there's Christian principles being applied in terms of the business. We lead with the Lord's Day as a part of what we're going to have there. So we make sure that people aren't having to work on the Lord's day. And so those ideas and then also using the book of Proverbs to talk to and develop management and then we have those things being used in the business and it helps to gradually leaven the lump and it creates opportunities for there to be kind of a building out of a really serious Christian culture. But that takes time and I think it really does generate great returns and rewards, but it takes effort and time to really have that fully go into effect.

Dan (7:43)

Yeah, that's really interesting because, Jase New, you've had some experience in buying and selling equity and businesses and things like that. And so you could see how it'd be really attractive to do what David had just said, where somebody acquires a business. And often when they clean up, like the profit and loss statements and the balance sheets, what that means is that they're reducing payroll, they're firing a bunch of people, maybe putting in some better processes, perhaps just to inflate your profitability metrics. So then they could put that multiplier on there. And it depends on the industry. Right, David, what the multiplier is, it's somewhere between, you know, one and a half X to as high as if it's a tech company, who knows? I mean, like over seven and a half X, you know. So you could see why that'd be attractive to one of these big, big equity funds, because you take a business in David's example, that's $1 million in cash flow, and they go to 5 million, and then you get a 5x, you know, multiplier on that. So the business that you paid, you know, whatever your original, let's say it was $5 million and it made a million dollars a year. Now you're able to sell for 25 million, you know, so it's a quick turnaround. But what sort of.

David Reese (8:55)

But even more than that, when you. When you. When you. There are certain stair steps that a lot of the times when you can get. You not only get a multiple in terms of, like, going from, you know, you bought this thing at five to going to 25, because you have five times, you know, growth in the profitability, but you actually increase the multiplier to a lot of the times when you increase the number. So if you go from 1 to 5 million, you might go from a 3 to 5 times, you know, the purchase. 3 to 5 times the profitability as a purchase price to, like, all of a sudden you're at like maybe eight times.

Dan (9:29)

Is that because there's like a growth multiplier in there? Because it shows, you know, that there are future. There's meat left on the bone, so there's more opportunity for it to grow.

David Reese (9:38)

So that's a great point. If there's a growth multiplier in terms of the revenue, sometimes that can increase it, too. But the reason is because there's so much capital that's trying to figure out how to manage these larger groups. A lot of the private equity guys do not want to deal with the headaches of the development of talent. They want to be able to immediately pay some CEO a million dollars and have him have staff that's making a quarter to a half million dollars a year as sea level people blow him. And if it's not producing five to $10 million of profit a year, you can't afford to throw on the really high quality staff that has already got, you know, 10 years, 20 years, you know, 25 years of track record of running businesses and building them. So their goal is to, is to have a very easy process of just buying the business, having this team of people that they plug in that are super expensive and that are already, that have already been in some sort of like process of buying and flipping for a while or they're coming out of like a public company or whatever. So they've got, it's this super expensive management load on which I'm not saying that by itself is bad. You know, I'm all for people making money for being talented and skilled, but the issue is it's not worth it to them to go down into the smaller businesses. And that's one of the reasons that we target these businesses in the 1 to 5 million dollars especially profitability zone. And then we're willing to go into the 5 to 10. But the problem is the prices start to really go up. And so we can't get the same sorts of deals because of the fact that there's competition from money from people who are willing to, you know, just, just spend a lot more to make it easy. And they're accessing institutional capital.

Jace Renneveld (11:22)

And I think it's great to get that insight and perspective because in the same way with real estate you start to see how banks can actually shape the world around us. In this case that David's talking about, consolidation is going to be a key part of getting to those EBITDA numbers. So when you see dental groups or insurance brokerages, they start to consolidate so they can hit those numbers, get those multiples and get the big money attracted. But what is the result of that is less family owned businesses, lower quality services, more streamlined, less flexibility on just personalizing products and things like that. The same is true in real estate. I learned a long time ago you're not going to get the big money from the banks unless you can have something with global cash flow. And that's why you see Chipotle, Starbucks and yogurt land on every corner. Because the Banks want to take the risk. And so I think this is why the work is so important. Because otherwise, what would happen to these businesses that David's referring to? I think they would have to either close their doors or they would get acquired by another company, probably just for assets or something far less than what it could be worth to a group like us. And then that business down the road would sell when they reach these numbers. And so I think it's just good for the listener to know how the banking, that's how it's affecting our world.

Dan (12:48)

Yeah, well, boots on the ground. What does that actually look like for a community though? Because you're, you're, you know, Jace running some small businesses in the area. And so what does that look like on a day to day versus, you know, essentially having Globo Homo taking over these businesses? What does that actually do to the employees and the, and the community and the culture and things like that?

Jace Renneveld (13:09)

Yeah, I mean, to start, you're a lot less likely to get a living wage out of a, you know, a corporate group like that versus working directly with an owner or small business. And I think there's just a lot less diversity of architecture and creativeness. It's like I think Brian said that you're everywhere and nowhere all at the same time. And so it's a lot harder work. And I think we're experiencing it right now. It's hard work to raise the capital to buy a real estate project or to buy a business. And that's why we're so excited to be working alongside David, because he's kind of open our eyes in a way where for me, I was thinking, hey, let's start small businesses. Let's empower individuals to then break away from their nine to five, which I think is still good. But what David is alluding to is basically walking into a business similar to what it says with Israel. You're going to tend and harvest vineyards that you didn't build or you didn't plant. The boomers planted some great businesses. In our lifetimes, we're not going to have the ability to achieve that kind of growth in most cases. But now we have the opportunity to go in and hopefully harvest some of those. And that's why I think this is a pretty cool opportunity to be working with David.

Dan (14:24)

Yeah. So, Pastor Reese, I'm going to talk, Pastor Reese, for a second. We've talked in the past about how we participate in businesses is actually if we do it righteously, it's fulfilling the second commandment, you know, to Love your neighbor as yourself. I was wondering if you could speak to that as far as like your employees, you know, as far as holding on to businesses and not doing the, you know, flip strip and flip sort of model.

David Reese (14:52)

Yeah, no, I think one of the big things is you start to think about people in terms of long term development of people. And I have to train managers and people that I will start to work with to really think about this. That, that there's always like, there's like a need for something in the business and it's always like, well, let's go hire somebody out there. And it's like, can we train them? Can we pay somebody to train on this? Can we, can we just as a, as a, can we take somebody? You know, you look at employees and you're going, okay, what kind of character do they have? You know, what kind of, you know, mental capacity, what level of intelligence? And then how diligent are they? And I break those down. You know, the character you look at, you know, the law of God helps to show the elements of character and their intelligence in terms of like, can they learn quickly? Are they able to communicate well to other people? Are they, are they able to, you know, to, to be able to have systems in terms of the ability to like lay out an organization of how they think about a thing. And then when you deal with, when you, when you deal with diligence, it's like, well, the energy level but also the focus level, right? We only people who like do a project and then like they burn out or they, they kind of start things but don't finish. And that's, that's energy, but they're not focused on completing. And so if you could find people with different talent sets and have them work together to look at positions that work well for them as opposed to just kind of always looking to hire externally. If you're intentionally trying to develop internally, you think about people in terms of long term track with them. And those opportunities to develop are also, by the way, discipleship opportunities. So Deuteronomy 6 talks about the set times of discipleship as you rise and when you lie down. But also there's this idea of by the way, as you're walking, by the way. And so as you have opportunity for people to lead and you encourage people to lead by talking to the people down below them and helping to raise them up with opportunities to pay them more and to have the training go to them, you're also looking for ways to pour in in terms of the culture and having Biblical principles that you can talk to people about. And I've had a lot of people convert to the Christian religion while working at places that we've got because of the fact that. That we seek to talk about and apply biblical principles. And the law of God is so much more the practical element of Christianity than the gospel. The gospel is important practically, psychologically, and the gospel is what saves. But when you talk about the law of God and you talk about the book of Proverbs, which is full of stuff to do, what you do is you have all these unbelievers that they're convicted by the law of God. They see that it's better. They see practical wisdom. And. And what it does is it makes it so that they start to ask questions about the gospel. And so there's all these, you know, you just have people that are just having conversations, and you don't have the HR freeze, right? Where people are like, as opposed to hr, I want to have a chaplaincy, right? Like this. This is not. This. There's not this effort to like, impose down global homo and feminism and all that kind of stuff. Instead, it's what are biblical principles? And that makes it. So There's a totally different environment for people to talk about things. So that's one thing for the pastoral piece, but also for people, the management opportunities that can be existent for most people. There's this process where you're trying to figure out which track are you going on. Are you going on a technical track where you're developing a technical skill and competency to do something where you can generate extra value by having skill? Are you trying to develop management competency or maybe sales? So a lot of the times, the places where you can make the most money are developing some sort of intense competency at a technical thing or to develop a sales ability, which is sort of a mixture of certain methods, but also how to deal with people. And we like to focus on this idea of consultative sales where you're working with people to tell them stuff that's useful for them. And you tell them, oh, no, you shouldn't do this. We don't have. This product's not gonna be good for you saying no to people. And they're gonna tell people in their network if there's ever something that comes up about it that you were honest with them about, this isn't the best thing for you. And so that kind of idea of what is, you know, how do you deal with people in the sales thing? And then with management, you know, you're Developing people, they have to be able to manage people. They have to govern themselves well. They have to have done enough work that they understand when you know what are the like the psychological hangups that people have. And so that that kind of dealing with people in that perspective of trying to develop. Develop people, their competencies, have a path for them, building relationship for with them and trying to pass on biblical principles and encouraging that as sort of an interlinking set of chains where there's all throughout the institutions you're encouraging relationship. A lot of the conversations we have are different there and also with CEOs that report to me where I'm the chairman of the board and I'm not running it. What I do one of my thing I have with a monthly meeting with them and sometimes there's extra meetings if there's some issue that comes up. But there's the monthly meeting where you do a business review. And one of the things that I make sure is emphasized there in that discussion is what are the cultural initiatives that are being done to help to improve the lives of people, help to have biblical principles on display and how are relationships being built and people being kind of brought up. And so those are like major differences that would occur that where our group does that you would not see inside of a lot of private equity or inside of sort of the public companies that people run into a lot.

Ben (20:14)

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Dan (23:29)

Yeah, that's. I mean, that's fascinating because of the complexity of your organizations and you have multiple organizations, so it's really interesting to hear how the Christian faith and the law of God has permeated every aspect of your company to produce a certain and particular type of culture. I bet. I'm just curious if you'd be willing to share like turnover rates, company morale or anything like that just because, you know, you just compared and contrasted like what is a publicly traded company versus your own companies where you're prioritizing, you know, training and, and you know, essentially discipleship within a company to give opportunity for, for growth and career trajectories that, that are actually challenging them and give them opportunities to, you know, have more responsibility and to make more money versus like probably we've all had experience in W2 land where it's, it's not been that. It's more of the quick to fire, quick to hire, you know, both. And so I was just curious what overall like morale within your companies, do you think? It's pretty good. Turnover rate's pretty good.

David Reese (24:40)

So it depends on the type of job and it depends on a few things. So one thing is I'm a big believer in slow to hire and quick to fire. And what I mean by quick to fire is more this idea of when you have character failures and there's other types of discipline that can be done and we've worked through things with people, but this idea that, that when, you know, if you, if you, if you allow you control the environment and so much of the environment that's important to people is working with good people. And if you allow people who are a bad character to stick around and to do stuff to hurt people or to create problems, you're, you're going to, you know, you're going to either make your best people miserable because they're loyal and they're sticking through it, or you're going to lose them. And so, but the firing being for the other reason. The other thing is we've also been very careful to try to do severance for people when there's not termination for cause. And so if we have some business that's had again, the tactical world, it's very up and down, right? Very up and down. So like in Covid, you know, with Armored Republic, you know, we went from 2019 to 2020, we tripled in sales over how do you, you know, you have to hire a lot of temporary manufacturing work and stuff like that to kind of get through stuff. So that's like this crazy up and down thing, but you're trying to be open with people about that and you have higher turnover when you're going to have like fast hiring for that kind of stuff. But for places where there's more skill like in construction or in a more advanced manufacturing environment or the office groups, turnover is really, really horrific because of the way that knowledge gets lost. And so what we found is that you have, in the first three years of after acquisition, you kind of get this cultural shakeup where people either are like, yeah, I want to do this, or they're like, yeah, I want to get out of here. And so you have this kind of gradual process of interacting on the cultural things. And people are, the first 18 months, they're kind of like unsure of what you're doing and who you are. So you're trying to gradually build confidence. But about a year and a half in, people really have either solidified their loyalty to you or their hatred of you. And I don't have any enemies. And so that process of building things out, what you find in that first 18 months, you typically are going to have a 10 to 30% changeover of people. And so that ordinary, depending on the skill level, if it's a higher skill thing, and you got people that are sort of been there for a long time, you might see their ordinary turnover might be 5% or something. And so you're looking at a doubling to maybe as many as 4x or 6x times in terms of the changeover in some sort of period of time. And then you have a really solidified culture as you're continuing to hire people and it kind of stabilizes there. Sometimes you don't have many people change over. In a deal that we recently did, for example, we've got a lot of people that are really solid team and we're not really seeing, you know, any problems or changeover that's, that's occurring. And in another business that we did about a year and a half ago, we've seen, you know, something in that lower range of change. But this, this idea that you're being clear about the culture and the expectations and people can either sign up for it or they kind of go, I want to go elsewhere. There's easy, there's places that don't hold me accountable or there's places that, that I don't have to think as much. And there's sort of. Some people just don't want to be a part of a Christian culture or whatever. So you have these various motives for people leaving as well as the ordinary changeover that would occur there.

Dan (28:15)

No. That's absolutely fascinating. And Jace, running small businesses, I know that you've really placed an emphasis on the culture of those businesses. I was wondering if you could just give us a snapshot of what it's like to work with your guys and kind of the culture that you have, the mentality that you really bring to the team there and just tell everybody how much they love you.

Jace Renneveld (28:35)

Well, I can tell you everybody loves not being in the W2 environment without an HR department, and that's because we all know it. We were Talking about this yesterday, there's just like, handcuffs on young men and old when you're in that environment. And so we hear it all the time from my guys. We've got, I think, now, six on our team. And they're all just, like, grateful that they can. They can rub shoulders with other guys who are also pursuing different business adventures, but also part of a team that is, you know, we cut to the chase, we talk openly, we can joke together without getting our feelings hurt and being kind of at the head of that organization, so to speak. It's a group of different, you know, verticals, you know, with brokering, insurance, investments, accounting, you know, real estate, et cetera. You're able to. To impart a. A vision and a culture onto those guys. Because. Because I'm looking more for guys who I think can be very successful kind of independently. That's what. What I've been doing thus far. Obviously, what. What David and I are working on with. With everybody is, Is a little bit different. But in those cases, you're able to really shape a guy to. To see the long term and know that it's not just about making money for himself. Like, of course I want you to have a living wage. I want you to take care of your family. I'd even love for you to have your house paid off with no debt. Absolutely. But once you get past that, why are we doing it? And that's probably a great question for David, too. Why do we want to buy these businesses? Why do we want to make money? And there's a reason there, and that's to build Christendom and to take Dominion, like David's saying. And so when you're able to get these guys in the same room and they see the vision lived out in how we deal with customers and why we want to make money, nobody has to be ashamed of. Like, yeah, we want to create wealth. Why not? So we can have a nice car, which are great, too, but because we want to go and invest with guys like David, and we want to go own a block of real estate, and we want to build a school and all these things. And so I think that's been the greatest part of having our crew together, and it just would not happen in a remote environment and. And in the average corporate cubicle environment.

Dan (30:58)

Yeah, you bring up some really good points. And David, I want to ask you, because Jason mentioned, why are you doing this? Because you're a pastor of a church, and a lot of the pastoral track ends up being you get a barely living wage and the rewards are eternal and it is worthy work. I'm not trying to downplay that. But why, why did you start acquiring businesses like this? You know, why, why doing. Why do the extra work? Because, believe it or not, I know it's a lot of work being a pastor. So why would you make your life harder by doing the work that you're doing with Reese Fund and buying these businesses and acquiring. What's the vision there?

David Reese (31:43)

Yeah, so, funny thing. So, so first of all, I think there's sort of this like, ladder of power that occurs in terms of the, the order in which people can, can govern, right? You, you first, you have to govern yourself in the knowledge of tr. Free from slavery to sin. Then there's, can you govern a house? Well, and I think that includes the estate in terms of, you know, are you able to manage the estate effectively? And then there's the. Also in terms of public office, there's being a pastor or deacon, and then there's also the civil magistracy, right? And I think that building wealth is about being able to exercise dominion, to glorify God in all the culture and all the detail and handing over something for your wife to rule and preparing inheritance for your children and then trying to do well for the people that are under your authority in terms of that business domain as a part of the household. And you're trying to then have resources that you can pour into public service. And I think that this, this perception that we have this idea of like the, the you need to get your pay principally from doing the public service, whether it's in the church or in the state. And I think in reality, having a patrimony, having property, having having money that you've inherited, having something where you've got some substance, where you're not so dependent on paycheck to paycheck to. For public service allows you to resist when the crowd runs to injustice. And it allows you to have an independence where you can go like, well, if they, you know, throw me out, if they kick me out, whatever, I'm going to do this. And then I, you know, worst case scenario, I'm back to doing my duties, you know, in my smaller domain. And my dad really gave me, in my 20s, in my early 20s, I was looking at going to basically do studies for the ministry. My dad was like, I want you to focus on business and you can do ministry, but I don't want you to be dependent upon people. I've seen so many pastors, my dad was telling me, I've seen so many pastors be ill treated by congregations. And I know that you have strong convictions and you're going to be unpopular in a lot of ways. And so he just was like, you need to be able to, to not worry about it. And so he really pushed me to do that. And so I'm really grateful to my father for his advice to me to work on business and to make sure that my family was provided for first before moving into that. And so looking to be able to have something to then go into public service. But the other thing is, I think that when you look at, I think it's in Judges 9, where you have the parable of the bramble bush, where there's all these productive men that are able to do things and they don't want to go into public service because they're like, I can enjoy this, I can enjoy the fruits of my labor and I can do all these other things. And why would I give all that up to go and rule over people who are ungrateful who will gut punch you and do all this stuff? And I'd rather just be left alone. And the danger is that when all the productive men don't want to do public service, the people who are not productive and want to govern the productivity of other people and enslave them, they take the offices. And so it's a curse to be ruled by unproductive men. And so that when you turn the bribes or whatever, the church is a tithe farm or the tax farm for the state, that's danger. That, that's the thing. And so I love seeing pastors who are productive and in doing stuff like what you guys are doing in Ogden, in terms of just working to produce and publish and do all this glorious stuff like you. You know the old saying, if you want to get something done, if you want to see something get done, give it to a busy man. You know, so when somebody's already productive and got a full schedule, it's like you can give it to him and, you know, it'll get done. And. And so this, that's what I love. So that's why I appreciate you guys so much, is just the hard work that you put in and all the stuff that you're able to accomplish while also ministering to God's people. And so that's my thought about. That's why I think it's important to do business and to give an example and to be able to show people how you can be generous with your own property. It's easy to Be generous with other people's money. It's harder to be generous with your own. And so I think those are all things that can be an example if you're building.

Dan (35:54)

Well, I appreciate those are. Words are high praise. I give all credit to God. And secondly to Martin, or also known as Martina McBride, if you're a Hana Cosmos listener. And so Martin is a very busy man. Gets a lot done. I think that I would. I would really like to talk. Well, the three of us worked on a deal recently for a glass company in Phoenix. And that was a very exciting process. It's the first time I've ever participated in one of these business acquisitions. The whole thing was really cool to me. Of course, I do like looking at P and L statements and balance sheets and, and seeing value propositions and stuff like that. It was, it was really interesting. I was wondering, David, if you could, if you could just introduce kind of what, you know, like deal flow and how you identified this business and, and kind of what that funding process looked like just at a high level.

David Reese (36:49)

Yeah. So the company is mirror works and horn doors. And so it does, you know, basically it fabricates windows and doors and then installs them. Right. So it's a mixture of construction and manufacturing. It's not a window manufacturer, it's not a door manufacturer. It's rece components. But then there's, there's still, you know, you've got to cut up extrusions, you've got to cut up glass, you've got to, you got to deal with, you know, getting things ready to install and then the actual installation process. Right. So those, those are the things there that have to be done. And so it's again, that mixture kind of manufacturing plus installation. So that business, we look for businesses that are, that are sort of in the. We consider blue collar, in other words, manufacturing trades or construction. And that this one, normally with deals, what we're doing is we're networking, we're talking to people we're calling business owners. We're dealing with brokers or whatever. In this case, we had reached a point where there was enough of a reputation for what we're doing. They actually called us to see if we wanted to buy them. Yeah. And so that was the first time that had happened to us was on this deal that was pretty neat. And it was because of not only us being in the same city, but also culturally being more of a fit in terms of having conservative values. And so those two things together kind of opened up the opportunity. And so that was something that was neat and new. And since then, actually, over the last year or so, when we first got contacted from them, we've had more businesses starting to reach out to us. And so that's one of the neat things about building reputation and stuff is just kind of the way as people see you get deals done, they sort of go, oh, here's a person, actually they can do this. When you go through a selling process, one of the big dangers is that you put in months and months of work and then the person can't buy it. And so the ability to actually pull the deal together is a big part of that. So we had that come in and what we start to look at when we're evaluating the business, there's five elements of any business. You're talking about value proposition, which on a basic level is what does it do that people are interested in that they're willing to pay money for? Right. So for here it's like, well, there are people who want windows to be in their house and they would like doors to be in their house. And as long as people continue to want windows and doors being built into their houses and people are building them, or the same with commercial buildings, then there's opportunity here to provide value. Great, okay, so then the next thing, basically, if you don't understand the value proposition of a business, do not invest in it. If it's super complex and you have no idea what it is they're doing, it provides value to anybody. You just move on, look at the next opportunity. So if you can't, the value proposition has to be understandable. The next thing is you're looking at what the next, the next four pieces are. Marketing, sales, value delivery and finance. So marketing is getting attention and turning it into interest. So how do they market, how do they get people's attention and how they develop that into an interest to buy from them. The sales process is taking interested parties and turning them into customers. So how do they do that? And then the value delivery process is, okay, once you've sold, you've made a promise, there's either a contract or an exchange of money. How do you then provide the value that you're going to get paid for or have been paid for? And then the last part, finance, you're looking at the balance sheet, which has to do with, you know, the liabilities and the assets. You're looking at income statement in terms of profitability, and you're looking at cash flow statement, which is, you know, the cash coming in and the cash going out. And you're trying to avoid seizing up. You know, you can have a really great opportunity with high margins, but if you, if you, if you don't have the money to fulfill, then you kind of just have problems. So those are the things you're looking at on any business that you need to understand. So this thing, this deal came through the door from them calling us and then from there. And basically you have a bunch of men who have been hard working greyheads that had been doing this business together and they're in the process of retirement that own it. And so we're going, okay, so these men have worked for a long period of time. They've been in this thing, they're in their 60s and 70s and they're looking for opportunity to honorably transfer and to take care of the people that they want. And so they actually knew that they had other offers from other firms that were higher that to, to, to do the kind of strip and flip. And they very specifically chose to not sell their business for as much money as they could in order to avoid that fate for their business. And so, so they, they gave us a good deal on that. Now sometimes some businesses are harder to sell and they don't have that opportunity. But this business was big enough that they really could get access to a number of people that would be interested in buying. And when a business has like multiple layers of management is large enough, this business is 120 employees, right? So this business very easily is institutionalized already and can run without input. So that's, that's a perfect target for, for larger, larger firms. So that being the case, when we're looking at this, we're starting to learn about the business, we're grateful for the opportunity because of building in there. And we start to look at the marketing process and they're basically not doing any marketing. They're just relying upon like 35 years of reputation of the operation. And so we have, you know, basically the whole team and we continue to have involvement of some of the owners. And there's kind of this gradual process of retirement that occurs, but you have this transition of knowledge. And they've got these guys that have been there for 10 years, 15 years, 20 years, you know, and so you've got this whole kind of gradation of team that's already there. And then we also bring in quality new people in terms of trying to, you know, help to continue to build out and intentionally build the culture. So they're not doing any marketing. And so we start to go, okay, we have opportunity to support there. We then look at the sales process and they were basically not doing any sales process. They were just providing estimates to existing customers. And so we're like, we can, we can actively increase, you know, reaching out to try to support growth. And when you have men that have been doing something for a long time and they're kind of reaching the last decade or so of their career, a lot of the time what happens is they go, we're just going to do things well and we're not going to try to grow anymore. And they also stop pushing their people as hard because they're looking for opportunity to kind of just make it. So, okay, I've done a lot of the work. How can I leave this? And how can I enjoy some of the fruit of my labor? And so there's sort of this. A lot of the younger men are chomping at the bit to like then go push and grow. And so we found that when you have honorable men that have led a business and run it well and done good things, a lot of times they've got quality people that are there underneath them that when they move into retirement, these guys are ready to charge. And so that's kind of the neat thing is there's a bunch of quality people there that are ready to charge. So then, so then from there you have this, the value delivery piece is how do you do efficiency? And a lot of times, especially businesses that have been old owned by people who are going into retirement, efficiency has not been the focus. It's sort of just been like, well, are we doing well enough at it? And so there's a lot of tools using books like, you know, they focus on like the theory of Constraints or certain lean principles or whatever, where you can improve things for the efficiency. And you don't want to have this like endless tinkering into everything. But you want to figure out, are there some, are there some obvious and clear ways of improving efficiency? Is there money we can put into tools that will make things faster? What can we do to make life easier? And so those things in terms of efficiencies and thinking about teams, is there a way to start specializing people to kind of do certain types of tasks more? So that kind of stuff helps to really increase efficiency in the operations set. From a finance perspective, a lot of the times there's difficulty for growing. So like in construction, one of the big constraints on growth is capital because you have to put money into building stuff and then you have to from there wait to get paid. And so you're trying to figure out how can you grow. And when you take on new customers, there's payment risk, there's debt risk. And so you have to be able to support the cash flow not only for growth where you invest stuff and you're waiting months to get paid, but you're also having like the risk of new customers not being able to pay you back. And so you're trying to manage those things and have access to capital to be able to support them. And so we were able to come in and support the capital for the growth. We're able to help to improve efficiencies, we're able to encourage the sales operations to start become growth focused. And we're able to help with sort of the marketing processes with search engine optimization, paying money on paid advertising, using email, using text message marketing, that kind of stuff, and engaging and using social media in an appropriate way to be able to roll it out. And so with the value proposition you're looking at, is there a need for something here? Like is there a new R and D, like a new product line? Or do you just, do you just say, hey, we're going to actually just focus on selling more of what we're already doing because there's untapped potential there and those are the major decisions that have to be made.

Dan (46:07)

So then, Jase, maybe you can speak to this a little bit. You know, David identifies this business. He goes through a whole complicated process of looking at all of those five steps. Secures some bank financing or some other, you know, private financing, seller financing, things like that. And then you have an interesting opportunity as an investor where you give people access to being able to participate in this purchase and to the business in varying degrees depending on what the terms are. But really it's, it's a very exciting process because it's not like sales. There is some sales in there. You know, you have to convince people that the business is legitimate, but you're really giving them access to opportunity, to really all the opportunity that David has created through that whole process that he just talked about, where you've identified a great business with good employees, you've identified the value proposition and the growth potentials and things like that, and then you are generous enough to give investors opportunity to participate in that with you. So I'm just curious, Jace, from your perspective, participating in this deal with Mirrorworks, I guess, what was that process like? Had you experienced anything like that before? What did you see as you like recruited other people, like, hey, check out this deal. I'm able to participate you can do it with me. Like, what was that kind of like.

Jace Renneveld (47:31)

No, I think that's a great question. And, and you know, just to give context to the listeners, we went down to open up a new branch of our business in Phoenix and Dan said to me, hey, I just have been connecting with this guy David Reese. You should link up with him. And so I said, all right, well, great, let's go to his church on Sunday morning and meet David. And that was really solid, obviously. And so I'm like, okay, there's some pretty big trust here. And clearly there's very foundational levels of. Yeah, of trust. And then David says kind of on day one, hey, I know I haven't bought you dinner yet, but let's meet up and talk about this deal that, you know, that that might be of interest. And I was like, okay. So I think David was, the next day after church that I drove, you know, the hour across town because Phoenix is such a huge market, or Metro, rather. And we sat down at AR500's facilities and I got to see, you know, investors. We want to see what the guy's made of and kind of how he's running an operation. So I think that was important for me to see the facility and what he was already doing before even receiving the pitch, learning about the complexities in the organizations. And clearly it was a tight run ship. And so then we get to sit down and I hear a lot of basically what David just said. And I think if you're like me, the. His candor, his style and thoroughness inspires a lot of confidence. And you're like, wow, this is kind of the first time I'm considering something like this, but I really want in because you don't get those phone calls. And we've been talking about this recently is how do you get on the list, how do you get the email or the phone call with a great opportunity? Because if you're not in those circles, then you're just stuck with making your own way or trusting Wall street to manage your money for you. And so it was really exciting to hear, but then realize, hey, I don't actually have the money to do it independently. I would have loved to, but what ended up happening was even cooler, I think, because I didn't want to let David down. There's immediately like, hey, we got to make this happen. And so I call you and we start to, I call my dad and. And you start to put the numbers together and realize that, hey, I think we can actually put a seven Figure number together to get what David needs, because we trust him. We know the business is solid. I know Phoenix is a growing market. My dad has experience in construction, and basically I'm like, hey, if the lawyers are good with the paperwork and my dad likes the deal and we all like David and more importantly, trust him, then I'm now willing to pick up the phone and call people to try to raise money for the deal. And so that was a really good process because it's a banding of the brothers in a way to actually go after a common goal. And it was surprising how streamlined it was when you have already built the trust that had a lot to do with you as well in being able to call guys here locally and, and, and raise the funds and, and, yeah, give them as much detail and information as they wanted. But kind of like you and Eric were talking about on the Hard man podcast, some guys didn't know really anything about the deal. And I don't want to overly simplify that, but. But they probably didn't open up any of the spreadsheets, and that's okay, right? We are here putting our own money on the line and vouching for other brothers. And that's kind of, I think, where we're excited about how we can continue to build this. This is why we just got the taste with Mirrorworks. And we want to see how we can leverage our, you know, our biblical principles and our community to, you know, to. To the point where you don't need to call, you know, I don't want to drop any Edward Jones to invest your money because, you know, there's guys in your community that are going to actively deploy this for all the reasons that we just discussed. So hopefully that answers the question.

Dan (51:48)

No, no, that does. What's really exciting to me is now there's a Christian business that exists in the Phoenix area that will provide a great service to its customers, both residential and commercial, in producing glass, you know, mirrors, doors and things like that. And it exists because of the work David did. And then we were able to support that. That's really exciting to me. And I think one of the aspects that is often underestimated this is this is what makes, like, stock market investing so difficult, is that you can do your stock picking thing and you're like, oh, I own. I own shares in Tesla. Like Elon Musk and I, you know, we're like buddies now. You're like, no, you're a faceless, nameless. You know, you bought a few shares. Congratulations. Like, you have no influence whatsoever. You have no say. You don't actually know what's going on. You don't know the character of the people. You're placing a lot of trust in a company that has. I don't know what their profit to earnings ratio is, but it's probably off the charts. You know, it's. It's insane. Whereas what we did and. And to your example of guys, not really, you know, diving into the numbers of the business is that really, when you boil everything down, we're working in an economy of trust. I trust that this person will do what they say. I mean, even if you go to McDonald's, you trust that they're going to give you what you order and you have certain expectations. Often they don't meet it. But that's really how we operate as an economy of trust. So when we get men like David Reese, who's identifying these businesses and everything like that, I'm not going to be as sophisticated as David Reese and his attorney and his CFO and his, you know, his tax guys and all of that.

David Reese (53:27)

They.

Dan (53:27)

I trust that David will do his due diligence. And I'm ultimately like, we're ultimately investing in David Reese because we can see his body of work, we can see his character. And, you know, I said, write a check, do the wire transfer. I trust this guy. I'm investing in David Reese. So thank you for being a trustworthy man. Please don't lose all my money at the same time.

Jace Renneveld (53:52)

We're. We're on the same team, but we're sitting on other sides of the table. And if I'm going to make a phone call and ask somebody to invest, it's almost better that David and I are kind of on separate sides of this, because I need to be. And you need to be very judicious in your questions and getting them answered and doing the due diligence independently so that we can check each other and then know that, hey, yeah, I'm not just on David's team. Totally. Of course we're on the same team. But as far as breaking this down, I want to make sure that. That I'm, you know, asking guys to do something that I would do because I had kind of an almost an adversarial relationship with the numbers, to play devil's advocate, which we've been doing, you know, so that we can consider, you know, future opportunities and then get better and better to where we build a reputation through trust in David that people can call us and maybe, Lord willing, even reinvest their funds in the future after we've shown that, that this is the right model.

Dan (54:53)

No, that's, that's a really good point, Jace. I think that nobody would argue that I'm a big, you know, there's a bigger killjoy than me. So I've really loved that process. And David, you've done very well in answering a lot of my questions on the next deal, which is really something that I'm very excited about. And David, I have questions. I have questions. There's a deal right now that we're funding for that's very exciting, particularly because of the industry that it's in, is very exciting for me personally. I was wondering, David, if you could just introduce, like, what are you doing right now?

David Reese (55:35)

Yeah, absolutely. So right now, when we look for businesses, when we're actively pursuing businesses, they don't necessarily come to us, but even when they come to us, we're looking for things, we're looking for other businesses where we think that this is a good deal or we can run this well, or we want to set it up as a platform. And there's this difference between a platform business and a business that you think you can have in some way connect onto an existing business and to have them work well together. And so we recently had an opportunity come up where Armored Republic is obviously in the tactical space. It has huge email list, it has, you know, a huge text messaging list. We've got, you know, all sorts of, of, of we've been around for over a decade, all sorts of stuff where we're just, we've got a lot of contacts. And so we had an opportunity arise to acquire an ammunition manufacturer. And, and so you think about the people who buy body armor tend to, to also be purchasers of ammunition. I know, controversial statement, but I said it. So that being the case, we thought as a business thesis, it would be easy to be able to take the same sorts of customers that buy body armor and to be able to sell ammunition. So I know, hard to follow, but there's a line of reasoning that connects those things. Now the other thing is that you go, okay, so these are separate businesses. And so when you're trying to build out investment, what you're trying to do is you're going to figure out how do you pull in that money, give an attractive return and deal with governance and stuff like that. So this will not be kind of joined into Armored Republic. It'll be a separate business with its own board. And so one of the ways that you have things, one of the Things that's neat about these kind of smaller investment groups is, you know, you guys helped to pull together money for, for that deal that we closed and you have a board member that you were able to elect. And so you have a member of the board as well as having the ability to know the people involved in the deal and all that kind of stuff. And so the neat thing about interacting in that you had a small group of guys that elected a board member. And that's not happening with a small group of guys that are working together unless you're billionaires on some sort of public company. So that's one of the neat things there. So we're trying to build out the governance and to make it so that not only is there trust, but then there's also this sort of like how do things work in the ongoing way. And so we're again doing that same thing. We're building out a group of investors that will then also get to elect for themselves a board member. And so we move forward. And this deal, basically the current sales are, are focused on selling to firearms manufacturers. It's not doing business to business sales, sorry, it's not, it's not doing business to consumer sales as the way it's doing business. And so the neat thing is it's got this sort of stable process of currently selling very high quality ammunition to very discerning buyers, manufacturers of firearms. And then we are now going to add on using all of our tools for marketing and sales that we have at Armored Republic and we're going to sell a direct to consumer line. And so you look at the value proposition, you go, okay, if there's currently sort of a focus on proof rounds and to be able to fire these rounds out of firearms and to have those firearms then be able to show their quality and to be able to withstand the explosive power of the gunpowder, what you're then doing is, okay, there's already a high quality product here, what can we add on? And so the focus of what we're planning to do in terms of add on is not to go and compete for the cheapest possible ammunition, right? We don't want to go compete with like Wolf for like steel cased ammunition. And see, can we, can we, can we win in that market? The ammunition market is a multibillion dollar market in terms of the amount of ammunition that's purchased by American consumers. So our goal is to go, how do we put out very high quality rounds that are, have a very high probability of shooting when you pull the trigger and and doing that with defense rounds, marksmanship rounds, but also subsonic rounds which have been an increasing thing that people care about because you use suppressors for that. And so this idea of, of being able to use subsonic rounds to be able to hunt with them or to be able to use them in environments where, where they wouldn't normally you wouldn't really expect them, where you don't have to wear earring, your ear protection, but to be able to instead be able to fire and have a lower decibel and this, this idea of how do you make that? So this round is still good. We've, they've got, we've got designs that we're using to be able to have high grain bullets, to be able to have those be shot and still maintain the same amount of energy that gets transferred newtons or joules that you're, that you're dealing with in terms of the transfer of energy. And on the other side with marksmanship rounds, you know, the reality is if you've got to resist tyranny, the most important thing is not going to be, you know, how quickly can you clear a room, it's going to be how effectively can you shoot a distance. And so that being the type of thing where people are thinking about can they hunt well, can they, can they practice marksmanship well, can they have a store of really high quality long distance bullets? And then the defense round, something you're expecting to actually go off some sort of hollow point that's, that's designed to pedal and have a very effective sort of build out there. So these are the types of value proposition changes that we intend to bring to a business like this, where we've already got all the structure for how things work and you can do additive value to see significant growth.

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Dan (63:38)

I mean, I'm very excited about this actually. There's a group of guys I know, they were out shooting just yesterday at a range and all of them were hitting at a thousand yards. And so being able to have ammunition that can consistently do that, that's one of the biggest challenges. As a guy who likes hunting and shooting long range, I find it to be absolutely fascinating is the difference between a hand load. You know, guys in their garage that are like, measuring out the powder and, and they're looking at the seating, depth of the, of the bullet and crimping or not crimping and, and all of that. It's, it's actually very difficult to do hand loading well, and then you go to factory rounds and one of the issues with factory rounds is that they have these massive machines that they're just cranking out as much ammunition as possible. You shoot out, you shoot this, this, these factory load, this factory Load ammo. And you could have variances of hundreds of feet per second with some of these larger, longer range calibers. Which means. What does that mean? Well, at distances, it means like feet or at least a foot of, of, you know, variance within your groupings at the, at that long range. So that's an easy one to understand is you have a company that right now has very tight tolerances for their business to business. That's what proofing is, is they're providing new firearm manufacturers with the specialty ammo. That's. Is it overcharged? Is that the test?

David Reese (65:03)

Yeah. So it's more, it has more pounds per square foot in terms of the, the explosive power that's generated so that you can test it and show that this thing can withstand above what it's stated to be able to stand.

Dan (65:14)

Yeah, and so it's, it's very, very accurate. The, the loading is very, very accurate for this ammo. Because this has to hold up in court.

David Reese (65:21)

Right.

Dan (65:22)

For these firearm manufacturers. And so you take, you take that quality and precision and then you apply it into these different categories. Defense ammo. You want it to go bang every time you pull the trigger. You don't want the case where you're carrying your pistol. You've carried it for years. And finally there's a situation where somebody is trying to harm you and you pull the trigger and it doesn't go bang. You know, you're shooting long range. You want it to hit exactly where you expect it to hit. And I do always hit where I'm aiming. It's not always where I'm shooting for.

David Reese (65:51)

Right.

Dan (65:52)

That's the, there's the marksmanship joke. But so with this, with this business, I guess you've, you've identified it, you've done all your due diligence, and right now it's open to investors. And I alluded to this in the Hardmen podcast interview with Eric, if you haven't listened to that, that there is an opportunity right now. And if you're interested. Well, you're hearing the opportunity now from David is that there's actually an opportunity to invest in this ammunition company. And there's a lot more details that we can obviously provide. But what, I guess, what are the qualifications for somebody to invest? Because unfortunately, you know, if you've got, you know, a couple thousand bucks in your savings account, you're just burning your hole in a pocket, in your pocket. You can't just necessarily, you know, participate. What are the qualifications, Jace?

Jace Renneveld (66:44)

Yeah, so for this offering, we have to have an accredited Investor. And that means you have a net worth of a million dollars without including your own personal residence. And then if you're single, you know, $200,000 per year as an alternative, or if you're married, 400,000. So David can correct me if I'm wrong, but it's kind of an either or thing. And so, you know, there's different ways to, to reach this. You know, it's a, it's a self certification. And so I think sometimes people forget that they, you know, they do have assets that they own. And so, you know, you're right. If you just have a couple thousand in your account, probably unfortunately not going to be able to do this one. But if you're, if you're close or, you know, you think you might be in the, in the ballpark, definitely, you know, still reach out. Yeah, there's ways to do it.

Dan (67:30)

Who, who should they reach out to? You know, just to, to check for that.

David Reese (67:35)

Yeah, so they can come to, they can go to reesefund.com and they can fill out sort of the investor form there. And you may end up talking to basically Jace or to you, Dan, to be able to then have some kind of conversations about some of the process there. And so people who come from this would like to just, you know, we can go through the forms on the site. It'll be easy for you to deal with. And they might end up talking to somebody on my staff in terms of some of the check in there. We've got one of my associates for the firm, but also our general counsel sometimes can help to deal with some of the things that come up with that. But then for being able to talk more about a lot of the details of this particular deal, since you guys are involved in it, helping to kind of organize some of those conversations and we might end up, end up talking to you guys at some point there after they get through some of that initial checking. So that's the kind of the process they would go through. And then the other thing is, just as you think about people coming in here, you know, again, who is, who is, who's well positioned for this. Our goal is not to encourage people to come and throw all of their money into some opportunity here. We intentionally, these are high risk, high reward types of scenarios. Our goal is to have high rates of return, but our goal is also to take risk. And we're doing that by buying a business. And then there's some portion of that that's debt, some portion of that that is invested capital, and there's a plan for growth. And so the goal is to, is to aggressively strive to get good returns. But the other thing is the underlying value is this. When you buy stock on the stock market, the average stock right now in the stock market is selling for 20 times price to earnings, which means it has to operate for 20 years at the profitability it had last year in order for it to pay for itself. We, you look at the, the, the s and P500 and you have the big businesses that are, that are there, they're selling for about 25 times price earnings. So they have to operate for 25 years at their last year's profitability before they pay for themselves. You look at the Nasdaq and it was at like 35 or closer to 40 and now it's down to like closer to 30 or whatever. But, but this, this, you look at 30 times and so you're literally buying things, you know, 20 times, 25 times, 30 times their, their, their earnings, right? So if the business was making a million dollars in profit, you know, on, on the stock market in general, it'd be selling for 20 million bucks. It'd be selling for 25 on the S&P, it'd be selling for $30 million on the NASDAQ. So you have this idea of like, these are the really crazy prices that are being paid. We're buying businesses and we're buying businesses somewhere between like three and six times, depending on its growth and stuff like that. So you're looking at, you know, if a business is making, you know, a million dollars a year, we might be buying it for three or four or five or six million dollars. So right there you're already looking at, if the company doesn't grow, you're already looking at a rate of return where you're Talking about a third or maybe 18% of the initial value being returned in profitability if it just flatlines. And so that right there is the dramatic change. The difference is with stock, when you're buying it on the stock market, you can buy and sell same day, right? The problem is this stuff, the illiquidity, the way it gets tied up. And so that's part of the risk. People go, oh no, I have this demand. So it's like, do you have some money you can put aside and think about it as a long term investment? A few years. So that's the, it's a few years being tied up. But the idea is in exchange for that, you're getting an opportunity for a much higher rate of return. There's also the risk though of businesses even going out of business. Right. So we try to be really straightforward about all that. And when I talk to people, the other thing I want to say, so people need to have a risk tolerance. Like if you don't, if you don't have the gut to deal with it, if you don't, you can't handle the stress of like a high risk investment, just, just do something else, you know, that's, that's, that's the reality. Put it in gold. Yeah, that's good. So, so then we have, on the other side, you reach out to Jason if you want other stuff that's going to be like a good place to park things. And then later you change your mind, you know, you can do something, deal with us. Right. But the other thing is, there's also this, this other thing there is, you have this, you know, the rate of return you have, you have the risk, you have this idea of the tie up. But the other thing is if you're just starting out, like, and you're willing to take risk. Okay. But the reality is I try to advise men, get some assets that you have control over, like buy a piece of real estate to do something like that where you're able to get something and it's 100% under your control. And when you have some property that's under your control and you're able to either rent it out or to make sure that you can live in it. When you have stuff that's under your control, it gives you some security. So I would advise people to build up some stuff. Typically, like with my own sons, I teach them to try to get four pieces of real estate where there's rent being produced on it and then start going into other stuff related to like businesses or whatever. So my goal is not to get everybody to put everything they can there. My joke sometimes is, you know, give me all your money. That's the, that's the, that's how I start the pitch, is how I end the pitch, and you know, please give me all your money. But the, but the reality is that there are things to do in certain orders and I want people to understand how to evaluate this type of thing. So that's the, that's, that's who this is meant for is a person who has some money that they can tie up and take a risk with for a potential high return.

Dan (73:02)

Yeah, that's, that's great advice for other people. I prefer to ape all in on everything I do. It's 100% actually leverage it. No, that wasn't financial advice. I'm not a financial advisor. Do not take that advice. Anyway, Jason, do you have anything that you wanted to mention? Now I'm completely lost my train of thought.

Jace Renneveld (73:21)

No, I was just going to say that is great advice. However, we've all counseled enough young men to know that four pieces of property in today's environment would be extremely difficult. And so one thing I do want to throw out there is that if you have put your trust in Tesla or Microsoft or Apple, hey, it's probably done well for you. But alluding to those P and E ratios, maybe there's an opportunity with your IRA to roll over some of it into a much better ratio of price to earnings. And so a lot of guys don't think about that. We do it all the time with gold. We roll over portions of IRAs into metal. But you can also do that with your ira. So, yes, still got to meet the requirements. I would absolutely recommend what David's saying, but if you're not there in the property side, but you are sitting on some capital within your ira, I think this could be another great opportunity to diversify those holdings. If you have spare funds in there, or if you're a boomer getting ready to retire, maybe looking at diversifying, getting out of the potential stock market risks. I would personally put my money on this versus the stock market, but that's just me.

Dan (74:40)

Well, yeah, it's something real, right? It's something real, you know, the people that are involved in it, which is a really exciting, you know, really exciting thing. You'll be able to see the product, you know, you buy it online. You know, it is a, it's a real thing that, that you're participating in. I'm just curious, David. So for, for an investor that's like, oh, yeah, I'm. I'm interested in an opportunity. You talked about higher risk, high reward. Just based on your, you know, initial fairly conservative projections for this business. What could an investor based on those, you know, projections expect to see as a, as a potential return if everything goes your way?

David Reese (75:26)

Yeah, so. So first of all, where we've designed it is to be preferred shares, which means that it has a special dividend. And Jase, you helped to design that. And so the number that was settled in on for the preferred dividend. Can you remind me?

Jace Renneveld (75:39)

8% per annum. Per annum.

David Reese (75:42)

So. So it's just paying on a monthly basis, basically. That comes out like 0.67%, basically a month on the monthly payment. And so it's paying out that. So it gives some sort of cash along the way. But then in addition to paying out some cash along the way, it also is tied to basically the way the money comes out because we're not flipping it to sell it to somebody else. What we're doing is we're trying to hold and to continue to have that work so we're buying the shares back. So what happens when you think about the way normally private equity works is you've got sort of this, like money comes in from investors and your interests are aligned because you're buying a business and you're trying to buy it as cheaply as possible. And then at the end you're selling it and everybody's trying to sell it for as much as possible. Easy interests are aligned. So for us, what, how does this work? Well, we go in and we're trying to buy the business as, you know, as affordably as we can. And then you're trying to then build the business out. But how do we deal with the exit of investors? Well, we're buying their shares back as a stock repurchase. So how do we determine a price on that? The way we determine a price is by having basically an algorithm built in or having a formula that's there. And the formula is tying the value of the share to the growth in the profitability of the business. And so the more profitable the business becomes, the more expensive the repurchase becomes. Now, that desire to see the business grow and to then use the business to buy back its own shares is how all that lines up. And so we become incentivized, as the business is growing, to buy back the shares as quickly as possible so that there's this, so that we're not having to pay for it at the higher price point later. So there's this like, race to grow, to make money, to be able to buy back the shares and, and to try to do that faster. So the idea is to get your money back more quickly. There's pressure on us. And then the idea that as that's growing, you're take. You're participating in the growth. And so if we, if we're hoping to be able to do the repurchases in somewhere between two and a half and four years is sort of the timeframe there. And during that time, we're hopeful that we could have a pretty dramatic growth. We're talking about trying to take the current profitability and make it so that it grows by 4, 5, 6, 7 times during that and have it to be directly related. So that's the same sort of possible return there. You're talking four times the money, five times six times seven times the money, depending on the level of growth. And so that's the kind of high reward is in a few years time seeing those kind of multiplications of initial capital. And so that's where this is different from a lot of what you see in terms of the publicly available opportunities for investment is that kind of dramatic growth.

Dan (78:28)

Yeah. That's incredible. When I first started looking at these opportunities, you know, with David and running the numbers, you know, I'm looking at my stock portfolio and my cryptocurrencies and things like that and I'm like, wait, wait a minute, I can do what sort of investment and anticipate what sort of returns. This is insane. And the thing that's really, I think kind of a travesty is that the SEC is trying to protect the average person from this sort of investment. Isn't that insane? I think it's crazy. I understand that there are risks, but apparently only, you know, the wealthier people can, can take on risk that has really good return, you know, but, but this does. One of the opportunities and the concerns that you brought up is like with the stock market, you know, I can go buy Tesla shares and then sell it tomorrow and I only have to pay short term capital gains tax if, if it's profitable, otherwise you write it off, which I'm really good at now. But with, with something like this. Yeah, your, your funds are locked in.

David Reese (79:29)

Right.

Dan (79:29)

And so you have a, the company has an optional purchase of your shares at, at what time, time frame? At two years.

David Reese (79:39)

So basically. So yeah, so there's, there's an initial point and, and Jason, sorry, I know you worked through the details on, on our period of time here. So can you repeat what are the numbers that we chose on this deal?

Jace Renneveld (79:50)

Yeah, so calls and puts. Right. So the company call opportunity opens up at year two, which in this case will really be two and a half because if we purchase the business mid year, we want to make all our calculations and valuations based on a full calendar year of gapped accounting analysis. So. But at year two is when the company has its first option to buy back and call those shares in accordance with the EBITDA multiplier equation that we've calculated. And it would be based on those end of year numbers, in this case 20, 27. And then at year six we have what's called a put, which is where the investor can say, hey, I'M out. Buy my shares, do the math, calculate the ebitda, give me my preferred share strike price, and then I'll be about my business. But all through that time you're getting that dividend. And the way I like to explain it is kind of like on a short term loan, say it's a five year with a balloon payment, and in this case the borrower is the company and they're saying, hey, we have no prepayment penalties starting at year two, so we could buy back those shares at year two, but by year five, we absolutely must buy them back. So that's been kind of an easier way for me to think about it personally, being a real estate guy. And then a couple other things is, you know, I was talking to a guy who does, you know, real estate syndicates, and one of the benefits is, is that, you know, he was getting dividends quarterly and in this case we're getting them monthly. And so as a real estate guy, it's almost like owning property that pays you rent without the broken toilet or the new roof requirement, which is pretty cool. We got our first dividend payment for the last deal on April 1, which was very awesome because I'm used to having to send a general contractor out to make sure everything's good and then I get my rent checks or what have you. So that was cool. It's monthly versus a lot of these are quarterly. And then there's, there's capital calls a lot of times in these syndicates that, that, you know, if you want to stay in and keep your position, you got to add more money. And, and that's not how we're, how we're setting this up. And, and a lot of times those are longer deals and so those are just some considerations that, that are, are pretty cool with, with an offering like this.

Dan (82:19)

Yeah, yeah. Was there anything else you wanted to add, David? If not, I'll, I'll, I'll wrap us up.

David Reese (82:25)

I think just to, to summarize, I, I think that the opportunity here is for money that you can put away for a while and just leave it and that there's opportunity for substantial growth. This is a type of deal that we do that we're, you know, we're looking for acquisitions all the time and we're talking about an opportunity like this, you know, occurring a few times a year. But this one is unique in that it's a very high growth, one we normally are not focused on really, on really high growth as much as we're just looking for durable cash. Flow and maybe sets of assets that can help to support the value of the business. In this case, this one is a very high growth one. So when we were talking about, you know, in Mirror Works and having you guys work with me and investing in that, that was an asset heavy business that had really high capital requirements for continued growth. And so our growth plans on it were not very aggressive but it was still a really great return because of the fact that it's just the underlying value of the business. Having a business that you're not buying for the 20x or 30x on the stock market of the price to earnings ratio but instead that you're looking at a business where you're buying it in that smaller zone single digits price to earnings ratio. And so this one is neat because there's that underlying business that we already have in it that is going to be a, you know, a pretty stable business in terms of you'll have ups and downs but we're not talking multiples but adding on that consumer component being able to have the prospect of, of a really fast multiplication of the, of the profitability of the business. And so that's not the norm for the stuff that we're seeing. And so this is unique in that way. And, and so I'm excited about this one and, and I hope that that's something that your listeners are, are interested in and that we can give them opportunity on.

Dan (84:13)

Yeah. And so if you are interested we'll have the link in the show notes for the Reese Fund webpage. Do you have the website off the top of your head?

David Reese (84:22)

Just reesefund.com reesefund.com will be a place where they can go in and they go to the invest page, fill out the forms there and then they can just communicate in the message that they're interested in this ammo deal. They heard about it here and so mentioned Kings Hall.

Dan (84:38)

Thank you. Thank you so much David. And I hope you're all encouraged and interested in this topic. I know one of the accusations that we have commonly received in the past was that we are basement dwellers in our mother's basement. And my mother made very good grilled cheese sandwiches. But I have not lived at home in a very, very long time. And we are actually building real things and doing real things. And we all live by the motto Festa Nalente. Make haste slowly. And so we'll see you next time on the King's Hall.

Ben (85:11)

Stay safe. Mask up, get the vax. Don't take unnecessary risks. Be careful. We've been coddled smothered in warnings, trained to fear and avoid risk. We've been taught to play it safe and be on our guard. And not just against a scraped knee or a failed endeavor. No, we've been taught to censor our speech, our words, even our thoughts. Don't think those dangerous thoughts. Don't notice. Don't speak out. If you do, we're coming for you. Who's coming for you? It almost doesn't even matter whether it's the HR lady at your company of either sex, weaponized church courts, the social media censors, or even those you once considered allies. Watch out. Take care. Play it safe. But was it always this way? Have we always lived under this kind of stifling, wet, blanketing panopticon?

David Reese (86:04)

Is this.

Ben (86:05)

Is this the spirit of our Christian forefathers? Of the men who founded our nation in blood and in faith, willing to face down all the might of Britannia and her Redcoats? There was a time when Americans didn't shrink from risk, when they would rather die than bend. Our Christian forefathers knew what it was to draw the sword and throw away the scabbard. They knew it. It was to set sail for the unknown. They defied tyrants. They built, explored and dared great things. Who settled this land? Who built one of the greatest nations ever to be? Who settled the west and covered the continent from sea to sea with the Christian people? Who searched out glories, crisscrossed the plains with railroads and fought off usurpers and invaders on all sides? Risk wasn't a bug, it was a feature. Without it, our fathers knew there was no greatness. And now we're supposed to trade boldness for bureaucracy. We're supposed to tremble at the unknown instead of mastering it. We're supposed to bow and scrape. Not even before bullets, but before HR Ladies, we don't think so. It's time to remember who we are this year. Join us here at New Christendom Press for our annual conference. Safety Third. Recovering the.