Inside the $2.5B Blackstone Deal with Champions Group

Summary

TO THE POINT – HOME SERVICES PODCAST
Episode: Inside the $2.5B Blackstone Deal with Champions Group
Guests: Frank DeMarco (CEO, Champions Group), Leland Smith (Founder)
Aired: April 28, 2026

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Episode Overview

This episode dives deep into the recent landmark deal in the home services industry: Blackstone’s $2.5B acquisition of Champions Group. Frank DeMarco, CEO, and industry legend Leland Smith share candid insights on the deal, what made their company attractive to Blackstone, lessons learned over decades, and what this means for the evolution of HVAC, plumbing, and related services. The discussion is both practical—in terms of business operations—and philosophical regarding leadership, people, and industry change.

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Key Discussion Points & Insights

1. The Blackstone Deal: Why and How It Happened

• Deal Size and Significance:
  Frank DeMarco discusses the $2.54B deal, joking about the rounding down and the sheer magnitude relative to the industry.

  "I like how they round down. It's like 2.54 billion, but who's counting the four, I guess." (02:11 – Frank DeMarco)

• Third Generation Perspective:
  Frank reflects on his roots and the journey from being a “plumber from Cleveland” to leading a company admired by the world’s top private equity firms.

  "Not bad for a plumber from Cleveland, Ohio." (02:39 – Frank DeMarco)

• Industry Elevation:
  This deal and similar ones are cited as transformative, elevating perception and opportunity in home services.

2. Keys to Preparing for a Sale

• Beyond EBITDA:
  The panel emphasizes culture, people, and consistency as differentiators. Multiple top PE firms (KKR, GTCR) competed for the deal, but Blackstone won because they prioritized the Champions Group’s people.
• Due Diligence and Growth Metrics:
  • Growth rates were steady (10% top-line, 14% bottom-line annually).
  • No volatile or risky growth strategies; instead, steady, reliable progress.

3. Why Blackstone Chose Champions Group

• People First:
  Blackstone’s Joe Baratta directly cited trust in the leadership and team as the deciding factor.

  "Frank, we love your brand... but we're going to write a really big check. What do you want to do? ...We're betting on the people." (09:03)

• Culture is King:
  The company's retention and care for both employees and customers were a major draw.
• System Consistency:
  While many companies have similar programs (memberships, training), Frank attributes their success to executing consistently, not to any secret formula.

  "There’s nothing special about our business... we just felt like we were consistent." (13:26 – Frank DeMarco)

4. The Power of Memberships

• Recurring Revenue & Cross-Selling:
  The Champions Group has 150,000 active memberships; this steadies revenue and insulates from weather or seasonality.
  • Enables cross-selling of services and a strong base for growth.
  • Investors value this predictable, resilient customer base.

  "The length of our customer relationship was significantly better under those 150,000 agreements." (18:14 – Frank DeMarco)

  • Memberships allow for lower marketing spend (approx. 5.8%) and predictable cash flow.
  • Blackstone sees synergy between its service company portfolio (e.g., Chamberlain Garage Doors, Servpro).

5. Leadership and Growth Philosophy

• Community & Peer Learning:
  Leland Smith explains the value of peer groups: sharing financials, learning from those further ahead, and never being the smartest in the room.

  "If you're the smartest one in the room, you're not learning." (26:22 – Leland Smith)

• Hiring Upwards:
  Hire people smarter than yourself—Frank’s leadership as an example.
• Transparency & Relentless Improvement:
  Frank speaks to the non-negotiable need for relentless growth and accountability (“there is no going backwards”), as well as maintaining squeaky-clean financials for credibility and value.

6. Debt Management and Financial Health

• Conservative Financials:
  The deal was enabled by clean books—no aggressive add-backs, prudent debt levels.

  "We got credit and the high line sale price... because the financials were squeaky clean. Literally no adjustments on buy side and sell side..." (29:49 – Frank DeMarco)

• Disciplined Borrowing:
  Champions Group took on what was considered sustainable debt; the team analyzed free cash flow carefully and declined to lever up excessively.

7. The Ultimate Leadership Trait: Fearlessness

• Be Fearless:
  Frank credits fearlessness as the secret ingredient to transformative growth.

  "Really, the only thing that holds you back from growing your business is fear... The leader's job is to say, we're going that direction, and everybody has to believe you, but you can't have any fear." (32:56 – Frank DeMarco)

• Personal Responsibility:
  “I’m going to run this business the way I see fit, and one of two things is going to happen: I’m going to become ridiculously wealthy, or they’ll fire me. But either way, I’m going down my way.” (33:37 – Frank DeMarco)

8. What's Next for Champions Group and the Industry

• Future Outlook & Consolidation:
  Frank predicts more deal activity, potential consolidation, and further elevation of service industry standards.

  "The last five years are gonna look like we are standing still relative to what the next two to five look like..." (34:55 – Frank DeMarco)

• Ongoing Commitment:
  Despite the big exit, both Frank and Leland see this as just another milestone—emphasizing head-down, eyes-forward persistence.

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Notable Quotes & Memorable Moments

• On Culture:
  “Take care of your people, they'll take care of your customers. I'd rather not lose the employee.”
  — Frank DeMarco (10:33)

• On Consistency:
  "It's a simple business. It's just not easy to execute on every day.”
  — Dave Geiger (as quoted by Frank, 13:26)

  "It's an easy business. It's just easier not to do the things you need to do every day to be great.”
  — Leland Smith (as quoted by Frank, 13:26)

• On Membership Model:
  “If you can't sell $20 a month, how dare you think you can sell $40,000 jobs?”
  — Frank DeMarco (21:39)

• On Peer Groups:
  "Get in a group with people that are larger than you so you can learn, and hire people smarter than you.”
  — Leland Smith (27:23)

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Timestamps for Important Segments

• [02:11] – Frank DeMarco on the Blackstone deal and personal reflections
• [09:03] – Blackstone’s Joe Baratta on people as the deciding investment factor
• [13:26] – "What's special about Champion Group?" and the reality of 'table stakes'
• [18:14] – The value and investor appeal of 150,000+ membership agreements
• [26:22] – Leland Smith on peer groups and shared learning
• [29:49] – Debt, financial discipline, and keeping the books clean
• [32:56] – Fearlessness as a leadership trait
• [34:55] – Frank’s outlook on industry consolidation and future moves

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Closing Thoughts

This episode offers a rare, unfiltered look inside a billion-dollar home service transaction, with foundational lessons on leadership, growth, and industry transformation. The overriding messages:

• Sustain growth with disciplined execution
• Invest in people—employees over customers
• Build strong, teachable culture and peer networks
• Be fearless in leadership and honest in business practices

The Champions Group’s journey is far from over, and both Frank and Leland urge their peers to connect, share, grow, and continue to elevate the industry for all.

Transcript

[Chris]

Hey, what's up, everybody? It's your boy, Chris.

[Podcast Host]

This is going to be the final Rhino X episode that I am going to play because starting next week, things are going to look a little different around here. It's going to be a nice little change, a nice little shift. Trying some new stuff on the podcast to bring a little new life into it. But this particular episode is going to be great. It's when Frank, Frank DeMarco and Leland Smith, they talk a little bit about their Blackstone deal and some of the things that came with that. And it was really interesting at Rhino X to, you know, to have them there and to talk through it shortly after that announcement was made. But that's such a great thing for our industry and to hear these guys talk through some of the details was awesome. So enjoy this episode and this final chapter of the previous to the Point Home Services podcast with my friends, Frank DiMarco, current CEO of Champions Group, and my longtime friend, founder Leland Smith.

[Frank DeMarco]

This is to the Point a Rhino

[Podcast Intro Voice]

experience voted one of the top home

[Frank DeMarco]

services, marketing and operations podcasts.

[Podcast Intro Voice]

Cutting through the bullshit and getting to the point.

[Moderator / Interviewer]

Chris, thank you for the honor to be able to facilitate for these two legends in our industry, Leland and Victor, we're grateful for your time here. I'm going to start just with, you know, kind of the elephant in the room, if I could. Obviously I got a really interesting news article earlier this week that Chris mentioned to begin the day with and so just wanted to one congratulate you and if you would and whatever you can't tell us or what you could share with us about it. And really my question around it is what was an area of focus or your main area of focus, maybe besides ebitda, that you were doing or focusing on your business to prepare it for this event?

[Frank DeMarco]

Well, first, thanks. It was, it's been an exciting for me seven years, but I'll just say the last three months. So the deal we had, the news came out. We've done a deal with Blackstone for. I like how they round down. It's like 2.54 billion, but who's counting the four, I guess.

[Moderator / Interviewer]

What's another, you know, like that number?

[Frank DeMarco]

Look, I'm a third generation doing this stuff and I say like, not bad for a plumber from Cleveland, Ohio, but

[Moderator / Interviewer]

really, it's heck, seriously, congratulations.

[Frank DeMarco]

But really, I mean, I've been fortunate enough to have, you know, a friend and a mentor like Leland Smith, Dave Geiger, along the way with my years at Horizon. So this has been in Motion for a long time. I'm most proud about an industry that I grew up in that everybody said, you know, I go home or I go back to Cleveland, Ohio. And people are like, you're the plumber, you're the heating guy. You know, I'm a guy who's pretty quiet. I don't do a lot of podcasts. I'm head down, eyes forward, work hard, which many of us are. Everybody in this room, if you're in this industry, for sure. And I just believe we can elevate the industry more. And so to have what I believe is the top private equity firm on the planet, they manage 1.2 trillion in assets, have an interest in the business that I run is flattering. At the end of the day, I think we should all be happy. I mean, we've. The person who kind of led the way was way back when was probably Ken Haynes, who's not here, but Ken led the way a long time ago with this. And so, hey, this is the next iteration. What was focused on. We were lucky. We talked to a number of top firms. Kkr, gtcr, these are all. These all manage a half a trillion, few hundred billion, or a few. You know, these are large, large firms. They have an interest in the industry for a number of reasons. One big one is, I mean, I know we have our AI partners in the room. I love you all, but it's like, stop sending me information on LinkedIn. Like, we. We know you're all out there. We're gonna get to everybody and assess it all. We have to be. We do have to listen. We have to, you know, be on top of things. I think the beauty about our industry is we gotta send human beings every day to knock on a door. If you're passionate about what you do, every day. We use the word culture here at nauseam. It's the one piece that I think was a big deal for Blackstone. I had to go to the offices and spend three days meeting with their executives. And at the end of the day, their answer was, frank, we love your brand, and this is a cool industry, but, you know, we're going to write a really big check. What do you want to do? And I'm not making this about me. It's about the people. They're investing all this money in the people. Yep. We have some great systems and things that I learned from Leland and a number of people in this room, but it's the people you have. And it was great to hear everybody who's been up here said, take Care of your people, take care of your customers. You know, heard Tommy Mello talk up here. Felt like for me, I was giving that speech in terms of put your arm around people. Everyone's dealing with stuff every day in their life. Like, I grew up, I'm a third generation. I watched my grandfather, my father poke people in the chest doing this stuff. We put our arms around people and try to help people figure out what their life at home is, what's going on, and why the day's tough. Leland Smith had an employee, and they'd say, bad day, good life. So what are the things they focused on? Well, it was a colonoscopy of every single brand we owned and what happened every single month and quarter and year for each one of those businesses. But ultimately, we had been fortunate to just be steady with our growth. We didn't really grow the business organically in any dynamic number, but we did it consistently. So we grew the business on average 10% per year on the top line, and the bottom line grew on average 14% a year. If you do that and you're, you know, we're now just a little shy of 750 million. That is what makes private equity firms a lot of money. Can you repeat that year in and year out? And then can you buy new businesses? They believed in the system, quite honestly, we thought we would hold the business for the entire year 2026. I've talked to a number of you here, and the reality is those big private equity firms don't feel like those multiples will hold, which is why I'm surprised that the multiple got paid. Ultimately, a high teens multiple is flattering. There are assets in our space that will come up for sale that will not, you know, hopefully we helped people. But there are multiple large platforms that just haven't. They own great companies. They just haven't performed as a whole as well. And PE is circling and they're really smart. These big firms are very, very smart. And they will ask you every question about how you're going to grow. I think Tom just said it like. Or somebody said, Tommy said this, you want to grow, how are you going to do it? It was excruciating detail we had to give them as to how we were going to continue to do that. They believed it. They believed in the people. And at the end of the day, the gentleman that made the decision on the deal, his name is Joe barata, he runs 250 billion for Blackstone. And he said, frank, we were having lunch in his office and it's a funny story. And we'll move on to questions, but he sat with me. He said, just stop eating. Just stop eating for a second. And I said, okay. And he said, look, I'm about to sign off on a really big check for a billion 5 of our money, my money and this company's money. And then we have to borrow a billion dollars to buy your company. I gotta be really convinced right here and right now that you and this team want to go forward. If you don't, I can't put my name on this because we're betting on the people. And I think the message is you all have great teams and systems. Like, it's not about. Well, it is about getting the phone to ring, but, like, take care of your people. We think we take really good care of our people. I know you all do. To me, that was the big component that they wanted to know who was staying. And right up to the point where I said there was a number of things in my particular part of the deal I didn't love. It wasn't because they were bad. They just, I didn't love it from where I thought I would end up and the amount of money I have to put back in. I have a lot of my personal worth in a business I control. But it was about the people. If I wasn't interested, they didn't want it because they knew the people would ultimately go somewhere else. And again, that's not about me. It's just the culture. And I loved everything I've heard today. And talking to everybody in this business and the businesses that were built, because what we're hearing more about is there is blocking and tackling, but like, take care of your people, they'll take care of your customers. I've heard that a few times from some people. I know we used to say, we don't want to lose a customer. Now we say, I'd rather not lose the employee. I don't want to lose a customer, but I'd rather not lose the employee. So a lot of words. Appreciate the time. It's been a. It's been a real challenge to get here and not just with Blackstone, but to build these businesses at scale. You certainly know. And then it's relentless. We did that at a private equity is not evil, by the way. I've had a really good experience, I really have, with a good exit. I just want to stress that part. For me, what I would say is it's relentless. We have a 18 and a half percent net profit after our corporate Charge. So it's like a 23% net business. There is no going backwards from that. There's just no such thing. So you have to go forward, you have to reinvent, you have to get better. You have to challenge your people. You have to challenge yourself. And so I know this wasn't supposed to be a message about what you have to do, but when you're selling a business for what some pro sports teams sell for, I think that's pretty cool for our industry. You know, we had one go in the Northeast. I talked that there's a really great business called Ceela that sold to Goldman Sachs. They fetched a big multiple. The people that sold us, William Blair sold them. Really exciting times. I hope we helped everybody. I've been taught by Leland specifically and Dave Geiger, we have to help each other. You know, we put this industry on the map. These guys put it on the map. Ken Haynes put it on the map. Dave Geiger put it on the map. Ken Goodrich put it on the map. And I'm sure I'm missing others put it on the map. Our job is to elevate it. It's not the guy rolling up. None of you have this. Nobody's rolling up in a truck with ripped jeans and torn T shirts and dirty vehicles without a logo. That is. We are far from that. And what they also realized is Covid certainly helped and we are an essential industry. And now AI is while they're involved, they can't knock on doors yet. Maybe one day, but right now they can't. That's why they also love us. So sorry for the long winded message. It was an interesting process. Happy to answer anything I can. I'm pretty transparent when you ask me. But if I haven't thanked you and you've been in this room and I've done something with you or learned something from you, and it's a lot of people in here. I appreciate it. We could talk more about it. You can catch me tonight. I'll be happy to tell you all about it. It's been quite a journey and flattering along the way, but stressful along the way too. So thanks for the question, Frank.

[Moderator / Interviewer]

Thank you. I set it up for you. You hit it home. Just to recap, I loved your comments about. This is all about the people. And really, when you build a business like you have, you build it around people. This is a people business. And, you know, for a company like BlackRock to want to invest in you personally and, you know, your commitment to your people, it Says a lot about your organization. So my follow up question was to, you know, what makes the Champion group so special that BlackRock would want to invest in it? But I think you kind of answered that.

[Frank DeMarco]

Yeah, I mean, look, I don't think everybody said in their own version, I don't think we got asked. And they said, what's a differentiator for you? And people said, well, you had this membership model that Leland started and you do your training program and those are table stakes today to me, like that's table stakes. If you're not doing those two things, I mean, Chad Peterman's built a great business. I mean, there's so many great businesses in here. Aaron's built a great business. You, you have to train your own people. You can hire people from the outside, but you gotta invest. It's not a cost and it's an investment. If you're not big enough to do that, figure out how to do it on a small scale because it's so expensive. But it's more expensive to train them and then lose them. But it was pretty funny. I had to sit in front of the investment committee for Blackstone and they said, so what makes you different? And I literally said, I really can't tell. You know, like we have this model where we have, you know, memberships and we train our own people and nothing. We're all doing very similar things. There's nothing special about our business. I would say, I can't even say we do this different than anybody in here, but we just were consistent about how we did it. Leland Smith and Dave Geiger have the same phrase. They just use it differently. Dave Geiger would say, frank, it's a simple business. It's just not easy to execute on every day. Leland Smith says it's an easy business. It's just easier not to do the things you need to do every day to be great, get up, be passionate, chase it. But ultimately you have a great business. Ken's built a great business with great brands. There's people in here, I mean, so many names in there that have built it. Nothing. We told them nothing. We just said we're just. But we just felt like we were consistent. I think the one thing we did maybe a little differently was by happenstance, we didn't run after as many acquisitions early on and it helped to get our hands around things faster. And so that helped us, where we had a little wobble here or there in a business, it helped us just smooth the growth out. And that's what they looked at, but I can assure you now it's a war chest of money that they want to spend on buying things. So we'll see where all that goes. But nothing. We're all doing the same things. And that's not the. I hear everybody talking here. We're all doing the same things. I hope we continue to elevate each other in this industry. We were just lucky enough to be in front of the right people at the right time. And I hope for those of you who haven't done the next transaction that this multiple helped and I'm congratulating you one day. But for us, I'm just, for me, I'm just getting started. It's been a, you know, we got here, this was a stop along the way. That was always the goal. You know, how do we do something special?

[Chris]

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[Podcast Host]

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[Chris]

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[Frank DeMarco]

Not much. You've been doing it. All these guys have been doing it so well.

[Moderator / Interviewer]

Let's, let's hope you guys open the door for it. So thank you for that. So to recap, you may not have done anything special, but what you do, you certainly do with speciality to get you where you're at. And so you should be commended for that.

[Frank DeMarco]

Yeah. Thank you. Thanks.

[Moderator / Interviewer]

You kind of teed up one of my last questions here, and I wanted to leave enough time for some Q and A. I'm sure there's some People that want to ask you guys some questions. It has to do with the memberships. And, you know, on the article I saw that, you know, something around 150,000 memberships. So the question really is, besides two part, besides the value that brings to your business, and for the reasons that we typically all do that, but what was the value of it to the investors and to the valuation, what part of that did that play into it? So just kind of a two part, if you want to touch on both those.

[Frank DeMarco]

Yeah, and my mentor to my right hasn't had to answer any of this. But the membership, the membership plan is. Leland Smith created this really simple thing. I came from Horizon Services. If you don't know Dave Geiger, Mark Akin owned that business. Great, great platform that's run by a guy named Ken Papora today. But in the east, we waited on weather forever. That's how I grew up. I grew up in Ohio. And you had to wait and hope that summer was hot or winter was cold. I ultimately, you know, anybody wants to listen to the story, I'll tell you how I got out west. But when I ran into Leland, said, frank, you gotta change your mind on this business. I don't have those swings. I have to have memberships and I have to impress people with the value in that membership at 20 bucks a month. And so they tore the system apart. I thought they were crazy. We would yell at guys in the east if they spent more than 45 minutes doing an inspection on a furnace. Here, he'd yell at them. If they only spent 40, they'd probably get fired. So the value ultimately to Blackstone was that we could cross sell. And we did that, like many of you do. We took an H VAC based business that Odyssey Investment bought at 250 million. And we just organically grew that. We leveraged the base. So what they loved was ultimately, you don't have to rely on weather as much. It's not weather, it's weather. Helps weather, make the business more weather resilient. But I don't have to wait for the phone Turing 150,000 customers need two times they need a tune up and one time, now they need a plumbing safety inspection. Happy to tell any of you about that model. It's really, really simple. But at the end of the day, they're Blackstone. Tommy's in here and he knows this. But like, they own Chamberlain Garage Doors, who owns liftmaster? We have 150,000 agreements. Some point they figure that, that I know Tommy's already, but like they at some point they figure you can leverage that. You're in the home, you did the hard part and got across the threshold of the door. They own servpro. I don't want to be in restoration. But boy, you can refer leads back and forth. I mean, Blackstone owns everything, it seems like so. But they like the fact that it created a customer. And the length of our customer relationship was significantly better under those 150,000 agreements. And the all the talk about marketing, it lets us run the business at a five and a half, 5.8% marketing cost and takes away the huge swings in the business that we're all used to. And so we can cross sell plumbing, cross sell electrical. And we haven't really, you know, in most of our businesses, the 20 we own, we're only in probably inning three in as far as plumbing or underground. So they figure, okay, we still have growth to go there. And you haven't really done any electrical. We have maybe 15 million up in one business up in Seattle. So on a 3/4 of a billion dollar platform, you figure you got 250 just organic growth over the next five. And that's without doing heavy cross sell. So they do. They run their math on that. And they just loved it. They thought it was the best thing ever. A lot of us have agreements. We just use ours the way Leland started to teach me to use it, which is just, if you can't sell $20 a month, how dare you think you can sell $40,000 jobs? And so Blackstone love that and they have partnerships that we think we'll be able to leverage in the future.

[Moderator / Interviewer]

Yeah, thank you for that. Had a privilege of learning from leland about maybe 25 years ago on this. Same on service agreements. And I've been a big part of most of our cultures with it. So good to hear that not only is it an essential part of running a business and community value, but it creates additional value for investors when you've got a large membership base to be able to leverage off of. Yep, excellent. Quick time check. Yeah, we've got about five minutes to open it up for some Q and A. I got a couple other questions, but I wanted to make sure I have enough time. If you have any questions for our guests.

[Frank DeMarco]

I love that.

[Moderator / Interviewer]

A lot of great information here.

[Frank DeMarco]

I'm happy. Yeah, Wyatt. I think that's Wyatt

[Chris]

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[Podcast Intro Voice]

Yeah, I'm a major investor in, in the company at this time. Frank's done a great job getting us where we are and. But yeah, I'm a major investor. Right. Very happy. We got a minute to let me just say one thing. Frank's done a phenomenal job. My wealth came from him. It started when I hired him. And there's two things that I'd really like to share with you guys to know. One, when I sold in 19, we had five or six companies, one of them Horizon, where Frank came from. And we called it the Family. Kevin Comer and I did this and we would have six companies and every Tuesday we had a 10 o' clock conference call. No agenda, but all of us would get on the call and any problems that you're having, you'd be able to discuss with five or six companies and you'd get two or three good answers of how to solve your problem. Every third Tuesday we shared financials, we had our CFOs all agree how to do the financials the same. And we could look at from a $50 million company I was to 100 million that Horizon was. And you see a line item and you can find where you could save thousands because you didn't know what to look for until you saw these other companies. And I always wanted to be the smallest in any group that Kevin and I had, we always were. If we became the largest, we got got out of that group and got in another group. So in 2019, when I sold, Kevin and I were about 50 million each. There was a 70 million, 90 million, 100, $120 million companies that we were associated with. So I always wanted to be the dumbest one in the room. Because if you're the smartest one in the room, you're not learning. You've got to have people around you smarter. Ken Goodrich has been a great help. Smart guy, hanging with it, hanging with Tommy just recently is a great help. I also believe other than having a group, you need to have a group before you leave here. You should find one or two companies larger than you are. If you're a $10 million company, find a 20 and 30 before you leave. Get their phone number, call them next week, go visit them next month. Create that association where you're talking constantly. Because if you're 10 million, you got a problem. The $20 million company went through that problem. They got your answers. They'll help you get through it so you get through it quicker. And the final one is hire people smarter than you. I mean, I knew how to run an air conditioning company, but I hired Frank. He was smarter than I was. He came in, did better than what I have done. Obviously you can tell, you heard him just talk about we went from 50 million to selling for 250 billion and $750 million company. But I'm a believer you hire people always smarter than you. Don't try to be the smartest one in the room. They can be good at what they do, but they need to be better at what you are so you can grow the company. And I think that's the biggest thing that we've done. We have a team phenomenal at what they do and with Frank's help, even grew it even more. So when he became the GM CEO, became the CEO. All this happened because of what Frank did, because the hardest guy is smarter than me. So those two things get in a group with the people that are larger than you are. And also make sure they always share financials. That's a key thing, sharing financials. You know, you have, people can talk and Tommy had that at his event just recently. People talk about revenue, but they don't talk about profit. You got to talk about profit. That's what you really want to know and make sure they're willing to share that. So those are my two things. Get in a group of people that are larger than you so you can learn and hire people smarter than you.

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[Frank DeMarco]

Yep. Obviously Renovo just went under. They were, they were profitable but they couldn't manage the debt. How do you guys feel about debt that shouldn't be 50? What is your take on that? I just know we're able to cash flow to pay on the. So we had to look at the loan terms which we didn't get the loan but we, we knew what it was because obviously the debt goes up more. We all know there's some people in the space that are struggling to pay their bills. They're big. We got credit. So I'll answer your question probably more specifically, but we got credit and we got the multiple we got and the high line sale price we got because the financials were squeaky clean. Literally no adjustments on buy side and sell side, KPMG and Deloitte. So no adjustments. We decided not to do any add backs. There are people in our space that are adding back double what the EBITDA is and you still have to pay the loan. So when we looked at the loan dynamic we thought, forget the just round numbers. It said, you know, on a billion you're going to pay 80 million a year in interest, you know, give or take. We thought, okay, well we, we even with Capex, we still have free cash flow of probably this year. 50 million. So that's how we look at it, Tommy. We just didn't want. But they also can only finance, as you know, even a Blackstone can't get any more than seven times, maybe 7.25 times leverage. So I've learned all these terms a lot in the last few years, but literally, if your EBITDA was a hundred million, the most they can borrow would be 700 million. So you could. It's like selling your house. I wanted to sell this business at three plus billion because I just wanted a three in it. And I'm kind of pissed that it was 2.5, but it was the right time to do it. But ultimately that we analyzed the loan. The CFO and I talked to the current partner, felt like it was no sweat to pay the interest, and we felt pretty safe with that number. But they, you know, our current partner's rolling a big chunk because they want to stay involved. So that was the other part. Otherwise, the check would have been like, where the. The loan would have been like 1.4 billion. That starts to get a little more edgy to pay that bill because I need free cash flow. So I'm not sure if I answered your question, but the billion was a tolerable number at the interest rate we were getting. I was just gonna say one other thing. I know, Chris, we gotta go. You know, Leland says he hired me and I was smarter. I don't buy any of that. You can tell by the smirk on my face. Just had good experience. What I would tell you is what I've learned from everybody in here that is a great owner or operator. There's one thing that they're all missing, and I've learned to have to lose this, which is fear. Really, the only thing that holds you back from growing your business is fear or bringing somebody smarter in or somebody better at what they do. The leader's job is to say, we're going that direction, and everybody has to believe you, but you can't have any fear. I operate the business. People said, like, how are you successful? My answer is like, I actually just. I really don't give a shit at the end of the day what the private equity partner thinks. I'm gonna run this business the way I see fit, and one of two things is gonna happen. I'm gonna become ridiculously wealthy or they're gonna fire me. But I'll tell you what, one way or the other, I'm going down my way. And so if I don't make it, at least I did it. The way I was fearless with the people who want to go with me. And if I do, I can say I didn't do it because somebody, you know, told me to do it a certain way. I don't have the energy in my life to be something that somebody thinks I should be. And so I just say those owners that all took a chance and said, I need to let go and let somebody else do this and still be the leader. You're all in here and they're outside of here, too. This guy to my right said, I think you're better at this than me. Do what you're really good at and let me do it. That's why the business is where it is. We had to use all the DNA and the processes he built. But be fearless. I heard all these guys test stuff. Just be fearless in what you're doing. It's going to be okay. We're going to make mistakes. But Leland Smith was fearless and let me do what I thought I was good at. And, you know, we got a two and a half billion dollar sale price on a heating and air conditioning company. So anyway, yeah, Wyatt, I think we got one more.

[Chris]

Let's go.

[Moderator / Interviewer]

Congratulations. Yeah, thank you.

[Frank DeMarco]

What's that? Very. Look, I think what you're going to see is like, hopefully we kick off. I think Sila kicked it off, but, like, there's only so many firms that can buy these businesses. Short answer is everything's on the table. When we talk to Blackstone from trying to buy other platforms, that's tricky because the debt gets immense, but not out of the realm of reality to what other verticals can we get into? But ultimately, I think the last five years are gonna look like we are standing still relative to what the next two to five look like in terms of what's going on. Still a hot space. All the people that bid on us are still looking for stuff to bid on and buy. I think there's consolidation with the consolidators to some degree, and then there's fund dynamics that are causing some of these to come for sale. And I think there's gonna be some other challenges, but for me personally, I've got. I want one more turn to do this. There's a lot of hard work in it. For me, I can't answer for Leland, but I think I know because Leland just calls me and says, just, you're doing a great job. What do you need from me? But at the end of the day, my. The most pressure I feel is taking his money and returning it to him. So I think there's going to be a lot, Wyatt. It'll be very, very interesting to see where it goes, but for me, it's got to keep, like. Announcement came out. Appreciate all the congratulations. Good for all of us, really. Hopefully, yeah, we're happy, but, like, head down, eyes forward, work hard, you know, increase what we're doing in the industry and improve it.

[Moderator / Interviewer]

Thank you. Be fearless. That's it. Turn it over to Chris now, guys.