0048 - Inside a Real Business Acquisition: Mistakes, Due Diligence, and Deal Structure

I thought it was going to be a guy moving back to Texas to buy a business. Then I get here and learn. There's an ecosystem and there's words and right, it's all defined by different things. And so what I thought was going to be a 3 to 6 month And so what I thought was going to be a 3 to 6 month process is looking more like it's going to be an 18 to 24 month process.

Welcome to Business Buying for Financial Independence. I'm Tim Delaney, I'm Tim Delaney, and I help young professionals buy small businesses so they can escape the 9 to 5 and take control of their time, income, and future. If that sounds like you, hit the subscribe button and let's get into it. - Today I have Jeremy Hans.

Jeremy is a family man, naval pilot, real estate investor and business owner who is successfully acquired, run and sold a business. Today we're going to jump into that story and more. Jeremy, welcome to Business Buying for FI. - Tim, thanks for having me.

Glad to be here. - Awesome. Well, thanks for being here. I would like to just start by pointing out that you have successfully bought a business, ran it for a while as the CEO grew it substantially, and then sold it.

So that's what the guests are going to hear a little bit more about today. But let's back up a little bit and give people a little overview of your your background. - Yeah, I'm Jeremy, I'm here in just north of Dallas, Texas, married, four kids, and started life as a Navy helicopter pilot. You might be able to see behind me.

I did that on active duty for ten years. Literally went around the world on deployments there, living on the aircraft carrier, and realized while I was doing that that though I loved the Navy, I didn't think was going to be a full time focus for my whole life. And so I transitioned out while I was already kind of started building a commercial real estate company in 2017 and moved to the reserves and did basically another five years in the reserves full time, which I wasn't expecting, but it allowed me to build a business, and it was during that time, my partner and I met one of the founders of velocity, and so we had a full time real estate investment firm focused on apartments and then shifting to RV parks.

And then we met Stuart, who had founded Velocity in 2021, and we basically set out after meeting him to try to buy the business. And if I'm being really honest, we did a terrible job, and what should have been a couple of months ended up taking almost over a year, and we never actually closed on the business. But he ended up using our offer to buy out his co-founding partner, and then we joined him in that process. And to say that we did everything wrong would be an understatement.

Just didn't know. We didn't know. Sharing lawyers, not knowing the full process. We'd raise money from investors.

We had to give it back to him just because basically on how the company was set up but ended up closing on that deal, buying out the co-founder, and then I stepped in, basically helped for six months and was planning to go back to climb capital after the six months I ended up staying eventually taken on the CEO role, that business, I mean, we just hit at the exact right time. And so from 2021 until recently, you know, we tend to the bottom line. And so, you know, 30 something employees and beginning of 21 today, 150 employees, 20 trucks completed in 2020 before we started this year, you know, we're hoping to do almost 200 and then recently exited a majority position at the private equity.

And so a really cool opportunity. And I'll be honest, like I was just part of the team. As much as I wanted to say I was more definitely had some opportunities to sit in leadership. But it was really cool.

And then as part of that, I knew that I probably wasn't the right fit for a CEO of a P/E-backed company in Pensacola, Florida. And so my wife and I, we all kind of decided it was time for us to move back to Texas. So we did that about 18 months ago, and we were on the hunt for the next gig. So, kind of an interesting - kind of just continue falling forward since leaving the military, where I'm doing just interesting things and just really blessed to be here.

- It's an incredible story - and a ton to unpack there. I want to I want to just start with that mindset piece, because that's something I talked to my mastermind participants and my audience a lot. You're working on an aircraft carrier, and by all like outside perspective, you have a pretty safe, stable job. I imagine a helicopter pilot can't be quickly or easily replaced, necessarily.

What - What about that job made you think this isn't going to be it forever? Well, so, you know, I think there's an idea of what the military and flying is going to look like. And then there's the reality and they don't always match. And that was probably good for me.

The truth is, I was massively airsick for most of flight school and so got really skinny because I'd eat twice a day and, you know, lose half of my lunch almost every day flying. And that was - as Navy elevators, we always start in at the time we started in fixed wing. And so, you know, we were doing aerobatics on our second or third flight. And for whatever reason that just didn’t sit well with me.

I wasn't a natural stick. I was getting sick. It was hard. It was hot.

South Texas. And so the flying portion, as much as it was cool, was also something that wasn't something that I loved, right? And so I knew pretty quickly on like, oh man, this is going to be work for me. This is not natural like some other people.

And as much as it's going to be cool to, you know, look like Tom Cruise, man, I'm gonna have to work my butt off. Every day is a test, and I'm not guaranteed, not guaranteed to pass. And so when I was selected for helicopters, I was relieved. That's really what I wanted to fly anyways.

And when I got to the aircraft carrier, by the time you get to the squadron, you're a pilot in name and you definitely fly and you definitely fly a lot more on deployment. But you're workweeks are mostly administrative and bureaucratic. And so the good news was, is I was good at that. But when you're good in the Navy, you're good in the military.

You don't get paid anymore. You just get more work, right? And so the goal is basically if you do really well, you can hopefully kind of guide your career on what you do next. That was kind of the tradeoff.

And so I'm on deployment. I remember getting calls like 10:00 at night. Remember we came home between both deployments. We had Fridays off to try to give some time back with families, and I had to go work every Friday because of the job I had.

And I was just thinking, man, like, this kind of sucks. Like all the other guys, like, they're not working today. They're not getting called the middle of the night to do stuff. And then the payoff was like, hey, you know, well, I get I get to pick my future, right?

Well, then I didn't get to pick my future, and my future got picked for me, right? And so unfortunately, I didn't get what I was hoping for, kind of was my follow on. I got to fly, moved to Pensacola. I was super disappointed about it.

But man, sometimes God works in mysterious ways because what I thought was going to be kind of a death kill ended up being a really some opportunity. But I knew kind of in that process, like, as much as I love the Navy, I love flying. I don't love living on a boat for 6 or 7 months out of the year. I don't love the idea of coming back and doing this again to be my boss.

And if I work really hard to come back to be his boss and I didn't like it that much in the first place. And so the other thing I'd say is like, the military definitely is an upper out. And so we need a lot of people at the bottom, and you'll need a few people at the top. And so if you're not really in love with it, man, go find something else.

Go serve a different way. So I saw that pretty early on for myself. Still had a lot of success, number one out of my squadrons. But you know, it was time, time for me to go do something entrepreneurial.

And at the same time, while I was in San Diego on that first squadron, I also bought my first fourplex, and I learned the kind of the power of like, oh man, if I don't have to pay to live, and I'm getting paid to live in my own house, this is pretty cool and I want to get more of this. And that's really kind of what launched me kind of out of the Navy. And then I didn't really leave, right? So it's 2017.

I got hired by two airlines, supposed to start training in August, and instead I got that call to come back and serve continuously in the reserves. And so never went to the airlines, continued to build the real estate business. So I continued flying helicopters full time. So I had 15 full years of flying, which was really cool.

And it was even cooler for those last five years to kind of be reservist and, you know, having a little bit more say in where I was at, what I was doing. - It's awesome. I don't think that's necessarily exclusive to the military that, you know, you do better at your job and as you get is more work to do. You know, I've talked to, you know, attorneys on here that, you know, start out and you look at your life and it's a lot of work and you look up at the bosses and they're just doing more work.

I mean, yeah, sometimes they get a little more money, but it's just harder and harder. You expect to do more. Your hours at your on-call all hours of the night. It just, you know, it doesn't matter how much you love your job.

It can get wearing, you know, trying after a time. - You know, the military is very time-based. Like sustained superior good timing sometimes because for me on my first, on my first, in my first squadron, I was gone a lot. I had buddies that were in the same time frame.

Good friends, right? They were in opposite squadrons. They were gone for six weeks. I was gone for 27 months, right?

And so like, you know, he ends up staying in and now he's had lots more deployments than me. Right. But in that, in that one time frame, kind of early on, you know, just know what you're going to get. And so I am so glad that I joined the Navy.

It was one of the best things that ever had to me, kind of really set who I am. And I'm even happier to say that was in my best. - Yeah. It's one thing I respect with almost every military person I've ever come across as the discipline and the work ethic that it puts into you is super valuable and can set you up for future success.

So speaking about that future success, you started dabbling in real estate. You started, you know, you realized that that house hack, as people call it, you're living in one unit. Renting out the other units, I think, is one of the most powerful ways for anybody to start building a good financial position, whether it's a single family house that you rent out the bedrooms to buddies or a multiple unit like you did, it's such a powerful tool. But real estate doesn't necessarily always provide sustainable cash flow to provide for a family at a small level either.

So it sounds like you built up some commercial real estate. And then what made you start thinking about the business aspect? - So, you know, we were uniquely let me go back. So I joined the Navy in 2007, graduated and I commissioned and the Navy or not the Navy, but I guess some of the Navy are military affiliated banks have career starter loans.

So USAA, Navy, federal there might be more, but they provide these 25 to $30,000 loans for new officers to kind of get you started. So the idea is you can buy a car, you buy some clothes, you buy, you know, furniture or whatever, really what it is, it's a tool for these banks to have a relationship with you, probably for your next 10, 15, 20 years of your life, if not forever, by giving you a low interest rate loan. It's kind of a loser of a deal for them, but they know they're going to have a customer for life.

I've always been the guy that kind of likes to read the fine print and figure out the hard stuff, right? And so in 2007, I went and got both of those loans, which I don't know if anybody else has ever done this, and I didn't need them. And so my goal was basically, I'm going to take these two loans, I'm going to go invest them, I'm going to get rich. And then, you know, the Navy's just going to be a joke because I'm gonna have all this money from being so smart and investing.

And so I took both bones late 2007, and I bought individual stocks into 2007, beginning of 2008. And then maybe you heard about 2008, but I was successful in turning in $55,000 and borrowed money into about $10,000 of residual value left over, with nothing to show for it but $1,000 a month paycheck. And so that was my first kind of entry into investing and into business. And it was a reminder to me that there are billionaires out there hiring millionaires to go do what I'm trying to do, as like not even a thousandaire, right?

And so I had to do something different. And so that really kept me down this path of like, what are the things that I can do, right? That would make sense and that more enduring. And so the first thing there was like, hey, real estate.

So I started I started shopping for real estate. 2009, 2010, again coming out of this recession. So I was able to buy kind of at the very bottom of the market, and I was able to then - when I moved to Pensacola, Florida, continue buying. And it was more of a business in the sense that because the market was still so low.

I mean, you could really buy anything and make money on it. At the time, it wasn't a question of it was going to make money. So which one's going to make more? Which is not necessarily the case today.

And so I was able to build a business with that relatively quickly. But then over the last 6 to 7 years that doesn't work anymore. And so like the easy stuff has kind of gone away. And so I think real estate is a great wealth tool and, you know, have a lot of real estate and I have a lot of wealth on paper.

And I like to remind people that it's not my bank account. And so one of the things that became very apparent after we started our commercial real estate firm is we need to think about buying some more cash-filling assets that we could scale. And real estate is easy to manage. You know, a large it's particularly easy to manage a large kind of horizontal portfolio, but your growth is going to be kind of bound by the market - whereas maybe we can buy some businesses a lot harder to manage.

But your growth is really unbounded by kind of your ability to think and solve bigger problems and or buy or whatever the other kind of levers for growth are. And so we knew that going in in 2020 when we officially launched our business, a real estate investment firm, and then this deal kind of just fell in our laps a year later, when we were actually trying to pitch a real estate deal to Stuart, and he just complained about his business and his business partner, and it was definitely overwhelmed.

He was kind of the only manager of the team at the time. And so we just made a comment like, hey man, we'd love to buy this if you don't, if you want to sell. And so that, kind of that, that, that really kind of took off. And then once I got inside that business and really learning that a business runs a lot different than real estate, right?

You've got to understand your numbers a lot better. You've got a lot of people, you've got a lot of things that are moving. And even in a business like that, though, great profit generator growing, growing a business I found also doesn't really have a lot of cash over. And so constantly searching for cash, either buying these wealth building real estate tools or these growing, these growing businesses, right?

Like it's always cash constrained. And so, you know, for me, I think there's kind of a good thing to kind of always be somewhere in between all of those at the end of the day. But really, once I saw the ability to grow something and scale something like that from the inside, and I can't go back like that, that's my future, the multiple expansion and just the opportunity to kind of put your hard work to, to use is just too interesting to not continue doing it. - Yeah, that's an important thing for people to remember, is that a business that grows too fast is almost as dangerous as a business that's losing money or losing revenue because it's very easy to run out of cash to keep fueling that growth.

And a lot of people, it doesn't sound it sounds counterintuitive to most people because you're like, well, the business is growing, but sometimes keeping up with the cash that needs to go in can be a very big challenge. And you grew velocity at a pretty fast pace. So that's that can be lead to a lot of challenges. Yeah, very.

- So when I was at Velocity, I was probably more of a break and I was trying to slow us down to kind of, you know, like get that cash back from my partner Stuart, the majority owner there, man, he to his credit, did not take his foot off the gas. And anytime we thought about, hey, slow it down, let's, let's bring this let's bring this goal down a little bit. Let's even out the team. Let's not hire this next guy.

He's like, no, we're going all the way. Like we have an opportunity right now. We're going to take the opportunity wide exist, right? It may not come back again.

You know. He proved he proved to be correct, even if the pain sometimes was excessive in the moment. - Yeah. It's good to have - I guess that's one of the good things about working with team is that you have people that can balance each other out and help push each other to certain boundaries that might not feel comfortable, but ultimately lead to good things.

Yeah. So talk about how that went from a real estate pitch to Stewart, to ending up getting into his business and taking a look at it. - Well, listen, if you're listening to this podcast, you're probably already doing it better than I am, right? Because I had this theoretical idea that business would be a good idea, but had absolutely no training, had spent no time kind of putting any thought into what this would look like.

And so we make that comment in January of 21, while we were at his office, he calls, a couple of weeks later, he got serious, like, yeah, we're absolutely serious. And we were we just didn't know what we're talking about. And so, you know, we went and did a Covid and then we just started googling this like we're trying to just like figure this out as we go. And if I could go back in time and shake Jeremy really hard.

I don't know if I would change anything because I don't know if I knew - if I knew more, the deal probably wouldn't have come together. But by not knowing more, the deal also did not come together in the way that I expected or was maybe hoping for, and definitely took a lot longer. And so, you know, And so, you know, we were sharing a single attorney, thinking that we're on the same side against the other co-founder, when really we should have had our own attorney. Right?

Everybody really kind of needs their own individual person to understand that, you know, we didn't understand the structure of the business. It was an S-corp, an LLC taxes S-corp. And because we were doing a stock sale, trying to convert that back to a partnership was going to have a massive tax bill that we didn't realize until a week before closing. And so we had already done a Reg D - we had raised a couple million bucks from investors.

We were bringing that into the deal. Well, now we're realizing, hey, we can't bring into like investors in an LLC. They're ready to this deal. What are we going to do?

We've got to revert to a partnership. We want to do this. Well, there were other options there that I didn't know about at the time. We could have done F-Corp re-orgs.

We could have looked at corporations that may or may not have worked, but, you know, there were more options than we realized at the time. Instead, we just gave all the money back to the investors and just found another source of capital. And so, you know, of course, I wasn't controlling that. So I lost a lot of equity potential kind of in that, in that changeover.

And then I didn't have my own attorney at the time. I was using the same attorney that cert was using. It was just, you know, who do you talk to? Right?

And so I didn't understand that stuff, didn't understand that the deal really should have probably been structured more like an independent sponsor. And that kind of had the team already in place. We were talking to investors where the deal was too small, right? Where we were talking to family officers like, hey man, look, this just doesn't move the needle for us.

This is not a big business. And they were talking to other investors like, well, those checks are just way too big and so just didn't know who to talk to and how to talk through that. And, you know, if I could go back in time, And, you know, if I could go back in time, I think there's a lot of things I would do differently, knowing what I know now. But there's a lot of things I would do differently, knowing what I know now.

But a deal did get done. And at the very least, you know, my little, little sliver of ownership. And I had the opportunity to go help out. And in those six months of me helping out, man, I think we formed a good enough team to really want to keep pushing that hard.

And I learned a ton. And so, you know, no harm, no foul, even if a even I skipped the whole process and ended up with a sliver. Not with a chunk. - Yeah.

A couple terms you mentioned. Q of E, which is quality of earnings. This is a report that you can have done and you probably should have done, if it's any substantial sized business where external parties will come in and evaluate the quality of the earnings. So making sure that the earnings, the revenue is what it is going to be and that you're not reliant on any one person or one customer or different things like that, that they'll evaluate so you can feel confident in the deal.

You also mentioned, Reg D, do you want to explain what that is for people? - Yeah, I'm a real estate guy. And so I've raised a lot of money through syndications. And to be able to do that legally, you need to have a broker dealers license.

If you want to get around that, there are some exceptions that allow that. And so the Reg D is the regulations basically from the SEC that allows you to raise money legally without having that brokers dealer's license. But it's an official form. Excuse me.

You file with the SEC. That's public knowledge. And so once you do that, now people know that, hey, these investors are trying to come into this business. So if they then come in as their individual names, that would have caused some problems.

And so just a SEC form to keep it legal when you're raising money. - Yeah. And so Jeremy was trying to raise some capital to help him by this business. It wasn't just him trying to buy it outright.

And as you heard, he was actually buying out a partner in this, which makes it a little bit more complicated with raising money and just getting the deal done. - I mean, now you're looking at a stock sale versus an asset sale. You get all kinds of taxes that we had to work through. Yeah.

And I'll be honest, I didn't know what I was getting into. I learned all these things after the fact when I realized, oh, that wasn't very good. Or we could have done that differently. But, you know, sometimes I think just being hard headed enough to just keep going was, was the way forward.

And I'll get my partner in the real estate business, Bob, all the credit. Excuse me. He he recognized that he just had to be a pit bull on this and just not let it go. And so a deal that probably died ten times, he just kept bringing it back before it finally closed.

- Yeah, I think that's the case with a lot of deals, whether real estate or business. It's going to go through ups and downs. You're going to think it's dead and it's going to come back. There's a lot of emotion and a lot of personalities involved in the deal that can fluctuate from day to day, hour to hour, minute to minute.

- I don't know if you think this the same way, but, you know, I think I tell people I was like, and even when I'm doing now, right, there's like three things you have to be good at this, right? You have to be good at a search. You have to find a deal. And that is a skill set that is in and of itself separate than most.

What something people have that can run businesses. Then you have to be able to close deals. And once you find something to closing like that is a skill set that some people really have. But that can be really hard and a whole different skill set.

But then the thing you actually have to be good at to make money is you actually have been able to run the business, right? And so the thing I always try to remind myself right now is I'm in this time where I'm searching for my next deal. I don't necessarily want to be a great searcher, like I'm paying some other people to help me. Like, you know, I may not be excellent at this stuff, but my goal is to be an excellent business owner.

Operator, right? Because that's really where the money is made long term. And I'm willing to pay for shortcuts or for help, kind of in the first two buckets to get me to where I think, you know, my skill sets are going to shine the best. - Yeah, I think that speaks a lot to the the team mindset as well is sometimes teammates are just people that are doing it alongside of you that don't cost anything because you're sharing the upside, but sometimes you pay for those people or to be around certain people.

I mean, that's why I started a mastermind for people that are looking for businesses. That's why other people join other types of masterminds and groups or pay experts for their services, because that it's still a team. And you can go farther with a team. And you know, sounds like you're beating yourself up for only having a small sliver instead of a big chunk.

But at the same time, who knows what would have happened if you had a bigger chunk? Maybe. Maybe it would have never got done. Maybe it, you know, maybe things would have changed.

And so sometimes it's better to have a small piece of a bigger pie than to have a whole pie that's micro size. - I was wanting to do the work, but I didn't start the company. Right. And, you know, I didn't have the day like I had to kind of be.

I had to recognize my place. I can run a great meeting, but don't ask me to go sit in a truck and turn wrenches. So, yeah, there's double skill sets all over the place. Yeah.

So you you get the deal to the finish line, you close on it, you're supposed to go in there for six months. What was what was that kind of role that you were going to be doing for six months? - So the business at that point had been around for about ten years, but was not very professionalized. And so when we had started, there was two partners and Stuart, who was the partner we in and a partner with had been running production and kind of had been over the business side of things.

And then his partner Brandon had been running sales and marketing. And so this business had been growing, you know, very well in the sales and marketing. And the look of the brand was really, really high. But with Brandon leaving, we wanted somebody in ownership to have an idea of what the heck he knew and try to at least replace that and hire that out.

And so really, the goal for those six months, for me to sit with him to understand, hey, what was the special sauce? Trying to make sure that all the systems in the and the and the, the understanding of those systems was still held at the ownership level and then hire out a team to replace him as he finished his earn out. What I found was there was a lot of other things that needed to happen to. And so, you know, there was no marketing plan, there was no marketing budget, there was no Rolodex of people to call.

There was really great pictures and some ideas on how this brand looked on and on Instagram. But besides that, it was it was pretty shallow. So we just kind of start building the business from scratch. And so my first month, I just threw my hands up and said, I'm not sitting in anymore.

These meetings were implementing EOS, right? And so, you know, it was implementing EOS. We had brought in as CFO, we were trying to get the financials in order to try to bring some order to the chaos of how fast we were growing. And so it was just business development.

It was picking up the phone and somebody would call and ask for something and saying, yes, it was letting people see inside the shop. Everything had been closed and insular. And so over those six months, we were just trying to open up the aperture of like, hey, what's out there? And so I came over to kind of really help the sales in marketing and ended up just kind of get my hands on all kinds of stuff as we just continued to grow.

And then I had really no intention of staying. Had planned to go back to climb capital all along the real estate business net into the six months. Just look at me like, what is it going to take for you to stay? Like, what do I have to do for you?

For you to stay here? And I was like, I don't, don't really think I want to be. I'm like, this is your baby. Like, I don't really like you.

Take your baby back. Let me go. Take my baby back. And like, you know, we'll be friends.

And he's like, well, what if I step back? And so at the time, we were doing a lot of M&A. We were we were talking to a lot of other companies about potentially acquiring or merging with or with them. And so the thought came like, well, if we continue to grow, he could step into kind of the M&A role, more of a chairman of the board, helping take over these new deals, let Jeremy come in and eventually run velocity.

And so that was the that was initially the plan for me to come over and take over CEO. And at the same time, during that discussion, we had hired investment bankers who were already starting to to look at potentially putting the company up for sale, which man painful, much longer process. It's almost like a second or third full time job along with the day to day, but lots of ups and downs. But again, great learning experience there.

- Okay, yeah, I'd like to dive into that deeper, but just touch on the operations a little bit more just so people are aware. Velocity is a company that was like restoring and rebuilding kind of classic cars, right? Like F-150 and a couple different models. - Through 2020, Velocity was a restoration shop, so you’ll bring your truck and primarily they did trucks and SUVs was kind of the core of their customer that they did cars also.

You'd bring your vehicle, you'd say, hey, this is what I want done to it. And, you know, 2 to 4 years later, you'd have spent 300 to $600,000 and had your one off custom vehicle. That's really hard to scale. And so what Stuart had started thinking about and we ended up kind of perfecting, was the idea of instead of you kind of doing this thing where you have to bring the truck, you have to find us, you have to make all these decisions.

Let us take some of that off your plate. We'll go find the truck. We'll go build the truck the way that we know it needs to be built to be the, you know, the best quality truck out there. You make some decisions on your color, your interiors and your options, and we can build this truck for significantly less money for you and significantly faster, and we can do a lot more of them.

And so that's really kind of what ended up. We turned the service of restoration into a product that ended up being really better for our customers and for us. And by 2023, we got rid of doing custom deals at all, even though on paper they seem to be really profitable. In actuality, there was just so much pain with the length of time, the specialty of the work keeping track of a very one off inventory that it became just much more made much more sense for us to just continue to grow through building our signature Series vehicles.

- Yeah, that makes sense. I mean, there's a reason that Apple launched one iPhone. They didn't give people too many options and choices and still don't. I just heard an interview with somebody high up at Tesla for a while who changed their whole operation.

Elon wanted everything to be custom, and this guy came in and was like, no, let's build a couple basic models. And their sales took off, like give customers less choice. - And you know, you looking at Tesla, they have like 12 options total to make for you as a - in the past, that was like 400. And so you know we find the same thing.

There's a lot of guys. And you know I think part of this is just change in culture in the way the world works. There's a lot of guys who like cool trucks, but they're not mechanics. They don't want to work all weekend to drive it on Monday.

They just want to turn the key and go. And we thought that we could really kind of meet that market. And so that's really what we focused on is, hey, maybe you're not maybe not the guy that's going to go out and get your own wrench. You just want the car to turn over, but you still want that classic cool looking truck.

But you'd like some of the modern, nice amenities, right? So let's get a brand new engine, transmission. Let's update the suspension, make sure you have brakes that stop, seatbelts that work. And let's have all the look and feel of that classic truck.

But, you know, the modern amenities and but honestly, you're gonna have to pay for it, right? This is a this is an expensive, highly refined product that kind of sits at the top of the market. And so you were really going after kind of that level of clientele. - Yeah.

That's good. I'm sure there's a lot of people out there that like that, like you said, like that classic look style, but don't want to have to worry about the engine crapping out on every couple of weeks and fixing it and or taking it - - Yeah. I mean, it was a whole new, different experience than that of 1970 truck with 1970s parts. - When I lived in Ethiopia, I drove a 1957 Volkswagen Beetle.

That was my car, and I loved it. And I'm not mechanically inclined, and it would break down often. But the labor, the mechanic was so inexpensive that it didn't matter. They pulled it in in the morning, they would rebuild a gear, and put it back together.

If they custom make a gear in their shop and put it in like 20 bucks, 25 bucks. So. But I can't imagine what that would cost to run and operate here. - The skills that guys who can do that is really waning.

And so part of our success was we were able to really be able to find and grow with mechanics who know how to work on trucks, but they don't have the specialty. They can't do it all right. They don't have the artisan kind of mindset or background. They're building the same truck every week.

And so they can be really good at building that truck. They maybe can't build anything, but they can build our truck really, really well. So it's just a really cool way to productize the service. - Yeah.

So you, you found a way to scale something that on the surface appeared on scalable, and you grew it substantially over the couple of years that you were there. And then you started packaging it for sale. When did you decide that this was going to be something that you were looking to sell so quickly? Was that right from the get-go?

- I mean, so I mean, this is post-Covid. So this is 2021. We started building the business plan and we didn't close till ‘22. So the business had already started running the business plan beginning in ‘21, middle of ‘21.

And so by the end of ‘22, it became apparent to us that we were growing fast enough. And we're kind of taking market share fast enough that we had a product that we could sell. And the plan was to sell all along, right? I mean, we were building this.

We thought there was an opportunity. And so SEMA is a big car show in Las Vegas every year, typically end of October, beginning of November. And so by SEMA of 2022, I had started shopping for investment bankers, and we were taking multiple meetings, basically shopping for an investment banker. And you can think of investment bankers like a real estate agent for a real estate transaction.

These are the guys who are going to lead you through selling your product. Big fees, but they also do a ton of work. And so we spent a long time searching for who we thought could be best lead us through that. And then after we selected them, going through the process again of doing another QofE, kind of getting the business ready to sell and packaged appropriately.

And then we knew because of how, you know, niche and one off we were this was not going to be an easy sell because it's not like private equity be like, oh, I understand this business. Like this is a brand new business kind of greenfield. And so, you know what? We thought we might take a couple of months, three or 4 or 5 months, ended up taking two years and had multiple different offers from multiple different companies in that process.

Waiting on lives and, you know, yes. Okay, here's the LOI. But now you got to hit a certain number. We're waiting on this.

And you know, it's just constantly waiting kind of a waiting game and answering questions. So, painful process. But you know one that finally succeeded here. - And so an investment banker like you said, a real estate agent or a business broker for a smaller, you know, a lot of times the smaller mom and pop type businesses, you're going to a business broker and you're, you know, shopping for the right one.

They take a commission of the sale price. An investment banker is somebody at a much higher level, dealing with larger dollar numbers and finding more, more focused on finding that right buyer for you, which if they're a good investment banker, that's what they're going to do - and get that to the finish line as well. Like that, having that again, that third party team member that can be the intermediary, any intermediary, and make sure that both parties are playing nice and not getting over emotional or over distracted by different elements and getting everybody in the closing table.

- And guiding to the process, I mean, the process is long and arduous. I mean, you're just in entertaining interested parties and like bringing them through the shop and going out to dinner and having cocktails afterwards. And like, you know, it sounds really cool. And it is for the first two and then for the next six, you're like, okay, like, what are we doing here?

Right? Okay. And then like, they like it, but they want to come back, right? And so then, you know, they're just the process starts to just start taking lots of time.

And then it's the request for information. You know, we're a fast growing business that two years ago was doing its financials in Excel. And so now we're getting asked for deep financial information that quite honestly, sometimes we hadn't even ever prepared. And so we were creating this for the first time, to be able to give it back to somebody who potentially was looking to acquire us.

So kind of a full time, a full time position for both of us to try to figure out how to how do we answer these questions that we're having to go Google what they're asking? - Yeah, yeah. And having that investment banker probably helps guide you, guide you through those terms. And that what exactly and how to present it models - Building models and redoing models and like by the way, we're going to go GAP standard.

And we need you to do all these other things with the way you're doing operations, right? To make you more accessible to kind of the average buyer that is talking to you. Yeah. Really fascinating business.

- And that's an important thing for when you do close on a business, is to start getting your financials in order right away, even if you don't plan on selling in the next 5, 10, 20 years, the sooner you start focusing on your financials and having them in order is just going to be better for you in the long run. It helps your valuation. It helps you look more buttoned up when somebody does come to buy and you know, you didn't necessarily have all that much time in the business.

So it sounds like you did what you could. But, you know, also looking at it from a buyer's perspective, that's an opportunity. When you see a seller that is not buttoned up, that is still doing their financials in a book or on a spreadsheet instead of an accounting software. You can use that to your advantage to help kind of lower the price point, because you're not as certain as to what they're doing and what the business potential is.

- And I think there's, you know, there's levels too, Tim, right? Like, you know, when we're a business, the size that we were at talking to an investment banker, there's a different expectation, right, than when I'm looking at these, you know, sub million dollar EBITDA businesses where, you know, probably looked at 300 now. And I'd tell you 40% of the time, I can't trust a balance sheet because I don't think anybody knows what's on it, right? And so now that I've been through this process of fixing those things, I do feel like I have maybe not the specific accounting skill sets, but at least the mindset and the grit ready to kind of go through the process of turning that stuff over.

And that is fixable. I mean, I think to your point, that is something that somebody that's buying a business really does have the opportunity to make a lot better and relatively quickly to. - Yeah, know your financials, know how to read a balance sheet and know how to make the balance sheet presentable. Super important.

Any tips for people that get to that stage where they are shopping for an investment banker, or just even a business broker, depending on their level? Any tips or things that you learned through that process that you could share? - Yeah, I think one of them is that you are signing up for a very big bill for them, right? And they're going to be doing a lot of work.

And so go slow, right? You're not in a race to get this thing closed and signing up for the investment banker. They're going to tell you all the all the things you want to hear up front, but you know that there is going to be an immense amount of work and pain and suffering on the other side of this. And so just bracing yourself, I think, for the process that, you know, it's just like when you drive to go buy a car or buy a house, what you think should be a fun experience, theoretically, never, ever is, right?

And you could just magnify that by ten when you're now trying to sell a business. And especially when you're trying to take that business kind of from a call it a mom pop main Street business to really kind of the first institutional level. There's just a lot of stuff that's going to have to happen, and you're going to pay a lot of money to make that happen. So make sure that the juice is worth the squeeze is really what it comes down to, I guess.

- Yeah. Before we - I want to just jump into your current search a little bit. Anything else about Velocity or that whole process that you'd like to share? - No, I think everybody should go to Instagram, go like and follow.

As much as it sucks that business is totally reliant on people like us liking it for you to stay in business. So. So for those guys as we go forward, have a little slug in it, but it's nice to not have an email there anymore. I'll be honest.

- Nice, awesome. And so like you mentioned, you exited that and now you've been looking for another business to buy. How has that process been going? - So to be fair, I again probably should have known more than I did.

I thought it was going to be a guy moving back to Texas to buy a business. Then I get here and learn. There's an ecosystem and there's words and right, it's all defined by different things. it's all defined by different things.

So I guess I'm now a full time self-funded searcher, you know, SBA-backed. So that has been interesting. The other thing I would say is a lot of people have gotten the same idea. And so the market has definitely gotten crowded.

I don't think all those people are necessarily serious. And so I don't think the number of serious buyers has as has massively changed. But the amount of noise in the market has, certainly has. And so what I thought was going to be a 3 to 6 month And so what I thought was going to be a 3 to 6 month process is looking more like it's going to be an 18 to 24 month process.

process is looking more like it's going to be an 18 to 24 month process. When I started my search, I wanted to focus only on deals that were for sales because I didn't want to wait the time it would take to kind of work through a proprietary deal. Looking back, that was probably mistake and should have started a proprietary deal search. At the same time, I also wish I would have started the search.

I knew I was going to go search for a business. The data I was going to start, but I didn't do anything for it until I actually started. I wish I could have gone back when I was still CEO. It's still Velocity and gone ahead and hired a search for him to kind of just get the process started off.

And so the search has taken a lot longer. I've had a lot of buyer sorry sellers walk away from the process while we were in it, which has been surprising and little frustrating but not shocking. I guess when you kind of realize more for them, it's the same problem we had. Velocity like this is a massive, a massive change in their life.

And so overall, I mean, I think I've learned a ton about business. I can't tell you how many times I've been having a conversation with someone, and they tell me about the 12 trucks that they got that comes with it. And then I look at the balance sheet and there's no trucks on the balance sheet or, you know, hey, what's this? What's this over here?

And the like? Well, that's my lake house. Like, well, your lake house isn't coming with the business, right? And so try to decipher kind of financials when they are not clear has been tough.

And then I think for me, the thing that my real takeaway is I could have bought a business probably a hundred times in the last 18 months. But after having the experience of Velocity and seeing how powerful growth and that exit could really be, I'm not really ready to sign up for an okay or not good business. I'm really looking for that needle in a haystack. And so I've been fortunate that I have the ability in the runway to not have to buy something right away.

And so I've been really picky, and I wish it had to be as picky and could have gone faster, but at the same time had a great time learning about AI tools, hanging out with the kids, and looking at a lot of deals. - Yeah, you know, you talk about not you - You don't - You can be picky because of your situation. For somebody that is anxious to get out of a job that they don't care for and just wants to get into a business, do you think that you've seen enough deals out there for the right person to be less picky and still have some success?

Or do you think what you're seeing is just not good at all? - So that's a hard question to answer because I think skill set matters, right? And so if I'm describing myself as a like a video game character when it comes to business, business ability, right? I kind of see myself as a perfect circle, right?

You got speed, acceleration, strength, or you got operations, marketing, marketing and sales and finance. Well, I've sat in all three seats and so I have a good understanding of all of them, but I don't have a great understanding on any of them. So I'm never going to be the sales guy. I'm never going to be the CFO.

I'm never going to be the marketer, right? If you have one of those, I think it's really easy for you to jump into something probably a little bit faster. And you can kind of use that push to kind of build something a little bit bigger. Maybe it's a little bit smaller - for me, I'm looking for something that's very specific.

I also moved to be back close to family, and so I have a very tight geographic location that I'm willing to be at. If I was willing to move farther south in Texas, you know, I could have bought 3 or 4 businesses last year. I know in Houston that absolutely inside the strike zone for me. I got four little kids.

So just a different stage of life. So yes, I do think if you were willing, if you had different skill set and you had a different requirements maybe than me, there's lots of opportunities out there. But finding the right fit for you may take longer. And so I think the one thing I would say to anybody that's sick of their job and ready to jump is, don't dump that job until you've you're just a little bit closer to actually that deal.

- Yeah. I tell people that all the time is wait till you're at least have something under contract. And even then it's, you know, things can go wrong or take longer than you think. But yeah, definitely don't leave your job unless you have a substantial runway to work with.

It was something else that you mentioned. I want to touch on - Yeah, I guess geography plays into it a lot to with different people. Oh, the skill set. You know, it's another thing that we talk about a lot.

I've talked to other guests, talked about it myself is know what you're good at and what you need. And buy the business that makes sense for you. If you are that marketer, that killer marketer, don't buy the business that already has killer marketing in place. You're not going to add the value to it - buy the business that that has amazing operations, and maybe a great second and third in command for that end of the business that you can pour fuel on the fire because they do crap marketing.

So, you know, like Jeremy, I'm kind of that jack of all trades rounded person. I don't specialize in any one thing, but I know that there's a lot of you out there that really have a very particular skill a lot of you out there that really have a very particular skill that could accelerate a business, the right business for you. You talked about hiring people to help you with the search. What does that look like?

What are you know, for a lot of my listeners, they're out on their own. - Yeah, I was really slow to do this. And it still gives me a bit of heartburn because I'm searching full time. And so I'm doing the same thing.

I'm basically hiring somebody to do. But what I've come to believe is that, you know, on any given day, and I've seen this even when I sat in the CEO seat, you get emails, you get calls, people reach out to you on LinkedIn, right? Whether I entertain that or not is totally a condition of just time of day. How I'm feeling, the week that it is, how's business doing?

And so, you know, for a lot of business owners, they may or may not be interested in selling and that may change by the day or the hour. And so if there's more people fishing the same pond, the opportunity I think increases that you're going to go find are those fish. And so I have talked to probably over a dozen kind of done for you search opportunities. And so typically you're paying these people a fixed fee monthly and probably some type of success fee if you buy something through them.

And so, you know, a real and extensive cost consideration. But if they can use different tools that I'm using, if they have different sorts of data or if they're just doing it differently than I am, their email sound different. They show up on Tuesdays and might show up on Thursdays, or their phone calls come on Fridays instead of Mondays. I don't know, they may have the opportunity to present me and get get me in front of business owners.

I would not know myself. And so at this point, after the length of my search so far, spending, you know what's going to end up probably being $30,000+ just in the search, plus whatever success fee makes sense in comparison to having an extra year of the search of supporting a family of four. And so trying to speed up my process, I think, is really the idea of why I'm working with those groups. But I'll tell you, like, there is no guarantees.

It's really hard to vet who's better one way or the other. A lot of these companies haven't had, years and years and years of experience. You know, they're all relatively new, it seems. And then mandates matter.

And so, you know, if you are a searcher and you're willing to go anywhere in the country and, you know, a specific vertical that you want to stay inside of, pretty easy for somebody to help you out. If you're Jeremy Hans and you say, I'm not moving 45 minutes from my house and it's got to be these kind of qualifications, man, I'm giving you a really hard pill to try to find something that kind of fits that. And so, you know, did finally sign up with those guys and over the next six months, hope that they'll continue to just give me more opportunities.

It may or may my deal may or may not come from that. And I'm okay with that. Could be a sunk cost, but, I'm trying to get as many fishing lines as I can right now. Just - let's find something.

- And they're looking for off-market deals primarily? - Primarily. I mean, most of those groups are using all different types of data, and they're doing blast of emails, phone calls and mailers. Some have networks too that they can kind of run into.

Some will do ads, but they're using all of the same proprietary tools that a searcher could do themselves. - Yeah, yeah. So it's things that you can do yourself if you have the time and inclination reaching out to businesses that you find in databases that have been around for a while or haven't changed hands, but this just expedites it - - That is expensive. And the other thing I'd say the reason I ended up doing this is I decided I wanted somebody else to be an intermediary between me and some of these business owners.

I find that because I have some experience and I'm very fluent in finance, and some of the questions I ask that when I'm talking to an owner, it sometimes comes across as accusatory when it doesn't mean to me, but because I have just a little bit more information. I'm now the buyer talking to the seller directly. It's just like you don't do that, typically when you're buying or selling a home, you have your agents involved. You don't ever talk to that person because it just adds some unnecessary friction.

And so my hope is that by them introducing me third party and maybe getting some of that basic qualification off the table first, that we can go straight into a conversation that's not not as maybe potentially frustrating to the seller. - Yeah, that's a huge point because it happens in real estate as well. And like in businesses, even more emotional and more tied sellers tied to it. Having a third party in between, like I mentioned earlier, it just can help grease the wheels, help keep emotions stable, you know, make sure that things aren't interpreted incorrectly.

The way the way something said - - Yeah, you get two shots, right to say the same thing, right? So you say to them like, well no, no, we're not going to say that, right? Okay. So you can edit maybe some of the things that you're, you're responses to on both sides.

It becomes very valuable. And so we'll see, you know truthy don't you know we won't know until the deals arrive. And even then it's, it's up to me to actually close the deal. They're not closing the deal for you so they can give me a silver platter.

Perfect deal. If I don't have the skill set and ability to actually get a close, that's not really on them. That's on me. - Well, I respect your time here.

I really appreciate you coming on. Is there anything else you'd like to share before we close out or anywhere, anything that the audience can do for you or help you out with, - If you've got any that you know that I should know in the Dallas, Texas market or within 45 minutes of Plano, Texas, please reach out. I'd love to take somebody to lunch. That's what my kids think I do full time.

You know, the last thing I'd say and I think, you know, Tim would say the same thing here. Like his whole Power of Biz. Like, we are so blessed to live in the United States and to have the opportunity to go out and take swings at the ball. And if we strike out, you can go back out and do it again.

And so, you know, I'm not rooting for anybody to, to not succeed. But, you know, there's the opportunity to succeed, but it also means there's an opportunity to fail. I think being really sober minded about that and understanding that, but also realizing that even in failure, like there's always an opportunity to get back up and do it again. And so, you know, keep your head up, do things right.

And even if it doesn't work out, just try it again. It's a numbers game. At the end of the day, they're not going to work, so - - Yeah, it's a great way to close out. I really appreciate that.

That reminder to everybody. It is you know, it is a risk. But there's also a risk in staying put and not doing anything too. So take your take your shot, do something with your life.

And that's like Jeremy mentioned, the US is a great place for that because you could just keep trying. So, is there anywhere people can find you? I'll put something in the show notes, link to your website or email address. - You’ll find me on LinkedIn, All the social media platforms you can find me, Jeremy Hans, Jeremyhans.

com, or my search fund is ETLFund.com. Glad to reach out. If anybody's got questions at the time, I'd love to give you whatever I know or hear anything that you know too.

So, either way - - Appreciate that, Jeremy. And as I've done with some other guests that are in the process of searching, I know you're successful buyer and seller already, but I invite anybody that comes on podcast that is willing to share their searching story, offer them one free month in my mastermind. So if you want to come to a couple of meetings with that group, that would be awesome as well. Thank you all for listening today.

Really appreciate it. Thank you. Jeremy, for being here, and I'd love to hear any follow up questions that you might have for Jeremy. Please drop those in the comments so that we can - I can answer them, or maybe Jeremy will jump in and answer them as well.

Thanks, everybody. Talk to you again soon. Thanks for listening to Business Buying for Financial Independence. If you're serious about owning your time and building long-term wealth, make sure to subscribe so you don't miss the next episode.