Episode 17 - Gabriel Chick, Service-Tech Corporation

So the big question is this, how are entrepreneurs who aren't scaling tech startups or building lifestyle businesses from scratch doing it? How do acquisition entrepreneurs find businesses, buy them, and then create generational wealth while taking on less risk? Welcome to Surge funded the Entrepreneurship through Acquisition podcast. I'm your host, Nick Lal and I'm here today with Gabriel Chick. Gabriel is the owner and operator at Service Tech Corporation. Service Tech is an industrial H Vac company based out of Cleveland, Cleveland, Ohio that serves Ohio and the surrounding region. Prior to doing a search and acquiring Service Tech, Gabriel got his MBA at Carnegie Mellon and served as an operator in residence at Generational Transfer Entrepreneurs. Before that, he was a field artillery officer in the Army. So, thanks so much for joining today. Really interesting background, a little bit different from other entrepreneurs I've spoken with. I was wondering if you could talk a little bit about your personal history and any influences that may have led you to want to become an entrepreneur and what it was that led you to take the plunge into search for an entrepreneur.

Sure thing, Nick. Glad to be here. So my background, what kind of led me there. One of eight children, Pittsburgh born and raised. My father did own his own small business for a short while, so I had a little bit influence from there. He was in the steel mills that went bust and then he bought a paper route. Back then you could actually buy paper routes, but you called a newspaper carrier. And he bought it with help from my grandfather who used the collateral from his IBM and GE stock to help my dad buy that business. Unfortunately, that went bust too when the Pittsburgh Post success went through a major strike with the union. I think this is back in the, probably the 80s 90s when all that happened. So I had a, maybe a little bit of influence from my family, but afterwards my father went back to a more traditional blue collar job afterwards. And then I was fortunate enough to go to college, not two of my siblings did. And so my path was going to be a much more traditional path. I ended up joining the Army. So if anything, there I was, you know, I was part of one of the biggest organizations in the world, very bureaucratic. And when I got out and I applied to MBA programs, I was very explicit, you know, saying like, hey, my goal is to get a corporate position or a consulting position. My plan was to just kind of stay and, you know, go from one big organization to another. It wasn't until, I want to say, the latter half of my first year at the MBA program that I took a class called Entrepreneurial Alternatives. To be frank, I had no interest in startups. I think startups are quite a crapshoot in the sense that the numbers are just brutal. I mean, the attrition is brutal. I mean, you're talking 1%, maybe less chance of having a truly exceptional outcome. But I found the whole idea of business ownership to be something that appealed to me outside of the startup realm, just given my military background. You know, I was comfortable taking risks, comfortable leading organizations, comfortable making decisions with limited information. So I took entrepreneurial alternatives and it was mainly focused on franchises and buying a small business. And this is before CMU actually had like a formal ETA program, core curriculum, I should say. And that really kind of opened up my eyes to the whole concept. And so I spent that summer I had a traditional MBA internship with a large energy company working in their treasury department. And while I was doing that, I was interviewing searchers, mainly local guys, once a week in person. And by the end of the summer I had 10 or 12 of those done. And I finished my internship and I thought, well, I can go back and go work at a big company like this for the rest of my life where I can go do this entrepreneurship thing. And I knew, I was pretty sure that that's what I wanted to do by the end of that summer. And then just taking the follow on courses and delving deeper into the search fund model kind of just confirmed that. So by the, say, the very early part of my second year at cmu, I was set that that's what I was going to do.

Yeah, I think a lot of people are introduced to the concept during the mba and as you said, it makes a lot more sense to people who may not necessarily be interested in taking the startup or VC funded type route. And when they see that this is actually an option, it's a lot more att. You mentioned your experience in the military a little bit. I was wondering, once you've become a business owner, what learnings from your past in the military have you applied to your management style or how you approach.

Work or So, I mean, there's a lot to take from the military that you can apply to entrepreneurship, mainly from in terms of leadership, communication, limited information, you expect things to go wrong after serving times in the military. You just, you know, Murphy's Law, anything that can go wrong will go wrong. Building in redundancies, dealing with difficult employees, learning to influence and manage a larger organization and a large group of people who in many cases come from poor backgrounds or from difficult backgrounds and don't have necessarily the family structure or support you had growing up. So they don't have the same framework, mental framework that you have in terms of responsibility and integrity, things like that, that you kind of take for granted. So the military is really important for that. Just some, maybe some more concrete examples. One I would say is leading from the front. That was very big in the unit. I was, I was in the 101st Airborne. That was just a very big mantra. I was like, leaders lead from the front. And I've taken that here at Service Tech. Like, I've spent a considerable amount of time in the field. If there's a difficult job or difficult issue or safety concern, I'm one of the first people out there addressing it personally. You can't do that for everything. Obviously you have to delegate. But I think a lot of, especially MBAs, I'm not, I don't want to bash on MBAs, but a lot of them think they can manage a business from their office or even, God forbid, remotely. And I'm sure there are certain businesses you can manage from your office or manage remotely. But many businesses, especially small businesses, if you try to do that, I genuinely believe much of the time that will be a recipe for failure. So that's a big concrete example, is actually leading from the front and actually being involved in the business. Understanding what your men do on a daily basis, what the obstacles are, what they encounter, what the problems are. A lot of owners and a lot of leaders just don't seem to want to do that, know how to do that. That's a very big thing. Another one is just trying to build relationships with your guys. I mean, that's obviously really important with the military, and it's easier in the military because you spend so much time with them. But I've realized it's much easier for someone to do something for you if they like you. And it's much harder for them to do something for you if they don't like you. And so it's. It just makes everything so much smoother and better if you develop. I mean, you don't have to be best friends with these people, but if you develop a good relationship, a mutual respect, and even just a simple friendship with your staff, it makes everything go so much better again because it. You want to. You people you like, you want to help them, right? Because you like them, you know, they're your friend. You have a good, you know, when you think about them, you have good feelings, you have good vibes with that person. If you have somebody you don't like or you don't Respect or just, you know, they're strange to you or weird or awkward, you're going to struggle a lot more to do those difficult things than you would otherwise. So that's just another important thing that I took away from the military. Things that are different. I mean, the military, you had a pretty significant support structure. I mean, you were part of a bureaucracy. And I think this is something that anyone that's coming from, even not the military, but coming from corporate America, you know, you have an HR department, you have a sales department, you have an operations department, you have an ID department. I mean you have departments for everything. You don't have any of that in a small business. I mean you're, you know, you might have one person that does HR and a few salesmen, an office manager that might also be your IT person. So I mean, there's a lot of wearing multiple hats and requiring you in many cases, like you can't defer to some expert or department. You're going to have to figure out what the issue is, figure out what the solution is, find the vendor and then push that vendor through, like push the implementation through from that vendor and get buy in from your staff. And that's going to be, you know, a lot of that's just, you're going to have to drive that yourself. You may be used to delegation, coming from a military or corporate background and you're just not going to have the resources available to delegate a lot of these critical tasks too. So that's going to be a big change for a lot of people.

Sure. That military experience is probably some of the best experience you can have when it comes to knowing how to build a team and hit the ground running, get on the ground and be side by side with your employees and understand them. So definitely makes a lot of sense. And in my own personal experience, if you don't do the work that even the lowest level employees are doing, you don't really understand it. So definitely appreciate that perspective. I guess given your background, you mentioned that your father had worked in some blue collar jobs and bought the paper route and also in the military you were working with people from similar backgrounds to that. I was wondering if when you were searching for businesses, were you particularly looking for blue collar businesses or what sort of industry thesis did you have and how much was that based on businesses that you thought you would be a good fit for versus ones where you just saw an opportunity?

Sure. So I didn't have an industry thesis. You know, I went with GT Generational transport entrepreneurs, which is an Accelerator. I was one of the first operators in residence they brought on board. So I didn't write a ppm, I didn't have an investment thesis. I didn't go through that whole song and dance that searchers have to do to race. And to be frank, like I was an artillery officer so I called for fire, which means you're out in the field like calling for the artillery rounds. You're an observer for an observer calling for artillery strikes or airstrikes or mortar strikes, or you're the platoon leader running the guns, the gun line or you're the fire direction officer actually running the small staff and computer that actually directs the talks between the forward observer and the gun line. It tells the gun line where to aim the cannons. So if you can imagine, there's really nothing in corporate America that relates to that. You know, it's not like I was supply in the army and someone like hey, I'm going to go into logistics and distribution or anything like that or I was in maintenance or, or what have you. So I knew all I really can bring to bear is my leadership experience. My, you know, all the, all those leadership communication, all those kind of valuable skills I learned from the military, but nothing that would necessarily put, you know, I didn't have a unique industry perspective or knowledge that I could bring to bear. So I came in very industry agnostic would be the best way to describe it though. I definitely had a preference for blue collar versus white collar given my background. And so I was just very open minded about the whole process. You know, I looked at a number of different industries, whether it's janitorial, mechanical contractors, manufacturing, distribution, just a whole different number of businesses. And then quite a few of my industries or targets came up through brokered search. You know, some people call opportunistic versus proprietary. And I think that's a really good way to kind of broaden your, your search approach because you just, there's so many industries and some industries that you're not going to find looking top down because a lot of those systems are, those top down classifications are imperfect and you're just going to miss a lot of things. And that, I mean in the shuffle you're talking about millions of companies and many thousands of industries and sub industries. And so that was very helpful. Like obviously landed in H vac industrial and kitchen exhaust cleaning. And you know, that's a very unique, especially the air duct clean. That's a very unique industry that you probably would never find if you came in with like an investment thesis by Industry like it would just never occur to you it's too small, it's not big enough when you totally miss it. So I think it's very important to use different resources like the broker channel to broaden your opportunities you're looking at and kind of the industries you're looking at.

Sure. So when you found service tech, was it just that it happened to be a really good company and it wasn't like you were looking for H vac cleaning businesses or what was the process for finding service tech? And sure. Proprietary or broker. What was. Was that?

So it was. I guess it was. Technically it was neither because I had found a company in the air duct cleaning space in a different part of the country that was. And this was brokered. The deal ended up following through because we found out the broker had been lying. I don't think he was lying about the specific nature of the business, but he admitted to lying us during the process about some important stuff. More process lies than lies specific to the company. But it really poisoned the well. And at that point, you really can't go forward and spend potentially millions of dollars on a company when you know your intermediaries like admitted to lying to you because it's like, what else is he lying about? I don't know. And we told the owner like, hey, we loved him before with you. And we were his preferred buyer. And he's like, but you have to get another intermediary because we can't, we can't work with this guy because that'd be really foolish on our part to go forward working with an intermediary that we know lies about stuff and has had issues in the past. You know, he said, hey, I signed with him, I'm stuck with him. I'm really sorry about all this. So I planned on actually going to the industry conference because we were getting pretty serious on that deal. I mean, we were just about to sign an LOI when all this blew up. And I told a friend of mine who was also searching at the time, Andrew, and I said, hey, you know what? Really interesting industry, I really think you should take a look at it. I was going to go to the industry event, but I'm not now because, you know, this just blew up in my face. And he's like, hey, I've been meaning to go down there anyways to the city where it's at because one of my investors is down there. And I was going to meet with him because he was, I don't know if he was a year into his search so he went and he ended up sitting at a breakfast table during one of the events. And he was like, hey. He was talking to one of the other guys sitting there was named Al, who happened to be the owner, service tech. And Al asked Andrew like, hey, what are you doing? He's like, oh, I'm actually looking at buying a business. And I was like, oh, no kidding. I'm actually looking at selling my business. So they met over breakfast. Andrew ended up passing on the deal because I think Andrew, I don't want to speak for him, but I think he wanted something perhaps a little bigger, perhaps more white collar than blue collar. He ended up going into a. Buying a software company, which I think was a better fit for him. So he ended up passing on that. He passed it to me and we had a relationship where we. I'm trying to remember what's in the search on primary. It's kind of like the River Guide contract or referral system. That's what we ended up having. And so we had a little referral fee to one another if we ever found a deal that wasn't a good fit for us that we refer to the other guy. So that's how I ended up finding service tech was through that I had actually reached out to them through proprietary and it didn't go anywhere. And I don't even know if the owner even saw any of my emails because, you know, a lot of them get captured by spam filters or they get, you know, they end up just getting, you know, they don't take it seriously because it's, you know, a lot of those emails. I mean, the hit rates on email campaigns are very small. So it's kind of ironic that I had reached out to them proprietarily in the space but never ended up going anywhere and actually found it by having a referral contract agreement in place with another searcher. So I think that shows you it pays dividends to develop meaningful relationships with other searchers. Because a lot of searchers, and I get it, you know, it's very competitive. You're under a time constraint. You feel like it's a zero sum game in every deal that you don't get, you know, another searcher gets. Doesn't go to you, but it doesn't need to be like that. You don't need to create that kind of atmosphere with the other searchers and you're at least in your community or in your network. I think you can have a really productive symbiotic relationship with these people instead of having a Very, you know, competitive zero sum game one. So that was how I found service tech.

Sure, yeah. It's great to hear. I think you see that in general, the search fund community is really collaborative and it makes sense that you're just kind of building the pie for everyone instead of trying to keep other people out. I want to go back to that broker that had lied to you. How did you uncover that? Was that during the due diligence process or. Because I think that's probably a big concern for a lot of searchers. It's probably something they might even think of. It might happen, but obviously it's a concern that it could happen. So was it after you'd sent out the LOI or what point did you realize that he wasn't being fully honest?

I mean, and everybody knows this. Who's done anything with brokers? I mean, most of them are garbage. I mean, they're trash. I mean, their quality of their work is trash. Their attitude is trash. They're so misleading. They're unhelpful. And that's probably 90% plus of at least the ones I've interacted with. And I'm not even talking about that stuff. I mean, that was kind of expected. I mean, this guy was really unhelpful. He got in the way. I mean, he didn't even send out, if I remember correctly, he didn't even send out a sim. For those who know that's a confidential information memorandum. It's kind of like your little book on the business that you get once you sign NDA. He did a video, so it was like a 30, 40 minute video of him like following the owner around, asking questions, looking at the business. It was ridiculous. It's just absolutely ridiculous. And not to mention, like no one wants to sit down and watch a 40 minute video. Right? They want to have something they can read, they can reference, where it's all written down like a normal human being. So I mean, that definitely kind of was a red flag. Like this guy seems really strange. He was really unhelpful. And a lot of brokers are like this. They won't pay you the time of day, they won't get you the stuff you need. But we kind of worked through that and he was kind of giving hints that like, you know, if we do an loi, we're not going to do exclusivity because the owner doesn't want me doing that because he wants me working the full time. He doesn't want me sitting around while you guys do due diligence. And stuff like that. And we got to the LOI and we were like, you know, we were very insistent, like, no, we're definitely doing exclusivity during LOI because we're not going to spend tens of thousands of dollars on diligence. And all this time, even more importantly than the money, is the opportunity cost for the searcher. You know, we're not going to spend all this time if we don't have a guarantee that you're not talking to someone else. And he kept pushing back. He's like, no, no, the owner doesn't want me to do that. And then we found out, he's like, actually, I've been lying. It's not the owner. I just don't want to do that. I want to run like two or three of you guys parallel during this process. And I was like, well, like, first of all, no one in their right mind would ever agree to that because it's going to be a huge leverage against you because if you try to back out or renegotiate because you find something of concern during diligence, you're not going to have any leverage to renegotiate these major risks or issues because you have all these other people involved in the process. So that's a huge issue, right? That puts you at a huge disadvantage to. It's going to be a total nightmare, right? Because now you're doing due diligence while other people are doing due diligence, right? So now you got multiple people trying to, like, valuate things, look at things. I mean, the owner's not going to have time to manage all that stuff. The broker clearly is incompetent, not trustworthy. So, you know, that sounds like diligence would be a nightmare. And then third and most importantly, trust has already been broken, right? If there's no trust, no one's going to put up millions of dollars to buy a business. You know, you can't go to investors, you can't go to a bank and pitch this deal if you already have a huge trust issue with the intermediate who has clearly lied to you about a pretty significant issue, like he was misleading you about exclusivity and why he was trying to avoid that. So, I mean, that's just something you just have to flush out. A lot of searchers are kind of weak, for lack of a better word, right? They get to a deal and they know there's a problem with the deal or they know there's a problem with their searchers and they know there's a problem with the owner or they know they got a concern with due diligence and instead of addressing it head on and facing it quickly, they kind of just like meander and avoid it and try to like sweep under the rug. And it's like, no, stop being so lazy and weak and address the problem immediately. As one of my classmates at CMU was Rob Southern. His dad was Jim Southern, who was one of the first searchers. And he came and spoke. It was a very, very insightful lecture from him. He was very big and he went to Harvard. He was kind of making fun of the Harvard book, getting the yes about negotiating or something. He's like, no, no, they're all wrong. He's like, it's about getting to know. He's like, you want to get to know. Because once you get a no on a big issue like that, then it's clear that you need to move on to the next deal. And for whatever reason, searchers just to avoid that, because once they get a live one on their line, you know, fishing, they're just like, they don't want to give it up. Even if it's a bad catch, they just don't want to give it up. And so it's just really important to get to know. And it's very important for searchers to kind of push back on owners. I mean, you don't have to be mean about it, but you have to be very serious and you have to be very candid. You have to be very clear. And quite honestly, brokers and owners will respect that when they see that because they know that you're serious, you're a serious buyer, and that's really secretly what they want. They might give you a lot of grief if you push back on certain things, but at the end of the day, they want a serious buyer because they want to close, the owner wants to sell, and the broker wants their commission.

Right.

And so sometimes you just, you have to be comfortable being the bad guy. I mean, I'm looking at doing a bolt on. We're probably within a few weeks of closing on the bolt on from our business. And I mean, we had some pretty. I mean, the deal was touch and go on certain issues. I mean, the owner could be very option about certain things. And I was like, this is what we're doing. And you know, I'm happy to talk about it and happy to like negotiate certain things. But this more or less, this framework or structure, that's how it's going to be. It's not about being mean or difficult but it's also being very clear these are my non negotiables. And if these don't work for you, hey, I totally get it. Everybody's got their own priorities, then we can't move forward. And I mean, he was ready to blow up the deal and then I pushed back on that. I said no. And it seemed like he was just going to call it quits. And then the next day he called me back. He's like, well, we changed our mind and we're comfortable with that. So I think it's just really important for those of people who don't play poker. Like you got to have a poker face and you got to know how to like bluff and you got to know how to work with the cards you're dealt. And if you can't do that, then you're probably going to struggle with the actual deal negotiating side of this.

Sure. First of all, congrats on the bolt on. And secondly, I think that's great advice. It's something that applies to sales as well. I know if you, you're a salesperson and either you say no to the prospect or you're actually the one qualifying them, then they end up respecting you a lot more rather than the person who just bends over backwards and prompts us things that aren't there just accepts things that they shouldn't accept. So makes a lot of sense and definitely seems like there were a lot of red flags with that broker and he was not doing things the right way. I guess the next question would be what was the process with service tech? What about the seller or the company made you realize that this was one that you should actually pursue? And what was the process from discovering service tech to actually making the acquisition?

I first got in contact with Al in April of 19 and we closed in October. So that's about, I don't want to say, what is that like five months, six months depending on. I can't remember when exactly we closed it. 10-31-19. Can't remember when exactly in April, if it was early April. And that's pretty common. So if you aren't finding a deal by your 18th month of search, your window is getting much narrower that you're going to close within 24 months because the process just takes forever. I mean diligence, I want to say took 120 days. The reason I kind of knew service tech was a good fit, I mean it just comes with repetition. I had looked at many businesses, many dozens of businesses, hundreds of sims, and you kind of know Intuitively, after that much repetition, whether this is going to be a good fit or not, in terms of geography, industry size, customer concentration, industry risk, growth opportunities, historic financials, none of this stuff is rocket science. It's a matter of just like looking through, checking the boxes and then asking yourself, do I want to do this? Is this kind of company I'd like to do, but would be okay living here and running a business like this for the next 10 years or longer? And people, I think most searchers kind of know that intuitively. Again, they don't make a decision because searchers are, you know, like I said before, they're strange like that. They just don't want to make a hard decision. But, you know, do you want to live in Cleveland? Do you want to run a company that does this type of cleaning? Yes or no? It's not a complicated question, right? Like, you obviously know that, you know, you're an MBA graduate, you're obviously a smart, educated person. So make a decision, right? Get off your butt and make a decision, then move forward. And so I knew pretty clearly, like this checks a lot of boxes. This is a good business. It's in a geography I like might not have the greatest growth potential, but it's very stable, right? There's trade offs you make there. I can understand the business fairly well, fairly quickly, things like that. It's blue collar. That's what I'm looking for. So I mean, a lot of that stuff was pretty straightforward. Then the main issue is like, all right, is there a price and structure that works? And so by the end of my search, I was very quick and very candid in my negotiation of price. Like, hey, based on the numbers, this is where we're at. It's going to be this much upfront, it's going to be this much seller note, and this much I'm going to earn out based on hitting these numbers. And I remember that Al had a representative and I remember him being like, I remember him saying something on the call like, is this some kind of like high pressure sales tactic? And I was like, what are you talking about? This is what we're interested in doing. This is the numbers that work for us. We're obviously willing to negotiate because that's how it goes. But if this is not even relatively close to what you're looking at or what you want, then let's just end the conversation now. And I think he was just so taken aback by that that he was just like, is this some kind of high pressure sales tax? I'm like, no, I know what I'm looking for. I know what my investors are looking for because I've been doing this for quite some time and you know, I'm not here to waste my time on deals that aren't going to come to fruition, you know, and if you don't think we're realistic or our terms aren't fair, let us know, we'll take a look at it. And if you think you can get more somewhere else, like maybe you need to go somewhere else. And a lot of searchers I think cringe at hearing that in a conversation. But it's not like they don't know that, right? It's not like the broker doesn't know that or the owner doesn't know that, right? It's not like they're stupid, right? These people, the one person helps people buy and sell million dollar companies and the other person ran a million dollar company. They're not stupid. They know what the company's worth, they know what's realistic, they're going to get in market. So if you're wildly off, they're going to know. It's not like you're somehow going to like trick them, right? So there's no reason being coy. I mean, you just need to be respectful and transparent. And again, I think they really respected that and they went with us. And I would, on my offers, I would put an expiration date, like you have two weeks to let me know and then it's, the deal's off the table and I'm moving on to something else. And part of that came from my two year mark was May of 2019. And I talked to my investors, I said, hey, I'll search until the end of the year and then we'll wrap up my search and that'll be the end of it if I don't find anything. When I first talked to him, you know, I was at month 23, 24 and I knowing I was going to probably month 30 and then I was cutting it off. So I mean I should have had that mentality in my whole search which is like, don't waste my time. Both you say that to yourself and to potential businesses like I'm not here to waste my time, don't waste my time. So I think that really helped me go into that negotiation process with right mindset. Not that I didn't have anything to lose, but just the right mindset of like, if it doesn't work, it doesn't work. I'm not here to waste time, not here to make a bad deal. And I think I wish searchers would start with that mindset, but it's really hard to until you kind of go through the ringer and learn that mindset. But it's critical to being successful searchers having the right mindset like that.

Sure. It's really interesting that the time pressure actually can help in some ways. I know that's something that searchers a lot of times might complain about, but it actually seems like there are the benefits also that forces you to speed up the seller as well. So talking more about the industry, H Vac is becoming pretty popular industry for searchers. I was wondering what are the benefits of H Vac cleaning over other niches within the H Vac space? And maybe you could just talk a bit in general about H Vac cleaning versus other types of businesses. And what other. If you were to look at other types of H Vac businesses, which ones would you look into?

Yeah, I mean H Vac has gotten really popular. I and this is just my assessment because it's a service business and a lot of it's recurring, right? You have maintenance contracts or service contracts. I think that's where a lot of the search interest is stemming from. Because you know, the search fund primer, which is like the bible of search, you know, it's like religious doctrine is like you must buy contractually reoccurring revenue, you know, you must have fragmented customer base, you know, you must have xyz, all this stuff. But I think there's a lot of interest there. I doubt there's too many searchers that are interested in doing design and build because that's very competitive and it's very difficult and it's smaller margins and there's much more risk into it. So I imagine a lot of the interest from search fund again is because of the recurring revenue and it's service based. And so when you're doing some more service work, you can generally command a better margin because it's the less. Not to get too economics here, but it's a less efficient market while like the design to build is a much more efficient market. Right, because you have very clear schematics, very clear like scope of work. This is what the building wants in terms of H Vac or plumbing or electrical or what have you. And there's like 10 other people bidding it that really squeezes out the margins. Right? Because it's a far more efficient market, a far more perfect market. While services, you know, the scope of work is greatly more ambiguous. You know, it changes Quite a bit. All those different things so that you can command a higher margin because of that. Because it's a less perfect market, less efficient market. I think that's why there's a general interest in that space. And again, it's reoccurring. Unlike design and build, which is kind of one and done. Or as my boss would say, you eat what you kill as opposed to service, which is kind of like you grow. It's more like farming instead of hunting. It's a recurring sales opportunity. So I think that's a big part of it. I would be a little hesitant on the bigger commercial stuff just because you're going to probably have a need a contractor's license, mechanical work, and it can get fairly technical, opposed to say with a cleaning we do, which is much less technical. I mean, you still need to get a certification, which I got. Got that before I even came to the business. So I got that during due diligence. So that shows you how manageable is to get certification for ASCs and air systems Cleaning specialist. So I went and got it at the NADCA conference while I was completing due diligence. So I went and did that. I think, I think that was during October, September, October. I went and got the certification while I was a diligence. So I just set aside some time for studying and then I went to the conference, which was good anyways because I was gonna. It was kind of prepping me for the industry. So that was very manageable on the cleaning side. Right. Cleaning's much more. It's a much simpler business. It's a much less technical. And so it's much more understood by an outsider, which much faster and easier to be understood by an outsider coming in than say, hey, we're going to do design and build or we're going to do maintenance work on a, you know, 50,000 square foot commercial building. Good luck. Understanding that without many years of experience and training and all that other stuff to understand the level of H Vac complexity or electrical or plumbing, you know, you're going to keep hitting that same hurdle. So that would require the searcher to have a pretty solid bench of expertise in their company without taking on some kind of like key man risk in the business. So that's kind of my thoughts on that. But if you buy a big enough one, you'll probably be okay. The bench is big enough. It has enough qualified people that you don't have to worry about that. And then you become more managerial. The only issue is when you're getting companies that big, then you're starting to bump up against private equity, which tends to drive up valuations. And that can really put a crimp in the whole search fund model if you're trying to hit a 35% IRR.

Totally.

I've looked at mechanical contractors as well and either the key man risk is there or its valuation might be a bit too high if it's too big. So those are definitely both there. Just one final question I guess is how's your personal life changed since you became a business owner? Any surprises? Any differences? What's new?

I mean, I would say one mistake on my part is I didn't realize the nuances of the business. So we do quite a bit of weekend work and second shift work and that's definitely been a more demand on me than I anticipated. The hours themselves. Working a lot of hours. I mean, I was fully expecting that. Anyone who goes into search should. I think the scheduling was a bigger thing that caught me off guard because by its very nature you're going to have more issues on second shift than you would on first shift. You're going to have more issues on a weekend job than you are going to on a weekday. So that's definitely been a greater demand on my schedule than I anticipated. But if you aren't expecting to be not every week, but a lot of weeks working 50 or 60 plus hours a week, then like don't go into search because you're just not going to be as successful as you should be, as you could be if you don't. First of all, I mean, like I said before, I mean, you're wearing many hats, you're doing a lot of different things. You know, you're in a competitive market competing on a small business level, so there's going to be a large demand. And also bear in mind that I might be a little bit out of line with some people because I came in October of 2019. So that was about. What was that, five months, six months before COVID So imagine, you know, you come in, you buy a company and you're just getting through your transition phase, which is like better part of the first year. And then you go into like the greatest economic health event in the past a hundred years. So my perspective on work, life, balance and search is probably not the most relevant because I had a crazy event happen shortly after I acquired. So that really throws things off. So that might not be super relevant. And I also had more. My search was a bit of a grind too. You know, I searched for 899 days, which is quite a long search time. So I also had a much longer search and then I had a pretty significant economic societal event in my business and then my business. Like I said, we do first shift, second shift, and a weekend work. So I just had. I've had a lot of demand on my personal life then I would suspect most searchers don't have as much, so mine might be a little bit more demanding than most. Regardless, putting all that aside, you should still expect a pretty high demand. And again, I was comfortable with that because I was a military guy and that's just how the military works, at least for the officers. There's a pretty big demand on your personal life and your time and if you don't want to do that, then you shouldn't do search.

Sure, yeah, don't think people should do search if they're not willing to put in the commitment. Anyway, thanks so much for joining Gabriel. Super fascinating discussion. Really appreciate your honest, transparent, direct answers. Really interesting stuff. So I think people enjoyed it a lot.

Yeah, I appreciate it.

Thank you Nick this episode of Search.

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