SecretSearcher
536 posts
SecretSearcher
@Secretsrchr
Spent most of career at PE backed PortCos. 2x successful exits. Offloaded all assets into a SLAT and swinging for the fences. Here to roll up.
Texas Katılım Temmuz 2024
775 Takip Edilen1K Takipçiler
Closed our first acquisition this week. Specialty distributor of underground utility and telecom materials in Minnesota. Founded in 2003, still run by the guy who built it.
The business is not sexy. It moves pipe, conduit and fiber components to contractors and utilities across the Upper Midwest. No SaaS margins, no obvious growth hack. A company built on technical knowledge and reliability for over twenty years.
That's exactly what we were looking for.
The search process was longer and harder than I expected. The deals that look clean rarely are. The sellers who seem motivated often aren't. You build a lot of conviction on things that fall apart. This one didn't.
One thing I'd tell someone buying in the sub-$2MM market: seller quality matters more than business quality. At $5MM EBITDA there are systems, management layers, institutional memory. Below $2MM the seller often is the business. An OK business from an honest seller who wants you to succeed is a better deal than a great business from someone who starts playing games. The transition period is long, the seller knows things you don't and you're going to need their help. Who they are as a person is part of what you're underwriting. Talked to a handful of peers in the space yesterday and there was unanimous agreement on this.
Grateful to the founding team for trusting us with something they spent twenty years building. That's not a small thing.
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Why do people think every plumber is out there scamming the whole world?
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Met with a seller 6 months ago and conversations went nowhere.
Had an MP today with the same business. Completely different tune when you have another one under LOI and bring in a former GM of one of the big PE backed strategics.
He’s more confident in me because of the above and I’m more confident in him because he got a QofE done.
Checks every mark in my buy box and strong fit with the other business. This one will hurt if I get outbid
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@EnergyCynic Goodness I can’t imagine trying to negotiate G&P deals in the Delaware and showing a sample settlement with that
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Is this leading to shut ins beyond Apache? And now does this work for a royalty owner?
Quite honestly this is understated in the news.
Selling gas for -$10/mcf so you can flow oil. Permian going to Permian, what a waste of resources.
Paul Phillips@BlueFlameBlues
-$10 Spot Waha this morning…
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@ZiggyWumpus @BoringBiz_ This is when I bought. Literally rally when he screaming on CNBC the world was over. I loaded up. Felt fake.
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Bill Ackman on how he made $2.5 billion by hedging and shorting stocks during March 2020
Worth a listen
"There was a massive storm coming. We could see the storm, but everyone else was playing on a beach. We bought a credit default swap on the index, and over a 10 day period, we bought about $74 billion notional of this insurance.
It cost us only $27 million. 10 days later, it became worth $2.6 billion. We took that money in March 2020 with the market down 30% and bought stocks"
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I would like to thank everyone who has responded with ridicule instead of reasonable counterarguments. I see there’s no point in honestly posting my P/L after the ceasefire.
However it’s quite a unique experience to be mocked by people managing $30k accounts when I’ve lost $2M after making $15M. I won’t stop you though; I guess that’s just how it goes.
At the end of the day, even as we argue right now over 10mb/d of production remains offline and that’s all that matters.
I’ve done all my oil trades through derivatives this year, but today was the first time I actually added oil equities.
Physics will do its job anyway. Guys, I’m just a humble trader. There’s no need to waste your time and energy mocking me. Just go about your business.
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@JackieHirsch_ Pretty much 100% earnout. This business is unsellable. I will let it flounder for a month and come back.
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@Secretsrchr How would you mitigate the 40% customer concentration? Hold back escrow? Price reduction? Earnout? And I agree, that is a huge deal but we get deals done with that but you need to mitigate the risk.
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Just got off the phone with a freshly minted SMB broker (RE agent, of course) - $100K SDE biz run solely by husband and wife and could be a nice bolt on to my existing business. Broker tells me it’s standard to have earnest money down and a signed LOI before sharing names or locations of customers. God bless this small world of SMB. 40%customer concentration was also ‘not a big deal’.
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@JackieHirsch_ I play the game - this is my outlet instead of hanging up the phone or yelling…. I post anon about it on X!!!!!
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@AlanPetersonSBA Never, under any circumstances, engage with a tranny world broker. You will thank me later.
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In the pursuit of an enduringly profitable business you still gotta sort through a mountain of shit deals before the right one shows up.
What’s one thing you refuse to bend on when targeting an SMB for your first or next acquisition?
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Those valuations are impressive and I have been in the market as an investor and buyer for a long time. Are those hockey stick numbers or pretty stable year over a year and I’m curious if those are generally the asking price so somebody is just locking the deal in quick or if these are below asking price because I sure do not see these kind of multiples on a steady attractive business in asking prices
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🙌Congratulations to the 22 Viso clients (+1 more who is closing today) who closed their deals in Q1 26!
Observations on the market:
Demand for SBA business acquisition loans remains high, more mid-career buyers are in the mix than in the past, valuations stable at 3-4.2x
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Big change - I recently sold my Rolling Suds biz and just joined Centric Fiber as VP of Finance. I am relocating my family to The Woodlands, TX in the coming months.
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@econ_713 @GodsBurnt Iran has no incentive to stop / let ships pass. None.
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@GodsBurnt We’re connecting those exact dots. It’s inevitable. ⬇️
Peter Sutherland@econ_713
Trump’s Grand Ambition: 1. Overwhelm Iran (in progress) 2. Strong-arm Ukraine & Putin into settlement (pending) 3. Unleash global crude supplies as massive econ stimulus 4. Pump equity mkts & seize mantle of “global peacekeeper” just in time for midterms Caveat (oil) emptor
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Nobody is connecting these dots.
Trump needs a win before November.
The fastest win available is ending the war, dropping oil prices, and letting the new Fed chair cut rates into a recovering economy.
That's not a theory.
That's the only move on the board that saves the midterms.
And when that liquidity hits?
It won't trickle in.
It'll flood.
The 2020 money printer made people rich.
What's coming makes 2020 look like a warmup.
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Iran can’t read this and think, “we must rush to make a deal.”
There is no logical explanation for them to make a deal now. Literally none.
First Squawk@FirstSquawk
Trump is urging advisers to bring an end to the Iran war in the coming weeks-wsj
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@Secretsrchr Great question! Have you listened to the sponsor Q&A call?
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"I strongly believe there are many high net worth people in finance (IB, hedge fund, PE, etc) who have a desire to allocate some money to LMM deals/roll-ups but don't feel like they have access to vetted deals."
How about an established $2.9M EBITDA residential HVAC platform at 5.7x entry (under LOI)...
Purchase Price: ~$16.25MM (5.68x EBITDA)
Revenue: ~$10.3MM
EBITDA: ~$2.86MM (27.6% margins)
Gross Margins: 45%
FCF Conversion: 88%+
Base Case Returns: 3.32x MOIC | 30% IRR (net of all fees)
Important to mention that the sponsor has a signed add-on acquisition under LOI at 2.6x EBITDA, bringing pro forma EBITDA to ~$3.2MM and reducing the effective entry multiple to ~5.3x, before any organic growth or operational improvements.
A few important notes regarding this specific deal:
1. This is not investment advice. You should conduct your own independent diligence.
2. I would prefer not to share all details here. Instead, I have included a link below with additional information:
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@Will_Schryver Thanks for sharing. I’m going to put this in front of my wife while I ask to extend my unfunded search. Exhibit A.
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Another MASSIVE deal for KKR
15x MOIC in ~3 years
Private equity firm KKR acquired CoolIT for $270 million, or ~16.5x EBITDA
Today, KKR is selling CoolIT for $4.75 billion, or 29x NTM(!) EBITDA
15x MOIC in 3 years equates to well north of 140%+ IRR, depending on timing of actual cash flows
For the uninitiated, NTM is Next Twelve Months
KKR realized 29x on future EBITDA
And the average employee will net $240,000 with the longest-serving employees walking away with $380,000
The payouts are part of KKR’s equity ownership program the firm rolled out to its portfolio companies (see CHI)
This deal will represent one of the firm’s top returning investments over the past 20 years
Win win for private equity and employees
Full article: WSJ
Will Schryver@Will_Schryver
How can Private Equity make money buying companies for 16x - 18x? KKR paid a premium EBITDA multiple in a preemptive bid and made 10x their money Here’s how the PE firm did it: KKR acquired C.H.I. Overhead Doors in 2015 for $685 million, ~13x EBITDA 2015 CHI Financials: $290 million revenue $61 million EBITDA (21% margin) Over the next 7 years, KKR more than doubled revenue organically, expanded EBITDA margin, and grew EBITDA nearly 4x 2022 CHI Financials: $700 million+ revenue $229 million EBITDA (30%+ margin) KKR sold C.H.I. Overhead Doors in 2022 for $3 billion, ~13x EBITDA KKR generated ~10x MOIC over a ~7 year hold period, one of highest returns on an investment for the firm in 30 years As part of the sale, hourly employees on average received $175,000, with the most tenured employees earning $800,000 The employee payout was due to KKR’s employee-ownership program the firm rolled out to its portfolio companies The operational performance, combined with the employee-ownership program (which KKR credits for the outperformance), drove the outsized returns
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Agree. I was 100% focused on SBA (using 100% of my own equity to retain ownership) but the best deal I had seen hit my desk and had to structure like IS. Was an absolute grind catching up on the IS world (SBIC / FO intros) under a very tight timeline. If your are ‘searching’ I highly recommend you make connections with SBIC / FO world just in case….
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If you’re buying, one of the better ways to get coverage is to be open to Independent Sponsor sized deals ($2M EBITDA+) and SBA sized deals ($350K EBIDTA+).
If you can legitimately pull off both, your market opens dramatically.
Worth exploring and building this capability.
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@frattyhercules @petermillar Holderness and Bourne is the way
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