April 28, 2023

E117: Malcolm Peace Shares Journey To Successful Small Business Acquisitions - How2Exit

E117: Malcolm Peace Shares Journey To Successful Small Business Acquisitions - How2Exit

Malcolm Peace is the founder of Tsetserra Growth Partners, a company specializing in buying family-owned small businesses with established Texas Legacies. Unlike traditional private equity and business brokers, Tsetserra uniquely positions itself to...

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Malcolm Peace is the founder of Tsetserra Growth Partners, a company specializing in buying family-owned small businesses with established Texas Legacies. Unlike traditional private equity and business brokers, Tsetserra uniquely positions itself to purchase businesses for the long term, with a focus on operating and growing them.

Watch it on Youtube: https://youtu.be/mS_y5uGTsjE
Contact Malcolm on
Linkedin: https://www.linkedin.com/in/malcolmpeace/
Website: https://tsetserra.com/
Email: info@tsetserra.com
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[00:00:00] Ronald Skelton: Hello and welcome to the How2Exit podcast. Today I'm here with Malcolm Peace. He is the founder of Tsetserra Growth Partners. A company that specializes buying family owned small businesses,~ uh,~ with established Texas legacies. ~Uh, ~thank you for being the show. Did I get it right?

[00:00:15] Malcolm Peace: Yeah. That's great. I really appreciate that. 

[00:00:17] Ronald Skelton: Yeah, it's cool that you have a cool name, it's like, did I say that right? Because I really want people to make connections with things and when they read the naming, like he, he butchered that. So I wanna make sure we get it right. You are down in, I think we were talking before the show. You're down in the Austin, Texas area, right?

[00:00:31] Malcolm Peace: Yeah. I'm actually born and raised in Austin. So I came back a couple years ago. Grateful to be a part of the community that's growing here. But yeah, thankful to be also established here in, long term roots.

[00:00:40] Ronald Skelton: Yeah. You talking about a place that's changed over the last 15 or 20 years now. Austin has really changed this landscape. Now I've been a few times. I love the place I've never been to South by Southwest. I don't know why. I probably should just go. Anytime I get a business, opportunity, someone, Hey, can you go to Austin, yeah I'm there. Great music, great, great vibe downtown, great food. For those that don't know, Austin's always made a kind of a home for, musicians and I like a good like, blues, guitar and stuff. So you can always find some, somebody there. 

[00:01:08] So how did you get from, growing up in Austin to, to being on a show about mergers and acquisitions? Let's just do the, origin story here. 

[00:01:16] Malcolm Peace: Yeah. Story that could take our full hour. So I'll try to keep it brief and kind of succinct for the audience. So I ended up going and playing tennis at James Madison University in Virginia. That's how I ended up in Virginia. My wife and I met there. Soon after, got married. Kinda soon after college. Spent some time in Virginia. And candidly, I got an opportunity to go work with the University of Virginia Men's Tennis Program. That was my dream. I was gonna go be a head college tennis coach. That was the plan, to go down that path. They were the number one team in the country.

[00:01:43] They had just won national championships. It was, go be around the best was my mentality. And as I spent time there, I started realizing that I had other interests. I started looking at kind of the life cycle and the life of being a college tennis coach on the road for 30 weeks out of the year. Travel all this amount of time we had just had our first child. I was kind of considering, what does kind of life look like in this structure? And lo and behold, some of the donors of our program, were small business owners. They owned businesses in Atlanta. They owned businesses in Alabama. They had children that were on our team, or they were legacy team, alumni themselves.

[00:02:18] And I kind of looked across the aisle and said, how do I get from here to there? I mean, their lives looked so much more, just balanced, I think is the best word I could describe it. As I started exploring that, we got a new dean of the business school at the University of Virginia Darden School of Business. And him and I started playing tennis in the mornings. Dean Beardsley was a great influence in my life for a season of time, and candidly, he, started just talking openly. Talking and sharing like what his life looked like. He was a managing partner at McKinsey, and kind of looked at like his life and said, he had traveled more time in an airplane in a year than he did on the ground.

[00:02:51] And I kind of looked at his life and I was like, wow, how do I, how do I avoid that too? When someone reveals that kind of life with you, you tend to, open the door. They tend to open the door to ask real questions. So I started communicating to 'em, Hey, I see this person over here, this family over here that have these businesses that have been around for so long. How do I get from here to there? And he said, well, I just happened to read this business school. Why don't you come check it out? And so, I took two years, at the University of Virginia at Darden. I credit a lot of the teachers being willing just to answer a lot of my questions. From going from a transition of a college tennis coach to I want to own small businesses.

[00:03:24] And when I took the time to really reflect on what I was trying to do. One, many career counselors said, why don't do a stop gap. Go get an investment banking job. Why don't you go do this in between situation? And I kept looking back and thinking, wow. Like if I look at my family's history. Entrepreneurship and owning businesses, that really brought, positive change and positive influence to the community has always been a part of my ethos and part of my family.

[00:03:50] So the name Tsetserra really comes from that. My family, I'm a first generation American. My family moved here in the summer of 1990. I was born six months later. They were entrepreneurship. That's what it was. My mom's side, it was all in cattle, dairy and cattle. And my dad's side was in banking and finance and other aspects of accounting and things of that nature. With his grandfather and generations beforehand. And so when they moved to the states, entrepreneurship was what they did. My dad was running an import-export business. My mom, self-taught herself how to do computer programming and came and started working for startups here in Austin. She was part of, if you recall, during green card days and things like that, people were getting award through the green card lottery.

[00:04:32] They would come based on the skillset you had. And so they landed in Austin for a numerous reasons. But landed in Austin really to start their entrepreneurship. Kind of restart, to life after leaving South Africa during the breakup of some political stuff there. And so I share all that to say that when I was going through the experience at Darden, I often found myself reflecting back to like, who am I at a core person? So I took two years to essentially work any opportunity paid unpaid, to transition into owning, running, and developing small businesses, particularly lower mil market. There was a very strategic interest there because it was a, an opportunity to build a life, that I really wanted to see. That wasn't 30 hours of, sorry, I should say 30 weeks out of the year on the road.

[00:05:14] So pretty intentional from that perspective. And that kind of got me through, kind of that transition period. 

[00:05:19] Ronald Skelton: I get it. When I got outta the military, I was in the military for a while. When I got outta the military, I worked for Lockheed Martin and once our project was ready, we had to travel a lot to, install. I can't talk too much about what we did. I can tell you we built firewalls for different agencies and military stuff. Big firewall systems, security systems. When it was time to go install those testos and put 'em in the field and make sure they're up and running and teach the different units about it. There were times, there was at least a year, maybe a year and a half there, where I was at home less than three weeks in a single year.

[00:05:51] I was on the road and I was, newly wed at the time and we were having problems. It was one of those, I ended up quitting the job cuz I was like, cuz this is just too hard on our relationship. What it turned out is we just, you don't know anybody until you move in with them. So, I quit the job and went to a different company. A different tech start up. All my friends were making millions in the tech startup world. So I went into that realm. And turned to find out we just didn't like each other and ended up divorced anyway.

[00:06:15] To end that story real quick, I moved over to the.com area right as it blew up. So I got really good, at liquidated equipment and having to lay people off. That was bad timing on my behalf. Made some money in the space. But yeah. I love Austin. I love ~what you're, ~what you're doing there. ~Uh, ~let's talk about the,~ uh,~ type of companies that you're looking for.~ Uh,~ what your goal is to do with them? Why you chose that kind of stuff. Cuz it'll help, there's some lessons in there for other people. 

[00:06:39] Malcolm Peace: Yeah, great question. So I think it all originates back to the name Tsetserra. I think it's important kind of from an ethos perspective and what we do. So my family owned one of the largest 70,000 acres, cattle and dairy producing farms on the border of Mozambique and Zimbabwe. It was on my mom's side, it was called Tsetserra, colloquially, or like within our family. It was at the base of Mount Tsetserra, you can look it up. Very remote part. They had a big, big farm set up there. But the biggest part and the stories that I continue to hear, even with my grandmother who's still alive on my mom's side, is how this piece of land, this area cultivated a culture of just community amongst the locals that were there. As well as a resource that just really benefited the local community.

[00:07:22] And my great-grandfather was an entrepreneurship. Through and through. And so, for him there was some capital side of it that he wanted to obviously produce, but he never missed the, the chance to be able to take care of the local community. And that still is part of what we do today. So I share all that to say that I look for businesses, we look for businesses that have been an established players in the market, for an extended period of time, and have a local reputation particularly. Be able to invest in those and continue to make them develop and grow, so that we can benefit not only the local community, but the employees that we have there.

[00:07:54] So I was really, going through my own, discovery and development of kind of our, our thesis and what we do. It came to me that there is a big need for these small businesses that have historically, been in a family for some period of time. There's not a son, daughter, niece, or nephew that it wants to take 'em over. Come into those businesses and continue to see them grow and thrive. In the space, a lot of people call it by and hold. I really call it preserve and make them thrive to what they could be. And in the hopes that, we can continue to just grow the team and the team that's already there sees the transformation that takes place.

[00:08:27] Ronald Skelton: Now you go out, you've made acquisitions so far, right? You were telling me earlier about, about one that you did recently. What did you go through to find it? Did you go through a traditional, like search process? Like, this scholastic version of a search funder? Or what was your process in which was locating these? 

[00:08:44] Malcolm Peace: So when we first got started, it was broker, small investment bank is really the direction that we went initially. It was just, easier. They've already been teed up to some extent to be considered for selling or want to sell obviously. As that come across the finish line moment happens, things obviously come arise. It wasn't until 2020, 21, that we really pushed for proprietary deals. Prior to that it was a lot of relationships, build relationships locally. I had a slightly different thesis at the time. And so as we started making this change, it became apparent to me that there was a lot of businesses, if you just, we focus just on Texas. So a lot of businesses in these tertiary markets and other markets that may or may not understand that their business is worth something to somebody.

[00:09:28] And so what came true to me is as I started exploring these businesses, we started building these relationships. It was very apparent that we could get to them relatively early. Again, not a knock on the industry, but we could get to 'em early and have a longer and more thought out conversation about what a transition could look like. And so I would say right now we're at about 65, 70% roughly on proprietary deals. It's just relationships. And I consider proprietary deals that people are not in the day-to-day industry of selling businesses. So no brokers, no investment bankers. They may be people that are wealth advisors, tax advisors.

[00:10:03] Recently, last week had a conversation with the landscape company. From a relationship I have at PNC Bank. All these people that interact with business owners, I would call them proprietary still. It's relationships that we've developed. And then it's direct email and direct phone calls, after that. So that would be about 60 to 70%, annually of the deals that we look at. And then 30% of it comes from our drip and process that we do with brokers and investment bankers, and keeping us at the top of their mind. And so this last business, this manufacturing company, this past fall, came from actually a brokered relationship that we had nurtured over time.

[00:10:36] They had presented the deal to us. The price just wasn't right when they first marketed us and said, Hey, in a couple months if things change, if their circumstance changes, please reach out. And that did. Four months later, there was a circumstance with this previous owner, and they needed to move relatively quick. I think I jumped on a plane the next day after I got a phone call. If not maybe two days within that. And so, that was it. I jumped on a plane, I landed. In the middle of a small little area, it's in Harlingen, Texas, which is south Texas. And I got an Uber to the restaurant that I needed and then I tried to request an Uber to get to the actual building to me have the meeting and there was no Uber.

[00:11:10] So I walked a mile in order to have this meeting with the broker and the owner. And they were blown away. But I wanted to make the impression that I didn't really need their resources to go put this all together. And so I'm glad I had enough time to be able to facilitate the walk of a mile or so heading for the restaurant to the building. But yeah, that's how that relationship came to be. 

[00:11:29] Ronald Skelton: That's quite a little story there because, not too many people have done that. Most people probably would've called them and say, Hey, I'm stuck here at the restaurant. Can you send somebody to grab me? 

[00:11:36] Malcolm Peace: To be truthful to the story, I called the broker and I said, Hey, are you at the facility yet? And he said, yeah, I'm already here. And when he told me that, I said, well, then I can't ask him to come pick me up now. But if he was on his way, the plan was for him to come pick me up. But after I found that out, I said, no, I guess I'm gonna have to walk. And so I carried my backpack over one shoulder so I didn't sweat at my back and show up and told him the story.

[00:11:56] Ronald Skelton: Now you, that was a recent purchase? 

[00:11:59] Malcolm Peace: Yeah, we bought in October. So it was a quite a sad story. And to the respect to the last owner, there was some circumstances that happened with her family that I'm gonna respect and keep kinda offline. So it was, the intention was to kinda summer timeline to start going through due diligence. And she created, through, just inexperience on selling a business. Her dad who actually ran the business, passed away from Covid in 2021 and she took over. A lot of care for the people. I'll tell you that. Care a lot about the people. Just in an experience on running a business.

[00:12:28] And she would say that to you. And so I feel comfortable saying that when we came to trying to close and go through due diligence, there was a lot of hesitancy and resistance around getting the deal done. It just was a complicated equation. And candidly there was a, family law attorney, that was involved and just, he hadn't done a lot of m and a transactions, at least from my experience with him. It didn't seem that way. And so there was a lot of extra NDAs that I had to sign. There was a lot of resistance about handing over information that made our process a little bit longer. So I wouldn't say a six, seven months due diligence is ideal.

[00:13:02] But it was a little bit outta my hands at times. To respect to her, it just made it a little bit more challenging. But we essentially got it done at the end of, sorry, beginning of October. 

[00:13:10] Ronald Skelton: So, if you're listening to the show and you got a business for sale, do not use your family attorney and do not use attorney that set up your LLC. There are attorneys out there that specialize in the buying and selling of businesses, m and a transactions. And it makes the process go a lot faster because they know, not only do they know what's supposed to happen, they know how to communicate with you to make you at ease with what's supposed to happen.

[00:13:34] I've seen that a couple times already. I actually walked away from one because the attorney was just so lost. It was such a small deal I wasn't have to attorney up to deal with him. And it wasn't worth it. The deal was so small. Like, by the time I pay an attorney for this, it's gonna take me two years to recover my, it's gonna take me an extra year to return, recover my investment. And it was just a little add-on.

[00:13:54] Malcolm Peace: Yeah. And it can be that way. I think that most, I think most attorneys, mean well. And they care about this seller primarily. But they miss some of the fundamentals on how to communicate and how, things need to go. When you show up for due diligence on a day and they're basically calling you that day saying that they can't release any information to you, it makes it a bit challenging.

[00:14:16] Or we're under exclusivity and a potential other buyer shows up the same day you're there. Just things where it's like scratching your head and the deal seems to be dying, and you're like, all right, what am I doing here? Am I gonna keep going with this? Am I gonna keep pushing through? But it was worth it in the long run. The team that's there is incredible. I travel there basically every other week at this point. And we've got a lot of great things to established and we build upon and so on and so forth. So things are great. 

[00:14:40] Ronald Skelton: So owner passes away, daughter's not running it right. Did you find somebody in the company? Who's the operator now? You're going there every other week, but who's the day-to-day operator?

[00:14:48] Malcolm Peace: Yeah. I'm embarrassed to say ~that ~that's what we certainly are still at right now,~ um,~ in some ways. ~Uh, ~so again, to respect the last previous owner, when we closed the business, she had moved to Orlando. So she had chosen in the middle of the summer basically during due diligence to up and leave and go to Orlando.

[00:15:04] And so she needed to, for her personal reasons of her family and so on and so forth. And so the business essentially from, July through October ran independently. And candidly before that it was running relatively independent without her or with her there, irregardless. But I think what the worst case scenario was for me, is if I came in and said, let me go. Straighten up the ship and try to get it all right. There might be some resistance? And so that was my hesitancy for better half of, or the end of 2023 was, let me just see how this all kind of plays itself out. And I was trying to evaluate who internally. I was going more frequently too. Who internally was gonna be able to step up. Maybe there's someone that grows into a general manager or something greater or something of, a larger sense.

[00:15:47] And what I came to find out is that, a lot of them just wanted to understand what's the vision in general. And so that's how we're running it now, where I do run remotely, basically. I'll probably look for someone, in the near future to come in and run to kind of keep things tight. But we made some shifts on the personnel side. They never had a quality assurance person. Which I shifted somebody over to that role and he's just, he's killing it honestly. He's taking ownership of that role. At one point her title was executive assistant and I moved her way more into like, Office manager with an increased opportunity for project management and she stepped up to that role.

[00:16:21] We've put in virtual assistants. We've played the playbook that we typically do and I can share more about that, kind of after this. But, right now things are stable and now it's okay, how do we grow from here? And I think there is gonna need to be someone there day to day. But because of the way that the business was structured with her being in Orlando, there was a lot of autonomy that folks were already experiencing and already doing, that I'm trying to, six months in, right. And I'm trying not to disrupt at this point.

[00:16:47] Ronald Skelton: You said manufacturing. What do you guys make?

[00:16:49] Malcolm Peace: It's called sort right International. We manufacture U S D A graded devices that sort the sizes of shrimp. So it's a 72 year old business. If you go to a crawfish boil and you want to be able to get a jumbo shrimp or you go get a stir fry, an Asian stir fry. It would have a smaller size shrimp. We ship devices and machines all over the world that, sort those sizes of shrimp, through a gravity fed and process. 

[00:17:12] Ronald Skelton: Interesting. A shrimp sorter. And I would've never thought about like, there's a company out there making a device that's sort shrimp. My wife's, I guess it's her uncle. He works at a company that they build, specialized products like that. They build all kinds of random, specialized products and stuff for years. He's almost at retirement age right now. He is at retirement age, but he loves what he does. He's kind of an engineer. But they're talking about like, things that put weird stuff in boxes and just, the odd stuff.

[00:17:38] I never thought about, there's a company out there that actually designs the device that says, this is a big shrimp. This is a small shrimp. I figured it was just a bunch of, workers just like, doing the table thing.

[00:17:48] Malcolm Peace: No. When I came in, there was some warranty things that came up. We sell a lot into Ecuador, central South America, Asia. We're sending a lot into the Middle East now. We've gone as far as Australia, Papua new Guinea. And I share all that to say that, when walking through a factory, I was, we closed on the seventh and I went to a factory within six days. I believe I was on a plane to go to Ecuador regarding a warranty issue and a convention that we were a part of.

[00:18:11] And it was very eye-opening to me. I had never been in one of the factories before. It was very eye-opening to me how much is not actually manual. Um, although the volume at which they produce, allows them to have some manual processes to it. I mean, the volume we do, our machines do up to 8,000 pounds per hour. So if you can imagine, it's a lot of shrimp being pumped through. 

[00:18:30] Ronald Skelton: That's a lot of shrimp. 

[00:18:32] Malcolm Peace: Exactly. So it was eye-opening to me when you step into a factory and 70% of the product is actually leaving, exporting the country to the largest producer, which is China, and going to them.

[00:18:42] So you can imagine how much China is consuming, from a shrimp perspective as well. It's a fascinating industry that, I learned about during due diligence. But until you step in one of those factories and you see how everybody works and how your machines operate and all that kind of stuff in real time. It's pretty impressive. 

[00:18:57] Ronald Skelton: Yeah. I've never seen that on the Bubba Gump. This is the kind of stuff I like to chat about. It's like the uniqueness, right? I had a guy on the show who, he buys, foundries. Like the old school, pour metal, and they do templates and stuff. And my favorite question for him was like, what's the most unique thing he ever made?

[00:19:12] And they made adult sized, like so adults could get on it. Do you ever see the steel rocking horse in a kid's playground? They made 1 or two, I think it was two of them in New York that were big enough for adults, but they were unicorns. And you could climb up on these as adults and like rock back and forth on this giant steel. And they poured the mold for that.

[00:19:29] Just like the unique things that are out there that people, that you can buy. Right? If I would've guessed, if you'd given me a hundred guesses as to what your manufacturing does in Texas, I would've probably said tractor parts or, rebuild alternators or, something, along the automotive slash you know, industrial. Never a, a shrimp sorter cuz like, who thinks to build one of those in Austin? You're a few miles from the ocean, right? There's not a big shrimp industry right there.

[00:19:53] Malcolm Peace: Yeah. So the actual company is quite a distance. So it's a, it's about a plane flight away. An hour plane flight on Southwest gets me there. But you are right. In Texas you wouldn't ever experienced that. But again, it's a whole world that I didn't really know existed. There's machines that are dedicated for sorting the sizes of onions and potatoes, and a good friend of mine owns a potato company in Albuquerque, and he's using certain other machines. And there's a whole industry to it.

[00:20:15] Rollers particularly. You see 'em in like Amazon factories and stuff. We do rollers that are 12 feet. 10 to 12 feet long. So that's a specialty in its own that very few people do. And so, all that to be said, I think all these little niches, there's opportunities. And candidly, you mentioned when you graduated, I'm 32 years old. And when I get to step into a room with an owner who runs this business and it's a boring, kind of blue collar, industrial type business, and they don't have a niece or nephew or anybody that really wants to run it, and I can sit down at 32 years old and say, I love your shrimp manufacturing company.

[00:20:47] I love your brick company. I love your bridge installation company. I love these things. I'm not trying to be boastful, I've had owners tear up where they've been wanting that. They've been wanting a niece, nephew, these baby boomers have been wanting a niece, nephew, son or daughter to be able to come in and run these businesses. So I feel a lot of pride when I think back to our origin, for Tsetserra about what we're capable of doing. And when I get to take a young supervisor, one of my guys right now in this company, and he's never hired somebody. And I get to say, here's your, here's your org chart. You need three more fills.

[00:21:17] Like, go fill 'em. And he gets to do that. And he comes up to me and whispers to me, thank you so much for trusting me. That's what gets exciting about it.

[00:21:23] Ronald Skelton: That's awesome. Awesome. I've walked through some really cool stuff. I had a buddy who, he gets into weird stuff. He started a plastic recycling company, where they buy, bulk plastics or they would take donations of bulk plastics. Everything from, big PVC to C PVC pipes or whatever. The big black pipe, whatever that one is.

[00:21:40] And then they would clean it and then grind it, and then put it in these huge, it was like big shopping bags that were made for a pallet. They were the size, the size of, bigger than a mini fridge. I mean bigger than a refrigerator. They were just these big bags. And they had these devices that would cyclone, like the small pieces out so they could sort them by size and they ground them and these giant grinders that would have metal detectors.

[00:22:01] I walked to that place, half a dozen times. As a matter of fact, I wasn't even doing, marketing at the time, but he needed somebody to, come through and help grow it and do some stuff. Redid their website for him, put their social media up and, for about two months I went over to his office and did some marketing stuff. Just cause I wanted to be around that. And then he jumped for another cool company. Bought the technology to make a new type of cattle feed. It presses the feed into, little square cubes, for the cattle. And the technology is different and such that most of the time when they make the pellets, it uses a lot of filler.

[00:22:31] So when they feed the cattle, this filler, your family used to be in the cattle business. When they feed the filler, it takes a lot of the feed to put weight on the cattle. The new methods, more protein and a better quality. It takes less pounds of feed per pound of, meat or muscle that they can put on in the finishing lot.

[00:22:46] So it's a more efficient way and healthier way for the cattle. So they bought that technology and I don't know what he is doing now, cuz the other day I seen him selling luxury cars online. So I think it's either a side hustle or he, maybe he sold the cattle plant or. But he's jumping, he jumps from one thing to another.

[00:22:58] Malcolm Peace: I was gonna say, I went to this convention in October in Ecuador and I saw all sorts of amazing feeds on the feed side. Irrigation or irrigation side and all this type of stuff. I mean, It's neat. What people are able to come up and do. I mean, I, that's what I always say.

[00:23:11] I always tell an owner at the end of the day, the fact that you started this from nothing and built it to where it got to 3 million in revenue and plus, you've done harder work than I will ever do. I gotta give you all the credit. I mean, what you've been able to do is figure out how to create this product or innovate so and so product, to be able to get to the point where you are today and to stabilize this kind of business for the last 10 plus years. I mean, more credit to you. I just want to continue that legacy cuz what you've done is impressive. 

[00:23:35] Ronald Skelton: So let's jump in that. Okay, now you've acquired it. Now what? I'm actually gonna do a series at some points, like, and I'm gonna call it, You bought it now What? Because I've been talking about buying, growing, and selling companies, but we usually spend the talk about buying it or maximizing the exit. The growth, growth after acquisition, I should say. Cuz growing a company that you found is one thing. Acquiring something new and taking it down a growth and scale process. What's your plan on that? I'm intrigued to learn from you in that space. 

[00:24:00] Malcolm Peace: Yeah, great question. I'll kind of answer that in a long way about it. I think it's important. So I've got a group of friends every Monday night, we play pickleball. Religiously. Never miss it. As best as we can, no matter what. Even if there's kids little leagues, we'll push it back. It came out of, I played college tennis. I wanted to come in and learn about pickleball.

[00:24:15] They had been playing for a while. They're gracious to let me come join their group. And now we've been playing for multiple years. And one of the things that I always bring up, and the reason I share that story is we often talk business. One of the guys that I play pickleball with, good friend of mine now for a number of years, is an investor of ours, in this deal.

[00:24:30] So we often talk business. We don't tend to talk about this deal particularly. He gets kind of updates exclusively about that. But we do talk business, we do talk deals. And one of the questions I always ask when we bring up a deal and we have a conversation is, what is your thesis? And what is your thesis around this business?

[00:24:45] Again, nothing novel. But you know, what is your thesis around the business? What's the ultimate goal you're trying to do here? And so when I look at this, when I looked at this deal, Sort Right, and I'm embarrassed to say this cause I always get more questions that come after this. The business had done $980,000 net at the end of the year and I bought it for $400,000 cash. Kind of a weird structure, right? Like things you don't typically hear about. What happened was, is the owner wanted the real estate and the business to sell. Originally it was all priced for around $3 million.

[00:25:15] I didn't think it was worth that. There was some constraints around all of that. They had one year that didn't look very good. And it was, essentially when the owner died, kind of as he was raising out health wise. And so when I looked at it and I said, how do we make this the best thing possible? If I buy it low, my main goal is to stabilize it as soon as possible. So we had put together a plan for the first a hundred days of just to get this stable. The last thing I wanted to do with employees that had on average, been there for six years. A lot of them had been in this company for a long time.

[00:25:46] Last thing I want to do is come in and people just scatter. That was my biggest goal. Is they had been in a circumstance where the owner had left, the previous owner had died. The last thing they needed wasn't someone to come in and be like, all right, let's get to work and let's push this hard as we can and X, Y, and Z. So candidly, the first a hundred days was just stabilized. Deal with the personnel side, the customer warranty issues, all those types of things, and just stabilize as best we can. Now we're in what I would call growth mode. Now it's, Hey, I've been building in the background. Here's all the software.

[00:26:18] One of our strategies is we do low code, no code, software implementation. So we've got a process of really sales is a lot of it, but then manage it to the backend. Connecting it with QuickBooks and other softwares and things of that nature to monitor and performance. I was building that in the background while also stabilizing the personnel and the warranty issues from a customer perspective.

[00:26:38] And so once the new year came around about mid-January, we rolled that out. And candidly, it's been well received. But if I would've rolled that out in the first a hundred days and just like young ho, I don't think it would've been. We had family, what I call family meals and we would sit down every two weeks or so. And, I show up and I say, here's what I like to talk about. Any other questions? Actually, I gave it to 'em as an agenda the day before. Here's what we're gonna talk about tomorrow. Any other pre-questions, feel free to bring them and kind of just left the table open. Sit amongst the group. Sit in the middle of the table. Don't sit at the head of the table and let them just ask.

[00:27:11] Because they had been in such volatility and uncertainty for so long. 90% of their conversations was like, am I gonna have a job? And what does the sales process look like? And so being able to lay that out very clearly of like, here's the runway. Here's what we're looking at, here's the sales we have coming down.

[00:27:27] What I wasn't anticipating is their need for just security. I mean, that's really what it is. And I think that's what a lot of these small business owners have to offer in some cases. When I look at the kind of, this is a little bit of a macro thing for me personally. But when I look at the schema of everything that's going on in the tech space and other spaces that I have all these layoffs and I had a coffee with a friend this morning that his wife works at one of the tech companies and she's nervous about coming back from maternity leave.

[00:27:51] All those types of things. Like one of the things that these small business owners can really do and myself in this position, is we can provide a secure situation for these business owners by giving them transparency. Tomorrow we're gonna have our quarterly meeting and I'm gonna explain. Here's what our sales process looked like for the last quarter.

[00:28:09] Here's how we did. Here's our runway, here's our hits, here's our losses, here's our margins, here's how we managed overtime, here's how we did all these types of things. So they know, hey, I can lock in and I can go buy that new car I needed. Or I can go do whatever I needed to do for my family at the time.

[00:28:24] And I think that's the real kind of sell point. I can't create a cafeteria with all-you-can-eat food. But I can create a circumstance where like your paycheck's gonna clear and you're gonna have really good foresight at your future here. So that's how we do things. And implement from after stabilization.

[00:28:39] Ronald Skelton: So do you guys have a, couple questions. I just did an article for my newsletter on, Protection or IP moats. Just basically looking for companies that have some competitive advantage. Especially in a market where our, our economy is faster, faster than ever becoming a global economy. So what is the, how many companies out there make shrimp sorting machines? 

[00:29:01] Malcolm Peace: Yeah, there's quite a few. There's some that can only compete locally and regionally. And then there's some that compete, obviously compete internationally and such. I'll take it just from a real candid conversation that happened with my sales guy yesterday.

[00:29:13] So Esteban is our international sales. He is actually based in Mexico, but travels quite a bit for us. And he's been with the company since 2016. But has have 40 years, I believe, in the industry. I could be wrong about that, 30 or 40 years. And the truth is that, there are lots of other competitors. In Ecuador when we're competing for, the second largest producing country in the world for this space, we're competing against two companies. One that has arguably equal equipment and one that has lesser than that. And so when I look at the situation where they are selling it for 15 to 20% less in price, I can't go to my employees and say, Hey, I'm gonna cut your salary. I'm gonna cut your hourly rate, by 20%. It's just not gonna happen.

[00:29:54] So what used to be the competitiveness of, we are the ability to go international at all times. All those types of things is becoming a little more challenging. So we've had to shift. I have an opinion that there's three ways that you compete and, as the audience, please chime in at some point, to share, maybe some other ways that we can compete. But I believe you can compete on customer service. I think you can compete on quality and the assurance on that quality. And then you can compete on price. And I think you've seen that in other circumstances, other industries in the world where they're trying to figure out which one are they focused on at that time.

[00:30:26] And we just weren't, we weren't knocking it out of the park on any of them. Our price was still a little bit higher than the average. And our quality control was a little bit wonky, wasn't the greatest. And then candidly, there was nobody in the customer service side. It was the sales guy. He was handling pre-sale, post-sale, quality control. He was handling everything. And so we've shifted a lot of those around. To be clear that, hey, this is how we're gonna compete and you're gonna get a quick response this way. You're gonna get a quality machine that shows up. We have check sheets and processes that we never used to have before, before anything leaves the door.

[00:30:59] I'm embarrassed to say this, but the machines that are quarter million dollars used to go out with cardboard wrapped around them and like, really ugly. I wish I could show you a picture right now. So now everything is saran wrapped. It's got documentations, it's got photos, we've got Google documents that shows all the photos of the pre and post and all that stuff that just wasn't in place.

[00:31:16] And so, what used to be the competitive advantage of our moat of, we were this unique thing has been knocked off internationally at this point. And they're selling it for 20% less. But the skillset of 72 years, the reputation of 72 years, is you just can't do, you can't repeat. And so, my commitment is that although we may be the more expensive, call it the Bentley of the industry, we are gonna compete on quality. And when it shows up right. 

[00:31:41] And that's what I can assure you. Because again, knowing the industry now that I know it, a lot of these companies are seasonal. They have harvesting times of year. And so if they get a machine that shows up and it doesn't work and it's down for a month, you can imagine the economic strain that happens on that business and the employees that don't work and all that kind of stuff.

[00:32:00] So, all that to be said, our competitive advantage is it's gonna show up, right. And it's gonna show up with quality at this point. 

[00:32:06] Ronald Skelton: So you said you could compete on, customer service, price, and what was the third one?

[00:32:11] Malcolm Peace: Customer service, price and quality.~ That, ~I think that at some point a company has to decide which one they're gonna be. And I think if you try to be all three, you're gonna be mediocre at all three. 

[00:32:21] Ronald Skelton: I mean, if you're the machine with 20% more. If your machine will outlast them by 10 years or 15 years because it's a higher quality, uses higher gauge steel, uses, stainless steel that won't rust or whatever. Cuz imagine you're around salt water shrimp, right?

[00:32:34] The quality of materials inside of that has to be, it could be undesigned too. I'm thinking about, well, what problems would a shrimp sorting machine have? One of 'em has to be sanitary. 

[00:32:43] Malcolm Peace: You wouldn't be surprised. So yeah, everything has to be U S D A grade. I mean, just to give the audience some perspective. You walk in and you get sanitized three different ways in order to come into these facilities. People are wearing full, head to cover. It's very well done. Which I, made me want to eat shrimp, right? 

[00:32:57] You walk into some of these places and you're like, I don't know so much. The truth is that, even the smallest pin size hole on one of our machines could eventually cause an issue. Where mold and just bildo and things get built up. You imagine these shrimp, not to be too graphic, but as they're going through, little pieces of them kind of break off and as they're going through the process.

[00:33:17] So as that starts building up, that's where bacteria starts being created. And you don't want that. So our check sheet and our process that we go through on every single machine, has just increased because of that need. It's a necessity for the business. And so, I share all that to say that, years ago that these machines used to last forever and ever and ever and ever. And as time went on, the owners, in their own way got comfortable with how the business was run. And they weren't stressing out about sales. Cuz they, they had a bit of a moat. They were the leaders of the industry and that helped. Over time, that stuff starts to fade. And people catch you when you're sitting down.

[00:33:53] And so yeah, I've been into factories where the machine is 30 years old, I can see it still running. And the owner is calling us because the machine still runs 30 years. Shifting to, how do we service those customers the right way so they can expect the same result that they had 30 years ago has been a core focus over the last six months.

[00:34:11] Ronald Skelton: I would imagine, I was sitting there thinking, I'm an avid fishing guy. I love to go fishing and I've accidentally left a package of shrimp in my tackle or whatever. And he come back on a hot, summer day and like been in Texas of all places, right? I've been in Texas and had shrimp fishing for catfish or whatever, and chilling out with the kids and didn't think anything of it and just threw it in the backpack or threw it in the, the tackle box.

[00:34:31] Cause I thought I'd get home and take it out. Two to three days later in the hot Texas sun, you get, you find that. I can imagine a shrimp sorting machine if it's got some type of flaw and that those things didn't get tangled up loose. You could contaminate, I'd imagine one bad shrimp could contaminate a whole. I wonder if it's like fruit too. Where the bacteria from, like if you get a one rotten apple can spoil a whole bunch. Cuz the bacteria that rots the apple can rot the other ones faster. I wonder if a bad shrimp can actually make the whole package bad because that bacteria goes, grows and gets on other stuff.

[00:35:02] Malcolm Peace: Yeah, there's a lot to that. And not to go too much into it. But yeah. I have been impressed just being out in this industry for the first time. Like, I'm impressed with the quality control that a lot of our customers have. I mean, I really am. And that gives me assurance that I can go have a coconut shrimp, which ironically was one of my favorite task times with my mom every year at out Outback Steakhouse. Shout out to them.

[00:35:21] Ronald Skelton: So as a company specializes in buying multiple companies, are you looking for more things like that, that you guys can cross sell, upsell? So if there's a sorting machine, is there a packing machine, somebody else's building? How are you going to, are you gonna be just picking other manufacturing? So you have similarities in process, but it's a different industry. What's your game plan for future acquisitions? 

[00:35:40] Malcolm Peace: Yeah, great question. So one of the things that we want to do is we want to be in a position where we can buy multiple businesses that have the same process, same ethos from a software SOP standardization.

[00:35:53] We hire a lot of virtual assistants outta the Philippines. I've been really grateful for the effort and all of the team kind of putting into that. But, candidly we wanna buy businesses that, we can add value pretty evidently. And that was something that was obvious to me. As I started looking at these other deals is, there's businesses where I think you can come in and you know by happenstance you get a little lucky by the industry. But where can we actually roll up our sleeves? And that's what I like to do. Between you and I and the audience here, I like rolling up my sleeves and getting involved. And building a business where, they can last for a long time, buy and hold lasts for a long time.

[00:36:29] And they do a great quality job on, on the products we got produced. So, to specifically answer your question, there are businesses that we are looking at and in conversation with, that are in complimentary industries. They sell devices that sort the sizes of potatoes, onions. Anything round is a big focus of theirs.

[00:36:47] It's just a different type of machine. I wish I could show you, but the, there's rollers and things that are just different. And it would be a shift of do we buy them and integrate at some point? Do we buy and we hold ourselves as a position? But all of the businesses that we're buying, because they're older than 10 years, they have a solid reputation. I think that's part of what you buy, right? And so, they have a solid reputation in the industry. And can we add some sophistication to them? Can we add some real value add? In a tangible way to the team and so on and so forth. 

[00:37:16] So those are the kind of qualitative set, quantitative questions that we're always asking ourselves as we're looking at different deals. Where can we add value here? Where is it, that this business is capable of going? 

[00:37:28] Ronald Skelton: All right. I was thinking along the lines of like, I don't know how the, what the assembly line looks like, or what do you call it?

[00:37:34] I don't even know if that's the word you're looking for. There's a sorting machine. There's gotta be something that packs it. There may be, there's something that sanitizes it. Something that runs it through some type of ultraviolet light or something that kills any, you know. I don't know what the food packing process looks like, but. 

[00:37:48] Malcolm Peace: Yeah, so there's, I would say there's two phases, that we used to play in. We used to play in the harvesting phase where we were actually out at the fields and out at the different ponds and doing the harvesting side. That's become less of a focus because there's a lot of bigger players, that have come into that industry and it's hard for us to compete if that's not a core focus.

[00:38:05] We are exclusively in the sorting and packaging side. And then with that, we compliment ourselves with another group of folks. Different regional internationally, that do flash freezing. So what they'll do is right when they come off of the machines, they get flash frozen. That component is something that, it's just a, it's industry of itself. It's a uniform industry that can be used across the board and you would have to own a company that just does that. And so that's how we kind of partner. So when we come in and we do a full line, we've got some bids out right now in Saudi Arabia and other places that our people are doing stuff.

[00:38:37] We would come in and say, here's a full line of the sorting side. And then we'll partner, here's a relationship we have with the flash freezing to kind of bring it all together. 

[00:38:45] Ronald Skelton: That's what I was gonna ask. You could actually, we provide this component, but we have these relationships and we can improve your entire line by our component. We bring our relationships with you and we make sure your whole line is world class. So I was curious on that. 

[00:38:59] Malcolm Peace: Yeah. I think one of the things that I want to emphasize is we bought the business at a really great price. 

[00:39:04] Ronald Skelton: I was gonna go back to that. I was heading there right next. 

[00:39:07] Malcolm Peace: And so if you can imagine, if we stabilize the business and we're doing, just shy or just north of a million dollars in earnings, the business is a great return. I'm not gonna deny it. It's a good business. They're stabilized. There's things are great. So what I wanted to do from a thesis and a strategy perspective is, get it to a point where, we were all on the same page about what our core competency is. And our core competency can't be we're gonna keep Pete on price every single week. 

[00:39:34] And I had a sales guy, bless his heart, I really enjoy him. We have a great relationship. Kept asking me, can we have a discount? Can we have another discount? Can we have another discount? And eventually you just run out of that as an option. And so when I looked at it and I said, okay, what are the two other ways we can compete customer service side? Although we had a phone, there was nobody really answering any customer complaints.

[00:39:51] It was going through my sales guy who needs to be focused on new relationships, really. And then there was nobody really checking the quality. These machines went out, to be real for your audience, there was three machines that went out, within a year before we closed. And I've got about 80, $90,000 worth of warranty issues that are coming in out. So just from a perspective, from a price perspective, I could have paid two guys, a year's salary for those issues. And so, that stuff matters. I think long term that's straight from the bottom line coming right off.

[00:40:19] That stuff matters. And so, all that to be said, we looked at it and say, okay, if we buy this business at a good price, and we know that we can stabilize it from a customer side of things, there's enough demand, all that kind of things, what do we really need to do here? We need to get dialed in. And that's what we've really been focusing on. Is how do we get dialed in? Don't try to add too much. Get understanding of what's actually occurring. Get the bookkeeping cleaned up for Pete's sake. Just core things that just weren't taking place. Understand what your cost is on this machine.

[00:40:48] I came in through due diligence and they couldn't tell me. I mean, they could not tell me how much it cost to make a machine. Just couldn't. And so I spent three days with a good friend of mine. My buddy that owns a potato company in Albuquerque, and we went through every single receipt. I ran my own QV because I was like, I don't even know where to start with this. And they don't know where to start with this. So lemme just show up on day one on here and just grab every single receipt. And we did that for about a year's worth of sales and expenses. So, anyways, that gave me assurance that there was enough margin in these machines and we can make this work.

[00:41:20] Ronald Skelton: So what's your goal? I mean, I don't wanna give industry secrets away. Cuz that would be not helpful to you. But what's your goal for margin? Where do you think that this company and similar companies. The reason I ask is I've actually interviewed, the author and the, trainers of a business you might have heard of, the Great Game of Business. It's kind of EOS or one of those, I've interviewed those guys too. In the interview with the Great Game of Business, they started off, they've bought 60 plus businesses. 

[00:41:44] They're doing manufacturing and remanufacturing of tractor parts is mostly, and parts businesses. And they opened my eyes and said, the national average for profit margin is less than 6%. And they take these companies, they're making less than 6% and turn 'em into employee stock option, companies and do just a totally different realm.

[00:42:03] The whole great game of business is about getting everybody at the company to own their stake. Now what's your goal side of this? Are you willing to share that like, you think your company, this company could eventually be a profit margin of 20% or 18% or 15?

[00:42:15] Malcolm Peace: Yeah. Let me tell you this, and because it's transparently on our site. We don't look at businesses that do less than 15. So I'll tell you it's more than 15. That's one of our criterias. The business has to be able to sustain itself even if things kind of drop off a little bit, right?

[00:42:30] And so, it's north of 15 but I always say that like, because we bought it at a good deal, my investors are very happy. We're in great communication. It's a small group. So part of the deal that I wanted to do personally as we look at businesses like this, is I wanted to build a network. I've got about 30 people on a Rolodex now, that we make those phone calls.

[00:42:48] This last deal, we made five phone calls. One guy couldn't do a capital call at the time. And we closed the deal very quickly. Once we got through the due diligence, NDAs and all the things that she finally approved. But you know, truthfully, yeah, the business does well. And it just needed to stabilize.

[00:43:03] They needed reassurance. Again, my employees on average have more than six years. That's excluding one guy that's been there for 40 years. So just, guys that have been in this kind of generation of the business, six years average, there's a lot of knowledge there. There's a lot of understanding about how this business is run. How to do it right, how to build things, how to manufacture 'em. What's should take, what certain amount of time.

[00:43:23] The last thing I wanted to do was lose anybody. And just to tell everybody to be frank, the week before I came in, two guys that had been there less than a year, father son moved outta state. They left and they thought they could earn more money somewhere else. And since then we've lost one guy.

[00:43:38] He went back to the police force. And we talked through that and so on and so forth. But, we were able to stabilize. And I'm really grateful for that. I'm grateful for the buy-in of the team. I'm grateful for the fact that they understand that like, this is not a sprint, this is a marathon. And, candidly it's a circumstance where, you know, as long as things can kind of click along the right, I mean everybody and should be benefiting long term.

[00:44:00] Ronald Skelton: So I've made a few offers where like the company was a little distressed and I thought I could turn it around. Kinda like you just did. And, the way I positioned mine, because the offer was way like some, something similar was way less. Is I left some skin on the table for the original owner. Did you buy a hundred percent of the company? Or did you like buy 75 and say, look, here's our plan, here's what we're gonna do with it. This 25% of the company's gonna be worth, a lot more than the 75% I'm buying today. I mean, what was your?

[00:44:27] Malcolm Peace: So we bought a hundred percent of the business. The plan was to buy the real estate and the business. I could share this now, some things came up as we were exploring the real estate side. And so we have put in a lease for that. So we have an option to purchase. We have a first rider refusal. I can't go into all the terms of it, but we have a first rider refusal on the real estate. If that's, something we want to explore down the future. But we set up a pretty, what I would consider a good situation for her, given her circumstances.

[00:44:51] She gets a nice lease, circumstance and she got some good closing cash. And so, it wasn't, I wouldn't say it was, the walkaway cash in the pocket that she was hoping for. But there's still that option for her. She can still sell the real estate. We have the option to purchase it that comes up, but, she can still sell the real estate and, there's flexibility from that perspective.

[00:45:10] But we retained a hundred percent and honestly she was ready for that. There was some, one minority partner who was ailing, that was friends and business partners with the dad that passed away. And he, I since have never met him, even to this day. But she was fully out of the business by the time October came around. I always, I heard you say about distress businesses. I think there's two different types of distress businesses. There's financial distress businesses and that there's personnel and kind of vision and where we're heading, kind of distressed businesses. 

[00:45:35] Ronald Skelton: Owner distressed or business distress, right? 

[00:45:37] Malcolm Peace: Correct. Correct. And they're different. They can be mutually exclusive, they can also be the same. It can be a combination of all sorts of things. But the market was very clear that there was still a need for this business. And that we could, comfortably come in and make that happen. Now, on the personnel side we had to do some work and we're still doing that work. But, I'm grateful. 

[00:45:56] Ronald Skelton: Are you familiar with the sell leaseback strategies?

[00:45:59] Malcolm Peace: A little bit. Tell me a little bit more. 

[00:46:01] Ronald Skelton: A sell leaseback is where, she decides you really need the money from the real estate. You can make an offer to purchase it. And then you buy the property within a day or two. Sell it to some, to a third party institutional investor. A lot of times they'll pay a premium on it cuz they'll give you a 15 year, lease. So it all depends on your profit margins. A lot of times, like the ones that we've helped with were in the, like high rent dental offices and stuff like that.

[00:46:25] Things that the business could handle a higher than average. So you can pay a little bit of premium. Cuz they're gonna pay you a, they're gonna look at it and give you a particular cap rate that they're looking for. And a lot of times they'll give you more. That's one of the ways some of these guys, you hear these guys say, I'll buy a dollar down business. I put a dollar down and buy the business.

[00:46:43] One of the strategies they're doing is they're buying both the real estate and the business. They're doing a sell leaseback of the real estate. So they're selling it to an institutional buyer. Leasing it back from them and using that proceeds from the sale to fund the entire transaction. Cause they're taking a premium on it.

[00:46:58] Like if their rent was supposed to be, let's make the math over simple and way under price. Let's say a thousand dollars a month and they can really easily afford $1,500 a month. Then the institutional investor will pay more for it on a 15 year lease. Right? They lock themselves into a 15 year lease at 1500 with a, every two years they have the opportunity to raise the rent by market percentage.

[00:47:20] So there's built in rent increases. But then they can take that capital and, say it was a million dollar property. And because you're paying more rent, the investor might pay 1.5 million for it. And then now you've got $500,000, and we got a million dollars to give to them and $500,000 worth of working capital to turn the company around.

[00:47:38] So there's structures out there. They're not as easy to get done as a lot of the gurus and mentors will teach you because these, every single one of these investors have their own criteria. A lot of these guys that come and want to do these type of deals, they're fairly new at this. And the one thing I'll say about, if you're listening out there and like, Hey, I want Ron to show me how to do this. Understand that investor, loaning you that money to, or buying that real estate from you is gonna verify you have the ability to pay that lease outside of the business you're purchasing.

[00:48:04] So they're gonna look at other assets you have, other income you have. So if the business fails, can you still pay your lease? What's their security? Cuz they're gonna overs securitize. So a lot of times they're gonna do cross collateralization of other real estate you own and other stuff. They're gonna protect themselves. I've seen a couple of deals where, they just failed. It was a great deal for the investor, but the guy buying the business had never run that type of business. And so he didn't have the, we call it the resume to and instill trust.

[00:48:32] And when the investor says, well, what else do you have? What other income you have? Can you pay this if you fail at running dental offices? This is your first one. They couldn't come up with that. But that's what that is. A sell leaseback would be an opportunity if she came to you and said, I want the money out of it now. And you didn't have it or your investors weren't ready. You could probably find an institutional investor that would. Facilitate that transaction to a 15 year lease back to you and maybe even offer to sell it back to you at the end of that 15 years. 

[00:48:57] Malcolm Peace: Yeah, we had a conflicting situation. Thank you for sharing that. That's super helpful. We had a conflicting situation that occurred. She became, it became difficult. And I'm not trying to point fingers, but it became difficult on the due diligence side to get the information that we needed. So candidly, I started just doing it on my own. I mean, there was very little assistance from the previous owner. I'm not sure she had the guidance on what she was supposed to assist with. And to be kind of collaborative in this approach to get the across the finish line.

[00:49:22] So as I started doing that, I started exploring and found out that the real estate was not worth what she believed it to be. And so, given that and given some other, environmental stuff that came up, it was evident that wasn't the path. And so I wanted to make sure that she had still had the option to, if that was her belief that business or that real estate was worth that what it was. I gave her that right to go do that. That was important to me to let her kind of, if that was what she believed was, possible and capable, to let her go do that. And I was gonna take care of the business and the people, at the end of the day. 

[00:49:51] Ronald Skelton: Okay. That's cool. We've talked for a little while. I've asked you a lot of questions. What should I have asked? What should I have asked you that I haven't? Did we miss something you'd really like to cover? 

[00:49:59] Malcolm Peace: I think that, you hear this in so many different fields. I mean, this is the first thing that comes to mind. I think that there are so many businesses out there that just don't know that they have an option. I really mean it. We specifically look at some of these tertiary and secondary markets, intentionally. Because there's a lot of great businesses. It may be the biggest employer in the area.

[00:50:18] But these great businesses that have been here and established, and they have great quality people that don't wanna go anywhere. They wanna be there and they want to know that their paycheck's coming through, and they want to know that they're a part of something cool and need, and we use their skillset. We've got a lot of welders on our team. They can either work for us and, 30 minutes down the road, they can go work for SpaceX. We pay a little bit less than SpaceX, but you're not outside every single day. It's a little bit different. And so, I think that there are these great opportunities, for buyers out there as well as business owners.

[00:50:46] That there are some young, hungry people that want to go out and run these businesses and will do it right. I think that's the part that I always try to encourage a business owner. Is look, I might not be the buyer for you. But at the end of the day, like I can assure you through proven exercise here, that I'm gonna take care of your people. And that I'm intending to run this business long term. And so, that's what I would say. Is that there is a plethora of people. There's school. The grass is, ultimately wide for all, for both parties. And a lot of people just, don't cross collaborate on this kind of thing, I think.

[00:51:17] And so we leave it up to investment bankers and brokers to do that part. And they do a great job to fill the gap. But I think the gap is even bigger than they fill.~ Um,~ that there are a lot of owners and a lot of buyers that could really benefit from each other. 

[00:51:30] Ronald Skelton: We stepped over something I really would like to chat for just a second. I know ~we ~we're running out of time. But how did you build your network of bankers, investment bankers, CPAs and stuff that would bring you deals? Did you go through trade associations? Did you go to the local chamber events? Did you start calling, cold calling? How did you build those relationships to foster those leads?

[00:51:50] Malcolm Peace: Yeah. I would be lying to you if I told you the percentage that we had, of which type of lead was the best and most effective. I'll tell you that I spent quite a bit of time on just turning up lists. I mean lots and lots of list, and developing that. I met, a group that helped me put together some low-code, no-code software process in 2021, beginning of 2021.

[00:52:10] And that was a game changer. When I started to realize, and again, no tech background. Didn't have any experience here at all. I realized that like there was an opportunity to go into this space, and to really drive this. I had one guy that I worked exclusively with at this firm. The software, low-code, no-code software firm. Which really showed me here's what's possible.

[00:52:30] And once he did that, it was like, okay, now I know how to run. And so, all that to be said, we pulled a lot of lists, lots of communication. We still, today, we have a lot of drips and things that are happening in real time right now. But getting really tight on the fact that there are a lot of people that interact with small business owners on a daily basis.

[00:52:49] I have a call with, Sarah that's in an hour from now. She's a connection that I got connected with from another connection. And so the communication starts happening. And I'll also say this for anybody that's looking to get into this space. And I remember you sharing, I can't recall if it was on the call or prior to our call, but you know what you focus on. I had a coffee with a gentleman about two and a half years ago. And he was talking, he's in sales and he's a very good communicator. And I was kind of telling him what we were doing and what we were looking at. And he said, Malcolm, I'm really confused. And I was like, what? 

[00:53:20] Like I thought I had like laid out this perfect explanation. And he said, I can't bookmark you in my head. Like I can't explain to anybody else what you do. Because you have such a broad generalist approach to this. And so what happened from that conversation, incredibly impractical conversation. After that conversation, I started to realize like I need to succinct down what we do.

[00:53:41] And once that started happening along with these lists and other communication and all this kind of stuff happening. It just started rolling. And I get a lot of inbound. I'm not being facetious. Had four last week. I consider that a lot from an inbound perspective, versus us going out and pursuing the communication and all that kind of stuff. And so all that to be said, we buy businesses, blue collar industrial businesses in Texas and we add software and SOPs to them and hold onto 'em long term. As I started communicating that, it started resonating. 

[00:54:08] Ronald Skelton: So let's wrap up with that. What is your target acquisition? What are you looking to purchase? So people know that they own that or know somebody that owns that they can bring it to you? And then how do people reach out and get ahold of you? 

[00:54:18] Malcolm Peace: So my firm, Tsetserra Growth Partners, we buy businesses that have been in Texas longer than 10 years. Headquartered in Texas, can do sales and can do operations outside of Texas. But have been and headquartered in Texas, have an established brand here that are doing three to $12 million in revenue and netting 15% from that.

[00:54:36] We like businesses that have been stable. Call it 5% growth over year. Get excited about stable long-term businesses, that have a strong team in place that we can add, processes and sophistication. We specialize in what I call sales follow up. So we build systems and processes where we drive our sales by follow up. A lot of these niche businesses need the systems in place. And we, we hope to kind of add to the, ultimate plethora of what they're capable of doing from a service perspective. 

[00:55:03] Ronald Skelton: Awesome. And how do people reach out to you? 

[00:55:04] Malcolm Peace: Yeah, you can look at our website, Tsetserra Growth Partners. Tsetserra.com. You can reach out to us at info@sitara.com. Or I'm on LinkedIn. Pretty active. Posting regularly on LinkedIn. Feel free to reach out. I'm always game to talk. And you can find my phone number on there and all that kinda stuff directly get access to me. 

[00:55:19] Ronald Skelton: Awesome. And that'll all be in the show notes for you guys that are driving or anything else. I appreciate you being on the show today. We'll call that a show and wrap it up. 

[00:55:26] Malcolm Peace: Cool. Thanks Ron. Appreciate it.