May 3, 2023

E118: International Entrepreneur Carlos Rodriguez Laconi Discusses His Successful Exit Story

E118: International Entrepreneur Carlos Rodriguez Laconi Discusses His Successful Exit Story

Carlos is an entrepreneur from Argentina, down there he started a farming and exporting business (chia seeds, beans, citrus, etc). He came to the US in 2015 for his MBA where he learned about Search Funds. He took an alternative path for...

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Carlos is an entrepreneur from Argentina, down there he started a farming and exporting business (chia seeds, beans, citrus, etc). He came to the US in 2015 for his MBA where he learned about Search Funds. He took an alternative path for Entrepreneurship through acquisition, partnered with the owners a Boston-based business to grow and sell it, and recently completed the exit of this business.

Carlos talks about his experience with starting an organic farming business in 2009, followed by his journey to the US for his MBA. In 2020 he received a LinkedIn message offering him the role of CEO and General Manager of Boston Tree Preservation, a company founded in 1977 by an arborist. The company's goal is to help these older trees live longer and healthier lives, up to 80 or 90 years.

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[00:00:00] Ronald Skelton: Hello and welcome to the How2Exit Podcast. Today I'm here with Carlos Rodriguez Laconi. He is an international entrepreneur with his first exit behind him. And I'm looking forward to hearing your story today. Thank you for being the show, Carlos. 

[00:00:13] Carlos Rodriguez Laconi: Hi. Thank you for having me. Pleasure to be here.

[00:00:15] Ronald Skelton: So, I always like to tell people where people are coming from. Everybody on the show knows I'm sitting in the Redwood Forest in Northern California. Where are you located right now? 

[00:00:23] Carlos Rodriguez Laconi: Right now I'm in Salta, in the north of Argentina. Like around thousand miles from the, from Bueno Aires. So, yeah, really far. I live in Boston. I wanting to escape from the winter. And came down here, and now here is freezing, is like 50.

[00:00:37] Ronald Skelton: So the cold weather followed you down there. So let's talk about your story. You grew up in Argentina, and then, let's just go from there.I always joke around like you were born and then you ended up on a show about mergers and acquisitions. How did you end up here? Could you give us your origin story? Tell us about you. 

[00:00:52] Carlos Rodriguez Laconi: So right out after college I started a company with a business partner. And where I am from is in North Argentina. The agriculture is the most dynamic sector and ~like ~that's where basically the money is. And like we just wanted to create a company and do stuff like this. So we started producing soybean, corn and stuff like that. Commodities and selling, and we were leasing farms from, from like the farmers. But in, in here there are more like business people that own the piece of land, but like they don't grow it.

[00:01:26] So we set up a team that was leasing these farms. And then the company was doing well. Then we started following the trend of natural food and organic food. We started producing chia seeds and that has been in our main product. That company, is one of the main growers of that product. We started processing that and then exporting to Europe, mainly Netherlands, the UK, Italy.

[00:01:51] And then we opened up the US markets in East coast, west Coast. And you know, chia seeds were a big thing. And then we started growing other stuff. Also organic, certified like beans and manned beans, and, and citrus and stuff like that. But everything was going well. This was in o'nine when I started the company. And I always wanted to go to the US to do my MBA. And then my plan was just to go to Boston, do my MBA, and come back to the business and continue growing it. And for that, one of my roommates in Boston, was from Mexico, and he wanted to do a search fund. So immediately when I arrived, he started talking about that. I said, oh, this I had no idea about the concept. So I thought, oh, this sounds really cool.

[00:02:38] Tell me more about that. After that, I decided to do my concentration in entrepreneurship through acquisition. Boston College had that program and was one of the few schools that had it. So I ended up doing m and a for entrepreneurs buying a small business, searching a small business, and a bunch of other classes related to that. And then I did my internship in search fund accelerator. One of the first cohorts doing that. And after the MBA, I was still obsessed with the concept. I said, okay I wanna do something with this. I wanted to raise a fund, I tried. But I didn't have my visa at that point. I wasn't like the one year O P T that after you study in the US they give you.

[00:03:18] So talk to all the, not all, but ~like, ~like investors of traditional invest, search funds. And, they wanted me to do the search in Argentina. And by training, I'm an economist. So I knew all the issues of the country and my projection was that all the country is collapsing on syncing. And that's still happening today, eight years after that. We are in a trend, like last 80 years, the country has been going down. So, the search model is for like stable scenarios and like a bunch of other assumptions that Argentina didn't have. I said, no. I don't see a future going down to Argentina and acquire a company.

[00:03:58] Talked to a few private equities in the area. They told me no, you're right. I mean, we are struggling here, buying companies and everything. So then, my search fund thing and ATA was like, out. Because I, I basically couldn't. So I decided to open a subsidiary in the US of our Argentinian company and started importing our products. Selling in the east coast, in the west coast. Then we partnered with the main organic ingredients buyers. Most of them are industrials. And then with them we develop supply chains for ~like ~cane sugar, citrus and other products. And also grew the business for the European side. And then, at that point I'm living in South Carolina. It's like the 2020 and ETA was gone to me. And I receive a LinkedIn message from someone saying, Hey, do you wanna be manage my dad's company and be the general manager, CEO of this company?

[00:04:52] And I said, like first it was all grid and like on (the a angleo?). So I said, oh, this looks cool. And then, so I had a call with a guy, super cool guy. And explained me the whole situation. Basically it was a company, a Boston based company, Boston Tree Preservation, founded in 1977. His dad had was an, is an arborist, and he started this company and developed a bunch of, basically he developed the concept of organic plant healthcare. At that point, I didn't know anything about like landscaping or plant healthcare or stuff like that. But started talking with these guys and I said, I don't want to manage a business that, I'm not looking for a job or like I'm, or another thing. I really like ATA. And then ~like ~talk to the whole family.

[00:05:34] The founder, his son that was in the board of the company. And I propose list, do a deal based in search fund terms. Put together the company, grow it and sell it. And that to me was really exciting and that I was like a hundred percent in. And they agreed. And basically, that was in 2020, I joined Boston Tree Preservation. And when I saw the company, it immediately caught my attention, how great everything was. And that was in this process of ~like ~joining the company. Like the company had like multiple thousands of accounts. So really low customer concentration. It had, recurrent revenue.

[00:06:14] Like about ~like ~80 to 90% with customers that have been with the company since like, 90 or like 1980 something. So company operates in a very wealthy area. The north shore of Boston. And that we just here Arlington, Belmont and all this area. So like very wealthy clients and, very progressive people that, they really buy the value proposition of the business that is organic products for your trees. And the whole business model blow my mind. ~Like, ~Boston is a very green city and it has a bunch of like multiple trees. When you are there, but these trees are like 50 to 80 years, something like that. And they represent huge value of your property. They cannot die. I mean, if they die, then you have to wait like 50 years, 20 years, 30 years or so to have ~like ~a nice tree there.

[00:07:01] So basically what the company does, is like all proactive treatments to keep the trees alive and a tree that usually will live like 50 years, can live 80 or 90. And it's great to have ~like ~those beautiful trees. And the company has, that's ~like,~ everything organic. So fertilization composting, that is done in-house. And it has ~like ~30 programs like for like different trees. Insect control and all these products have ~like ~some level of IP. They're formulated in-house and the company sells the product. So when I thought of ~like,~ this is landscaping. It has nothing to do with that. 

[00:07:33] They just go in the tracks, spray the products, and then continue. And when you're in landscaping, tree removal business or stuff like that, you cut your tree and that's it. ~Like,~ you charge like couple of grands to the house owner. And then ~like ~that's no recurring. It has a lot of CapEx, liabilities, a bunch of things. This company, this is like super linked business model. Another thing that caught my attention was that, everything was in paper. So it was a company like that had ~like ~a software from 1980, but like the software wasn't doing well. And then everything was in paper. And the best thing of the business, two-thirds of the revenue came briefly, as prepaid.

[00:08:09] So that to me was amazing. So basically the company performs the services from March to December. But gets paid for most of it during the winter, on the month that the company's not doing anything. So we start with cash here and then like it goes ~like, ~like that and you operate out that. So positive cash title. Everything that, that we read in all the search from literature was there. Because this is like the perfect business. Another thing was that, what I suggest like to searchers sometimes, and it's like, when you see a business, try to see how the business owner lives. Because basically you are taking over his position and you'll have like kind of his life.

[00:08:47] So when I met the owner of Boston Tree Preservation, what an amazing guy, like serial entrepreneur. And then, like multiple businesses and then went to his house. He has like a beautiful farm. Get caught in the water and amazing cars, motorcycles, like all his guitar are like,~ like,~ like really good people, well allocated. So basically what I was trying to do in my mind was like, this business can support all that stuff. It's great, because when you ask like the small business like that, what is the EBITDA of the business? The business owner doesn't know. Like they're just operating the business and like they, they don't use all the lingo that MBAs and people from entrepreneurs through acquisition, search, phones use, you know?

[00:09:27] That type of signal was the one that I was trying to see and then talk with the guy. He had started another company. Actually he invented the, the guy is Peter White. Now he's ~like, ~like family to me. I mean, we are very close after the whole process. But, he invented the injections for trees and it was part of the program of the company. Back in the late 1990s. Then he patended that. Put his money, raise money from VCs and investors. And created like an amazing business that manufactures the injections and then they sell all the whatever.

[00:10:03] It's ~like, ~kind of like the Gillette business model that you have, like the shaver and you sell all the stuff. So he spent the last, from 1999 to ~like ~2015, I think, working on that company. So that was another signal of the company absent owner, for like, so long. And, but like the agreement he had there, I don't know, but ~like, ~he's always been living off the small company. So that to me was like really cool. So basically I joined the company that was in, as I said, in 2020, and great experience. Like nothing to do with ~like, ~like everything we've seen like in, in classes and like the literature like to practice. And no really cool. So joined that company, the first thing we did was a digital transformation and we put like software.

[00:10:54] And ~like ~digitalize the whole thing. Now, when someone, our employees, when, well, it's not ours. I mean, I'm out of the company, but like now when they join, they arrive, they get a tablet with all the routing. They do all the systems, everything goes to the system. So like now we have like perfect trackability of everything. And the backbone was like a, one of the main software companies. And then we put like QuickBooks online. And, constant contact for email campaigns, everything integrated. And then ~like,~ field service for the guys in the field, tracking their hours. We switch from like salary to like hourly and that create a lot of like optimization in times of like expenses. More efficient.

[00:11:37] And the one thing was that we were in the middle of a change while I was learning the business. So that's like you are like, basically like what I usually suggest is ~like ~sit there, see a whole year. And once you understand what each bottom means, then start like changing stuff. But that wasn't our case. Our case was like in just joined and changing everything. Or ~like ~digitalizing everything basically. But yeah, no great experience and met with great guys. Because basically in a service business like that, the people is the business, and the company had people that have been with the business for ~like ~20, 30 years.

[00:12:12] There were a few that had been since 1977, still there. So like these guys like knew everything. And to me it was different, like different experience because like I come from farming. But it's different. Let's put it this terms. It's been difficult or ~like, ~not difficult, but like new to me managing a blue collar force in the US. Being from abroad and ~like ~having this accent and ~like, ~these people in Boston and they're great guys. We had a lot of fun with them. But they're like the most Boston-y people you can imagine. ~Like, ~Red Sox hat. It's snowing and they're wearing shorts and they have the Boston accent.

[00:12:47] And they never probably talk to someone that is not from New England. And then like someone, a foreign guy like me comes and ~like, ~okay, now this is like the general manager or CEO, whatever. That was really cool. I really enjoyed it that experience. And then basically when I joined the company, and the whole plan was ~to, ~to fix it and sell it. When I was there, I thought, oh,~ like,~ damn, I should buy this. Or ~like,~ but that wasn't the plan. And the agreement was like, increase and maximize the price of selling.

[00:13:11] So the funny story here is that once, the company was growing and all the accounting fix and everything. Like now we have ~like ~companies ready for sale or in the process for that. I mean, because it's like an ongoing process. And then I posted the deal in search funder. So posted there and got ~like ~50 people reaching out to me. I said, and I was just testing the waters. We're not like, at that point, they're ready to sell. 

[00:13:35] Of these people I knew a lot from the conferences and like interested. Like two of these of the main candidates that we had for selling were, had been like classmates at Babson for me. And that was, oh yeah. They were like my friends. Not friends, but like I knew them a lot. So sign LOI with one of them went through the process. And at that point, I'm a seller. I'm just trying to put like the maximum price or whatever, and like trying to negotiate. And I thought that the dynamic was going to be like negotiating and like reaching a price.

[00:14:10] So I put, I don't know six times EBITDA. Something like that, like really high or like when they will low, lower a little. And then, the guy couldn't get financing or, and investors and everything. It took us three months of due diligence and then I mean, that deal went down. And then I said, in my mind I was thinking, oh, like now that they, if there's a deal that cannot be approved. It creates noise. So like we didn't have a lot of chances here. Like I thought, no, now we have to like, all what we've done, we'll do like a better job now.

[00:14:39] I reach out to one of the guys that was in that, in my list of potential buyers. Also a guy that, he's a Harvard educated, but he was going to have some classes on entrepreneurship through acquisition as a listener. Cause he is older than me and he had done his MBA like 10 years previous. But got obsessed with the concept that was doing a, had a search fund and wanted to do a search fund. And at that time he was in the classes. So went through the whole process with him again.

[00:15:05] And, but this time, we were better, better prepared. Put like a, like the a market price for that and then like work on the whole, the covers ratio and everything so that everything would be feasible at this time. And then, through the community, the search fund community, all the professionals that I use, I will get it from like the community, which is great. Like podcasts like the one you do and there are other guys like listen to all of them and then mention something and then you take stuff. So actually this really helps.

[00:15:34] Prospective searchers and searchers what you do. And basically what we did, well at that point we had to, to do a whole quality of earnings report and was also someone from the community and also from Babson. So everything was like rounding around my college. Then we work on that and that was like an amazing experience work back to back with this guy that had 15 years of experience in private equity and then had his company that, does like quality of finance reports for search funds.

[00:16:03] That was really cool work and. And then like we, we finally got approved, sold the company, and now the company's doing really well. I mean, I left the company in November. I'm still in contact with the new owner and like he's about to start the new season. So everything going well there. Basically what we did was, what I did was a reverse search fund. I was coming from the community and had all the, this let's call it like concepts or knowledge about the thing. And like it was way easier. So if I wasn't on, on that position, I think that the connection between the searchers and the business owner would've been like impossible. And all the, I had access to all the information and I knew the deal was financed by the SBA.

[00:16:48] And then like sellers know then some equity. But I had everything in mind because like for the last five years, I mean, since I heard the concept search fund, I've been going to the conferences, listening to podcasts like yours and talking to searchers and other times. So like I knew how to deal with the whole thing. But yeah. That's basically the story.

[00:17:06] Ronald Skelton: So it's interesting, instead of doing the traditional route, which we, you raise a fund and then you go out and inquire something. You found a way to still use your knowledge inside of that, the search funder community. And you found a company that technically quite wasn't ready for a search funder to buy. Cuz they, they needed some updates and they needed some stuff. You stepped in and you got it, you engineered that company to be viable to your community. That reverse search fund, as you called it, it's a great concept.

[00:17:33] You might have carved off a niche for yourself, right? You build the following, the people in the search fund, the community, people that are looking for businesses, you know what they're looking for. Technically like what kind of financials, they're looking for what kind of stability systems and processes. Now you can go to any company that says, Hey, if you're thinking you're about selling in two to three years, I can come in and help, help gear this up to where the search funder community can buy it. Right? 

[00:17:57] Carlos Rodriguez Laconi: Yeah. Typical business owners on, on these like type of businesses and without the transition plan, they don't know this lingo. And what I noticed from like searchers is that they think that they're talking to a private equity investor or like an investment banker. And the guy just said pay me $5 million and that's it. Don't come with four point times, 4.5 times.

[00:18:17] And then the cash flow. And like what? No. Like he doesn't want to listen that. And we experienced some of that. But the good part of the story is that I was in the middle. And so I was translating both sides. Yeah. But yeah, no, you're totally right. And that's potentially a path, hopefully. Go and joining companies and, yeah.

[00:18:39] Ronald Skelton: So if you look at, what happens the most of the time is you're either you're investment banker. If it's a deal over 10 million or you're a broker, if it's a deal under 10 million. The business owner gets educated in this process by an advisory of some sort.

[00:18:54] So if you go direct, all you guys out there, if you're doing, search funds and stuff and you're doing cold outreach what you saying right there is that they don't know the lingo. So you don't have that intermediary and they're teaching them what to expect next. And I've talked to business owners that they don't have a clue what an LOI even is. And then I had one guy say, why would you even send me something that's non-binding? Is this like a hollow promise or something? He just he was offended by the whole concept of an LOI that's non-binding.

[00:19:20] Carlos Rodriguez Laconi: Yeah. And especially like people that are like in their seventies. I mean, we're dealing with baby boomers and like they didn't want to deal, like the whole process is really long, it took us nine months. From due diligence that like getting the funding, doing the whole thing. At that point, like the level of uncertainty, and I had that level too. Like say, oh, is this happening or not? Like I can imagine someone that doesn't know the what we are going through.

[00:19:44] Obviously, like you can explain but, in their mind, someone is coming with cash and saying, okay, here you have it. Or we'll just do a set, like a earn out or something like that. Like for a part of and. But that's what they're used to. Not like this whole thing that, well.

[00:19:59] Ronald Skelton: Yeah. They don't understand. They don't get it. Like one of the guys like, he'd had two businesses. He was trying to sell me the smaller of the two. He'd already sold, the bigger of the two. But he sold it to a competitor that basically reached out and said, I'll buy this thing, and gave him a price and it closed fast.

[00:20:16] I said if they closed that fast, your price was probably too low. They probably would've paid more. But anyway, cuz they didn't do much due diligence, they just snapped him up. And then, so he starts talking to me and he is look, at some point I was walking through the process we needed to go through and what due diligence does look like. He goes, I paid more for my house in Florida than I'm selling you this business for. And I just wired them, money and we did the closing online. So if you want it, you want it. If you don't, you don't. Just tell me this. And he goes, I want X amount money for it. I'll give you my balance sheet and I'll give you my income statement stuff, but I'm not doing all this other stuff.

[00:20:45] And I was we had to explain to him that's the process. And because he had another experience of selling something fast, he's like, Now, I just sold my other one for $27 million or whatever. It was in the high, 27, 30, somewhere between 27, $30 million. And he goes, they didn't do all this stuff. And I was like, they probably would've paid you double for that.

[00:21:04] Carlos Rodriguez Laconi: And I think that so like really small deals? Like the mom and pop shop. That's like, you do it in a napkin. Now you go sit there whatever, pay me. Once you get through, like between I don't know, maybe two to 3 million to like five. Those deals are like really complex because if you're going to be using, or the buyer is going to be using SBA loans, I mean that's federal money. So like they need, everything needs to be audited and perfect. And then like a deal like that takes a lot of complexity.

[00:21:32] And it's probably more difficult than, if you buy a company that is 10 or $15 million, the accounting is there better. And then like you obviously go to a large company and they have like perfect systems. If you go to a company like below $5 million, or like probably less. All the accounting is like, messed up. Usually the expenses from like that the small business is the owner, and everything is mixed. So like it creates a lot of difficulty on that matter. And yeah, yeah. 

[00:22:00] Ronald Skelton: So you probably already know this. But a lot of guys listening may not. So I'm gonna explain something real quick cuz on the SBA loans, a lot of people think that an SBA loan is a government loan. It's not. It's a government insured loan. So the government will insure, I think it's 70 or 75% of that loan balance. And I don't know if it's all the time, but a lot of the bigger lenders, the government doesn't actually approve the loan at all.

[00:22:23] The bank approves it. And the only time the government actually looks at that, it's like an insurance policy. If the loan defaults, the government will audit the loan that the bank made before they give 'em their 70%. And if, it met all the criteria, then they get it's insured and stuff. It's kind of like you get in a car wreck. You pay for an insurance. They don't come inspect your car and take a bunch of photos and stuff. You buy a car. Most of the time they just, you give 'em serial numbers, you give 'em everything or whatever. And then nothing's ever said until you get in a car wreck.

[00:22:55] And then the car wreck, like I go, who's at fault? What condition was the car in? They start trying to back out of it. They start looking for reasons why they shouldn't have to pay. And that's the same way that these bank loans are. So the bankers have to be, really cautious and make sure they follow all the federal guidelines. And a lot of times what happens is they'll actually lay on top of all the federal guidelines, a lot of their own. So if one SBA lender tells you no, and they tell you, well that, I can't do that. It's against, the SBA guidelines. You need to know enough about the SBA guidelines to know, is that true. Or is it in some guideline that bank layered on top of the SBA guidelines.

[00:23:29] And it's very often the case where it's the, it's the secondary. And a lot of people also don't know that a lot of the SBA lenders out there, the banks that loan money that's insured by the small business or the SBA loans, they have specialties. And they'll tell, they'll tell, we'll loan to anything. But you say, okay, what was your last 10 loans to? And they'll say, like in Oklahoma or something where it's very common, they'll probably say medical supplies, medical research, automotive, that type of stuff. But you say, I'm a tech software company, and they've never, most of those banks have never, there's not very many of 'em around.

[00:24:01] So those banks have never done an SBA loan to it. You're less likely to make it through their board approval. So if you get told by one, I know of about three or four search funders that went through six banks. Before one of 'em said, on the same deal, before one of 'em said yes. I have know quite a few that go to two or three before they get that yes. The first lender says no, and they like, they realize that it wasn't because of a federal guideline or anything, it was just that bank said no. So they go to the next one and they, get it done. 

[00:24:27] Carlos Rodriguez Laconi: Yeah. But now there's like banks that have special like ETA or search from area and they know the whole thing. If you go to any bank that has, like the SBA loan seven, series A or I don't remember the name. They're going to talk about that. But they don't really, they don't really know about the model. They'll ask stupid questions and like they have nothing to do with the thing.

[00:24:49] But now, like the main, the ones that are in all the conferences, sponsoring, they know perfectly what they're talking about now. And they're, they've done so many deals that it's for them. 

[00:24:58] Ronald Skelton: I'll give her a free, I'll give her a free plug here. I like Live Oak. I've interviewed two other people so far. They're really good about getting it done. That's what they specialize in. So, anybody out there looking for some, something like that, reach out to those guys or reach out to me and I'll give you some, I got a couple people over there that I've worked with them. Had 'em on the show. Not all of 'em are equal. I'll just tell you that.

[00:25:15] There's a few, especially like local and regional banks. They will do the SBA loan backs, but, they're not specialized in it. They don't know your lingo. It's just something they, they do. If you've got something that's really powerful in the community, meaning it's like a main job provider for the community. Say you're employee 30 or 40 employees in a small town. Then the local regional banks that do SBA loans are probably your best bet because they want to keep those jobs there and they've got community ties there to do so.

[00:25:42] But if you're looking at a software company in the middle of a, a rural area like, Tulsa, Oklahoma or something. You probably ought to reach out to some of the guys on the national level that specialized in that. 

[00:25:50] Carlos Rodriguez Laconi: We offer that. So like with the account that we had, brand new business was a small local bank. Where the company's located. And so obviously they've been, they knew all the financials and numbers. How stable it was and or like growing. They've been like giving small loans for like tracks or stuff like that for multiple years. So in our mind, we thought, ah, maybe they know the business. So it's probably easier for them to issue an SBA loan.

[00:26:16] So we introduced the potential buyer to the bank, and now it was like, like zero connection. They don't understand a thing. And then like they went there because we suggested. But then they went to the banks that you mentioned and that was like a completely different story. They know what they're doing. They've done this multiple times. They know, all the lingo and everything. And it's like they follow a script for the process and that's, that was great. Yeah. 

[00:26:41] Ronald Skelton: There's a lot of guys out there. They've done dozens and dozens of these. They've looked over thousands and they've completed dozens of them and dozens of them. So, a lot of times it's just picking the right banker. I think it's one of the gurus out there is like, I think it was Dan Peña said on one of his videos, he said, if you don't get money to do a deal, you just didn't ask enough people.

[00:26:58] There's always somebody that'll believe in your idea and has more money than you. And it's just not that right and he'll give it to you. So he says, if you're not getting your deal funded, you probably just haven't talked to enough banks and enough people. He actually tells people to go to the local regional banks on the day that they open a new branch. Cuz that new branch has to get books of business up to a certain level pretty quickly. And they're more likely to give a loan than one that's been around for everybody you know, in stable and been around for years and years. He says find your local, community bank or whatever that does these type of loans and they just opened a branch in your town. And then rush in there on the opening day cuz they gotta get some business on the books. 

[00:27:34] Carlos Rodriguez Laconi: Yeah. No, absolutely. Yeah. 

[00:27:36] Ronald Skelton: So there's creative ways to get it done. So tell us about, kind of where you at now? What are you doing next? I see that you're back in your hometown, but what's the game plan man?

[00:27:44] Carlos Rodriguez Laconi: I'm still living in Boston. That's where I'm based. And my idea now is to, so originally I've talked to my business partner and the idea was to, okay, like fit, complete your exit and then come back to the business. And I wanted to take like a, some time off. But now, I just wanna do like another search and I really like that.

[00:28:03] And yeah, really enjoy. The adrenaline of like, when you are closing a deal that like, I really liked it. So, yeah, I'll be doing another search soon. Yeah.

[00:28:11] Ronald Skelton: Let's talk about your search, your new search. Have you thought about like any industry or?

[00:28:15] Carlos Rodriguez Laconi: I'm still developing the plan. Like I haven't come up with that yet. So I come from the industries that I know are like food supply chain. Well, landscaping, plant, healthcare. I'll end up doing something like that. Or especially I need to like the final product.

[00:28:32] And like I, so by training, I'm an aesthetic economics and finance. But I went to like farming and stuff like that because I like, like to the plants, trees. And something like that, like simple as that. So yeah. Some people buy like the, HVAC or stuff like that. When I see that, that's not exciting for me. And then or type of business services like that. But like in Boston Tree, I really enjoy, like things that we did. For example, like some days, I would just go with the business owner on a truck. And go all over.

[00:29:03] So now I know all the towns in Boston and, and then like Cape Cod. That to me was like really cool going, driving. I'm obsessed with motorcycles, planes, cars, anything that has an engine. So some days I would just say oh, this day I just want to. And it was an amazing experience, like getting all this knowledge from someone that had 46 years of experience in the industry. And the guy like, I mean, if you want one day we can have him in, in the show. Like typical, like Great American, baby boomer. And to me, I don't come from that culture. But like I really was trying to learn from that, like that generation.

[00:29:38] Like baby boomers are great generation. And, learned a lot from the guy. It is like now when we were working, he's the owner of the company and I'm managing his business. Like we, we cannot be friends. Now we're friends. After we sold the business, I spent Thanksgivings, at his house. And I think like the point of my story is like I'm coming from the opposite side of the world. Coming to Boston and then ETA is more for like local people. And I would do the same. If I was a traditional investor and someone from the other side of the world comes and say, why would I go with you?

[00:30:08] Okay, you're going to a good school and everything. You had like interesting experience. But why would I fund you instead of someone that is local and that knows everyone and has been here forever. And I think that the point in this story is that, for international searchers is that, it's totally feasible. And the US has this open culture that you cannot have than I mean, it's totally feasible. Obviously it's more difficult. But yeah. And my path wasn't the traditional path. I had to set up my own company in the US. Go on my green card.

[00:30:37] But when I was doing that, I knew I was going to be back to ETA. So like I said, okay, I'll put in, offer a little bit because I only have one year of Visa. But then, I knew that, oh, when I have it, I'll just try to do it again. And instead of me going and doing the whole thing, everything came to me. And that's another point. I think the people they found me on LinkedIn. Because I was, well, living in Boston at that time. I'm living in Charleston, South Carolina. But like my profile said Boston, the company is in Boston. So it's at Boston then eh, NBA.

[00:31:11] Agriculture, they thought, so this is like arborists and landscaping. But they thought, they thought I was a farmer. I'm more like finance and numbers, like not a farmer. But I used to manage a farming business. I come from a family of farmers. But in their mind, and then also like little signals, like I did my internship research for an accelerator. And they saw that and said, oh, this guy, knows about like small businesses, transition. And eventually they wanted to grow the company for 10 or 15 years that's what like they had in mind and sell it.

[00:31:40] But I said no. And I just wanted to do it fast. Like I was more excited of the whole process than operating a plant healthcare business. It's okay. But like that, I'm more obsessed with the doing the whole process. Like starting a company or joining a company, growing it, selling it. That was a, and the sale was like, enjoy so much of it.

[00:32:02] Ronald Skelton: I'm interested in the, like what they were doing just because I, one of the businesses I own is a pest control company in Oklahoma. And with a simple, I don't think any of my techs have the, I think we have to get a fertilization designator. Like we gotta go take another test in order to spray fertilization.

[00:32:18] Actually I think we do have it. Cuz we mixed some stuff with the, with the grass stuff. I think two of my guys do. Cuz they, on the side they own lawn businesses too. Anyway, I just have to look at all the, you got all these designators of things you can. I know the ones we don't have, right? 

[00:32:30] I can't do crop dusting. I don't have the, that, and I don't do anything that's aerosol. Like you have to put the gas mask on and do fumigation. I don't have it.

[00:32:36] Carlos Rodriguez Laconi: And that was the whole thing from Boston Tree. It's the only company doing organics. Or some companies do it, but like Boston, like their thing. We are a hundred percent organic. Everything is organic. No other problems with that. But it's a different type of customer. If you want, there's some sort of trade off in landscaping. Do you want to have like your long looking like a golf course. When you see that beautiful, but for that you have to put like synthetic fertilizers, and like chemicals and everything.

[00:33:00] And then the organic doesn't look like that, but yeah. But nowadays, like everyone wants, you don't want your dog eating like chemicals or something. And the thing with that is if you wanna have that type of, of long in your landscape or like your backyard, that, affects the trees long term. Because you're like spraying chemicals and putting fertilizer, fertilizers. Make the tree grow and then they make them like, more substitute for insects. And then you have to like, start putting more chemicals. So basically there's a trade off, like what do you want to have a ice longer or trees. And I see that people now love trees.

[00:33:34] That part of the business I really like. The margins are better and more sophisticated. But yeah, so like we, we had to, at some point we had to educate the customers of what we were doing. 

[00:33:46] Ronald Skelton: It's interesting you're talking about those trees living 80 or 90 years. The trees in my front yard over here. They live 2,500 years. 

[00:33:52] Carlos Rodriguez Laconi: Wow.

[00:33:54] Ronald Skelton: These redwoods. Yeah, they're the oldest living tree. There's actually one tree out there that's the largest land mass, tree there is. I forgot what forest here in the United States. I believe it's a forest. But all has the same root structure. So they consider it one tree because all of 'em share the, the same root structure. Anyway, these are the tallest, but not the, that would be considered the biggest tree because it covers so much land area. But these are the tallest. They get, 250 to 300 feet tall. And they live 2,500 to 3000 years.

[00:34:24] Carlos Rodriguez Laconi: That's incredible. Yeah. Learned a lot about trees. So I, I was with basically a guy that created the, or disrupted the industry and had so many ideas. So like, I'm not technical on trees or even in agriculture. I've always been like the on, on selling stuff or like exporting or like operations on how to send like the contractors to the farms. And obviously the finance and all that stuff. But not really enjoy that. Like, I was actually living in Boston. So like everything that the guy used to say, oh, I would sit there and yeah.

[00:34:55] Ronald Skelton: I have a real estate in Oklahoma and I've had to pay some guys to take trees down and stuff. And I would watch 'em, like they just climb 'em there. Like they just put these spikes on their shoes and the rope thing and they scuttle up the tree. So I pulled over one day here cuz I was like, I've seen some guys getting out chainsaws to do with a tree here. I'm like, are they really gonna scuttle up a 300 foot tree to cut those limbs off up there? I'm like, I'm curious, right? I just pull over the side, and I have time, I have my own thing.

[00:35:16] So I pull over side the road and I'm like waiting and waiting. I probably watching something on my tablet. I was waiting. I'm gonna see what these guys are, how, how are they gonna deal with this tree? And they show up at this bucket truck that looks like a crane. And that thing took 'em way up there. And then they did this thing from a bucket truck cuz like they didn't scuttle up the 300 foot tree. They actually had heavy equipment they brought in to do it. But I was curious. They're getting out at chainsaws and cleaning them up and stuff. Like they're gonna do something in these trees over here.

[00:35:41] How are they gonna do that? I just wanted to see a guy climb a 300 foot tree cuz this was an old growth, redwood that they were gonna mess with. But yeah, it's interesting. I love the businesses are so diverse. Like you were dealing with organic products, taking the health of trees and, middle to upper class or upper class neighborhoods. I just talked to a guy yesterday and you're talking about the food industry. And halfway through the show I was like, well, what kind of manufacturing company did you buy? And they're like, well, we produce shrimp sorters. I was like, what? 

[00:36:08] I guess there's a giant piece of machine that costs like a quarter of a million dollars that you dump, thousands of pounds of shrimp through it. It ~sorts out the, ~sorts out the sizes. So the medium go in one vertical, ~you know, ~small, medium, large or whatever, you can adjust it. But there's a machine that actually sorts shrimp. And ~uh, ~he bought a company that manufactured that out of Texas. 

[00:36:25] Carlos Rodriguez Laconi: The sorting machine?

[00:36:26] Ronald Skelton: They design or build and have for, I wanna say 60, 70 years. The company was old. But the sorting machines that used around the world that he has to go to different locations of the world where they harvest shrimp. And they buy these machines, put 'em in the factories, and you dump it in. You clean up your shrimp, you dump it in there and it sorts it out by size. And I would've never thought.

[00:36:43] Carlos Rodriguez Laconi: So many businesses like that. And like the shrimp industry is huge. Like all over the world. They eat that and like they, they need to do that stuff. So yeah. If you asked me like three years ago, what is plant healthcare? I'm like, no idea. So I live in a house full of trees. Never done anything to trees. But yeah, because we live in a, like next to the mountains and never apply anything. Not even water. I mean, it rains.

[00:37:04] But like, when you live in a suburban area, with the construction and everything, the soil. So at the end of the day, it's all about the health of the soil. How healthy it is. There's a lot of documentaries now. Kiss the ground one of them. The topic it is like mainstream now. So everything is about like, How the micro nutrients and like the microbiology within the soil. So concepts that I had no idea. I mean, we're used to like other stuff. But it's so interesting and to me it's like, people are willing to pay like, I don't know, like a thousand dollars per year to keep their trees alive in places like that.

[00:37:40] So that's recurrent. They want to have it and amazing business. And another thing, our business was 95% of the majority residential. So it was like residential plant healthcare. So very niche, organic, so like industry leader. And it's so cool how you go to like places like that and you see people that have developed the small businesses like that and so interesting and so creative.

[00:38:04] Ronald Skelton: Outta curiosity when I see something new, I love to learn like you do. I like to learn new things. My son was asking me about these trees and he's like, man, to hold that tree up, the roots have to be a mile deep, right? So we did the research and they're not. They're actually, the redwood trees are roots are less than 10, 15 feet deep.

[00:38:18] I think they're like six or eight feet. They're really wide and they intertwine between the others. So you rarely see a redwood tree by itself. Cuz the way they stay up and keep the wind from blowing 'em over is their roots are all intertwined out and they hold each other up. And they've done studies where they, if you like, you put two trees beside each other and they put like a chemical on one of them, and it, it was hurting the tree, the other tree would give it nutrients to help heal it.

[00:38:41] Like the trees know each other in danger and they help each other, cuz they're counting on each other for survival. And it's just incredible. Like, the things that we didn't know 20 years about forest and nature and stuff and what exists now. Right. 

[00:38:52] Carlos Rodriguez Laconi: And there's businesses out of that.

[00:38:53] Ronald Skelton: Yeah. There's absolutely. My brother-in-law's one of those guys. I dunno if he still does it, but I think he's driving a concrete truck or something now. But my brother-in-law used to be one of the guys that climbed the trees. So when I got here, I took pictures and sent it to my sister. He climbed the trees and he would cut trees. He would do the, he worked for an arborist. Basically a tree trimming service, what do you call it. And I was like, how would you like to get up on one of these things?

[00:39:12] My son would be like, he asked me one day, he said, what happens if there was a guy up in one, way up in there. He goes, what happens if he falls? I was like, I don't know. You only get to do that once. The guy that falls only gets to do that one time. He doesn't get to tell you the story about it. So that's a long ways down.

[00:39:25] So how do you set up, you're about to do another search, right? That's your next thing. What's the process to, like, how do you sort out what you're looking for? Is it just something you stew on for a while? And it comes to you, is something you start putting out fillers. Cuz I know for me what I do is I'll just say, Hey, I'm looking for businesses to buy. I kind of think it's in this industry. And I'll start looking through and, looking at LOIs and, I mean, not looking at LOIs.

[00:39:46] Carlos Rodriguez Laconi: There's different ways to do it. Like what I did at some point was, go to the brokers. Like the websites that are there, and you see a lot of businesses. And start digging in business that I like, talking to a broker. Once you've done that, then try to see competitors like that. That if they look the same and learn about a new business. And then eventually if you really want to do something in that industry, like getting the supply chain of the industry, or trade shows. If you're talking about like landscaping, go to places that they supply stuff for that. And these people will know, oh, there's a guy that is 70, probably selling or like stuff like that. 

[00:40:21] That's what I do. In my case like, as I say, I like to see the final product, in this case our services. So taking care of some of a tree. In the case of Boston Tree. But yeah, like I will try to do something in an industry that I know. And because the asymmetry of information is so big. On the negotiation with a business owner that at least I want to be, to know, like 60% if you know the industry. But if I get into an industry I know nothing. Like I'll get to know 30%, 40%. Then you're negotiating with someone.

[00:40:50] So that was also the assymetry of information was something also we consider when selling. And I was considering that the owner. He did not want to sell this to a strategic buyer. Because he wanted to keep his crew. And these people are like his family and. All these stuff that you read on entrepreneurship through acquisition is actually true. They really care about the people. They care about the legacy. And we're thinking at some point where I was thinking like, oh, why don't we just sell this to one of the big guys? And he said, no. First of all, they'll just change the name immediately and, put it there and probably, change all the processes of we've been doing here.

[00:41:26] And then change, replace the people. So like he really, he was really in, in the conversations that I have with him. He was really interested on that. The new guy also is a smart guy and understands that. The culture of the company and the knowledge is down there. Like he needs to keep everyone happy and keep jobs. And at the end of the day, that's the whole purpose. One of the purposes of this whole thing is like keeping businesses, keeping jobs. And that's why I guess that's why there's a program insured by the government. Like the SBA loan. Like keeping jobs like that.

[00:41:59] Ronald Skelton: Okay. So, if somebody has a, usually at the end I always end up with the, like, how do we reach out to you? How do you contact you? Do you want people to, if they've got a business, they're in the Boston area, they would like help selling it to the search funder or selling it at some point. Would you like to?

[00:42:14] Carlos Rodriguez Laconi: If they even just want to know about the experience of what we do, just call, yeah. My LinkedIn, I think I'm the only Carlos Rodriguez Laconi. Just reach out and I'll be happy to like, have a call. Or if you're around Boston, we can have a coffee around or whatever. Like, now I have plenty of time because I'm like taking some time off and like really enjoying doing stuff like the one I'm doing today. Telling you our story and yeah.

[00:42:38] Ronald Skelton: Yeah. So reach out to you through your LinkedIn and, if you've got something that you know would be of interest. What about, if other podcasters are listening here, you wanna go on some other shows and tell 'em your story?

[00:42:50] Carlos Rodriguez Laconi: Yeah, of course. I mean, and especially like among Latin Americans, when you go to an MBA, all the Latinos are doing finance and m and a and stuff like that. And like the concept is like really popular among, like, in our m and a class. Like 50% was Latinos. And like Latino from all the countries, and Spain too. So like the concept of being a CEO and like buying a small business in us. This will sound like, like a journalistic thing. But when you say like IT and stuff like that. Like people from Asia, like, like finance, Latinos. That's what I've seen in MBAs.

[00:43:23] It's totally feasible. We really like to do this. And in my case, I wanted to do a search fund, in the US. It's tough. Now they've changed. They have like MBAs, you can do STEM and you have three years and the searching is two. So now, an advice that I would give to people like that, if you want to do this, do the STEM program. Three years, then you have more chances of getting funded by someone. Because you, when you talk to an investor, yeah, we'll search for two years.

[00:43:50] And then you have three. The extra year, and then you can do like a, apply with the, with a company that you acquired for your visa or something like that. I think that, that it's important.

[00:44:00] Ronald Skelton: Okay. How about words of advice for other search funders? We both participate on search You went through college for it. You've got friends and this stuff. If you could leave 'em with anything we said in a show where it's just like three main topics or three main points, what would you say to the other guys out there trying to land their first business and do their first search fund deal?

[00:44:22] Carlos Rodriguez Laconi: Be involved in the community. Originally, I was skeptical about this. Like when all these podcasts, like yours. Or like that website that you mentioned or something, or even the conferences. You go there and they're like repetitive, the same thing. But like being close to the community. Everything I took from, I basically did this reverse search fund through that. Used all the resources. Listen to these people experiences, go to conferences, use these websites. And then I got like the lawyer from that website. The quality Assurance report guy from that website.

[00:44:52] The buyers, everything. So it really works. I mean, it's a great tool for searchers. That'll be one. Another is try to connect with the business owner and don't come with very sophisticated financial lingo. The guy just wants to sell the business and first of all, he's going to give you like three minutes of his time. If he doesn't catch your idea there, because they come and usually a searcher will come and say, yeah, I'm doing a search fund. Well, a search fund, 10 investors, units, I have this and everything. If you go that road, you've lost the baby boomer that is listening to you. 

[00:45:23] So you have to come and connect with the guy and like eventually, if he trusts you and that's more like how to connect with the person. There's not a script for that. You can just go make a few jokes, you're funny and then like you share something with the guy and that's it. And then like another thing that I will say like, the cultural thing is, it's not like a limit. I come from Argentina, we play soccer, we speak in our language, nothing to do. And all the guys that I was talking to, in the company, they were like fans of the Bruins, hockey and they didn't know that even Argentina was playing the workout.

[00:45:56] No one cared about that or stuff like that. But then eventually you find like a few things. And a few guys there have like good sense of humor and I laugh. So like they will start making jokes, laugh, then you connect with the people. Go have like, with the team. And obviously like you're a general manager and these people are like employees . Yeah it's like.

[00:46:13] Ronald Skelton: Rapport is everything, right? 

[00:46:14] Carlos Rodriguez Laconi: Yeah. Yeah. Another thing that I notice is like, all these people were like super smart. And they probably didn't have the opportunities you and I had. But they were like, like super smart people. And hardworking and, yeah. That's what makes a great company. And like they are kind of auto-selects. Because, who hire young kids with college degrees and they had a passion for like soil and nature, but it was all like not real. And then like they were join here, they were lazy. And then the crew of people that have been with the company forever, they will like just say, this guy is and they will reject this kid.

[00:46:51] So that to me, because business school, they talk a lot about culture. That was something. Especially in a small business like that, I mean, you can even see that. 

[00:47:01] Ronald Skelton: Awesome. So I get it. Rapport and culture are critical. I got a team of, people we're working on right now. We're putting together a book on the culture side of the deal. That basically it's not, it's actually called, not two sides. Basically not a us and them thing. If you don't build rapport and any type of B2B transaction, if you don't build rapport, it's usually not gonna get done. Well, I appreciate having you on the show today. So let's call that a show and hang out for a few seconds and we'll call that a show.

[00:47:26] Carlos Rodriguez Laconi: Perfect. Excellent. Thank you.