E204: Sam Turner's Journey from Corporate Finance to Building an Empire of Small Businesses

[00:00:00] Ronald Skelton: Hello and welcome to the How2Exit Podcast. Today I'm here with Sam Turner of Advantos. And I think I got that right group. He's out of the UK and we're going to talk about buying and selling small businesses and his unique experience. Thank you for being here today, Sam.

[00:00:13] Sam Turner: My pleasure, Ronald. And, uh, yeah, good to, good, good, good to be back on the show. Maybe, maybe a couple of years ago now, so.

[00:00:21] Ronald Skelton: Let's talk about your origin story. We, uh, clearly you've been into it for a couple of years, but what got you into the space and kind of, what are you up to so that people can know who they're hearing today and, really bite in and listen to us.

[00:00:34] Sam Turner: Sure, yeah. So, I, I'm from the UK, just outside London. When I left school, I played football, which you would call soccer. Um, uh, but football is the correct term, not, uh, not, not soccer, for two or three years after I left school to full time. I didn't make it eventually. Fell into doing my accountancy exams and, and spent a 22 year career in the travel industry, which was fantastic.

I got to live, in different places of the world. I lived in Spain for 10 years. In Singapore for some months and Switzerland for four years before, deciding to return back to the UK a couple of years ago. So, so I had a sort of corporate career. So finance background, I was a FD of a sort of fairly large business that was private equity owned.

We grew, we acquired our, our sort of two largest competitors. We're about 6 billion euro, similar in dollar terms, I guess, business. So fairly large business. I moved out of finance into the commercial, um, function to run commercial teams all over the world. But, following the integration of these, uh, three businesses, and that's, that's relevant.

Because I think it comes to my strategy around not into partly as to not integrating businesses, which is part of our vision and ethos going forward. And this is partly why, but not the whole story. And after doing that integration for two years, I've kind of decided to have enough of the corporate world. I was on a plane every, every, every week, basically out of Switzerland, all over the world. Had two young kids.

I didn't like the politics in the organization, which came with those kind of large, uh, P backed,organizations. And therefore I decided to do something completely different. And I thought long and hard about it. What was I good at? What did I enjoy? I've got a good finance background, but I like working with small businesses.

I like working with people. And sort of put everything together and decided I want to build a group of companies. And at that point, I didn't really know which industry I wanted to go into. So, I did some, a couple of, a couple of training courses around small business M& A. I had a, had experience, uh, from an M& A perspective in my corporate career, uh, as the kind of CFO.

Driving some deals, obviously on a much larger scale and therefore some different dynamics involved. So I, I did a bit of the,the training to kind of brush up on a few things from an SME or SMB perspective. And then, sort of set about, contacting businesses a bit randomly, initially in terms of different sectors.

And really my criteria for where I wanted to invest and build a group was large, large industry because I wanted to build a large and fragmented because I wanted to build a collection of businesses. You might say a roll up, but we're not really integrating. So it's not, I would say a traditional roll up.Fairly low cyclical business.

Wasn't going to be outpaced by emerging technologies every five minutes because I'm not really a kind of a tech, a tech guy.Good multiples in terms of valuation of entry, but also, um, sort of exit multiples, the access to that arbitrage of multiples. And good sort of general industry tailwinds.

So it was an industry that was going to be there around that. I probably looked at about 10 or 15 different industries and then eventually did my first deal in December, 2021 in a heater, plumbing and heating business. But not for consumers, so in, in the B2B space. And sort of went, went from there, but yeah, effectively that was kind of my, my background. My, uh, my reason for wanting to change and wanted to do something different.

I'm not somebody who's ever started a business. Um, so I don't think I have the skill sets or desire to start from scratch. That kind of zero to one journey is not me. But I've, I've grown, managed, led much larger organizations. So, the bigger the organization is, the more comfortable I feel if that, if that makes sense.

So that's kind of, that's why I think the whole ETA piece versus start something from scratch, made far more sense in terms of leveraging what I was good at and also what I enjoy.

[00:04:40] Ronald Skelton: You brought up something really good there. Leveraging what you're good at. A lot of people are getting into this space coming from the corporate world. And if you, I'm going to step back a little bit. If you look at the traditional startup route and watch what private equity and startup companies typically do, it's usually a different leader it takes to come up with an idea and get investors interested. 

And then the leader sometimes switches right then and there. Once the investors are involved to actually start building or raising capital, it's often, it's a different guy who can raise the capital. And then, there's levels just kind of like the arbitrage you're talking about. You know, this, the guy that takes you from zero to one million dollars in revenue, may or may not be the same guy that can go from one to ten. Who may not be the same guy that go 10 to 25? And some people, there's a good example would be oracle like Larry Page and those guys. They hit a stage in their growth where they realized, wait a second, we're probably not the right guys.

And they stepped out of the way and quite honestly, they're back in play now. But if you look at it, it's probably cause they went off and got their butts mentored really deeply and what it takes to run at that new level. Your awareness that that's not you is heads and heads and miles above everybody.

[00:05:54] Sam Turner: It's having that self awareness exactly as you said because I'm not the guy to come up with the idea to kind of work at putting the basics in place all over the place and really sort of, fingers in, in, in everything and kind of build something from scratch. That's not me. That's, that's not my sweet spot.

What I am good at is, and I've probably got a slightly, not unique, but a slightly different corporate background in the, despite I'm financially trained, I was always more involved in the business side of things, in the strategy side of things. And then ultimately kind of commercial side of things, leading sales organizations, leading, procurement organizations.

And so I've got like a balance of the kind of corporate experience and therefore talking to investors, talking to banks and lenders is, you know, water off a duck's back for me. I mean, it's, it's absolutely fine. I enjoy that. I'm good at that. I know what they're looking for. I know how to look at the numbers.

I know the angles to kind of like cover. But also I really enjoy, being on the ground talking to small business owners because that was also part of my role. A lot of my customers were, um,small owner managed businesses that we helped as a large corporate. 

And I kind of played that role when I moved from the finance role into the commercial world of coming back into the boardroom and going, guys, you've got no idea. Your PowerPoints don't make any sense. When you get on the ground and you're dealing with emotional people that have no corporate background whatsoever, you need to operate differently.

So I think I've got a little bit the sweet spot between, those two areas that enables me to go, yeah, I'm happy to raise the capital. I'm happy to deal with that, but I'm also happy to be on the ground talking to business owners, talking to guys on sites and understanding what's going well, what's not going well.

I mean, don't get me wrong. We've got people there that are managing those businesses and we'll get onto that in terms of how we structure it. But that's, that's what I quite enjoy going between those two different areas. And I think that's what I'm quite good at.

[00:07:50] Ronald Skelton: It takes something to be the guy that can build a team too. You're saying you guys, you're not the guy that creates the company or the guy that can build the team and run the organization. That's a totally different skill set. I'll be straight up honest. I've failed at probably more startups than I actually succeeded at.

And I came from the corporate world. I came from the military. You know, uh, I say that I've been, I've been an entrepreneur since I was a kid. My dad handed over a painting and remodeling business to me when I was 16. And I ran it until I realized I wasn't saving money and getting an education. So I gave it back to him when I was 20, went and joined the military, right? And I actually talked to a guy yesterday out of getting his MBA because I was like, look, I did, I got mine.

I'm telling you, if you're wanting to be in the ETA space, you don't need an MBA. What you really need is some good partners that they can fill in that, you need a team. You need to fill in the gaps that you don't have. Do some self discovery, figure out what your skills are, and then surround yourself with people that, that do things better than you in the areas that you need, that you just don't either don't want to do or, shouldn't be doing because you're not great at it.

[00:08:49] Sam Turner: I think that that's critical. I mean, a large part and we'll get on to the details of what the group is and how we're structured and everything. But a large part of my role now is just making sure that we've got the right people in place in those critical roles. Andnow I'm starting to get that I've got a great executive team at a group level.

So there's four of us. And it's a fantastic team and that, that is a solid platform that can grow and that, that just makes the world of difference. I've got an advisory board that are handpicked with people that actually can add value in the different areas that perhaps I'm not good at that will challenge me, et cetera.

And it's these things that really make the difference. Having the right MDs in place in each of the businesses is also critical. And it sounds like daft that people are everything, but they are. You won't achieve anything without good people around you. And you need to make sure that part of what you do, a big part of what you do is really focusing on what are those skillsets and it's not hiring people that the same as you because you like them.

I've made that mistake before. I'll hire, I'm a finance guy in a sense, although I'm not a stereotypical accountant probably, but I was hiring a CFO and I kind of had a couple of options. And I was going to go with the option that was the guy that I kind of resonated perhaps more with because it was more like me.

And somebody had to challenge me to say, yeah, but you don't need to be more like you. You need somebody that can compliment you, what you're, what you're good at. And actually, you know, I, I switched. Went with the, with the other candidate and it's been proven to be invaluable because he's great. All the stuff that I'm not good at or I don't enjoy and likewise. 

So we really balance, that, that well. So I think being rigorous around the people that you put around you, and that can be full time. It could be advisors. It could be, your lawyers or accountants, even as well, if you're doing the deals. It's really, really critical if you want to succeed. It's, for me, everything is about the people.

[00:10:44] Ronald Skelton: Yeah, I'm a big believer in that. I think that, uh,the reoccurring theme on this show and everything in this space, and I've been interviewing a lot of people about raising capital lately. And I was shocked that it carried through on that too. And it's rapport building and people skills. And on top of people skills, the key side of that is, advanced communications, both listening. Uh, a phrase I like to refer to as active listening. Really understanding what people are saying and try and communicating.

And then, just being able to clearly articulate in a way that resonates with the other person, your vision, that aligns with their goals. I'm a big fan of a comment, I don't know if I read this somewhere or made it up out of my own head, but I often say that everything we have now, everything you ever want to have in the future, everything you ever had in the past, everything you don't have is a direct correlation with conversations you've either had, should have had or avoid having, right?

You know, the difference between you and I and, and I don't know, we'll state ourselves and not put somebody, let's put somebody in the past, say Rockefeller, right? If you really know his history, he was brutal. Just like one of the top guys in the world, Warren Buffet stuff is the people who are, you know, who buys mega mill-, billion dollar companies. Is the conversations we're having, who we're having them with.

We might be buying companies, but the difference between a, who we're talking to, we're talking to mom and pop shops buying, you know, one to $20 million EBITDA type of companies. Max, he's out there talking to bill-, billion dollar companies.

And, uh, but it's just a different conversation with a different crowd. But it still comes down to, he builds rapport with 'em. They believe in his vision and his ability to get done what he says he's gonna do. So there's some integrity in his vision. And, um,his ability to communicate that well, right. 

[00:12:27] Sam Turner: There's a great, great, great point, Ron. I think the vision piece is really critical. And we talked about this also off air, but I think what, and one of the things that I, from my background, I guess I have a perhaps a more strategic view than an operational view in terms of how I operate. But I also have a very, very strong vision about what we're trying to create, and that is more than just, let's say, money and profits for me.

And I think that was so critical to hiring the kind of people that I've just described that are sitting now on the executive, because they really, really bought into that vision. They wanted to be part of that vision. And I think that's critical also when you talk to,investors, when you talk to, even your, your lenders. They want to understand that you're passionate about what you're trying to achieve.

And obviously they need to kind of buy into that as well. So I think being able to communicate that and like you say, have those conversations in a way that is compelling is a super, super important. And I agree. If you could have, if I could elevate the game and actually be having those conversations with different people with larger amounts, then, you know, it's the same thing, but doing it on a different scale, isn't it?

But, uh, but, yeah, having that compelling vision is important because, I think people really want to buy into the journey.

[00:13:47] Ronald Skelton: To drive the nail to the into this coffin here, it's so powerful. It's actually dangerous. If you think about, think about recently, uh, I forgot the guy's name. The guy that founded and started WeWork, right? The reason he could raise billions with a B, is because he had a vision and he could articulate it. Was it a great business idea? I don't think so, personally. It was a beautiful vision. It was very utopian. But it just didn't carry mirror, at the scale on things that he did and he made some mistakes along the way. But he turned around and got an exit package because people still believed in when he left. He lost billions of dollars for them and they still end out now.

Now he's doing it again. So if he's got a new vision, a new story and a new startup and people are loaning or not loaning, but, you know, investing in his vision,his business. That's, you know, that is an amazing storyteller and I hope that he succeeds someday, but,there is powerful in this and you can be, a great communication skillset and a great vision that people buy in. Can override a bad business idea and it's been proven time and time again.

Let's talk about what. Where did you land? I know, you and I talked about this beforehand. I have your bio up, so I know what it is. For the audience sake, what is it? What is it that you guys have been acquiring or still looking to grow and acquire more of?

[00:15:06] Sam Turner: Yeah. So we have, so the first acquisition was in December 21. We acquired two businesses in, in 22 and we completed, just a couple of months ago, the fourth, acquisition. So we have a group of, I would describe it as, uh, mechanical and electrical focused businesses. And businesses that provide, what we would call hard facilities management services, which typically are those types of services. Anything mechanical or electrical in, in buildings. Uh, our focus in terms of the type of, let's say, customer base that we look at.

We're not doing, let's say, consumer business. It's all B2B. We typically focused on what I would describe as the built environment versus construction. The first business we acquired was more in construction, but we're now pivoting that away to be much more into kind of commercial customers in existing properties as opposed to, as opposed to construction. For various reasons, but less cyclical, less risky, less challenging, higher margin, et cetera.

Our, I mean, maybe it's easier to kind of describe our vision, if you like, and, uh, and then what that means. So our vision is to be the UK's favorite, what we call favorite platform for independent M& A. Which is mechanical and electrical stroke FM, which is for citizen management companies. And our ambition is to get to 150 million pounds of revenue per annum, within a 10 year period.

And we're about 18 months into that, into that journey. We will do about, we do about sort of 23, 24 million pounds of revenue today with those four, four companies. So for me, I guess it's important to kind of describe what that means. So UK's favorite platform.

Favorite platform means, we're favorite to three core stakeholder groups, I would say. Firstly, is the teams that are employed by these companies. We want to be the employer of choice in this industry. And then we've got a whole people strategy around how we will do that, because there's a massive competitive advantage you can have by being good at that.

Most companies are not good at that. So we want to be the favorite from an employee or team member point of view. Secondly, is the customers. So because we're building out different companies, we've got more resources on the ground to cover nationwide all the needs for you as a customer. So we can now be a one stop shop because we might have electricians, air conditioning,engineers, heating engineers, plumbers, fabric engineers, uh, that can do all, all of that. So we can become your one stop shop. So we,we are your favorite platform from that perspective. And the third stakeholder group is the communities that we operate in. So we have a big vision around having a substantial impact in the communities that we operate in.

We have about seven or eight offices currently between those four companies. And we have sort of plans in place to them to make a positive impact in the local communities. So that, when I talk about favorite platform, that's what I mean, but it's favorite for those three stakeholders. And platform really means we don't, our philosophy is not to integrate businesses.

So we're creating what we would define as a platform where companies can come into that platform and get the benefits of being part of that group, but retaining some independence, retaining the brand, retaining the management, retaining the P& L ownership. But benefiting by collaborating with the other businesses in the group by having access to services that the group provides for all companies.And by having some, some management expertise for, from my exec team that I've got, that are senior people, that have run businesses, that can give a bit more structure, process, systems, financial, uh, knowledge, et cetera.

So that's kind of, that's what we're trying to create, but in that, yeah, mechanical and electrical stroke FM, hard FM services to the built environment. 

[00:19:08] Ronald Skelton: You know, a few years ago. It's been a couple of years now, but a couple of years ago, maybe 18 months ago. So I was looking at something I think might have fallen within your bailiwick. Not the one I was telling you about before the show, but they did fire, suppression inspections. So basically buildings have to have certain fire suppression systems, fire alarms, sprinkler systems, all that type of stuff.

Those regularly every so many years have to be inspected to make sure they're up to code. And then his brother or brother-in-Law, I can't remember, actually owned an installation, repair, and, retrofitting company. So if code changed andcertain things happen, you had to retrofit your building to meet current codes.

He could do it and stuff. And, I wanted both of 'em. But one of the things that was interested in that particular space is not only did you have to understand all the building codes in your state federal safety regulations and stuff for certain federal buildings. And then some counties have their own permitting and you know, different things.

So if you, you know, make a change to it, you have to go pull out a local permit and all that. So it was fairly complex engineering type ofthing. But with that, that would almost fall within the realm of what you're talking about, right? Like, it's something that every building owner that has, more than a 50 or 100 employees have to have. You know, I forgot what the number is here in the United States, but, they have to have the certain things to be a commercial building.

[00:20:26] Sam Turner: So that would form part of when we talk about the hard facilities management services. Typically, which come under that banner. So, if we have a contract with a building provide, owner, or it might be through one of the larger FM companies that then outsource it. We would provide those services.

We don't have the resources for the fire aspect ourselves, but we have a bunch of subcontractors that we would then get in to do that aspect. But fire is a great example where, fire stopping, fire alarms, all this kind of stuff, is on the compliance side, it's slightly higher margin, it's needed to be done.

It's higher profile. Is not necessarily complicated work. Yes, you need the relevant accreditations. Is not different per area here in the UK is just one. So that's, that's an area that we're looking at in terms of further acquisitions, because we do some of it, we subcontract some that at the moment. So if we had our own resource, there's the margin benefit, because we could do that in house.

And there's a sort of like a cross selling opportunity. So that's kind of what we're looking at. All of those services, can we do more of them ourselves, as opposed to maybe subcontracting some of these out.

[00:21:36] Ronald Skelton: The other one that comes to my mind, and maybe it's just totally off, off the wall there, but, would be janitorial, for these commercial buildings because, who sees everything that's broken, but the janitor, right? So if you own the janitorial and they reported to you, you know, you as, Hey, you know, might want to talk to these guys.

[00:21:51] Sam Turner: I see,power boxes are missing their covers or whatever it happens to be. I own a small pest control company in Oklahoma, and I've always considered buying cleaning companies because who finds more bugs than the cleaning lady? So cleaning and commercial cleaning is a big area that would be classed under the soft FM services. So we don't provide those typically. But you know, again, you've got a classic M& A question is, well, do you continue to buy the same services in different geographies? Or do you buy different services in the same geographies?

Where's the biggest opportunity? So do you move into soft services? Cleaning would be the kind of the obvious one that almost kind of spans between soft and hard services. So yes, we don't currently do it, but it's a great example of is there an opportunity to,to add more and again, get more cross selling opportunities.

[00:22:38] Ronald Skelton: Going back to what you are doing, well, I'm just blurted out. Are the profit margins really good on that? Because the fire, the fire suppression, the reason I was interested in it, when he first told me what they were doing, I'm not interested. And he's like, but you know, you want to talk to the owner. This thing makes a lot of money.

I was like, how does it make a lot of money? You're walking through and going, yeah, your sprinklers are up to code or no, they're bad. Because he says it makes a lot of money because there's not a lot of people who are licensed and certified to do it. And it has to be done. So it's a high profit margin, right?

So they can name their price. 

[00:23:07] Sam Turner: I think you've hit the nail on the head. So yes, the fire business is, the much higher margins, I would say. So you might be looking at, for example, a 50 percent gross, gross profits number versus a 25 percent gross profit number in the other services that I described. So yes, it's substantially more, because of those two reasons.

And it's, it's the same here in the UK. There aren't enough people that do that.And it's a compliance aspect. It has to be done. So somebody can't put it off. And I think those two things together, I mean, there was a really, let's say, unfortunate incident here in the UK several years ago, in London where one, it's called the Grenfell Towers.

So there was a whole block of flats that were burnt and killed a lot of people, um, sadly. And therefore, since then, the government has massively increased the compliance factor. And again, in a very small space of time, then there isn't enough people that are accredited to do those things. And that's why the margins are so high.

Now, will they stay high over time? Probably not because the work is actually not that complicated. So I suspect the margins probably will come down over time, but right now you're, that's spot on. It is high margin. In the, um, in the M and A space, no, it's not, you know, that would be one of the downsides of the industry. Is not typically high margin if you can get, um, you know, our ambition openly is to be sort of 10, 11 percent EBITDA margin in the, in, in the group. That would be above the average for the industry.

So, um, just give you some context.

[00:24:37] Ronald Skelton: Yeah. I was curious what the industry is like. So that, that, that answered my question. 10, 11 is you running fairly efficiently. So when you're looking at buying a company, what is a typicalacquisition target look like? When they come to you and they're ready to sell after 10 and 11 is optimal, are they running, you know, half that? Or, are you looking at companies running five to seven or?

[00:24:59] Sam Turner: It's interesting because actually, there is a correlation we see between size of business, which is a not an intuitive correlation. Size of business and profit margin in that the larger the business, the smaller the profit margin, which isn't particularly intuitive. And that's, I think, largely because some of these large M& A players, they bid on these massive tenders that are highly competitive, that everyone wants to win.

Certainly not relationship driven, i. e. there's a whole purchasing process and everything else. And therefore, the margins end up being two, three percent most of these players. So actually, if you look at the smaller, and that's one of the reasons why we want to almost have a network of companies in this space that all have access to relatively small contracts.

Yes, we might have some large ones that we have at a group level. But therefore that can keep the margins higher. It can be more relationship driven, where you're not tendering against 10 players and actually it's a race to the bottom. And that's, that's kind of where we want to be. So it's kind of like, it's probably my ideal, what the business looks like.

And then we will typically look at anything between about four or five million of revenue and about 20 million of revenue in terms of where we're looking to acquire. But the ideal would be, you know, 25 percent gross profit margin is decent. 12 and a half percent spent on the overhead of the business and 12 and a half percent left would be a good kind of business.

And that's the typical that we try and look for. We won't look at anything that's less than about a 7 percent EBITDA margin because that's just too thin, too risky. Yeah, we don't want to go there. The first business that we acquired was around about that, if not a bit less and has suffered since because of the nature of the market that was in. We're now kind of turning around, but it's just not worth it.

So there are enough out there that we can fit that kind of profile that we think,the 11 percent is as a target above average. In reality, I'd like to be a bit north of that.

[00:26:57] Ronald Skelton: It's interesting. You said it's not intuitive that the,the bigger, the business, the thinner, the profit margin. It is for me because of where I've been. I bought that pest control company. And, when I did, I kinda, I was in Tulsa, Oklahoma. 

Everybody, is one of those guys, I'm one of those guys I walk into a restaurant and five people say hi. Cause I used to speak on stage at all the, entrepreneurial type of stuff and teach marketing and teach different things. I was a marketing coach and business coach and I would, I was everywhere. So when I got into this space and I bought that pest control company, I put it all over social media. Had a dozen or two business owners go, Hey, I'll come bid on ours.

And you know, some of these guys are friends of mine. Even like county, like county jobs and stuff where they had, 30, 000 square foot or 50, 000 square foot of office space. You know, like, Hey, I run all the offices for the, you know, this, this county. Come bid on our pest control. I was so overbid.

It was embarrassing because I did it like the residential stuff that, we'd bought and knew, and we were way off. I'm talking eight X, 10 X, what everybody else's bid was. And I just looked at the math. Like, I have to pay my guys the same thing to walk around your place and spray it and treat it.

And I have to use the same chemicals. I don't see how these other guys are doing these jobs, unless they're just spraying, scented water and telling you that it's something else. Even the manpower to, to walk around with the sprayers and place the traps and do everything, I just didn't know how it worked. But,I guess there's an economy of scale thing, but one of the factors that came to mind, I think I've been like, it was like 800 bucks per month, to go there and do the outside and inside. Replace the rat traps, do all this stuff for that pest control company, would do for that particular, that size of facility. And people are offering to do it for, $99 or 125 a month.

I think my guy's going to spend three hours there every, every time he walks on site. You know, I'm going to use $50 worth of, you know, traps and chemicals. Anyway, so I can get it to, you know, when they get bit, when they get bigger, that's so competitive, they squeeze down.

And, some of these guys, they have to be, these are loss leaders. Some of these guys are just doing that because they know when they walk around, there's 400 employees at that place. They're going to go, Hey, can you come spray my house? And then they get those jobs too. I don't know, that's the only thing that ever made sense.

But, I can see why when it gets bigger, it drives it down. Plus you have a lot more overhead, right? You have a lot more accountants doing accounting. You got a lot more just random, sales guys. And just, it just takes, it takes more gears to turn a bigger machine.

[00:29:21] Sam Turner: There are more places to hide in that kind of corporate machine, I guess. More fat, but, but yeah, like you say, intuitive for you because probably not intuitive for most people because you would assume that there's a kind of scale, right? So that's, um, yeah, that's the kind of nature of the model that we're sort of looking at and what we're trying to achieve over that kind of eight year period or so.

[00:29:43] Ronald Skelton: You know, it wasn't intuitive in the beginning. I've been on three of them before I realized, wait a second, it's not, it's not them, it's me. We're not going to be able to do these things. Um, not at, you know, not at our particular scale and I, and I don't want to, right.

You know, it's one of those, we want to provide the best service and honest service, and we want to know that when we do something that gets done right. And for those prices, we wouldn't have been able to do it. So, there's a thin, thin space there. So what does it look like for you guys on the, let's go to the one topic, I really want to make sure we cover well while we're here. 

The integration or not? That is almost religious. You got a group of people say you have to integrate, or you don't have a synergistic company and you're wasting money and you have other people go, yeah, that doesn't work as well as you think it does. So tell me your thoughts on integration and why you do it the way you do it.

[00:30:27] Sam Turner: Yes. So, our ethos is, like I say, is one of collaboration, not integration. I think, integrating businesses is tough. It's always easier on paper. The synergies are there nicely on the PowerPoint. Much more complicated to deliver. In a large organization there's less risk because you're not dependent on one customer, one person, et cetera.

And a small organization, you've got all that risk that you piss one person off and half the business is gone. So I think it's fraught with danger, fraught with a risk in a small business context. Also what we have is slightly different businesses offering slightly different value propositions, different trades. 

Therefore, does it really make sense to culminate in one brand? I would say no. If you've got exactly the same value proposition, then brand synergy makes sense. If you don't, then it probably doesn't. And, so I think there's various reasons not to, I think, but the risk for me is, is great. It's not that we won't look at opportunistic benefits from doing things once.

And for all that, of course we will do. But that's part of what we have as a philosophy. But I'm interested to kind of have this debate around where, are you therefore not delivering value ultimately for shareholders for not integrating. And is your multiple, are you going to be valued less at the end?

I think there's a debate around that, but I would say, I think we can get more benefits from the P& L perspective by collaborating the way we do without the risk.I think the multiple is driven by a number of things, but one of the big factors of multiple, as you'll know, is the risk of a business.

Now, if I've got no customer concentration because I've got 20 businesses that have got each themselves got, limited concentration. Each in slightly different segments and slightly different geographies, you know, that is diversification, um, you know, a classic diversification. So you have got less risk.

So the risk components of the multiple has to be increased. Now, whether your ability to extract the maximum benefit and actually, the maximum value for somebody to sell to would be if it's one system, one, you know, there's an argument the other way. I get that. And perhaps the multiple isn't quite so high.

But my argument is, well, the risk is less. And actually, I think the nature of what we're doing against our vision to create a great environment for our people means that do I really want to go through? You know, redundancies everywhere and all this kind of pro, no, not really. And that's, I don't think we need to to extract the best of both worlds.

And, I think you become slower. As a bigger organization, you take your eye off the ball for a good period of time once you're integrating because you're internally focused, not externally focused. So I think there's many arguments for not.But I guess the argument that, that maybe I lose on is, well, the end that you end up with a lower valuation for the business.

Well, if that's the case, I'll take that. I'm not in it for the short term. I'm in it for the long term.I don't have a particular exit plan at this stage. My vision is to create value for those stakeholder groups. And along the way, we'll create value for ourselves as shareholders as well. But that, that is kind of, as a result of doing those things well.

[00:33:46] Ronald Skelton: Interesting. Now, is this, I know it's not for overall integration under single branding and stuff like that. Do you combine any of this stuff? Like, do you have a common payroll system or a common, I don't know, CRM tool or, you know, different things like that? Or do you end up getting, so you buy 20 companies, you end up getting 20 different tax and accounting systems, you have to kind of correlate and pull together or?

[00:34:10] Sam Turner: It's a great question. I'm laughing because our next advisory board, which is in two weeks, is around technology. So, we'll have the debate there. So at the moment, yes, we are quite these businesses and they've all got different systems. Now, it is our view that it makes sense to move towards a common tech stack over time because everyone can benefit from that.

So that is probably the biggest, um, piece that sits in the middle. I would say a lot of everything else, we probably wouldn't touch back office finance and stuff like that. Honestly, I just don't see the benefit worth the hassle. But the technology one is one that I think if we could move to a common platform, we certainly will do with non core systems.

So find, the finance system, which is not critical for your USP in the marketplace. Let's say we will move to a common platform. And that's, that's, that's already decided. So over time, we'll move everyone to have that. So have the visibility, transparency and all that kind of stuff. The operational platform where maybe one business has got created a real part of their value in the way they use that to serve the customer, is more dangerous to then take them off that platform and move them to a core common operational system. We may end up with two or three blends of that, but with one, one sort of system to support. So, I guess what I'm saying is, is finding the optimum balance to not disrupt, destroy value in the business.

And also we want the MD to be accountable for the P and L and the results of the business. So if we then say, I'm going to change all your system and all your things that are important for you to drive your business. Guess what? His level of accountability drops completely. And I've been there and done that.

I've operated in environments where, which were decentralized. Then we centralized everything.And I saw a massive impact on levels of accountability of the P& L because you go from 10 P& Ls to one. And then nobody's accountable out in the, out in the businesses. And I think there's a real danger of doing that and I'll be, that's why i'd be very interested to hear from people that have done that. And their learnings from that if they've got sort of real success because the classic is, yeah, you buy companies, you roll them all up, you integrate everything, you've got one business. Okay. But I haven't heard of that many people that have done that successfully at a kind of small business level. I think it's easier once you have bigger businesses, a small business level at that kind of two, three, four, five to 10 million kind of revenue level.

I'd be interested to see whether there's many, uh, successful case studies of that.

[00:36:42] Ronald Skelton: There's a way to circumvent that. Have you ever heard of a, there's a book by, I can't remember the author's name for now, I'm drawing on a blank. The book's called The Great Game of Business. Now, the guys that did this wrote The Great Game of Business. It's a fairly famous book here in the United States.

They've bought themselves. I've interviewed their chief, chief trainer here on the show. They bought over 60 companies. And they're in a, in an industry that's extremely tight profit margins. Meaning that, I'm talking like 6 percent or less, I think. They do uh, refurbished auto and tractor equipment and stuff like that.

So they'll take a turbo off of a diesel, rebuild it and sell it, right? They rebuild used car parts and stuff. And a lot of their, a lot of their purchasing is in the round that tractor and that type of stuff. So very lean. The great game of business is it's gamifying the business, but it's teaching every single employer, at least all the management level employees and anybody that has a critical stake, how to read a PNL, how to understand it, how their day to day task influence and impact that PNL. How to truly understand it to the level where they can take some ownership in it.

And it does two things. So right now in the United States at least, and I think probably worldwide, there's a lot of people who they do, they got nicknames for it, quiet quitting, or disengagement, or they're leaving to create something on their own, or there's, it's hard to keep a good employee.

And a lot of it is, is people want more control over their future in this time of uncertain economic terms. I think it can give somebody some sense, not maybe a full sense, but some sense of economic control by having them truly understand what turns the gears in your company. And, I think that business systems like The Great Game of Business and EOS is close to it. 

They don't teach the deep financials, but it's, having great systems around and people truly understanding how their day to day task implement input into an influence. The overall economic risk factors of them keeping their job. The company doing well, they have them knowing how they contribute to the company and everybody in real money will see it and then when being able to articulate to others, what they do and how it, how it impacts the business is brilliant.

I think that gamification that they do, it pairs really well with, and they preachESOPs, employee stock ownership programs. But you don't have to do one to do that. You just, that's just a very common because, you know, I think, I think that handing the company over to just general employees without doing something like the great game of business is a bad idea.

Not every business, not every employee is a great operator and should be running the business, even if you have an executive team. But I think, what, paired with something like that, where all the employees are now stock shareholders and they understand what they do and how it contributes, is an amazing step forward. I don't know if you've ever heard of that,particular model. 

[00:39:29] Sam Turner: I haven't heard of the great game of business.

[00:39:31] Ronald Skelton: Steve Baker.

[00:39:34] Sam Turner: I've written it down. I'm going to look it up because it's super, super relevant. Two things. What we do is try and bring a standard framework of best practice, which is loosely based off the E. O. S. kind of framework, right? So that kind of, making sure we've got clear vision processes, documented systems, data, scorecard, et cetera, people.

So we try and do that. But one of the challenges is, in the model that we have is how do you make sure in a decentralized way that you want to ensure that everyone is collaborating together at a group level? How do you make that happen when they don't have a stake in the group, for example? So what's in it for them by collaborating with other companies? And this kind of concept of having at least management, but in an ideal world, everyone in the organization having the ability to somehow buy shares in your companyis something that really fascinates me as a sort of a great tool of alignment and kind of loyalty driving retention down and all the, all these, or retention up of employees and talent.

So that, I mean, that's fascinating. So I'll take a look at that because this is one of the biggest challenges that we've got at the moment. We want the group that 10 percent of its profits come from how we collaborate together. And that's very, very strong. So I don't want a group of independent companies that don't collaborate that happen to be successful.

No, that's not the vision. The vision is collaboration, how we work together and get more out of what we've got together. But you have to have people somehow incentivized to drive that collaboration as well. We can facilitate it from a group level, but you want the MDs, you want the management teams, and ultimately you want the teams underneath, to all be feeling like we're part of the same family, we're part of the same vision. 

And ultimately I can see, you're right, I can see that doing what I do contributes to that and I somehow get the benefit. How do you link all that together is, is a massive question for me at the moment to get right.

[00:41:31] Ronald Skelton: Check that one out though. I hate to make this. I like, they're not a sponsor by the way. And if they ever want to sponsor me, I probably say it like once a, once a month on the show out of, you know, every four or five shows. Their book comes up because I'm a real fan of the model. 

The website is great game. com. So it's just that's a simple website that they actually do training it's really, great game. com And the, I said that the author was Steven Baker. That's the co author. It's jack stack is the actual author of the book. I looked it up. So you see me stare straight up here I have a monitor up there. I have four monitors.

So check it out man, because uh, I think that that's what we're going to do on any company I get involved with. We're going to have the employees truly know,it's been a missing and everything I've done before. The numbers, you know, the stuff, and it is, you go in front of somebody and go, these are the numbers and they just don't get it.

They don't, uh, they don't understand that this gives them the ability to understand what that means and how it impacts things. And it's training around that. I think it's critical and especially in today's social economic environment where people are quite quitting and disengaged and don't feel like they contribute and don't think things are fair. A lot of people see a company, when we did four billion this year and they don't run, they realize they did four billion on a four percent profit margin, or even they did four billion in years and some they're still bleeding money and they lost, you know, they lost money at that like they're not profitable. Uber eats and some of these Uber driving, they're just bleeding money.

But if you're an employee, they're like, I can't believe they, they only pay me so much for driving because they make this amount. That eliminates a lot of that. Understanding those numbers and understanding, and, don't think that you have to disclose everything. The cool thing with that great game of business thing is it's, you disclose what's necessary and will benefit them to do their job. 

So, you won't give everybody's salary to everybody because that might cause issues, right? But you can say the salary pool is, we pay X number of dollars in salary. So, um, you get, there's discretion in what you disclose, but you disclose enough that they can see what it cost to do things.

[00:43:24] Sam Turner: I'm a massive fan of doing that, but most companies don't do that, even to their management. So, so these companies that you look at, the owner, anyone underneath won't have a clue what the numbers are.

And for me, it's like, well, how do you incentivize them, first of all, to be part of, how do you make them accountable for anything? How do you make them part of the solution for things and really, you know, so I think even at a management level, that's critical.

If you could get that kind of down communication to people that really, across the board really understand their contribution. How little changes can make a big difference. How they can benefit from some of those ultimately as well. That's yeah, that's brilliant. So that's that's exactly the conundrum in my head around. How do we do that better? 

Because, it doesn't happen well enough today. And that's, that's you've hit on a massive point. So that's a definite, follow up for me for following this. So thank you for that.

[00:44:14] Ronald Skelton: Oh yeah. So, uh, glad to be of help. This is an interesting business in that you have. I love that it's B2B.

I love that you're not doing, you know, you're not doing home services, not fixing, fixing, heat and air. Because businesses, it might, maybe I'm wrong with this, but a lot of times the first market in an insecure economy, the first market, it kind of is dealt the hardest blows. A business to commercial, the b2c. So if i'm struggling financial, having a hard time business, you know doing business, I used to be in the real estate space for a long time.

I know if somebody's having a hard time. They're less likely to have their air conditioner repaired because I bought a bunch of houses that had broken air conditioning. Like how long is your air conditioning? We're in Oklahoma. Like I have a bunch of houses in Oklahoma. It's a hundred and ten with humidity on the worst parts of the worst days of summer.

Often it's 101 with 80 percent humidity. It is miserable there. How do you operate without a heat and air? They tell you, put fans in the window. We had to. Or they'll put something horrible in like a swamp chiller, right? Because it's cheap they can buy one, you know any used thrift store because they used to put them in houses and this thing just blows moist air in a moist environment and, causes mold and other issues.

Or they'll damn near burn down the house cause they put window units and then overload the circuits that, you know. But cause that was what they could afford to do. And the B2C space employees quit if things, if the air conditioner breaks in a company, they fix it because nobody's going to stay there. I grew up in a, in an environment where I worked in a few factories in my life that didn't have a heat and air.

[00:45:47] Sam Turner: Yeah. I mean, you hit the nail on the head. You have to have,air conditioning and likewise heating in the winter in commercial offices. So we do commercial offices, uh, maybe hospitality sector as well. So, you know, you can't go into a restaurant and it's, not got the righttemperature or it might be schools, education, hospitals, um, universities.

All these types of places you want to get into leisure centers, gyms, you know, they, they have to have, this is a critical function. But for the whole, it's also good that it's not the core of their business. So they're not in that business. So again, you tend, it tends to be, let's say, less commercially aggressive because they just need somebody to fix the job for them.

[00:46:27] Sam Turner: And, you know, and therefore if you've got the relationship and they call you up to do it, and et cetera, the margins can be, you know, okay margins. So that's kind of why we're focused on those areas and not like you say, in the consumer business, um, uh, or, the more construction related business where it's more cyclical and commercially aggressive, I would say.

[00:46:46] Ronald Skelton: I bet you even have a size as far as square footage. At a certain square footage of commercial space you probably have your own maintenance crew on. So if you've got an apartment complex that's got more than say 200 units, you probably have heat and air guys on staff, right? Maybe more than that. Maybe it's five or 600 units.

There's a certain threshold where it just makes sense to where you have your own maintenance crew. So there's, there's gotta be a sweet spot for you that it's a commercial building. And it's not more than X number of square feet, or it's not, you know, in this industry, in this industry, it's not more than like, very rarely would a restaurant ever have its own maintenance staff. Or a gym. But, you know, a commercial structure with 300, 000 square foot under and, 2000 employees work there, they may have that because they may have six other facilities, and they may have guys that go from facility to facility, so. 

[00:47:34] Sam Turner: Typically though, even large outfits, they won't have everything themselves. They'll have to kind of, first port of call and then they maybe don't have the expertise to do the large replacement job that's required, et cetera. Also we like to work with companies that have multi sites. So if you've got like a restaurant, we work with a restaurant chain, or a group that's got a number of brands.

It's got maybe 250 sites. They've got like two or three guys on their mechanical and electrical side. And all they're doing is working with different subcontractors for different, different things. They don't do any of it themselves. Even though they're a large organization because they've got all of these sites all over the place.

So, so I think there's, yes, but there is, it's highly fragmented, lots of opportunity. I guess the challenge is there, there isn't the, there's a shortage of skills from a trade perspective. So that's probably the biggest challenge. We're trying to grow organically as well as inorganically at the moment and finding access to good talent is a real challenge.

And that's kind of, that's why we want to make it, you know, we want to be the employer of choice. We want to be having, not just paying the best wages and we don't pay the best, but we pay good. But we want to have the, all of the perks, all of the environment for that person to be better than going to work for somebody down the street.

And that, that I think is takes a little bit of thought, a little bit of care, is not rocket science, but can make a big difference. And that's what we're trying to focus on.

[00:48:58] Ronald Skelton: Maybe that book I gave you would be a key element inside of that too. Just because now everybody kind of knows how they play within that. And it's one thing to attract great employees. It's another thing to keep them. So, and to grow people, I always tease around and say, there's no such thing as a bad employee.

I've had a lot of people that work for me. They weren't that I ended up firing. They weren't great or they weren't bad employees. They just probably were better at flipping burgers than they were at running, working at a real estate investment firm. So I met, I let them go. Go flip burgers if that's what they needed to do.

So everybody's a good employee for somebody, right? That said, you know, I'm, I'm great in environments that are extremely entrepreneurial and startups, rollups, that type of stuff.

So that's where I thrive, but I think everybody thrives somewhere. But to find people that once you have somebody thriving in your company, it's so hard to replace them. It's best to find ways to keep them. And I think this is just, that was just one method out there. Just to have them truly understand how the gears turn, how they, the levers and stuff, and the pulleys that they pull on a day to day operations, how those apply to that. 

And then how they can improve things because when they can see the cool thing with, with that is these guys, I told you they bought 60 companies. They bought a lot of turnarounds. Like companies that were failing. And then they would teach these, everybody and the employees. These 60 companies they bought, they would teach all these employees basically gamify the system. And, they could turn these things around and run them really lean.

To the point where the employees would come with to them with all the ideas. Hey, if we just did this, we'd run a little leaner. 

[00:50:23] Sam Turner: So we have a, we had a survey for all the employees in the group to drive to understand what we were around engagement, what we could do better. And out of that, then we agreed and we developed a framework that's kind of a pyramid of five, five things. One is the bottom line, you've got to get the reward and compensation aspects correct.

And therefore we said, we're going to do the following things. Like, for example, give everyone their birthday off. Simple thing went down really, really well. Everyone does it now. That's part, one thing out of that box. Communication, the next thing. Because people don't communicate, generally. We talked about how to really engage people by understanding their impact on the organization and everything, but just the basics communication wasn't in place everywhere.

So we put a number of initiatives around that. Then it's things like recognition, rewarding people for a job well done. Recognizing saying brilliant, brilliant job. Thanks for that. Over the, you know, over the moon that, I had a new engineer start today. I sent him a message. I don't know him from Adam, but I knew he was starting today.

I sent him a text message. And he was delighted. I got a text message from the group CEO and it's like, it took me 10 seconds. And the guys started, what a great first impression. So recognition and then we've got teamwork. So how we, how we build teams and how we do things together and that sort of thing, how we serve the community together.

And then at the very top growth. So access to new skills, we put, we're putting a growth fund together for every individual so that they know that if they want to develop their skills over the next couple of years, they've got a pot of money to do X course. It has to be relevant for the business, but that's there set aside.

No, so it's just having that, and then none of that is rocket science. And we're only kind of starting that journey, but I think doing all those things well, puts you light and day above the competition typically. And that's about them retaining good people, but it's also being able to attract good people as well.

[00:52:15] Ronald Skelton: It's interesting that some of those skills that you have overlapped, right? The one that comes to my mind is the heat and air guy. So for every heat and air guy, he has to understand basic electricity because he's wiring the units in. And he has to understand basic public plumbing because he's soldering copper to do the, I don't know what chemical they use that used to be free on or whatever. But whatever the chemical that runs through there, they're soldering that type of stuff.

So they understand basic plumbing and stuff. So them being able to cross train and get certifications and some of those other areas and be able to fill multiple roles for you guys would be brilliant because they got the skills anyway. And they've got, they're doing the day to day task and they're licensed under their license to do certain things.

But it wouldn't be hard for them and it'd be a logical progression for them to, you know, end up being multi, multi skilled.

So we talked for a little while here. What are some of the things you're looking to do? If somebody is out there in the UK and your general area and they've got a company, what's your target acquisition? Are you still, are you still looking for new acquisitions? 

[00:53:10] Sam Turner: Yeah. So we'll look at anywhere between sort of one to three acquisitions per year for the next sort five, five, six years.Anywhere between sort of four and five million revenue and 20 million. Got to be profitable between 7 percent and above from an EBITDA perspective. We like recurring revenue as, as everyone does.

So maintenance as a core component of what we do. We've got a big chunk of that. So rather than big, just, just projects. But anything related to mechanical, electrical or hard facilities management services. Can also be anywhere in that value chain also. So, for example, going forward, we'll look at, I don't know, a recruitment company that serves that industry, for example. Or, a digital marketing company that special are, I'm giving a silly examples, but you know. So it doesn't need to be the same business, but anywhere in that value chain, we will look at acquisition.

So, yeah, if anyone knows any businesses in, in that space, or if there's, or any skills or anyone wants to come and join the, join the journey, because it's an exciting journey, then I'd love to, uh, to hear from people. But also, if people are going through the, you know, and people do reach out to me quite a bit to get inputs around their journey as well, and I'm more than happy to, to help as one of my kind of key things is to help other people. So, more than happy to do that as well.

[00:54:27] Ronald Skelton: Awesome. Well, I want to thank you for being here and how do people reach out to you? What's the best way for somebody to get ahold of you?

[00:54:32] Sam Turner: Yeah. So either on LinkedIn. So look me up on LinkedIn.I'm sort of regularly on, on that or also directlyemail, which is sam. turneratadvantos. com. Shoot me an email, that's fine. Or the group website as well, which is, www. advantos. com. So any one of those three, there's ways to, to contact me and be in touch and be happy to hear from people.

[00:54:58] Ronald Skelton: Sam, I want to thank you for being here today. And I think we should call that a session.

[00:55:02] Sam Turner: No, thanks again, Ron. And, uh, I look forward to catching up maybe in the, in the future as well.

[00:55:06] Ronald Skelton: Awesome.