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April 8, 2022

How2Exit Episode 25: Sam Turner - Co-founding partner of Advantos and CEO of Advantos HVAC Group.

How2Exit Episode 25: Sam Turner - Co-founding partner of Advantos and CEO of Advantos HVAC Group.

Sam has had an extensive senior corporate career helping to scale the last company he worked in from €0.8b to more or less €6b in sales and has spent 15 years outside of the UK. He has since moved from the corporate world into the world of...


Sam has had an extensive senior corporate career helping to scale the last company he worked in from €0.8b to more or less €6b in sales and has spent 15 years outside of the UK. He has since moved from the corporate world into the world of Entrepreneurship through acquisition being a co-founding partner of Advantos equity partners and the founder and CEO of Advantos HVAC Group where he has already completed the first acquisition. He loves working with and developing people as well as utilising his financial/strategic & commercial skills helping small businesses to prosper.
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Contact Sam on
Linkedin: linkedin.com/in/sam-turner-svt
Website: advantos.com

If you’d like additional ways to support this podcast, you can become a patron here: https://www.patreon.com/bePatron?u=66340956
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Reach me to sell me your business, be on my podcast or just share some love:
Linkedin: https://www.linkedin.com/in/ronskelton/
Twitter: https://twitter.com/ronaldskelton
Facebook: https://www.facebook.com/How2Exit

Have suggestions, comments, or want to tell us about a business for sale call our hotline and leave a message: 918-641-4150
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Watch it on Youtube: https://youtu.be/V2nefA3yHg8
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Other interviews:
Zoran Sarabaca: https://youtu.be/OLqszNP7yHY
John Andrews: https://youtu.be/vmGWbd2y5x0
Chris Daigle: https://youtu.be/jHWzFGRbpD4
Arturo Henriquez: https://youtu.be/uwN7y8AE4EQ
Joe Valley: https://youtu.be/ZQLdybxcZKs
Christopher Wick: https://youtu.be/xhIf9ltgedA
Jonathan Brabrand: https://youtu.be/oC82Ls54CXo
Carl Allen: https://youtu.be/VIU2Lqj_FY4
Klint Kendrick: https://youtu.be/eJ2GICCj2TA
Walker Deibel: https://youtu.be/xoUH_Ixeook
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Ronald P. Skelton - Host -

Reach me to sell me your business, connect for a JV or other business use LinkedIn:
Ronald Skelton: https://www.linkedin.com/in/ronskelton

Have suggestions, comments, or want to tell us about a business for sale
call our hotline and leave a message:  918-641-4150

 

Transcript

Ronald Skelton  0:06  
Hello, and welcome to the how to exit podcast where we introduce you to a world of small to medium business acquisitions and mergers. We interview business owners, industry leaders, authors, mentors and other influencers with the sole intent to share with you what it looks like to buy or sell a business. Let's get rolling.

Hello, and welcome to how to exit podcast. Today I'm here with Sam Turner. Sam has an extensive senior corporate career helping to scale that his last company from point 8 billion to 6 billion in sales. I spent the last 15 years outside of the UK. He's since moved in from the corporate world into the world of entrepreneurship through acquisition, being a co founding partner of Advantos did I say that right? Ventos. Alright, equity partner and the founder and CEO of Advantos HVAC group, where he's already completed his first acquisition. He loves working with, with and developing people as well as utilizing his financial, financial strategic kick reversal skills, helping small businesses to prosper. And let's just get jump right in here. Thank you for being on the show. Let's let's jump in with like, kind of what got you into this? You went from corporate world to a very entrepreneurial world. Yeah. So tell us a little bit about how what what that brought that on? And

Sam Turner  1:35  
yeah, sure, so So my background actually I started when I when I left school, my first job was playing football, and you'd say soccer, but so not not the American football, but for the proper football. So I did that for for three years as a sportsman at heart, but then didn't make it for whatever reason, and and then sort of drifted into accountancy but bizarrely, but I say that story, because I think the, the sports elements, and actually failing almost at that is really kind of the key one of the key drivers for me to succeed at something, if that makes sense. So, you know, I wasn't necessarily the most academically minded, I was okay, but not, you know, the top, top, etc. But I had I had this drive to succeed. And I ended up long story short, in the corporate world, I was qualified as an accountant, and worked in the travel industry in various various roles of being up to FD as a finance director roles, commercial director, so I've moved from, from finance to the commercial world. And, and I was part of a journey, one business that scale from, you know, sub 1 billion in sales to six billions as a massive growth that included acquisitions. But we were sold, actually, we were we were part of a listed footsie 100 business here in the UK. And we were sold to private equity. And then with that came, the desire to go and acquire our largest competitors, which we did we integrate, we spent a couple of years integrating these businesses, it was very, very painful. And that's part of my philosophy going forward about whether to integrate or not, it kind of stems a little bit from my experience there. But anyway, in terms of then why I decided to leave that was for a couple of key reasons. I think the first was, you know, I was living outside the UK with my family, I've got two young kids twins that they're nine years old. At the time was two years ago, at the time, I was on a plane pretty much every week, either on Sunday or Monday. And it got to the point where my daughter was literally, you know, started to cry when I said, you know, I was having to go again on a Sunday. So that was kind of one one big driver thought I don't want to do that forever. The second was, it got quite the politics, let's say in the corporate worlds were something that just I just did, disliked, intensely disliked. And that's not for me, you know, one of my key values integrity, and I just don't like this kind of elements of you know, going behind trying to manipulate things, etc. It's just not for me, so that that was a second one. And the third one was, I was in a very responsible position. You know, we had almost a couple of 1000 people in my in my team, all over the world. And yet, I wasn't really able to make any big decisions. And I felt like you know, that almost a bit of a puppet in a in a roll that can actually make an incision. So I think the three things compelled me to leave and to do something different. I managed to secure an exit there was there was good and spent some time off, which was which was nice. And then I was really thinking about doing two things. One is property investing, and I know it's something that you've, you've done and you've come from and you're still in there and the other was, was investing in small business. And I spent a lot of time reflecting on you. What What were my strengths? What did I really enjoy? And I sort of quickly came to the conclusion that actually, it made much more sense to put my skills to use in a business context, work with people that I love to work with. And actually go that that route. So that's kind of the driver behind why I went there. And obviously, it enabled me to then do something for myself. So where my decisions were, you know, I was accountable, but I also had the decision making capability. So, so that was, that was great. And then I spent a lot of time reading digesting content, and going on various courses. And built a like a network of people. I was living in Switzerland at the time. And we, a number of us, that was part of like a mentoring or accountability group after one of those sort of training programs decided to try to work together. And that's when we created to advance us Equity Partners, which was about probably 10 months ago, something like that 1011 months ago, there's five of us five partners, we're all coming from different backgrounds. And

and then my that, I guess that was how I sort of got got into it. And we can cover more in terms of why, why the industry that I've chosen and that sort of thing, but that's kind of my key drivers were that I was fed up with the corporate world, I wanted to do something where I could really utilize my skills. I mean, I really value working with people. Part of my role in the corporate world was working with small businesses, so they were my my customers, I really relished actually helping them to grow, you know, maybe slightly less sophisticated, but there were easy things that we could do to help people grow. So that really, really strikes a chord with me helping small businesses to grow, and working and developing people. And that I think is critical. It's a critical component of what I'm trying to do now.

Ronald Skelton  6:57  
I don't think real estate would have been a bad choice, either. But uh, right before, I mean, like, right before you jumped online with me, I actually got off the phone with one of my real estate investment friends, who I convinced to take a look at what we're doing buying businesses and stuff. About a week or two ago, a guy called me from one of my outreaches saying that I'm looking for business to buy. And he had owned a tow truck company before and wanted his business partner died short story, the business partner died to make sure that business partners family was taken care of, they sold the assets off, he thought he was done, he took a couple years off. And now he's back working for another tokage company land and hundreds of 1000s of dollars with a contract for him and it's just eaten him alive. So he calls me off one of my ads and says do you invest in, like, explain what he's doing, like, adds too much of the startup for me. But I have an in it's gonna take more time than I have. But I have somebody that may be interested. So I introduced him to the real estate investor, private lender, friend of mine, who was wanting to try something like this, he says that 60,000 I can't buy a house here for that, and the money I'll make per year, yes, you know, multitudes times what I would take to fight you. If I bought if I put $60,000 down on a house,

Sam Turner  8:10  
I think that's one of the things I'd done is, is sort of put together a presentation or a deck for investors, because we have some some investors that have committed some some capital. And one of the things that really excited me, despite you know, is not necessarily just about the money, I think I have other drivers and even with the money, I think I have a very clear driver behind why why the money is a one of those drivers is to do something with that. And so I'm very clear about that. But what was interesting when researching this is if you look at the average returns in this type of asset class, in terms of buying into this, whether it's this kind of search fund model or the ETA so the entrepreneurship through acquisition model, the the average and the data around this the average returns you know massively outweigh any other type of asset class and when you consider that the risk profile is not is not gigantic is not it's not like betting on an idea. It's you know, you're you're acquiring in many cases very established cash flow stream so I think that once you start to understand that I think that's really interesting for for people to get involved with.

Ronald Skelton  9:28  
Cool. We have a guest, Perez? Perez says, Hello. So anyway, um, it's always cool to have somebody jump in and say stuff. If you have any questions out there. If you're listening, you have questions ask us so we'll try to get to them. So, you were in the corporate world you got retrained, you just kind of evaluated your next move. I kind of it's interesting. I did the same kind of thing and funny thing was that private investor is actually that was telling you about in a previous life or not A couple years ago, he was one of the robin Madonna's train coaches type of guys. And I brought him on to help me with like a performance coach. And then we become really great friends. And he still coaches viewbid over for his like, he's retired Marine Corps. So you can imagine what that coaching looks like a lot of times, Max Max back, right. But I had him I brought him on, like, connected with him, because it's kind of helped take me to the next level one day, where I had a real estate investment for him one day, we were closing some deals and we had a call with him, or I had a call with him. He says, Man with everything, you know, you should be playing a bigger game. Every since that point, I would close the house right in our business, not me. But the business make 30 or $40,000 on that deal. And in the back of my head is like but you shouldn't be playing a bigger game. So I had already been training people in investing, and I started training people to take the next step. And you know, the logical next step of real estate is go from residential houses to like things like RV parks, apartment complexes, you know, mobile homes, like cashflow. So I was coaching people to do that. And I was like, I don't want to go against I had five or six of my good friends, I coached him to move into that next. And it's like, if I take that same approach, because I'm at the stage where I really need to do something different. If I take that I'm competing with everybody I trained. Right? And I don't and I'm pretty competitive, I would dominate them. And I just didn't feel right about going in and just like out marketed to them as like, you know. And now if you're listening, everyone has got an ego I keep, you'd never be able to dominate you. That's what the other guys thought when I got into the foreclosure business too, right? But stopping foreclosures. I honestly, I did this jump because I seen an opportunity here. And I'm sure you see that same opportunity is tight. And all these courses, there are hundreds of 1000s if not millions of businesses that either are going to shut down, or be sold or transferred in the next five to 10 years. And there's just not enough buyers around. So and I was just telling you before the show, that one you chose to heat and air business that is just amazing. I just had Adam coffee on the on the show, he'll probably come out just before you do. But he they built a billion dollar company, you know from the heat and airspace, right? He went through acquisitions and mergers, they buy a cornerstone they buy like you've already got your one and then they started added onto it. Bye bye and others expanding that way. And he's saying is the private equity wants to see a 30% growth. So the only way to really hit that you can run a business really well, even in the heat and airspace and you know, businesses typically get 10 15% growth, maybe 20% growth? On a good year, yeah, on a good year, you start adding acquisitions and mergers, you can hit that 30 pretty easily because you're buying other companies that are growing at 10, 15, 20. Right. So you said it's almost not you're almost not able to do it without buying other companies. So that yeah, um,

Sam Turner  13:00  
did they did you know, in terms of the model that he used, was he looking at sort of acquiring and consolidating companies? Or how did he do it?

Ronald Skelton  13:11  
He did it. And so it sounds like to me through our conversations that he did it totally through the private equity model, meaning the private company, private equity company hired him as CEO, because he came from a different like a corporate world. Yep, to go out and be the CEO of these the cornerstone company and help grow. So but the cool thing was, he learned very well. And he's written two books on it on what a private equity company is looking for. And then how to sell to next private equity company, right. So there, they were somewhere, he actually said he didn't I think Max was a five. So they got brought in, they grew it, they sold it to another one, that private equity, a bigger private equity. A lot of people, if you're new to acquisition, entrepreneurship, understand that there's tears, right. Most of us that are listening here, we're buying companies, we're looking to buy companies that that, you know, 1 million turnover in the UK for us listed in their revenue in the United States. I say that because here in the United States, we say toner turnover, it's the employees leaving turnover is like how fast you're losing your employees in there. It's revenue, right? It's it. It's the so so our revenue is your turnover. But most of the people that were our circle is looking to right below that private equity model. They're kind of one to 5 million, or $10 million in  EBITDA where the private equity is or sorry, one to $5 million in revenue, where the private equity companies what he was saying is they're starting out that maybe some of them are at 1 million and EBITA. But most of them are at 1.5 million and up. That's where they'll start buying and looking at that. But so yeah, What's your game plan man you've bought one, you've got that you got it and you did the training. You formed a team, which is critical. I want people to understand that, you know, why didn't you go with on you know. That's a great question. What Why did you not go out on your own? You've got the experience?

Sam Turner  15:04  
Yeah, so so I think working with other people is, is first and foremost, you got to understand what's your preference, and my preference is to work as, as work with other people. And that's what I liked what I enjoy, we touch base, every, every single week, we're discussing deals, every single week, we're discussing best practice, how to raise capital in this market, blah, blah, blah, blah, blah. So all of that is, is much easier, I think, and much more enjoyable doing it as part of a team. So this is, I guess, first and foremost, but I think it also helps, because we can, we can bring opportunities together. So there's more of you like eyes and ears in the market. So we can all be involved in each other's deals, which effectively we are. So it just just compounds your ability to connect, I think with with more businesses, with more investors with more, you know, maybe debt capital providers, you know, just with with with a greater sense of, of connection to stakeholders, plus, is more enjoyable. And from, from, from my perspective, now, maybe others they prefer doing on their, on their own, but, but that's, that's, that's what we've done, the way the way we've, the way we've done it is we we still have a fairly kind of loose model in the sense that so for example, the HVAC business, and that's the roll up, that I'm involved in on and leading is effectively my my focus, but the others are investing art as part of my investor community, let's say have pledged capital to that. And one of them is sitting on the board of that. So that's how we're still involved. And obviously, we update together every week, how's it going, etc. Likewise, that the other deals that these guys are doing, maybe in more technology related areas, maybe one or two of us, I'm investing in what other people are investing one or two. So it's not like everyone is investing the same in every deal. It's kind of open. And then and then we create the structures based on who wants to participate in that in that field. But so far, it's worked worked well. And, and yeah, my game plan is to is to build sort of 10 plus companies. In the coming three to four years. We're looking at building initially. And this I say initially, because the deck that we had for, for investors, and what we're saying to investors, and the banks also is we'll get to 50 million revenue in four years, principally through through acquiring that business. So we don't assume a huge amount of growth, in that we acquired the first business end of November, that's about a five and a half million pounds, revenue or turnover. Business. So that's kind of a bit that's gone very well, the transitions been been really good. And it's about then looking at looking at the next I've just signed last week, actually heads of terms on another and I've got one that we're about to sign heads of terms on now. So so that will be that'll be three, but I'm hoping for, you know, another another three. In addition, by the end of this this year,

Ronald Skelton  18:19  
I have a couple questions and that spread. Do you mind sharing what the EBITDA was on the 5 million?

Sam Turner  18:24  
Yes, about about eight 9% is about 400,000 pounds.

Ronald Skelton  18:31  
It's not bad. I mean, 10%, I think is average, but like, so you've got clearly room to grow inside of that there are some service companies. It's funny, as I own a pest control company, I bought it out of a favor to a couple of relatives, or I say bought it, we started buying it. And I ended up pretty much creating one from scratch because the guy we were buying from like, was really a mess. So I think we got some of his equipment, and maybe some of his customers. And anyway, the rest of it, we had to start over with so big mistake, then I wouldn't got trade because like I bought this wrong. So I went got trade. But so you got your first I was I say the reason I got into it's like, it's not uncommon for a pest control company to have a 30 or 40% profit margin. Like the industry standard is 18 to 20. But they're if you're really lean and you're really careful, you can push that number and I just I didn't believe it until I seen three or four they were set for sale and they were claiming 35 or whatever, you know, profit monthly, whatever. Brokers lie, that's a lie. I thought I seen another one and another one. So I'm gonna go check this out. So I haven't done the research on HVAC, but I have to assume you could push that number up probably to 15 or 20.

Sam Turner  19:42  
Yeah. It depends, you know, HVAC here, which which area and you've got different let's say traits within there, you've got the heating side air conditioning side, the more the plumbing, you know, is it on the products or service so you know there's a kind of a quite a large scope and our our scope is quite large. So we will on sort of a complementary set of businesses, not all the same, not all exactly the same company. But I would say on average, the the kind of margins range between five and 10 percents is not, not a it's not a high margin business, but there are some businesses within there and some that we're looking at that are 15%. Plus, yeah,

Ronald Skelton  20:18  
I'm actually going to Google right now, because I'm curious what it is in the United States and see if it's, yeah, you're right. 10% or higher, isn't like, is possible. But it says, I figured in the United States that might be higher, because we charge the snot out of people for H fat. But I was curious, what if there was a disconnect between the UK? So if you ever look and see me, you guys on the show, if you see me glancing over here, I run this podcast on a four monitor monster of a computer, so I can do multiple things and answer your questions. Somebody, someday I'll be famous enough to have a production engineer that would just feed me that stuff in a chat line or something. So the second question I have is, are you growing? So there's a couple of different ways you could this could grow, right? H fac is pretty cool. Because you could just be residential, you could do residential, commercial, you could do commercial and like do HVAC fixing walk in coolers and that type of stuff inside of you know, gas stations, restaurants and all that stuff? There's so many different aspects is that what you say? I mean, when you say you're going to expand and its capabilities,

Sam Turner  21:15  
so what so our scope is to buy complementary businesses or HVAC, and complementary trade. So let me give an example. So one, one company that we're we're headed to terms with now as an electrical installation and maintenance company. So that's

Ronald Skelton  21:31  
where I was going next year, it wasn't,

Sam Turner  21:32  
you wouldn't say exactly HVAC as but it's on the fringes. But if I look at the one trade that is supporting the heating side most and is dependent on is probably the electrical side. So there is a very clear, complementary aspect there. And for example, our first business is focused almost 100% on the residential market, but on the new build residential markets, they install all of the heating and plumbing elements of new builds properties, so but we're talking about large scale developments, not individual properties. But But this electrical company is focused on the retail, commercial, customer base. But again, if I look at both of those customer bases, they both need electricals, and they both need sort of more the heating and plumbing and elements. So the cross sell opportunities there, when you get into customer bases are very significant. So you don't need to focus on it has to be the same, exactly the same type of business. Because my my philosophy is very much not to consolidate businesses together, because I just see, you typically destroy more value than you create, even in a large company. So in a small company, you undoubtedly will create it will destroy more value than you create, unless you've got literally exactly the same businesses and therefore it makes sense to put them all on one system, one back office, you know, one sales function, blah, blah, blah. But So given these are not, we will keep them and run them as like individually autonomous business, businesses within a portfolio. So within within a group, but we will create a model to for them to be able to collaborate and share best practice talent, capital, access to bigger contracts, cross selling of opportunities between customers and suppliers. And that cross selling element just from the conversations I'm having, I see is really massive. Now you gotta be careful not to kind of be too too quickly going after that you need to kind of slowly slowly not to disrupt the kind of momentum of the business as it is. But the upside there I think is very big. And then you don't get into the perils of how to smash businesses together and reduce costs and stuff, which I think is a recipe for disaster in their in this in this in this type of business for me.

Ronald Skelton  24:01  
So it's interesting, because we have the same strategies, the way I'm going to focus on growing the pest control company is I've already been in negotiation for the last year on like six different ones here in town, but I will buy one larger pest control company because I bought this one too small. But after that, when I was like I've been told this, this business is in Tulsa, when I'm ready to go to let's say Oklahoma City, which is 100 miles away, I will not buy a pest control company down there, what I'll do is maybe something that is great to cross sell with. So for me, you know, like a cleaning service. So if somebody that cleaning service that cleans houses, that actually has 25 or more, you know, two or $3 million a year that 25 or more employees doing that. And then the cool thing is whatever offices there I'll go ahead and license a pest control Park two trucks out there hire two employees. So my operations here will have a footprint there, right? And then the same thing the operation Then Tulsa will will start doing will follow their process for cleaning cleaning crews here and start getting jobs here. And that's how I plan to expand it sounds like you could do the same thing. When you enter new markets to avoid the collaboration or sorry, the integration. You just for you, I mean, for what you're doing Heating Air, a foam insulation insulation company that actually has the tools to, to detect thermal leaks and stuff like that would be awesome for you. Right? Hey, we're selling, you know, we're selling you a high efficiency unit. But I can tell your windows and doors are probably not going to hold the air very well. Would you like us to have our you know, our insulation commonly come out, scan your house show you where you need some help. Right?

Sam Turner  25:40  
Exactly. There's a great example I had a call with with a company earlier today. And they specialize in renewable, renewable energy, which is obviously the sort of key thing attacking the sort of the key climate change issues which heating the heating industry is, is, is a big part of and you can see absolutely then being part of the group to then provide the expertise for the rest of the group. And actually having that within the group is a massive compliment, because they're doing well, but they're very small, they can't do everything that they that they could get, because they just don't have the access to resources, etc. But if they're working as part of a bigger group with lots of let's say, people are doing the maintenance and installations of the different heating systems, then their expertise can actually permeate into what these guys do, and they can add more value that way. And that's another thing I think with the heating space, given that has, it is such a, I wanted an industry that wasn't gonna be disrupted by Google and Google and Amazon, that, for me was clear. But actually, to say it's completely stable is also not correct, because the industry is shifting away from away from gas. I mean, here in the UK, the government has kind of announced that after a certain period of time, there's no more gas boilers will be fitted in houses, which is what everyone has today. And it's still what's going in new build housing. So there's new technologies that are going to come along, and we need to be at the forefront of that. And I think that that's what I'm trying to do as well positioning businesses that can leverage that as well as you know, one or two businesses really are at the forefront of, of that to take forward. And I think in terms of creating value for the group as well, when I think about an exit, which is years down the road is not is not tomorrow, I think clearly any kind of energy related or heating related to or HVAC related company has to be demonstrating that they're at the forefront of that.

Ronald Skelton  27:40  
Yeah, my my, you might be able to develop the same vision, my vision with the, what we call it as Lullaby Pest Control. So I actually have the card on my desk here, as you can actually see the we let my daughter name it. Oh, sorry, it was off center was I forgot to the there he goes. My, my, my daughter was about four or five. And we were putting this all together. She's six now. And we were outside with my cousins that were I was helping buy this thing. And we're trying to name it. And my daughter said no, no, no, you guys are going to call it lalbhai Pest Control. As you guys, you guys wouldn't kill bugs. She's just putting them to sleep. Right? So, you know, we just like, you know, that's kind of cool. So basically, the logo there says all of our pest control that it says so you can sleep better at night. It's all it says on it. Right? But you know, I hope to turn it into, you know, something you could do to is like, instead of calling it you know, event toasts you know, what do you got it there at h fat group, it could be what I'm going to do with lullaby eventually, it'll be a lullaby Home Services, right? And I want to have the if you need a handyman, or want you to call me if you need your house cleaned, I want you to call me, right. And you know, when the when the cleaners go in there and she sees she sees a bug. She goes, Hey, and she sees something crawl underneath one of the doors. She goes you probably should call our handyman service and have them replaced the threshold. Right? Or, you know, there's like they just they're, I would keep them independent like you I don't really I don't like the idea of integration. You know, some maybe they have their own we all use one CRM, but they all have their own kind of zone in it. So they don't see everybody else's garbage. Yeah. I want them to we would have meet my my vision is we'd have meetings where they're all there. And we're all cross trained. And this is what you say when you see this. Right. And some of my guys, I mean, we, we kind of do this already, we do some clean outs and stuff. Because of the pest control business we show up. You know, we have investors that buy houses like Oh, my God is covered the bus, bugs and we show up and it's like there's stuff everywhere. It's like, you know, the best way to deal with this is to have it cleaned up completely. We know you're gonna remodel it anyway, for $400 or whatever the number is, my crew will come in there with dump bed trailers and haul that stuff off. Then we'll spray the house when there's no garbage there, right. What we don't tell them is we spray it for free first because we want to kill as many bugs as we can before we put that stuff in our dump trailer and haul it around. But you know, we spray it, put it at you know, haul it off, spray it again. And, you know, but you guys could do the same, like, you could have a home services business where somebody shows up, and they just like they can get you squared away, which is pretty much pretty much anything that happens at your house.

Sam Turner  30:11  
Yes. Yeah, no, absolutely. I think that's, that's a, that's a good vision. I think what we need, what we need to do is have some of the core services, air conditioning, electrical, plumbing heating within the within the within the group, and then and then sort of work out how they can, over time come together and provide the service. Because some are, you know, servicing commercial customers, some are servicing final customers. So, you know, we need to figure it all out. But it's exciting, but I love the love the vision around the sort of lullaby maybe that's the kind of like the umbrella brand, then is it the kind of lullaby group or something I would lullaby home services group, but maybe with individual businesses within that.

Ronald Skelton  30:55  
Yeah, I think that I think that you guys have the same play there. Let's jump back to your deal. You've done already. How did how did you guys fund that? Did you like do a really creative deal in the cellar funded it? Or did you at LBO model or were leveraged buyout?

Sam Turner  31:08  
Yeah, so it was a I would say it's more typical LBO deal. So we use the combination of equity, debt, external debt and deferred consideration. For me, that's probably the way that will look. So look at the next few deals, at least, what I will then look at is, is having a model whereby companies can join with through a share based share swap based approach. Because at the moment, we're sort of obviously buying companies that people want to exit, but maybe there are companies that people don't want to exit. And I know actually a few of my, let's say, not close friends, but friends who own businesses in this space. I think they're still young enough, but but actually, they have no exit plan at the moment, you know, and what, you know, maybe their business is doing a couple of million pounds turnover, revenue. But what's the future for for them they have, and when you talk to them, they have they have no plans. And you mentioned about what, you know, if you actually be part of a group, you could sell, swapping shares that you explain it to them, all of a sudden, they kind of are going to find that sounds really Yeah, sounds really interesting. So that I will do. But that will be after we've got the first few businesses on board. So yeah, this deal was was was, I would say, more or more typical LBO, we actually negotiated the deal. With I think, initially, it was something like 45 50% on completion. And what happened is, the numbers turned out to be worse, because they only do the numbers once a year. So it was at the end of the year, but they hadn't done the Saturday Council, when they did that they had a bit of a surprise on the numbers, and the numbers came down. So we renegotiated the whole deal. And instead of, you know, a purchase price of closer to 2 million, it ended up being closer to 1 million. But what I did do is pay more upfront. So that's where the external debt was helpful. So I paid I think, two thirds or 70%, upfront with 30% deferred. And that's that's the model that we that we used.

Ronald Skelton  33:24  
Yeah. Did you guys have the does the UK have anything equivalent to what we call the SBA, the Small Business?

Sam Turner  33:30  
No, unfortunately, not. I mean, the access to that in the US would be good. I mean, we're looking to also add somebody, somebody from the US to give us that kind of reach into that huge market. But no, we don't. And I think actually financing and funding in the UK is something that you would think actually given that the UK and London especially as one of the financial centres of the world, you with access to capital would be very easy, very straightforward. But I think in comparison to many, many countries, including others in Europe, it's the opposite. So actually access to funding for deals that are I would say sub half a million EBITDA are very, very difficult. There's very few lenders in the market that will want to touch that. Most most deals will look at asset back to finance only, so most lenders will look at that. I was lucky to find to find a lender that supporting now not just this deal, but the whole plan which is which is great. On a pure purely sort of cashflow lens or not, not with a asset back to let's say finance.

Ronald Skelton  34:39  
I wasn't gonna say I was curious on how many assets a heating air company would have you got your tools which are not probably fundable, get your trucks maybe maybe fundable, but you know here there are some companies that we consider like solid long term contracts, so contracts of two or more years with the government or some corporation that says to Cornerstone there's not going anywhere, they would consider that an asset. And actually kind of you can finance it against something like that. But I was curious what you said it was asset asset backed. I was like, what assets? Does heat and air company have? It's a service based business.

Sam Turner  35:15  
Yeah. The main the main asset normally in a business like that is debtors. Yeah. And in fact that that's the kind of the, probably the easiest asset to finance as well. So you can normally get on between 80 and 90%, or between 70 and 90%, I would say, depending on the quality of data. So So that's, that's the big one. But even that wouldn't wouldn't have been enough in terms of the level of debt isn't in the business. So yeah, it is tricky. And I think what I do see is a lot a lot of people now wanting to get into the space to look at buying businesses, they do, you know, a couple of courses and think, you know, this is the easiest way to make money. And then realize that it's actually not as simple as that. I mean, if you do things the right way, it's not complicated. But I think there are certain things that you need to understand and and I think many people don't. And I think that's, that's where we have a challenge. And I think you mentioned earlier, where you've got this disconnect of buyers and sellers, and I do see that I know, the stats are all about the US, there's millions of businesses, that you know, with retirement sales are going to come up and then nowhere to go. And it's really sad, isn't it? Because like, like you said, I mean, what's going to happen with those people with with those services. And I think the same will be true in the UK and other markets. And yet, I don't think we're still doing a good enough job educating people on how to do that, and actually connecting connecting the dots, because I still see lots and lots of people thinking they can just do the following thing, and then go and buy 3, 4, 5, 6 businesses, and you look at them two years later, they're still trying to do the same thing. And, you know, so we got to ask ourselves, what's what's missing here, I think in terms of the education and

Ronald Skelton  37:07  
right, innocent, you know, it's here in the United States, and it's probably the same there, I see it, it's kind of a, I want to call it an insane cycle, you got business owners retiring, shutting their doors, and walking away, closing them off. And before I got into acquisition, and mergers, I can tell you right now, I've shut the doors on 1, 2, 3, 4, 5, 5 companies, I grew them, what built them, you know, in the market change, something happened, or whatever I got, or I got burned out, and then started something else, you know, I sold one of them, you know, to a partner, like I sold my half to him. And that was just kind of an asset switch, we had a bunch of assets together in that business. And I just gave him more than I took when I left. Right. So that said, you know, almost every business, I just kind of okay, I'm going to do this. Now this markets kind of shifting, and I started over. It's interesting, there were so many valid business, Now the eyes are open, there's millions of businesses that they need to have a transition plan, they need somebody like you as an entrepreneur to step in, run them and keep them going. But most people, even me to this day, I have this thing where I just, you know, I can't find something to to buy right the second I'll just go builds something, right. And that's the entrepreneur entrepreneurial thing is like, I'll just go build it. And if you look at the statistics behind that, like 95% of all businesses fail in the first five years, out of those 5% that succeed only on a say, out of that 5%. So you got 100 businesses, right? Five of them make it past five years. And that in that five that made it past, you know, five years within 10 years, only one I think in a hundred of those five. So if you look at you'd have to you'd have to have 2000 businesses go through make it past what they call an area of significance. So a revenue of a million or more. Right, so you got a shot. I think I did the math once and I might somebody correct me I hate doing live math, but uh, sir, I think it's a shot of like one and 2000 so if you wanted to create a million dollar business, statistically, you need to go start 2000 businesses, even if it's in heating air, you got to go start 2018 their company is running for less fuel for five years. And you'll hit one to hit a million. Yeah. Or you could go figure this out, find the financing work with investors, lenders or whatever and buy one that's already two or 3 million. Yeah, once you realize that it's just like, ah.

Sam Turner  39:27  
No, I, I completely agree. I think the what you see in these types of industries is a lot of people that are you know, they they're working for someone else, and they go out on their own and they start as a one man band and and maybe finished as a one man band, or a two man band or a three man band. So you have a lot of those businesses that maybe they're not creating a new idea, but they're just kind of doing working for themselves almost there. But yeah, you do see this into The relevant size businesses the chances of doing that from from scratch, versus acquiring, I think all the stats lead to you're better off acquiring having said that it's still not natural for people to do. Is it? Because people think, well, you know, I want to start something. I'm the opposite. So I'm not from an entrepreneur background was, was, I would say, I wasn't a purely typical corporate kind of guy, but I always wanted to, I want to do something by myself, but I'm not I'm not an ideas person. So I'm not a, well, let's think of a product or service that doesn't exist today. And you know, would do that I'm at a very much a, what's, you know, what's an existing, let's say, business? And how do we grow that? How do we scale that? How do we do more of that kind of thing. And that's why, for me, it fits much better with with my skill sets as well, then, the final piece, and you will have done it then many times is the work involved in doing that is, you know, is crazy, and I'm a period of my life where I've, you know, I've worked hard for many, many years, it's like, I'm not saying I'm not going to work hard, but I am not going to work 90 hour weeks, you know, to get a business off the ground. That's not what I want right now got young kids. And so all of those things together. For me, it's kind of a no brainer, but I do think that people still assume once they start to think about doing it, that maybe it's kind of easier to do that than then maybe it is, if that makes sense. Yeah, it's not. My it's not like it's amazingly complex, and you can do it. But you've got to go in with your eyes open about what's realistic, and what's not. And therefore, where to focus more. And I see a lot of people scratching around stuff, that's never going to happen. And that's the bit that frustrates me because I feel like maybe the the education around, it still is pushing people into those things that maybe is never going to happen, if that makes sense.

Ronald Skelton  41:55  
I get that. And you know, I honestly think almost almost all the guys that teach this stuff. If you did exactly what they told you to do at the volume, they told them that they tell you to do it, you'd probably pull it off, but most people can't, you know, if you look at the program, both you and I did, it's talking about, you know, really low down creative structures. And a lot of people said, that's just not possible anymore. You know, business owners will take that. But I can tell you it is I, we started a rollout process for marketing companies. And within within 200 days, we had over $100,000,000.90 8 million, to be honest, depends on which which day you asked one day, it was like 89, next day with 98. And then, but we had, you know, commitments of people who are zero down going to do an equity swap into a big roll up. And, you know, in a short period of time, we were we were already on track to do over $100 million in revenue in less than a year. And unfortunately, that fell apart because of some team dynamics on the team that we selected to run it. Yeah, as far as far as I'm for legal reasons about as far as I'm willing to go inside of that conversation. But uh, but uh-

Sam Turner  43:08  
I'm not saying, I'm not saying it's not feasible in some of those creative structures, I think a great what what I what I what I feel is, maybe still there's a disconnect between the people that are so for example, in that case, you have plenty of experience in in in buying, running starting businesses. So you're drawing on all that experience on whoever else you were working with. Right? So if you're new to this from from having never done it before, I think it's very difficult to do those sorts of complex elements without some kind of knowledge, a real knowledge and understanding and experience in that space, if that makes sense. So I think I think it's that that a little bit that disconnect that I think the the person that's really never done anything like it, not even not done it because I was I hadn't done it. Although from a corporate perspective, I've bought companies before but having people that have never been been anywhere near even running a p&l in in a bigger business or anything, I think it's it's, it's a little bit misleading in terms of saying, Oh, it's so easy. You just do xy, X, Y and Zed. And I think that's, that's, I guess the point that I yeah, I think can be refined by actually focusing them in a slightly different way, if that makes sense.

Ronald Skelton  44:33  
So I run a couple of Hangouts and kind of networking things. I get to meet the different people in this space around this. And I come across a lot of people who have taken these types of courses, their employees, maybe they're IT employees or even finance employees. They've never been responsible for p&l. They've never even seen one until they took this course right. They don't know how to read a financial statement. And, you know, I they asked me to jump on a call with him to help him negotiate persons and some business this and John's like, okay, my first step is always like, what's your team? What are your skills? And then who's on your team to fill in? We're not. And it's remarkable to see some of these guys like, well, I want to be the CEO of this, like, cool, what have you been the CEO of? Like, I'm not going to help you negotiate a deal from somebody who helps you because that's what I love the negotiation side, I'll help you out the conversation. I don't have a problem getting on the phone with anybody never seen a phone number I didn't like, right. But that being said, I'm not going to help you do that when you're like, I gotta be the CEO, and you've never run anything, because I'm not going to help you negotiate taken over somebody's baby, right? They created this business, they may have run it 20, 30, 40 years, I'm not going to be the guy that convinced him to hand it to you. Yeah, when you don't have a team to support it, and you have no business running it. Right. So, you know, the one thing I'm real big on is who's on your What are your skills? And what is you know, who's on your team to augment that? There's a book by Dan Sullivan called who not how and I absolutely love it. Right. Yeah, I played the joke with people on the in the version and I do a knock knock joke, right? And the doctor, you know, I go knock knock, you go ahead, knock. I need a, I need a who? Yeah you do. You're gonna need a lot of who's right. So the whole joke is is like, you know, you don't need to figure out how to do this, you need to who you need to figure out who do you need on your team? Right? That's the whole premise of that book. And but, uh, it's, it's incredible to think that you're gonna go from an hour like, some of these guys aren't even at the point where they're sourly. Right? Their hourly wage, IT or one of the guys a janitor, right? He had a little bit of an entire inheritance, he had the 10 Grand to play for pay for some mentoring, jumped right into this, he's like, I'm gonna buy my first business. And I was like, cool. Who's gonna, who's gonna run it for you?

Sam Turner  46:48  
Yeah. And you're completely right. And I don't want to come across as being dismissive of people's ambitions is not at all what I'm saying. In fact, I'm the first to help anybody who would want to reach out to me and you know, but But it's that disconnect between what's really involved in this and like you say, the experiences such as you've got, so you have to, as you rightly say, fill in the gaps. Now, somebody could have no experience, but recognize myself aware that they've got no experience, and work hard to plug as many gaps as possible in their own knowledge, and work with those people that can bring the knowledge that where they where they've got the gaps. And that's what that's what you want. And that's the holistic view that I think, doesn't exist enough in terms of the way the some of the training elements are there, because it's kind of generic, this is how you buy. And here's the techniques to buy. But I think buying is one thing, then then there's a lot of detail that's not really covered in terms of, you know, dealing with a lender, for example, if you haven't got a very, very good understood a very good understanding of the financials, or somebody that has, you will struggle, you will struggle to have those conversations. So walk into that, knowing that you need somebody, again, you're not going to be an expert, but know somebody who hasn't researched somebody. So all of this. And then the first day, how are you going to stand up in front of the team and say, Hi, Guys, I'm the new guy, you know, what, what's, if you've never done that, and you can't kind of shy away, how you're going to pay, you got to think about these things. And what I'm saying is, it should be a little bit more holistic than, than just these the techniques to buy. And then I think would be more because ultimately, we want the same thing, right? We want actually there to be more people that are able to do this to actually you know, make that balance in terms of the buyers and sellers in the market and not have 1000s and potentially even more than 1000s of companies have to go under because there's nowhere to go.

Ronald Skelton  48:51  
Yeah, and and I'm not I'm not trying to discourage anybody, it's a matter of fact, I encourage them, if you don't know anything about running business, and you're really serious about buying one, by one so big that you know, this company is so big, it's already got a general manager in place, it's going to run it and you getting in the way as you get in the way. And then you buy it, you own it, you operate it and you learn as you go. And you know, at that point, it's running well and it's yours to run as opposed to you got to step in and help it do something which you're not trained or have experience to do. So, Sam, we're hitting the top of the hour. And now it's 15 minutes into this. Let's make sure everybody knows how to get a hold of you. I have your LinkedIn profile on the screen, and it's standard linkedin.com/in and then I'm going to spell out the last part of it Sam dash Turner s a m dash t u n, e r dash S V T. So it's Sam Turner SVT with hyphens or dashes in between it on LinkedIn. You're located where if I if they searched for the SAM Turner that's not an uncommon name. So you're located in the UK somewhere

Sam Turner  49:54  
in the UK, not far from London, the place for those notes but yes, so that's great. Also email Sam dot Turner at advantos.com. So more than happy to, like I say more than happy to to help people that are considering getting into it. And I've, you know, always got time to share my experiences in the space. 

Ronald Skelton  50:15  
Now you guys look into expanding into other countries like the US are other stuff at some point? 

Sam Turner  50:19  
Definitely, definitely we were talking. We had a bit of a strategic goal setting, which is a bit late in the day in first of March or 20th of February when it wasn't supposed to be for this year. But we got found the time early this week to do that. And one of the things that we said is we want to bring in a partner in the US, as well as in Southeast Asia, as well as potentially in Australia. And for for to have more more parts of the world covered, I think with with the experience that we've got. We don't just cover our own locations, we have got experienced contacts, networks in other in other markets, but those kind of three big areas, then would would give us more global coverage in terms of looking at deals. Having said that, I mean, my my 100 100% my 80% focus right now is building in the in the UK business, but as a group, we will be looking at expanding. Absolutely, yeah.

Ronald Skelton  51:18  
So I mentioned this before the show started. But before, before we get off here, just remind me or bring before we after the show or something. I interviewed earlier this week, Adam Coffey, which is the guy who wrote the private equity playbook. He created or he was the CEO of a HVAC roll up that went over a billion dollars. So I'll connect you with him. And if you know he's here in the United States, he's in California, I believe. At least I think this was his LinkedIn profile said he was I think he's in California. And maybe he knows somebody in town that's wanting to do that, again, like you know that, you know, there could be your team member here that would you know, already has connections and those age fat companies. So if nothing else, it'd be worth a conversation with Adam to see because he's done it. He's been there, he knows the space. And when you're ready to sell it, you've probably noticed the buyer, because he sold he sold that HVAC-

Sam Turner  52:11  
In contact like that, and I really appreciate the offer, Ronald. Thank you for that contact like that conversations like that. I think even if it's comes to nothing, I think conversations and this is where I'm saying, you know, for people wanting to do something in this space, have as many conversations as possible. Because if somebody knows more than you about something, and they're more than willing to give their time to help you then take advantage of that. Because that's, that's, that's what it's all about. And I think the good thing is in our kind of community, I see a lot of people that are like that, which is great.

Ronald Skelton  52:42  
It's interesting, I started this podcast for that sole purpose, right is to get out make connections, make friends with people in the industry. And if you look, I was telling somebody the other day, he's like, have you monetize your they asked me if I monetize my podcast, like how much it's making. He's I haven't even thought about that. But if you really look at it, in January alone, the people I had on my podcast that I interviewed, if I would have paid for their time for the hour to hour and a half I got to spend with them. I just spent 50, you know, I looked at I looked at every one of their websites, I just I was curious, I did the math, I just Oh, just over $55,000 in consulting fees in January for the time that I spent interviewing those individuals. So I do this for to learn. I'm a newbie in this realm. You know, I've been an entrepreneur for most of my life, probably, since I was a teenager mowing lawns and stuff. But you know, but I do this because I want people to know what the spaces exist, I want to kind of help expand the exposure that of, you know, acquisition entrepreneurialism. And then the second thing is I want to I want to connect you guys with each other, I want the guests to be able to reach out to this, you know, the, the audience, the audience to be able to reach out to the guests and the guests to be able to talk to the other guests or so I I think that's going to help us all and you know, I see opportunities popping up already got people reaching out to me going, Hey, are you interested in because they heard the podcast or whatever, I've had people coming up, say, hey, when you need funding, let me know. We gotta be careful with those a lot of those guys who reach out to you say I have funding, if it's anything like the real estate space 99% of those are gonna rip you off. I thought about running a podcast where I just I just interviewed the people who are offering to fund your deals. Yeah, I just I drilled them on the podcast and see if they're scammers or not. That would be kind of an easy one to do.

Sam Turner  54:27  
I think you're right, I think, you know, having people just get in touch is helpful. Obviously. You can't be naive around people trying to sell you something but I think nine times out of 10 people that genuinely want to connect, talk through ideas, you know, is there any mutual interest in certain things and that's great, right? And that's what it's all about. So, no, I think he did a great job as well and doing that and helping out the community with that with that. So if there's anything I can do at all and then please do keep me in mind but yeah, connection to, to Adam will be will be fantastic. Yeah.

Ronald Skelton  55:02  
Yes. Adam Coffey. Yeah. So Adam Coffey. But uh, yeah, I'll make that connection. I'll share. I'll probably do it via email. I was making a lot of connections on LinkedIn. And I just got a message this morning and you've reached your maximum for the week. Yeah. So next week, I was like, okay, maybe I got a little ambition this ambitious to, to reach out. So anyway, right. But I'll send you guys an email, we'll introduce you guys. And maybe you can help each other out. If nothing else, it'd be a great guy to know, when you get to the point and maybe three, four years from now, when you're thinking about exiting here, having him in your Rolodex would be amazing, just because he's done it before he knows who those buyers are? Absolutely, I think he said there's something like 6000. Currently, there's something like 6000 private equity companies with over 6000 With at least you know, 3 trillion sitting idle to devise something to be able to know out of which which of those 6000 are interested in HVAC companies would be a pretty strategically important to you. So,

Sam Turner  56:01  
It would be, yeah, that that kind of database. And that insight would be would be fantastic, wouldn't it? So no connections like that are invaluable. So thank you for that. Well, thank you.

Ronald Skelton  56:08  
I'll do that if there's anybody else you want to meet. And same thing with the audience and stuff if you want to meet one of these speakers of stuff. And if for some reason, you can't reach them through what we did on the show give you the contact, it's okay to reach out to me because I stay personally connected to a lot of these guys, and all all helped make that connection for you. Thank you for being on the show. I am going to call it a show and the history of hang out for just a second afterwards and we'll clean up anything we need to clean up. 

Sam Turner  56:33  
Thanks very much, Ronald, thank you. 

Ronald Skelton  56:35  
All right, that's the show. The investors and entrepreneurs professional mastermind. The investors and entrepreneurs professional mastermind combines that additional peer to peer mastermind introduced first in Napoleon Hills famous book Thinking Grow Rich, with accountability partnering, where your peers help you ensure that you set goals take action and get results. If you want to scale blow past roadblocks and achieve success faster than you might think it's possible. I suggest you take a visit over to tiepm.com That's T i e. P m.com. And check out the investors and entrepreneurs professional mastermind