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Owned and Operated #192 - The Ultimate Playbook to Buy & Scale Small Businesses

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The Ultimate Playbook to Buy & Scale Small Businesses

Want to grow your business through smart acquisitions, direct outreach, and personal branding? In this episode of JackQuisitions, we dive deep into the art of buying small businesses and building relationships that close deals. Host Jack sits down with an experienced operator to explore what it really takes to acquire businesses, from cold calls to contract signing.

Whether you’re a new buyer, an aspiring entrepreneur, or an operator aiming to expand your portfolio, this episode is your blueprint for mastering business acquisitions, deal structuring, and effective broker relations. Learn proven strategies for sourcing deals, building trust with sellers, and navigating private equity competition.

Discover how top acquirers are identifying great opportunities, building authentic connections, and using storytelling to stand out in a crowded market. You’ll also hear real-life examples of deals—from pool cleaning to art framing shops—and gain insight into due diligence, deal terms, and transitioning ownership the right way.

🚨 In This Episode, We Cover:

🔹 How to cold call and source small business deals effectively
🔹 The challenges and benefits of working with private equity vs. good operators
🔹 Why storytelling and personal branding are key to broker success
🔹 Real-world acquisition stories: from pool cleaning to art framing
🔹 How to handle deal terms, due diligence, and transitions smoothly
🔹 Tips for standing out as a serious buyer in a competitive market

💼 Special Thanks to First Internet Bank!
Looking to buy or expand a business? First Internet Bank is a National Preferred SBA lender specializing in acquisitions for the skilled trades. Their SBA7a loan program offers up to 90% financing for business acquisitions, partner buyouts, and commercial real estate—plus optional lines of credit to fuel future growth. Unlike traditional lenders, they take a “how can we” approach, making deals happen for both first-time buyers and experienced operators.

👉 Special Offer: Mention Owned and Operated for a reduced good faith deposit and a complimentary deal review + buyside prequalification.
Connect with Alan Peterson from First Internet Bank here to get started

🎙️ Episode Host:
🗣️ Jack – x.com/thehvacjack

🎙️ Episode Guest:
🗣️ Chris Barr - Linkedin

📢 Enjoyed the episode?
✅ Like, Comment & Subscribe for weekly insights on business acquisitions, deal flow, marketing, and growth strategies!

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Episode 192 Transcript

Jack Carr: [00:00:00] So why do you think that you are one of the 10% that actually makes it to the acquisition phase? Of

Chris Barr: course, I saw that a lot in the franchising world of like, oh, I'm gonna do this franchising. I'm gonna get an operator, sit back, do my thing, and like, oh boy, it's a rude awakening. For a lot of operators out there that are then slicing lettuce at 5:00 AM

Jack Carr: every misallocated dollar is worth three to four of yours, whether that's 9,000, 10,000, 20, 30, 50,000.

It's like if you're gonna lie to the government and risk going to jail and fines, like you're gonna risk lying to the buyer. Like

Chris Barr: very excited to, you know, have you and your audience. Both be involved in my process, track how it goes, and then, you know, celebrate the big win.

Jack Carr: Guys, welcome to the first episode of Jack Acquisitions. I'm so pumped to have you guys here today. We are sitting down with Chris Barr. One of the segments we're doing here on Jack Acquisitions is we're following a searcher in real time to help them out. Get closed on their first [00:01:00] business. I'm really pumped.

He does an amazing job, and as you listen through this series, you get to watch him get closer and closer until he finally closes on a business. So stay tuned, keep listening, and enjoy. Welcome back to Jack Musician. Woo. So this is an awesome segment we're bringing to the podcast where we are taking. Home service acquirers or, or want to be acquirers and bringing them on this podcast, we're breaking down what they're looking for, who they are, and then we're gonna follow along on their journey to their first acquisition.

We're really excited. We got an awesome person here. Chris Barr. How's it going, Chris? Doing well, Jack, appreciate you having me, man. Of course. Appreciate you coming on. This is a super fun segment that we are really excited about because I think it's gonna be the neatest thing in the world to start with you today.

And then look back in a year. You're acquired, you're building, and now you're on this different journey, and then [00:02:00] we can follow along and check in with you. But it's really cool to actually see people get to the finish line. So why do you think. That you are one of the 10% that actually makes it to the acquisition phase.

Why are you special? But

Chris Barr: you know, I, I, I don't have a crystal ball or anything, so, um, you know, this is based on my, my best data on myself. Um, but yeah, just kind of a, a bit of a background on me. I'm still a relatively, you know, young, ambitious professional. Um, and I've got this really highly diverse background that's super versatile.

You know, uh, past experiences have included, you know, United States Marine Corps infantry. Been a history major, a substitute teacher, uh, commercial real estate broker, you know, marketing specialist for a fast food franchise. Uh, so I've kind of been all over the place. Um, you know, and I've been a, felt a little consistently held back that I don't really have this, I.

Niche that I can leverage into, you know, vocational opportunity. I feel like that's what a lot of employers are looking for. [00:03:00] Um, so, you know, I stepped back and kind of looked at my general skillset and looked at how best to leverage this versatility. Um, and I realized it was through entrepreneurship. Um, and in seeing that again, you know, said, okay, what's our avenue there?

Um, and. Obviously a, you know, business acquisitions are very much a trend on the rise. It's a very buyer heavy market out there right now. Um, the silver

Jack Carr: tsunami, as they say, my least favorite term out there at the moment. Yeah. But you know, it is, it is a great opportunity. You're right. And so, so what a diverse background man.

That's, that's crazy. And so now you're looking into to home services.

Chris Barr: Yep. Correct. Um, so yeah, looking into home services and. You know, specifically, again, wanted to buy something that was existing. Uh, I saw a lot of the, again, for entrepreneurship as a whole, a lot of the risk and the pitfalls come in this kind of takeoff process and getting something off the ground.

So why not just kind of sidestep that in and buy something that's already been, you know, up and well [00:04:00] functioning. Um, and yeah. You know, so getting into home services, uh, again, I, I have started to get a little bit more agnostic about exactly. What type of service and even kind of getting away from that initial preference of home services.

Um, we've got a, a pretty tight, um, geographic area we're playing in. Um, we are really looking from something from Boca Raton to Vero Beach, so any of those four counties. And between there, um, we started to kind of pick through already what was on the market, um, in home services. So again, trying to, to cast a little bit of a wider net.

Um. You know, again, kinda getting back to that initial question of, uh, why, you know, why exactly am I gonna be one of these, these 10% guys? Um, and kinda that old officer and gentleman quote, like, I got no place else to go. I, I really feel like, you know, I, I've kind of exhausted the avenues, um, that excite me that are available and, uh, again, there's enough tenacity there where I really do [00:05:00] feel like I got what it takes to make this happen.

Um, so

Jack Carr: walk me through that, that process. Right. So I'm always very interested in. This, this process of somebody either quits or gets fired from their job, and then that's the moment that they're sitting around their dinner table going, what am I gonna do next? And then finally it's ding, I'm going to go buy a business.

So my, my key moment was my wife and I left into an RV and we wanted to travel the United States. I love that. I mean, I had twins and it, it didn't work out exactly like that, as nothing ever does, but like that was the moment where I said, wherever we stop next. I'm gonna buy because I don't like answering to people, and now I just answer to a giant customer base instead.

Yeah. Oh, so what, what was that moment? What was that turning point for you?

Chris Barr: Yeah, you know, um, I, I was a vice president acquisitions, um, in my previous role, uh, for a niche style of real estate deals and. Yeah. You know, left on pretty amicable [00:06:00] terms with them and then just kind of looked at it, you know, of, of next movement and said, you know, I've a hopped from so many things to so many things, but I've been, I've been a low man on the totem pole plenty of times, you know?

Mm-hmm. Um, took plenty of orders in, in the military and was like, you know, I would kind of like to be in a position where I'm synthesizing all of these diverse experiences I have into kind of leading the ship and leading a vision. Um. And, and again, not necessarily one that I have to create from scratch on my own.

Taking something that's well-functioning already built, um, building off of that and applying my own kind of personal touch along the way. So it felt like that was really where my skillset would be best utilized. And I, I said I could not, I. Think of any other options that were gonna be as well tailored to me as that.

So, um, that's really how we landed there. And then, you know, I'm a boomer at heart man. Uh, I don't, I don't like tech. Um, you know, I really don't, uh, I can barely operate my iPhone. Uh, I know how to get to the calculator app, so, you know, I got that going for me, which is nice. But, um, you know, I wanted to find [00:07:00] something that was pretty impervious to tech.

Um, and I, I don't really see Amazon co-opting the HVAC space, uh, anytime soon. Uh, it seemed like home services were, I. We're pretty tried and true. Um, and again, especially the vintage ones have been through 2008, have been through covid, have continued to thrive. So, um, yeah, and I think that, you know, you asked a good question at one point, I.

And what I'm looking for is also, you know, what are you specifically trying to avoid? And I think that, you know, new sexy, high growth stuff, you know, like give me, give me steady Eddie, give me something very unsexy. Give me something that is an industry that's been around and has operated. Same with a lot of the same players sense time of memorial.

So, um, that really kind of shaped that desire for, again, home services now that we're. Slowly expanding onto service in general. Um, but you know, we're, we're starting with a pretty. Small purchase price. Um, 500 K to 1.5 million. We're pretty well versed in commercial real estate. Um, we've got a [00:08:00] decent portfolio there.

Um, but this is a new asset class us, so figure, you know, best to start small.

Jack Carr: That being the case. So 1.5, 1.6 million in purchase price. Mm-hmm. I mean, if you are going to look at the industry, all the industries as a whole Sure. From a service or home service or B2B service, um, I mean you're looking at right?

Give or take. For a first purchase, we will talk about the buyer's trap throughout this, this entire mm-hmm. Um, segment. But just from a rule of thumb, what you're gonna find out there on the open market is gonna be a two to three x of SDE. Right? And so 1.6 is like somewhere around, uh, $500,000. SDE, which really means after you take out the owner salary to pay yourself, you take out his car that he was using and all the add-backs he used to run his business.

It's really like a 200,000 net business, which doesn't leave much room for, you know, the, the tried and true. [00:09:00] I'm just gonna hire an operator, buy the business, hire an operator, put 'em in. So what you are gonna be the man on the ground doing a lot of the things. Oh yeah. Where do you feel that your skillset.

Um, really plays to, right, because in my mind there's, there's the finance guys that come in, they come out here with their MBA, they buy a nice cushy, $1 million ebitda, and then they're the, the puzzle makers, right? They're moving around all the finance and they're making it work, which, you know, in certain businesses that does well.

Sure. Yeah. That then you have, um. You have the operators, like people, engineers, or they are ex tradesmen and they go out and buy a trade and, and they can run as a tech, they can also run the business. It's like the typical person that we think of when we think of owning a business. And then there's, you know, the marketers, the people who think that, that, that they solely drive marketing.

They're usually really good with AI automation and they're, they're systemizing the business so that. They're getting rid of all the overhead. We see those guys a lot in [00:10:00] like, um, house cleaning companies is a big one. Or window washing is they, they're just really a lead gen and then they sub out all the work.

Mm-hmm. Like where do you think that you fit in? Where, where, where is Chris The man? When it comes to this kind of stuff? All of it.

Chris Barr: No, not, not exactly. Um, no. I think that's, that's one thing that we've also done to distinguish ourselves, um, as buyers to a lot of the owners we've been speaking with is I, I, you know, I know that the before Jack acquisitions, the podcast was owned and operated, you know, and I think that is something I really buy into in that sense of, I do plan on operating this thing, you know?

Um, and that's also kind of shaped the type of home services we're looking at. Staying away from stuff that's really highly technical, like. I'm not an electrician, nor am I going to be. Um, you know, but something like pressure washing, painting, landscaping cleaning, um, fence building, you know, a pool service.

These are all things that are, are pretty obtainable. Um, also having very upfront conversations with owners about overlap. [00:11:00] Period of, Hey, listen, yeah, you're willing to stay on for X amount of time, complimentary, that's great, but I'd like to keep you on for an extra, you know, six months, a year if I can. Um.

You know, on a, you know, contract basis, uh, because I truly want to understand and learn and be able to wrap my arms around, um, the industry as it operates. Um, and I think that I've said a lot of those MBA finance guys, again, no disrespect, but they also couldn't turn a screwdriver to save their lives. Uh, that, that ate me.

Um, definitely have more kind of hands-on experience with, again, this big diverse background. So I wanna put that to use. Um. And so I think, again, getting something that I can, you know, have the ability to get my mind and arms around in a pretty rapid fashion. Um, and then being willing to operate and yeah, over time obviously would love to grow.

It, would love to bring in managers, not trying to buy myself a job. Definitely looking at scaling, but I think that that's. And I, and you would know the buyer trap far, far better than I do. But I feel like that's something that either gets people in the hairy situations post close or [00:12:00] prevents them from closing is 'cause they hit that realization of if my manager walks on me.

What the heck am I gonna do? And I don't want to be in a position where that inhibits me. Um, I wanna say, all right, manager walked out the door. I'm able to roll my sleeves, handle this, make it happen. Obviously, backfill them as quickly as I can. Um, or if they don't have management in place to be able to own, operate, manage myself, grow it, scale it to a point where I can step back, bring in a manager.

But again, doing all that. Per what's healthy for the business, not I wanna sit there and collect my mailbox money because that is what sounds cool to me.

Jack Carr: Probably one of the most important decisions you can make in your ETA journey is which SBA lender. You are gonna pick a lender who will be in your corner to get you closed on the deal, as well as set you up for future expansion.

That is why we partnered with Alan Peterson from First Internet Bank. He and his team take a how can we approach as well as I personally know they specialize in home service acquisitions. [00:13:00] Mention the show or my handsome bald head and receive a reduced good faith deposit, as well as a detailed deal review and maybe even a buy-side.

Prequalification, no strings attached. Head on over to Alan FIB. Dot com, that's A-L-A-N-F-I b.com or click the link below to get connected. It's, it's interesting 'cause I mean, we hear this a lot in the beginning and I, I know it was a thought that I had, um, is the, you know, bringing in an operator at some point in the near future.

But I think that when you actually get into your business, there's a realization at some point that, that, that that's not a reality. Bringing in an operator isn't a reality until you hit a certain level. Right? Because it's never really with the SBA debt and with the personal guarantee that, that some people take on.

I don't know if you are. We'll get there. Yeah. But. For myself, right? I, there's no one I can trust that I'm gonna put in the business that is going to make sure that I don't lose my real estate from a personal guarantee or personally bankrupt [00:14:00] myself. Even with monthly or weekly check-in on finances. It just doesn't make sense.

And so that, that number where I thought it was, maybe, you know, that four or 5 million, you have enough what you do, you have enough to bring in a gm? Sure, yeah. That a p and l owner, essentially a, a GM that would really own the business. It, it's much later and it's, it's for HVAC and plumbing in particular.

Somewhere around that $10 million mark is where I, I view it. Fair. Yeah. Because you can start installing, um, you know, C-Suite team, like, hey, this is the director of finance. This is the director of operations. This is the CEO. And there's enough money that you could still pull a salary from the business while it's big enough to be able to manage a, an actually top line team.

Sure. But, but beside the point, I mean that that's less about acquisitions and more about operating. So, no,

Chris Barr: and I do do wanna offer one note because, you know, again, I. Pulling from the super diverse background. One of the things I did before stumbling on this was I was a marketing specialist for Jimmy Jots Court headquarters, and I saw that a lot in the [00:15:00] franchising world of like, oh, I'm gonna do this franchising.

I'm gonna get an operator, sit back, do my thing, and like. Ho boy, it's a reawakening for a lot of operators out there that are then slicing lettuce at 5:00 AM Yeah, exactly. So understanding that and accepting that upfront and planning for it has been a huge approach. Circling back to the acquisitions process, um, which is kind of where we're

Jack Carr: at now.

There you go. No worries. And so as we're moving into, into this, and you're actually. Going from this idea to reality where, because this is a process, how long have you been doing this for now? How long have you, since you started the journey.

Chris Barr: Man. Uh, I left my previous gig back in November of last year. So spent those last two months of the year just educating myself, reading as much as I could on the process, and then really started the process in our s Jan one of this year.

So we're only about, you know, two and a half months in.

Jack Carr: Perfect. So we're two and a half months in as you start to generate focus. And what I, it's actually my father-in-law [00:16:00] saying, which is one of those old man sayings that always is like, yeah, lemme tell you about my life. And it's. You don't know what you want, but you always know what you don't want.

So where, where are the guardrails on this? You gave us one guardrail. Hey. Now it can't go above 1.6 million. I want it, I don't want to do that. I want it to stay there. Yeah. Um, so we have a price guardrail. You have another guardrail, uh, parameter if you will, that hey, I need it to be in this tight geolocation, but you're open agnostically to the type of service.

So what are the other parameters that you're putting on this search to be able to a, accurately drive and b maybe to help some of our listeners who are kind of one step behind you saying, okay. What, what parameters should I be putting on this? Like yeah, how, how do I concise this down to a point that's actually manageable?

'cause there's so many different types of businesses out there.

Chris Barr: Sure. No, and I think that that's been the playing with how wide we're casting. That has been one of the biggest I. The [00:17:00] biggest parameter in flux by far since we've started the process. You know, there's a few easy, quick ones, like anything that started realistically less than five years ago.

I've got a pool of business right now that was started just about five years ago, and it's checking a lot of the boxes, but that always gives me pause. I really want something around, honest to God, at least 10 years. Um, so having something that's vintage is a, is a guardrail that, um. Is pretty significant kind of understanding, kind of basic margins.

Um, and that again, is not a MBA finance guy. That was something I definitely had to educate myself on. Um, so doing some back research. Um, and again, as sectors are changing, as industries are changing, I'll kind of do some research into what the, you know, appropriate margins are for that business. And the second that you're looking at.

You know, tax return to your cn, you know, cogs or certain expenses are kind of way outside those margins. Like epass easy to kind of get those outta your court and move on to something else. Um, I would say again, uh, the, and recently, um, because of my [00:18:00] operations approach, um, things that are overly technical, you know, we were kind of examining general contractor opportunities, stuff like that.

And. There is still potential for them qualifying, but we're really backing off of this. That's another Yes.

Jack Carr: That's a good question. So I mean, that's part of what I'm asking here is like, I know for my search, one of the big caveats because my search was a little different than yours, right? Mine, everyone's is, my parameter was I wanted something that was going to, as a, as a child of, of oh eight, and who saw my friend's parents in Southern California.

Um, get absolutely decimated by the, the recession. I wanted something that was recession proof. So one of my optimizations was saying, Hey, no new construction, because one of those, you know, debt. So if anyone can see my finger debt plus, um, a downturn in the economy from a new construction perspective mm-hmm.

Is, is absolutely a failure of your business any way you cook it unless you were able to [00:19:00] get a really interesting. Um, create a finance on that. So, so is there anything like that, that you really have kind of hard nos on? Um, and, and some of those might even, right. Some of those might go to, Hey, I want a luxury item, or I wanna stay away from luxury items, or, sure.

I, you know, like, I, I find one of the hard parts about the, the initial searches, it's the nets so wide and then you have to kind of reel it in over time. So that you can understand markets better to make good decisions. So are you looking at anything like that or, or is, are you still in that phase where you're just still trying to go, Hey, you know, I just really need to see some cis to, to understand markets first?

Y

Chris Barr: yeah. You know, there was again, um, kind of a process of starting with a really, really tight net. And then kind of right around end of February, mid-February realized our net was way, way too tight and we're running out cis and I'm wondering what to do with my hands. And as an entrepreneur, that's a very terrifying place to be.

Um, so then [00:20:00] rapidly started casting a much, much wider net and are now starting to kind of reel it back into this good sweet spot that we're looking at. Um, you know, and so in that sense, it's still probably a little bit of a work in process. Um, we work in progress, I should say. Sorry about that. Um, the, uh, you know, I would say that recession proof is also, um, again, I want, I want stability.

That's the reason that mm-hmm. This whole kind of thing came out was targeting stability. So something that's recession proof is, is obvious in, it's almost like so ingrained into the approach that, like, I didn't even really think about it as a parameter 'cause something like. Pressure washing something like painting, landscaping, like these are all things that, you know, the home services just really proved their worth.

Um, in the covid environment, all those tended to do pretty well. Oh eight, again, also getting a business that has existed pre 2008 and I could see their numbers and I could see how they performed. Um, you know, that stability and recession, you know, proof ability, uh, is something that's just kind of been ingrained.

[00:21:00] Um, but kind of, I guess back to the, the parameters. There's things that again, are. Also ambiguous and kind of come as second nature that you don't even realize that you're, that there are legitimate parameters that you're using to weed out certain options. Like for example, there was a roofing business and over the past three years I saw sales.

Continually decline. But SDE was continually going up and I'm like, something, something don't feel right here now. Yeah. And, and using trends like that, um, that are weirdly fri freaked me out at the beginning, but even after two and a half months and really start to become second nature once you see enough ci.

Yeah, I mean,

Jack Carr: I think that's over time that you, you get better at reading financial statements and you understand more. Mm-hmm. Um, I, maybe I'm asking this the wrong way. I, I guess so if you were to, in a perfect world. If snap your finger tomorrow and you just have the business of your dreams. Mm-hmm. What, for the listeners out there, what does that look like?

Like is that, Hey, I wanna service HVAC company that [00:22:00] does, you know, that meets my standard. Or you know, like, what, what is that for you?

Chris Barr: Sure. Yeah. Um, well I'm expecting after episode one of this show a pressure washing business in West Palm Beach that, you know, I was making. 500 k an SDEA year is gonna call me up and give me a two x multiple and you know, we're gonna have a done deal.

Um, yeah, I think that, again, I have my, my preferences, I, I really do like pressure washing. Um, I think that it's underserved. I think that there's a lot of people, um, and that's crazy 'cause a lot of people would say it's actually oversaturated. But I would say in legitimate players, especially in my market, agreed.

Um, for people that are doing it. You know, suit, you know, suited uniforms, good looking trucks, not just like an F-150 with a pressure washer in the bed. Um, for people doing it in an upstanding business to business context or context. I, I think that, that, um, I. Is a great opportunity specifically with where I'm at.[00:23:00]

Um, so that, yeah, that is a pretty much a targeted ideal sector. But again, you know, because I'm hunting in four counties within Florida, I can't narrow myself into into that. Yeah. You know, there's been, things has ran Again, I gotta be careful. No,

Jack Carr: but that, that's, that's a good, that's a good starting point, right?

Yeah. Because like, that I think helps out to really look at what you are trying to accomplish. Mm-hmm. And, and so let, now let me take this a different way and say, okay. Pressure washing. Just for a great example. Why not build or why not go franchise? Because there's some great, I mean, admittedly as a, as a show that is focusing on ETA and acquisitions, there are some absolutely wonderful franchises out there like Rolling suds, um, you know, shadow Aaron Harper, he is a great guy.

Lives here in Nashville, actually had had lunch with him a few days ago. Great guy, great business. It's it, they, they pressure washed the um. The, what is it? New Orleans Superdome before the, the game. So like they, they get these really nice [00:24:00] contracts and they, they work on the stadiums and, um, I point being is like, there, there's optionality out there to go the franchise model with this or.

Wow. Even so startup because, you know, yeah, it's not, um, a purchase, but it, you know, one guy in a truck is a pretty low lift to be able to start that business. So why, why, why buy?

Chris Barr: Yeah. Um, I will, I guess I'll start with why not build first. Um, you know, I got out of the Marine Corps like 28. I graduated school at like 30, and then I was a commercial real estate broker and a hundred percent commissioned in spring of 2020, just.

Covid was not a good time to be in that biz. So I re that was a reason I kind of got out of brokerage. I'm like, you know, it can be a great, great business if you have this ramp up cycle, but with where I'm at in my life right now, I don't have the years to ramp up, you know? Um, and, and when building something from scratch, there's inevitably going to be that ramp up cycle, um, mm-hmm.

In a, in a few lean years. And they say most businesses, you know, lose money before they start making [00:25:00] money for the first, you know, like three years or something like that. I really just don't have that timeline available to me. Personally, so that's really the hesitancy against building. Um, and there was an opportunity to do that with a local connect down here who wanted to build something, need some equity, didn't work out, no sweat.

Um, but so it, it's, it's not entirely off the map, but there's reasons why building isn't right. And then franchising, um, again, I already dropped the franchising organization I used to work for, um, and, and Jimmy Johnson was great and, and no disparaging towards them, but you kind of see. The, the good, the bad and the ugly in, in franchising.

And I think that moreover than the good, the bad and the ugly and the, and the in between and the uncertainty of what makes the good, the bad and the ugly from a f you know, franchisee perspective. Um, it was also kind of a post marine tourism in that I've seen what big. Large organizations and the bureaucracy [00:26:00] and the lack of being nimble comes along with that.

Um, and again, I'm sure there's great franchise orders are out there. I'm sure there could potentially be a great fit. And I don't claim to not be misguided here. Um, but dealing with larger, more chunky organizations where there's a lot of protocols and bureaucracies, et cetera, um, is really something I'm trying to move away from and really kind of just a, a, a small shop dynamic.

Um, and so that's where buying something really stands out to me.

Jack Carr: Hey, don't disagree with you whatsoever. I think franchising works for a lot of people. Um, I'm actually in the same boat as, uh, I, I will tell people outright the reason, and I joke about it, but I, I, there's two, there's two types of owners. So there's owners that want independence.

Uh, from whatever, from, from having a job, being able to, you know, take the days off you want, be able to make your own decisions, all that, that wonderful stuff. And then there's owners that don't like being told what to do, so they want to ran their own business. And I definitely have a large [00:27:00] portion of that.

Second quality is, is being told what to do. It's, uh, not, not something I personally enjoy and have never enjoyed it. So I went out and did my own thing. Uh, perhaps, but that's, that's just the personalism that I feel is, is is pretty, uh, true for. For all the owners I've met. Um, yeah, great, great people though.

And, but, but it is interesting from, as you kind of go through this journey, I do want you to keep an eye on that. And I want you to keep an eye on that because what I found is the red flags from owners, right? So as you are positioning yourself to be in a spot where the owners are begging you, saying, Hey Chris, I need to sell it to you.

Part of that is understanding the personalities of these owners. Right. And, and there is a, like, like I said, when when I sell one day, there will be somebody sitting across the table trying to, to work with me. And if they understand that about, you know, entrepreneurs, that they kind [00:28:00] of, they figure that out really quickly.

Mm-hmm. And we see it a lot with, with new owners, is there's a reason. That owners don't stay around after they sell their business very long.

Chris Barr: Mm-hmm.

Jack Carr: And it has to do with that dynamic and it's such an interesting thing that you'll run into. But I'm excited 'cause I'm excited for, to see you actually start dealing with that.

Um, yeah. So speaking of owners and, and red flags and how you've started Sure. You've been doing this two and a half months. You've had to have talked to some owners by now. Yeah. Yep.

Chris Barr: Absolutely. Yeah. Um, I would say probably I. Half a dozen or so, you know, general conference calls, get to know you, you know, owner, buyer introduction.

Um, and then, uh, last Friday was on, uh, a ride along for, and I gotta be careful with NDAs and whatnot. Yeah, yeah, of course. But yeah, it was on a ride along for one of these, um, service businesses and again, getting to sit in the car with the owner and really, um, kind of get to know him and see what he does up close and personal over the course of the day.

Um. [00:29:00] And yeah, man, it's a, it's a mix of personalities out there. You know, you get some, and I, I like, and it's not just specific to small business, but anybody who's like, oh, we're the nicest, we're the best, we're the most like, ethical. It's like, but are you, like if you, if you had to say it like, you know, um.

So they, you know, and there's some that are just, that are just really, really energetic and don't always want to get kinda at the data or the meat of the matter. And I'm not a data guy either. But at the same time, you know, there's some, you know, some black and whites we need to get on the table. And some of 'em just kind of want to talk about more on the metal level of things.

So. Yeah, very

Jack Carr: ambiguous. That is true. Yeah. Yeah. So that's, that's, so do you view that as a, do you view that as a red flag or do you view that as kind of a, the business culture? How do you, how do you take that?

Chris Barr: No, no. You know, we, all of us humans, we have our little piccadilly's man, and so it's, it's kind of understanding them and their personality and also like how that.

Shapes the business. 'cause obviously it's an extension of them in essence. Mm-hmm. Um, and so again, like, you know, pidd, sometimes they're just PIDs, not good nor bad. Um, [00:30:00] sometimes they can be indicators of other things. So kind of trying to read between lines and, and read people is, is a interesting practice.

And then on the flip side, I had, again, I can't share too much. We just had an intro call with an owner 'cause there's cm didn't include any financials like at all. And I was like about to be like, no. But then my broker's like, this does happen. They want to just get to know you before, you know, letting you take a look in the hood.

Yeah. And I'm like, O okay, fair enough. And, uh, could not have gone better. I, I, this owner and I absolutely hit it off. He seems just like such an amazing, high value guy. Um, it just, it was hard, is truly, truly in the right place. Um. Again, I, I tempted to reveal a lot. So, but, you know, and I haven't seen financials and I already wanna put an LOI on this thing, and I'm like, don't get too outta yourself here.

So

Jack Carr: there's, that's, that's, that's what I'm curious about. So I'm gonna, I'm gonna dig in a little bit here. Yeah, please. Um, so do you view that feeling or the generation of that feeling by an owner is a good [00:31:00] thing?

Chris Barr: You know, um, it's difficult because again, like I'm not an NBA I'll be completely candid in that, you know, viewing the financials.

I, I obviously do it, you know, but it's definitely not my strong suit. It's definitely something I have to like, really get a quiet space, sit down and folks, and like really, really do it. 'cause it, it doesn't come second nature to me, but relationships do. Um, you know, do you feel

Jack Carr: that, that yourself and the owners are in a, like a symbiotic or in an adverse relationship throughout the transaction?

You know,

Chris Barr: um, I think it's, that's the question. And no is it ever, you know, and I think it's a, it's a mix of both, you know? And I think that that's one where I got lucky that, you know, commercial real estate, commercial real estate brokerage really prepared me for that because we're both working towards the same goal.

You know, you have something and you want to sell it and get paid for it. I have something that I want to buy. We, we have our, our goals are aligned, so it can be symbiotic, but then there, there's. You scratch the surface a little bit, you start getting the particulars and our [00:32:00] interests aren't always gonna align.

And so, um, you know, I wish that I had experience of moving through an LOI with you that I could share of kind of how that process looked like and how symbiosis and patent the cool part is. That's what we're here for, right? That's what the point of this is. I'm excited gonna see it. You know, I'm gonna, I'm gonna have this conversation with you.

I'm gonna say this is how that came to, um, well, the reason I

Jack Carr: ask Chris is because, um. You know, maybe incorrect. I'm not gonna pretend that, that I am, you know, the Messiah to acquisitions. But what I will say, what I will say is that naturally, just from a numbers perspective, right, you, we are buying.

Businesses based on a, a multiple. Sure. Right? So three, three x, four x, two x, whatever that may be. 1.2 x. But I think it's a very, very important part as we start digging into these processes and going through cis, that we realize that we [00:33:00] inevitably are in an adverse relationship. In my opinion, don't get me wrong, it doesn't mean being mean, it doesn't mean being angry.

It's not bad in any sense, but there is a natural dynamic where. Every dollar that they misrepresent truthfully or untruthfully is worth $4 to you. It's worth $4 to them too. But every single dollar that they can route through a business incorrectly or you know, slide under the table is worth about three to $4.

And so when you're talking about, Hey, this is an add back for the cost of my car per year, well. Did you use that car for your business? Am I gonna have to replace that car? And we start ha like later episodes when we go through these add-back discussions and through these CIM discussions and finance discussions.

There's, you realize that there, there's a benefit to them being very nice and making you feel like they're trustworthy and stuff. A because what? You want a business that's trustworthy, right? That's how they, like you said, internally, you want that cohesion [00:34:00] inside their business. But as long as that, there's an understanding that at the end of the day.

Every misallocated dollar is worth three to four of yours, whether that's 9,000, 10,000, 20, 30, 50,000. And when you close on that business and they, their time's up, they're gone. Oh yeah. Like they're gone. And it's you and it's you with the big load on your back. And for everybody who hasn't heard my story, um.

You know that that's what happened to me. Like I overpaid and the owner and I are still friends to this day. But that being said, like it will. It wasn't great. It wasn't great. And so I just, I'm curious. I, I want to see, see this interaction go on with other people, not just myself. Um, but that, that's my soapbox.

And I'll, I'll jump off to continue. No, totally.

Chris Barr: And one of the kind of mentors I've had, he's a, he's a lecture at Harvard on, you know, small business acquisitions. He is an MBA from [00:35:00] University of Illinois. Absolute, absolute stud. Um, and he was acquiring, um, I think some sort of medical practices. Something along those lines.

I don't have all details, but I know deal number one, there was basically like two sets of books. Um, one set of books that they reported, the IRS and then the actual set of books, and he bought a ugly, ugly situation again, you. He's a stud. So he was able to kind of, you know, write the ship and everything ended up okay and, you know, everyone went home happy, but like it was, it was a little ugly there.

And so avoiding a scenario like that is of utmost importance. And that was kind of in the, again, I haven't gotten to deal with it hands on yet, but in my kind of pre-research and reading, that was something that was really, really harped on. So you gotta go through the tax returns. And again, it ended up just happened with the ride along, you're saying, oh yeah, you know, I expensed, you know, you always see that on the, the.

Tax returns too. Like 2022 looked okay. 2023 looked okay, 2024 looks great because they decided they wanted to sell and realized they couldn't expense, you know, every little thing through their business. And that's where [00:36:00] you saying it's like, oh, I was just expensing stupid stuff just to avoid paying Uncle Sam.

Like, alright, that's, well, that's well and good, but like, show me the receipts and if you can't, then like, we're, we're gonna have to calculate this entirely differently. I'm not going on like, good word and hopes and dreams here. And that's where, again, commercial real estate brokerage, um. Was helpful because it, it helps you not get very personal.

It's like, again, I still like you, you still like me. We still have a, a end state that is very symbiotic, but hey, listen, like you're saying, you have this personal car and it's gonna be an add-back. I'm saying it isn't. And listen, either we come to an agreement or we don't do the deal and that's just, that doesn't, so I think that being objective about those things is something I've gotten a little bit of practice for, but don't have the experience with it in this context yet.

So that'll be. That'll be interesting to, to happen

Jack Carr: upon. Yeah. One of the great rule of thumbs that someone gave me really early on, uh, 'cause I remember looking at like a $50,000. The broker was like, oh yeah, he is a slush fund expense through the government, like miscellaneous and some, I was [00:37:00] sending it through somebody who, who, maybe it was Sam Leslie.

I don't know. Somebody back in 20 22, 1 of the, the, the Twitter guys, and he's like, Jack, trust me, if they will lie to the government, they're gonna lie to you. And it makes sense. Like if you're gonna lie to the government and risk going to jail in fines, like you're gonna risk lying to the buyer. Like no chance that you are like the government is, sits above the buyer in this hierarchy.

Oh, yeah. Um, so no, very interesting. I'm, I'm, I'm really pumped for this because I'm excited to kind of get this feel again. Um. So how as we move forward, are we gonna get you closed on a deal in one year? Guaranteeing it to the listeners right now?

Chris Barr: Yeah. Um,

Jack Carr: no, they wanna see Chris win. I wanna see Chris win.

I want to get through all this, get the juice out, get to see LOY, get to see due diligence, like knock through all these walls to close. What are we gonna do to get there?

Chris Barr: No, I, I so [00:38:00] appreciate it. I think it's gonna be. Kind of getting an understanding of what my process looks like, um, and having a kind of a sounding board for that process.

Getting advice, input, and then accountability. You know, knowing that, you know, we're gonna be meeting and then we got, we got an audience we're speaking to, you know, it def not that I wouldn't otherwise, but definitely helps kind of keep me on the ball. Um, and so I think kind of the, through that feedback kind of shaping.

What the daily consistent actions look like, because obviously, you know, we've set aside a year for this. This is a marathon, this is not a sprint. And marathons, in this sense habit, there's a daily consistent action. And so if we're fine tuning and, and tweaking along the way, what those consistent actions look like, um.

Then I think that it would be surprising if I would not end up with an acquisition within a year from now. W

Jack Carr: what, what do you think that, uh, do you have any ideas? So like, one of the cool things really early on that people should do if they're [00:39:00] doing acquisitions is, I, I. I mean, you're, you're on, I'm guessing biz buy sell, right?

You're on biz buy sell, you're on all these kind of online marketplaces. You're probably working with brokers, the normal things. Yeah. But you know what was really neat early on is, is there's a lot of people doing some very interesting stuff. And one of those interesting things that I did early on was I paid a VA in the Philippines, I think it was like 48 bucks or like 68 bucks, something ridiculously small.

And what they did is they scraped every single HVAC. Um, listing on like three different websites from, uh, Patrick Lang. Oh. He's a business broker that does HVAC only, they scraped his website. They scraped biz buy, sell, and I think they scraped another website. And they pulled all those listings into a singular folder.

They added the ones that had real estate. They took out the other ones, and then they, they, they wrote if it was commercial, residential service, whatever. Oh, yeah. And then on top of that. They went through and then they compared 'em to each other. So now I gotta [00:40:00] see, okay, in this market it's selling for this, and this market's selling for 2.3 x and this size it's selling for this, but this $6 million, one is selling for that.

And then that helped me later on when I was talking to brokers, I was like, Hey, but like in this market next to you, like in. In, in Louisville, I'm in Nashville, so it may be for you. It better. Hey, in Orlando, one just sold for two X, so why are, why are you, it's exact same business, same size, same range. Yep.

Why are you selling for four? Like what's the juice that makes you so special? Yeah, so that was helpful to have the brokers know. That I knew the market and have the business owners know like, oh, hey, this guy's serious. He's talking to other businesses. So like, what? I'm excited, what are you gonna do? No, that, that,

Chris Barr: that's brilliant, man.

Um. Gosh, I got, then there's people, like,

Jack Carr: then there's people like Rory. Um, oh, goodness. I, I interviewed him a few months ago. Uh, he bought a nursery out in like North Carolina and what he did. Oh yeah. Yeah. He just went out and he started like, he just [00:41:00] cold knocking on doors. Business owners like knocking on doors.

Yeah, like that's definitely an option too, especially for an area like yours where you have a small geo. So yeah. I'm like, I'm interested, man. I'm, I'm excited like this. That's the fun part about this, is getting to build these, these systems.

Chris Barr: Yeah. And, and you know, I know we're running a bit short on time, but just to kinda give you some insight.

Yeah. Again, I've gone through the broker process and would always, still will. I, now I feel kind of like embarrassed. It's like I form a commercial real estate broker. Like I had, I have not done the deep work on comps that, that you did and that's probably something that I should be doing. But, uh. You know, instead of, I'm gonna definitely look into, but getting away again, I, I felt kind of some dead ends happening in that broker cycle.

Again, we'll always have a, a foot in that pool, but, um, again, I, I saw that episode with the, the guy from Greenville and was like, I need go out there and knock on some doors. I'm like, I'm a commercial real estate broker. I can drive a market. And then got like, weirdly for the first time ever, like cold feet of like.

I have no idea how much they're doing in revenue. I have no idea. I have nothing about this business. I'm not a consumer of them. [00:42:00] I like, I was like, I sit outside the business, like I'm not gonna walk in here. But, um, I did subscribe to Dun and Bradstreet, um, yeah, their database and, you know, it was a few grand, but, um, it's been a great resource to kind of.

Filter out businesses and sectors I'm interested in. Um, put a bunch of search parameters in there, see what it spits me back out. See what their, um, you know, their total sales to, you know, how many employees they have is kind of a, a good, you know mm-hmm. Understanding of preliminary what their margins might look like.

So I've reached out view that got told to f off. A good few times from that, those cold outreaches and then have just really been hitting the networking hard, especially in the past, like two to three weeks, been going to Chamber of Commerce, uh, events and networking, you know, power, power dating, almost like, yeah.

Right. Um, events. And honestly, they've been, I've seen, because I, I think we all can agree that like everyone's really just trying to find a good off market deal. Like, yes, by all means. Like see what's out there on the market, be the brokers, but like everyone's hunting for that. Really [00:43:00] quality smacks you right in the face.

This is the deal I gotta go for on, on an off market situation and instead meeting with a lot of these local business owners. Um, going to some networking events, getting my name outta the community. I've had. Three people in the past week be like, oh, you know, I, there's this service business honored, tragically had a heart attack, Weiss been trying to run it.

I think it's gonna be best to sell. Uh, so I'm like, wow, there's been so much traction, such a condensed period of time by just kind of getting away from that routine system. Call the brokers, follow up, fill out the NDA, get the CIM and just kind of putting your. Name, face, intention out there to your community, um, has yielded a ton of results.

So I'm excited to kind of continue to pursue that and see where that goes.

Jack Carr: I mean, that's definitely the best option. I mean, you can make all the, the quirky tools like I did that you want. Yeah. But the networking, and actually I was thinking like, how, how do you get in, where, where's a place like that? You could sign up like a pickleball gym or something where Yeah.

Yeah. It's just all old, old guys who are like, I, I don't work on Tuesdays. I go and play pickleball. Like, that's [00:44:00] where you need to network at. Oh yeah. And go find somewhere. But uh,

Chris Barr: for a country club membership or something, man. Yeah, exactly. That's, yeah.

Jack Carr: So interesting. Well, you know, I appreciate it, Chris, you coming on today and you agreeing thank to like this entire process.

'cause I know it's gonna, it's gonna be uncomfortable at times, right? Yeah. But, um, I think this is gonna be really fun to, to watch you next weekend. We'll dig into, you know, a little bit more. Uh, as we move forward and as you kind of run into situations, we'll start digging into, um, like in depth items. So like, what does an LOI look like, why, and where and when and how, and all kind of the really nitty gritty.

Granular tasks through 'em. Mm-hmm. And I think that'll be fun to, to work with you and, and see where you're at in the processes. And, um, update the audience, because that's gonna be a fun, fun track.

Chris Barr: I'm, I am your ball of putty right now, so mold me, shave me, poke holes in it, gimme homework. What, whatever you gotta do.

Um, but yeah, very excited to, you know, [00:45:00] have you and your audience both be involved in my process, track how it goes, and then, you know, celebrate the big win. Uh. Not yet, but when that happens, so when

Jack Carr: guaranteed one year, no, absolutely no pressure. No, I, I appreciate it. And so listeners, if you like what you heard today, if you like this segment, leave us a comment.

What do you want to see Chris do learn, talk about? We're really interested. Um, and leave us five star review wherever you listen to your podcast, and we will see you next week.

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