"Should I Buy Growth or Build It?"

0:00you do. Uh my name is John Stoll, from Arizona. We sell roofing, residential and commercial. Uh we do right around 30 million a year. And we're trying to Our goal is to get to 100 million. Um and maybe even more specific to that, we're trying to drive more EBITDA, right? We're trying to put more more net profit. So, whether that's 100 or whether that's 10 million EBITDA, I'd rather shoot for 10 million EBITDA.

0:25What's stopping us? Um we came into the end of last year with a goal or a strategy to grow through acquisition. And that's kind of why I'm here. I want to learn the acquisition space, how to evaluate businesses, how to evaluate our own businesses. Um but as I've gone through the conference, I've realized that with probably three tweaks, big tweaks, um we could probably grow organically and get to that 100 million mark in probably a relatively same amount of time that it would take to to acquire. Um so, that's what I need help with. I need you to help us decide, like, you know, do we continue to go down the road of of acquiring and, you know, allocating funds and resources to finding businesses, or do we take a step back and focus on the organic side of the and growth of the business?

1:10>> So, the the the question that um you're asking is a very classic one, which is buy or build, right? And um building is almost always the better long-term solution uh in terms of short-term. If you can get Basically, it's just such a different business to do M&A. Um and I would say that having that as a core competency The people who do it, they come into an existing platform company, and then they're like, that's all we're going to do. We don't really care about the business, we're going to just let it stay, and then we're going to acquire, you know, five to 10, sometimes uh tuck-ins into that platform, and all of the operational expertise is just integrating those businesses into the core business, rather than like, how do we improve the business? Acquisition.com is almost exclusively organic growth in terms of how we try to drive uh alpha, or, you know, increase above the baseline.

1:57And so, for you, I think the question is and Leila has this really amazing frame for strategic problems, which I think I mentioned to a couple of you guys last night, which is which problem would you rather have? And fundamentally, it's like either path has problems and I think being able to accurately articulate what problems exist also will help you pay down ignorance tax, meaning okay, let's play it out. So, you buy. What problems are you going to run into?

2:21You're going to run into getting basically deal flow. So, how do I you know, I number one it's deal flow. Number two is motivated deal flow because you can make offers to people, but they might not want to sell for the number that you want to want to want to buy at. Um you might have some issues in terms of capital. I don't know if you're planning on raising capital in order to do that, which is typically what most M&A people who are who are trying to grow through M&A have really strong credit relationships or they have a fund behind them that can that can provide the liquidity for the deals.

2:50Um or you'd have to get more kind of creative, I'll call it, on the deal structure where you have a lot of owners, a lot of cooks in the kitchen that are all sharing on the slice of a larger hold co, which can kind of introduce its own problems as you might imagine. But, in that situation, the problems that you're going to encounter are going to be good creditors, raising capital, and then if you if you are going to be doing kind of partial deals without those, the cats and dogs of many people in hold co having, you know, disparate opinions about stuff, which there will be.

3:22The alternative is what problems exist. Is are you I'm guessing you're local, right? So, you might run into kind of regional caps based on the number of people or roofs literally in your area. >> Yeah. >> Um so, that would be that's a problem that you could solve either by expanding to a new market um or just doing that organically. And so, in that instance, it would probably be can we spin up a team or lead gen in whatever new market we'd have to spin up, number one, and number two, how can we drive more operational efficiency within the business so we can drive more EBITDA per per dollar revenue. And so, those are kind of the problems that exist on both path. And so, the question is really which one do you feel you're more equipped to solve?

4:05>> Personally? >> Yeah. >> Definitely the latter. >> Well then, >> Organic. >> then organic's probably the way to go. But that's just for everybody like kind of breaking that down, that's fundamentally how we think through it is like, what are the problems and what which problems do I feel more equipped to solve with my given skill set, resources, that I have available to me. So, if that was the big decision, I would go build rather than buy. >> Mhm. Okay. >> If you're a business owner and you're not growing as fast as you'd like, I'd like to give you a free gift. So, my team and I put together the $100 million scaling road map, which is basically 200 hours of us looking over all the portfolio companies we've had and what stages of growth they went through and more importantly, where they got stuck and how they got past it. And so, we broke it into these 10 stages and we made this little kind of quiz thing where if you put in your business information, it'll tell you where you're at and the most important part for you, what to do for each of functions of the business across product, marketing, sales, customer success, recruiting, IT, human resources, and finance. And so, no matter what you're struggling with, someone else has already struggled with it and solved it. And so, I'd like to give you this thing absolutely free. You can go to acquisition.com/roadmap, plug in your business information, and if you want us to actually help you deconstruct the business and you're trying to scale, we'd love to help you out. On the thank you page, you can just book a call with my team and we will look at the business, see if we can help, and if we can, we'll invite you out to Vegas and we'll do this in person live.